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TMI Blog2023 (6) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. As per the grounds of appeal, the assessee has challenged the additions made by the Assessing Officer under Section 41(1) of the Act amounting to Rs. 69,59,056/- on account of cessation of liability. 3. Briefly stated, the assessee e-filed its return of income declaring total income at 'Nil' and claimed loss of Rs. 9,27,239/- for the Assessment Year 2015-16 in question. The assessment was framed under Section 143(3) of the Act wherein the Assessing Officer inter alia alleged that four parties appearing as sundry creditors namely, Shri Ram Hari Ram Jewellers, Shovana Enterprises, Royal Sales Corporation, Eksara Trading Company aggregating to 69,59,056/- were outstanding for last three years. A notice issued under Section 133(6) to such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective orders of the lower authorities. 7. We have carefully perused the assessment order and the first appellate order and the case records with the assistance of the ld. DR for the Revenue. The applicability of Section 41(1) in the facts of the case is in controversy. 7.1. The assessee in the instant case has claimed that the liability shown under the head 'sundry creditors' arose due to non payment but all the creditors / registered VAT dealers had issued tax invoices, a copy of which was placed before the Assessing Officer. The bona fides of the liability thus cannot be effaced merely because of non response to the notice under Section 133(6). The longevity of the outstanding per se cannot be a ground to treat such outstanding as ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts. 7.4. The issue is squarely covered in favour of the assessee by the judgment of Hon'ble Delhi High Court in the case of Vardhman Overseas Ltd., 343 ITR 408 (Del) and Dattatray Poultry Breeding Farm P. Ltd. vs. ACIT (2019) 104 taxmann.com 366 (Guj.). The Hon'ble Delhi High Court in Vardhman case inter alia observed that for invocation of Section 41(1), it is necessary that the assessee should have received 'some benefit' with respect to all such trading liability. However, the benefit in respect of trading liability should be 'by way of remission or cessation of the liability'. The assessee in the instant case, has continued to recognize the liability and one cannot say that the liability is not unenforceable against the assessee wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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