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TMI Blog2012 (11) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... dates - Held that:- Claim of the assessee regarding cash sales under peculiar conditions that the assessee was discontinuing its business and therefore some sales were made in cash cannot be summarily rejected. It cannot be said that in the case of cash sales, the assessee is bound to keep record of the names and addresses of the buyers. Under these facts, ground of the assessee is allowed and addition made is deleted - Decided in favor of assessee - I.T.A. No. 896/ Ahd/2011 - - - Dated:- 20-7-2012 - Shri A. K. GARODIA and Shri KUL BHARAT, JJ. Appellant by: Shri Sapnesh Seth, AR Respondent by: Shri Rahul Kumar, Sr. DR ORDER PER SHRI A. K. GARODIA, AM:- This is assessee s appeal directed against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding advance from customers of Rs.80,369/- shown in the name of seven customers and the total amount so outstanding was Rs.33,97,308/-. The A.O. made detailed inquiry regarding these outstanding creditors. He also stated in the assessment order that on query raised from these parties, no reply was received in most of the cases and, therefore, the balance remained unconfirmed. He invoked provisions of Section 41(1) of the Income tax Act, 1961 and made addition of this outstanding amount in the name of various creditors and customers. Being aggrieved, assessee carried the matter in appeal before Ld. CIT(A) but without success and now, the assessee is in further appeal before us. 4. It was submitted by the Ld. A.R. that all these bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment was not made to this party because of some dispute with regard to quality of goods. He further submitted that the dispute was settled in the next year and it was agreed to supply goods of the same worth and the terms were finalized with the help of one broker M/s. Lohiya agency and accordingly, such goods were supplied to this party in the subsequent period. It is further submitted that in case of most of the creditors, the amount was already surrendered for tax in subsequent period when the company considered it that the liability no longer exists and since the same was offered to tax in subsequent period, no addition should be made in the present year by invoking the provisions of Section 41(1) of the Income tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these two judgements of Hon ble Apex Court, the provisions of Section 41(1) are not applicable in the present case considering the facts of the present case. The judgement of Hon ble Apex Court rendered in the case of T V Sundaram Aiyenger as reported in 222 ITR 344 is against the assessee in respect of advances from customers but in the present case, this judgement is also not applicable because the facts are different. Regarding the amount outstanding in respect of various customers of Rs.80,369/-, it was the submission of the assessee that the amount was not received as advance from these customers but in fact, in most of the cases, the amount was paid by the customers to the assessee company although the same was payable to a sister c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment cited by the Ld. A.R. We find that this is noted by the A.O. on page 30 para 7 of the assessment order that the assessee has claimed to have effected cash sales of grey cloth on three dates i.e. 16.5.2006, 17.5.2006 and 31.3.2007 totaling an amount of Rs.9,95,870/-. The A.O. s objection is this that why cash sale is only on these three dates in the year and not on other dates. With regard to this objection of the A.O., it was submitted by the assessee before the A.O. vide written submission dated 29.12.2009 that since the assessee decided to discontinue the business, major quantity of grey cloth lying in various process houses were called back without processing and the grey cloth so received was sold in cash. It is also submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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