2016 (11) TMI 1047

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....ms in another proprietary concern M/s. Brainwave Production. The assessee filed his return of income for assessment year 2008-09 on 23/3/2009 declaring an income of Rs. 5,53,180/-. The return was processed under section 143(1) of the Income Tax Act, 1961( in short 'the Act') and the case was subsequently taken up for scrutiny. The assessment was concluded under section 143(3) of the Act vide order dated 15/12/2010, wherein the income of the assessee was determined at Rs. 81,96,760/- in view of the following additions/disallowances:- (i) Addition on account of difference in sales : Rs. 19,10,929/- (ii) Addition on account cessation liability under section 41(1) : Rs. 33,44,827/- (iii)Addition on account of differen....

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....that of the AO be restored. IV The appellant craves leave to amend or alter any ground or to submit additional new ground which may be necessary." 3.2 As per the record, this appeal was fixed for hearing on at least 20 occasions. On the days on which the Bench did not function, the case was adjourned through information on the Notice Boards. It is seen that on all the dates the case was called for hearing, none was present for the assessee, nor any adjournment sought. Even notices issued by RPAD have been returned unserved. When the case was called for hearing on 17/08/2016, again none was present for the assessee but the Ld. Departmental Representative was present and ready to argue for Revenue. In these circumstances, we are o....

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....of the Act on the grounds of cessation of liability and carefully considered the material on record. The facts of the matter as emanate from the record are that in the course of assessment proceedings the Assessing Officer observed that the assessee's balance sheet for the year under consideration i.e. 31/3/2007 reflected creditors aggregating to Rs. 33,44,827/-. On being queried in the matter, the assessee submitted that the same are old creditors pertaining to the period when he carried out business in Indore and have been carried forward for the last 7-8 years and not paid so far due to certain dispute with the creditors. The Assessing Officer, however, brushing aside the averments of the assessee considered the entire creditors balance ....

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....as on 31/3/2007. The Ld.CIT(A) also observed that no independent inquiries were carried out by the Assessing Officer to establish that these creditors have written off the debts appearing in their respective account. In that view of the matter, the Ld. CIT(A) went on to hold that the Assessing Officer was not justified in unilaterally deciding that the liabilities existing in the Balance Sheet of the assessee to the extent of Rs. 33,44,827/- had ceased to exist within the meaning of section 41(1) of the Act and directed that the entire addition on this account be deleted. 3.4.3 According to the averments of the assessee before the Ld. CIT(A), the addition under section 41(1) of the Act to the extent of Rs. 33,44,827/- cannot be sustained....