ITO, Ward - 3(3), Kolkata , Kolkata V. M/s. C D Steel Pvt. Ltd., , Kolkata

ITA 1360/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2783 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CHOUDHURY
• Keywords: Capital asset; Business income; Period of limitation; Additional evidence; Tangible material; Bad and doubtful debts; Onus to prove
• Section: 43B; 143(3); 133(6); 131; 148; 68

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1360 / KOL / 20 17 ASSESSMENT YEAR :2013 14 INCOME TAX OFFICER, WARD-3(3), AAYAKAR BHAVAN, P-7, CHOWRINGHEE SQUARE, ESPLANADE, 4 TH FLOOR, KOLKATA-69 V/S . M/S C.D. STEEL PVT. LTD., COMMERCE HOUSE, 2A GANESH CHANDRA AVENUE, 4 TH FLOOR, ROOM NO.8E, KOLKATA-13 [ PAN NO.AABCC 3442 L ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI R. CHOUDHURY, ADDL. CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 16-08-2018 /DATE OF PRONOUNCEMENT 29-08-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2013-14 C HALLENGES CORRECTNESS OF COMMISSIONER OF INCOME TAX (APPEALS) -12 KOLKATAS ORDER DATED 31.03.2017, PASSED IN CASE NO.10161/CIT(A)-12 /KOL//W.3(3)/2015-16, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1 961; IN SHORT THE ACT. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEHES T. THE REGISTRY HAS ALREADY SENT IT AN RPAD DATED 05.07.2018. WE TH US PROCEED EX PARTE AGAINST THE ASSESSEE IN THE INSTANT CASE. 2. THE REVENUE HAS PLEADED FOUR SUBSTANTIVE GROUNDS IN THE APPEAL. ITS FIRST GRIEVANCE SEEKS TO REVIVE THE ASSESSING OFFICERS A CTION MAKING UNEXPLAINED ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 2 CASH CREDITS ADDITION OF 4,51,649/- U/S. 68 OF THE ACT. ITS CASE BEFORE US I S THAT CIT(A) DID NOT CALL FOR THE NECESSARY REMAND R EPORT FROM THE ASSESSING AUTHORITY. WE FIND NO MERIT IN THE INSTANT ARGUMENT . CASE FILE SUGGESTS AS PER THE CIT(A)S RELEVANT PORTION IN PARA 3.2 THAT THE ASSESSEE HAD RECEIVED THE AMOUNT IN QUESTION FROM ITS DIRECTOR NAMELY SRI BIS WANATH BERIWAL FOR MEETING ITS DAY-TO-DAY EXPENSES WHOSE DETAILS ALREADY STOOD FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT. BE THAT AS IT MAY, THE FACT REMAINS THAT IDENTITY OF ASSESSEES DIRECTOR IS NOW HERE IN DISPUTE. WE THEREFORE HOLD THAT GENUINENESS AND CREDITWORTHINES S IDENTITY OF THE ASSESSEES DIRECTOR HEREINABOVE IS NOWHERE IN ISSUE . NOR IS THERE ANY MATERIAL INDICATING ADMISSION OF ADDITIONAL EVIDENCE UNDER R ULE 46A OF INCOME TAX RULES. WE THEREFORE AFFIRM THE CIT(A)S LOWER APPEL LATE FINDINGS UNDER CHALLENGE REGARDING THE INSTANT ISSUE. 3. NEXT COMES THE REVENUES SECOND SUBSTANTIVE GROU ND THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING U/S 43B D ISALLOWANCE OF 12,64,109/- MADE DURING THE COURSE OF ASSESSMENT. WE NOTICE HER EIN AS WELL THAT THERE IS NO REBUTTAL ON REVENUES PART QUA THE CIT(A)S CLINCHING FINDING THAT THE AMOUNT IN QUESTION NOWHERE FORMED PART OF ASSESSEE S DEDUCTION CLAIM(S) PERTAINING TO IMPUGNED ASSESSMENT YEAR 2013-14. WE AFFIRM THE CIT(A)S FINDINGS UNDER CHALLENGE ON THIS COUNT ALONE. 4. THE REVENUES THIRD SUBSTANTIVE GROUND CHALLENGE S CORRECTNESS OF THE CIT(A)S ORDER DELETING THE DISALLOWANCE OF EXPENDI TURE TO THE TUNE OF 1,33,880/- MADE IN THE COURSE OF ASSESSMENT. WE NOT ICE HEREIN AS WELL THAT REVENUES HAS NO CASE ON MERITS SINCE THE ASSESSEE; WHO HAD NOT DERIVED ANY BUSINESS INCOME IN THE RELEVANT PREVIOUS YEAR, INCURRED THE IMPUGNED EXPENDITURE ALIKE TELEPHONE, ELECTRICITY CHARGES AN D OTHER EXPENSES FOR RUNNING ITS BUSINESS WHOSE DETAILS ALREADY FORMED P ART OF RECORD BEFORE THE ASSESSING OFFICER. WE THUS REJECT REVENUES INSTANT THIRD SUBSTANTIVE GROUND AS WELL. ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 3 5. NEXT REVENUES LAST SUBSTANTIVE GROUND THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING U/S 41(1) ADDITION OF CESSATION OF LIABILITY INVOLVING SUMS OF 43,35,622/- AND 1,25,30,000/-, WITH THE FOLLOWING DETAILED DISCUSSION:- GROUND 9: THE AO HAS ADDED RS.43,35,622/- ON ACCOUN T OF CESSATION OF LIABILITY IN HIS ASSESSMENT ORDER WHICH WAS STATED IN HIS ASSESS MENT ORDER AS UNDER:- S PER AUDITED BALANCE SHEET, THE ASSESSEE HAD OUTS TANDING EXPENSES PAYABLE LIABILITY OF RS.43,35,622/-. THE ASSESSEE W AS ASKED TO PRODUCE DETAILS OF SUCH PARTIES. THE ASSESSEE COULD NOT SUB MIT DETAILS. THIS LIABILITY WAS OUTSTANDING EVEN IN EARLIER YEAR. ASSESSEE HAD NO BUSINESS /INCOME DURING THESE YEARS. THERE WAS NO EVIDENCE TO PROVE THAT SUCH LIABILITY STILL EXISTS. WHEN ASKED BY THIS OFFICE LETTER WHY THIS S HALL NOT BE TREATED FOR CESSATION OF LIABILITY, THE ASSESSEE DID NOT GIVE A NY REPLY. THE TOTAL LIABILITY AS STATED ABOVE IS TREATED AS INCOME DUE TO CESSATION OF LIABILITY. PENALTY U/S. 271(1)(C) OF THE ACT INITIATED FOR THE SAME. 7.1 THE APPELLANT HAS SUBMITTED THE FOLLOWING WRITT EN SUBMISSIONS: DUE TO FINANCIAL CRISIS, ASSESSEE COMPANY UNABLE T O PAY THE OUTSTANDING STATUTORY DUES FOR THE ELECTRICITY BILLS OF RS.43,3 5,622/- SINCE LONG BACK. IT IS PERTINENT TO MENTION THEREIN THAT THE SAID OUTSTAND ING ELECTRICITY DUES OF RS.43,35,622/- ARE NOT RELATED TO THE ASSESSMENT YE AR 2013-14 AND THERE ARE NO TRANSACTION DURING THE ASSESSMENT YEAR 2013-14 I N THIS REGARD. THE SAID AMOUNT IS BROUGHT DOWN SINCE THE FINANCIAL YEAR 200 5-06. ASSESSEE DID NOT CLAIM ANY DEDUCTION OF AID AMOUNT DURING THE ASSESS MENT YEAR 2013-14. ASSESSEE ALSO DID NOT WRITE BACK THE AMOUNT AND THE SAID AMOUNT STILL REFLECTING IN THE LIABILITY SIDE OF THE BALANCE SHE ET FOR THE ASSESSMENT YEAR 2013-14. PRAYER: IN VIW OF THE ABOVE ANALYSIS AND EXPLANATIO N, THE HON'BLE CIT(A) KINDLY MAY PASS AN ORDER DIRECTING THE AO TO DELETE THE ADDITION AMOUNTING TO RS.43,35,622/- ASA THE SAID AMOUNT NOT WRITE BACK A ND STILL REFLECTING IN THE LIABILITY SIDE OF THE BALANCE SHEET FOR THE AM YEAR 2013-14. 