TMI Blog2012 (7) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... as not proper as the bills issued by the parties related to period prior to 31.3.2001 whereas the AO had asked those parties about the transactions carried out in FY 2005-06 to FY 2007-08. The existence of these 5 parties was therefore not in doubt - CIT (A) deleted the addition - no infirmity in the order of CIT(A) and therefore no interference is called for in his order - I.T.A. No.1223 /AHD/2011, I.T.A. No.1621 /AHD/2011 - - - Dated:- 25-5-2012 - SHRI G.C.GUPTA, SHRI ANIL CHATURVEDI, JJ. Appellant by : Shri N.C.Amin Respondent by : Shri Samir Tekriwal, Sr. D.R. ORDER PER: SHRI ANIL CHATURVEDI, A.M. These are two cross appeals one filed by the assessee and the other filed by the Revenue against common the order of Ld. CIT(A) dated 4-4- 2011 for the assessment year 2008-09. The assessee has also filed cross objection against the appeal filed by the Revenue. 2. The grounds of appeal raised by the assessee are as under:- ITA No.1223/AHD/2011. 1. That the Ld. CIT(A) has erred both in law and on the facts of the case in agreeing with the Ld. A.O. for application of Section 41(1) of the I. T. Act. 2. That the Ld. CIT(A) has further erred on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to Rs.3,73,032/- and Rs.52/- respectively is not legal as the appellant has not committed default of Section 207 to 219 of the I. T. Act 1961 and hence unwanted interest charged under various sections be deleted. 12. Your appellant craves leave to add, alter or amend any of the grounds till the appeal is finally heard and decided. 3. Grounds of appeal raised by the Revenue are as under:- 1 The Ld. C.I.T. (A)-XX, Ahmedabad has erred in law and on facts in deleting the addition of Rs.15,64,054/- made by the Assessing Officer u/s.41(1) as cessation of liability. 2. On the facts and in the circumstances of the case, the Ld. CIT (A)-XX, Ahmedabad ought to have upheld the order of the A.O. 3. It is therefore, prayed that the order of the Ld. CIT(A)-XX, Ahmedabad may be set aside and that of the A.O. be restored. 4. Cross Objections raised by assessee are as under:- C.O.NO.162/AHD/2011. 1. The Ld. CIT (A)-XX has erred both in law and on the facts of the case in retaining an addition of Rs.20,94,308/- out of total amount of Rs.36,58,362/- made by Ld. A.O. u/s. 41(1) of the I. T. Act,1961. 2. That the conditions of section 41(1) is absent and on unwanted fact, ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for Financial years 2005-06 to 2007-08 and as such no amount is due to them from the Assessee. The AO thus held that the outstanding liability of Rs 36,58,362/- shown in the name of 21 creditors does not exist and are not required to be paid. He held that the liability has ceased to exist and accordingly taxed it u/s 41(1) of the Income Tax Act. 8. Aggrieved by the order of AO, the assessee carried the matter in appeal before the CIT (A). CIT (A) after considering the submissions of the A.R. gave partial relief to the assessee by observing as under :- 4.3. (ii) A perusal of the above makes it clear that the liabilities as shown by the appellant in respect of 12 parties in respect of whom no details have been furnished are not existent and have ceased. If the appellant does not have any contact with the party of the agent through whom the purchases were made then how is it possible to repay these parties. In 12 cases the appellant does not even have their addresses. These parties also cannot enforce collection due to the limitation of 3 years. The A.R. of the appellant was also not able to explain how the appellant could ever repay these parties because he neither knew their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant to pay this party had ceased. In view of the above the A.O. was not justified in holding that the liability of the appellant had ceased in respect of the 5 parties from whom replies were received and in respect of one party in whose no enquiry was conducted. The addition made by the A.O. u/s. 41(1) of the I. T. Act in respect of these five parties is hence deleted. The appellant gets a relief of Rs.15,64,054/-. 9. The Assessee as well as Revenue are thus aggrieved by the order of CIT (A). The Assessee is aggrieved on account of confirmation of addition of Rs 20,94,308/- whereas the Revenue is aggrieved on account of deletion of addition of Rs 15,64,054/-. Hence both are now in appeal before us. 10. Before us the Ld. A.R. reiterated the submissions made before the lower authorities. He further submitted that the assessee had made purchases from the parties in earlier years. The assessee is not in a position to furnish the documents like bills, vouchers of those period as according to it the documents have been damaged on account of heavy rains. It was further submitted that the liability of creditors is genuine, the books of accounts of preceding years were audited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases from the parties have been made through agents but however the assessee was not in a position to furnish the details of the agents through whom the purchases have been made or substantiate its submission. The list of creditors includes 21 parties where the credit balances have remained unchanged. The assessee did not furnish any details with respect to 12 parties. It did not have the addresses of these 12 parties. It furnished the copies of the bills to AO only in respect of 9 parties. AO in turn issued letters u/s 133(6) to 9 parties. Out of the 9 parties to whom the letters were issued, letters were return undelivered in case of 3 parties with the remarks not known . The assessee was not in a position to give the current addresses of the 3 parties. In respect of 5 parties to whom the letters were issued, replies were received from them. In connection with these parties the CIT(A) has given a finding that the enquiry made by the AO was not proper as the bills issued by the parties related to period prior to 31.3.2001 whereas the AO had asked those parties about the transactions carried out in FY 2005-06 to FY 2007-08. The existence of these 5 parties was therefore not in dou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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