2021 (12) TMI 303

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....ed 27/12/2017 by the ld. Income Tax Officer-19(1)(1), Mumbai (hereinafter referred to as ld. AO). 2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in deleting the addition made in sum of Rs. 207,90,576 u/s.41(1) of the Act on account of cessation of liability, in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. We find that assessee is an individual carrying on the business of dealing and manufacturing of cut and polished diamonds and had filed his return of income for the A.Y.2015-16 on 30/09/2015 declaring total income of Rs. 13,25,010/-. During the course of scrutiny assessment proceedings, the ld. AO on....

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....7, the assessee also filed a detailed note as to how the provisions of Section 41(1) of the Act could not be made applicable to the facts of the instant case. It was also pointed out that all these parties had valid PAN and in view of severe depression in diamond market and insolvency of numerous parties, several parties had shut down their businesses and shifted their place of business. It was also pointed out that except for M/s Sangham Diamonds having outstanding balance of Rs. 40,90,969/-, the assessee had furnished the confirmation together with the ledger account of all the remaining creditors. The assessee also placed reliance on the decision of the Hon'ble Apex Court in the case of CIT vs. Sugauli Sugar Works Pvt. Ltd, reported 236 ....

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.... all these sundry creditors have a valid PAN. All these sundry creditors have been duly discharged by the assessee in subsequent assessment years as under:- Name of Creditor Amount outstanding on 31/03/2015 Amount Paid Bank Statement at Pg. No.     Date Amount   Bahubali Diamond 30,44,787 07/09/2016 30,44,787 16 Mona Gems 42,29,572 06/04/2016 4,32,830 18     07/09/2016 5,50,000 19     26/12/2016 9,50,000 20     26/12/2016 10,50,000 20     28/12/2016 12,46,742 21        42,29,572   M/s. Sangham Diamonds 40,90,969 17/07/2015 ....