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TMI Blog2019 (5) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... mity in the stand of Ld. first appellate authority, in this regard. Accordingly, ground Nos. 1 to 3 stands dismissed. Addition u/s 41(1) - substantial accounts of Sundry Creditors have been squared off by the assessee during impugned AY itself - HELD THAT:- The balance amount has been paid in subsequent years. Therefore, under the circumstances, nothing would suggest that there was remission or cessation of liability within the meaning of Sec. 41(1), in any manner. In fact, AO, in the process of making addition u/s 41(1), has disallowed entire expenditure claimed by the assessee against those Sundry Creditors, which was never the case of AO. No material has been brought on record to establish that the assessee s liability with respect to Sundry Creditors ceased to exist, in any manner. Further, during assessment proceedings, the assessee had placed on record most of the account confirmations from these parties. This being the case, no infirmity could not be found in the impugned order with respect to this addition. By upholding the stand of Ld. first appellate authority, we dismiss the revenue s grounds of appeal. - I.T.A. No.5538/Mum/2013 - - - Dated:- 16-5-2019 - Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n when these entities were not traceable at the addresses supplied by the assessee and the assessee also failed to produce them before the A.O. despite being specifically asked for by the A.O. during the course of assessment proceedings. 6. On the facts and circumstances of case and in law, the Ld.CIT(A) erred in not confirming the additions out of ₹ 3,14,66,127/- u/s 41(1) of the I.T. act when the tenor of the assessment order clearly showed that A.O. doubted the genuineness of the credits some of which were squared of during the course of previous year, in the books of accounts of the assessee. 7. On the facts and circumstances of case and in law, the Ld.CIT(A) erred in fresh evidence with regard to the genuineness of credits appearing in the books of account some of which were squared of during the course of previous year, in violation of Rule 46A without giving reasonable opportunity to the A.O. of rebutting this fresh evidence admitted during the course of appeal proceedings . 8. On the facts and circumstances of case and in law, the Ld. CIT(A) erred in giving relief of ₹ 3,14,66,127/- for non-genuine payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, since none of the expenses could be directly attributable to the receipts shown under the head Income from other sources, the expenditure could not be allowed even u/s 57(iii). Therefore, the aforesaid expenditure aggregating to ₹ 52.30 Lacs was disallowed and added to the income of the assessee. 2.3 The root of second addition lies in the fact that upon perusal of financial statements, it transpired that the assessee reflected an amount of ₹ 165.15 Lacs as payable to Sundry Creditors, the details of which was called from the assessee. To verify the genuineness of the same, notices u/s 133(6) were issued to all these parties. However, the status of the same has not been enumerated in the quantum assessment order. Proceeding further, Ld. AO form an opinion that the assessee could not file any details regarding the name and addresses of persons from whom these deposits were purported to have been received and it is not known whether the amount of ₹ 314.66 Lacs represented the deposits or the unaccounted money of the assessee. Therefore, an amount of ₹ 314.66 Lacs was added back u/s 41(1) with an observation that any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, therefore, the expenses incurred by the appellant as professional fees to Ms. Sharon Dias and Percept Limited were rightly claimed and could not have been disallowed by the AO. 7.6. It is also seen that such Professional Fees to Ms. Sharon Dias and Percept Limited are being paid and claimed as deduction by the appellant year after year for services being rendered by them and in the preceding assessment year i.e. Assessment Year 2009-10, the AO had himself allowed the profession fees paid to both the above parties as business expenditure and there has been no change in the facts in the current year. It is thus evident that the AO has wrongly disallowed the expenditure of ₹ 52,30,000/-. Same is hereby deleted. 3.2 Assailing addition u/s 41(1), the assessee submitted that there was no remission or cessation of liability within the meaning of Sec.41(1) and therefore the additions were not justified. It was submitted that entire outstanding liability was squared off by the assessee in the very next financial year. The party wise details of Sundry Creditors, outstanding balances and subsequent payment made to them was placed on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made similar payments to these payees in AY 2009-10 which has been allowed as business expenditure by revenue in an assessment u/s 143(3) and therefore, the additions, in our opinion, on similar facts, was not justified. 5.4 Keeping in view the totality of factors, we find no infirmity in the stand of Ld. first appellate authority, in this regard. Accordingly, ground Nos. 1 to 3 stands dismissed. 6. Regarding addition u/s 41(1), the undisputed position that emerges is the fact that substantial accounts of Sundry Creditors have been squared off by the assessee during impugned AY itself. The balance amount has been paid in subsequent years. Therefore, under the circumstances, nothing would suggest that there was remission or cessation of liability within the meaning of Sec. 41(1), in any manner. In fact, Ld. AO, in the process of making addition u/s 41(1), has disallowed entire expenditure claimed by the assessee against those Sundry Creditors, which was never the case of Ld. AO. No material has been brought on record to establish that the assessee s liability with respect to Sundry Creditors ceased to exist, in any manner. Further, du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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