2020 (8) TMI 754

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....ereinafter referred to as the 'Act') dated 26.17.2017. 2. The grounds of appeal raised by the Revenue are as follows: "1. That on the facts and circumstances of the case the Appellate Authority has erred in deleting the well discussed addition of the Assessing Officer. 2. That on the facts and circumstances of the case, the Appellate Authority has erred in law and fact that section 41(1) of the I.T. Act 1961 is not applicable in case of sundry creditors and advances in the case of the assessee whereas it is clearly seen that assessee failed to fulfill the primary responsibility to provide details as asked for and did not provide complete details of parties. 3. That on the facts and circumstances of the case, th....

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....bility of Rs. 1,61,95,176 /- shown under the head 'Sundry Creditors and Advances' actually exists or not. Hence the AO made addition by invoking the provision of Sec. 41(1) of the I.T. Act, 1961 at Rs. 1,61,95,176 /-. 4. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the CIT(A) who has deleted the addition made by the Assessing Officer observing the following: "When the language of the section is clear and unambiguous, there is no scope of importing into the statute words which are not there. Such importation would be, not to construe, but to amend the statute. Even if there be casus omissions, the defect can be remedied only by legislature and not by judicial interpretation." As....

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....nt available with the AO to establish that the appellant was required to furnish the confirmations as per Rule 46A(4) of the Income-tax Rules. Thereafter, the appellant has furnished the confirmations from the respective sundry creditors and all the creditors have confirmed the outstanding liabilities and furnished PAN/Aadhar. Therefore, it is stated that the liabilities has neither ceased nor remitted. The appellant has not got any benefit by way of cessation or remission of liability within the meaning of the section 41(1). 4.5.4 As per the settled legal position, the onus is on the AO to establish that the liability has either ceased or remitted especially when the appellant has stated that the liability has not ceased/remitted.....

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.... the creditors have duly concealment of income and furnishing of inaccurate particulars of income." The above statement of the Assessing Officer is not legally tenable due to the following reasons:- (a) There cannot be any disallowance u/s 41(1) as disallowance can be only for the expenses claimed in the Profit & Loss a/c. Legally there can be addition u/s 41(1) and not disallowance. The amount appearing as liability is a Balance Sheet item and not a Profit and Loss a/c item. Disallowance can be made for a claim made in the Profit & Loss a/c and not Balance Sheet. (b) The AO has treated that the said amount of Rs. 1,61,95,176/- as income from undisclosed sources. Legally, the liabilities appearing in the Balance S....