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TMI Blog2017 (4) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... nsion of the period of limitation by acknowledgement of the creditors in the assessee’s balance sheet as on 31/03/2007. We, therefore, hold that the addition of ₹ 10,38,403/- upheld by the Ld. CIT(A) is not sustainable and direct the A.O to delete the same. See CIT vs. Sugauli Sugar Works (P) Ltd.(1999 (2) TMI 5 - SUPREME Court ) - Decided against revenue. - ITA No. 879/MUM/2014 - - - Dated:- 19-8-2016 - SHRI JASON P. BOAZ (AM) AND SHRI SANDEEP GOSAIN (JM) For The Appellant : Shri. Nitesh Joshi For The Respondent : Shri. M.V. Rajguru ORDER PER JASON P. BOAZ, AM This appeal by the assessee is directed against the order of the CIT(Appeals)- 6, Mumbai dt. 29/10/2013 for Asst. year 2007-08. 2. The facts of the case as emanate from the record, briefly, are as under:- 2.1 The assessee company filed its return of income for Asst. year 2007-08 on 31/10/2007 declaring total income of ₹ 2,77,566/- The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short the Act ) and the case was subsequently taken up for scrutiny . The assessment was completed u/s 143(3) of the Act vide order dt. 30/12/2009, wherein the assessee s income was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and maintenance, security maintenance, computer and mobile expenses, petrol and telephone expenses. 5.2 We have heard the rival contentions of the Ld. AR for the assessee and the Ld. DR on behalf of revenue and perused and carefully considered the material on record. As observed by the Ld. CIT(A) in the impugned order, the assessee was not able to furnish the relevant details and supporting documents evidences in respect of the claim of the aforementioned expenses before the Assessing Officer ( AO ) in the course of assessment proceedings. We find from the record that even in appellant proceedings, and also before us, except for raising the ground, the assessee was not able to bring on record any material evidence to establish the claim of the aforementioned expenses. In this view of the matter, we find that the disallowance made by the AO of 10% of the aforementioned expenses to be reasonable in the factual matrix of the case and consequently uphold, the aforesaid disallowances of ₹ 25,635/- out of business promotion expenses and ₹ 1,42,230/- out of the Misc. expenses mentioned above . Consequently, ground no. 2 of the assessee s appeal is dismissed. 6. Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port, and consequently sustained the addition of ₹ 10,38,403/- which is before us for adjudication. 6.2.1 In this ground, the assessee has assailed that impugned order of the Ld. CIT(A) in sustaining the addition u/s 41(1) of the Act to the extent of ₹ 10,38,403/-. At the outset of the hearing, the Ld. AR informed the Bench, that subsequent to the passing of the impugned order, the Ld. CIT(A) vide letter dt. 07/03/2014 had proposed rectification of the same u/s 154(3) of the Act, in order to reduce the addition u/s 41(1) of the Act to ₹ 6,00,471/- (i.e. ₹ 25,36,874 less ₹ 19,36,403/-) and placed a copy of the same on record. The Ld. AR, however, submitted that the assessee is not aware whether the proposed rectification to the impugned order has been effected by the Ld. CIT(A). 6.2.2 The Ld. AR for the assessee submitted that the addition of ₹ 10,38,403/- or ₹ 6,00,471/- u/s 41(1) of the Act upheld by the Ld. CIT(A) could not be sustained since the outstanding balance of the parties/sundry creditors involved appear as outstanding in the assessee s Balance Sheet as on 31/03/2007. This fact, the Ld. AR contends, clearly establishes /ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia, proposed the addition u/s 41(1) of the Act be sustained to the extent of ₹ 25,36,874/-. We find that the Ld. CIT(A) observed that the A.O in remand proceedings has not verified the confirmations filed by the assessee nor commented on them and therefore proceeded to examine the same. On examination thereof, we find that the Ld. CIT(A) held in the impugned order that the addition u/s 41(1) of the Act could be sustained to the extent of ₹ 10,38,403/-. On subsequent examination thereof, the Ld. CIT(A) vide letter dt. 07/03/2014 has further proposed to reduce the addition u/s 41(1) of the Act to ₹ 6,00,417/-. 6.4.2 According to the Ld AR for the assessee, even the additions u/s 41(1) of the Act to the extent of ₹ 10,38,403/- or ₹ 6,00,471 cannot be sustained since the outstanding balances of the creditors / parties involved appear as acknowledged outstanding creditors in the assessee s balance sheet as on 31/03/2007. In the case of hand, as observed by the Ld. CIT(A) neither in assessment proceedings nor in remand proceedings has the A.O verified the confirmations, details, additional evidences filed by the assessee in support of the outstandin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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