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TMI Blog2016 (3) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... ount payable by the assessee company to 5 creditors. 3. The Assessing Officer while completing the assessment made addition of Rs. 1,10,40,890/- and Rs. 32,68,454/- for the assessment years 2006-07 and 2008-09 respectively u/s. 41(1) of the Act treating the same as cessation of liability. The AO stated that sundry creditors as on 31.3.2005 which stood at Rs. 2,92,71,073 as against Rs. 2,65,48,762/- as on 31.3.2004 and no details of the sundry creditors were available on record. He was also of the view that debtors as on 1.4.2005 amounted to Rs. 2,12,36,856/- got reduced to Rs. 80,05,080/- as on 31.3.2006 and this shows that the assessee collected its dues from the debtors and at the same time not made any payments to the creditors. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore he came to the conclusion that creditors are not in existence and made addition u/s. 41(1) of the Act. It was the submission of the assessee that complete details were furnished in respect of the creditors by letter dated 5.11.2008 and therefore there is no justification in stating that no details were furnished. The Ld. CIT(A) deleted the addition observing that the assessee has furnished all the details and the AO failed to prove that the liability in respect of the trade creditors ceased to exist. He further held that simply because the assessee has realized amount from debtors and no payment was made to the creditors, it cannot be inferred that creditors are ceased to exist. 7.1. We agree with the findings of the Ld. CIT(A). The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market. It was submitted that the entire business activity was closed down in the earlier financial year and also the Delhi office which the prime place for this market and there was no option left but to dispose of entire stock in one lot. Therefore in this financial year in the month of May, 2007, entire stock was sold at a lumpsum price of Rs. 7.78 lacs only to M/s. Susen, M.G. Road, Bhavnagar. However, the AO rejecting the submissions of the assessee brought to tax at Rs. 1 crore towards decrease on stock. 9. On appeal, the Ld. CIT(A) deleted the disallowance against which the Revenue is in appeal. 10. The Ld. DR vehemently supports the orders of the AO in making disallowance towards decrease in stock. 11. The Ld. Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the disallowance made by AO should be deleted. I have considered the facts of the case. The appellant has claimed reduction in stock on account of damage of stock in the heavy rains and selling of' goods on minimal prices. The fact of loss to appellant on account of heavy rains occurred in Mumbai, in July 2005, and consequently damage of appellant's stock was also subject matter of appeals of earlier years. In A.Y. 2006-07, the appellant's claim of gross loss of Rs. 8.25 crore was disallowed by the AO. In appeal order, the disallowance made by AO was deleted. The Sales Tax Authorities have also considered the effect of heavy rains of 2005, on appellant's business and loss to the appellant in their sales tax assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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