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TMI Blog2023 (9) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... order sheet entry dated 03.11.2022 to obtain the list of legal heirs and take steps for bringing them on record. The said order sheet entry is reproduced as under: "The Revenue is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), Jalpaiguri dated 03.07.2019 passed for A.Y. 2014-15. 2. This appeal was put on the Board first time on 04.02.2020. Thereafter case was adjourned from time to time and every time notices were issued through RPAD, which have been returned with the postal remark "incomplete address". On 21.06.2022, when this fact was brought to the notice of the ld. D.R., then he pointed out that the assessee has expired and legal heirs are not traceable. The Bench has passed the following order:- "At the time of hearing, the ld. Departmental Representative brought to our notice that the assessee has expired and the legal heirs could not be brought on record. It was further pointed out by the ld. Department Representative that Mr. Sunil Surana, represented the assessee before CIT (A) and upon being contacted qua pursuing this appeal by bringing legal heirs on record, he stated that legal heirs are not interested in pursuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .05.2023, none appeared on behalf of the assessee. The case was taken up for adjudication ex parte qua the assessee with the assistance of Ld. CIT, DR by taking into account the material available on record. In the course of dictation of the order, for the purpose of ensuring that the notice has been effectively served on the legal heir, a telephone call was made to her enquiring about the interest of the legal heir of the assessee to make any submission in the matter for which the department is in appeal. The legal heir Smt. Subbulakshmi Devadoss communicated that she has nothing to do with the case referred to her though the notice of hearing was effectively served on her. 5. In the present case, the assessee has expired and is being represented by the legal heir. In this context, it is important to take note of the provisions of section 159 of the Act which deals with liability to discharge the tax demand by the legal representative, devolving on the deceased. The said section is contained in chapter "Liability in Special Cases A- legal Representatives" and is reproduced below for ready reference. "Legal representatives 159. (1) Where a person dies, his legal representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative brought on record by the Department. We further note that sub-section (6) of section 159 provides that liability of legal representative shall be, inter alia, limited to the extent to which the estate is capable of meeting the liability. 6. With this back-drop, we take up the matter to adjudicate upon, for which the grounds taken by the revenue are reproduced as under: "1. Whether on the facts and circumstances the Ld. CIT(A) erred in Rs. 3,53,45,260/- deleting the addition made on account of bogus sundry creditor of Rs. 7,74,32,498/- without appreciating the fact that the assessee filed to produce most of the creditors. Further, the genuineness of transaction, identify and creditworthiness of the sundry creditors could not be proved. 2. Whether on the facts and circumstances, the Ld. CIT(A) erred in deleting the addition of Rs. 7,74,32,498/- considering that the amount outstanding against sundry creditors are related to earlier years without appreciating the fact that sundry creditors shown in balance sheet of the assessee as on 31.03.2014 was Rs. 8,29,63,210/- as against Rs. 55.21.712/- as on 31.03.2013. 3. That the Ld. ClT(A) erred in deleting the addition ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, that is why you are not able to furnish details of the so called sundry creditors in spite of giving several opportunities. Thus, in absence of the details of the sundry creditors, the identity and credit worthiness of the so called creditors as well as genuineness of the transactions with the so called creditors could not be verified. Under the circumstances, you are hereby asked to show cause why the sundry creditors amount of Rs. 8,29,63,210/- shall not be treated as false and added the amount to your total income as false liability. In this regard, you are asked to furnish the reply of the show cause letter within 7(seven) days of receipt of this letter, failing to which it would be assumed that you have got no objection in making addition of the sundry creditor amount to your total income as false liability. Please note that the case being barred by limitation on 31.12.2016 no further time will be entertained under any circumstances. Hence please treat the matter as MOST URGENT." 7.2. In compliance to this show cause notice, assessee furnished a list of sundry creditors for which it was stated that these sundry creditors were payable by the assessee against the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancies which have been noticed by the Ld. AO on the documents furnished by the assessee, such as : (a) Discrepancies in challans wherein they do not contain VAT/CST no. but only PAN. Also, there is no mention of challan serial Nos. There is no mention of description of the goods as to brand/make of the product/material supplied. (b) Discrepancies in ledger account. The information given in the accounting entries contains the narration as "building material suppliers". Further, the print out of ledger account of 71 sundry creditors are in the same format and same fonts, raising a doubt on the genuineness of the same. (iii) Certain creditors were produced before the ld.AO and on enquiry it was found by the ld. AO that they had not received any payment from the assessee against the supply of goods though they have admitted to have supplied the goods to the assessee for construction of nursing home. Based on the above enquiries and examination, Ld. AO arrived at the conclusion that the so called sundry creditors are not genuine. 7.7. Ld. AO held that sundry amount shown by the assessee against the investment made in the share capital of CMHPL for its construction of its nursing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. Assessee has explained the source of investment made in the share capital of CMHPL as the sundry creditors which arose on account of building material supplies for the construction of nursing home belonging to CMHPL against which shares have been allotted to the assessee. Allotment of shares in CMHPL to the assessee has taken place in the year under consideration against which the sundry creditors have been reported in the Balance Sheet. Thus, the basis on which Ld. CIT(A) has concluded his finding is not correct vis-à- vis the assessee. 9.1. Sundry creditors originally belong to CMHPL which may have arisen in the earlier years against the supplies of material to CMHPL for construction of its nursing home. However, when we look at the Balance sheet of the assessee as on 31.03.2014, wherein the investment in the share capital of CMHPL has been linked to these sundry creditors which are originally of CMHPL, it clearly suggests that the credit in the hands of the assessee has arisen in the impugned year. These sundry creditors have been explained to be the source of making investment in the share capital of CMHPL. We also take into account the observation and fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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