TMI Blog2022 (5) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... it has to be presumed that the impugned outstanding liabilities/creditors were existing at the end of the Financial Year 2012-13 pertaining to Assessment Year 2013-14. As per mandatory requirement of section 41(1) of the Act, the AO entitled to make additions in the hands of the assessee where the liabilities/creditors seized to exist but in the present case, neither the assessee company has written off the impugned amount as bad debts in its books of accounts nor there was any other positive material on the record and in the hands of the AO showing that the impugned amount of the liabilities/creditors seized to exist during the relevant Financial Year. Therefore, we are unable to see any ambiguity, perversity or any valid reason to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments of Ld. Sr. DR. 4. The Ld. Sr. DR drawing our attention to para 3 of the assessment order, submitted that the Assessing Officer ( AO ) was right in treating the impugned amount to the seized/non-existence, because of the fact that the liability was being shown outstanding for many preceding years and the assessee could not provide confirmations from the respective creditors and also failed to provide necessary details like PAN, address etc. of the creditors. Ld. Sr. DR therefore, submitted that the AO was right in holding that the impugned liability to the extent of the impugned amount, no longer existed and he was right in invoking the provisions of section 41(1) of the Income Tax Act, 1961 ( the Act ) and making additions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d outstanding liability in the books of accounts and these are still in existence. 6. From the relevant part of first appellate order, we observed that Ld.CIT(A) has granted relief to the assessee with following observations and findings:- 6.3. I have considered the facts of the case, finding of the AO and submissions of the appellant. The addition u/s 41(1) was made by the AO on account of sundry creditors in respect of whom appellant failed to furnish confirmed copy of account. The appellant has provided the list of the sundry creditors alongwith confirmation on major parties and it is observed that the appellant has provided PAN No. of most of the parties except the creditors amounting to Rs. 31,69,207/-. The appellant has filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed even under section 41(1) because amount was being shown as payable in balance sheet of assessee which would establish that there was no cessation of liability. 6.5. In the case of Satpal Sons (HUF) Vs ACIT [2017] 85 taxmann.com 283 (Delhi - Trib.) it is held by Hon'ble ITAT that Where assessee had shown outstanding sundry creditors for last three years in its balance sheet and no provision was made to write off outstanding liabilities in its books of account, there would be no remission or cessation of liability under section 41(1) even if sundry creditors were not in existence at address provided and PAN of creditors were found to be invalid. 6.6 The provisions of section 41(1) are applicable in the cases where the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act, the AO entitled to make additions in the hands of the assessee where the liabilities/creditors seized to exist but in the present case, neither the assessee company has written off the impugned amount as bad debts in its books of accounts nor there was any other positive material on the record and in the hands of the AO showing that the impugned amount of the liabilities/creditors seized to exist during the relevant Financial Year. Therefore, we are unable to see any ambiguity, perversity or any valid reason to interfere with the findings recorded by Ld.CIT(A). Thus, we uphold the same. Accordingly, Ground Nos. 1 2 raised by the Revenue are dismissed. 8. In the result, the appeal of the Revenue is dismissed. Order pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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