TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 648
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....ntial question of law arising out of the order dated 22nd February, 2023 passed by the Income Tax Appellate Tribunal, 'D' Bench, Ahmedabad (for short 'the Tribunal') in ITA No. 2764/AHD/2017 for Assessment Year 2013-14 : "Whether on the facts and circumstances of the case and in law, the Appellate Tribunal has erred in deleting the addition of Rs. 8,21,50,309/- made by the AO by invoking the provisions u/s.41(1) of the IT Act?" 3. The brief facts of the case are as under : 3.1. The assessee filed its return of income on 28.09.2013 declaring total income of Rs. 92,08,040/-. During the course of assessment proceedings, the Assessing Officer found that the assessee failed to prove genuineness of the outstanding credit balance pertaining t....
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....here was cessation or remission of any liability. Reliance was also placed on the decision in the case of CIT-III Versus Bhogilal Ramjibhai Atara in Tax Appeal No.588 of 2013 dated 04.02.2014 of this Court. 3.4. The Assessing Officer considering the submissions of the assessee held that the assessee failed to prove the genuineness of transaction undertaken with the said party and the factum of payment of Rs.45 Lakhs to the said party did not appear to be correct since said transaction is not reflected in the bank account of the said party. The Assessing Officer also noted that the proprietor of the said concern has categorically denied any transaction with the assessee and the assessee had also failed to produce any agreement regarding the....
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....tanding dues to be paid to the assessee, there was clear cessation of liability. 3.7. The Tribunal after considering the submissions made by both the sides and after analysing the provisions of Section 41(1) of the Act, confirmed the order passed by the CIT (Appeals) deleting the addition recording the relevant facts emerging from the record as under: "Section 41(1) has been invoked with respect to the outstanding liability in the books of the assessee as at the end of the impugned year relating to one party, M/s.Paper Star Marketing (PSM) amounting to Rs.8,21,50,309/-. The transaction leading to the impugned outstanding balance were undertaken by the assessee with the said party in the preceding year i.e. Asst. Year 2012-13 when it was ....
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....n Stating that there is no sense taking bogus bills as the assessee is incurring more tax burden in accepting bogus bills." 3.9. The Tribunal therefore considering the above findings held that the sundry credit balance again could not have been found non- genuine for the very same reason that the said party has not entered into any transaction with the assessee and therefore no transaction was reflected in the bank account of the said party with the assessee. The Tribunal considering the findings of the Assessing Officer in the preceding Assessment Year 2012- 13 where it was examined by the Assessing Officer and found the transaction to be genuine held that on the very same basis, the outstanding balance pertaining to the same transaction....
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....rder after the same being examined by the Assessing Officer, then the outstanding balance pertaining to the same transaction could not have been stated to be non-genuine since the Assessing Officer in preceding year after conducting inquiry had found that the adverse material on record in form of denial by the said party did not lead to the conclusion that the transaction of the assessee with the said party was non-genuine. The Tribunal therefore has rightly come to the conclusion that for such reason only the CIT (Appeals) has rightly deleted the addition made by the Assessing Officer amounting to Rs. 8,21,50,309/- by invoking Section 41(1) of the Act. Section 41(1) of the Act reads as under : "41. Profits chargeable to tax.-(1) Where an....
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....penditure or some benefit in respect of any such trading liability by way of remission or cessation thereof" shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.] Explanation 2-For the purposes of this sub-section, "successor in business" means,- (i) where there has been an amalgamation of a company with another company, the amalgamated company; (ii) where the first-mentioned person is succeeded by any other person in that business or profession, the other person; (iii) where a firm carrying on a business or profession is succeeded by anoth....