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TMI Blog2013 (1) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,36,76,461/- in respect of unverifiable Sundry Creditors. 4. The A.O., while making this addition has observed as under:- 4. Disallowance on account of sundry creditors:- 4.1 On verification of the transaction details as regards to the sundry creditors schedule C of the audited account, the assessee has shown sundry creditors of ₹ 1,93,56,797/-. The creditors to the tune of ₹ 56,80,336/- are verified on the basis of confirmations/details furnished by the assessee, remaining amounts of ₹ 1,36,76,461/- remained unverified for which no valid confirmation/no any details to established the transactions are furnished by the assessee. Therefore remaining amount of creditors of ₹ 1,36,76,461/- remained unverified. This being a liability of the assessee same is required to be added u/s 41(1) of the IT. Act. 4.2 A show cause notice to the above effect, was issued to the assessee vide this office letter dated. 20.12.2011 fixing the hearing on 26.12.2011. The AR of the assessee attended on 27.12.2011 and furnished the reply/explanations. I have considered the reply of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uditor in relation to the quantitative accounts. Merely for want of confirmations, the addition made is, therefore, not called for and deserves to be deleted. Section 41(1) reads as under: 41. Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assesses (hereinafter referred to as the first mentioned person) and subsequently during any previous year,- (a) the first mentioned person has obtained whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be the profits and gains of business or profession and accordingly charged to income tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or.... (b) ..... [Explanation: For the purposes of this sub-section, the expression loss or expenditure or some benefit in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AO. Your appellant also seeks reliance from the observations of the Hon. High court of Delhi in the case of Devsons (P) Ltd. vs. Commissioner of Income tax and Others 48 DTR 137. The extracts have been reproduced below. Adverting to the second issue, the finding recorded by the Tribunal is that there was no evidence regarding payment of ₹ 36,17,986 by the assessee to the sub-contractors in connection with the execution of the garbage collection work and, as such, the deletion made by the CIT(A) of the aforesaid sum of ₹ 36,17,980 was unsustainable. We are of the view that the Tribunal failed to take note of three very vital aspects of the matter. The first was the finding of the CIT(A) that the factum of rendering of services by the subcontractors was not in dispute as the appellant had meticulously maintained log books for each subcontract, which were duly verified and authenticated by the JMC. The Tribunal casually brushed this aside by stating that mere filing of a log book was not sufficient to discharge the onus laid upon the appellant. The log book was a contemporaneous document maintained by the assessee company on a day to day basis and it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in respect of such trading liability by way of remission or cessation thereof (iii) Such amount or benefit is obtained by the assessee; and (iv) Such amount or benefit is obtained in a subsequent year. 3.3 Perusal of the assessment order reveals that the above mentioned conditions are not fulfilled in the instant case. The A.O. had not brought anything on record to prove that any amount or benefit had been obtained by the appellant during the year under consideration against liabilities which is allegedly ceased to exist. It is also an established proposition of law that onus is on the A.O. to establish that any benefit has accrued to the appellant against alleged liabilities during the year under consideration. The A.O had not discharged his onus. I have also perused the case laws relied upon by the appellant and the ration of these case laws supports the case of the appellant. 3.4 Perusal of above facts reveals that the A.O. had not mentioned even the details of the liabilities which has ceased to exist. The A.O. had taken balancing figure from the balance sheet and made the addition u/s.41(1) of the I. T. Act. The action of the A.O. does not confir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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