TaxTMI 
TaxTMI 
2022 (8) TMI 779
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....t there was no case to presume or infer cessation of liability u/s 41(1) of the Act under the facts and circumstances of the appellant's case, in as much as the balances due to sundry creditors were still outstanding and the appellant was liable to discharge the same and hence, the addition sustained by the learned CIT[A] is misconceived both on facts and in law. 3. The learned CIT[A] is not justified in upholding the aggregate sum of Rs.16,05,130/- added u/s 68 of the Act, treating the same as "unexplained cash credits" under the facts and in the circumstances of the appellant's case. 3.1 The learned CIT[A] is not justified in upholding the addition of Rs.2,05,130/- as unexplained cash credit u/s 68 of the Act on account of the alleged difference in the brought forward opening balance in the cash book on 17/09/2007 under the facts and in the circumstances of the appellant's case. 3.2 The Ld. CIT(A) is not justified in upholding the addition of Rs4,50,000/- as unexplained cash credit u/s 68 of the Act, being the amount realized by the appellant from M/s Bindu Promoters upon the failure of allotment of land to the appellant, which advance given....
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....e's books of accounts shows sundry creditors of Rs.11,01,453/- from the following parties:- Sl.No. Party Amount (Rs.) 1 KPV Trading Company, Kottur 5,23,504/- 2 Ramya Traders, Birur 40,660/- 3 Balaji Trading, Kottur 5,13,240/- 4 Tungabadra Adake Mandi 7,409/- 5 M/s. Lakshminarayana Betelnut 16,640/- Total 11,01,453/- 2.1 The assessee has not filed the confirmation from these parties before the lower authorities. This balance is outstanding since 3 to 4 years. According to the AO, this credit was not proved by assessee. Hence, it is ceased to be existed. Accordingly, he invoked the provisions of section 41(1) of the Act and treated it as income of assessee. Against this, assessee is in appeal before us. 2.2 We have heard the rival submissions and perused the materials available on record. The Ld. A.R. made a submission that AO treated as his income only on the reason that the assessee was not able to file the confirmation letter from these parties. It cannot lead to the conclusion that the debt was ceased to exist on this reason and thereby it cannot be treated as income u/s 41(1) of the Act. In this case th....
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....fore us. 2.5 We have considered the arguments of both the parties. In our opinion, the closing balance as on 13.9.2007 should be the opening balance as on 17.9.2007 since there was no transaction between these two dates, though there was deposit of Rs.2,25,000/- into bank account on 17.9.2007. Thus, AO has taken only the difference between these two balances as income of the assessee. He ought to have considered the difference at Rs.4,30,130/- (Rs.2,05,130 + Rs.2,25,000/-). We are not enhancing the additions, since the revenue is not in appeal before us. However, we confirm the addition to the extent of Rs.2,05,130/- only. This ground of appeal is dismissed. 2.6 Next ground is with regard to sustaining addition of Rs.4,50,000/- as unexplained cash credit u/s 68 of the Act. 2.7 The facts relating to this issue are that the assessee shows the receipt of Rs.4.5 lakhs from Bindu Promoters. The assessee has explained before AO that this is the balance outstanding receivable from Bindu Promoters in earlier year and same was reflected in the balance sheet as on 31.3.2007 as outstanding from Bindu Promoters, Bangalore at Rs.4.5 lakhs and same is received the previous year 2007-08 ....
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.... Naveen Traders are received. This means the assessee had surplus cash of Rs 9.50 lakhs available on 14-03-2008, which has been deposited in the bank. Thus, the AO added this amount as unexplained cash credit under section 68 of the Act. 2.11 The plea of Ld. A.R. is that this is only clerical error and sought an opportunity to reconcile the entries in the cash book and produce the same before the AO. We acceded to the request of Ld. A.R. Accordingly, this issue is remitted to the file of AO with the direction to the assessee to produce the correct cash book after incorporating all the entries and the AO has to consider the same in accordance with law and decide afresh. The issue is remitted back to the AO for fresh consideration. 3. Next ground is with regard to sustaining addition of Rs.9.51 lakhs out of Rs.19,02,709/- after deleting addition of Rs.9,51,709/- by Ld. CIT(A). 3.1 Facts of the issue are the AO found that the assessee has started construction of a house in April 2007 jointly with his wife and the investment up to September 2007 was Rs 30,87,709/- as per valuation report by the registered engineer of the Bank. The AO also noted that as per ledger account submi....