Shyam Prakash Spinning Mills Ltd., Ahmedabad V. The ACIT.,(OSD)Circle-8, Ahmedabad

CO 42/AHD/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1359 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: JAGDISH SHAH
• Keywords: Depreciation; Deemed to accrue or arise in india
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO. 34/AHD/2012 A LONG WITH C.O. NO.42/AHD/2012 A SST. Y EAR: 2007 - 08 ASSTT. CIT(OSD), CIRCLE - 8, AHMEDABAD. VS SHYAM PRAKASH SPINNING MILLS LTD., 111, NEW CLOTH MARKET, RAIPUR, AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO. AADCS 0882J APPELLANT BY SHRI JAGDISH SHAH, SR. DR RESPONDENT BY SHRI DHIREN SHAH, AR DATE OF HEARING: 15/10/2015 DATE OF PRONOUNCEMENT : 23/10/ 2015 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THESE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE ARE ARISING OUT OF THE ORDER VIDE NO.CIT(A) - XIV/DCIT, CIR.8/267/2009 - 10, DATED 25/10/2011 PASSED BY COMMISSIONER OF INCOME - TAX (APPEALS) - XIV, AHM EDABAD [IN SHORT CIT(A)] FOR ASST. YEAR 2007 - 08 . ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT) BY DCIT (OSD) ON 29/12/2009. ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 2 2. AT THE OUTSET THE LD. AR OF THE ASSESSEE REQUESTED FOR WITHDRAWAL OF THE CROSS OBJE CTION NO.42/AHD/2012. THE LD. DR HAS NO OBJECTION. SO AFTER HEARING BOTH THE PARTIES, WE ALLOW THE ASSESSEE TO WITHDRAW THE CROSS OBJECTION. THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. 3. NOW WE TAKE UP THE APPEAL OF THE REVENUE WHEREIN REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL : - 1. THE LD. CIT(A) - XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DEPRECIATION ON MACHINERY PURCHASED FROM GROUP OF COMPANIES AMOUNTING TO RS.7,25,013/ - . 2. THE LD. CIT(A) - XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.59,24,478/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CESSATION OF LIABILITY U/S 41(1) OF THE ACT, IN RESPECT OF UNPROVED CREDITORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - XI V, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) - XIV, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY , ENGAGED IN THE BUSINESS OF MANUFACTURING OF CLOTH AND RUNNING SPINNING MILLS. IT FILED ITS RETURN OF INCOME FOR ASST. YEAR 2007 - 08 ON 30.10.2007 DECLARING TOTAL INCOME OF RS. NIL AFTER SETTING OFF BROUGHT FORWARD LOSS. ASSESSEE S CASE WAS SELECTED FOR SCRUTINY ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 3 ASSESSMENT. ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 29/12/2009 ASSESSING THE INCOME OF ASSESSEE AT RS.1,89,22,384/ - . OUT OF VARIOUS ADDITIONS ONLY TWO ADDITIONS HAVE TRAVELLED TO THE TRI BUNAL AS APPEARING IN THE GROUNDS OF APPEAL : - 5. GROUND NO.1 RELATES TO DEPRECIATION OF RS.7,25,013/ - . THIS DISALLOWANCE OF DEPRECIATION OF RS.7,25,013/ - COMPRISES TWO PARTS AND HAS ARISEN FOR FOLLOWING TWO REASONS - (A) DISALLOWANCE OF DEPRECIATION @ 15% ON PURCHASE OF MACHINERIES OF RS.46,43,000/ - FROM GROUP COMPANIES AND THE AMOUNT OF DISALLOWANCE WORKS OUT AT RS.6,96,450/ - . (B) DISALLOWANCE OF RS.28,563/ - BEING CALCULATED @ 7.5 ON MACHINES PURCHASED AT RS.3,80,835/ - FOR THE REASON THAT ASSESSEE HAS CLAI MED DEPRECIATION FOR WHOLE YEAR WHEREAS THE AO ALLOWED DEPRECIATION FOR SIX MONTHS ONLY AS THE MACHINES OF RS.3,80,835/ - WERE PUT TO USE AFTER 30 TH SEPTEMBER, 2009. 