8. GROUND 10: THE AO HAS ADDED RS.1,25,30,000/- ON ACCOUNT OF CESSATION OF LIABILITY IN HIS ASSESSMENT ORDER WHICH WAS STATED IN HIS ASSESSMENT ORDER AS UNDER:- AS PER AUDITED B/SHEET, THE ASSESSEE HAD OUTSTANDI NG OTHER ADVANCE RECEIVED LIABILITY OF RS.1,25,30,000/-., THE ASSES SEE WAS ASKED TO PRODUCE DETAILS OF SUCH PARTIES. THE ASSESSEE COULD NOT SUB MIT DETAILS. THIS LIABILITY WAS OUTSTANDING EVEN IN EARLIER YEAR. ASSESSEE HAD NO BUSINESS / INCOME DURING THESE YEARS. THERE WAS O EVIDENCE TO PROVE T HAT SUCH LIABILITY STILL EXISTS. WHEN ASKED BY THIS OFFICE LETTER WHY THIS S HALL NOT BE TREATED FOR CESSATION OF LIABILITY, THE ASSESSEE DID NOT GIVE A NY REPLY. THE TOTAL LIABILITY AS STATED ABOVE IS TREATED AS INCOME DUE TO CESSATION OF LIABILITY. PENALTY U/S. 271(1)(C) OF THE ACT INITIATED FOR THE SAME. 8.1 THE APPELLANT HAS SUBMITTED THE FOLLOWING WRITT EN SUBMISSIONS:- DUE TO FINANCIAL CRISIS, ASSESSEE COMPANY UNABLE T O REPAY THE ADVANCE RECEIVED FROM PARTY OF RS.1,5,30,000/- SINCE LONG B ACK. IT IS PERTINENT TO MENTION HEREIN THAT THE SAID ADVANCE RECEIVED FROM PARTY OF RS.1,25,30,000/- ARE NOT RELATED TO THE ASSESSMENT YEAR 2013-14 AND THERE ARE NO TRANSACTIONS DURING THE ASSESSMENT YEAR 2013-14 IN THIS REGARD. THE SAID AMOUNT IS BROUGHT DOWN SINCE LONG BACK. ASSESSEE ALSO DID NOT WRITE BACK THE AMOUNT ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 4 AND THE SAID AMOUNT STILL REFLECTING IN THE LIABILI TY SIDE OF THE BALANCE SHEET FOR THE ASSESSMENT YEAR 2013-14. HON'BLE HIGH COURT AT KERALA IN THE CASE OF COMMIS SIONER OF INCOME-TAX V. V.T. KUTTAPPU & SONS 96 ITR 327 HELD AS UNDER:- THE QUESTION IN REGARD TO THE SUM OF RS6,725 IS WH ETHER THERE HAD BEEN A CESSATION OF LIABILITY. THIS IS MORE DIFFICU LT TO DEALT WITH. IT IS SAID THAT THERE HAS BEEN SUCH A CESSATION OF LIABILITY B ECAUSE THE DEBTS HAD BECOME IRRECOVERABLE DUE TO THE PROVISIONS IN THE L AW OF LIMITATIONS AND FURTHER BECAUSE THE ASSESSEE HIMSELF TREATED TH ESE DEBT AS IRRECOVERABLE, DECIDED THAT IT WAS UNNECESSARY TO S HOW THE AMOUNTS AS DUE TO CREDITOR AND THEN PROCEEDED TO DIVIDE THE AMOUNTS AND INCLUDED THEM IN THE CAPITAL ASSET OF THE PARTNERS OF THE FIRM AND MADE CREDIT ENTRIES OF THESE AMOUNTS IN THEIR INDIVIDUAL ACCOUNTS. THE QUESTION IS WHETHER THE LAPSE OF TIME AND THE DEBTS GETTING BARRED IN CONSEQUENCE, AND THE ATTITUDE OF THE ASSESSEE THAT HE WOULD NOT PAY THESE AMOUNTS, AND HIS REFUSAL TO SHOW THESE AMOUNT S IN HIS ACCOUNT BOOKS AS DUE, AND FURTHER TREATING THESE AMOUNTS AS BELONGING TO HIMSELF WOULD BE SUFFICIENT TO SAY THERE HAS BEEN A CESSATION OF LIABILITY . COUNSEL FOR THE REVENUE CONTENDED THAT THIS AMOU NTS TO AN ADMISSION ON THE PART OF THE ASSESSEE THAT THE LIAB ILITY HAD CEASED AND THAT, THEREFORE, THE BURDEN IS ON THE ASSESSEE TO E STABLISH THAT IT IS A WRONG ADMISSION MADE ON A MISTAKEN BASIS OR ON SOME SUCH PLAUSIBLE GROUND. WE ARE UNABLE TO ACCEPT THIS ARGU MENT. WHEN A DEBTOR DECIDED NOT TO SHOW ON AMOUNT AS DUE TO THE CREDITOR BECAUSE THE AMOUNT HAD BECOME IRRECOVERABLE UNDER THE STATU TE OF LIMITATIONS AND WHEN HE PROCEEDED TO DIVIDE THE AMOUNT FO HIS O WN PURPOSES ALL THAT IT MEANT IS THAT THE AMOUNT IS NOT RECOVERABLE FROM HIM AND THAT HE DOES NOT INTEND TO PAY THAT AMOUNT IF AN ACTION IS TAKEN BY THE CREDITOR AGAINST HIM. THERE IS IN TERMS NO ADMISSIO N THAT THERE IS NO LIABILITY. IT IS A WELL-KNOWN PRINCIPLE THAT IF A R ECOVERY OF DEBT HAD BECOME BARRED WHAT IS BARRED IS ONLY THE REMEDY AND NOT THE RIGHT. A FORTIORI THE CORRESPONDING OBLIGATION MUST CONTINUE EVEN AFTER THE RECOVERY OF THE DEBT HAD BECOME BARED. WE REQUIRE S OMETHING TANGIBLE AND FOR MORE SPECIFIC THAN THE MATERIAL TH AT WAS ITSELF HAD CEASED TO EXIST. WE CANNOT SPELL OUT SUCH AN ADMISS ION FROM THE FACT THAT THE DEBTOR REALIZED THAT THE AMOUNT WAS NOT RE COVERABLE AND THAT HE NEED NOT MAKE ANY PROVISION FOR ITS PAYMENT IN H IS ACCOUNT. THE VERY FIRST STEP IN THE ARGUMENT OF THE DEPARTMENT, THEREFORE, CANNOT STAND AND THERE IS, THEREFORE, NO NEED TO CONSIDER THE QUESTION WHETHER THERE WAS ANY EVIDENCE THAT THE ADMISSION W AS MISTAKEN OR NOT. WE DO NOT THINK THAT THE DECISIONS RELIED ON B Y COUNSEL FOR THE REVENUE IN COMMISSIONER OF INCOME-TAX V. GANGADHAR BANERJEE AND CO. (PRIVATE) LTD., [[1995] 57 .T.R. 176 (SC)] AND ASSOCIATED BANKING CORPORATION OF INDIA LTD. V. COMMISSIONER OF INCOME -TAX [[1965] 56 I.T.R 1 (SC)], HAVE ANY APPLICATION TO THE FACTS OF THIS CASE. THE DECISION OF THE ANDHRA PRADESH HIGH COURT IN SEMAKU RTI SOMANNA V. VANKADARI SUBBRAO [[1958] S.C.R. 1122 (SC)] 33 I.T. R. 116 (AP)] HAS ALSO NO APPLICATION. THE RELEVANT DECISION SEEMS TO BE THAT OF THE SUPREME COURT IN BOMBAY DYEING & MANUFACTURING CO. LTD V. STATE OF BOMBAY [[1958] S.C.R. 1122 (SC)] REFERRED TO BY THE TRIBUNAL FOR THE PROPOSITION THAT UNDER THE LAW A DEBT NOTWITHSTANDI NG THAT ITS RECOVERY HAD BEEN BARRED BY LIMITATION DOES NOT IMPLY OR IMP ORT AN ADMISSION THAT THE LIABILITY CEASED TO EXIST. THE OTHER RULIN G THAT IS IMPORTANT IS THE ONE ALSO RELIED ON BY THE TRIBUNAL OF THE BOMBAY HI GH COURT IN K.CHEMICALS TD. V. COMMISSIONER OF INCOME-TAX [[196 6] 62 I.T.R. 34 ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 5 (BOM.)]. THE DECISION IS EXACTLY ON ALL FOURS WITH THE FACTS OF THIS CASE THOUGH AN ADDITIONAL GROUND IS MENTIONED IN THAT CA SE FOR HOLDING THAT THE LIABILITY CONTINUED TO EXIST. EVEN WITHOUT THIS ADDITIONAL GROUND THE COURT WAS WILLING AND DID COME TO THE CONCLUSION TH AT THERE WAS NO CESSATION OF LIABILITY. COUNSEL FOR THE REVENUE CON TENDED THAT THE VIEW TAKEN BY THE BOMBAY HIGH COURT REQUIRES RECONSIDERA TION. WE RESPECTFULLY AGREE WITH THE VIEW TAKEN BY THE BOMBA Y HIGH COURT AS WE DO NOT SEE ANY REASON TO DIFFER FROM IT. A COPY OF SAID JUDGDMNT OF COMMISSIONER OF INCOME-T AX V. V.T. KUTTAPPU & SONS 96 ITR 327 IS ANNEXURE HEREWITH AND MARKED AS D. 8.2 I WILL TAKE UP THE GROUNDS OF APPEAL NOS. 9 AND 10 TOGETHER AS THEY RELATE TO THE ISSUE OF CESSATION OF LIABILITY. I HAVE PERUSED THE FACTS BOTH THE GROUNDS OF APPEAL AND THE SUBMISSIONS OF THE APPELLANT. THE AO NOTICED TH AT AS PER AUDITED BALANCE SHEET, THE ASSESSEE HAD OUTSTANDING EXPENSES PAYABLE LIABI LITY OF RS.43,35,622/- AND OTHER ADVANCE RECEIVED LIABILITY OF RS.1,25,30,000/-. TH E ASSESSEE WAS ASKED TO PRODUCE DETAILS OF SUCH PARTIES. THE ASSESSEE COULD NOT SUB MIT DETAILS. THESE LIABILITIES WERE OUTSTANDING EVEN IN EARLIER YEARS. ASSESSEE HAD NO BUSINESS / INCOME DURING THESE YEARS. THERE WAS NO EVIDENCE TO PROVE THAT SUCH LIA BILITY STILL EXISTS/. WHEN ASKED BY THIS OFFICE LETTER WHY THIS SHALL NOT BE TREATED FO R CESSATION OF LIABILITY, THE ASSESSEE DID NOT GIVE ANY REPLY. THE TOTAL