2013 (1) TMI 928
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....ground of appeal:- "The ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,36,76,461/- in respect of unverifiable Sundry Creditors." 4. The A.O., while making this addition has observed as under:- "4. Disallowance on account of sundry creditors:- 4.1 On verification of the transaction details as regards to the sundry creditors - schedule -C of the audited account, the assessee has shown sundry creditors of Rs. 1,93,56,797/-. The creditors to the tune of Rs. 56,80,336/- are verified on the basis of confirmations/details furnished by the assessee, remaining amounts of Rs. 1,36,76,461/- remained unverified for which no valid confirmation/no any details to established the transactions are furnished by the assessee....
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....r want of time other confirmations could not be furnished in time. Out of total creditors of Rs. 1,93,56,797, the confirmations from the creditors to the tune of Rs. 56,80,336 could be furnished. The learned AO has made the addition of the balance of Rs. 1,36,76,461 to the total income of the appellant u/s 41 (1) of the Act. Your appellant would like to submit as under: Your appellant is subject to the Central Excise Regulations. Accordingly he is required to maintain detailed stock account of the raw materials purchased and consumed, and finished goods produced and sold. These records have been properly maintained. The sundry creditors most of them are for goods purchased. Some of the others are for statutory liabilities and for expens....
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....ssion in respect of which the allowance or deduction has been made is in existence in that year or not; or.... (b) ..... [Explanation: For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.]. Your goodself will kindly appreciate that the appellant has not written off any liability in his accounts. In fact, the learned AO had been given the accounts of the parties for the subseque....
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....t with in details the circumstances which should be present for the invoking of the section 41(1). Since the appellant has not written off the balances in the books of accounts, the question of invoking the provisions of section 41(1) does not arise and more so when the sundry creditors have been paid in the subsequent year and the necessary evidences furnished to the learned AO. Your appellant also seeks reliance from the observations of the Hon. High court of Delhi in the case of Devsons (P) Ltd. vs. Commissioner of Income tax and Others 48 DTR 137. The extracts have been reproduced below. "Adverting to the second issue, the finding recorded by the Tribunal is that there was no evidence regarding payment of Rs. 36,17,986 by the assess....
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....same or without rejecting the same, the learned AO proceeded to make the addition. Your appellant therefore, submits that the addition made to the total income of the assessee is uncalled for and deserves to be deleted. The same may kindly be held so and the addition made be kindly deleted." 6. After taking into consideration these submissions of the assessee ld. CIT(A) deleted this addition of Rs. 1,36,76,461/- made by the A.O. u/s 41(1) of the Act. 7. Aggrieved by the order of ld. CIT(A) now the Revenue is in appeal before us. 8. At the time of hearing ld. D.R. relied on the order of the A.O. 9. After hearing both the parties and perusing the record we find that ld. CIT(A) has given relief to the assessee by holding that no conditio....
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.... of law that onus is on the A.O. to establish that any benefit has accrued to the appellant against alleged liabilities during the year under consideration. The A.O had not discharged his onus. I have also perused the case laws relied upon by the appellant and the ration of these case laws supports the case of the appellant. 3.4 Perusal of above facts reveals that the A.O. had not mentioned even the details of the liabilities which has ceased to exist. The A.O. had taken balancing figure from the balance sheet and made the addition u/s.41(1) of the I. T. Act. The action of the A.O. does not confirm with the scheme of this section. For the application of this section the A.O. has to work out specific trading liabilities which has ceased ....