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TMI Blog2024 (5) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 68 nor 41(1) of the Act could be applied by the Revenue Authorities. Accordingly, we delete this addition made in respect of S.K. Enterprises. With regard to Amitabh Enterprises when the inspector has visited the premises, it was reported that the firm was not operative from that address in the year 2015. Transaction took place prior to 01.04.2009 and the non-existence of this firm in 2015 cannot be reason to sustain addition and the report of the inspector cannot be relied in its entirety since there was no basis for such information so recorded by him by following the due procedure as stipulated in Code of Civil Procedure. Hence, unless and until there is an evidence to show that these credits are ceased to exist, there cannot be any addition u/s 41(1) of the Act, accordingly we delete the addition. With regard to Shiv Shakti Card there was no cessation of credits in the assessment year under consideration. Full payment has been made in the assessment year 2013-14 and the purchase has been accepted in assessment year 2012-13. Being so, it cannot be added u/s 143(3) of the Act as discussed in earlier para 7 above and for the reasons mentioned thereon, we delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Rs. 17,48,316/- Shiv Shakti Card Rs. 11,20,431/- Renuka Enterprises Rs. 21,99,935/- Sikka Paper Pvt. Ltd. Rs. 67,88,062/- Total Rs. 1,34,97,009/- 1.1 That under the facts and circumstances, the findings of Ld. CIT(A) that these are bogus sundry creditors which have ceased to exist is legally and factually incorrect and unsustainable in law as well as on merits. 1.2 That under the facts and circumstances, without confronting with the report of ITI and in the absence of proper and sufficient opportunity to rebut the same, no cognize of the ITI report can be taken. Also, under the facts, the report of the ITI is not as per law therefore even otherwise also it is not an admissible evidence against the assessee. 1.3 That without prejudice, Ld. CIT(A) exceeded his jurisdiction in sustaining the addition made by the A.O. u/s. 68 of the I.T. Act as the addition u/s. 41(1) of the Act. After giving a finding that the addition cannot be made u/s. 68, the Ld. CIT(A) was required to delete the addition threshold. 2. That under the facts and circumstances both the lower authorities grossly erred in law as well as on merits in making addition of Rs. 35,54,572/- for the following tow sundry cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue are that the balance sheet of the assessee shown outstanding sundry creditors at Rs. 1,70,51,581/-. The ld. AO called for names and addresses of the parties, which has been provided by the assessee. As per the Ld. AO, assessee has purchased only goods worth of Rs. 47.06 lakhs, whereas the outstanding creditors were Rs. 1.70 crores. To ascertain the genuineness of the creditors, notice u/s 133(6) of the Income Tax Act, 1961 (in short the Act ) was issued to all the parties. All the notices sent were returned as un-served with the remarks left without address or remained closed from long time . Later, the ld. AO asked the assessee to produce those sundry creditors before him or produce the address of above sundry creditors, which was not complied by the assessee. Later, an Inspector was deputed to make local enquiries and find out the whereabouts of the above creditors. The inspector vide his report dated 6.12.2015, 7.2.2015 9.2.2015 has stated that no concern is running at the given address or it is closed/left for more than 3 to 4 years . Later, the ld. AO vide order sheet entry dated 13.3.2015 asked to show cause that why the same may not be treated and added to the taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties that the assessee made payment of Rs. 37.04 lakhs in assessment year 2013-14 and later fully paid in assessment year 2014-15 through bank account to the tune of Rs. 56.99 lakhs and cash payment of Rs. 94,483/- and the assessment was completed u/s 143(3) relating to assessment year 2014-15. These creditors were duly registered with the VAT authorities and the assessee has paid the VAT on these transactions which is not disputed. As rightly pointed out by the ld. A.R., the authorities have not brought anything on record to prove that the liability is ceased to exist and neither of the parties has written off the same in their books of accounts. Further, balance sheet of this assessment year has been duly signed by the assessee itself thereby acknowledged the debt and in such circumstances, the lower authority is precluded in applying the provisions of section 41(1) of the Act. More so, lower authority was not sure whether section 68 of the Act to be applied or section 41(1) of the Act. In such dichotomy neither provisions of section 68 nor 41(1) of the Act could be applied by the Revenue Authorities. Accordingly, we delete this addition made in respect of S.K. Enterprises. 8. Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. The assessee has filed confirmation dated 22.7.2016 before ld. CIT(A), showing the balance as outstanding since 31.03.2012. The confirmation was also having PAN number of the creditors. As discussed in earlier para, the assessee signed the balance sheet, which was the acknowledgement of debt and the ld. AO has not brought anything to show that it was ceased to exist in the assessment year under consideration. In such circumstances, it is not possible to hold that debt ceased to exist. Accordingly, by placing reliance on the Judgment of Hon ble Supreme Court in the case of CIT Vs. Balkrishna Industries Ltd reported in 300 CTR 29, wherein held that if there is no remission or cessation of liability, amount in question cannot be treated as income u/s 41(1) of the Act . Similarly, Hon ble Supreme Court in the case of CIT Vs. SI Group India Ltd. held that since record before authorities did not disclose that, there was no remission or cessation of liability, one of the requirements spelt out for applicability of section 41(1) of the Act had not been fulfilled in facts of present case. Addition is deleted . Accordingly, in our opinion, in all these cases mentioned above, it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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