TMI Blog2020 (12) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... o do the bare minimum in order to establish that the liability towards the aforementioned party, though disputed, was however outstanding. Apart from that, except for harping on the fact that the payment to the aforementioned party was towards an advance in lieu of a contract for installations to be carried out in a hospital i.e. a capital expenditure, nothing had been placed on record by the assessee which could irrefutably substantiate the said factual position to the hilt. In the backdrop of the aforesaid facts, we are of the considered view that in all fairness the matter requires to be restored to the file of the A.O. for fresh adjudication - Decided in favour of assessee for statistical purposes.. - ITA No. 191/Asr./2016 - - - Dated:- 30-6-2020 - L.P. Sahu, Member (A) And Ravish Sood, Member (J) For the Respondents : Charan Dass, D.R. ORDER Ravish Sood, Member (J) The present appeal filed by the assessee is directed against the order passed by the CIT(A)-2, Jalandhar, dated 16.03.2016, which in turn arises from the order passed by the Assessing Officer u/s. 143(3) of the Income Tax Act, 1961 (for short 'IT Act'), dated 20.11.2009 for A.Y. 2007-08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee reflected a credit of ₹ 50,000/- on 31.03.2007. On a perusal of the account of the aforesaid party, it was observed by the A.O. that the assessee had purchased air conditioners from the said party i.e. M/s. Hitachi Home Life Solutions (India) Ltd., pursuant whereto there were credit entries of ₹ 1,39,411/- and ₹ 66,700/- on 23.04.2005 and 04.05.2005, respectively, against which there were corresponding debits of the amounts that were paid by the assessee by demand drafts. On being queried as regards the liability of ₹ 50,000/- that was appearing in the account of the aforementioned party in the books of account of the assessee, specifically when the same had been squared up by the said party i.e. M/s. Hitachi Home Life Solutions (India) Ltd., it was submitted by the assessee that the aforesaid amount was an advance that was given by the promoter from his own account, which on having been received back from the aforesaid party stood reflected as a credit in the books of account of the assessee. However, the A.O. was not inclined to accept the aforesaid claim of the assessee, and treated the aforesaid outstanding liability of ₹ 50,000/- in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of air conditioners. It has been the claim of the assessee that the entry as regards the advance paid by the director on behalf of the assessee company had remained omitted to be recorded in its books of account. Accordingly, it is stated by the assessee that when the said party had returned the aforesaid amount of ₹ 50,000/-, the same in the absence of a corresponding 'debit', therein continued to be reflected as a 'credit balance' in the books of account of the assessee company. As observed by us hereinabove, it remains as a matter of fact that the assessee had purchased air conditioners from the aforementioned party i.e. M/s. Hitachi Home Life Solutions (India) Ltd., pursuant whereto the credit entries along with the corresponding debit entries are found recorded in its books of account. Be that as it may, in a case where the deduction has been made in the assessment for any year in respect of any trading liability incurred by the assessee, and subsequently during any previous year the assessee had obtained some benefit in respect of such trading liability by way of remission or cessation thereof, the benefit accruing to the assessee shall be deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds the nature of the transaction under consideration. Apart from that, we are unable to comprehend that in case the A.O. had any doubts as regards the veracity of the aforesaid claim of the assessee then what stopped him from verifying the factual position by calling for the requisite details from the aforementioned party? Be that as it may, on the basis of the aforesaid facts, we are of the considered view that de hors satisfaction of the requisite conditions for characterising the aforesaid outstanding liability of the assessee as a ceased liability within the meaning of Sec. 41(1) of the Act, the addition of ₹ 50,000/- therein made cannot be sustained and is liable to be vacated. The Grounds of Appeal Nos. 1 2 are allowed. 11. We shall now advert to the characterization of the outstanding liability of ₹ 6,98,007/- in the name of M/s. Aakshi Electrical Sys Pvt. Ltd., as a ceased liability within the meaning of Sec. 41(1) of the Act. As is discernible from the orders of the lower authorities, it has been the claim of the assessee before them that it had given a contract for electrical installations in its hospital to M/s. Aakshi Electrical Sys Pvt. Ltd., in lieu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the satisfaction of the aforesaid requisite conditions prior to invoking of the provisions of Sec. 41(1) of the Act. Not only that, we find that even otherwise there is nothing discernible from the record which could persuade us to conclude that the benefit, if any, obtained by the assessee by way of remission of cessation of the aforesaid liability could be related to the year under consideration. As such, we find that the lower authorities had shirked from making necessary verifications, which could have safely be done by calling for the requisite details from the aforementioned party i.e. M/s. Aakshi Electrical Sys Pvt. Ltd. But then, we also cannot remain oblivious of the fact that the assessee had also failed to do the bare minimum in order to establish that the liability towards the aforementioned party, though disputed, was however outstanding. Apart from that, except for harping on the fact that the payment to the aforementioned party was towards an advance in lieu of a contract for installations to be carried out in a hospital i.e. a capital expenditure, nothing had been placed on record by the assessee which could irrefutably substantiate the said factual position to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the rule so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether or not the passing of this order, beyond a period of ninety days in the case before us was necessitated by any extraordinary circumstances. 15. We find that the aforesaid issue after exhaustive deliberations had been answered by a coordinate bench of the Tribunal viz. ITAT, Mumbai F Bench in DCIT, Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unpreceden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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