Case Summary: Geeta Bhasin vs. ACIT, Circle-28(1), New Delhi
Case Details
Case Number: ITA 89/DEL/2021
Appellant: Geeta Bhasin, New Delhi
Respondent: ACIT, Circle-28(1), New Delhi
Assessment Year: 2014-15
Date of Filing: 2021-02-08
Order Type: Final Tribunal Order
Date of Order: 2022-11-28
Pronouncement Date: 2022-11-28
Background
Geeta Bhasin, a resident of New Delhi, appealed against the order passed by the Commissioner of Income Tax (Appeals)-25, New Delhi, which upheld the Assessing Officer’s decision to make additions under Sections 2(22)(e) and 41(1) of the Income Tax Act, 1961. The additions were made on account of deemed dividend and cessation of liabilities for the assessment year 2014-15.
Grounds of Appeal
The CIT(A) erred in confirming the addition of Rs. 4,70,000 under Section 2(22)(e) as deemed dividend. The addition was deemed excessive and legally untenable.
The CIT(A) erred in confirming the addition of Rs. 32,61,337 under Section 41(1) on account of cessation of liabilities, which included retention money, security rent, and amounts payable to various creditors.
The CIT(A) erred in confirming the addition of Rs. 76,29,910 under Section 41(1) on account of cessation of liabilities to various creditors.
Arguments Presented
The appellant’s counsel, Shri Sandeep Sapra, presented multiple arguments:
The addition under Section 2(22)(e) was incorrect as no payment was received from the creditor during the year under consideration. The amount was an opening balance carried forward from the previous year.
The additions under Section 41(1) were unjustified as the liabilities were still subsisting and had not been written off by the creditors. The appellant provided confirmations from the creditors.
The appellant relied on various judicial pronouncements to support the claim that the liabilities were not time-barred and that the provisions of Section 41(1) were not applicable.
Tribunal Findings
The Tribunal noted the following:
The CIT(A) confirmed the addition of Rs. 4,70,000 under Section 2(22)(e), but the Tribunal found that this amount was an opening balance and not a transaction during the year under consideration. The issue was remanded to the AO for verification.
The additions under Section 41(1) were based on the assumption that the liabilities had ceased. However, the Tribunal directed the AO to verify whether the liabilities were still subsisting based on the confirmations provided by the creditors.
The Tribunal acknowledged the need for further verification by the AO regarding the subsistence of the liabilities to determine if the additions under Section 41(1) were justified.
Conclusion
The Tribunal set aside the CIT(A)’s decisions and remitted the matter back to the Assessing Officer for fresh assessment in accordance with the law. The appeal was allowed for statistical purposes.
Final Judgment
“In the light of the above delineations, the matter is set aside and restored to the file of the Assessing Officer for framing the assessment afresh in accordance with law. The appeal of the assessee is allowed for statistical purposes.”
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