COMMISSIONER OF INCOME TAX Vs. GP INTERNATIONAL LTD.

JUDGEMENT

(1.) THE revenue has filed this appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act), against the order dated 12 -2 -2009, passed by the Income Tax Appellate Tribunal, Delhi Bench 'I New Delhi (hereinafter referred to as 'the ITAT) in ITA No. 4346/Del/2005, pertaining to the assessment year 1996 -97, while raising the following substantial questions of law:

(2.) IN the present case, the assessing officer, while completing the assessment under Section 143(3) of the Act, made addition of Rs. 3,30,000 in respect of outstanding payable to M/s Axis Chemicals and Pharmaceuticals Ltd., Faridabad and addition of Rs. 15,00,000/ - on account of unexplained share capital besides other additions. On appeal filed by the assessee, the Commissioner (Appeals) vide its order dated 9.8.2000 set aside the assessment order and remanded back the matter to the assessing officer to frame the assessment afresh after providing full opportunity of being heard to the assessee. Thereafter, the assessing officer completed the assessment under Section 143(3) read with Section 250 of the Act and again made the aforesaid two additions. The assessee again filed appeal against the order of the assessing officer. The Commissioner (Appeals) deleted both the aforesaid additions. The appeal filed by the revenue against the order of the Commissioner (Appeals) has been dismissed by the ITAT. Hence, this appeal.

(3.) AS far as the addition of Rs. 3,30,000/ - is concerned, it has been held that during the proceedings under Section 143(3) read with Section 250 of the Act, the assessee furnished a confirmation certificate from M/s Axis Chemicals and Pharmaceuticals Ltd., Faridabad along with PAN number. On asking of the assessing officer, the assessee has confirmed that the said liability is still outstanding. In spite of that material, the assessing officer made the addition of the amount on the basis that this liability has ceased to exist and the same is not payable by the assessee, and treated the said liability as income by invoking provision of Section 41(1) of the Act. The Commissioner (Appeals), while deleting the said addition, has observed that the similar addition was made in the case of Febon Con, Faridabad, where the similar liability was shown to be payable to the same party i.e. M/s Axis Chemicals and Pharmaceuticals Ltd., Faridabad. In that case, the said addition was deleted by the ITAT. It is the admitted position that the said order of the ITAT passed in ITA No. 114 to 116/Del/2004 has become final. In view of these facts, in our opinion, the ITAT has rightly come to the conclusion that the aforesaid liability of the assessee cannot be said to have ceased to exist and the provision of Section 41(1) and explanation to this provision are not applicable, because the assessee is still showing it as a liability in its books and has not written off the same.