9911796707
TMI Blog2010 (8) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 10,93,245/- in respect of the following three parties under section 41[1][a] without proper verification of facts and cogent reasons. Sr.No. NAME OF THE PARTY AMOUNT 1. M/s Dilip Textiles ₹ 5,24,273 2. M/s. Kohinoor Textiles ₹ 3,23,993 3. M/s Nakoda Textiles ₹ 2,44,979 TOTAL Rs.10,93,245 2. The Learned Commissioner of Income Tax [Appeals] has further erred in confirming the addition of ₹ 6,57,126/- being purchases made from M/s Padmavati Syndicate in spite of the fact that the appellant has made the full payment to the above party on 09-04-2003 by account payee cheque. 3. The assessee, an individual, in the relevant assessment year derived income from trading in cotton textiles in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and the matter was in the final discussion phase to be settled soon. Thus, it was submitted that the addition u/s.41[1][a] was premature as the same was done in the very first year of the purchases made by the assessee. The ld. CIT[A] rejected the assessee's claim, inter alia, observing that neither before the AO, nor during the appellate proceedings, assessee could establish with any corroborative evidence, the existence of the liability which, admittedly, was on account of purchases of earlier years and, therefore, according to the ld. CIT[A], the trading liability deemed to have been ceased. 6. As regards the addition of ₹ 6,57,126/- being purchases made from M/s Padmavati Syndicate, the assessee had filed a copy of the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t addition, if at all, could be made u/s.68 and not u/s.41. He submitted that ingredients of sec.41 should have been satisfied before invoking the said provision. Further, since it is not disputed that the liability pertained to earlier year, hence, addition could be made in earlier year only and not in this year. The Ld. counsel of the assessee further submitted that opening balance has not been disputed and, therefore, the addition could not be made in this year. He submitted that what AO could not do directly also could not do indirectly. He referred to page-37 of the paper book wherein copy of the ledger account of M/s Dalip Textile is placed, to demonstrate, that out of the opening balance as on 1-4-2002 of ₹ 7,05,835/-, goods wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no transactions of purchases during the year. All the balances were out of opening balances only. Therefore, sec.68 could not be invoked as the genuineness of the liabilities had to be examined in the year to which it pertained. As far as the applicability of sec.41[1][a] is concerned, since assessee has not written back these amounts, therefore, department could not treat the liability as non existent, merely on the ground of non service of summons on the parties, particularly because in the current year goods have been returned, which fact has not been disputed by the department. Once the transaction is going on with the parties, it cannot be said that liability has ceased to exist. Further, assessee has filed an application for admission ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
