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TMI Blog2023 (4) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, has directed the Assessing Officer to make enquiries in respect of said liability shown by the assessee as noted above. Similarly, in respect of other two parties, the notices sent to them were received back unserved. The ld. CIT(A), under the circumstances, though at the first instance, deleted the additions made by the Assessing Officer but thereafter directed the Assessing Officer to make further enquiries in this respect as reproduced in earlier part of this order. No infirmity in the order of the CIT(A) in directing the Assessing Officer to make further enquiries. There is no merit in the appeal of the assessee and the same is accordingly hereby dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer thereafter discussed the reply/status etc of the sundry creditors and found that the sundry creditors in respect of five parties were either not genuine or the liability of the assessee in case of five sundry creditors had ceased to exist. The Assessing Officer, in this respect, has made the following observations in respect of the said five sundry creditors: "7. On perusal of the reply received from M/S Goodwill Corporation (India), it is seen from the ledger, which was sent as attachment to the email, that during the, relevant year total sales of Rs. 29,86,200/- was made to the assessee and the total payment for the same amount was received during the same year. In the party's ledger there is no reflection of any opening or closing balance dues as receivable from the assessee. (i) From the above, it is clear that the claim made by the assessee is incorrect. Since no closing or opening balance exist in the books of account of the party [M/S Goodwill Corporation (India)], the liability as claimed by the assessee in his books of account ceases to exist therefore it is a gain in the hand of the assessee, hence Rs.28,87,040/- is added back to the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is incorrect and no liability as claimed by the assessee in his books of account exists. Hence, the total sundry creditor of Rs.15,80,550/- is added back and penalty u/s 271 (1)(c) is initiated for furnishing of inaccurate particulars. 10. In the case of M/S Swastik Trading & Mfg. Co., the notice issued u/s 133(6) of the I.T. Act, 1961, was returned to the office of the undersigned with the remark of the post office as "UNKNOWN". The assessee was asked to furnish the name and mobile number of the person In-charge, the e-mail address of M/S Swastik Trading & Mfg.. Co. The assessee said he had no contact details besides what is in the purchase bill (copy submitted). The assessee was then asked to produce the details of last transaction done with the party. From the ledger and bills produced in support of his transaction done with the assessee, it is seen that the last transaction was done on 02/2/2012 and the sundry creditor balance has been brought forwarded from A. Y: 2012-13 till date. First and foremost there seems no existence of the party as the notice served in the full address as per the tax invoice return un-served with the comment of the post office "UN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty during the year and the entire amount was paid during the same financial year. The said party in response to the notice issued u/s 133(6) of the Act, sent reply, wherein, it stated that "we hereby declare that Shri Arun Kumar Bose is completely unknown to us and we have done no transaction with him in the said F.Y 2013-14". But thereafter, it had taken a u-turn and submitted a copy of ledger account of the assessee as appearing in its books of account for the A.Y 2014-15 and stated that there was no outstanding balance receivable from the assessee as on 01.04.2013 as well as on 31.03.2014. In nutshell, the said party denied any opening balance and closing balance. The assessee contended before the CIT(A) that the said party had made a wrong statement. That the amount of Rs.29,87,040/- was still payable by the assessee to the said company. The ld. CIT(A), though, held that since the liability was still existent in the books of account of the assessee, and that since the assessee has not written off liability in its books of account, therefore, provisions of section 41(1) were not applicable and held that the applicability of section 41(1) of the Act was void ab initio. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer to the extent of Rs.3,00,000/- being opening balance, however, confirmed the addition of balance outstanding of Rs.5,70,785/-. The assessee is not aggrieved by the above action of the CIT(A) in respect of the said party. 8. In case of M/s Quality Udyog, the Assessing Officer had held that the said party was not in existent on the ground that the notice issued in the full address as per the tax invoice was returned unserved with the comments of postal authority 'unknown'. However, the ld. CIT(A) held that the Assessing Officer had not made any further enquiries including on the spot inspection to demonstrate that the said party was a non-existent party. He, therefore, held that the addition made by the Assessing Officer under the circumstances was not sustainable. The ld. CIT(A), however directed the Assessing Officer to make further enquiries, the relevant part of the order of the CIT(A) in this respect, is reproduced as under: "6.32 Coming to the issue of assessability of brought forward opening balance which is also appearing as closing balance as on 31.03.2014, as the income of the assessee either u/s.68 or u/s.41(1) of the Act, I have already adjudicated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2014, as the income of the assessee either u/s.68 or u/s.41(1) of the Act, I have already adjudicated the matter in detail vide Para Nos.6.12 to 6.20 above. Accordingly, I am of the considered opinion that the addition made by the AO cannot be sustained in the eyes of the law. Thus, the AO is directed to delete the addition subject to the following conditions. 1) It is imperative on the part of the assessee to explain the year in which the said liability to the extent of Rs.21,64,314/- had originated along with details of corresponding purchases made and the FY/AY in which the said credit entries are made against the party concerned in the books of account of the assessee. 2) Also, the assessee is required to explain whether the said opening as well as closing balance of Rs.21,64,314/- has been paid to the party concerned subsequent to the end of the FY i.e., on or after 01.04.2014. If so, the details of the same such as amount paid, date of payment, mode of payment etc., shall be submitted to the AO at the time of giving effect to this order. 3) Similarly, the AO is at liberty to examine the books of account and the return of income filed by the assessee including the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, the ld. CIT(A), to give fair chance to the assessee, has directed the Assessing Officer to make enquiries in respect of said liability shown by the assessee as noted above. Similarly, in respect of other two parties, the notices sent to them were received back unserved. The ld. CIT(A), under the circumstances, though at the first instance, deleted the additions made by the Assessing Officer but thereafter directed the Assessing Officer to make further enquiries in this respect as reproduced in earlier part of this order. It is pertinent to note here that the Hon'ble Delhi High Court in the case of "CIT vs. Chipsoft Technology (P) Ltd." 210 Taxman 173 (Del), has held that in the case of an employer, omission to pay the dues/liability to employee over a period of time and the resultant benefit derived by the employer/assessee would qualify as a cessation of liability, albeit by operation of law and that a debtor or an employer, holding on to unpaid dues, should not be given the benefit of his showing the amount as a liability, even though he would be entitled in law to say that a claim for its recovery is time barred, and continue to enjoy the same. The relevant par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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