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Ad-Hoc percentage basis Addition on Sundry Creditors Is Illegal – 41(1) Can’t Run on Presumptions
Case Law Details
- Case Name
- Blaze Manufacturing Co Vs DCIT (ITAT Delhi)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2014-15
- Courts
- All ITAT, ITAT Delhi
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Blaze Manufacturing Co Vs DCIT (ITAT Delhi)
ITAT Delhi allowed the assessee’s appeal for AY 2014-15 in Blaze Manufacturing Co., deleting the massive addition of ₹5.00 crore made u/s 41(1) on an estimated / percentage basis, holding that cessation of liability cannot be presumed.
The AO, while giving effect to PCIT’s order u/s 263, made enquiries only in 207 out of 680 sundry creditors and found 63 parties allegedly non-traceable / non-responsive. On this basis, he applied a 29.24% thumb-rule to the entire creditor balance of ₹17.12 crore and treated ₹5.00 crore as ce...
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