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TMI Blog2016 (7) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... these liabilities in its books and continues to show the same. Thus, the assessee has not written off the liabilities in its books of account. There is nothing on record to indicate that the creditors have given up their rights to recover such amounts from the assessee. Under the circumstances, it is clear that the addition is based upon an assumption on the part of the Assessing Officer that the liabilities have ceased to exist. The Tribunal, therefore, did not commit any error in upholding the deletion made by the Commissioner (Appeals). - Decided against revenue - Tax Appeal No. 125 of 2016 - - - Dated:- 15-3-2016 - Harsha Devani And G. R. Udhwani, JJ. For the Appellant : Mrs Mauna M Bhatt ORDER ( Per : Honourable Ms. Justice Harsha Devani ) 1. The appellant revenue in this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) has challenged the order dated 14th May, 2015 made by the Income Tax Appellate Tribunal, D Bench, Ahmedabad (hereinafter referred to as the Tribunal ) in ITA No.536/Ahd/2011 by proposing the following question stated to be a substantial question of law:- Whether the Appellate Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,13,719/-, the assessee was required to furnish complete address and confirmation or to produce the creditors before the Assessing Officer. It was also made clear to the assessee that if it fails to submit any concrete information in respect of these creditors or adduce any evidence to the effect that these liabilities are in fact payable, the same will be treated as ceased liabilities. The assessee, however, failed to furnish any detail to establish that these creditors still exist. The Assessing Officer, after giving ample opportunities to the assessee, recorded that the creditors were not available at the given address and the assessee himself was not aware about their whereabouts. The inter-departmental investigation of the records of eight creditors did not show any amount receivable from the assessee. The Assessing Officer, accordingly, held that it was clear that the liabilities amounting to ₹ 81,60,350/- (Rs.57,46,631 + ₹ 24,13,719) have ceased and accordingly added the same to the income of the assessee under section 41(1) of the Act. 4. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals) who agreed with the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The Commissioner (Appeals) also agreed that it was highly unlikely that the concerned parties have written off the said amounts since the physical shares of the companies in which they are Directors, were still with the assessee company and thus, allowing a major stake in those companies to the assessee company without anticipating payment for such shares could not be said to be a prudent decision on their part. Since the assessee was still showing the liabilities in question as existing liabilities in its books of accounts and had not written off the same, it had furnished confirmation of majority of the parties along with evidences in support of the transaction and the shares in respect of which the liability had arisen had been duly shown as stock-in-trade in the books of the company. Since, the Assessing Officer had not confronted the assessee with the material gathered behind its back for rebuttal and cross examination of the parties as well as having regard to the fact that the unilateral act on the part of the parties does not in any way translate into income in the hands of the assessee, the Commissioner (Appeals) deleted the addition made by the Assessing Officer under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of trading liability by way of remission or cessation thereof as envisaged in the said section. The assessee has filed details and explanation in respect of outstanding creditors in the form of complete list of creditors, copy of ledger account of parties from the year 1996-97 in which the liability was raised till the year under consideration, original bills for purchase of shares for which liability was outstanding, etc. The assessee had also furnished confirmation of a few parties and also furnished the addresses as was available with it. It appears that the Tribunal noted that the Assessing Officer had not dealt with the confirmations filed in this regard. According to the Tribunal, section 41(1) of the Act would apply in cases where there had been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled. Additionally, such cessation or remission has to be during previous year relevant to the assessment year under consideration. The Tribunal on an appreciation of the material on record found that both the elements were missing and there was nothing on record to suggest that there was remission o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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