2012 (11) TMI 281

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....of the Assessing Officer in making addition of Rs.33,97,308/- on account of 'sundry creditors' and 'advance from customers' as deemed income u/s. 41(1) of the act.   2. On the facts and circumstances of the case as well as law on the subject, the learned CIT (A)| has erred in confirming the action of the Assessing Officer in making addition of Rs.9,26,856/1 u/s 68 of the Act by treating cash sales as unexplained cash credits. If   3. It is therefore prayed that various addition made by Assessing Officer and confirmed by CIT (A) may please be deleted.   4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. Fornjtisha Silk mills Pvt. Ltd." 3. Regardi....

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....it can be seen that all are brought forward opening balance and there is no fresh credit in the present year. He also submitted that the balance sheet of the assessee company of the present year is available on page 27 of the paper book and the details of current liability in Schedule 'J' is available on page 32 of the paper book which is showing outstanding amount of Rs.30,80,374/- in respect of credit for goods and Rs.80,369/- in respect of advances from customers. Regarding advances from customers, it was submitted that it is explained before the A.O. also that in most of the cases, payments were made by the customers wrongly to the assessee company although the same was to be paid to the sister concerns and in the subsequent year, the a....

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....s aspect that the total amount was shown as liability in the balance sheet and there is no credit in current year. In the light of these facts, we find that the provisions of Section 41(1) are not applicable because nothing has been brought on record to show that the liability in question has ceased to exist. In the case of Parag Prings Ltd., goods of equal amount were supplied by the assessee to this party in the subsequent period and in most of the cases of the creditors, the assessee has surrendered the amount for taxation in subsequent period. As per the judgement of Hon'ble Apex Court in the case of Sugoli Sugar Works as reported in 236 ITR 518 and in the case of Kesaria Tea Co. Ltd. as reported in 254 ITR 434, it was held by the Hon'b....

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....ned by the customers for which the payments were made to them in subsequent period and, therefore, the facts in the present case are different and therefore, this judgement of Hon'ble Apex Court is not applicable in the present case. In view of the above discussion, we are of the considered opinion that addition made by the A.O. and confirmed by Ld. CIT(A) is not justified because the provision of Section 41(1) are not applicable in the present case. We, therefore, delete this addition. 7. In the result, ground No.1 is allowed. 8. Regarding ground No.2, it was submitted by the Ld. A.R. that the addition was made by the A.O. in respect of cash sale declared by the assessee on 16.5.2006, 17.5.2006 and 31.3.2007. He further submitted tha....