TaxTMI 
TaxTMI 
2017 (3) TMI 1775
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....rder dated 26-02-2013passed under section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act'). 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO applying the provision of section 41(1) of the Act in respect to outstanding sundry Creditors amounting to Rs. 31,88,521/-. For this assessee has raised following three grounds: - "1 The Learned CIT(A) is not justified in confirming addition of Rs. 31,88,521/- holding that the explanation offered by the assessee is "make believe" argument having no evidenciery value in spite of the fact that sufficient documentary evidence was produced both before Assessing Officer as well Learned CIT(A) in support of Assessee&....
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....eased to exist and accordingly he had a sum of Rs. 31,88,325/- by observing in Para 4.10 as under: - "4.10 In view of the facts and circumstances of our case and the decisions of various courts as cited above, the liabilities shown in the books of accounts against the creditors of Rs. 48,50,875/- which is not claimed for several years and assessee has failed to prove the genuineness of the credit balances have ceased to exist. The assessee has already written off credit balances of Rs. 16,62,350/- in the return of income filed for AY 2011-12. Therefore, the balance liability shown under the head creditors amounting to Rs. 31,88,525/- is brought to tax u/s.41(1) of the I.T. Act" in this assessment year." Aggrieved, now assessee p....
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....,88,525/-outstanding in its books of account which have not been written off till asst. year 2011-12 and the reasons furnished also do not justify the existence of this amount in the books of accounts of the appellant, as on 31.03.2010. I, therefore, confirm the addition of the amount of Rs. 3 1,88,521 being the liability which is not existing during the year and accordingly add the above amount to the income. The first two grounds of appeal, are thus, dismissed." Aggrieved, now assessee is in second appeal before Tribunal. 4. Before us, learned Counsel for the assessee filed a statement of sundry creditors year wise which reads as under: - "National Building Corporation Statement of Sundry Creditors Asst Year Amount Am....
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....r whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof. 5. In view of the above provisions of section 41(1) of the Act, it is clear that the following conditions must be fulfilled before section 41(1) of the Act could be held as applicable: (i) In the assessment of an assessee, an allowance or deduction has been made in respect of any loss, expenditure or trading liability incurred by him. (ii) (a) Any amount is obtained in respect of such loss or expenditure, or (b) Any benefit is obtained in respect of such trading liability by way of remission or cessation thereof. (iii) ....
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.... liability u/s 41(1) of the Act on account of sundry creditors and offered to tax. The learned Counsel for the assessee fairly agreed that this fact can be verified by the AO. In view of the above given facts and the fact that assessee's Counsel fairly agreed for verification of factum of offering of this amount of sundry creditors as income in their respective years, the AO can verify the same. However, in this year no addition can be made u/s 41(1) of the Act and we delete the addition and allow the appeal of the assessee on this issue. 6. The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing foreign travel expenses of Rs. 6,27,772/-. For this assessee has raised fol....