TMI Blog2015 (11) TMI 1809X X X X Extracts X X X X X X X X Extracts X X X X ..... ces remained static, in the books of the assessee, for several years, therefore, there was no possibility of any claim being made by the creditors, therefore, he added to the income of the assessee - genuineness of the transactions entered in the books has not been questioned by the AO herself. For invoking the provisions of section 41, there should be an irrevocable cessation of liability without any possibility of being revived. In the present appeal, the assessee having acknowledges liability successively over the years reflected in his books as payable, therefore, we find no infirmity in the conclusion of CIT (Appeals), therefore, his stand is affirmed. Finally the appeal of the Revenue is dismissed. - ITA NO.3360/Mum/2014 - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come at ₹ 1,81,72,450/, u/s 143(3) of the Act. During assessment proceedings, the Assessing Officer asked the assessee to furnish the details of sundry creditors which were outstanding for more than three years. The assessee vide letter dated 7.12.2012, 10.01.2013 and 21st Jan 2013 furnished the details. After going through these letters, the Assessing Officer asked the assessee as to why the liabilities of overseas creditors, which are continuously outstanding, should not be taxed as income of the assessee as per the provisions of section 41(1) of the Act. The explanation of the assessee was that the due to financial constraints the assessee could not pay the said sums to the overseas parties. However, periodical payments to such par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee furnished the details as called for and explained the reason of non-payment/part payment or delay which was claimed to be due to losses in the business. The assessee also explained as to why the provisions of section 41(1) of the Act should not be imposed. We find that major import from the overseas parties was during financial year 2007-08, during which the sales turnover of the assessee was ₹ 16.93 crores and out of that sales proceeds (sundry debtors) was to be recovered only ₹ 1.19 crore. In subsequent year ( A.Y. 2009-10), the assessees showed sundry creditors of ₹ 3.10 crores and the sale proceeds to be recovered were only to the tune of ₹ 27.89 lacs. During the year, the assessee had only business of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nagpur), CIT Vs. P.S. Jain Company Ltd 322 ITR 320 (Del.), Smt. Prabhavati S. Shah Vs. CIT 231 ITR 1 (Bom.) So far as invoking section 41 of the Act is concerned. The assessee has explained the reasons for making the payments which were on account of lack of funds and further the assessee established that the creditors to the tune of ₹ 1.54 crores out of ₹ 1.79 crores were actually paid in later years and further demonstrated that the liability has never ceased. In view of this factual position, we are satisfied with the conclusion drawn by the Ld. Commissioner of Income Tax (Appeals) that invocation of section 41(1) was merely based on arbitrary decision of the Ld. Assessing Officer. Our view finds support from the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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