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2022 (6) TMI 842 - AT - Income TaxAddition u/s 68 - unexplained cash credit - onus to prove - AO concluded that the creditworthiness and genuineness of the transactions had not been proved - summons u/s 131 could not be served because of sundry creditors were not traceable by the Jurisdictional Assessing Officer at the given address by the assessee goes to prove that the identity of the sundry creditors was bogus - As submitted by assessee Mere fact that the notices u/s 133(6) and summons u/s 131 could not be served, it does not lead to conclusion that the sundry creditors are bogus especially in the light of fact that the loans were repaid through banking channel along with interest after deduction of tax deducted at source in the subsequent assessment years - HELD THAT:- Indisputably, the assessee had discharged the onus lying upon him by filing all the necessary details and particulars such as PAN Numbers, copies of returns of income, bank statements etc. The mere fact that the sundry creditors had failed to respond to the notices issued u/s 131 could not justify any adverse inference being drawn against the assessee in the light of the judgement of the Hon’ble Supreme Court in the case of CIT vs. Orissa Corpn, (P.) Ltd [1986 (3) TMI 3 - SUPREME COURT] The same ratio was followed by the Hon’ble Delhi High Court in the case of CIT vs. Divine Leasing & Finance Ltd. [2006 (11) TMI 121 - DELHI HIGH COURT] In the present case, though the Department is in possession all full particulars of loan creditors, such as bank passbook, etc, nothing more than mere issue notice u/s 131 of the Act was done by the Assessing Officer. There was no effort made to pursue the creditors. Even the Assessing Officer granted unreasonably short time to produce the sundry creditors before the Assessing Officer. Considering these circumstances, we are of the considered opinion that the Assessing Officer had not discharged the onus of burden of proving that had shifted to it that the sundry creditors are bogus and credits represent the income of the assessee. Therefore, the Assessing Officer as well as the ld. CIT(A) had failed to appreciate the facts and law in proper perspective. Accordingly, we set aside the orders of the lower authorities and direct the Assessing Officer to delete the addition - Decided in favour of assessee. Addition u/s 41(1) - AO made addition disbelieving the genuineness of the credit and brought the tax u/s 41(1) - CIT(A) considering the fact that the sundry creditors are not written off in the books of accounts held that the question of invoking provisions of section 41(1) does not arise - HELD THAT:- It is settled position of law that merely because the credit was outstanding for long time does not lead to conclusion that the sundry creditors are not payable. We find from the material on record that there is a material on record in the form of credit notes issued by the appellant as to how the amount became payable to these parties. This evidence was not reverted by the Department. The submission made by the assessee that these amounts were paid in the subsequent year through banking channel remained uncontroverted. The burden lies upon the Department to establish the cessation of liability before invoking the provisions of section 41(1) of the Act. Apparently, this burden was not discharged by the Revenue, inasmuch as, the amounts of sundry creditors were paid in the subsequent year then there is no scope to invoke the provisions of section 41(1) by the Assessing Officer. Thus, we do not find any illegality and perversity in the order of the ld. CIT(A) to delete the addition made u/s 41(1) of the Act. Thus, we do not find any merits in the ground of appeal no.3 filed by the Revenue dismissed.
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