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2015 (4) TMI 1018 - AT - Income TaxAddition u/s 68 - taxability under section 41(1) of the Act in a case where long outstanding sundry creditors were treated as taxable - Held that:- CIT(A) had dealt with the issue threadbare. The appellant has chosen not to file the confirmation letters in respect of all the creditors before the Assessing Officer. It was only during the course of proceedings before the learned CIT(A), the appellant has filed two confirmation letters in respect of M/s R&A Techniques and M/s Millennium Marketing for credit balance of ₹ 6,76,000/- and ₹ 7,79,101/- respectively and had not filed any confirmation in respect of M/s Ganesh Enterprises and M/s Goyal Fasterners for credit balance of ₹ 3,70,588/- and ₹ 1,35,347/- respectively. The appellant filed these two confirmation letters before CIT(A) as additional evidence along with the application under Rule 46A of the Income Tax Rules, 1962. Apparently, after admitting this additional evidence, the learned CIT(A) has called for remand report from the Assessing Officer, who in turn, examined Mr. Rajesh Raheja Prop. of R&A Techniques and Mr. Anubhav Raheja Prop. of Millennium Marketing on oath. They stated on oath that there were no money payable to M/s Perfect Paradise Emporium Ltd. i.e. the appellant and they further stated that they never signed any confirmation letters. The remand report of the Assessing Officer was furnished to the Authorized Representative of the appellant by the learned CIT(A). This amounts to affording an opportunity to rebut the remand report. While responding to the remand report, it is noticed that the appellant had not asked for the opportunity to cross examine those two parties except stating that the amounts were written off unilaterally by those two concerns. This, in our considered opinion, is not acceptable, inasmuch as, it is for those concerns to explain that the outstanding amounts have been written off in the earlier year itself. Pleading at this stage that the CIT(A) has not given opportunity to cross examine those parties is not tenable in the eyes of law since no party can take the advantage of its own mistakes. Therefore, the depositions made by those two creditors have become final and the depositions remain uncontroverted. This clinches the issue that sundry creditors can be held to be fictitious and no longer payable by the appellant. Therefore, in our considered opinion, the CIT(A) is justified in holding that the sundry creditors are factious. The amount in question cannot be brought to tax in the year under appeal under the provisions of Section 41(1) of the Act. It is trite law that an addition under Section 68 can be made only in the year in which credit was made to the account of the creditors in the books of account maintained. Admittedly, in this case the credit to the account of creditors was made in the earlier years and therefore, the amount even cannot be brought to tax under Section 68 in the year under appeal. However, it is open to the Department to levy tax on such amount by resorting to the remedies available under the provisions of Act by duly following the procedure known to the law. - Decided in favour of assessee.
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