If the order passed by CIT is beyond the power is deserved to be set aside

Last updated: 22 August 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Assessee took up the matter in appeal and challenged the action of Assessing Officer and it was submitted before first appellate authority that the assessee is a proprietor of M/s Ceco Electronics and is engaged in the business of transformer manufacturing but the business has been closed for the last ten years. The assessee had shown the sundry creditors of Rs.65,96,929/- which included the liability of Rs.44,32,266/- of Oriental Bank of Commerce (OBC) Chandni Chowk, Delhi. Since the business of the assessee was closed and the assessee was not able to pay the liability of the bank, there was a compromise between the bank and the assessee through the Delhi State Legal Services Authority (Lok Adalat) for settling the accounts of the bank. As per the compromise formula the assessee was required to pay the amount of Rs.31,08,833/- as against the liability of Rs.44,32,266/- and as such there was cessation of liability of Rs.13,23,433/- (Rs.44,32,266)(-) Rs.31,08,833/-). Since there was a cessation of liability to extent of Rs.13,23,433/- the Assessing Officer has made the addition for this amount u/s 41(1). Assessee aggrieved by the order and appeal to CIT and CIT after satisfying passed the order in favor of assesse and Revenue cross appeal on the order.

Citation :
ITO, Ward 29(3), New Delhi (Appellant) Vs. Late Shri Shyam Sunder Chopra, L/H 1. Smt. Shashi Chopra (Wife) 2. Mrs. Shweta Sood (Daughter) B-3/450, G/F, Paschim Vihar, New Delhi-110063. (PAN/GIR No.AADPC969609G) (Respondent)