TMI Blog2016 (6) TMI 1371X X X X Extracts X X X X X X X X Extracts X X X X ..... ran Dutta on the ground that notice for verification was not served u/s. 133(6) of the Act but Ld. AR has produced the same before appellate stage for AY 2010-11. So the identity of the party (Mr. Samairan Dutta) cannot be doubted for instant case and for the year under consideration. The copy of the order of Ld. CIT(A) is placed at page 68 of the paper book. In this view of the matter and after considering assessment order for AY 2010-11, we are of the considered view that the party is not identifiable and so the purchase cannot be held bogus. Therefore we are inclined to reverse the orders of Authorities Below. This ground of assessee s appeal is allowed. Remission and/or cessation of several accounts comprised u/s 41(1) - HELD THAT:- Certain old creditors are reflecting in the balance sheet of assessee and none of the sundry creditors was written off in the books of account of assessee. In our considered view the income cannot be brought to tax us/ 41(1) of the Act until and unless the trading liability ceased to exist in the books of account. In the instant case the liability of the sundry creditors is very much appearing. Therefore, the question of treating the same as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000/- and which could not be explained by the appellant. Now the plea taken by the appellant as narrated (supra) cannot exonerate him from the clutchs of section 40A(3) and also I find that the appellant; case is not covered by any of the exceptions contained in Rule 6DD. Hence, the addition made by the AO amounting to ₹4,14,003/- on this count is confirmed. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. Shri A.K.Tibrewal, Ld. Authorized Representative appearing on behalf of assessee and Shri Kalyan Nath, Ld. Departmental Representative appearing on behalf of Revenue. 5. Before us Ld. AR submitted paper book which is running pages from 1 to 1 to 75 and index of various judgments containing pages 1 to 35 respectively. At the time of hearing our attention was drawn on pages 1 to 4 of the PB, where the detail for the payment of labour charges was recorded and claim that in none of the case excess payment was exceeding of ₹20,000/-. Ld. AR further drew our attention at pages 6 to 41 where the vouchers in respect of labour placed. On the basis of those vouchers it was further submitted that where the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments made to the parties is not doubted by the revenue, the provisions of section 40A(3) could not be made applicable to the fats of the instant case. It will be pertinent to go into the intention behind introduction of provisions of section 40A(3) of the Act at this juncture. We find that the said provision was inserted by Finance Act 1968 with the object of curbing expenditure in cash and to counter tax evasion. The CBDT Circular No. 6P dated 6.7.1968 reiterates this view that this provision is designed to counter evasion of a tax through claims for expenditure shown to have been incurred in cash with a view to frustrating proper investigation by the department as to the identity of the payee and reasonableness of the payment. In the instant case, the genuineness of the payments has not been doubted. Besides the above we also find that from the submission made by Ld. AR that none of the case, the payment has exceeded more than ₹20,000/- and where the payment was exceeding more than ₹20,000/- it was paid to the sardars who further paid to individual labourers. In rejoinder Ld. DR has also failed to bring anything contrary to the argument placed by Ld. AR b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration by the assessee failed to provide the address of the party and vehemently supported the orders of Authorities Below. 11. From the aforesaid discussion, we find that AO disallowed the purchases from Mr Samiran Dutta on the ground that notice for verification was not served u/s. 133(6) of the Act but Ld. AR has produced the same before appellate stage for AY 2010-11. So the identity of the party (Mr. Samairan Dutta) cannot be doubted for instant case and for the year under consideration. The copy of the order of Ld. CIT(A) is placed at page 68 of the paper book. In this view of the matter and after considering assessment order for AY 2010-11, we are of the considered view that the party is not identifiable and so the purchase cannot be held bogus. Therefore we are inclined to reverse the orders of Authorities Below. This ground of assessee s appeal is allowed. 12. Next ground is as regards that Ld. CIT(A) erred in confirming the action of AO by sustaining disallowance of ₹31,59,970/-. For this, assessee has raised following ground:- 3. For that on the facts and in the circumstances of the case, the Ld. Commissioner of Income tax (Appeals) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n my view such sums have ceased to be claimable by the appellant. It would be a clear case of remission or cessation of the liability of the assessee. It is needless to say that as per section 59(1) of the Act, the provision of section 41(1) applies to income under the head Other Sources also. Being aggrieved by this order of Ld. CIT(A), assessee came in second appeal before us. 15. Before us Ld. AR submitted that these creditors are pertinent to earlier years and drew our attention at pages 47 to 50 of the paper book where the list of creditors along with other details were placed and he left the issue to the discretion of the Bench. On the other hand, Ld DR submitted that assessee failed to submit the addresses of the creditors and those creditors have been appearing more than three years for which no confirmation has been submitted by assessee. He relied on the orders of Authorities Below. 16. We have heard rival contentions and perused the materials available on record. From the aforesaid discussion, we find that certain old creditors are reflecting in the balance sheet of assessee and none of the sundry creditors was written off in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts. In view of the above, we are of the view that in the present case, the liability very much in existence in on account of sundry credit and this is trading liability and once it is not seize to exist, or remitted, the mere non-existence of the parties cannot be added as an income of the assessee. Accordingly, this appeal of assessee is allowed on merits. Similarly, issue in ITA No.2680/Kol/2013 for AY 2000-01, wherein only set off of sundry creditors to the extent of ₹ 9,78,152/- and carried forward from earlier year, as the appeal for AY 2000-01 has already been allowed in favour of assessee, this will not be treated as income for AY 2001-02. Hence, these two appeals of assessee are allowed. As regard to the ground on jurisdictional issue, for initiation of proceedings u/s. 148 r.ws. 147 of the Act, Ld. counsel for assessee has not pressed this grounds and hence, same are dismissed are not pressed. Taking a consistent view of the cases cited and the decision of one of the case law in the case of Recon Valves Co. (supra) we are inclined to reverse the orders of Authorities Below. This ground of assessee s appeal is allowed. 17. In the result, asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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