TMI Blog2016 (11) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the debts to creditors are outstanding in his Balance Sheet, that he is liable to pay his creditors, Revenue cannot suo-moto conclude that the creditors have remitted their liability or that the liability has otherwise ceased to exist, without bringing on record any material evidence to the contrary. In the case on hand, the creditors aggregating to ₹ 33,44,827/- continue to be reflected in the assessee’s Balance Sheet as on 31/3/2007. We are of the opinion that the Assessing Officer has not brought on record any material evidence to establish that there was cessation of liability in respect of the outstanding creditors balances represented in the assessee’s Balance Sheet as on 31/3/2007, and concur with the finding of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Expenses : ₹ 27,74,461/- 2.2 Aggrieved by the order of assessment dated 15/12/2010 for assessment year 2008-09, the assessee preferred an appeal before the CIT(Appeals)-31, Mumbai challenging the aforesaid three additions list at para 2.1 of this order(supra). The ld. CIT(Appeals) disposed of the assessee s appeal vide the impugned order dated 31/1/2011 allowing the assessee partial relief. 3.1 The Revenue being aggrieved by the order of the CIT(Appeals)-31, Mumbai dated 31/1/2011 for assessment year 2008-09 has preferred this appeal raising the following grounds:- I The learned.CIT(A) has erred on fact and in law and in the circumstances of the case in deleting the addition of ₹ 33,44,827/- made by A.O as cessat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee is not interested in seriously pursuing this appeal and we, therefore, proceed to dispose off this appeal with the assistance of the Ld. Departmental Representative and the material on record. 3.3 From a perusal of the grounds raised, it appears to us that the only issue for consideration and adjudication before us is with respect to the issue of the deletion by the CIT(Appeals) of the addition of ₹ 33,44,827/- made by the Assessing Officer as cessation of liability invoking the provisions of section41(1) of the Act. In these grounds, apart from assailing the decision of the CIT(Appeals) in ordering deletion of the addition of ₹ 33,44,827/- under section 41(1) of the Act , it has been contended that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e outstanding aggregating to ₹ 33,44,827/- as income of the assessee by invoking the provisions of section 41(1) of the Act as cessation of liability for the reasons that the said creditors are old from last 7-8 years, pertain to the assessee s old place of business i.e. Indore and the same have remained unpaid for many years. 3.4.2 On appeal, before the Ld. CIT(A) the assessee reiterated that the creditors outstanding balances of ₹ 33,44,827/- as reflected in the assessee s balance sheet as on 31/3/2007 were mostly 7-8 years old, pertaining to the period when the assessee was doing business in Indore and were not paid so far due to certain disputes with the creditors. According to the assessee, the aforesaid liability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be sustained since the outstanding balance of the creditors involved appear as acknowledged outstanding creditors in the assessee s Balance Sheet as on 31/3/2007. In the case on hand, as observed by the Ld. CIT(A), we find that the Assessing Officer has failed to cause enquiries to be made with or notices issued to creditors to ascertain from them whether they have remitted the dues from the assessee in their books of account. The fact that the creditors outstanding balances were not written back in the assessee s books of account, but rather stood reflected in the assessee s Balance Sheet as on 31/3/2007 clearly establishes that is no cessation of liability. On the contrary, it is an acknowledgement by the assessee of existing debts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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