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TMI Blog2015 (7) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... at when the assessee has offered impugned liability to tax in AY 2013- 14 and tax has been paid thereon then the similar addition cannot be upheld for AY 2007-08 an addition made by the AO and upheld by the CIT(A) cannot be held as sustainable and thus, in accordance with law and we direct the AO to delete the same. Decided in favour of assessee. - ITA No.2022/Del /2013 - - - Dated:- 22-7-2015 - Shri J.S. Reddy and Shri Chandra Mohan Garg, JJ. For the Petitioner : Sri K.R. Manjani, Advocate For the Respondent : Sri Vikram Sahay, Sr. D.R. ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER 1. This appeal by the assessee has been directed against the order of the CIT(A)-IV, New Delhi dated 05.02.2013 in Appeal No. 140/12-13 for AY 2007-08. 2. The sole ground raised by the assessee in this appeal reads as under:- Learned CIT(A) has erred on facts as well as in sustaining addition of ₹ 6,94,272/- outstanding in the books in the name of Shri Amir Mohammad (wrongly written as Amit Chand in this year). Ld. CIT(A) s observation that appellant has written back liability in the name of Shri Amir Mohammad and created new liability in the name of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rite from FYs 2004-05 to 2006-07 which is relevant to assessment year under consideration 2007-08. Therefore, the authorities below were not correct and justified in holding that the liability has been ceased during the relevant financial period. The Ld. counsel further pointed out that this liability of ₹ 6,94,272/- was offered to tax by the assessee in AY 2013-14 and tax has been paid thereon therefore, the addition made by the AO and upheld by the CIT(A) is not sustainable for AY 2007-08 in accordance with provisions of the Act. The Ld. counsel pointed out that the assessee s paper book pages 6 to 12 wherein at page 8 in the computation of income impugned amount has been offered to tax as income from other sources. 7. Ld. counsel also submitted a copy of the decision of the ITAT Delhi G Bench in the case of Shri Sunil Kumar Bhatia Vs. ACIT dated 11.10.2013 for AY 2007-08 in ITA No.2020/Del/2013 and submitted that in the similar facts and circumstances similar kind of addition has been ordered to be deleted by the Tribunal as the assessee Shri Sunil Kumar Bhatia offered similar amount to tax in AY 2013-14. 8. Replying to the above, the Ld. Departmental Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikely to be filed shortly. 4. Learned DR, on the other hand, stated that the assessee has not furnished any evidence, correspondence or detail which may justify that the liability was existing as on 31st March, 2007 and has ceased only during the FY 2012-13. She further stated that during assessment proceedings, the Assessing Officer allowed opportunity to the assessee to furnish the confirmation from the creditor but the same was also not furnished. The purchase was made ten years back and the whereabouts of the creditor are not known, therefore, the Assessing Officer rightly treated that the liability has already ceased. By writing of the liability in the FY 2012-13, the assessee himself has admitted the cessation of liability but the assessee is only trying to postpone the payment of tax on such liability. She, therefore, submitted that the order of learned CIT(A) should be sustained. 5. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the arguments of both the sides and the facts of the case, it is evident that now the controversy is very narrow because it is the stand of both the parties that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here there has been an amalgamation of a company with another company, the amalgamated company; (ii) where the first-mentioned person is succeeded by any other person in that business or profession, the other person; (iii) where a firm carrying on a business or profession is succeeded by another firm, the other firm;] [(iv) where there has been a demerger, the resulting company.]. 6. From the above, it is evident that main Section i.e. 41(1) would be applicable where the assessee has obtained some benefit in respect of any trading liability by way of remission or cessation thereof. It is a settled legal position that merely because a liability has become time barred or is outstanding for a longer period, it cannot be presumed that there is a remission or cessation of the liability. Explanation (1) to Section 41(1) is a deeming provision by which remission or cessation of liability would be presumed in the year in which the debtor has written off the liability in his books of account. In our opinion, in the case of the assessee, Explanation (1) to Section 41(1) would be squarely applicable for the FY 2012-13. Admittedly, there cannot be cessation of liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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