9911796707
TMI Blog2019 (11) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and law, the Ld. CIT(A) has erred in not remitting or sending back this issue to the assessing officer for verification under rule 46A of the I.T. Rules instead of accepting the said contention of the AR. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 41(1) of the IT Act amounting to Rs. 4,53,85,796/- without appreciating the facts of the case." 3. As could be seen from the grounds raised, the basic issue relates to deletion of disallowance made under Section 41(1) of the Income Tax Act, 1961 (in short 'the Act'). Briefly, the facts are the assessee, a resident company, is engaged in the business of trading in cocoa products. For the asst year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any justifiable reason as there is no remission/cessation of liability under Section 41(1) of the Act, since, the liability continued in the accounts of the assessee and ultimately, the liability was discharged by making payment to the concerned parties after obtaining approval from Reserve Bank of India (RBI). Learned Commission (Appeals), on verifying the facts on record, found that the outstanding liability in dispute continued to be shown as liability in the books of account of the assessee and ultimately, the accounts were squared off after the assessee discharged the liability after obtaining approval from the RBI. Therefore, following the ratio laid down in certain judicial precedents, learned Commission (Appeals) deleted the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses in their books nor was written back in the books of the assessee. Therefore, the liability continued to exist. He submitted, it is also not the case that the recipients have given up their right of recovery of the amount and, in reality, were pressing hard for recovery of the outstanding liability. He submitted, to repay the amount to the recipients, assessee had to seek approval of the RBI through its bank and ultimately, after obtaining approval of the RBI, the amounts were repaid. Thus, he submitted, when the liability has already been discharged, there cannot be any addition under Section 41(1) of the Act. The learned AR further submitted, there is no violation of Rule 46A of the Income Tax Rules as learned Commission (Appeals), in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, it is for the Assessing Officer to establish on record through proper evidences that the liability has not only ceased to exist, but, the assessee has derived benefit either in cash or in kind during the year under consideration. Prima facie, we are of the view that the Assessing Officer has not brought any material on record to demonstrate that the aforesaid conditions of Section 41(1) of the Act were satisfied. Merely because the liability remained outstanding for more than three years, it cannot cease to exist unless the recipient writes off such liability in its books of account and simultaneously, the assessee also writes back the amount in its books. The onus is entirely on the Assessing Officer to demonstrate that the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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