TMI Blog2019 (3) TMI 1973X X X X Extracts X X X X X X X X Extracts X X X X ..... e balance sheet, indicate the acknowledgement of the debts payable by the assessee. Merely because such liability is outstanding for the last two to three years, it cannot be presumed that the said liabilities have ceased to exist. It is also conceded position that there is no bilateral act of the assessee and the creditors, which indicates that the said liabilities have ceased to exist. In absence of any bilateral act, the said liabilities could not have been treated to have ceased. CIT(A) has rightly held that the AO was not correct in coming to the conclusion that the entire land advances of ₹.2,84,45,000/- should be treated as income for the assessment year 2014-15 under section 41(1) of the Act by rejecting the contention of the assessee that the portion of the outstanding liability amounting to ₹.1,66,90,000/- had been admitted in the Return of Income filed for the assessment year 2014-15. Thus, in view of the above facts and circumstances of the case, we are of the considered opinion that the CIT(A) has rightly directed the Assessing Officer to delete the balance liability amounting to ₹.1,17,55,000/- which the assessee claims not having been written of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny/2018 [M/s. RPD Earth Movers P. Ltd.] 5. The assessee has not filed its return of income for the assessment year 2014-15. Accordingly, a show cause notice dated 07.03.2016 was issued to the assessee by show-causing the assessee as to why the amount of ₹.2,84,45,000/- should not be considered as income for the assessment year 2014-15, which was admitted by way of letter and affidavit before the Investigation Wing during the course of search proceedings. The assessee has not filed any reply to the show cause notice. However, the assessee filed its return of income for the assessment year 1014-15 on 18.03.2016, in which under Column No. 2 of Part A-P L, the assessee had indicated an amount of ₹.1,66,90,000/- as CESSATION OF LIABILITY . The Assessing Officer noticed that there is a difference of ₹.1,17,55,000/- as per the additional income admitted at the time of search and as declared by the assessee in his return of income. Moreover, in the Schedule Part B- TI of the Income tax return, the income was shown as ₹.1,66,90,000/- after accounting for an audit expenditure, rates taxes and bank charges of ₹.34,935/-. When it was questioned about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular fact situation. The section applies where a trading liability was allowed as a deduction in an earlier year in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in a later year by way of remission or cessation of the liability. In such a case the section says that whatever benefits has arisen to the assessee in the later year by way of remission or cessation of the liability will be brought to tax in that year. The principle behind the section is simple. It is a provision intended to ensure that the assessee does not get away with a double benefit once by way of deduction in an earlier assessment year and again by not being taxed on the benefit received by him in a later year with reference to the liability earlier allowed as a deduction. Moreover, if after taxing the amount on the ground that considerable time has elapsed from the date of the debt during which the assessee had the benefit of the monies in his business, if it is found that, in another later year the creditor has recovered the money from the assessee, there is no provision in the Act to allow deduction for such payment. Further, the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been shown, which are payable to the sundry creditors. Such liabilities, shown in the balance sheet, indicate the acknowledgement of the debts payable by the assessee. Merely because such liability is outstanding for the last two to three years, it cannot be presumed that the said liabilities have ceased to exist. It is also conceded position that there is no bilateral act of the assessee and the creditors, which indicates that the said liabilities have ceased to exist. In absence of any bilateral act, the said liabilities could not have been treated to have ceased. The ld. Counsel for the assessee has relied on the following decisions of various High courts and he has also placed the same before the ld. CIT(A) and the ld. CIT(A) has considered these decisions laid down by the various High Courts: (i) Hon ble Delhi High Court in the case of CIT vs. Shri Vardhman Overseas Ltd. 343 ITR 408, wherein it was held that section 41(1) of the Act does not apply if the amount is not written back in the books of account. (ii) Hon ble Gujarat High Court in the case of CIT vs. Bhogilal Ramjibhai Atara in ITA No.588 of 2013 decided on 04.02.2014 has held that even if there is unclai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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