LIABILITY AS STAT ED ABOVE IS TREATED AS INCOME DUE TO CESSATION OF LIABILITY. IT IS NOT DISPUTED THAT THE LIABILITIES WERE OLD ONES RELATING TO 2005-06. LIABILITY IS BARRED BY LIMITATION BUT THER E ARE CASES WHERE LIABILITY IS BEING CARRIED FORWARD FOR YEARS IN THE BOOKS OF ASSESSEE. A LIABILITY CANNOT BE TREATED AS CEASED MERELY BECAUSE OF THE ACT THAT THE LIABILITY IS BEING CARRIED FORWARD FOR YEARS AND THE ASSESSEE IS NOT COMPLETELY ABLE TO PROVE TH E GENUINENESS OF THE TRADING LIABILITY, AT THE TIME OF APPLICATION OF SECTION 41 (1) BY THE INCOME TAX AUTHORITIES. CONSIDERING THE FACTS OF THE CASE AS NOTE ABOVE IT IS CLEAR THAT THE ASSESSEE HAD CONTINUED TO SHOW THE ADMITTED AMOUNTS AS LIABILITI ES IN ITS BALANCE SHEET. THE LIABILITIES REFLECTED IN THE BALANCE SHEET CANNOT B E TREATED AS CESSATION OF LIABILITIES. EARLY BECAUSE THE LIABILITIES RE OUTSTANDING FOR LA ST MANY YEARS, IT CANNOT BE INFERRED THAT THE SAID LIABILITIES HAVE CEASED TO EXIST. IT IS ALSO A FACT THAT THE ASSESSEE HAS NOT WRITTEN OFF THE OUTSTANDING LIABILITIES IN THE BOOK S OF ACCOUNT AND THE OUTSTANDING LIABILITIES ARE STILL IN EXISTENCE WOULD PROVE THAT THE ASSESSEE ACKNOWLEDGED HIS LIABILITIES AS PER THE BOOKS OF ACCOUNT. SECTION 41 (1) OF THE IT ACT IS ATTRACTED WHEN THERE IS CESSATION OR REMISSION OF A TRADING LIABIL ITY. THE AO SHALL HAVE TO PROVE THAT THE ASSESSEE HAS OBTAINED THE BENEFITS IN RESPECT O F SUCH TRADING LIABILITIES BY WAY OF REMISSION OR CESSATION THEREOF. MERELY BECAUSE THE ASSESSEE OBTAINED BENEFIT OF DEDUCTION IN THE EARLIER YEARS AND BALANCES RE CARR IED FORWARD IN THE SUBSEQUENT YEAR, WOULD NOT PROVE THAT THE TRADING LIABILITIES OF THE ASSESSEE HAVE BECOME NON- EXISTENT. HENCE, AS LONG AS THE ASSESSEE UNDER THE PROVISIONS OF SECTION 41(1) OF THE INCOME TAX ACT, 1961. THE APPELLANT HAS RELIED UPON THE JUDGEMENT OF COMMISSIONER OF INCOME-TAX V. V.T. KUTTAPPU & SONS 96 ITR 327. THE CASES CITED ARE SIMILAR WITH THE FACTS OF THIS CASE THOUGH AN A DDITIONAL GROUND IS MENTIONED IN THAT CASE FOR HOLDING THAT THE LIABILITY CONTINUED TO EX IT. EVEN WITHOUT THIS ADDITIONAL GROUND THE COURT WAS WILLING AND DID COME TO THE CONCLUSIO N THAT THERE WAS NO CESSATION OF LIABILITY. HENCE I FIND FORCE IN THE CONTENTION OF THE APPELLANT AND DELETE THE ADDITION MADE BY THE AO OF RS.43,35,622/-- AND RS.1,25,30,00 0/- AS CESSATION OF LIABILITY . 6. HEARD LEARNED DEPARTMENTAL REPRESENTATIVE VEHEME NTLY REITERATING THE REVENUES STAND IN SUPPORT OF THE IMPUGNED SECTION 41(1) ADDITION OF CESSATION OF LIABILITY. IT IS AN ADMITTED FACT THAT ASSESSEES BOOKS HAVE BEEN ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 6 CARRYING FORWARD THE IMPUGNED LIABILITY SINCE VERY MANY ASSESSMENT YEARS AT LEAST FROM 2005-06 ONWARDS QUA THE FORMER AMOUNT. T HERE IS NO EVIDENCE IN ITS BOOKS THAT THESE TWO LIABILITIES HAVE CEASED TO EXIST IN THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICERS STAND APPE ARS TO HAVE TAKEN NOTE OF THE ONLY FACT THAT THESE LIABILITIES CONTINUED T O EXIST FOR THE LAST MANY YEARS. WE FIND NO MERITS IN THE INSTANT ARGUMENT. WE QUOTE THIS TRIBUNALS CO-ORDINATE BENCHS DECISION IN ACIT VS. M/S SOORAJULL NAGARMULL IN ITA NO.1907/KOL/2016 DATED 20.07.2018 ADJUDICATING THE VERY ISSUE AGAIN ST THE REVENUE AS FOLLOWS:- 2. WE NOTICE AT THE OUTSET THAT CIT(A)S DETAILED DISCUSSION ON THE ABOVE SOLE ISSUE OF CESSATION OF LIABILITY U/S 41(1 )(A) OF THE ACT READS AS FOLLOWS:- 06. DECISION: 1. I HAVE CAREFULLY CONSIDERED THE ACTION OF THE LD .AO IN ADDING AN AMOUNT OF RS.12,97,47,322/- U/S. 441(1) OF THE INCOME TAX ACT , 1961, ON GROUNDS THAT THERE WAS A CESSATION OF LIABILITY ON THE PART OF T HE ASSESSEE FOR THE IMPUGNED AMOUNT, AND THAT THEREFORE IT WOULD CONSTITUTE PART OF THE INCOME OF THE ASSESSEE-FIRM. IT IS TO BE OBSERVED THAT THIS IS TH E 2 ND ROUND OF THE ASSESSMENT ORDER FOR THE A.Y 2001-02, AND IN THE FIRST ROUND T HE MATTER HAD TRAVELLED TO THE HON'BLE ITAT. BRIEFLY, THE FACTS ARE THAT THE A PPELLANT IS A VERY OLD PARTNERSHIP FIRM AND HAS BEEN CARRYING SUNDRY CREDI TORS OVER AN EXTENDED PASSAGE OF TIME. 2. FOR THE SUBJECT ASSESSMENT YEAR, 2001-02 THE APP ELLANT-FIRM HAD FILED RETURN OF INCOME U/S 139(2) ON 30 TH JULY, 2001, DECLARING LOSS OF RS.18,740/-. THE APPELLANT-FIRM THEREAFTER RECEIVED NOTICE U/S 1 48 OF THE INCOME TAX ACT, 1961, DATED 21.11.2006 REOPENING THE ASSESSMENT FOR AY 2001-02. IN RESPONSE THE APPELLANT FILED A RETURN OF INCOME DEC LARING LOSS OF RS.83,923/-. THEREAFTER, THE LD.AO FRAMED THE ASSESSMENT U/S 148 ON 31.12.2007, AT AN INCOME OF RS.13,02,16,901/-. IN THE AFORESAID ORDER THE LD.AO HAD MADE ADDITION ON ACCOUNT OF SECTION 41(L) AMOUNTING TO R S.12,97,47,322/- AND DISALLOWED BAD DEBTS OF RS.5,63,402/-. AGAINST THE SAID ORDER, THE APPELLANT PREFERRED AN APPEAL BEFORE THE LD. CIT(A)-XX. KOLKA TA. IN THE APPELLATE ORDER PASSED U/S 250 DATED 31.03.2008, THE LD. C!T(A: DEL ETED BOTH THE ADDITIONS MADE BY THE AO. AGAINST THIS APPELLATE ORDER, THE D EPARTMENT PREFERRED AN APPEAL BEFORE THE HON'BLE ITAT, KOLKATA. THE SAID A PPEAL WAS ADJUDICATED BY THE 'C' BENCH OF HON'BLE ITAT, KOLKATA ON 04.03.201 4 IN ITA NO. 1326/KOL/2008 . AFTER GIVING CONSIDERATION TO THE ARGUMENTS PUT F ORTH BY THE REVENUE AS WELL AS THE APPELLANT, THE HON'BLE ITAT SET ASIDE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. I HAVE THEREF ORE CAREFULLY EXAMINED THE APPLICABLE LEGAL PROVISIONS AND THE JUDICIAL DECISI ONS AVAILABLE ON THE SUBJECT AND RELIED UPON BY BOTH, THE LD.AO AND THE LD.A.RS FOR THE APPELLANT-FIRM. AS SUCH IT IS THE SECOND ROUND OF LITIGATION AND THE S COPE OF THE PRESENT PROCEEDINGS ARE RESTRICTED TO DIRECTIONS CONTAINED IN THE APPELLATE ORDER OF THE HON'BLE TRIBUNAL. THE RELEVANT OBSERVATIONS OF THE HON'BLE ITAT, KOLKATA ARE AS UNDER: ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 7 [QUOTE] 'THE QUESTION ARISES UNDER SEC. 41(1)(A), ON WHOM T HE ONUS LIES TO PROVE WHETHER THE LIABILITY HAS BEEN REMITTED OR CEASED. THE AO, IN THIS CASE, HAS MADE INQUIRY AND GIVEN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE EVIDENCE TO PROVE THAT THE LIABILITY STILL EXISTS BUT NO SUC H CONFIRMATION OR EVIDENCE WERE PRODUCED BY THE ASSESSEE. IN CASE THE ONUS LIES ON THE REVENUE, THEN THE' REVENUE