9911796707
TMI Blog2016 (11) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 22/02/2006 and the total income was determined at Rs. 3,77,40,185/-. Aggrieved by the order of Assessing Officer (AO), assessee carried the matter before ld.CIT(A) who vide order dated 28/07/2006 granted partial relief to the assessee. Thereafter, Revenue as well as Assessee preferred appeals before the Tribunal. The Hon'ble Tribunal vide order dated 22/05/2009 in ITA Nos.1973 & 2203/Ahd/2006 set aside the matter to AO to decide the issue afresh as per directions contained therein. Pursuant to the directions of the Hon'ble Tribunal, AO vide order dated 04/11/2010 passed u/s.143(3) r.w.s.254 of the Act determined the total income at Rs. 2,04,64,410/-. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A) who vide order dated 22/03/2012 (in Appeal No.CIT(A)- XI/228/DCIT.Cir-5/10-11) granted substantial relief to the assessee. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal before us and has raised the following ground:- i) The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,78,56,000/- made by the Assessing Officer u/s.68 of the I.T.Act. 2.3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various evidences filed by the appellant during the assessment proceedings and the case laws relied upon by the appellant. The appellant has specifically submitted that the following documents were submitted during the assessment proceedings to explain the source of advances received by the appellant company. (c) Copy of ledger account of share application money and break-up of unsecured loans. (d) Copy of account of the party duly confirmed along with name and address and PAN, name of the bank and cheque no. (c) Return of income of L T. Khusahalani and Meenaxidevi L Khusahalani for A. Y.2003-04. The income of Minor Rohit and Minor Paras have been duly clubbed in the return of their father Shri L. T. Khusahalani. (d) Balance Sheet and Capital A/c. showing source of money given to the appellant company in case of all 4 parties. (e) Certificate of foreign inward remittance in support of gift received from relative which is the main source of loan given to the company. (h) Copy of bank pass book / statement wherein the amount of gift has been credited and out of which the loan has been given to the appellant company. (i) Copy of bank books of all the banks of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the appellant company. 3.7 In view of above facts, addition of Rs. 1,78,56,000/- made by the A.O. u/s.68 of the I.T.Act is deleted. This ground of appeal is allowed." 3. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal before us. 3.1. Before us, ld.Sr.DR supported the order of AO. Ld.AR, on the other hand, reiterated the submissions made before AO and ld.CIT(A) and supported the order of ld.CIT(A). Ld.AR also submitted that assessee has proceeded on the basis of surmises. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to the addition u/s.68 of the Act in respect of share application money and loan received by the assessee from the Director and his family members. We find that the ld.CIT(A) while deleting the addition has noted that the persons who have advanced the amount to the assessee are assessed to tax and their PANs were furnished to the AO during the assessment proceedings, the advances have been received through banking channels, copy of the income tax returns of the Director were also furnished along with copy of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the AO the assessee should have offered the amount as income because according to him the creditor could not have enforced the payment qua the assessee. He accordingly, by invoking the provision of section 41(1) of the Act, treated the amount of Rs. 1,89,11,800/- as cessation of trading liability and added to the income. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A) who after considering the submissions, of the assessee deleted the addition by holding as under:- "3. 2 I have carefully considered the rival submissions. 1 have also perused various case laws relied upon by the appellant. I have also gone through the evidences furnished by the appellant during the assessment proceedings and during the appellate proceedings. It is seen that additions made u/s.41 (1) is disputed. In view of this, it will be pertinent to discuss the provisions of Sec.41(1) of the l.T.Act. In my considered, view the provisions of Sec.41(1) can be invoked, if the following conditions pre fulfilled:- (i) In the assessment of an assessee, an allowance or deduction has been made in respect of arty loss, expenditure or trading liabilities incurred by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing a deduction in respect of the impugned amount of Rs. 1,89,11,860/- in the earlier years. This way the first condition of Sec.41 (1) as mentioned above is not fulfilled. In this regard, it will also be pertinent to mention that the onus was on the A.O. to prove that deduction has been allowed in the earlier years. The A.O. has miserably failed to discharge his onus in this regard. Secondly, there is no evidence on record to indicate that the appellant has derived any benefit in respect of this liability. This way the second condition of Sec.41(1) is not fulfilled. Since the basic conditions as laid down in Sec.41(1) are not fulfilled, accordingly, I am of the considered view that the A.O. cannot invoke provisions of Sec.41(1). It is also a matter of fact that advance of Rs. 1,89,11,800/- was outstanding as on 31/3/2008 i.e. at the end of current assessment year. This way there is no question of any remission or cessation of this liability. I have also perused various case laws relied upon by the appellant and the ratio of these case laws fully covers the facts of the appellant and as per the ratios of these case laws also provision of sec.41 (1) cannot be invoked. In view of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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