Case Law Details
ACIT Vs Uppal Jitendra Shah (ITAT Pune)
The Assessing Officer made addition of Rs.16,14,500/- (M/s Arpit Enterprises) and Rs.12,35,500/- (M/s. V.S.N. Trading Co.) disbelieving the genuineness of the credit and brought the tax u/s 41(1) of the Act. During the course of appellate proceedings before the ld. CIT(A) as well as proceedings before us, the assessee had filed credit notes establishing as to how the credit in the name of said two parties came to be made in the books of account of the assessee. The ld. CIT(A) considering the fact that the sundry creditors are not written off in the books of accounts held that the question of invoking provisions of section 41(1) does not arise. It is settled position of law that merely because the credit was outstanding for long time does not lead to conclusion that the sundry creditors are not payable. We find from the material on record that there is a material on record in the form of credit notes issued by the appellant as to how the amount became payable to these parties. This evidence was not reverted by the Department. The submission made by the assessee that these amounts were paid in the subsequent year through banking channel remained uncontroverted. The burden lies upon the Department to establish the cessation of liability before invoking the provisions of section 41(1) of the Act. Apparently, this burden was not discharged by the Revenue, inasmuch as, the amounts of sundry creditors were paid in the subsequent year then there is no scope to invoke the provisions of section 41(1) by the Assessing Officer. Thus, we do not find any illegality and perversity in the order of the ld. CIT(A) to delete the addition made u/s 41(1) of the Act.
FULL TEXT OF THE ORDER OF ITAT PUNE
These are the cross appeals filed by the Revenue as well as the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 2, Kolhapur [‘the CIT(A)’] dated 02.06.2017 for the assessment year 2012-13.
2. Briefly, the facts of the case are that the assessee is an individual engaged in the business of wholesale trading in sugar. The return of income for the assessment year 2012-13 was filed on 06.09.2012 declaring total income of Rs.19,60,400/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Circle-2, Kolhapur (‘the Assessing Officer’) vide order dated 30.03.2015 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.13,73,82,925/- by holding that the assessee had failed to discharge the onus lying upon him in terms of section 68 of the Act. The Assessing Officer also brought to tax unpaid sundry creditors u/s 41(1) in respect of M/s Arpit Enterprises of Rs.16,14,500/- and in respect of M/s. V.S.N. Trading Co. of Rs.12,35,500/-. The factual background of the above additions is as under :
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