TaxTMI 
TaxTMI 
2023 (5) TMI 703
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....e same to be personal expenses." Sundry Creditors: 3. For the sake of completeness and ready reference, the entire order of the Assessing Officer pertaining to addition made on account of sundry creditors is as under: "As per balance sheet, the assessee has shown creditors of Rs.1,54,67,677/-. AR of the assessee was asked to file confirmation from all 35 creditors as shown in the balance sheet. AR of the assessee filed confirmation from only 7 creditors, total amount for which confirmation has filed is only Rs.45,84,804/-. No confirmation has filed for the balance amount of Rs.1,08,82,873/- by the assessee during the course of assessment proceedings. However, notice u/s 133(6) of the Income Tax Act, 1961 was also issued to some of the parties but the same were received back. Hence, the balance amount for which confirmation has not received/filed is hereby added back to the declared income of the assessee." 4. Aggrieved, the assessee filed appeal before the ld. CIT(A). 5. The ld. CIT(A) examined the issue at length in detail and confirmed the addition made by the AO. 6. During the hearing before us, the ld. AR, Sh. Gautam Jain vehemently argued that the sundr....
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....8 Bhaarat Rubber Product 01/04/2003 625,441.00 9 Chaudhary & Sons 01/04/2003 835,447.00 10 Jyoti Industries 01/04/2003 904,477.00 11 Rishab Agencies 01/04/2003 875,547.00 12 S.C. Industries 01/04/2003 725,844.00 13 Uniturn Industries 01/04/2003 834,457.00 4,915,018.75 14 V.K. Auto Industries 01/04/2004 310,530.00 15 Auto Link Industries 01/04/2004 377,900.00 16 Neelam Auto Parts 01/04/2004 270,000.00 17 Neelkant Trading Co. 01/04/2004 213,972.00 18 Sanjay Engg. Works 01/04/2004 446,575.50 1,618,977.50 19 Bhalla Auto Mfg. Co. 01/04/2005 42,350.00 20 Bhushan Auto Industry 01/04/2005 329,510.00 371,860.00 21 BKG Auto Intl. 01/04/2006 33,200.00 22 Chauhan Gasket 01/04/2006 37,700.00 23 Omega Brass Industries 01/04/2006 665,325.00 24 Raj Auto Enterprises 01/04/2006 90,000.00 25 Saini Electricals 01/04/2006 1,184,8....
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....ave examined provisions of the Act and the judicial pronouncements on this issue. 14. Section 41(1)(1) reads as under: "Section 41(1) (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,- (a) the first-mentioned person has obtained, whether in cash or in any other manner 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, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or (b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred Judgment dt.11.3.2019 ....
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....o confirm whether the credit shown in the entries are really in existence or not. When the Assessing Officer has found that such entries are incorrect, when an opportunity was given to the assesses to prove such entries, when the assessee has failed to prove the same inspite of giving an opportunity for the Assessing Officer, we are of the opinion that all authorities were justified in holding that the amount of Rs. 13,03,008/- as an unproved credit. In the circumstances, we have to answer the question No.3 against the assessee." 17. Further, the Hon'ble Madras High Court in the case of M/s West Asia Exports & Imports (P) Ltd. Vs. ACIT in Tax Case Appeal No. 302 of 2008 on the similar issue held as under: "11. On the other hand, the learned Senior Standing Counsel for the Revenue, Mr. M. Swaminathan, contended that the significant difference in Judgment dt.11.3.2019 in TCA No.302 / 2008 West Asia Exports & Imports (P) Ltd. v. ACIT 12 / 38 facts, in the present case, is that the entire business of the Assessee, namely the timber business, for which the said trade liabilities were incurred by the Assessee, had been closed by the Assessee about ten years back prior to the ....
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....t and loss account and therefore, it was liable to be taxed in the hands of the Assessee. The following observations in paragraphs 22 and 23 of the Supreme Court are quoted below for ready reference, Judgment dt.11.3.2019 in TCA N0.302 / 2008 West Asia Exports & Imports (P) Ltd. v. ACIT 14 / 38 22. The principle laid down by Atkinson, J. applies in full force to the facts if this case. If a common sense view of the matter is taken, the assessee, because of the trading operation, had become richer by the amount which it transferred to its profit and loss account. The moneys had arisen out of ordinary trading transactions. Although the amounts received originally was not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time, the claim of the deposit became time barred and the amount attained a totally different quality. It became a definite trade surplus. Atkinson, J. pointed out that in Morley's case (supra) no trading asset was created. Mere change of method of book- keeping had taken place. But, where a new asset came into being automatically by operation of law, common sense demanded that the amount should ....