TaxTMI 
TaxTMI 
2014 (3) TMI 69
X X X X Extracts X X X X
X X X X Extracts X X X X
....rishna Desai & Associates Prop. Krishna Desai and in Income Tax Return Losses are set-off by written off unpaid creditors which I.T. return for A.Y. 2009-10 was filled on Dt.22/09/2009 in Ward 3 (3), Surat wide Acknowledgement No.0303006312. In Balance no creditors are pending in Balance Sheet of Dt.31/03/2009. 2. The Assessing Officer have not apply Indian Limitation Act because the unpaid creditors can file suit against Assessed at any time under section 5 of Law of Indian Limitation Act which state that the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the applicant within such period before earing addition in Assessment." 2. The assessee is engaged in the busine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om these creditors in order to justify the existence of such liabilities. The current addresses of these sundry creditors are also not available with the assessee which proves that the assessee has no connection/relation even in the present. *. During the course of hearing the assessee has produced two legal notices which were received from M/s S.A. & Co. and M/s Blue Sky Synthetics through one lawyer Shri Sunii R. Tailor dated 08.12.2007. On being asked regarding the reply of these notices and court case no. pending against those parties the assessee replied that no such case was pending in the court of law neither any reply was filed from the side of the assesses. * For verification, a notice u/s. 133(6} of the Act was issued to Shr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the liability does not exist so that the parties were not sued against assessee for recovery of their dues. * The assessee has submitted the correspondences of Central Excise department which only proved that the assessee was in the businesss of manufacturing of texurising yarn under name & style of M/s Vibha Impex which is not 'in dispute. But no substaintial material is produced by the assessee which can lead to conclusion that the liability is in existence. * Burden is on assessee to prove that liability subsists - Whether the liability of the assessee has been fully discharged is within the special knowledge of the assessee. He has to prove that in fact the liability subsists. Where the conduct and surrounding circumstances ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who had dismissed the assessee's appeal by observing as under: "5.1 I have duly considered the submission of the appellant and find that the appellant has only reiterated the submission made during the course of assessment proceedings and has not furnished any evidence to show that his liability towards unpaid creditors for purchase were existing as on 31.03.2007. If, for the sake of argument, the appellant's contention that the creditors are genuine and existing and he is not able to make payment of the amount mentioned in the balance sheet only because of the losses incurred, is accepted, then nothing prevents the appellant to establish purchase transa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on'ble Gujarat High Court in case of CIT-III vs. Bhogilal Ramjibhai Atara in Tax Appeal No. 588 of 2013, order dated 04.02.2014, wherein identical issue has been decided in favour of assessee by following the decision of Hon'ble Supreme Court in case of Sugauli Sugar Works (P) Ltd., wherein it was held that cessation or remission of liability is to be there and in case, any enquiry if it is found doubtful, the assessee would be allowed to contest such finding. At the outset, ld. Sr. D.R. relied upon the order of CIT(A) and requested to confirm the addition. 5. We have heard the rival contentions and perused the material on record. On given addresses of the creditors, the letters were returned back unserved and in one case, namely, M/s. A....