TaxTMI 
TaxTMI 
2017 (3) TMI 1775
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....961 (hereinafter 'the Act'). 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO applying the provision of section 41(1) of the Act in respect to outstanding sundry Creditors amounting to Rs. 31,88,521/-. For this assessee has raised following three grounds: - "1 The Learned CIT(A) is not justified in confirming addition of Rs. 31,88,521/- holding that the explanation offered by the assessee is "make believe" argument having no evidenciery value in spite of the fact that sufficient documentary evidence was produced both before Assessing Officer as well Learned CIT(A) in support of Assessee's claim. 2.The Learned CIT(A) has erred in confirming the addition of Rs. 31....
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.... and the decisions of various courts as cited above, the liabilities shown in the books of accounts against the creditors of Rs. 48,50,875/- which is not claimed for several years and assessee has failed to prove the genuineness of the credit balances have ceased to exist. The assessee has already written off credit balances of Rs. 16,62,350/- in the return of income filed for AY 2011-12. Therefore, the balance liability shown under the head creditors amounting to Rs. 31,88,525/- is brought to tax u/s.41(1) of the I.T. Act" in this assessment year." Aggrieved, now assessee preferred the appeal before CIT(A), who also confirmed the action of the AO vide para 4.4.3 as under: - "4.4.3 In view of the facts discussed above, it is not understo....
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.... in the books of accounts of the appellant, as on 31.03.2010. I, therefore, confirm the addition of the amount of Rs. 3 1,88,521 being the liability which is not existing during the year and accordingly add the above amount to the income. The first two grounds of appeal, are thus, dismissed." Aggrieved, now assessee is in second appeal before Tribunal. 4. Before us, learned Counsel for the assessee filed a statement of sundry creditors year wise which reads as under: - "National Building Corporation Statement of Sundry Creditors Asst Year Amount Amount paid to Creditors Credited to P&L A/c 2010-11 Bal. B/F 48,50,875/- - - 2011-12 -- 1,56,000 16,62,350 2012-13 -- --- -- 2013-14 -- 96,044/- 18,16,481/- 2014-15 ....
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....ing conditions must be fulfilled before section 41(1) of the Act could be held as applicable: (i) In the assessment of an assessee, an allowance or deduction has been made in respect of any loss, expenditure or trading liability incurred by him. (ii) (a) Any amount is obtained in respect of such loss or expenditure, or (b) Any benefit is obtained in respect of such trading liability by way of remission or cessation thereof. (iii) Such amount or benefit is obtained by the assessee, and (iv) Such amount or benefit is obtained in a subsequent year From the above deeming provisions of section 41(1) of the Act it is clear that this provisions has two effects, namely:- (i) That....
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....ng of this amount of sundry creditors as income in their respective years, the AO can verify the same. However, in this year no addition can be made u/s 41(1) of the Act and we delete the addition and allow the appeal of the assessee on this issue. 6. The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing foreign travel expenses of Rs. 6,27,772/-. For this assessee has raised following ground No.4:- "4. The learned CIT(A) has erred in confirming the disallowance of Rs. 6,27,772/- being total foreign travel expenses incurred in entirety merely on the ground that because of partner has visited U.S.A alongwith his wife & minor son makes it clear that the foreign visit was not ....