TMI Blog2013 (12) TMI 1526X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is upheld. - ITA No. 7012/M/2010 - - - Dated:- 11-12-2013 - D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER For the Appellant: Shri Yogesh A. Thar For the Respondent: Shri Pitambar Das ORDER Per Sanjay Garg, Judicial Member: The present appeal has been filed by the Revenue against the order of the CIT(A) dated 16.07.10 relevant to assessment year 2007-08. The Revenue has taken following grounds of appeal: (i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the addition u/s. 41(1) of ₹ 86,25,651/- without appreciating the fact that the assessee failed to prove the genuineness of the liability. (ii) On the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 91,25,901/-. There was a dispute between the partners of the firm regarding payment of outstanding liability and as the dispute was not settled, hence the labour charges were not paid. However, the AO did not accept the contention of the assessee and observed that liability of labour charges outstanding for more than three years was something abnormal as generally the labour charges do not remain outstanding for such a long period. He further observed that despite being asked for, the assessee had not filed the addresses and labour bills of such labourers. The assessee had failed to prove the genuineness of such liability and the same had ceased to exist. He therefore Shri Shailesh D. Shah added the same into the income of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnology (P) Ltd. 210 Taxman 173 (Del), wherein it has been held that in the case of an employer, omission to pay the dues/liability to employee over a period of time and the resultant benefit derived by the employer/assessee would qualify as a cessation of liability, Shri Shailesh D. Shah albeit by operation of law and that a debtor or an employer, holding on to unpaid dues, should not be given the benefit of his showing the amount as a liability, even though he would be entitled in law to say that a claim for its recovery is time barred, and continue to enjoy the same. The relevant para of the above said judgment of the Hon'ble Delhi High court is reproduced as under: 9. Two aspects are to be noticed in this context. The first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , over a period of time, and the resultant benefit derived by the employer/assessee would therefore qualify as a cessation of liability, albeit by operation of law. 7. On the other hand the ld. A.R. of the assessee has submitted before us that the assessee had not written off the accounts of the sundry creditors into profit and loss account. The liability had regularly been shown in the balance sheet. The assessee's liability to the creditors thus subsisted and had not ceased even. The limitation act bars the remedy to recover through legal course of action but does not extinguish the debt. He has pressed that the amount is not thus assessable u/s. 41(1) of the Income Tax Act. He has strongly relied upon Shri Shailesh D. Shah the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of such persons. Even, as per the case of the assessee, the liability had been taken over by the assessee from the previous partnership firm. When no identity of alleged labourers is available with the assessee, then the possibility of subsequent payment of such amount to the alleged labourers does not arise at all. Even we have specifically asked the ld. A.R. that as to whether the Shri Shailesh D. Shah alleged labour charges have been paid now, to that the ld. A.R. showed his ignorance. However, subsequently a paper book was filed by the ld. A.R. which has been taken on record and the opportunity of hearing on the said documents has also been given to the ld. DR also. After going through the newly filed documents, it reveals that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that he had given a comprehensive power of attorney to his earlier partner and the said partner has not provided any accounts to him is of no help to the assessee. It is a matter between the assessee and his power of attorney and the assessee can Shri Shailesh D. Shah not escape from the burden to prove that the said liability has not ceased to exist. Even the nature of the liability i.e. labour charges outstanding for so many years themselves prove that neither there is any identity of any labourer nor there seems any probability of the assessee to pay any such amount to any such person at this stage. The assessee has just continued the entry of the same in his books of account without any intention to pay back the same. Even as obs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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