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2019 (5) TMI 1835 - AT - Income TaxAddition u/s 69C - unexplained expenditure - HELD THAT:- M/s. Gravity India P Itd. submitted its bank of Baroda Account statement copies for the month of Sept., 2009 highlighting the amount and cheque No. received from M/s. Venus International where the exact amount of payment received was tallied. Thus in this way, the assessee was also given an opportunity by the AO during the remand proceedings by providing the copies of the bank statement of M/s. Gravity India Ltd. The amounts credited into the account of M/s,Gravity India in Sept.09 exactly tally with the amount payable by the assessee. Thus in this way, AO had rightly brought this amount to tax u/s.69C as unexplained expenditure. We are also of the same view that even if for a moment, if it is presumed that the assessee had not made this payment and the amounts are still due to M/s. Gravity India Ltd. But in the present case, when the creditor itself is saying that it has received the payments and there is nothing receivable from the assessee, thus it amounts to cessation of liability. Additions as payable to M/s. R.D. textiles - AO had relied upon the statement of Mr. Harish Chandra Singh, Prop. of M/s. RD. Textiles recorded u/s 131 of the Act, in which he confirmed that no amount is receivable from the assessee. Even the said Harish Singh submitted that he had stopped the business in 2003 and had no knowledge of receiving any amount from the assessee. Thus this is a case where the creditor is stating that he does not remember any such receivable from the assessee which is good for the assessee. In this case, the copy of statement was provided to the assessee with regard to Shri Harish Singh, the proprietor of R. D. Taxtile. It is important to mention here that the matter pertains to purchases made in July, 2003 and the proprietor issued a statement in 2013 stating that he does not remember anything as receivable from the assessee. Even till the end of 2016, which is a good 13 years after the purchases, the party has not taken any steps for recovery. Thus in such circumstances, it was rightly concluded that the party is not interested in pursuing recovery if it all it was due from the assessee, and there is no chance " of any further measures for recovery. The assessee is carrying a fictitious liability, Additions made by AO u/s 41(1) - HELD THAT:- As far as furnishing of communication in the shape of letter are concerned, the same was rightly considered as fabricated as none of the parties personally appeared before the AO and even in the case of sunrise textile, there is no phone no. given on the letter head even though it is a very big party to whom the assessees dues itself is 1,71,26,130/-. Thus it is strange and surprising that somebody would keep quiet without initiating any legal action when the party i.e. the assessee is non-cooperative and defiant. As far as in the case of other parties, admittedly assessee had not made payment to any of them and the letters submitted by the assessee contains the phone numbers of the parties, which are only in 7 digits, which itself shows that no phone numbers are less than 8 digits since many years ago. These 7 digit phone numbers on the letter heads in 2016 itself doubted the genuiness of the letters. We are in agreement with the reasoning given by Ld. CIT(A) while rejecting the claim of the assessee. It is also an undisputed fact that none of the parties have been pursuing for recovery and it is as good as not recoverable. Thus all the parties seem to have given up on recovery. Otherwise there would have been legal suits initiated against the assessee. In the instant case, there is no unilateral write off in the books of accounts. In fact, the assessee has net written off the liabilities but the facts and circumstances showed that there is no possibility of any recovery. Therefore the additions made u/s.41(1) are justified. The assessee had not adduced any material or evidence or even explanation as to why the impugned amounts were not paid in normal course, the same amounted to cessation or remission of liability u/s. 41(1) - Decided against assessee.
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