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TMI Blog2024 (7) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of cessation/remission of liabilities u/s 41(1)(a) of Rs. 1,05,69,417/- by ignoring the findings of assessing officer that there was remission/cessation in the long term and short term borrowings, trade payables as well as other current liabilities aggregating to Rs. 1,05,69,417/- whereas same was not reflected in the bank accounts of the assessee. 2. On facts & circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition made by assessing officer on account of reduction in trade receivable to the tune of Rs. 1,05,57,313/- by ignoring the findings of assessing officer that there was reduction in trade receivable and there was no credit/receipt in the bank account. 3. On facts & circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: "As regards the addition of Rs. 1,05,57,313/- in respect of trade receivable, I note that the said addition was made by the Assessing Officer merely on the ground that there is a reduction in the trade receivable to this extent during the year and there is no transaction in the bank account. As discussed hereinabove while adjudicating ground no. 4 regarding addition made on account of reduction in liabilities, the Assessing Officer has failed to appreciate that the reduction in trade receivable is on account of reduction in trade payable and other liabilities. Thus, there was corresponding reduction in trade receivable consequent to adjustment of such receivable against the amount payable. Even otherwise reduction in trade receivable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as adjusted of by the debtors. The details of debtors and creditors have been duly examined by the ld. CIT(A) and hence, we decline to interfere with the well reasoned order of the ld. CIT(A) on this issue. 6. The AO has also made addition of Rs. 3,84,82,400/- on account of unexplained creditor, long term liabilities and other liabilities on the grounds that the assessee failed to prove the genuineness of brought forward trade creditors. The ld. CIT(A) deleted the addition on the grounds that there was no cessation of liabilities and hence, the same cannot be added u/s 41(1) of the I.T. Act. The provisions of Section 41(1) are as under: "Profits chargeable to tax. 41. [(1) Where an allowance or deduction has been made in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability by way of remission or cessation thereof" shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that subsection by way of writing off such liability in his accounts.]" 7. In the instant case, the assessee could not file any confirmation before the AO with regard to the sundry creditor whether they are still outstanding or not. There were no details about the intention of the assessee to pay the outstanding liabilities nor any reminders from the creditors seeking payment of the amounts due. The details of the litigation or any Court case have not been brought before us. The ratio of the ld. CIT(A) that the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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