TMI Blog2014 (3) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... mount has been paid in A.Y. 09-10 – thus, the AO is directed to verify whether the creditors have been paid or not – Decided in favour of Assessee. - ITA No. 3376/Ahd/2010 - - - Dated:- 26-2-2014 - Shri G. C. Gupta And Shri T. R. Meena,JJ. For the Appellant : Shri M. K. Patel, A. R. For the Respondent : Shri P. L. Kureel, Sr. D. R. ORDER Per : Shri T. R. Meena, Accountant Member This appeal is filed by the assessee against the order of the CIT(A)-II, Surat, order dated 01.10.2010 for A.Y. 2007-08. The effective grounds of appeal are as under: 1. The assessee has Written-off unpaid creditors of A.Y. 2003-04 worth Rs.1,37,80,024=00 in A.Y. 2009-10 which shown in Audit Report of C.A. Krishna Desai Associa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was mentioned by it that no transactions were made with the assessee in the year 06-07, 07-08 08-09 and no outstanding balance had been shown against the assessee for these years. The ld. A.O. gave reasonable opportunity of being heard on this issue, which was afforded by the assessee vide letter dated 25.11.2009. After considering the assessee s reply, the A.O. observed as under: * Despite giving several opportunities the assessee filed to provide the details of these creditors. Even the basic details such as copies of their ledger accounts, details in the requested format were not provided by the assessee. * Despite giving opportunity, the assessee failed again and again to submit any confirmation from these creditors in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where about of these creditors i.e. M/s S.A. Co. and M/s Blue Sky Synthetics are also not known to their lawyer which lead this office to conduct further verification in this regard. Therefore creditors M/s S.A, Co. and M/s Blue Sky Synthetics are proved to be not in existence alongwith other creditors. * Further the assessee was also very specifically asked whether any reply was given to parties from whom the legal notice was received or any civil case was sued against him from the parties. M/s S.A. Co. and M/s Blue Sky Synthetics, during the hearing on 25.11.2009 the assessee and his AR replied that no reply was given neither any case was filed against him from these parties in any court of law. It shows that the liability does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t performed in the period under consideration. The provisions of section 41(1) of the Act are applicable even if the business is not existence. b. As the assessee itself is not in possession of the details /present whereabouts of the creditors are in question, it can be very well inferred that there is no need for the assessee to repay back these sums to these non-existing creditors. Under such circumstances, it is also not clear as to how the assessee will repay back the sums to various creditors, even if he wishes to do so. c. By this it can be safely inferred that all these creditors are simply exist on paper: Thus, he made addition of Rs.1,37,80,024/- on account of liability is not in existence. 3. Being aggrieved by the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect address. In this situation, obtaining confirmation of account from the outstanding 7 creditors cannot be said to be a difficult task for the appellant I. therefore hold that the appellant has not established the existence of the liability towards unpaid creditors for purchase to the extent of Rs.1,37,80,024 and confirm the addition made by the assessing officer. The grounds of appeal taken by the appellant are dismissed. 4. Now the assessee is before us. Ld. A.R. for the assessee argued that the assessee had paid these liabilities in A.Y. 09-10 and also assessee had not written off the liability in books accounts. Therefore, it is not covered u/s. 41(1) of the IT Act. He further relied upon the decision of Hon ble Gujarat High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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