TMI Blog2016 (2) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition - Held that:- Assessing Officer was of the view that assessee should have shown 62,272/- shares of Spectra Industries as closing stock while assessee had been showing 61772 shares i.e. 4791 as per demat account 5698 in the pool holding account. The details of closing stock furnished revealed that assessee had shown 62272 shares of Spectra Industries and not 71772 shares as stated by Assessing Officer based on demat account. The stand of assessee shortage of 500 shares in demat and pool holding as on account of transaction of purchase of 7500 shares of Spectra Industries on 29-03-2007 out of which there was short delivery of 500 shares at the year and or found plausible by CIT since it is as per system of stock exchanges pay in and pay out, delivery of shares normally comes after 3 days and in case there is short delivery from stock then exchange proceedings to auction shares and only after 7-8 days thereof brokers are able to confirm whether delivery of shares had come or not or whether they got close out opportunities of the shares. Sell delivery then it will show short to the extent in the pool account until brokers get confirmed from exchange. In closing, as per books an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer in the year the outstanding amount to them was ₹ 81,60,350/- in respect of which assessee failed to file confirmation and also failed to furnish address in several cases. Assessing Officer stated that transaction with these creditors have taken place in A.Y. 1996-97 and from the date of transaction till date not a single rupee has been paid in spite of lapses of 12 to 13 years. According to Assessing Officer, assessee could neither bring any confirmation from creditor nor could it produce supporting evidence to prove that liability still exists. Ultimately, Assessing Officer concluded that all liability towards creditors totaling to ₹ 81,60,350/- was no more paid by assessee and are ceased liability as covered by section 41(1) of the Act. Matter was carried before First Appellate Authority wherein various contentions were raised on behalf of the asessee and having considered the same CIT(A) deleted addition that of disallowances of cessation of liability made by Assessing Officer u/s. 41(1) of the Act amounting to ₹ 81,60,350/-. The same has been opposed on behalf of the revenue interalia submitting that CIT(A) was not justified in deleting the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or profession and accordingly chargeable to income-tax as the income of that previous year. [ Explanation 1 - For the purposes of this subsection, the expression loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof shall include the remission or cessation, of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts,] [Explanation 2 - For the purpose of this sub-section, successor in business means, - (v) Where there has been an amalgamation of a company with another company, the amalgamated company; (vi) Where the first mentioned person is succeeded by any other person in that business or profession , the other person; (vii) Where a firm carrying on a business or profession is succeeded by another firm, the other firm:] (viii) Where there has been a demerger, the resulting company.] That from the perusal of the above Section, in order to apply and invoke the provisions of section 41(1) of the Act, the following points are to be kept in mind; (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year relevant to the assessment year under consideration. Even in case before us both elements are missing there is nothing on record to suggest that there was remission or cessation of liability that too previous year relevant to the assessment year under consideration. In view of above, order of CIT(A) is upheld whereby he has deleted the addition of disallowance of cessation of liability made by AO u/s. 41(1) of the Act amounting to ₹ 81,60,350/-. 3. Next issue is with regard to addition of ₹ 14,727/- on account of alleged unaccounted sale. 4. The said addition was made in two parts; (a) unaccounted sale of shares 14,490/- and (b) unaccounted purchase of ₹ 237/-. Assessing Officer stated that on verification of transaction of various share trading account it was noticed that assessee had purchased 1,21,483 shares of Spectra and had sold 59211 shares which implies that assessee should have shown a balance of 62272 shares as closing stock. After taking into consideration the total holding in demat account of 4791 and pool account holding of 56981 shares, it was concluded that assessee has been showing a balance of only 61772 shares and in absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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