6. AS REGARDS DISALLOWANCE OF RS.28,562/ - MENTIONED IN PARA 5(B) ABOVE, ASSESSEE DID NOT R EPLY TO THE QUESTIONS RAISED BY THE AO DURING ASSESSMENT PROCEEDING AND NOR MADE AVAILABLE ANY FURTHER INFORMATION BEFORE THE CIT(A) AND BEFORE THE TRIBUNAL. AS SUCH THIS DISALLOWANCE OF RS.28,563/ - MADE BY A SSESSING O FFICER IS S USTAINED. 7. NOW WE TAKE UP THE DISALLOWANCE OF RS.6,96,450/ - AS REFERRED IN PARA 5(A) ABOVE. ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 4 8. THE LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND , THE LD. AR OF THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER APPEAL , ASSESSEE HAS PURCHASED MACHINES FOR RS .46,43,000/ - FROM FOLLOWING GROUP COMPANIES : - 1) PRAKASH FINSTOCK PVT. LTD. RS.3548000 2) ASHUTOSH FIBRE PVT. LTD. RS.1095000 ----------------------- RS.4643000 ----------------------- LD. AR SUBMITTED THAT ASSESSEE HAS FURNISHED ALL THE NECESSARY DETAILS AND EVIDENCES IN SUPPORT OF THE PURCHASE OF MACHINERY OF RS.46,43,000/ - INCLUDING PURCHASE BILLS, ENTRY IN THE GATE PASS REG ISTER, INWARD ENTRY OF MACHINERY AND DELIVERY RECEIPT OF THE ORIGINAL BUYER. ON THE BASIS OF ALL THESE DETAILS CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO IN THIS REGARD. 9 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS, FACTS OF THE CASE AND PERUSE D THE MATERIAL ON RECORD. WE FIND THAT SUFFICIENT EVIDENCES HAVE BEEN PROVIDED BY THE ASSESSEE IN ORDER TO PROVE THAT ASSESSEE HAS PURCHASED THE MACHINERIES FOR RS.46,43,000/ - FROM TWO COMPANIES AND THE REASON FOR WHICH THE ASSESSING OFFICER HAS DISALLOWED THE PURCHASES WAS FOR NON - AVAILABILITY OF LORRY NOS. BILL/VOUCHERS FOR TRANSPORTATION OF MACHINE AND INSTALLATION CHARGES OF THE MACHINES. ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 5 10 . WE FIND THAT THE ASSESSEE IS A LIMITED COMPANY AND ALL ITS BOOKS OF ACCOUNTS ARE AUDITED UNDER THE PROVISIONS O F THE ACT AS WELL AS THE COMPANIES ACT. PURCHASES OF MACHINERIES ARE FORMING PART OF FIXED ASSETS SCHEDULE ATTACHED TO THE AUDITED FINANCIAL STATEMENT. PARTIES FROM WHOM MACHINES HAVE BEEN PURCHASED ARE REGISTERED UNDER VAT, PURCHASE BILLS HAVE BEEN ISSUED , ENTRY IS AVAILABLE IN GATE PASS REGISTER. THE REASON FOR ABSENCE OF LORRY NUMBER WAS THAT THE MACHINE(S) PURCHASED FROM PRAKASH FINSTOCK PVT. LTD. WAS AT EX - MILL DELIVERY AND, THEREFORE, THE TRANSPORTATION CHARGES WERE NOT REQUIRE D TO BE PAID BY THE ASSE SSEE AND IN THE CASE OF ASHUTOSH FIBRE PVT. LTD., THIS SUPPLIER BEING LOCAL PARTY , HAND CART WAS USED FOR BRINGING THE SEPARATE PARTS OF THE MACHINE TO THE DESTINATION WHICH WERE LATER ON ASSEMBLED