HAS TO PROVE AND BRING EVIDENCE THAT THE IN TEREST PAYABLE OUTSTANDING IN THE BOOKS GOT REMITTED OR CEASED DUR ING THE YEAR. IN CASE, THE ONUS LIES ON THE ASSESSEE, THEN THE ASSESSEE HAS TO PROVE THAT THERE IS NO REMISSION OR CESSATION OF THE INTEREST PAYABLE LIAB ILITY DURING THE IMPUGNED ASSESSMENT YEAR. IT IS NOT DENIED THAT THE LIABILIT Y RESPECTING THE INTEREST PAYABLE IS IN EXISTENCE FOR OVER 3 DECADES AND UNDE R THESE FACTS, THE IMMEDIATE QUESTION THAT WILL ARISE IN THE MIND OF A N ORDINARY PERSON IS HOW THE LIABILITY FOR THE INTEREST WAS NOT PAID FOR OVER 30 YEARS, WHETHER THE LIABILITY COULD BE REGARDED TO REMAIN IN EXISTENCE OR NOT AND WHETHER THE PARTIES TO WHOM THE INTEREST IS PAYABLE BY THE ASSESSEE ARE ST ILL SURVIVING OR NOT. IN OUR OPINION, ALL THESE QUESTIONS ARE MUCH MORE RELEVANT TO COME TO A CONCRETE FINDING WHETHER IT CAN BE SAID THAT THERE IS REMISS ION OR CESSATION OF INTEREST PAYABLE LIABILITY. WE NOTED THAT THE CIIT (A) HAS D ELETED THE ADDITION MAINLY ON THE BASIS THAT THE AO HAS NOT BROUGHT ANY MATERIAL OR RECORD TO SHOW THAT THERE HAD BEEN A REMISSION OR CESSATION OF THE LIAB ILITY AND BENEFIT HAS BEEN GRANTED TO THE ASSESSEE BY THE LOAN CREDITOR IN ANY MODES OF REMISSION WITHOUT DECIDING THE ISSUE FIRST WHETHER THE ONUS L IES ON THE AO TO PROVE THE REMISSION OR CESSATION OF THE LIABILITY DURING THE YEAR OR THE ONUS LIES ON THE ASSESSEE TO PROVE THAT THE LIABILITY IS IN EXISTENC E DURING THE YEAR. IF THE ONUS LIES ON THE AO, THEN THE AO WAS DUTY BOUND TO PROVE THAT THERE IS REMISSION OR CESSATION OF THE LIABILITY DURING THE YEAR. IN O UR OPINION, WHETHER THE LIABILITY IS IN EXISTENCE OR NOT, THE BURDEN OF PROVING IS ON THE ASSESSEE AND ASSESSEE HAS TO BRING EVIDENCE ON RECORD WHICH MAY PROVE THA T THE LIABILITY IS IN EXISTENCE DURING THE ASSESSMENT YEAR EVEN IF IT IS BARRED BY LIMITATION. IT CANNOT BE WITHIN THE DOMAIN OF THE AO TO PROVE THAT THE LIABILITY HAS CEASED OR REMITTED DURING THE YEAR EVEN IF THE ASSESSEE HAS N OT FILED ANY CONFIRMATION OR EVIDENCE TO PROVE THE EXISTENCE OF THE LIABILITY . WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, SET A SIDE THE ORDER OF CIT (A) AND RESTORE THIS ISSUE TO THE FILE OF AO WITH THE DIREC TION THAT THE AO SHALL RE- EXAMINE THIS ISSUE AFRESH AND GIVE PROPER AND SUFFI CIENT OPPORTUNITY TO THE ASSESSEE TO PROVE THAT THE INTEREST PAYABLE WHICH A RE MORE THAN 3 DECADES OLD ARE STILL LIABILITY IN PRAESENTI. THE AO IS ALS O DIRECTED THAT WHILE DECIDING THE ISSUE AFRESH, TO LOOK INTO THE RELEVANT PROVISI ONS OF THE INCOME TAX ACT AS WELL AS THE RELEVANT CASE LAWS ON THE ISSUE FOR ASC ERTAINING ON WHOM THE BURDEN TO PROVE LIES U/S 41.(1.)(A). IN THE RESULT, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ' [UNQUOTE] 3. IN THE IMPUGNED ORDER, IT IS TO BE SEEN WHETHER BOTH PARTIES, AS REQUIRED BY THE HON'BLE TRIBUNAL CARRIED OUT THESE DIRECTIONS A PPROPRIATELY AND ONLY THEREAFTER THE LD.AO COULD HAVE SUSTAINED THE ADDIT ION U/S 41(1) AS MADE IN THE ORIGINAL ASSESSMENT U/S 147/143(3). IN THE PRES ENT CASE THE FACTS ON RECORD BRING FORTH THAT IN THE ASSESSEE'S BALANCE S HEET, IT HAD DISCLOSED OUTSTANDING CURRENT LIABILITIES OF RS.12,97,47,322/ - WHICH WERE ADDED BY THE AO U/S 41(1) OF THE ACT ON THE GROUND THAT THERE WA S CESSATION OR REMISSION OF LIABILITY. THE ADDITION SO MADE IN THE ORIGINAL ORDER WAS DELETED BY FIRST APPELLATE AUTHORITY ON THE GROUND THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE LD.AO TO DEMONSTRATE THAT THE ASSESSEE-APPELLAN T WAS ACTUALLY GRANTED ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 8 REMISSION OF THE IMPUGNED LIABILITIES. HOWEVER WHEN THE MATTER TRAVELLED BEFORE THE HON'BLE TRIBUNAL, IT ISSUED THE DIRECTIO NS AS HAVE BEEN INCORPORATED IN THE ORDER, AND THESE WERE REQUIRED TO BE CARRIED OUT BOTH BY THE ASSESSEE-APPELLANT, AS WELL AS THE LD.AO. I FIN D THAT IN THE FIRST INSTANCE THE ASSESSEE WAS DIRECTED TO DEMONSTRATE WITH EVIDE NCE THAT THERE EXISTED VALID LIABILITY AND THESE WERE PROPERLY ACCOUNTED I N ITS BOOKS OF ACCOUNTS. FROM THE SUBMISSIONS MADE BY THE LD. A.R BEFORE THE AO AS ALSO IN THIS FORUM, IT IS TO BE OBSERVED THAT THE APPELLANT HAD FURNISHED THE COMPLETE DETAILS OF OUTSTANDING LIABILITIES AS ON 31.03.2001 AMOUNTING TO RS.12,97,47,322/-. THE DETAILS FURNISHED INTER-ALIA INCLUDED THE NAMES AND COMPLETE ADDRESSES OF THE CREDITORS AND THE AMOUNTS DUE TO EACH OF THEM. THE ASSESSEE ALSO FURNISHED COPIES OF THE BALANCE S HEET OF THE ASSESSEE- FIRM AND THE DETAILED LIST OF SUNDRY CREDITORS FOR THE AY.S 2000-01, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-1 1, 2011-12, 2012-13 & 2013-14. WITH REFERENCE TO THESE DETAILS, THE LD. A .R OF THE ASSESSEE DEMONSTRATED THAT THE LIABILITY OF RS.12,97,47,322/ - WHICH IS THE SUBJECT MATTER OF DISPUTE IN THE IMPUGNED PROCEEDINGS WAS CONSISTE NTLY DISCLOSED BY THE ASSESSEE ON ITS LIABILITY SIDE AND BY INCLUDING THE AMOUNTS DUE TO THE SAID PARTIES IN ITS FINANCIAL STATEMENTS FILED WITH THE TAX AUTHORITIES THE ASSESSEE HAD ACKNOWLEDGED THAT THE LIABILITIES WERE SUBSISTI NG AND OUTSTANDING. IN MAKING THE COMPLETE DECLARATION IN THE FORM OF LIAB ILITIES SHOWN IN THE BALANCE SHEET, THE ASSESSEE WAS ACKNOWLEDGING THAT IT HAD O BLIGATION TO PAY THESE AMOUNTS TO THE SUNDRY CREDITORS NAMED IN THE FINANC IAL STATEMENTS AND THE LIABILITIES HAD NOT CEASED TO EXIST. FROM THE PERUS AL OF THE ASSESSMENT ORDER AS ALSO FROM THE DETAILS AVAILABLE IN RECORD, I FIN D THAT THE ASSESSEE HAD NOT ONLY FURNISHED THE DETAILED LIST OF SUNDRY CREDITOR S OUTSTANDING AS ON 31.03.2001, BUT THE ASSESSEE HAD ALSO FILED LETTERS OF CONFIRMATIONS ISSUED BY THE PARTIES WHEREIN THEY HAD CONFIRMED THE BALANCES SHOWN OUTSTANDING AS PER ASSESSEE'S BOOKS OF ACCOUNTS. I THUS FIND THAT AS PER THE BALANCE SHEETS OF THE ASSESSEE FOR THE IMMEDIATE PRECEDING YEAR AS ALSO FOR THE RELEVANT ASSESSMENT YEAR, AND FOR THE SUBSEQUENT YEARS TILL AY 2013-14, THE ASSESSEE HAD DECLARED THE DETAILS OF OUTSTANDING LIABILITIES DUE TO SUNDRY CREDITORS. BESIDES DISCLOSING THE LIABILITIES IN ANNUAL FINANC IAL STATEMENTS, THE ASSESSEE-FIRM HAD SUPPORTED EXISTENCE OF LIABILITIE S BY PRODUCING BALANCE CONFIRMATIONS OF THE PARTIES FOR THE YEAR ENDED 31. 