2017 (11) TMI 902

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....essee-company has filed its return of income electronically on 24.9.2009 declaring total income at Rs. 2,51,39,767/-. The assessee has claimed depreciation of Rs. 34,03,491/-. The ld.counsel for the assessee has pointed out to us that correct figure is Rs. 22,71,970/-. This claim of the assessee was disallowed by the ld.AO on the ground that the business of the assessee was closed down and there is no business income during the year. The ld.AO further observed that these assets were not used for the purpose of business, therefore the assessee is not entitled for depreciation. Appeal to the ld.CIT(A) did not bring any relief to the assessee. 4. The ld.counsel for the assessee took us through the order of the ld.CIT(A) and submitted that the....

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....hat the ld.CIT(A) has erred in confirming the addition of Rs. 54,24,294/- which was added by the AO with the aid of section 41(1) of the Income Tax Act, 1961. 7. Brief facts of the case are that the assessee has shown liabilities under the head sundry creditors for goods, sundry creditors for expenses, advances from customer and other liabilities. The ld.AO formed an opinion that there is no manufacturing activity in the business since 13.3.2005, therefore, this liability is to be assumed as ceased. Accordingly, he made an addition of Rs. 54,24,294/-. 8. Appeal to the ld.CIT(A) did not bring any relief to the assessee. 9. With the assistance of the ld.representatives, we have gone through the record carefully. The section 41(1) applies w....

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....re was remission or cessation of liability that too during the previous year relevant to the assessment year 2007-08 which was the year under consideration. It is undoubtedly a curious case. Even the liability itself seems under serious doubt. The Assessing Officer undertook the exercise to verify the records of the so called creditors. Many of them were not found at all in the given address. Some of them stated that they had no dealing with the assessee. In one or two cases, the response was that they had no dealing with the assessee nor did they know him. Of course, these inquiries were made ex parte and in that view of the matter, the assessee would be allowed to contest such findings. Nevertheless, even if such facts were established th....