TMI Blog2021 (9) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... also furnished evidence in the paper book in the form of copies of confirmation letters from the creditors. There was no cessation of liability and facts are identical to case of M/s Srinivasa Hair Industries, Eluru [ 2019 (2) TMI 1463 - ITAT VISAKHAPATNAM ] - In the facts and circumstances of the case we, hold that there is no case for making addition u/s 68 and the Ld.CIT(A) has rightly deleted the addition, hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. - I.T.A.No.32/Viz/2020 - - - Dated:- 24-9-2021 - Shri N.K.Choudhry, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant Member For the Appellant : Shri D.K.Sonowal, CIT, DR For the Respondent : Shri G.V.N.Hari, AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crease in share application money amounting to ₹ 5,53,16,938/- as not genuine and brought to tax u/s 68 of the Act. 3. Against the order of the AO, the assessee went on appeal before the CIT(A) and reiterated the submissions made before the AO. The Ld.CIT(A) found that there were no fresh cash credits in the books of the assessee with reference to share application money, therefore, held that invoking section 68 of the Act is incorrect. Further, the Ld.CIT(A) verified the copies of accounts/statements submitted by the assessee and found that the trade creditors amount was transferred to share application money account and the same was reversed on 01.04.2013, thus there was no fresh credit and the identity, credit worthiness and gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the sundry creditors were reversed in the subsequent year and the same were paid by the company. Since, there was no introduction of capital or cash credit in the books of accounts during the year under consideration, the Ld.CIT(A) rightly held that there is no case for invocation of section 68 of the Act. As rightly observed by the Ld.CIT(A), the assessee has reduced the creditors and increased the share application money for the purpose of bank loans to project good financial condition of the company. Though the practice is unethical, there is no understatement of income or introduction of capital for which the source could not be explained. On similar facts, this Tribunal in the case of M/s Srinivasa Hair Industries, Eluru (supra) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a normal practice in the trading community though it is unethical. The assessee has retransferred the creditors balances in the subsequent years to the respective trade creditor which is evident from the traders account copies furnished in page No.47 to 51 of the paper book. In the case of Md.Mahasin Ali Khan, Bhagwanpur, the assessee has retransferred the sum of ₹ 3,15,08,585/- to the traders account and subsequently made purchases and as well as payments through bank cheque and there was no cash payment. Similarly in the case of Habibulla Mallick, Bhagwanpur, the amount was transferred to one of the partners capital account of Sri Kanigolla Srinivasa Gupta and the said sum of ₹ 1,32,19,285/- was transferred back to the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability. The question whether the liability is actually barred by limitation, is not a matter which could be decided by considering the assessee's case alone but it is a matter which has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt was barred and had become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act. The principle that expiry of period of limitation prescribed under the Limitation Act cannot extinguish the debt but it will only prevent th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, there is no dispute that no cash credits were found in the books of accounts during the previous year relevant to the assessment year for which the assessee could not offer explanation. What was found by the AO was sundry creditors were converted into share application money in the hands of one of the Directors and reflected the same as share application money. The sundry creditors were reduced and the share application money was increased. Subsequently, the sundry creditors balances were reversed back and the company has paid the same. The assessee also furnished evidence in the paper book in the form of copies of confirmation letters from the creditors. There was no cessation of liability and facts are identical to case of M/s Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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