2021 (9) TMI 1583

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....sed by the appellant, by way of a question posted for our consideration, is as follows: Whether on the facts and in the circumstances of the case and in law, ld. CIT (A) was correct in deleting the disallowance of Rs. 3,13,65,360/- made by the Assessing Officer u/s. 41(1)(a) of the Income Tax Act? 3. To adjudication on this appeal, only a few material facts needs to be taken note of. The assessee before us, inter alia, is a company engaged in the business of trading. During the course of assessment proceedings, the Assessing Officer noticed that the assessee owes Jiangsu Go Intl. Group Hua Tai Import & Export Co., China Rs. 1,25,10,400/- and M/s. Zhejiang Hengdian Apeloa Imp. & Exp. Co. Ltd. Rs. 1,88,54,960/-, res....

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....d above in his trading activity . Considering the above facts Rs. 3,13,65,060/- (Rs.1,25,10,400/- plus Rs. 1,88,54,960/-), which is a trading liability & is not paid till date is treated as deemed income of business by cessation of trading liability u/s 41(l)(a) of I.T.Act. (Addition of Rs. 3,13,65,060/- u/s. 41(l)(a)) 4. Aggrieved by the additions so made, the assessee carried the matter in appeal before the learned CIT(A). The learned CIT (A) took note of the submissions made by the assessee, as also the fact that the proceedings for recoveries with respect of these amounts were still in progress, as at the relevant point of time and, therefore, these amounts cannot be treated as ceased liability u/s. 41(1)(a) o....

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....ity as held by the A.O. The appellant has also filed copies of the petitions filed by these parties as additional evidence during the course of appellate proceedings. The documents were forwarded to the AO vide this office letter dated 13/10/2017 for his comments. The AO has not offered any comments on these documents in his report dated 07/02/2018. Looking to the fact that adequate opportunity of being heard was not provided to the appellant during the course of assessment proceedings, additional evidence filed by the appellant is admitted. From the evidences submitted by the appellant it is seen that the matter is sub - judice, therefore, the AO was wrong in concluding that the liability of the appellant has ceased to exist. Accordingly, ....