TMI Blog2015 (9) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... invoke the provisions of Section 41(1) of IT Act. We, therefore, direct not to make any addition in respect of these two accounts by invoking the provisions of Section 41(1) of IT Act. In respect of Akshar Enterprises we have inquired from learned AR that since how long the liability was outstanding and whether the assessee had made any attempt to liquidate this liability. We have also inquired that whether this amount was squared up by making payment in any of the subsequent years. In the absence of suitable evidence on record, so as to satisfy our above query, we hereby deem it proper to refer this part of the dispute back to the stage of the AO to inquire from M/s. Akshar Enterprises about the nature of the outstanding liability and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts in upholding the addition made by the Assessing Officer in respect of unexplained liabilities of ₹ 22,02,879/-, even when the appellant had furnished copy of confirmation letters from creditors. 2. That the learned CIT(A) further erred in law and on facts in upholding the addition of ₹ 1,66,968/- u/s. 40A(3) of the IT Act. 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) dated 23.03.2012 were that the assessee in individual capacity is in the business of trading in ferros and non ferros metals. It was noticed by the AO that under the head sundry creditors there was a huge amount of ₹ 52,88,932/- shown in the accounts of the assessee. The assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... names are treated as non-existent as on 31st March, 2007. In view of these facts and circumstances, vide order sheet entry dated 25-11-2009, the Authorized Representative of the assessee was show caused to explain as to why the liabilities in the names of above three creditors should not be treated as unexplained liability without considering payment of ₹ 1,70,000/- actually paid to M/s. Manidhari Co and why the same should not be added to the income declared by the assessee. The reply to the show cause was required on 30-11-2009. It was also categorically mentioned in the note sheet dated 25- 11-2009 that in case assessee fails to produce confirmation of above creditors why creditors' balance remained to be confirmed should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through cheque to those parties during the year but the copy of bank account were not furnished. For the sake of completeness relevant paragraph is reproduced below: 2.3 I have given careful consideration to submission made and evidence brought on record by the Assessing Officer. It is undisputed that documents/confirmation as required by the Assessing Officer were not filed. It is argued that these documents/evidences were not produced before the Assessing Officer because sufficient time was not provided. This contention is against the facts on record. The assessment order is dated 23.12.2009. Final show cause was issued on 25.11.2009. This means that preliminary queries were raised much earlier. Assessment was framed one month after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Akshar Enterprises, learned AR has informed that there was an opening balance of ₹ 6,16,147/- and due to a mistake in this account a sum of ₹ 1,70,000/- was credited which in fact belonged to an another party. He has pleaded that during the year purchases were to the tune of ₹ 75,16,549/-, therefore, the outstanding balance was reflected in the accounts of these parties. Although he has objected that there was no invocation of the provisions of Section 41(1) of IT Act but also drawn our attention that the AO had doubted the authenticity of the creditors and taxed the impugned amount on the ground that the liabilities did not exist. 5. From the side of the Revenue, learned Sr.D.R., Mr. M.K. Singh has supported the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since how long the liability of ₹ 6,16,147/- was outstanding and whether the assessee had made any attempt to liquidate this liability. We have also inquired that whether this amount was squared up by making payment in any of the subsequent years. In the absence of suitable evidence on record, so as to satisfy our above query, we hereby deem it proper to refer this part of the dispute back to the stage of the AO to inquire from M/s. Akshar Enterprises about the nature of the outstanding liability and whether the assessee has squared up the account by making the payment. Naturally if the liability is in existence then it should have been paid by the assessee for which a satisfactory explanation should be offered with supporting co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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