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TMI Blog2015 (7) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... te material and evidence to prove the genuineness of the loss in question. The assessee, however, failed to produce any requisite material and evidence before Assessing Officer in set aside proceedings to prove the genuineness of the loss in question. Therefore, authorities below were justified in maintaining the addition - Decided against assessee. - ITA No. 1177/CHD/2013 - - - Dated:- 6-7-2015 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER Appellant by : Shri Jai Gopal Bansal Respondent by : Shri Manjit Singh O R D E R PER BHAVNESH SAINI,JM This appeal by assessee is directed against the order of ld. CIT(Appeals)-II Ludhiana dated 11.11.2013 for assessment year 2006-07. 2. The assessee in the revised grounds of appeal, challenged mainly two additions i.e. (i) Addition of ₹ 3,95,614/- on account of cessation of liabilities under section 41(1) of the Act, and (ii) Disallowance of commodities loss of ₹ 4,20,824/-. 3. Briefly the facts of the case are that assessment in this case was completed on 04.12.2008. While completing the assessment, following additions were made to the returned income : i) Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of ₹ 4,20,824/-, being loss on sale of commodities, assessee filed copies of the contract notes. The Assessing Officer held that reply submitted by the assessee, was almost similar as was filed in the original assessment proceedings and no concrete evidence had been put forward by the assessee to substantiate his claim. The Assessing Officer, accordingly, made both the additions again. 8. The assessee challenged both additions before ld. CIT(Appeals) and it was similarly submitted that provisions of Section 41 (1) are not applicable to the facts and circumstances of the case and that assessee received advances from the customers and liabilities never ceased to exist during the year under consideration. As regards loss on sale of commodities, it was submitted that copies of the accounts and bills were placed on record which proves the genuineness of the loss. Therefore, addition should not be made by the Assessing Officer. 9. The ld. CIT(Appeals), considering the directions of the Tribunal above, found that Assessing Officer has not examined the issues as per the directions of the Tribunal. Therefore, Assessing Officer was directed to examine these issues as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to be trade advances received by the clients. The assessee claimed that these advances were received from clients in earlier years. However, assessee could not file copies of the accounts pertaining to the year in which these were received. Though the assessee claimed that no allowance or deduction was ever claimed by assessee in respect of these outstanding liabilities, however no evidence in this regard was produced by the assessee. The submissions of the assessee were found contrary. The perusal of the copies of the accounts filed by the assessee support the claim that accounts were squared up in subsequent year, would reveal that there are substantial cash receipts shown by the assessee. As per the books of account, these amounts are shown as sundry creditors. The ld. CIT(Appeals), on the basis of above facts, noted that assessee has not been able to prove the contention that amounts were not trading liabilities and no deduction of loss or expenditure with regard to these credits had been claimed in the earlier year. Therefore, ld. CIT(Appeals) held that Assessing Officer was justified in making addition under section 41(1) of the Income Tax Act. 12. The ld. CIT(App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Refer to page 14 of order also. The assessee, time and again has been reiterating that these were old balances and there were no cessation of liability for the year under consideration and advances were received from the client as margin money. Even in the earlier order of the Tribunal, it was noted that assessee had shown outstanding liabilities in accounts in respect of these persons for long. Even the ld. CIT(Appeals) did not dispute this facts that these were outstanding liabilities in the books of account of the assessee as Sundry Creditors . 9. On considering the facts of the case noted above, it is clear that assessee had continued to show the admitted amounts as liability in its balance sheet. The liabilities reflected in the balance sheet could not be treated as cessation of liability. The ITAT Ahmedabad Bench in the case of Nitin S. Garg V ACIT 40 SOT 253 held as under : Considering the facts of the case as noted above it was clear that the assessee had continued to show the admitted amounts as liabilities in its balance sheet. The liabilities reflected in the balance sheet could not be treated as cessation of liabilities. Merely because the liabilities were o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs have been given for the same. We, therefore, set aside the orders of authorities below and delete the addition of ₹ 3,95,614/-. This ground of appeal of the assessee is allowed. 11. As regards the loss of commodity is concerned, the enquiries from Ludhiana Stock Exchange revealed that claim of loss on account of commodity transaction was not a genuine claim. The assessee merely produced copy of notes from M/s Anand Commodity Services, would not prove that assessee suffered genuine loss. The evidences collected from Ludhiana Stock Exchange and confronted to the assessee clearly proved that the commodity transaction was not actually carried out but was merely accommodation entries. Earlier the Tribunal, while restoring the matter to the file of Assessing Officer directed the assessee to produce the requisite material and evidence to prove the genuineness of the loss in question. The assessee, however, failed to produce any requisite material and evidence before Assessing Officer in set aside proceedings to prove the genuineness of the loss in question. Therefore, authorities below were justified in maintaining the addition of ₹ 4,20,824/-. This ground of appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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