AT THE ASSESSEE S PREMISES. DUE TO THIS REASON THERE WAS N O TRANSPORT RECEIPT FOR MACHINE PURCHASED FROM ASHUTOSH FIBRE PVT. LTD. THEREFORE, THE ASSESSEE WAS HAVING SUFFICIENT REASON FOR NOT HAVING LORRY RECEIPT FOR THE MACHINES PURCHASED FROM PRAKASH FINSTOCK PVT. LTD. AND ASHUTOSH FIBRE PVT. LTD. A PART FROM TH IS, N OTHING CONTRARY HAS BEEN BROUGHT ON RECORD BY THE A SSESSING O FFICER TO CONTROVERT THE SUBMISSIONS OF THE LD. AR IN REGARD TO THE DETAILS SUBMITTED IN THE FORM OF BILLS, GATE PASS ENTRY, INWARD ENTRY OF MACHINERY, COPY OF BILLS OF MACHINERY OF ORIGINAL PURCHASER ETC. IN THESE CIRCUMSTANCES AND ON THE BASIS OF OUR OBSERVATIONS ABOVE, WE ARE OF THE OPINION THAT AS THE ASSESSEE HAS FURNISHED SUFFICIENT DOCUMENTS AND EVIDENCES TO PROVE THE GENUINENESS OF PURCHASE OF MACHINERIES FROM GROUP CO M P AN IES AND THEREFO RE , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF LD. ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 6 CIT(A) IN RESPECT OF DELETION OF DISALLOWANCE OF DEPRECIATION OF RS.6,96,450/ - AND THE SAME IS UPHELD. ACCORDINGLY THIS GROUND OF REVENUE IS PARTLY ALLOWED. 1 2 . GROUND NO.2 RE LATES TO DELETION OF ADDITION OF RS.59,24,478/ - UNDER SECTION 41(1) OF THE ACT ON ACCOUNT OF CESSATION OF LIABILITY BY CIT(A) - XIV. 1 3 . THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF ASSESSING OFFICER AND REFERRED TO THE DECISION OF ITAT MUMBAI BENCH IN THE CASE ASHT LAXMI DIAMOND & JEWELLERY VS. ITO, 21(1)(1), MUMBAI, (2015) 59 TAXMANN.COM 430 (MUMBAI - TRIB.) DATED 20.2.2015 1 4 . ON THE OTHER HAND, THE LD. AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER CAME ACROSS THE LIST OF SUNDRY CREDITORS FOR THE FINANCIAL YEAR 2005 - 06 AND FINANCIAL YEAR 2006 - 07 AND OBSERVED THAT BALANCE OF SOME OF THE SUNDRY CREDITORS ARE EITHER REMAINING THE SAME OR A VERY MINOR CHANGE HAS HAPPENED AND WAS OF THE VIEW THAT AS ASSESSEE HAS NOT PAID THE OUTSTANDING AMOUNT TO THE SUNDRY CREDITORS AND , THEREFORE, THE LIABILITY TO MAKE PAYMENT HAS COME TO AN END AND THERE IS A CESSATION OF THE LIABILITY AND ACCORDINGLY BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT MADE ADDITION OF RS.59,69,478 IN R ESPECT OF THE FOLLOWING PARTIES : - ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 7 SL.NO. NAME OF PARTY AMOUNT (RS.) 1. NEO ENTERPRISE 100000 2 PARAS COTTON COMPANY 5208303 3 SHALIN COTTON SUPPLIERS 210583 4 RAMNIKLAL VRAJLAL 24773 5 SAI SYNTEX PVT. LTD. 161862 6 SANDIP TRADING CO 10195 7 SVIT C APITAL MARKET LTD. 122660 8 UTILITY SERVICES 16828 9 AKSHARDHAM ENTERPRISES 10000 10 INDUSTRIAL TRADE ENGINEERS 23524 11 MANILAL SANGHYL 13000 12 RUSHABH ENTERPRISE 24750 5926478 THE LD. AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THAT WERE REGULAR TRANSACTIONS FROM MOST OF THE ABOVE REFERRED PARTIES AND THE MAIN REASON FOR THE ASSESSEE BEING UNABLE TO PAY THE LIABILITY SLOWLY IS THAT ASSESSEE COMPANY IS SICK INDUSTRIAL COMPANY AND AS APPLIED TO BIFR WHO VIDE ITS LETTER DATED 22 .3.2007 HAS