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TMI Blog2017 (11) TMI 1991X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the worth Commissioner of Income Tax (Appeals)-1 has grossly erred in not appreciating the fact that the assessment order is not at all clear as to whether the addition is being made u/s 41 of the Act or u/s 68 of the Act. (b) That the Ld. AO and the Worthy Commissioner of Income Tax (Appeals) has grossly erred in appreciating the legal position that if there is a cessation of liability, only then the amount could be brought to tax, subject to other requirement to be satisfied u/s. 41(1) and if the addition is to made under section 68 it has to be made in the particular year in which the transaction was carried out and not in the year when there is no transaction. (c) That the Ld. AO and the Worthy Commissioner of Income Tax (Appeals) has grossly erred in making/confirming an addition of Rs. 13,61,311/- on account of opening balance in the account of Gee Dee Stonex Pvt. Ltd. as there is no transaction entered into in the year under consideration. (d) That the Ld. AO and the Worthy Commissioner of Income Tax (Appeals) grossly erred in making/confirming an addition of Rs. 13,68,014/- on account of opening balance in the account of Jindal Tiles Pvt. Ltd. as there is no trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal evidence under Rule 46A of the Income-tax Rules, 1963. The CIT(A) after deliberating on the circumstances due to which the aforesaid documentary evidence could not be placed on record by the assessee during the course of the assessment proceedings, therein admitted the same. The CIT(A) after perusing the account of the assessee in the books of M/s Gee Dee Stonex Pvt. Ltd. for the period 01.04.2006 to 31.06.2016, therein observed that the same reflected a nil balance. It was further observed by the CIT(A) that after 2nd September, 2009 no transactions had taken place between the assessee and the aforementioned party. That as regards the other party, viz. M/s Jindal Tiles Pvt. Ltd., no copy of account was placed on record by the assessee. The CIT(A) after deliberating on the facts observed that not only the assessee had failed to prove that the aforementioned parties were his creditors, but rather, the books of accounts of the said parties revealed that the assessee owed nothing to them. That on the basis of the aforesaid facts as had so emerged, the CIT(A) held a conviction that the liability shown by the assessee against the aforesaid respective parties in his books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sugauli Sugar Works Pvt. Ltd. (1999) 236 ITR 518 (SC) (ii) CIT Vs. Smt. Sita Devi Juneja (2010) 325 ITR 593 (P & H) Thus, on the basis of his aforesaid contentions the ld. A.R had tried to impress upon us that the issue involved in the case of the assessee was squarely covered by the aforesaid judicial pronouncements, and as such, no addition under Sec. 41(1) was called for in the hands of the assessee. Per contra, the ld. Departmental Representative (for short D.R) relied on the order of the CIT(A). It was submitted by the ld. D.R that now when the aforementioned respective parties had themselves admitted that nothing was owed by the assessee to them, therefore, in the backdrop of the said facts the CIT(A) had rightly disallowed the outstanding liability aggregating to Rs. 27,29,325/- under Sec. 41(1). It was submitted by the ld. D.R that the appeal of the assessee did not merit acceptance and may therein be dismissed. 6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present appeal is sought for adjudicating the validity of the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. We have deliberated on the facts and find that the aforementioned parties though had clearly stated that there was no balance of the assessee as per their books of accounts, which though we are of the view would be sufficient to justify invoking of the provisions of Sec. 41(1), however, the year in which the benefit in respect of such trading liability on account of its remission or cessation thereof was obtained by the assessee cannot be lost sight of and would be crucial for bringing the same to tax in the hands of the assessee. We are of the considered view that it would not be justified on the part of the A.O to whimsically relate the remission or cessation of trading liability to the year in the course of assessment of which he learns about the same, therein bypassing the fact as to when the benefit emerging there from was obtained by the assessee. We are of the strong conviction that the correct approach for making an addition would be to find out the year in the which the benefit emerging from remission or cessation of such liability was obtained by the assessee. We find that in the case of the present assessee the only reason for making of the addition under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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