TaxTMI 
TaxTMI 
2015 (9) TMI 182
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat he has been instructed by the assessee not to press the Ground No. 2 & 3. Hence, both the ground of assessee is dismissed as not pressed. 3. The only issue which remains in this appeal of assessee is against the order of Ld. CIT(A) in upholding the addition of Rs. 6,21,489/- made by Assessing Officer u/s 41(1) of the Act, for which assessee has raised following ground:- "1. a) THAT on the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in upholding the addition of Rs. 6,21,489/- made by the AO u/s. 41(1) in respect of the following sundry creditors. i) Industrial Switch Gears Cable Co. Rs. 94,765.00 ii) Ratan Trading Corporation Rs.1,12,494.00 iii) M.K. Electricals Rs.3,94,094.66 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as no transaction entered into by assessee with this above four parties during the year under assessment and the balance had been carried forward from the earlier year and on verification regarding the genuineness of the creditors nothing could be conducted for non availability of the present addresses of the above said creditors. As this liability could not be established and since there was no transaction held during the year, the AO treated this liability as ceased to exist and applied the provision of Sec.41(1) of the Act and treated it as assessee's income chargeable to tax. Aggrieved, assessee went in appeal before Ld. CIT(A) and during the appellate proceeding before Ld. CIT(A) assessee submitted that due to paucity of fund, these fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... at Rs. 3,94,094.66, however the actual amount of sundry creditor of M/s M.K. Electricals as on 31st March, 2007 as per the audited balance sheet is at Rs. 45,331/-. The balance of M/s M.K. Electricals at Rs. 45,31/- is verifiable from the audited balance sheet filed along with paper book. The correct figure of the four creditors is worked out as under:- i) Industrial Switch Gears Cable Co. Rs. 94,765.00 ii) Ratan Trading Corporation Rs.1,12,494.00 iii) M.K. Electricals Rs. 45,331.00 iv) Najami Industrial Stores Rs. 20,135.82 Rs.2,72,725.82 As such, the figure of Rs. 6,21,489/- should be replaced by Rs. 2,72,725.82. In this regard, I have gone through the paper book fil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to the outstanding payment for purchases made from sundry creditors. Therefore, in the assessment of the assessee, the allowance or deduction has been made in respect of any loss, expenditure or trading liability incurred by him. Now, I go to the second condition and I can categorize the second condition in following points:- (i) whether any amount is obtained in respect of such loss or expenditure; (ii) whether any benefit is obtained in respect of such trading liability by way of remission or cessation thereof. Looking to the facts of the present case, the condition (ii) is not fulfilled as neither any amount is proved to have been obtained in respect of such loss or expenditure and nor any benefit has been obtained in respect of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not to owner his liability or by a contract between parties or by discharge of debt. In the present case, there is no material to indicate that the parties have contracted to extinguish the liability. Although, enforcement of a debt being barred by limitation does not if so facto lead to the conclusion that there is cessation or remission of liability. 9. Further reliance the decision of Delhi Bench of ITAT in the case of Perfect Paradise Emporium Pvt. Ltd. V. ITO in ITA No.159/Del/2011 dated 22.04.2015, wherein it is held similar facts as in the case of assessee's unclaimed liability to the creditors even if fictitious and bogus cannot be assessed u/s 41(1) of the Act in the absence of a write back. The bogus credit can be assessed u/s ....