TaxTMI 
TaxTMI 
2016 (7) TMI 749
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....o be a substantial question of law:- "Whether the Appellate Tribunal has substantially erred in law and on fact in overlooking that the liability amounting to Rs. 81,60,350/- ceased to exist as the creditors were found to be non-existing and were also barred by limitation to be enforceable and assumed and acquired the character of a benefit as contemplated u/s 41(1) of the Act?" 2. The assessment year is 2007-08 and the relevant accounting period is the financial year 2006-07. 3. During the year under consideration, the assessee had shown total sundry creditors of Rs. 1,76,21,509/-. The Assessing Officer with a view to ascertain the genuineness of the creditors called for various details such as complete name and address, con....
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....631/- were no more payable by the assessee as the persons to whom these were claimed to be payable no more claimed the same as was reflected in their Balance Sheet. As regards six creditors of Rs. 24,13,719/-, the assessee was required to furnish complete address and confirmation or to produce the creditors before the Assessing Officer. It was also made clear to the assessee that if it fails to submit any concrete information in respect of these creditors or adduce any evidence to the effect that these liabilities are in fact payable, the same will be treated as ceased liabilities. The assessee, however, failed to furnish any detail to establish that these creditors still exist. The Assessing Officer, after giving ample opportunities to the....
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.... which is contemplated by the legislature when it used the words "has obtained, whether in cash or in any manner whatsoever, any amount in respect of such loss or expenditure in the past." The Commissioner (Appeals) placed reliance upon a decision of this court in the case of C.I.T. v. Bharat Iron and Steel Industries. He further was of the view that no proper opportunity had been given to the assessee for defending his case and that the material gathered by the Assessing Officer and relied upon and made part of the assessment order, did not appear to have been furnished to the assessee though confronted in the order sheet during the course of assessment proceedings. He, accordingly, was of the view that the principles of natural justice an....
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.... the liability had arisen had been duly shown as stock-in-trade in the books of the company. Since, the Assessing Officer had not confronted the assessee with the material gathered behind its back for rebuttal and cross examination of the parties as well as having regard to the fact that the unilateral act on the part of the parties does not in any way translate into income in the hands of the assessee, the Commissioner (Appeals) deleted the addition made by the Assessing Officer under section 41(1) of the Act. Revenue carried the matter in appeal before the Tribunal but did not succeed. 5. Mrs. Mauna Bhatt, learned senior standing counsel for the appellant, assailed the impugned order by reiterating the findings recorded by the Assessin....
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....Act and found that the same would be applicable only if the assessee has obtained, whether in cash or in any manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, and that the amount obtained by such person or the value accruing to him shall be deemed to be profit or gain of business or profession and accordingly chargeable to income tax as income of the previous year. The Tribunal observed that in the present case it is not the case of the Assessing Officer that the assessee company has received any cash or benefit in respect of trading liability by way of remission or cessation thereof as envisaged in the said section. The assesse....
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....e learned counsel for the revenue that some of the creditors had written off the liability in their books was to be accepted, even then, such liability would have ceased in the year in which such amounts were written off in the books of those creditors. However, it is not the case of the Assessing Officer that the amounts were written off in the year under consideration. In these circumstances, the question of invoking section 41(1) of the Act would not arise. Moreover, this court is in agreement with the view adopted by the Commissioner (Appeals), as confirmed by the Tribunal, that a unilateral act on the part of the parties does not in any way translate into income in the hands of the assessee. As is evident from the material on record, t....