2026 (8) TMI 360

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....2025. The impugned orders emanated from the order of the Learned Assessment Unit, Income-tax Department (for brevity, 'the Ld.AO') order passed 147 r.w.s. 144B of the Act, date of order 10/01/2025. 2. The brief facts of the case are that the assessee is partnership firm and carrying a business of dealers and packaging material PVC films, sheetings and decorative laminates etc. The partnership deed was duly executed on 15.10.1996 having three partners namely Mr. Prafulchandra Chatrabhuj Sanghvi, Mrs. Vibhuti Prafulchandra Sanghvi and Mrs. Viral Prafulchandra Sanghvi. The deed of partnership cum retirement was executed on 11/04/2012 & one of the partners Mrs Vibhuti P. Sanghvi was retired w.e.f. 01/04/2012. During the impugned assessment y....

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....to the retired partner. However, without considering the aforesaid submissions and evidences, the Ld. AO treated the difference in sundry creditors as ceased liability and made an addition of Rs. 68,69,700/- under section 41(1) of the Act, thereby enhancing the total income of the assessee. Aggrieved by the said addition, the assessee preferred an appeal before the Ld. CIT(A)). The Ld. CIT(A) dismissed the appeal. Being aggrieved, the assessee is in appeal before us. 4. The Ld. AR advanced arguments and filed a paper book comprising pages 1 to 89, which has been taken on record. The Ld. AR submitted that the assessee had furnished ledger confirmations of the retired partner, Mrs. Vibhuti Prafulchandra Sanghvi, for AYs 2018-19, 2019-20, a....

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....d not get its accounts audited and did not file report of audit u/s. 44AB of the Act, from the auditor in prescribed form, online through ITBA within the stipulated time provided in the statute. The case was reopened on the basis of sales figure reported before the GST authorities, only. The appellant started complying only when the case was reopened and notice, u/s. 148 was issued, along with order u/s. 148A(d) of the I.T. Act. The AO has passed a speaking order taking into consideration all the explanations provided by the appellant. No further explanation, in addition to what was stated in the course of assessment, has been furnished by the appellant during this appellate proceeding. The appellant has also not intended to furnish any add....

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....essee had duly explained the factual position during the assessment proceedings and furnished supporting documents, including confirmation from the retired partner. No fresh or additional evidence has been placed before us beyond what was already available before the revenue authorities. The Ld. AO invoked the provisions of section 41(1) of the Act, which deal with cessation or remission of liability. However, the addition has effectively been made by treating the amount as a bogus sundry creditor, without bringing any material on record to demonstrate either remission or cessation of the liability. On the contrary, the retired partner has duly confirmed the outstanding balance and accepted the liability. In view of the above facts an....