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2023 (2) TMI 1222 - AT - Income TaxAddition u/s 41(1) - cessation of liability with respect to outstanding balance of one creditor in the books of the assessee - addition made of outstanding balance of the said party, PSM, in the preceding yea finding it to be bogus - HELD THAT:- In the impugned order before us this sundry credit balance has again not been found to be genuine for the very same reason that the said party has not entered any transaction with the assessee, and there was no transaction reflected in the bank account of the said party with the assessee. When this adverse material relating to the PSM was found to be of no relevance to its transaction undertaken with the assessee in Asst.Year 2012-13 which was examined by the AO and found to be genuine, we fail to understand how on the basis of this very same adverse material, the outstanding balance pertaining to the said transaction can now be stated to be ingenuine. Since the AO in the preceding year, had after conducting inquiry found that these adverse materials did not lead to the conclusion that the transactions of the assessee with the said party was ingenuine, the same adverse material cannot now form the basis of holding the outstanding balance pertaining to the said party in relation to very same transaction to be ingenuine.. For this reason alone, we hold that the ld.CIT(A) has rightly deleted the addition made by the AO amounting to Rs. 8,21,50,309/- by invoking section 41(1) of the Act. No infirmity in the order of the ld.CIT(A) deleting the addition made under section 41(1) - Decided in favour of assessee. Addition u/s 69 - outstanding credit balance of parties relating to preceding years - HELD THAT:- Revenue was unable to controvert the factual findings of the ld.CIT(A) that the majority addition deleted pertained to outstanding credit balance of parties relating to preceding years. The proposition of law that no addition could be made u/s 68 of the Act on account of opening credit balances of parties, also remained uncontroverted before us. In view of the same, we see no reason to interfere in the order of the ld.CIT(A) deleting the addition made of opening credit balance of parties. As for the deletion of the balance outstanding the factual finding of the Ld.CIT(A) that the same pertains to purchases made during the year from the said party, Bharat Bhai Rajgor, which purchases genuineness has not been doubted by the AO, has also remained uncontroverted before us. So also his findings with respect to outstanding balance which was found to pertain to opening balance. We see no infirmity in the order of the Ld.CIT(A) deleting the aforestated two outstanding balances also in the light of the facts as noted by us. CIT(A) has upheld the addition with respect to three parties outstanding balances amounting in all to Rs. 18 lacs. There can be no grievance of the Revenue with respect to the same.
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