TMI Blog2016 (12) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ing liability on account of aviation fuel and therefore no likelihood of any amount being paid on this account in the future and further that this amount of ₹ 99 lakhs claimed by the assessee is a bogus liability. The fact that the assessee has in its submissions before the learned CIT(A) (supra) stated that it has written back and offered to tax the so called outstanding liabilities of ₹ 99 lakhs in A.Y. 2012-13, evidences that the assessee itself admits that the liability in question is not genuine and was put forth only after the detection of these bogus outstanding liabilities of ₹ 99 lakhs by the AO. Thus when the existence of the stated outstanding liability on account of aviation fuel is found to be bogus, we are of the considered view that the addition is to be upheld on account of the said bogus liability of ₹ 99 lakhs remaining unproved.- Decided against assessee - ITA No. 7506/Mum/2014 - - - Dated:- 25-11-2016 - Shri Jason P. Boaz, Accountant Member And Shri Sandeep Gosain , Judicial Member Appellant by : Shri K. Gopal Respondent by : Ms. Pooja Swaroop ORDER Per Jason P. Boaz, A. M. This appeal by the assessee is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant at ₹ 1,73,63,470/- by disallowing the outstanding liability of ₹ 99,00,000/- invoking the provisions of section 41(1) of the Act. The Appellant being aggrieved by the above preferred the present appeal before your Honours. The Appellant craves leave of your Honours to deal with this issue paragraph wise as under: 6. Disallowance made under section 41(1) of the Act is unjustified ₹ 99,00,000/- i. The Ld. A.O. has discussed this issue in paragraph 5 - 5.5 at pages 2 - 5 of the assessment order. In the paragraph 5.1 of the assessment order the Ld. A.O. has observation with respect to the outstanding liability amounting to ₹ 99,00,000/- from the Assessment Year 2002-03 and the same are being carried on as outstanding liabilities from year to year. The Ld. A.O. has further mentioned about the query raised to the Appellant to furnish the relevant details. The Appellant submits that the statement made by the Ld. A.O. in this paragraph is factually correct. Hence, the Appellant does not want to make comment on the same as of now. However, no adverse inference can be drawn against the Appellant, relying on the contents of this paragraph of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving any notice and without proper handing over of work. It was only during the F.Y. 2011-12 the Appellant came to know that out of outstanding liability of ₹ 99,00,000/-, an amount of ₹ 91,00,000/- pertains to aviation fuel charges. The Appellant, therefore, in the F.Y. 2011-12 pertaining to A. Y. 2012- 13 passed the necessary entries and also offered the same to tax. Hence, treating the entire amount of ₹ 99,00,000/- as ceased liability under section 41(1) of the Act is unjustified and the same may be deleted. c. With respect to the contents of sub-paragraph (iii) of paragraph 5.3 of the assessment order, the Appellant submits that subsequent to the passing of the assessment order, the Appellant has filed its return of income for A.Y. 2012-13 and offered the entire amount of ₹ 99,00,000/- to tax Please see page no. 49 of the Paper Book. Hence, treating the amount of ₹ 99,00,000/- as ceased liability of the impugned assessment year under section 41(1) of the Act is without any basis and the same may be deleted. d. With respect to the contents of sub-paragraph (iv) of paragraph 5.3 of the assessment order, the Appellant submits that it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Hon'ble High Court has deleted the addition made by invoking the provisions of section 41(1) of the Act by observing that where assessee in return of income for assessment year 2007-08 had shown certain amount by way of his debts and Assessing Officer applying provisions of section 41(1) added back said amount in income of assessee as deemed income, since there was nothing on record to suggest that there was remission or cessation of liability that too during assessment year 2007-08, above amount could not be added back in income of assessee. 2.2.2 Before us, the learned A.R. of the assessee, when queried, admitted that the assessee s submission before the authorities below that these outstanding creditors balances of ₹ 99 lakhs were written back and offered for tax in its return of income for A.Y. 2012-13 (supra) was not correct. It was also contended that the creditors were pursuing their outstanding amounts but, on being queried, admitted that no legal proceedings were initiated by creditors for recovery, nor was any correspondence in this regard filed. The learned A.R., however, contends that since the said figure of outstanding liabilities for aviation fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was offered to tax in A.Y. 2012-13. The explanations put forth did not find favour with the AO. Observing, inter alia, that the assessee s return of income for A.Y. 2012-13 though due, was not filed, the AO also noted that even though ample opportunities were offered to the assessee, no details of who constituted the parties pertaining to the outstanding liabilities, their details and their confirmation of these transactions, credit worthiness, etc. was produced by the assessee and even the ledger accounts were incomplete, and proceeded to hold that as the assessee actually did not establish that it owed any money to anybody on this account, brought the same to tax in the assessee s hands under section 41(1) of the Act. 2.4.2 On appeal, the assessee while submitting that the outstanding liabilities of ₹ 91 lakhs were on account of aviation fuel, stated that it was not able to reconcile the balance of ₹ 8 lakhs. According to the assessee, these outstanding liabilities pertained to earlier years and the entire amount of ₹ 99 lakhs were written back and offered to tax in A.Y. 2012-13 and therefore since the AO s invoking of section 41(1) in this year is not just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r taxation in the A.Y. 2012-13, was found to be factually incorrect by the AO and this fact was admitted to be so by the learned A.R. in proceedings before us, i.e. that these amounts were not written back/offered to tax in the assessee s return of income for A.Y. 2012-13. In this factual matrix of the case, we agree with the learned CIT(A) that it can be concluded that there is no genuine outstanding liability on account of aviation fuel and therefore no likelihood of any amount being paid on this account in the future and further that this amount of ₹ 99 lakhs claimed by the assessee is a bogus liability. The fact that the assessee has in its submissions before the learned CIT(A) (supra) stated that it has written back and offered to tax the so called outstanding liabilities of ₹ 99 lakhs in A.Y. 2012-13, evidences that the assessee itself admits that the liability in question is not genuine and was put forth only after the detection of these bogus outstanding liabilities of ₹ 99 lakhs by the AO. In these peculiar facts and circumstances of the case, when the existence of the stated outstanding liability on account of aviation fuel is found to be bogus, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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