2017 (12) TMI 1613

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....atural justice and for many more other reasons. 2. Under the facts and circumstances, Ld. CIT(A) has erred in sustaining addition of Rs. 37,56,733/- made by Ld. AO under section 41(1) on account of bogus liability and liability cease to exist. The disallowance confirmed is unjustified, illegal or excessive. 3. That the appellant craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing." 2. Brief facts giving rise to this case are that, the Assessing Officer while framing the assessment issued a query dated 21/10/2013 calling upon to the assessee to furnish the details of sundry creditors with name and complete address. It was observed by the AO, that no reply was receiv....

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....nd inferred that liabilities towards these 16 creditors are bogus and ceased to exist. He submitted that subsequent payment by banking channel clearly establishes the existence of the party as well as liability, otherwise, neither payment is required to be made nor payment can be made through banking channel. Ld. Counsel for the assessee placed reliance on the Judgment of the Hon'ble Supreme Court in the case of Bomaby Dyeing & Manufacturing Co. Ltd. vs. State of Bombay, AIR 1958 SC 328. Ld. Counsel for the assessee submitted that in view of the binding precedents the authorities below were not justified in sustaining the addition. 4.2 On the contrary, Ld. D/R opposed the submissions. 4.3 We have heard the rival contentions, perused the....

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....he time of inception, cannot be treated to be ceased to exist. Hence, the authorities below have failed to appreciate this aspect of the matter. Admittedly, the Ld. CIT(A) has not accepted the explanation that such liability was discharged in subsequent years by making payment through banking channels. The relevant contents of the finding of the Ld. CIT(A) are reproduced here in below for the sake of clarity. "However, for the remaining creditors, either they have not replied or the notices came back un-served. Just because, subsequently, certain payments were made to them by the appellant does not absolved him from discharging the onus of proving the existence of such parties. No confirmations or their ITRs have been filed by the ....