03.2001. THE LD. A.R FOR THE ASSESSEE WAS DIRECTED TO FILE COPIES OF THE ASS ESSMENT ORDERS FOR THE YEARS PRIOR TO AY 2000-01 TO SUBSTANTIATE THAT IN T HE EARLIER YEARS WHEN THE LIABILITIES ACCRUED, NO ADVERSE INFERENCE WAS DRAWN BY ANY OF THE AOS UNDER SECTION 41(1). IN RESPONSE THE LD. A.R OF THE ASSES SEE PRODUCED COPIES OF THE ASSESSMENT ORDERS FOR AYS 1998-99, 2000-01, 200 2-03 AND 2003-04. FROM THESE ASSESSMENT ORDERS IT IS APPARENT THAT EV EN THOUGH THE SAME SET OF CREDITORS HAD APPEARED IN THE APPELLANT'S BOOKS OF ACCOUNTS UPTO 31.03.2000, THE LD. AO HAD NOT DISBELIEVED OR DOUBT ED THE GENUINENESS OF THE LIABILITI.ES AND ACCORDINGLY NO INFERENCE WITH REGARD TO REMISSION OR CESSATION OF LIABILITY WAS DRAWN. ALL THESE YEARS, HAD BEEN SUBJECTED TO SCRUTINY AND ORDERS WERE PASSED U/S 143(3) OF THE I NCOME TAX ACT. ON THE OTHER HAND, THESE ASSESSMENT ORDERS DEMONSTRATED TH AT EVEN THOUGH THE SAME SET OF CREDITORS APPEARED IN THE ASSESSEE'S BO OKS, THE LD. AO HAD ACCEPTED THESE LIABILITIES TO BE GENUINELY OUTSTAND ING AND DUE TO THE CREDITORS, AS LISTED. SIMILARLY IN THE SUBSEQUENT A SSESSMENTS ALSO THE AO NEVER DISPUTED NOR DISBELIEVED THE ASSESSEE'S TRANS ACTIONS WITH THESE SUNDRY CREDITORS WHEN THE ASSESSEE HAD MADE PAYMENTS AGAIN ST OUTSTANDING BALANCES DUE AS ON 31.03.2001. I ALSO FIND THAT EVE N THOUGH THE SAME SET OF SUNDRY CREDITORS WERE SHOWN OUTSTANDING AS ON 31.03 .2004, IN THE ASSESSMENT FRAMED U/S 143(3) FOR AY 2004-05, THE LD .AO HAD NOT MADE ANY ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 9 ADVERSE COMMENT ABOUT THE GENUINENESS OF THE OUTSTA NDING LIABILITIES. AN ASSESSEE IN THE ORDINARY COURSE OF ITS DEALING WITH THE CREDITORS IS EXPECTED TO MAINTAIN THE BASIC RECORDS IN SUPPORT OF THE TRANSA CTIONS WITH THE PARTIES. WHEN CALLED UPON TO SUBSTANTIATE THE TRANSACTION, T HE ASSESSEE IS REQUIRED TO FURNISH NAMES AND ADDRESSES AND THE DETAILS OF FINA NCIAL TRANSACTIONS CONDUCTED. FURTHER THE ASSESSEE MAY ALSO SUPPORT TH E TRANSACTIONS BY PRODUCING THE PARTY CONFIRMATIONS. THEREFORE WITH R EFERENCE TO THE SET OF FACTS AND DOCUMENTARY EVIDENCES AS DISCUSSED, I AM INCLIN ED TO OBSERVE AND HOLD THAT THE ASSESSEE HAD DISCHARGED ITS ONUS OF PROVIN G THAT AS OF 31.03.2001, THAT THE ASSESSEE HAD SUBSISTING LIABILITY TO PAY R S.12,97,47,322/- TO SUNDRY CREDITORS; DETAILS WHEREOF WERE NOT ONLY FURNISHED BEFORE THE LD.AO BUT THE ASSESSEE HAD ALSO FURNISHED CONFIRMATIONS FROM THES E CREDITORS. IN THE LIGHT OF THE AFORESAID FACTS, I THEREFORE HOLD THAT THE ASSE SSEE HAD DULY DISCHARGED THE ONUS CAST UPON IT OF PROVING THE FACT THAT THE ASSE SSEE HAD SUBSISTING AND GENUINE OBLIGATION TO PAY RS.12,97,47,322/- TO THE SUNDRY CREDITORS. THE DIRECTIONS CONTAINED IN THE ORDER HON'BLE ITAT, KOL KATA WHICH THE ASSESSEE WAS REQUIRED TO COMPLY WERE THUS SATISFACTORILY CAR RIED OUT BY THE ASSESSEE AND THEREFORE THE ONUS OF CARRYING OUT THE OTHER DI RECTIONS OF THE HON'BLE ITAT, KOLKATA SHIFTED ON THE REVENUE, MORE SPECIFIC ALLY THE LD A.O. 4.FROM PERUSAL OF THE ASSESSMENT ORDER, IT IS OBSER VED THAT THE LD. AO HAD ALSO CARRIED OUT ENQUIRIES AND INVESTIGATION INTO T HE DETAILS OF CREDITORS AS FURNISHED BY THE APPELLANT. IT IS NOTED THAT THE LD . AO HAD IDENTIFIED THE PARTIES WHO HAD LARGE OUTSTANDING SUMS WHICH TOGETH ER ACCOUNTED FOR MORE THAN 850/0 OF THE OUTSTANDING LIABILITY CONSIDERED AS INCOME U/S 41(1) AND HAD ISSUED SUMMONS U/S 131 ON SAMPLE BASIS TO SIX CREDI TORS. FROM THE IMPUGNED ORDER IT IS OBSERVED THAT ALL THE SUMMONS WERE SERVED UPON ALL THE SIX CREDITORS. THE SUMMONS WAS ALSO COMPLIED WITH B Y FOUR CREDITORS. THE REMAINING TWO CREDITORS DID NOT PERSONALLY APPEAR B UT FURNISHED THE DETAILS AS SOUGHT BY THE LD.AO BY WAY OF A LETTER WHICH WAS SU BMITTED IN RECEIPT / BY POST. THE STATEMENTS WHICH WERE RECORDED ON OATH BY THE LD.AO FROM THE FOUR CREDITORS HAVE BEEN EXTENSIVELY REPRODUCED IN THE ASSESSMENT ORDER AT PAGES 17 TO 24. AFTER CAREFULLY PERUSING THE STATEM ENTS U/S 131 OF THE INCOME TAX ACT, 1961, IT IS TO BE NOTED THAT THAT NONE OF THE CREDITORS DENIED THE, FACTS THAT THE DEBTS WERE DUE BY THE APPELLANT. NONE OF T HE PERSONS ADMITTED OR STATED THAT THE LIABILITIES DUE TO THEM HAD CEASED TO EXIST OR STOOD REMITTED. IN THE SAID CONTEXT, IT IS TO BE NOTED THAT THE DIRECT ORS OF THE CREDITOR COMPANIES WHO HAD APPEARED BEFORE THE LD.AO WERE APPOINTED ON THE BOARD OF THE COMPANIES MUCH AFTER F.Y. 2000-01, AND THEREFORE TH EY HAD EXPRESSED THEIR INABILITY TO EXPLAIN THE FINANCIAL TRANSACTIONS OF THEIR RESPECTIVE COMPANIES CONDUCTED A FEW YEARS BACK IN THE F.Y 2000-01. BASE D ON SUCH STATEMENTS THEREFORE THE LD. AO HAD INFERRED THAT THE INABILIT Y OF THE DIRECTORS OF THE CREDITOR COMPANIES TO EXPLAIN THE TRANSACTIONS WITH THE APPELLANT IN F.Y. 2000- 01 ESTABLISHED THAT THE LIABILITIES HAD CEASED TO E XIST IN TERMS OF SECTION 41(1) OF THE ACT. IN THIS FACTUAL MATRIX, IT IS OBSERVED THAT, FIRSTLY, THE LD. AO HAD ATTEMPTED TO COMPLY WITH THE DIRECTIONS OF THE ITAT , KOLKATA AS WHEN THE APPELLANT HAD DISCHARGED ITS ONUS OF ESTABLISHING T HAT THE LIABILITIES OF RS.12,97,47,322/- WERE GENUINE AND SUBSISTING AS ON 31.03.2001, THE LD.AO CONDUCTED ENQUIRIES FROM SUCH CREDITORS TO ASCERTAI N WHETHER THE LIABILITIES ACTUALLY EXISTED OR NOT. HOWEVER ON CAREFUL PERUSAL OF STATEMENTS U/S 131 AND THE FACTS AS AVAILABLE ON RECORD, I NOTE THAT THE C ONCLUSIONS DRAWN BY THE LD.AO BASED ON THE STATEMENTS RECORDED U/S 131 WAS WITHOUT PROPER AND COMPLETE CONSIDERATION OF THE CIRCUMSTANCES EMINENT . FROM THE STATEMENTS U/S 131, IT IS OBSERVED THAT NONE OF THE CREDITORS HAD DENIED THE FACT THAT THE DEBTS WERE NOT OUTSTANDING NOR HAD THEY STATED THAT THE LIABILITIES DUE BY THE ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 10 APPELLANT HAD CEASED TO EXIST. IT IS FURTHER MATERI AL TO NOTE THAT THE LETTERS OF CONFIRMATIONS ISSUED BY THESE PARTIES WERE FILED BE FORE THE LD.AO, GENUINENESS OF WHICH WAS NEVER DENIED OR DISPUTED B Y THE DIRECTORS WHEN THEY WERE EXAMINED ON OATH BY THE LD.AO. THE DIRECT ORS WHO HAD APPEARED ON BEHALF OF THE CREDITOR COMPANIES HAD ONLY EXPRES SED THEIR INABILITY TO EXPLAIN THE TRANSACTIONS WHICH WERE CONDUCTED WITH THE APPELLANT DURING FY 2000-01 SINCE THEY WERE NOT ON THE BOARD OF DIRECTO RS BACK