Case Law Details
M/s Hindustan Vegetable Oils Corp. Ltd. Vs DCIT (ITAT Delhi)
Conclusion: AO was unjustified in making addition under section 41(1) on the reason that sundry creditors and other liabilities had ceased to exit as the opening balances of the liabilities were already admitted in the immediately preceding assessment years and the issue for revival was pending before BIFR because of which the creditors remain suspended but there had been no notice which could extinguish the existing right except to the extent that they became part of the sanctioned scheme.
Held: Assessee had sundry creditors at Rs. 5,77,00,706 as against sundry creditors of Rs. 5,67,35,912 in preceding assessment year, but no details of the sundry creditors and other liabilities being filed by the assessee, therefore, AO made addition of Rs. 5,77,00,706 as liability that had ceased to exit and accordingly made addition under section 41(1). It was observed that assessee had gone into BIFR and most employees of assessee had left. Further it was observed that it was a scrutiny assessment for Assessment Year 2009-10 during which sundry creditors and other liabilities as existed as on 31/03/09 were examined by AO and the new creditors that added for the current year amounted to Rs.9,64,794/-. AO completed the assessment proceedings by disallowing entire amount of liabilities without considering the fact that the opening balances of the liabilities were already admitted in the immediately preceding assessment years. Assessee had placed the assessment order for the preceding assessment year before us for verification of the same. Further, the claim had been filed before BIFR and therefore the same could not be considered to have been ceased. It was only a matter of timing that as the issue was pending before BIFR, the creditors remain suspended but there had been no notice which could extinguish the existing right except to the extent that they became part of the sanctioned scheme. Thus, AO was unjustified in making addition as the liabilities had not ceased.
FULL TEXT OF THE ITAT JUDGMENT
Present appeals have been filed by assessee against the quantum addition confirmed by Ld. CIT (A)-4 vide order dated 21/10/15, and appeal filed by the revenue along with Cross Objection by assessee, against the penalty being deleted by Ld. CIT (A)-15 vide order dated 22/09/14 for Assessment Year 2010-11 on the following grounds of appeal:
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