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TMI Blog2015 (9) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... ee not to press the Ground No. 2 & 3. Hence, both the ground of assessee is dismissed as not pressed. 3. The only issue which remains in this appeal of assessee is against the order of Ld. CIT(A) in upholding the addition of Rs. 6,21,489/- made by Assessing Officer u/s 41(1) of the Act, for which assessee has raised following ground:- "1. a) THAT on the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in upholding the addition of Rs. 6,21,489/- made by the AO u/s. 41(1) in respect of the following sundry creditors. i) Industrial Switch Gears Cable Co. Rs. 94,765.00 ii) Ratan Trading Corporation Rs.1,12,494.00 iii) M.K. Electricals Rs.3,94,094.66 iv) Najami Industries Stores Rs. 20,135.82 He failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance had been carried forward from the earlier year and on verification regarding the genuineness of the creditors nothing could be conducted for non availability of the present addresses of the above said creditors. As this liability could not be established and since there was no transaction held during the year, the AO treated this liability as ceased to exist and applied the provision of Sec.41(1) of the Act and treated it as assessee's income chargeable to tax. Aggrieved, assessee went in appeal before Ld. CIT(A) and during the appellate proceeding before Ld. CIT(A) assessee submitted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the audited balance sheet is at Rs. 45,331/-. The balance of M/s M.K. Electricals at Rs. 45,31/- is verifiable from the audited balance sheet filed along with paper book. The correct figure of the four creditors is worked out as under:- i) Industrial Switch Gears Cable Co. Rs. 94,765.00 ii) Ratan Trading Corporation Rs.1,12,494.00 iii) M.K. Electricals Rs. 45,331.00 iv) Najami Industrial Stores Rs. 20,135.82 Rs.2,72,725.82 As such, the figure of Rs. 6,21,489/- should be replaced by Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made in respect of any loss, expenditure or trading liability incurred by him. Now, I go to the second condition and I can categorize the second condition in following points:- (i) whether any amount is obtained in respect of such loss or expenditure; (ii) whether any benefit is obtained in respect 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contracted to extinguish the liability. Although, enforcement of a debt being barred by limitation does not if so facto lead to the conclusion that there is cessation or remission of liability. 9. Further reliance the decision of Delhi Bench of ITAT in the case of Perfect Paradise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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