SANCTIONED REHABILITATION SCHEME FOR THE COMPANY. DUE TO THIS REASON AND ACUTE FINANCIAL CRISIS FACED BY THE COMPANY, THE CREDITORS OF THE COMPANY HAVE EXTENDED THEIR CO - OPERATION AND ACCOMMODATION TO THE COMPANY BY NOT PRESSING HARD FOR IMMEDI ATE PAYMENT AND WERE AGREEABLE FOR SLOW REPAYMENT BUT BY NO CHANCE THE CLAIM OF ANY OF THE SUNDRY CREDITOR HAS VANISHED. THIS FACT WAS ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 8 FURTHER SUPPORTED BY THE LEDGER ACCOUNT OF SOME OF THE PARTIES WHEREIN REPAYMENTS HAVE BEEN MADE BY THE ASSESSEE THROUGH BANKING CHANNEL. THE LD. AR SUBMITTED THAT AS ALL THE TRANSACTIONS ENTERED WITH THE SUNDRY CREDITORS WERE BUSINESS TRANSACTIONS CARRIED OUT IN THE NORMAL COURSE OF BUSINESS AND THE TRADING LIABILITY EXHIBITED IN THE BALANCE SHEET ARE THE LIABILITIES TO BE PAID BY THE COMPANY AND HAS NOT WRITTEN OFF THE SAME TO PROFIT AND LOSS ACCOUNT . I T DOES NOT BECOME INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 1 5 . IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR ALSO RELIED ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS (P) LTD. (1999) 236 ITR 518 (SC) AND THAT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOGILAL RAMJIBHAI AT A RA (2014) 43 TAXMANN.COM 55 (GUJARAT) . 1 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSED THE MATERIAL ON RECORD. THE ONLY QUESTION BEFORE US TO DECIDE IS THAT WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT WITH REFERENCE TO UNPAID S UNDRY CREDITORS. IN THE PROCESS OF MAKING THE ADDITION OF RS.59,24,478/ - , THE ASSESSING OFFICER HAS PICKED UP THE NAMES OF SOME OTHER SUNDRY CREDITORS O N WHOM, THERE WAS NO CHANGE IN BALANCES IN COMPARISON TO LAST YEAR. IN OTHER WORDS, NO TRANSACTION TOOK PLACE DURING THE YEAR WITH SUCH SUNDRY CREDITORS AND THEREFORE, TOOK THE DECISION THAT SUCH SUNDRY CREDITORS TOTALING TO RS.59,24,478/ - IS AN UNPAID LIABILITY WHICH THE ASSESSEE ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 9 HAS NOT TO PAY AND ACCORDINGLY, INVOKED THE PROVISIONS OF SECTION 41(1) OF TH E ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE A.O. WAS UNABLE TO APPRECIATE THE FACTS THAT THE ASSESSEE COMPANY IS A SICK COMPANY, SUNDRY CREDITORS HAVE NOT RELINQUISHED THEIR RIGHT TO RECEIVE UNPAID BALANCES, BUT HAVE AGREED TO RECEIVE THEI R OUTSTANDING BALANCES IN SMALL INSTALLMENTS DUE TO THE FINANCIAL STABILITY AND LACK OF FINANCIAL RESOURCES WITH THE ASSESSEE. THIS FACTS IS FURTHER SUPPORTED BY GOING THROUGH THE LEDGER ACCOUNTS OF SUCH SUNDRY CREDITORS AS WELL AS THE CHART SHOWN ON PAGE 235 AND 236 OF THE PAPER BOOK, WHEREIN TRANSACTIONS IN THE FORM OF PAYMENT TO THE SUNDRY CREDITORS IN SOME OF THE CASES IS SHOWN. TWO SUCH INSTANCES ARE IN CASE OF NEO ENTERPRISE IN WHICH CLOSING BALANCE AS ON 31/03/2007 WAS STANDING AT RS.1LAC WAS PAID DURING FINANCIAL YEAR 2007 - 08 BY PAYMENT OF RS.50,000/ - EACH ON 30 TH APRIL, 2007 AND 16 TH MAY, 2007. SIMILARLY, IN ANOTHER CASE OF PARAS COTTON COMPANY ON WHICH RS.52,08,303/ - WAS OUTSTANDING TO BE PAID AS ON 31.03.2007 AND DURING FINANCIAL YEAR 2007 - 0 8 THE SUM OF RS.7LACS WAS PAID ON VARIOUS DATES AND RS.3,50,000/ - DURING FINANCIAL YEAR 2008 - 09 ON VARIOUS DATES WAS PAID BY THE ASSESSEE COMPANY. THESE TRANSACTIONS VERY WELL SUPPORT THE FACT THAT ASSESSEE HAS TREATED THE SUNDRY CREDITORS AS ITS LIABILIT Y IN THE BALANCE SHEET AS ON 31.03.2007. NOT A SINGLE INSTANCE IS PLACED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO PROVE THAT THE SUNDRY CREDITORS ON WHOM HE IS GOING INVOK ING THE PROVISIONS OF SECTION 41(1) HAS REFUSED ITS CLAIM TO RECEIVE THE A MOUNT OUTSTANDING IN THE BALANCE SHEET UNDER THE LIST OF SUNDRY CREDITORS. ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 10 1 7 . THE LD. DR HAS REFERRED TO THE JUDGMENT OF ITAT, MUMBAI BENCH IN THE CASE OF ASHT LAXMI DIAMOND & JEWELLERY VS. ITO (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE OF ASSESS EE BECAUSE IN THE ABOVE JUDGMENT DEBTS WERE OUTSTANDING FOR SEVERAL YEARS AND CREDITORS HAD NO DEALING WITH THE ASSESSEE FOR LAST MANY YEARS AND NOR THERE WAS ANY DEMAND FOR PAYMENT BY ANY OF THE SAID PARTIES FROM ASSESSEE FOR LAST MORE THAN 10 YEARS. BUT T HIS IS NOT THE CASE OF THE ASSESSEE AS THE TRANSACTIONS BETWEEN THE ASSESSEE AND THE SUNDRY CREDITORS ARE GOING ON AND NOR THE ASSESSING OFFICER HAS BEEN ABLE TO PROVE THAT ANY OF THE SUNDRY CREDITOR HAS RELINQUISHED THE RIGHT TO HIS CLAIM FROM THE ASSESS EE. 1 8 . ON THE OTHER HAND IN THE CASE OF SUGAULI SUGAR WORKS (P) LTD. (SUPRA) HON BLE SUPREME COURT GAVE A LAND MARK JUDGMENT WHEREIN THE COURT CATEGORICALLY HELD - THAT THE MERE ENTRY IN THE BOOKS OF ACCOUNT OF THE DEBTOR MADE UNILATERALLY WITHOUT ANY A CT ON THE PART OF THE CREDITOR WILL NOT ABLE THE DEBTOR TO SAY THAT THE LIABILITY HAS COME TO AN END. THE COURT OBSERVED THAT THE LIABILITY CAN REMIT OR CEASE ONLY BY A BILATERAL AND MULTILATERAL ACT BETWEEN THE CREDITORS ON THE ONE SIDE AND THE DEBTOR ON OTHER AND NOT BY A UNILATERAL ACT. THE FOLLOWING WORDS IN SECTION 41(1) OF THE INCOME - TAX ACT, 1961 ARE OF IMPORTANT: THE ASSESSEE HAD OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER ANY AMOUNT IN RESPECT OF SUCH LOSS OR ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 11 EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY HIM . THE SECTION CONTEMPLATES THE OBTAINING BY THE ASSESSEE OF AN AMOUNT EITHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER OR BENEFIT BY WAY OF RE MISSION OR CESSATION AND IT SHOULD BE OF A PARTICULAR AMOUNT OBTAINED BY HIM. THUS, THE OBTAINING BY THE ASSESSEE OF A BENEFIT BY VIRTUE OF REMISSION OR CESSATION IS THE SINE QUA NON FOR THE APPLICATION OF THIS SECTION. THE MERE FACT THAT THE ASSESSEE HAS MADE AN ENTRY OF TRANSFER IN HIS ACCOUNTS UNILATERALLY WILL NOT ENABLE THE DEPARTMENT TO SAY THAT SECTION 41(1) WOULD APPLY AN D THE AMOUNT SHOULD BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. SIMILARLY IN THE CASE OF CIT VS. BHOGILAL RAMJIBHAI ATARA (SUPRA) HON BLE JURISDICTIONAL HIGH COURT HAS HELD SECTION 41(1) WOULD APPLY IN A CASE WHERE THERE HAS BEEN REMISSION OR CESSATION OF LIABILITY DURING THE YEAR UNDER CONSIDERATION SUBJECT TO THE CONDITIONS CONTAINED IN THE STATUTE BEING FULFILLED. ADDI TIONALLY SUCH CESSATION OR REMISSION HAS TO BE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE INSTANT CASE, BOTH ELEMENTS ARE MISSING. THERE WAS NOTHING ON RECORD TO SUGGEST THAT THERE WAS REMISSION OR CESSATION OF LI ABILITY THAT TOO DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007 - 08. IT IS UNDOUBTEDLY BY A CURIOUS CASE. EVEN THE LIABILITY ITSELF SEEMS UNDER SERIOUS DOUBT. THE ASSESSING OFFICER UNDERTOOK THE EXERCISE TO VERIFY THE RECORDS OF THE SO CALLED CREDITORS. MANY OF THEM WERE NOT FOUND AT ALL IN THE GIVEN ADDRESS. SOME OF THEM STATED THAT THEY HAD NO DEALING WITH THE ASSESSEE. IN ONE OR TWO CASES, THE RESPONSE ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 12 WAS THAT THEY HAD NO DEALING WITH THE ASSESSEE, NOR DID THEY KNOW HIM. OF COURSE, THESE I NQUIRIES WERE MADE EX PARTE AND IN THAT VIEW OF THE MATTER, THE ASSESSEE WOULD BE ALLOWED TO CONTEST SUCH FINDINGS. NEVERTHELESS, EVEN IF SUCH FACTS WERE ESTABLISHED THROUGH BI PARTE INQUIRIES, THE LIABILITY AS IT STANDS PERHAPS HOLDS THAT THERE WAS NO CES SATION OR REMISSION OF LIABILITY. THEREFORE, THE AMOUNT IN QUESTION CANNOT BE ADDED BACK AS A DEEMED INCOME UNDER SECTION 41(1). THIS IS ONE OF THE STRANGE CASES WHERE EVEN IF THE DEBT ITSELF IS FOUND TO BE NON GENUINE FROM THE VERY INCEPTION, AT LEAST IN TERMS OF SECTION 41(1) THERE IS NO CURE FOR IT. THEREFORE, THE APPEAL FILED BY THE REVENUE WAS LIABLE TO BE DISMISSED. THE FACTS OF THE CASE OF ASSESSEE ARE QUITE SIMILAR TO THE FACTS OF THE CASES ADJUDICATED IN THE ABOVE REFERRED TWO JUDICIAL PRONOUNCE MENTS . THE LIABILITY OF SUNDRY CREDITORS HAS NOT CEASED TO EXIST RATHER THERE WERE REGULAR TRANSACTIONS WITH THESE PARTIES IN THE LATTER YEARS AS WELL. NOT A SINGLE INSTANCE HAS BEEN BROUGHT TO PROVE THAT SUNDRY CREDITORS HAVE DENIED THEIR CLAIMS NOR THE ASSESSEE HAS WRITTEN OFF THE LIABILITY IN ITS BOOKS OF ACCOUNT IN THE YEAR UNDER PLEA, AND THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HON BLE APEX COURT IN CASE OF CIT VS. SUGAULI SUGAR WORKS (P) LTD. (SUPRA) AND HON BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. BHOGILAL RAMJIBHAI ATARA (SUPRA) AND IN LIGHT OF OUR DISCUSSIONS MADE ABOVE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND ACCORDINGLY THIS GROUND OF THE REVENUE IS DISMISSED. 1 9 . OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. ITA NO. 34/AHD/2012 ALONG WITH CO NO.42/AHD/2012 ASST. YEAR 2007 - 08 13 20 . IN THE RESULT, REVENUE S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/10/2015 SD/ - SD/ - ( RAJPAL YADAV ) J UDICIAL MEMBER ( MANISH BORAD ) A CCOUNTANT M EMBER TRUE COPY DATED 23/10/2015 MAHATA/ - COPY OF TH E ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST . REGISTRAR, ITAT, AHMEDABAD