TaxTMI 
TaxTMI 
2024 (7) TMI 441
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....ppellate Tribunal, "D" Bench, Ahmedabad (for short, "the Tribunal") in ITA No. 1847/Ahd/2014 for the Assessment Year 2007-08. [2] The appellant - Revenue has proposed the following substantial question of law for the consideration of this Court: "(A) Whether on the facts and circumstances of the case and in law, the order of the Appellate Tribunal is ex facie perverse, because the Appellate Tribunal has deleted the addition of Rs. 2,05,06,635/- made u/s. 41 (1) of the Act without appreciating the entire gamut of evidence on brought on record by the AO?" [2] The brief facts of the case are that during the course of assessment, the AO observed that from perusal of the list of sundry, in respect of several parties, the amount payable whi....
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.... and therefore falled to substantiate that these liabilities are existing which give presumption that appellant already paid such liability. It is therefore, though addition u/s 41 (1) of the Act may not be legally justified, but on the facts of the details & explanation with tax auditor's qualifying remarks about balances of creditors are subjected to confirmation, such addition made by A.O. is justified. I am inclined with A.O. the ratio of cases relied on by him are applicable in the case of appellant. The appellant failed to establish that such liability exists / subsist and therefore as per accounting principle required to added as income. The addition of Rs. 75,38,74,413/- is upheld confirmed. This ground is dismissed." [4] T....
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....mitted that the Tribunal ought not to have deleted the addition as the right to recovery of the said amount has become time barred and therefore, the Assessing Officer has rightly invoked the provisions of Section 41 (1) of the Act by making addition for cessation of the liability of the assessee. [9] Section 41 (1) of the Act reads as under: "Profits chargeable to tax. 41 (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....
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....] [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 another firm, the other firm;] [(iv) where there has been a demerger, the resulting company.] " [10] The provisions of Section 41 (1) of the Act provides for the liability and there can be cessation of liability only when the assessee has returned of such liability in its books of account and the provisions of Section 41 (1) of the Act cannot be i....
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....rts (Rs. 8,74,500/-), we are of the view that in this case, it cannot be presumed that the liability has ceased to exist and the Department has not brought forth any conclusive evidence in support of the same. With respect to Allure jewels (Rs. 1,19,94,266/-), we observe that the assessee has furnished complete ledger account with respect to the aforesaid party in order to support the fact that the liability to make such payment exists in the assessee's books of accounts. Accordingly, this addition in also liable to be deleted. So far as addition on account of FIRC is concerned, we are in agreement with the counsel for the assessee that no expenditure has been incurred by the assessee in this case and it in a case of export sales and theref....
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....in respect of the five parties for addition of Rs. 2,05,06,635/- after examining the relevant copy of ledger account placed on record, it was also found from the record that so far as addition of Rs. 1,59,978/- is concerned, the same was on account of purchase difference being outstanding differential amount towards marine exports and with respect to addition of Rs. 8,74,500/- of amount payable to Sonoma Exports Pvt. Ltd. Tirupur, it cannot be presumed that the liability has ceased to exist in absence of any evidence for the same. Similarly, addition of Rs. 1,19,94,266/- with respect to Allure Jewel, the Tribunal has examined complete ledger account purchased by the assessee to arrived at a finding of fact to make such payment exists in the....