Section 41(1) addition cannot be made merely for non-confirmation by creditors

Krishnaping Alloys Ltd vs ACIT (ITAT Mumbai) Ld. AO had alleged that the so called trading liability existed in the books of accounts of the assessee is non-genuine, because none of the creditors have confirmed the liability, when enquiries was conducted by issue of notice u/s 133(6) of the I.T.Act, 1961. The Ld. AO had also taken support from the fact that the so called shareholders have gifted their shares to the directors and relatives in subsequent financial years. No doubt, there may be no response from certain creditors in response to 133(6) notices, but non appearance or non response of...