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TMI Blog2015 (7) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... lding the addition made by the Assessing Officer of Rs. 31,82,258/- u/s. 41(1) of the Act. 4. The brief facts of the case are that the Assessing Officer observed that the assessee has shown sundry creditors for Rs. 31,82,258/- in the balance sheet. The Assessing Officer required the assessee to file confirmation and ID proof of the creditors. The assessee could not produce the same. Therefore, the Assessing Officer issued letter u/s. 133(6) of the I.T. Act to the creditors shown by the assessee to verify the genuineness of the assessee's claim at the addresses given by the assessee. However, except in one case of Aman Road Lines, all other letters were returned back unserved by the postal authorities. Therefore, the Assessing Officer held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors for Rs. 31,82,258/-. In order to verify the same, the Assessing Officer issued letters u/s. 133(6) of the Act. But except in the case of Aman Road Lines, all other letters were returned back by the postal authorities. The Assessing Officer observed that the assessee has not filed confirmation and ID proofs or PAN of the creditors and therefore, by invoking the provisions of section 41(1) of the Act, he made addition of Rs. 31,82,258/- to the income of the assessee on account of cessation or remission of liability which was confirmed in appeal by the Commissioner of Income Tax (Appeals). 9. We find from the order of the Commissioner of Income Tax (Appeals) that the creditors in question were old creditors and they were also appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tands perhaps holds that there was no cessation or remission of liability and that therefore, the amount in question cannot be added back as a deemed income under section 4 (c) of the Act. This is one of the strange cases where even if the debt itself is found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act there is no cure for it." We find that the above quoted decision of the Hon'ble High Court squarely applies to the facts of the assessee's case. Therefore, respectfully following the same, we set aside the orders of lower authorities and delete the addition of Rs. 31,82,258/- made u/s. 41(1) of the Act on account of cessation or remission of liability. Thus, this ground of appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Bhogilal Ramjibhai Atara (supra). 15. On the other hand, the Departmental Representative supported the order of the lower authorities. 16. We have heard the rival submissions and perused the orders of lower authorities and material available on record. In the instant case, the Assessing Officer found from the balance sheet of the assessee that the assessee has shown unpaid expenses aggregating to Rs. 13,51,347/-. The assessee could not produce evidences in support of the expenses and therefore, the Assessing Officer treated the amount of Rs. 13,51,347/- as bogus expenses claimed by the assessee and added the same to the income of the assessee which was confirmed in appeal by the Commissioner of Income Tax (Appeals). The Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard the rival submissions and perused the orders of lower authorities and material available on record. In the instant case, the Assessing Officer observed that the assessee has shown loan of Rs. 4,64,592/- from six parties as under: Sr.No. From whom loan taken Amount in Rs. 1 Aman Road Lines 2,75,392/- 2 Bhupendrasingh Delalsingh Bhaktana 38,300/- 3 Jitendrasingh Delalsingh Bhaktana 38,700/- 4 Laxmanbhai A Gadegi 38,000/- 5 Mehboobbhai Malak 36,700/- 6 Rajubhai Soni 37,500/- Total 4,64,592/- He observed from the ledger account furnished by the assessee that the loans were received in cash. Subsequently, the assessee furnished ledger account which shows that the loans were received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it entry of the year under consideration. The Departmental Representative has also not controverted the submission of the assessee that out of the unsecured loans as at 31st March, 2007 of Rs. 4,64,592/-, Rs. 3,82,228/- was the opening brought forward balance. In respect of balance Rs. 95,000/-, no specific submission was made before us which represents the fresh credit by the assessee in the books of account of the year under consideration. Therefore, we delete the addition to the extent of Rs. 3,82,228/- being balance brought forward from earlier years and confirm addition of Rs. 95,000/- being unsubstantiated credit of the year under consideration. Thus, this ground of appeal of the assessee is partly allowed. 19. In the result, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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