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Commissioner of Income-tax, Ahmedabad –III Versus Puridevi Mahendrakumar Chaudhary

2013 (11) TMI 1674 - GUJARAT HIGH COURT

Addition u/s 41 - Held that:- Addition was made solely on the basis that said liability is more than three years, it cannot be said that the learned ITAT has committed any error in deleting the addition of ₹ 51,37,327/- made under Section 41(1) of the Act. We see no reason to interfere with the impugned judgment and order passed by the learned Tribunal - TAX APPEAL NO. 944 OF 2013 - Dated:- 19-11-2013 - M.R. SHAH AND R.P. DHOLARIA, JJ. Varun K. Patel for the Appellant. JUDGMENT M.R. Shah, .....

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ch, she has carried out the business of wholesale of cotton grey fabrics. During the year under consideration, the assessee shown sales of ₹ 2,76,12,707/- from which she has shown net profit of ₹ 2,72,427/- @ 0.99%. The assessee filed return of income for the assessment year under consideration declaring a total income at ₹ 1,72,250/-. The said return was processed under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the "Act") and was selected .....

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it was observed by the Assessing Officer that the assessee had outstanding "creditors for goods" ₹ 2,53,74,512/-which according to Assessing Officer was abnormally high considering the fact that the assessee had made purchases of ₹ 2,64,14,747/- and therefore, creditors were almost equivalent to the expenditure incurred on purchases. Therefore, to verify the genuineness of the outstanding creditors, the assessee was required to furnish details of the creditors with a compar .....

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he ledger account of the subsequent years that the creditors had not been paid off except in the cases of M/s. Siranjeevi Textiles, Pakladom and Shri Vaishno Fab, Isanpur where partial payments were made in subsequent years. The assessee was also required to furnish addresses of such creditors. On the basis of the address supplied by the assessee, notice under Section 133(6) of the Income Tax Act were issued to 11 creditors calling upon for ledger account confirmations. With respect to 14 credit .....

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ility by way of cessation thereof (it is to be noted that said addition is not subject matter of present appeal). While passing the assessment order, the Assessing Officer made addition of ₹ 51,37,327/- with respect to those creditors whose liability is found to be more than three years and solely on that ground made addition. 2.2. Feeling aggrieved and dissatisfied with assessment order passed by the Assessing Officer making the addition of aforesaid two amounts under Section 41(1) of the .....

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ore the learned ITAT and relying upon the decision of the Hon'ble Supreme Court in the case of CIT v. Sugauli Sugar Works (P.) Ltd. [1999] 236 ITR 518 and the decision of this Court in the case of CIT v. Nitin S. Garg [2012] 208 Taxman 16, the learned ITAT has dismissed the said appeal preferred by the revenue. It is to be noted that against the confirmation of addition of ₹ 64,47,623/- by the learned CIT(A), the assessee preferred appeal before the learned ITAT being ITA NO. 1426 of 2 .....

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and perused the impugned judgment and order passed by the learned ITAT as well as order passed by the learned CIT(A) as well as assessment order. At the outset, it is required to be noted that AO made addition of ₹ 51,37,327/- with respect to creditors liability on the ground that said liability is of more than three years. Relying upon the decision of the Hon'ble Supreme Court in the case of Sugauli Sugar Works (P.) Ltd. (supra) and the decision of this Court in the case of Nitin Gar .....

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a matter which can be decided by considering the assessee's case alone but has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act&q .....

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