2013 (7) TMI 959

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.... Marlon Rego  O R D E R PER N.K. BILLAIYA, AM: This appeal by the Revenue is preferred against the order of the Ld. CIT(A)-12, Mumbai dt.30.06.2011 pertaining to A.Y. 2007-08. 2. The Revenue has raised two substantive grounds of appeal. The sum and substance of the Revenue's grievance is that the Ld. CIT(A) has erred in deleting the addition made u/s. 41(1) of the Act in respect o....

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....009 and explained that due to financial crunch and some dispute of old creditors, the assessee could not repay the outstanding liabilities. It was further explained that the assessee had incurred huge losses and therefore was not in a position to clear old creditors. On receiving no confirmation, the AO added the entire amount of sundry creditors amounting to Rs. 45,14,977/- u/s. 41(1) of the Act.....

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....ons which are exhibited at page-8 of his order. The Ld. CIT(A) further observed that for invoking Section 41(1) of the Act, it is very necessary to first establish by way of evidence that the receipts are income of the assessee and that there has been a cessation of liability. In this case, it is seen that it has been established by the AO that there are trade liability pending as far as the asses....

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....as been submitted before the lower authorities. 8. We have considered the rival submissions and perused the orders of the lower authorities. A perusal of the assessment order clearly shows that the AO has made additions only on the premise that the liabilities are outstanding for more than 3 years. This itself cannot be a sole ground for making additions u/s. 41(1) of the Act because where the ....