THEN AND THAT SUCH OLD BOOKS OF ACCOUNTS WERE NOT AVAILABLE WITH THEM. TAKING INTO ACCOUNT THE FACT THAT THESE DIRECTORS WERE NOT THE DIRECTOR S DURING THE RELEVANT PREVIOUS YEAR AND ALSO THAT MORE THAN 15 YEARS HAD ELAPSED SINCE THEN, I FIND MYSELF IN AGREEMENT WITH THE CONTENTIONS OF THE LD. A.RS FOR THE APPELLANT THAT THE INABILITY OF THE DIRECTORS TO EXPLAIN THE TRANS ACTIONS CONDUCTED BY THEIR COMPANIES WITH THE APPELLANT IN F.Y 2000-01 COULD N OT BE VIEWED ADVERSELY. I ALSO NOTE THAT EVEN UNDER THE COMPANIES ACT, 1956; THE CORPORATE CREDITORS WERE REQUIRED TO MAINTAIN AND PRESERVE THE BOOKS OF ACCOUNTS AND OTHER RECORDS OF THEIR BUSINESS TRANSACTIONS FOR PERIOD N OT EXCEEDING 8 YEARS AND THEREFORE IN VIEW THESE LEGAL PROVISIONS IF THE DIR ECTORS OF THE CREDITOR COMPANIES EXPRESSED THEIR INABILITY TO PRODUCE THE BOOKS OF THE RELEVANT YEAR OR PROVIDE EXPLANATIONS WITH REGARD TRANSACTION OF FY 2000-01 THEN NO ADVERSE VIEW APPEARS TO BE PERMISSIBLE IN LAW. THE MERE FACT THAT THE PERSONS WHO HAD APPEARED WERE NOT AWARE OF THE TRAN SACTIONS WHICH HAD OCCURRED MORE THAN 15 YEARS BACK CANNOT BE TAKEN AS AN ADMISSION BY THEM THAT THE LIABILITIES DUE BY THE APPELLANT HAD CEASE D OR THEY WERE REMITTED BY THE CREDITORS. I THEREFORE, HOLD THAT THE CONCLUSIO NS DRAWN BY THE LD.AO FROM THE STATEMENTS U/S 131 WAS WHOLLY UNJUSTIFIED. ON T HE CONTRARY, I FIND THAT THE ENQUIRIES CONDUCTED BY THE LD.AO ACTUALLY ADVANCE T HE CASE FOR THE APPELLANT-ASSESSEE. ADMITTEDLY THE SUMMONS U/S 131 WERE SERVED UPON THE CREDITORS AND WERE ALSO COMPLIED WITH. THE DIRECTOR S OF THE CREDITOR COMPANIES HAD PERSONALLY APPEARED AND THEIR STATEME NTS ON OATH WAS RECORDED. NONE OF THE CREDITORS HAD DENIED THE LIAB ILITIES DUE BY THE APPELLANT NOR HAD THEY ADMITTED THAT THEY HAD GRANTED REMISSI ON OF THE AMOUNTS DUE FROM THE APPELLANT EITHER IN FY 2000-01 OR AT ANY T IME. THESE FACTS THEREFORE GO ON TO POINT THAT NO INFERENCE COULD HAVE BEEN DR AWN BY THE LD. AO TO THE EFFECT THAT THE CREDITORS OF THE APPELLANT WHICH WE RE BROUGHT FORWARD FROM THE EARLIER YEAR HAD GRANTED ANY REMISSION OR CESSATION OF LIABILITY DURING FY 2000-01, SO AS TO CONSTITUTE AS BENEFIT CONTEMPLATE D IN SECTION 41(1) OF THE ACT. THEREFORE FROM THE FACTS AS WERE GATHERED IN T HE COURSE OF ASSESSMENT PROCEEDINGS, I FIND THAT THE MATERIAL COLLECTED BY THE LD.AO SUFFICIENTLY INDICATE THAT THE IMPUGNED LIABILITIES OF RS.12,97, 47,322/- AS REFLECTED IN THE BALANCE SHEET FOR FY 2000-01 HAD NOT CEASED TO EXIS T. FOR THE REASONS SET OUT IN THE FOREGOING, AND IN LIGHT OF THE AFORESAID FACTS AS DISCUSSED, I HOLD THAT ALTHOUGH THE LD. AO HAD ENQUIRED INTO THE LIAB ILITIES AS REFLECTED BY THE APPELLANT AS OUTSTANDING AS ON 31.03.2001, BUT THE ENQUIRIES DID NOT IN ANY MANNER SUGGEST OR PROVE THAT THE LIABILITIES HAD CE ASES TO EXIST OR THAT THE SUNDRY CREDITORS HAD GRANTED REMISSION OF THE LIABI LITIES TO THE APPELLANT DURING THE RELEVANT PREVIOUS YEAR SO AS TO ASSESS THE INCO ME UNDER THE DEEMING PROVISIONS OF SECTION 41(1) OF THE INCOME TAX ACT. 5. FOR THE REASONS DISCUSSED IN THE FOREGOING THER EFORE, THE SECOND DIRECTION OF THE HON'BLE ITAT, KOLKATA TO THE LD.AO WAS NOT F ULLY COMPLIED WITH AS NO CONVINCING MATERIAL OR IRREFUTABLE EVIDENCE WAS BRO UGHT ON RECORD TO PROVE THAT THE SUNDRY CREDITORS HAD GRANTED REMISSION OF THE AMOUNTS DUE OR OTHERWISE THE ASSESSEE'S LIABILITY DUE TO THE SUNDR Y CREDITORS HAD CEASED BY 31.03.2001. ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 11 6. FURTHER, IT IS TO BE OBSERVED THAT IN THE APPEL LATE ORDER DATED 04.03.2014, THE HON'BLE ITAT HAD FURTHER DIRECTED THE LD.AO TO BRING ON RECORD CLINCHING EVIDENCE TO SHOW THAT THE LIABILITIES IF EXISTED, T HE SAME WERE REMITTED DURING THE RELEVANT YEAR OR THERE WAS A CESSATION OF THE L IABILITY DURING THE FY 2000- 01 SO AS TO CONSTITUTE AS APPELLANT'S INCOME CHARGE ABLE FOR AY 2001-02. IN THIS REGARD I FIND THAT THE RELEVANT PROVISION OF T HE ACT READS AS FOLLOWS: '(1) WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE (HEREINAFTER REFERRED TO AS THE FIRST-MENT IONED PERSON) AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR,- (A) THE FIRST-MENTIONED PERSON HAS OBTAINED, WHETHE R IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF S UCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRAD ING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAI NED BY SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DE EMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR, WHE THER THE BUSINESS OR PROFESSION IN RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEAR OR NOT; OR (B) THE SUCCESSOR IN BUSINESS HAS OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF W HICH LOSS OR EXPENDITURE WAS INCURRED BY THE FIRST-MENTIONED PER SON OR SOME BENEFIT IN RESPECT OF THE TRADING LIABILITY REFERRE D TO IN CLAUSE (E) BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAI NED BY THE SUCCESSOR IN BUSINESS OR THE VALUE OF BENEFIT ACCRU ING TO THE SUCCESSOR IN BUSINESS SHALL BE DEEMED TO BE PROFITS AND GAINS OF THE BUSINESS OR PROFESSION, AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR. EXPLANATION 1. -FOR THE PURPOSES OF THIS SUB-SECTIO N, THE EXPRESSION 'LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF ANY SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF' SHALL INCLUDE THE R EMISSION OR CESSATION OF ANY LIABILITY BY A UNILATERAL ACT BY THE FIRST MENTIONE D PERSON UNDER CLAUSE (A) OR THE SUCCESSOR IN BUSINESS UNDER CLAUSE (B) OF THAT SUB-SECTION BY WAY OF WRITING OFF SUCH LIABILITY IN HIS ACCOUNTS. ' A PLAIN READING OF SECTION 41(1) SHOWS THAT THE BEF ORE THE DEEMING PROVISIONS THEREOF ARE INVOKED, IT IS NECESSARY FOR THE LD. AO TO DEMONSTRATE WITH TANGIBLE MATERIAL AND ADMISSIBLE EVIDENCE THAT IN R EALITY THE CREDITORS HAD GRANTED REMISSION OF THE LIABILITIES AND SUCH REMIS SION WAS GRANTED DURING THE RELEVANT PREVIOUS YEAR. SINCE SECTION 41(1) IS A DE EMING PROVISION OF THE ACT, IN TERMS OF WHICH CESSATION OR REMISSION OF A TRADI NG LIABILITY IS DEEMED TO BE ASSESSEE'S INCOME; THE ONUS IS ON THE REVENUE TO PR OVE THAT IN FACT THERE WAS A REMISSION OR CESSATION OF THE LIABILITY AND S ECONDLY SUCH REMISSION OR CESSATION OCCURRED DURING THE RELEVANT