TMI Blog2023 (7) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not unilaterally written back the accounts of the sundry creditors in its profit and loss account. In the present case, the AO as well as Ld.CIT(A) have recorded the fact that the creditors are outstanding for more than 02 years. However, in the case of CIT vs Sugauli Sugar Works Pvt.Ltd. [ 1999 (2) TMI 5 - SUPREME COURT] as recorded that the liabilities were existing for more than 20 years. Therefore,we are of the considered view that the authorities below were not justified in making the impugned addition. We therefore, direct the AO to delete the addition. Grounds raised by the assessee are thus, allowed. - ITA No. 8240/Del/2019 - - - Dated:- 14-7-2023 - Shri Kul Bharat, Judicial Member And Shri M.Balaganesh, Accountant Member For the Appellant : Dr. Rakesh Gupta, Adv. And Shri Somil Agarwal, Adv. For the Respondent : Shri Gurpreet Shah Singh, Sr.DR ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2015- 16 is directed against the order of Ld. CIT(A)-16, New Delhi dated 08.08.2019. The assessee has raised following grounds of appeal:- 1(a). There were outstanding creditors more than two year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors. The response of the assessee was not found acceptable and the Assessing Authority proceeded to make disallowance of INR 2,07,29,190/- u/s 68 of the Act. 4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who after considering the submissions, sustained the addition. Although, he made addition u/s 41(1) of the Act instead of section 68 of the Act, as made by the Assessing Authority. 5. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 6. Apropos to Grounds of appeal Nos. 1(a), 1(b) 1(c), Ld. Counsel for the assessee, Shri Rakesh Gupta, Adv. vehemently argued that action of the AO is ex-facie, unjustified, illegal and is a case of complete non-application of mind. He drew our attention to para 4 of the assessment order where the AO recorded that the liability are ceased to exist and he proceeded to make disallowance u/s 68 of the Act. Further, he submitted on the contrary Ld.CIT(A) sustained the impugned addition by invoking the provision of section 41(1) of the Act, without giving any notice to the assessee and contrary to the law laid down by the Hon ble Jurisdictional High Court in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the decision of the Hon ble Madras High Court rendered in the case of M/s. West Asia Exports Imports vs ACT reported in TCA No.302/2008 dated 11.03.2019, ignoring the binding precedents of the Hon ble Supreme Court and Hon ble Delhi High Court. Thus, in view of the submissions made at bar the short question, that arises whether Ld.CIT(A) was justified in sustaining the addition when himself was of the view that the impugned addition would not fall under the ambit of section 68 of the Act. 10. As per section 251(1)(a), Ld.CIT(A) is empowered in an appeal against the order of assessment to confirm, reduce, enhance, annul the assessment but it does not speak of modification of the order. In the present case, Ld.CIT(A) in essence has modified the assessment order by sustaining the addition u/s 41(1) of the Act instead of section 68 of the Act. Therefore, in our considered view, Ld.CIT(A) travelled beyond the jurisdiction conferred by the Act. Moreover, both the Authorities have failed to take note of the binding judgement of the Hon ble Delhi High Court in the case of CIT-III vs Shri Vardhman Overseas Ltd. (supra) wherein Hon ble High Court after examining the law on the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 were intended only to govern a particular factual situation. Section 28(iv), on the other hand, is a general provision which brings to assessment the value of any benefit or perquisite arising to the assessee from the business carried on by him. If, as contended before us by the learned standing counsel for the revenue, the alleged benefit enjoyed by the assessee by utilizing the amounts payable to the sundry creditors in its own business for a period of four years or more is to be brought to tax under Section 28(iv), notwithstanding that the conditions of Section 41(1), which govern the factual situation, are not satisfied, then it would render the latter section otiose or a dead letter. If we accept the argument of the learned standing counsel for the revenue, it would also introduce an element of uncertainty or subjectiveness in ascertaining as to what would be the lapse of time that would be necessary to render a liability to pay the creditors ineffective, which would result in an alleged benefit to the assessee. Moreover, if after the taxing of the amount u/s 28(iv) on the ground that considerable time has elapsed from the date of the debt during which the assessee had the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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