Salgaocar Mining Industries Private Limited Vs JCIT (ITAT Panaji)
Summary: The Income Tax Appellate Tribunal, Panaji Bench, disposed of cross appeals filed by Salgaocar Mining Industries Private Limited and the Revenue for assessment year 2011-12 arising from the order of the CIT(A)-1, Panaji dated 11.04.2016. The assessee challenged confirmation of an addition of Rs.7,07,68,721/- under section 41(1), while the Revenue challenged relief granted by the CIT(A) in respect of other additions. The Tribunal held that section 41(1) applies where there has been remission or cessation of liability during the relevant previous year and that the continued reflection of liabilities in the books, without material demonstrating cessation during the year, did not satisfy that requirement.
The inability of the assessee to furnish confirmations from creditors, by itself, was held insufficient to establish cessation. Relying upon the principles in CIT v. Tamilnadu Warehousing Corporation, CIT v. Alvares & Thomas and Aircel Cellular Ltd. v. CIT, the Tribunal held that the outstanding sundry creditors could not be taxed merely because they had remained outstanding for a long period or were subsequently written off and offered to tax. It accordingly directed deletion of the Rs.7,07,68,721/- addition and allowed the assessee’s appeal. In the Revenue’s appeal, the Tribunal upheld deletion of Rs.51,96,21,993/- relating to outstanding sundry credit deposits, finding that the CIT(A)’s conclusions were supported by the evidence showing continuing contractual or business relationships and no cessation of liability.
