2023 (3) TMI 617

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....d in confirming the order passed by the Assessing Officer (AO) is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred both on facts and in law in confirming the addition at an income of Rs.84,10,139/- as against the returned loss of Rs.2,98,367/- declared by the assessee. 3. (i) On the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred both on facts and in law in confirming the disallowance of loss of Rs.2,98,367/- by holding that no business activity was carried out during the year. (ii) That the said disallowance has been confirmed despite the fact that the loss is due to the expens....

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....expenses incurred during the year and addition of Rs.84,10,139/- u/s 41(1) by adding outstanding balances of sundry creditors and other liabilities. 4. Upon assessee's appeal, the Ld. CIT(A) elaborately dealt with the issue of application of section 41(1) as under:- "5.2. I have carefully considered the assessment order and written submission filed by the Ld. AR. The perusal of the appellant's financials indicate that the appellant had shown creditors of Rs. 56 45,576/ Further the assessee has shown other liabilities of Rs 27,63,613/- on account of due to M/s NDTV Films Imaging Lid. Skol Breweries Lid., M/s. M. M. Narang & Associates, Shubho Shekhar Bhattarjee and on account of salary payable. The assessee was asked to furni....

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.... nothing more to add other than whatever has been stated in submission. 5.6. The AO further observed that the assessee's contention that static balances and the advance, from customers cannot be added back to the income of the appellant unless the same are written back in the books of the appellant is not acceptable. The submission of the appellant could have been accepted, if the confirmations were filed. The primary onus to prove that the liability of creditors exists is on the appellant. The appellant can discharge this onus very well by furnishing confirmations of the creditors. Here in this case the appellant has squarely failed in its discharge of onus regarding the existence of liability. The failure on the part of the a....

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....ttedly, in the body of the assessment order, the AO has invoked provisions of Section 41(1) of the Act and treated the amounts outstanding as cessation of liability. The appellant was duly show caused by the AO during scrutiny. Even in appellate proceedings, no evidence, confirmation or documentation to substantiate the impugned transaction is furnished. The Ld. AR has not explained the nature of the transaction with these creditors In view of these facts and in the absence of any confirmation or supporting evidence suggesting that the transactions are made in the regular course of business, I do not see any reason to interfere with the finding of the AO. The addition of Rs. 84,10, 139/- is therefore, sustained. This ground of appeal is rul....