TMI Blog2023 (1) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes with folded hands. There was no iota of proof to demonstrate that the amounts have liable to be paid in the instant year or in the near future. The conduct of both the parties clearly demonstrates the remission of the amounts. The amounts which were hitherto remained unpaid for more than a decade cannot be treated as an existing liability. Hence, the action of the revenue authorities subjecting that amount u/s. 41(1) cannot be faulted with. The appeal of the assessee on this ground is dismissed. Advances Received - As on 31.03.2016, there was credit balances appearing in the account of M/s. Gaurav International and Elite Sales (India) which was advanced from customers - HELD THAT:- With regard to addition it is submitted that advances received by the assessee in earlier assessment years could not be brought to tax as undisclosed income during the year under consideration. In the present case advances were continuing from earlier years and during the year under consideration no fresh advance was received. Hence, we hold that the Ld. CIT(A) has erred in sustaining the addition on account of advance from M/s. Gaurav International and M/s. Elite Sales(India) u/s. 41(1). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in sustaining addition of Rs. 17,20,000/- on account of outstanding credit balance of Rs. 17,20,000/- in the name of M/s. Swastika Enterprises. 7. That the Ld. CIT(A) has failed to appreciate that the various observations and findings of the Ld. CIT(A) has erred in the impugned assessment order are irrelevant, unjustified, baseless and vitiated in the law. 8. That on the facts and circumstances of the case and the provisions of law, the Ld. CIT(A) has failed to appreciate that the Ld. AO has erred in charging of an interest u/s. 234B. Without prejudice the interest charged is also excessive. 9. That on the facts and circumstances of the case the Ld. CIT(A) has failed to appreciate that the Ld. AO has erred in initiating proceedings u/s. 271(1)(c) of the income Tax Act, 1961. 3. Ground No. 1 general 4. Ground Nos. 2 3 not pressed Ground No. 4 : Addition u/s. 41(1) 5. During the year under consideration, there were 3 creditors outstanding since last 15 to 16 years. On account of non-filing of the confirmations, the AO has made the addition of Rs. 25,39,190/- u/s. 41(1). The pertinent fact was that upto 09.01.2007 this firm was the proprietorsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained some benefit in respect of such trading liability by way of remission or cessation thereof, the value of benefit accruing to him shall be deemed to be profit and gain of business or profession and accordingly chargeable to income tax as income of that previous year. It was argued that in the present case the AO has not brought anything on record that the amount payable to above said creditors has ceased during the year under consideration itself. So, when the assessee has not got any benefit during the year under consideration there is no justification for making addition of Rs. 25,39,190/- u/s. 41(1) of the IT Act. 12. For this proposition, the ld. AR placed reliance on the following judgments: CIT vs. Sugauli Works Pvt. Ltd. 236 ITR 518 (SC) CIT vs. Chase Bright Steel Pvt. Ltd. 177 ITR 128 (HC) (Bombay) ACIT vs. M/s. Milroc Good Earth Property Developers LLP ITA 26/PAN/2018 13. Provisions of Section 41(1) reads as under: 41. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e last 15 years and the assessee has not made any payment and no demand from the lender could be proved by the assessee with regard to the outstanding payment. No business transactions have been made with these parties in the last 10 years and no confirmations have been filed before the revenue authorities. All these facts goes to prove that the amounts which have been debited to P L account once and taken as outstanding payable have ceased to exist. The argument of the ld. Counsel that if at all the amounts ceased to exist it could have been taxed in the last previous year or in the subsequent year, there is no reason to tax in the instant year cannot be held to be valid argument that such proposition would be devoid of any logic and revenue cannot be expected to wait for indefinite period to receive their dues as taxes with folded hands. There was no iota of proof to demonstrate that the amounts have liable to be paid in the instant year or in the near future. The conduct of both the parties clearly demonstrates the remission of the amounts. The amounts which were hitherto remained unpaid for more than a decade cannot be treated as an existing liability. Hence, the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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