TMI Blog2017 (5) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... nied to own these amounts. In considered opinion, no addition u/s 41(1) can be made merely on the ground that the debts remained unpaid in the appellants’ books for a number of years and no presumption can be made that the said liability had ceased or had been remitted. It is noted from the assessment order that out of the 4 invoiced, the payments for which outstanding as on 31.03.2012, the 2 were pertaining to the AY 2012-13 i.e. the year under consideration and 1 each was pertaining to AY 2010-11 and 2011-12, and thus as on 31.03.2012, these debts were not even barred by limitation. Thus AO was not justified in making addition u/s 41(1) of the Act - Decided against revenue - ITA No. 192/JP/2016 - - - Dated:- 25-4-2017 - SHRI KUL BHARAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96,351 as liabilities ceased. Against this the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions partly allowed the appeal. Thereby, the Ld. CIT(A), deleted the additions. 4. Against this the revenue has preferred the present appeal. 5. Ground no. 1 is against deleted the addition in respect of liabilities ceased and reduced the trading addition from ₹ 4,30,448/- to ₹ 49,96,351/- and the first ground is against reducing of trading addition. 5.1 The Ld. Departmental Representative supported the order of the Assessing officer and submitted that Ld. CIT(A) was not a justified in deleting the addition. 5.2 On the contrary, Ld. Counsel for the assessee supported the order of the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by the appellant that it was dealing in large number of gemstones on various qualities and sizes. Therefore it was impossible to maintain quality wise details of quantity of goods. All the purchases and sales were completely vouched and no defect was pointed out by the AO. Except some purchases from URD and cash sales. The sources of gem stones is petty karigars who manufactures them and as they have little turnover and profit and so are not registered under any law but this does not make that purchases are not verifiable. The cash sales are required to be made to consumers which a regular feature of jewellery trade. It was not the case of AO that sales were understated or purchases/ expenses were inflated. The appellant relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing addition of ₹ 4,30,448/- a sum of ₹ 2,89,486/- is sustained and the appellant would get a relief of ₹ 1,40,962/- 5.4 From the above, it is evident that Ld. CIT(A) has taken into account the increase in the turn over which is not controverted by the Revenue. Therefore, there is no infirmity into the order of Ld. CIT(A), same is hereby affirmed. Thus, this ground of the Revenue s appeal is dismissed. 6. Ground no. 2, is against cessation of liability. 6.1 The Ld. Departmental Representatives supported the order of the Assessing Officer and submitted that Ld. CIT(A) was not justified deleting the addition. He submitted that, Assessing Officer has given a finding that assessee has not filed any documentary proof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m has ceased, there can be no benefit arising to the appellant within the meaning of clause (a) of section 41 (1). Unless notices were issued to the creditors and they had stated that they had given up the claims against the appellant, no decision could be taken by the income-tax authorities, merely on the ground that the debts remained unpaid in the appellant s books for a number of years that the liability had ceased or had been remitted. (ii) I find merit in the contention of the appellant as the AO neither had made any inquiries nor brought any material on record that the creditors either had written off the said liabilities in their book of accounts or denied to own these amounts. In my considered o0pinion, no addition u/s 41(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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