PREVIOUS YEA R CONSEQUENT TO WHICH THE INCOME ACCRUED TO THE ASSESSEE. FOR THIS REASON THE HON'BLE ITAT IN ITS ORDER DATED 04.03.2014 HAD REQUIRED THE LD. AO TO BRING O N RECORD NOT ONLY THE FACT THE LIABILITY WAS REMITTED OR THERE WAS A CESSATION OF LIABILITY, BUT FURTHER THE AO WAS REQUIRED TO BRING ON RECORD SUFFICIENT MATER IAL TO PROVE THAT SUCH REMISSION OR CESSATION OF THE LIABILITY WAS GRANTED OR OCCURRED DURING THE FY 2000-01 BEING THE RELEVANT PREVIOUS YEAR FOR AY 200 1-02. FROM A CAREFUL PERUSAL OF THE IMPUGNED ASSESSMENT ORDER, HOWEVER I FIND THAT THE LD. AO DID NOT BRING ON RECORD ANY EVIDENCE OR DOCUMENT WHICH PROVED THAT THE ASSESSEE DERIVED THE BENEFIT IN THE FORM OF REMISSI ON GRANTED BY THE CREDITOR ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 12 DURING FY 2000-01 SO AS TO CONSTITUTE AS INCOME UND ER SECTION 41(1) OF THE ACT. 7. THE LAST DIRECTION OF THE HON'BLE ITAT, KOLKATA REQUIRED THE LD. AO TO CONSIDER THE SCOPE OF SECTION 41(1) OF THE INCOME T AX ACT, 1961 IN LIGHT OF THE PREVAILING JUDICIAL VIEWS ON THE SUBJECT. IT IS OBS ERVED THAT IN THE IMPUGNED ORDER THE LD.AO REFERRED TO A SOLITARY JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS CHIPSOFT TECHNOLOGY (P) LTD (26 TAXM ANN.COM 109) FOR JUSTIFYING INVOCATION OF S. 41(1) OF THE ACT. ON AN ALYSIS OF THIS DECISION IT WAS NOTED THAT IN THE DECIDED CASE, UNPAID DUES OF THE EMPLOYEES HAD REMAINED OUTSTANDING IN ASSESSEE'S BOOKS FOR MORE THAN 7-8 Y EARS. IT WAS THEREFORE THE REVENUE'S CASE THAT UNDER THE INDUSTRIAL DISPUTES A CT, THE WORKMEN'S DUES HAD BECOME TIME-BARRED AND THEREFORE THERE WAS A CE SSATION OF LIABILITY WITHIN THE MEANING OF SECTION 41(1) OF THE ACT. ON THESE F ACTS THEREFORE THE HON'BLE HIGH COURT HELD THAT THE UNPAID DUES OF EMPLOYEES, WHOSE RECOVERY HAD GOT TIME BARRED, LEGALLY CEASED TO BE THE EMPLOYER'S LI ABILITY AND THEREFORE IT WAS RIGHTLY ASSESSED AS INCOME BY THE AO U/S 41(1) OF T HE ACT. APPLYING THE DECISION RENDERED BY THE DELHI HIGH COURT IN THE AB OVE SAID FACTUAL CONTENT THE LD. AO JUSTIFIED THE ADDITION OF RS.12,97,47,32 2/- THE OUTSTANDING LIABILITIES OF THE APPELLANT WHICH REMAINED OUTSTANDING FOR SEV ERAL YEARS. THE LD. A.RS FOR THE APPELLANT, IN THE SUBMISSION IN APPEAL, HOW EVER, IN MY CONSIDERED VIEW HAVE CORRECTLY APTLY POINTED OUT THAT THIS DEC ISION WAS DISTINGUISHABLE SINCE THE FACTS INVOLVED IN APPELLANT'S CASE WERE D IFFERENT. THE LD.A.RS SUBMITTED THAT IN THE CASE BEFORE THE HON'BLE DELHI HIGH COURT, THE OUTSTANDING LIABILITIES WERE WORKMEN DUES WHICH HAD BECOME TIME-BARRED UNDER THE RELEVANT LABOUR LAW. THESE FACTS ARE HOWE VER NOT INVOLVED IN THE APPELLANT' CASE. IT WAS EXPLAINED THAT THE OUTSTAND ING LIABILITIES DID NOT INVOLVE A SINGLE RUPEE OF LABOUR DUES. INSTEAD ALL THE LIAB ILITIES WERE ' TRADING LIABILITIES ' IT WAS EXPLAINED BY THE LD. A.RS THAT UNDER THE L IMITATION ACT, 1903 WHICH GOVERNED SUCH LIABILITIES, SINCE THE APP ELLANT HAD ACKNOWLEDGED THE LIABILITIES IN ITS BOOKS OF ACCOUNTS, THEY HAD NOT BECOME TIME-BARRED BUT REMAINED SUBSISTING AND OUTSTANDING. AFTER PERUSING THE JUDGMENT OF HON'BLE DELHI HIGH COURT AND THE FACTS INVOLVED THEREIN VIS -A-VIS THE FACTS OF THE APPELLANT'S CASE, I THEREFORE FIND MERIT IN THE CON TENTIONS OF THE LD.A.RS. I FIND THAT, IN THE PRESENT CASE, UNDENIABLY THE OUTSTANDI NG LIABILITIES ARE NOT WORKMEN'S DUES AND THEREFORE NOT GOVERNED BY INDUST RIAL DISPUTE ACT. I FIND THAT UNLIKE THE FACTS INVOLVED IN THE JUDGMENT OF H ON'BLE DELHI HIGH COURT, THERE IS NO MATERIAL ON RECORD THAT THE LIABILITIES OF RS.12,97,47,322/- HAD BECOME TIME-BARRED OR THERE WAS A CESSATION THEREOF IN THE RELEVANT YEAR. IN THE COURSE OF APPELLATE HEARING, THE LD.A.RS FOR TH E APPELLANT FILED COPY OF A DECISION OF HON'BLE ITAT, BANGALORE IN THE CASE OF ASST. CIT VS ALVARES & THOMAS (62 TAXMAN.COM 286) WHEREIN THIS PARTICULAR ASPECT WAS CONSIDERED BY THE HON'BLE TRIBUNAL. IN THE DECIDED CASE ALSO T HE LIABILITIES OF THE ASSESSEE HAD REMAINED OUTSTANDING FOR SEVERAL YEARS . BEFORE THE HON'BLE TRIBUNAL THE REVENUE RELIED ON THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS CHIPSOFT TECHNOLOGY (P) LTD (SUPRA) TO CLAIM THAT THE LIABILITIES HAD BECOME TIME BARRED AND THEREFORE THERE WAS A CE SSATION OF LIABILITY. THE TRIBUNAL HOWEVER DISTINGUISHED THE SAID JUDGMENT AS IT FOUND THAT THE LIABILITIES INVOLVED WERE NOT WORKMEN DUES BUT THEY WERE TRADING LIABILITIES AND THEREFORE THE JUDGMENT OF HON'BLE DELHI HIGH COURT HAD NO APPLICATION TO THE FACTS OF THE ASSESSEE'S CASE. THE RELEVANT FINDINGS OF THE ITAT, BANGALORE IN THIS REGARD WERE AS FOLLOWS: 'THE LEARNED DR PLACED RELIANCE ON A DECISION OF TH E ITAT MUMBAI IN THE CASE OF ITO V. SHAILESH D. SHAH [IT APPEAL NO. 7012 (MUM) OF 2010, DATED 11-12-2013}. WE HAVE PERUSED THE SAID D ECISION AND WE ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 13 FIND THAT WAS A CASE WHERE THE LIABILITY IN QUESTIO N WAS OUTSTANDING LABOUR CHARGES IN THE CASE OF AN ASSESSEE ENGAGED I N THE BUSINESS OF CIVIL CONSTRUCTION. THE TRIBUNAL FOLLOWED THE DECIS ION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. CHIPSOFT TEC HNOLOGY (P.) LTD. [2012J 26 TAXMANN.COM 109/210 TAXMAN 173 (DELHI) WH EREIN THE HON'BLE DELHI HIGH COURT ON THE FACTS OF THAT CASE WHERE THE OUTSTANDING LIABILITY WAS WAGES OF WORKMAN, EXPRESS ED THE VIEW THAT IT WAS ILLOGICAL THAT WAGES OF WORKMAN WOULD REMAIN UN PAID FOR A LONG DURATION OF TIME AND THEREFORE HELD THAT THE LIABIL ITY SHOULD BE CONSIDERED AS HAVING CEASED. THE PRESENT CASE IS A CASE OF TRADING LIABILITY, WHICH CANNOT STAND ON THE SAME FOOTING A S DUE TO WORKMAN. WE ARE THEREFORE OF THE VIEW THAT THE DECISION RELI ED UPON BY THE LEARNED COUNSEL FOR THE REVENUE WOULD NOT BE OF ANY ASSISTANCE TO THE PLEA OF THE REVENUE. ' (EMPHASIS SUPPLIED) 8. I FURTHER NOTE THAT THIS JUDGMENT OF THE ITAT, B ANGALORE WAS THEREAFTER UPHELD BY THE KARNATAKA HIGH COURT & THE RELEVANT D ECISION IS REPORTED AS CIT VS ALVARES BR. THOMAS (239 TAXMAN 456). THE REL EVANT FINDINGS OF HIGH COURT WERE AS FOLLOWS: '7. AS IN THE ABOVE REFERRED ORDER OF THE TRIBUNAL, THE RELEVANT PORTION OF SECTION 41 IS REPRODUCED, WE MAY NOT REPRODUCE T HE SAME. BUT, THE RELEVANT ASPECT IS THAT, THERE ARE TWO REQUIREMENTS FOR INVOKING THE PROVISION OF SECTION 41. THE SINE QUA NON IS, THE R EMISSION OR CESSATION OF THE TRADING LIABILITY AND THE ADDITION AL REQUIREMENT IS, SOME BENEFIT IN RESPECT OF SUCH TRADE LIABILITY IS TAKEN BY THE ASSESSEE. IF THE AFORESAID CONDITIONS ARE SATISFIED , THEN ONLY SECTION 41(1) COULD BE INVOKED BY THE ASSESSING OFFICER. 