9911796707
TMI Blog2015 (9) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. The issue as to the genuineness of a credit entry thus does not arise in the current year and this issue could only be examined in the year in which the liability was recorded as having arisen. The Department having accepted the balances outstanding in the previous year, it was not open by Ld. CIT(A) to confirm the addition on the ground that assessee could not prove the genuineness of the said transactions which were undertaken. Thus hereby delete the addition made by AO u/s 41(1) - Decided in favour of assessee. - ITA No.2254/Kol /2013 - - - Dated:- 12-8-2015 - Shri Mahavir Singh, J. For The Appellant : Shri N.M. Bhansali, Advocate For The Respondent : Shri R.P.Nag, JCIT-DR This appeal by the assessee is arising out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The addition of ₹ 6,21,489/- is wrong, illegal and unjustified. b) Without prejudice to the foregoing ground, the addition in respect of sundry creditor M/s M.K. Electricals amounting to ₹ 3,94,094/66 is factually incorrect. The outstanding liability to M/s/. M.K. Electricals was ₹ 45,4331/- only. The addition is made on the basis of wrong facts figures. 4. Briefly stated facts are that assessee runs a business in trading electrical goods. The assessment order was framed u/s 144 of the Act by the Assessing Officer. The AO on the basis of available record on the file including written submission received including balance sheet and schedules thereof as well as on perusal of the list of sundry creditors for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that due to paucity of fund, these four creditors could not pay during the year under assessment. However, they have been paid in subsequent year so the question of cessation of liability does not arise as these are genuine creditors but Ld. CIT(A) confirmed the action of AO by giving following finding:- 5-3 I have perused the assessment order and considered the submission of the appellant. The act of the case is that the AO tried to verify the genuineness of the aforesaid creditors shown by the appellant. However, on verification, he found that the whereabouts of the persons concerned were not traceable in absence of their addresses. Therefore, he concluded that the liabilities were no more in existence, he invoked provision of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajami Industrial Stores ₹ 20,135.82 Rs.2,72,725.82 As such, the figure of ₹ 6,21,489/- should be replaced by ₹ 2,72,725.82. In this regard, I have gone through the paper book filed by assessee and relevant details of sundry creditors and I find that the contention of Ld. Counsel for assessee is correct. Ld. DR supported the view of Ld. AR and as such the figure of addition of ₹ 6,21,489.48 is to be replaced by ₹ 2,72,725.82. Ld. Counsel for assessee further submitted that as the liability was existing and none other of the sundry creditors have given any reply to the contrary and further as the sundry creditors have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of such trading liability by way of remission or cessation thereof. Looking to the facts of the present case, the condition (ii) is not fulfilled as neither any amount is proved to have been obtained in respect of such loss or expenditure and nor any benefit has been obtained in respect of such trading liability because sundry creditors have not refused for their claim of the due payment for the purchase and an additionally the assessee has confirmed that these sundry creditors have been actually paid in the subsequent year. 8. Hon ble Supreme Court in the case of Byeing and Manufacturing Ltd v. State of Bombay AIR 58 28 (SC) has clearly held that even in cases where the remedy of a creditor is barred by limitation the debt itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Emporium Pvt. Ltd. V. ITO in ITA No.159/Del/2011 dated 22.04.2015, wherein it is held similar facts as in the case of assessee s unclaimed liability to the creditors even if fictitious and bogus cannot be assessed u/s 41(1) of the Act in the absence of a write back. The bogus credit can be assessed u/s 68 of the Act only in the year such credits were made and not in the year they are found to be not payable. 10. In the facts of the present case, it is also not possible to conclude that the debt has become unenforceable. It is well settled that reflecting an amount as outstanding in the balance sheet by a concern amounts to the concern acknowledging the debt for the purpose of Sec. 18 of the Limitation Act, 1963. Further, sundry cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
