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TMI Blog2022 (11) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the sundry creditor u/s 41(1) being ceased trading liability to assessee who is a builder, we find that the AO was given liberty to examine such facts in relevant assessment year. Once the AO is given liberty, the Ld. CIT(A) found no reason to wait for her remand report as no prejudice is caused to either party on adjudication the matter. We are conscious of the fact that there is no ground of appeal raised by the revenue for making/ sustaining addition under section 41(1), yet we may observe that the assessing officer has not brought any evidence to show that it was a cessation or remission of trading liability. Asin PCIT Vs Matruprasad C Pandey [ 2015 (4) TMI 830 - GUJARAT HIGH COURT] held that amount of old sundry creditors appearing in the balance sheet cannot be added under section 41(1) unless and until it is found that there is remissions/ cessation of liability and that too during the relevant assessment year. Thus, on the basis of the aforesaid factual and legal position, we do not find any infirmity in the order of ld CIT(A) in deleting the addition of advance bookings and sundry creditors, which we affirms with these additional observation. X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kishorbhai Laxmanbhai. The Assessing Officer recorded that despite of numerous opportunities, the assessee has submitted the name and address of the advanced booking. No confirmation, income tax return any of persons from whom advances were received in Sarthee Industrial Park was filed. Further no details of Rs.24,65,000/- has shown as advance of Sarthee Height of Rs.27,22,000/- in balance-sheet of Sarthee Township Park was filed by assessee. No details in respect of Kishorbhai Laxmanbhai as a sundry creditor was filed. On the basis of such observation, the Assessing Officer doubted the advances. Against the sundry creditor of Kishorbhai Laxmanbhai of Rs.2.82 crores the assessee contended that said amount is payable to him against purchased of land at Moje Magob, Block No.77, F.P. 87, Disrict. Surat. The Assessing Officer on perusal of sale deed dated 03.08.2011 found that complete payment of the said property was shown. And Assessing Officer was of the view that such amount could not be outstanding after execution of sale deed and handing over possession to the assessee. Further it is not known whether Kishorbhai Laxmanbhai has offered the said amount in his return of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act. To support such submission, the ae relied on the case law of various Hon'ble High Courts including the decision of Hon'ble jurisdictional High Court in the case of Commissioner of Income-tax, Gandhinagar Vs. Jagatkumar Satish Bhai Patel [2014] 45 taxmann.com 441 (Guj), Hon'ble High Court of Delhi in the case of CIT Vs. Shri Vardhman Overseas Ltd. (TA No.774 of 2009 dated 24.12.2011) and Hon'ble Karnataka High Court in the case of CIT Vs. Alvares and Thomas 394 ITR 647 (Kar). On the basis of ratio of aforesaid decisions, the assessee stated that in assessee's case the entire amounts of balance recorded by Assessing Officer as on the last date of accounting year, representing the same opening balance and therefore, the provision of under section 68 cannot be invoked in the year under consideration. 6. On the second addition of sundry creditor of Rs.2.82 crores as unexplained cash credit the assessee submitted that assessee had purchased non-agricultural plot of land situated at Moje Magob, Block No.77, F.P. 87, District Surat for a total consideration of Rs.8.25 crores. The said plot was owned by three co-owners namely, Dahyabhai Karmshbhai, Jayantibhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invite any explanation from the assessee. The assessee submitted that the same cannot be added under section 41(1) of the Act since the amount was still payable. The assessee has not written off the same in its books of account for the year under consideration and no benefit accrued to the assessee by way of suggestion of trading liability. 8. To support such submission, the assessee again vide its submission dated 17.06.2018, further contended that Assessing Officer made both the additions under section 68 of Rs.7.38 crores while passing the assessment order under section 143(3). The said amounts representing the opening balance of the year. The section 68 deals with the credit of previous year and does not empower the Assessing Officer to make addition in the current year for any amount credited in earlier assessment year i.e. opening balance. To support such submission, the assessee relied upon the following decisions; Jagatkumar Satishbhai Patel (2014) 45 taxmann.com 441(Gujarat), Hon'ble Delhi High Court in Vardhman Overseas Ltd. (TA No.774/2009 dated 24.12.2011) and Hon'ble Karnataka High Court in the case of Alvares and Thomas 394 ITR 647 (Kar) (supra). 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that there is no dispute that amounts added are actually opening balance carried forward from assessment year 2014-15. On the observation of Assessing Officer for taxing the sundry creditor under section 41(1) being ceased trading liability to assessee who is a builder. The Assessing Officer was given liberty to examine and given her factual report, however, Assessing Officer has not responded. Once the Assessing Officer is given liberty, the Ld. CIT(A) found no reason to wait for her remand report as no prejudice is caused to either party on adjudication the matter. The Ld. CIT(A) after referring the contents of decision of Hon'ble jurisdictional High Court in the case of Jagatkumar Satish Bhai Patel (supra) and decision of Hon'ble Delhi High Court in the case of Shri Vardhman Overseas Ltd. (supra), wherein it was held that no fresh amount was credited in the account of creditor in the relevant accounting year, the applicability of section 68 is ruled out. The Ld. CIT(A) also followed the decision of Hon'ble Karnataka High Court in the case of Alvares and Thomas (supra) and held that it is an admitted fact that amount added are part of opening balance and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of remand report, Ld. CIT-DR for the Revenue submits that Assessing Officer was over burdened having additional charge of another ward and sufficient time was not granted to the Assessing Officer to file remand report. 14. On the other hand, Ld. AR for the assessee submits that there was very limited dispute before Ld. CIT(A) that Assessing Officer made addition of advance booking received in earlier year as a cash credit in the present year and no stretch of imagination, could be added for the year under consideration, even otherwise it was a part of booking amount against which assessee executed sale deed in favour of purchasers. The Ld. AR for the assessee submits that Ld. CIT(A) after appreciation of fact found that opening balance account of assessee cannot be added in the current assessment year. To support such submission, Ld. AR for the assessee relied upon the following decisions; Jagatkumar Satishbhai Patel (2014) 45 taxmann.com 441 (Guj) and Geeri Fashion (P.) Ltd. vs. ITO Ward-1(1)(2) Surat (2021) 191 ITD 155/130 taxmann.com 495 (Surat-Trib.) 15. On the addition of sundry creditor under section 68, the ld. AR for the assessee further submits that amount of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of two amounts under section 68, (i) opening balance of advances for booking and (ii) another sundry creditor. On the submissions of assessee that both the additions are made on opening balance carried forward for assessment year 2014-15. The Ld. CIT(A) examined the audited and financial statements of assessment years 2014-15 and 2015-16 respectively, wherein balance-sheet shows that both the amounts are closing balance for assessment year 2014-15. In ITR-5 for assessment years 2014-15 and 2015-16, which was downloaded from ITD system in closing balance for assessment year 2014-15 is shown at Rs.9.26 crores which includes the booking advance of Rs.4.56 and creditors of Rs.2.82 crores respectively. The assessee challenged the additions on legal ground, the assessee claimed that opening balance of advances and creditor cannot be added under section 68. It was held that advances for booking and sundry creditor added are carried forward from earlier year and cannot be added under section 68. Further, for creditor of Rs.2.82 crores, the assessee furnished copy of sale deed, wherein the details of cheque given to the seller and bank statements established that seller has not deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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