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TMI Blog2021 (9) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 32,41,130/-on account of sundry creditors u/s 41(1), inter alia by treating as cessation of liability and that too in the year under appeal. 4. The Learned CIT(A) has erred in confirming the addition made by AO under section 41(1) without considering the facts as well law on the point of applicability of provisions of sec. 41(1) of the I.T. act, 1961. A liability cannot be presumed to have ceased to exist, unless there is a conscious act on the part of the creditor to waive or forgo the liability, which is absent in the present case. 5. That the AO has arbitrarily alleged that the outstanding trade liabilities are not genuine liabilities without producing any evidence to support his allegations. 6. Without prejudice to the above, the Learned CIT(A) has erred in confirming the addition in entirety without appreciating the factual submissions made before him that substantial part of the said amount has already been offered for tax in subsequent years (in respect of 8 parties), thereby bringing to tax th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les and case laws relied upon by the Appellant have been wrongly distinguished. 15. That the disallowances made and the observations made are unjust, unlawful and based on mere surmises and conjectures. The additions/disallowances made cannot be justified by any cogent material on record and in any case they are excessive. 16. That the explanation given and the evidence produced, material placed and available on record has not been properly considered and judicially interpreted and the additions made cannot be justified in view of the said material and explanation. All the above grounds are without prejudice to each other." 2. The main issue challenged by the appellant is that Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 32,41,130/- on account of sundry creditors u/s 41(1), inter alia by treating as cessation of liability in the year under appeal vide ground no. 3 to 7. 3. The facts of the case as per record are that during the course of assessment proceedings, the assessing officer noticed from the details provided by the assessee that there were 25 sundry creditors outstanding for more than 3 years as on 31.03.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 133(6) it was replied by them that they had no outstanding balance with the assessee. Some of the parties were not found at the given address while others did not confirm the outstanding liability of the assessee. Considering the plea of the assessee the assessing officer has added back; creditors in the assessment year 2013-14. 3.3 During the appeal proceedings, the assessee has taken a plea that he has written off of the creditors in his books pertaining to Financial Year 2015-16. And the balance of creditors was not written off as the assessee was not sure that those creditors had ceased to exist. From, the facts brought out in detail in the assessment order it is apparent that these liabilities have ceased to exist, Therefore, the addition made by the assessing officer under section 41(1) of the Income Tax Act, on this point is upheld and ground of appeal of the assessee is dismissed. 5. The Counsel for the assessee submitted that Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 32,41,130/-on account of sundry creditors u/s 41(1), inter alia by treating as cessation of liability and that too in the year under appeal; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of liability with the supporting corroborative evidences on the record before application of the judicial precedents relevant in the present case. It is pertinent to mention that the assessee is required establish the financial year of written of the liability in the books of accounts in rebuttal to the evidence brought on record by the AO under section 133(6) of the Income Tax Act, that the said six parties have confirmed that during the previous year relevant to the asstt. year under consideration, they did not have any transaction with the assessee nor any opening or closing balance was outstanding during financial year 2012-13. Thus, these creditors have no credits or transaction with the appellant assessee for the year relevant. 9. The Ld. AR argued that the very fact that the parties have confirmed that there was no opening balance outstanding as of 01.04.2012 makes its clear beyond doubt, that even if accepted that there has been remission or cessation of liability with respect to said sundry creditors, no inference can be drawn that the same has taken place during the F.Y. 2012-13. The addition under section 41(1) of the Act can be made only in the year in which the remiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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