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TMI Blog2015 (7) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. Further, it is also observed that the addition was made by the lower authorities on account of expenses of which genuineness could not be established by the assessee. In the above circumstances, the decision relied upon by the Authorized Representative of the assessee which relates to section 41(1) of the Act is found to be not of any help to the assessee. Further, as no material to establish the genuineness of the above expenditure and genuineness of its liability during the year could be brought before us by the assessee, we find no good reason to interfere with the order of the Commissioner of Income Tax (Appeals) - Decided against assessee. Addition u/s. 68 - treating the loan as unexplained cash credit - Held that:- As find from the assessment order that the assessee also contended before the Assessing Officer vide his letter that opening balance of the loan creditors should not be added as income of the year under consideration. However, the plea of the assessee was not dealt with by the Assessing Officer before making entire addition of the loan of ₹ 4,64,592/-. The Commissioner of Income Tax (Appeals) also had not adjudicated upon this plea of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us cast upon him to prove the genuineness of the creditors by giving their identity, genuineness of transactions and outstanding balance. Therefore, the Assessing Officer held that it is presumed that either the assessee has paid the liability out of undisclosed income or there was remission or cessation of credit liability and made addition of ₹ 31,82,258/- to the income of the assessee. 5. On appeal, the Commissioner of Income Tax (Appeals) confirmed the action of the Assessing Officer for the very same reason. 6. The Authorized Representative of the assessee relied upon the decision of the Hon ble Gujarat High Court in the case of CIT Vs. Bhogilal Ramjibhai Atara (2014) 43 taxmann.com 55 (Guj.) and argued that the Hon ble High Court has held that even where the debt itself was found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act, there is no cure for it and where there was no remission or cessation of liability during the year under consideration, no addition could be made to the income of the assessee. 7. The Departmental Representative supported the orders of the lower authorities. 8. We have heard the rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such findings. Nevertheless, even if such facts were established through biparte inquiries, the liability as it stands perhaps holds that there was no cessation or remission of liability and that therefore, the amount in question cannot be added back as a deemed income under section 4 (c) of the Act. This is one of the strange cases where even if the debt itself is found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act there is no cure for it. We find that the above quoted decision of the Hon ble High Court squarely applies to the facts of the assessee s case. Therefore, respectfully following the same, we set aside the orders of lower authorities and delete the addition of ₹ 31,82,258/- made u/s. 41(1) of the Act on account of cessation or remission of liability. Thus, this ground of appeal of the assessee is allowed. 11. Ground no. 3 of the appeal is directed against the order of the Commissioner of Income Tax (Appeals) upholding the addition made by the Assessing Officer of ₹ 13,51,347/- on account of unpaid expenses. 12. We have heard the rival submissions and perused the orders of lower authorities and material avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 13,51,347/- as outstanding payable as at the end of the year. It is also not the case of the assessee that the outstanding amount in the case includes or represents opening balance brought forward from the earlier years. Thus, it is observed that the liability claimed relates to the year under consideration. Further, it is also observed that the addition was made by the lower authorities on account of expenses of which genuineness could not be established by the assessee. In the above circumstances, the decision relied upon by the Authorized Representative of the assessee which relates to section 41(1) of the Act is found to be not of any help to the assessee. Further, as no material to establish the genuineness of the above expenditure and genuineness of its liability during the year could be brought before us by the assessee, we find no good reason to interfere with the order of the Commissioner of Income Tax (Appeals) and the ground of appeal of the assessee is dismissed. 17. Ground no. 4 of the appeal is directed against the order of the Commissioner of Income Tax (Appeals) upholding the addition made by the Assessing Officer for ₹ 4,64,592/- u/s. 68 by treating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) also had not adjudicated upon this plea of the assessee by passing a speaking order. In our considered opinion, no addition could be made on account of unexplained cash credit u/s. 68 of the Act for opening balance brought forward during the year under consideration because the same was not a fresh credit entry of the year under consideration. The Departmental Representative has also not controverted the submission of the assessee that out of the unsecured loans as at 31st March, 2007 of ₹ 4,64,592/-, ₹ 3,82,228/- was the opening brought forward balance. In respect of balance ₹ 95,000/-, no specific submission was made before us which represents the fresh credit by the assessee in the books of account of the year under consideration. Therefore, we delete the addition to the extent of ₹ 3,82,228/- being balance brought forward from earlier years and confirm addition of ₹ 95,000/- being unsubstantiated credit of the year under consideration. Thus, this ground of appeal of the assessee is partly allowed. 19. In the result, the appeal of the assessee is partly allowed. Order pronounced in the Court on Friday, the 20th of June, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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