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TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 907
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....ssed u/s 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was subsequently taken up for scrutiny . The assessment was completed u/s 143(3) of the Act vide order dt. 30/12/2009, wherein the assessee's income was determined at Rs. 60,05,730/- in view of the following additions/disallowances:- (i) Disallowance u/s 40(a)(ia) - Rs. 5,27,067/- (ii) Addition u/s 41(1) - Rs. 50,33,230/- (iii) Disallowance of Business Promotion Expenses - Rs. 25,635/- (iv) Disallowance out of Misc. Expenses - Rs. 1,42,230/- 2.2 Aggrieved by the order of assessment for Asst. year 2007-08 dt. 31/12/2009, the assessee preferred an appeal before the CIT(Appeals)-6, Mumbai. The Ld. CIT(A) disposal off the assessee's appeal vide th....
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....nces of Rs. 25,635/- out of business promotion expenses and Rs. 1,42,230/- out of repairs and maintenance, security maintenance, computer and mobile expenses, petrol and telephone expenses. 5.2 We have heard the rival contentions of the Ld. AR for the assessee and the Ld. DR on behalf of revenue and perused and carefully considered the material on record. As observed by the Ld. CIT(A) in the impugned order, the assessee was not able to furnish the relevant details and supporting documents evidences in respect of the claim of the aforementioned expenses before the Assessing Officer ('AO') in the course of assessment proceedings. We find from the record that even in appellant proceedings, and also before us, except for raising the ground, th....
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....d and furnished confirmation from some creditors. The Ld. CIT(A) then called for a remand report from the A.O in respect of the additional evidences filed by the assessee. In the remand report dt. 31/05/2013 filed by the A.O before the Ld. CIT(A), the Assessing Officer submitted that, since Sundry Creditors to the extent of Rs. 31,63,352/- disallowed by the A.O were confirmed by the Ld. CIT(A) in the assessee's case for Asst. year 2003- 04, addition in respect of balance Sundry Creditors amounting to Rs. 25,36,874/- may be sustained by the Ld. CIT(A). In response to the AO's remand report, the assessee contended that the AO's proposal to confirm the disallowance in respect of the balance creditors at Rs. 25,36,874/- is incorrect since the A....
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....Rs. 10,38,403/- or Rs. 6,00,471/- u/s 41(1) of the Act upheld by the Ld. CIT(A) could not be sustained since the outstanding balance of the parties/sundry creditors involved appear as outstanding in the assessee's Balance Sheet as on 31/03/2007. This fact, the Ld. AR contends, clearly establishes /indicates that there is no cessation of liability on the part of the assessee or the creditors in those cases. Rather, it is acknowledgement by the assessee of an existing debt it owes to its creditors and therefore the additions made /confirmed u/s 41(1) of the Act by the authorities below is unsustainable. It is submitted that outstanding sundry credit balances of certain parties considered suspect by the authorities below like, Mayur Plywood of....
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....at the entire creditor/sundry creditors balances were not genuine and has ceased to exist and proceeded to bring the amount of Rs. 50,33,230/- to tax in the assessee's hands u/s 41(1) of the Act as cessation of liability. On appeal, the Ld. CIT(A) who called for remand report from the A.O on the additional evidences in the form of confirmation details filed by the assessee. The A.O in the remand report dt. 31/05/2013, inter alia, proposed the addition u/s 41(1) of the Act be sustained to the extent of Rs. 25,36,874/-. We find that the Ld. CIT(A) observed that the A.O in remand proceedings has not verified the confirmations filed by the assessee nor commented on them and therefore proceeded to examine the same. On examination thereof, we fin....
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....ission or cessation of liability. When the A.O was of the view that there was remission or cessation of liability in the case on hand and invoked the provisions of Section 41(1) of the Act, it was incumbent upon him to cause necessary enquires to be made to bring on record material evidence to establish invocation of the provisions of Section 41(1) of the Act. The fact that the assessee reflects these amount as creditors in its Balance Sheet as on 31/03/2007, acknowledges its liability to its creditors and also extends the period of limitation u/s 18 of the limitation Act. Once the assessee acknowledges and claims that the debts to Sundry Creditors are outstanding in its Balance Sheet and it is liable to pay its creditors, revenue cannot co....