TMI Blog2019 (1) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... We answer the questions of law in favour of the Revenue and against the assessee; but, however notice that the assessee had raised a contention that the liability as seen from the account of M/s.Veeriah Reddiar cannot be fully considered as a trading liability. It is also to be noticed that the remission of trading liability can be deemed to be an income arising from the profit and loss accounts only to the extent of the actual credits outstanding in the creditors account wiped off on the basis of the book adjustments made by the assessee. The question whether there is any liability other than a trading liability insofar as the outstanding credits found in the account of M/s.Veeriah Reddiar also has to be verified by the AO. Though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs, also debited the business account of the maternal uncle; thus wiping off the outstanding credit of ₹ 72,55,783/-. 2. The AO issued notice proposing an addition under Section 41(1) of the Income Tax Act, 1961 [for brevity the Act ]. The assessee replied that ₹ 75 lakhs was a gift from the maternal uncle and also produced a confirmation letter to that end. The AO, however, refused to accept the claim of the assessee that ₹ 75 lakhs was a mere gift. The first appellate authority also confirmed the additions made by the AO. The Tribunal, however, found that if actually a cheque was given as gift, then there would have been no addition made as remission of trading liability. It was also found that there was no requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxing authorities were not required to put on blinkers ; entitled to look into the surrounding circumstances to find out the reality (82 ITR 540 at 545 (SC), the Tribunal is right in law in interfering with the assessment of ₹ 75,00,000/- invoking section 41(1) of the Income Tax Act? ( 5) (a) Whether the Tribunal is right in law in putting the burden of proof on the Revenue, and is not such an approach and the conclusion in paragraph 12, extraneous unwarranted, uncalled for and perverse? (b) Did the assessee discharge the burden of proof? ( 6) Whether, on the facts and in the circumstances of the case, is not the approach and findings of the Tribunal in paragraph 12 of the order circumlocutory and perverted an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Further, the question whether there is any liability other than a trading liability insofar as the outstanding credits found in the account of M/s.Veeriah Reddiar also has to be verified by the AO. Though we find the assessment made under Section 41(1) to be proper, we remand the matter to the AO for the limited purpose of limiting the addition under Section 41(1) to that of the trading liability wiped off from the account of M/s.Veeriah Reddiar. The assessee shall produce sufficient material to substantiate the liability having arisen other than under trade between the two. Appeal allowed with a remand to the limited extent of ascertaining the actual quantum to be made addition of as remission of trading liability under Section 41( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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