TaxTMI 
TaxTMI 
2025 (12) TMI 971
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.... disallowing expenditure u/s 37(1) Rs. 4,40,00,000/- while making assessment u/s 144 of the IT Act, 1961. 2. That the Ld. AO erred in adding Rs. 1,80,54,511/- income due to cessation of trade liabdity u/s 41(1) of the IT Act, 1961. 3. That the Ld. AO erred in adding Rs. 43,85,362/- on account of purchases not accounted. 4. That the Ld. AO erred in adding 2&3 above since the original assessment disallowed all expenditure u/s 37(1). 5. That the Ld. CIT(A) erred in allowing the AO order u/s 144 & 143(3) RWS 147, which e.mounts to double taxation. 6. That the order passed by Ld. AO/ CIT(A) is liable to be set aside as the same has been passed on wrong presumptions, surmises and conjectures. ....
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....er the Explanation to section 37(1) of the Act, not allowed while computing the taxable income. 3. Thereafter the AO based on the information that one of the creditors of the assessee, Smt. Saantha Lakshmi Jayaram has written off debts to the extent of Rs. 1,97,48,195/- during the A.Y. 2011-12 out of the total debt of Rs. 2,95,48,195/-, had treated the written off of debts as an income u/s. 41(1) of the Act. Thereafter notice u/s. 148 was issued for which the assessee filed the return of income and declared a loss of Rs. 1,62,031/- and subsequently notices u/s. 143(2) as well as u/s. 142(1) were issued. The assessee filed their reply that the debts were not written off by the creditor and in fact the said debt is still available in the b....
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....e. The Ld.CIT(A) had also not accepted the ground that the recording of reasons to believe was not communicated to the assessee before passing the order and therefore the order is valid in law. Similarly, the Ld.CIT(A) had also not accepted the plea that the approval was not validly granted by the authority. The assessee on merits had disputed the addition made u/s. 41(1) of the Act since the liability was not resolved between the assessee as well as the creditor and also submitted that the waiver of liabilities in her books of accounts, without communicating the said waiver to the assessee does not justify the addition made on the assessee. The Ld.CIT(A) had relied on the assessee's accounts in which Smt. Saantha Lakshmi Jayaram ledger pag....
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....r none appeared on behalf of the assessee on 05/12/2024, 20/01/2025, 28/07/2025, 31/07/2025 and 17/09/2025. Even though the notices were communicated to the assessee and in fact on one occasion, i.e. on 07/10/2024, the assessee filed an adjournment petition seeking adjournment for two months. In the said adjournment application, the assessee had submitted that they are preparing a revised grounds of appeal and also informed that the current status of the appeal against the order dated 30/03/2013 was also not known to the assessee and therefore prayed an adjournment. Even though the adjournment application stated so many things, till date, the assessee had not filed any revised grounds of appeal and also not informed about the status of the ....
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....r the assessee had effected a total purchases of Rs 1,80,54,511/- from the said seller and not paid any single payment and therefore treated the said purchases as waiver of the liability and brought to tax as income due to cessation of liability u/s 41(1) of the Act. In such circumstances, the Ld.CITA) had considered the said facts and not accepted the plea raised by the assessee. Even before us, the assessee had not produced any records to show that the said amount was not actually written off by the creditor. Considering the ledger page of the said creditor Smt. Saantha Lakshmi Jayaram in which the assessee themselves had reduced the debt amount of Rs. 1,97,48,195/- and also the purchase ledger maintained by the assessee, we are of the vi....