TaxTMI 
TaxTMI 
2013 (1) TMI 928
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....y. 3. Revenue has taken following effective 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....
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....ish the confirmations from the sundry creditors. Some of the confirmations could be furnished and for 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 sund....
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....s and gains of business or profession and accordingly charged to income tax as the income of that previous year, whether the business or profession 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 a....
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....the decisions of the Supreme Court in the cases of CIT v. Sugauli Sugar Works P. Ltd. (1999) 236 ITR 518 and CIT v. Kesaria Tea Co. Ltd. (2002) 254 ITR 434. The Hon. High Court has dealt 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....
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...., there was adequate material on record to prove the genuineness of the sundry creditors and the same material was made available to the learned AO and was placed on the records. However, without referring to the 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 appea....
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....t fulfilled in the instant case. The A.O. had not brought anything on record to prove that any amount or benefit had been obtained by the appellant during the year under consideration against liabilities which is allegedly ceased to exist. It is also an established proposition 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....