8. EXAMINING OF THE FACTS OF THE PRESENT CASE REVEA LS THAT, IT IS NOT THE CASE OF THE DEPARTMENT THAT, ANY BENEFIT IN RESPECT OF SUCH TRADING LIABILITY WAS TAKEN BY THE ASSESSEE BUT, THE REVENUE CONTENDS THAT SINC E THE BURDEN WAS NOT DISCHARGED OF EXISTENCE OF THE LIABILITY, IT BE TRE ATED AS CESSATION OF THE LIABILITY AND THEREFORE, SECTION 41(1) COULD BE INVOKED. FURT HER, STAND OF THE REVENUE IS THAT, WHEN IN RESPECT OF DEBT IN QUESTION, CONFI RMATION WAS CALLED FOR, A LETTER WAS PRODUCED OF THE CREDITOR WITH ITS ADDRES S BUT, WHEN THE SAME WAS VERIFIED, THE REPORT WAS THAT, PARTY COULD NOT BE T RACED AND THEREFORE, IT WAS NOT VERIFIABLE. 9. IN OUR VIEW, EVEN IF WE ACCEPT THE CONTENTION OF THE REVENUE THAT THE PARTY COULD NOT BE TRACED AND THEREFORE DEBT COULD NOT BE VERIFIED THEN ALSO, BY NO STRETCH OF IMAGINATION CAN IT BE HELD THAT IT WOULD SATISFY THE REQUIREMENT OF CESSATION OF LIABILITY. IN LEGAL PARLANCE, MERELY B ECAUSE THE CREDITOR COULD NOT BE TRACED ON THE DATE WHEN THE VERIFICATION WAS MAD E, SAME IS NOT A GROUND TO CONCLUDE THAT THERE WAS CESSATION OF THE LIABILI TY. CESSATION OF THE LIABILITY HAS TO BE CESSATION IN LAW, OF THE DEBT TO BE PAID BY THE ASSESSEE TO THE CREDITOR. THE DEBT IS RECOVERABLE EVEN IF THE CREDI TOR HAS EXPIRED, BY THE LEGAL HEIRS OF THE DECEASED CREDITOR. UNDER THE CIRCUMSTA NCES, IN THE PRESENT CASE, IT CAN HARDLY BE SAID THAT THE LIABILITY HAD CEASED . IF THE LIABILITY HAD NOT CEASED OR THE BENEFIT WAS NOT TAKEN BY THE ASSESSEE IN RES PECT OF SUCH TRADE LIABILITY, IN OUR VIEW, THE CONDITIONS PRECEDENT WERE NOT SATI SFIED FOR INVOKING SECTION 41(1) THE ACT IN THE INSTANT CASE. 10. THE TRIBUNAL HAS RIGHTLY RELIED UPON THE DECISI ON OF DELHI HIGH COURT IN CASE OF SHRI VARDHMAN OVERSEAS LTD. (SUPRA). THE D ISCUSSION OF THE DECISION ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 14 OF DELHI HIGH CO WAS RELEVANT, FOR CONSIDERATION OF THE FACTS OF THE CASE IN ORDER TO FIND OUT AS TO UNDER WHAT CIRCUMSTANCES IT COULD BE SAID THAT THERE IS CESSATION OF LIABILITY. FURTHER, THE DECISION OF DE LHI HIGH COURT IS AFTER CONSIDERING THE VIEW TAKEN BY THE APEX COURT CASE O F CIT V. SUGAULI SUGAR WORKS (P.) LTD. [1999J 236 ITR 518/102 TAXMAN 713. 9. I FURTHER FIND THAT THE SUPREME COURT IN THE CAS E OF CIT V. SUGAULI SUGAR WORKS. (P.) LTD. (236 ITR 518) HAD CONSIDERED THE I SSUE CONCERNING CESSATION OR REMISSION OF LIABILITY AND WHETHER THE CESSATION OF LIABILITY CAN OCCUR BY REASON OF OPERATION OF THE RESPECTIVE LAW. IN THE S AID JUDGMENT THE SUPREME COURT REFERRED TO THE DECISION OF HON'BLE BOMBAY HI GH COURT IN J.K. CHEMICALS LTD. V. CIT (62 ITR 34), THE RELEVANT OBS ERVATIONS ARE AS UNDER: 'THE QUESTION TO BE CONSIDERED IS WHETHER THE TRANS FER OF THESE ENTRIES BRINGS ABOUT A REMISSION OR CESSATION OF ITS LIABIL ITY. THE TRANSFER OF AN ENTRY IS A UNILATERAL ACT OF THE ASSESSEE, WHO IS A DEBTOR TO ITS EMPLOYEES. WE FAIL TO SEE HOW A DEBTOR, BY HIS OWN UNILATERAL ACT, CAN BRING ABOUT THE CESSATION OR REMISSION OF HIS LIABI LITY. REMISSION HAS TO BE GRANTED BY THE CREDITOR. IT IS NOT IN DISPUTE, A ND IT INDEED CANNOT BE DISPUTED, THAT IT IS NOT A CASE OF REMISSION OF LIA BILITY. SIMILARLY, A UNILATERAL ACT ON THE PART OF THE DEBTOR CANNOT BRI NG ABOUT A CESSATION OF HIS LIABILITY. THE CESSATION OF THE LIABILITY MA Y OCCUR EITHER BY REASON OF THE OPERATION OF LAW, I.E., ON THE LIABILITY BEC OMING UNENFORCEABLE AT LAW BY THE CREDITOR AND THE DEBTOR DECLARING UNEQUI VOCALLY HIS INTENTION NOT TO HONOUR HIS LIABILITY WHEN PAYMENT IS DEMANDE D BY THE CREDITOR, OR A CONTRACT BETWEEN THE PARTIES, OR BY DISCHARGE OF THE DEBT THE DEBTOR MAKING PAYMENT THEREOF TO HIS CREDITOR. TRAN SFER OF AN ENTRY IS NEITHER AN AGREEMENT BETWEEN THE PARTIES NOR PAYMEN T OF THE LIABILITY. WE HAVE ALREADY HELD IN KOHINOOR MILLS CO. LTD. V. CIT (1963) 49 ITR 578 (BOM.) THAT THE MERE FACT OF THE EXPIRY OF THE PERIOD OF LIMITATION TO ENFORCE IT, DOES NOT BY ITSELF CONSTITUTE CESSATION OF THE LIABILITY. IN THE INSTANT CASE, THE LIABILITY BEING ONE RELATING TO W AGES, SALARIES AND BONUS DUE BY AN EMPLOYER TO HIS EMPLOYEES IN AN IND USTRY, THE PROVISIONS OF THE INDUSTRIAL DISPUTES ACT ALSO ARE ATTRACTED AND FOR THE RECOVERY OF THE DUES FROM THE EMPLOYER, UNDER S. 33 C(2) OF THE INDUSTRIAL DISPUTES ACT, NO BAR OF LIMITATION COMES IN THE WAY OF THE EMPLOYEES. ' FROM THE OBSERVATIONS AS CONTAINED IN THE JUDGEMENT OF THE SUPREME COURT, I FIND THAT IT IN FACT THE COURT WENT A STEP AHEAD AN D HELD THAT EVEN UPON THE EXPIRY OF THE PERIOD OF LIMITATION PRESCRIBED UNDER THE LIMITATION ACT, THE DEBT OR LIABILITY WILL NOT STAND EXTINGUISHED BUT IT WOU LD ONLY PREVENT THE CREDITOR FROM ENFORCING THE DEBT AND IN THAT VIEW OF THE MAT TER THE DEEMING PROVISIONS OF SECTION 41(1) COULD NOT BE INVOKED ON THE PREMIS E THAT THE LIABILITY HAD BECOME TIME-BARRED. 10. I FURTHER NOTE THAT IN ANOTHER DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS VARDHAMAN OVERSEAS LTD (343 ITR 408) FACTS INVOLVED WERE SIMILAR TO ONE INVOLVED IN THE APPELLANT'S CAS E. FACTS INVOLVED IN THIS CASE WERE; THE LIABILITIES IN QUESTION WERE TRADING LIABILITIES AND NOT WORKMEN DUES. BEFORE THE AO, THE ASSESSEE WAS UNABLE TO FUR NISH CONFIRMATIONS FROM THE CREDITORS WHICH APPEARED TO BE OLD AND THE ASSE SSEE WAS UNABLE TO FURNISH THE COMPLETE ADDRESSES OF ALL THE CREDITORS . THE OUTSTANDING CREDITORS WERE THEREFORE ASSESSED AS INCOME U/S 68. ON APPEAL THE CIT(A) THOUGH DELETED ADDITION U/S 68 BUT CONFIRMED THE ADDITION BY INVOKING SECTION 41(1) OF THE ACT. ON APPEAL THE ITAT FOUND THAT IN THE ASSES SEE'S BOOKS, THE AMOUNTS ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 15 PAYABLE TO THE CREDITORS WERE NOT WRITTEN BACK BUT SHOWN AS OUTSTANDING TO THE PARTIES AND THEREFORE SECTION 41(1) WAS HELD IN APPLICABLE. ON APPEAL THE HIGH COURT OBSERVED THAT TO INVOKE SECTION 41(1) IT WAS NECESSARY TO SHOW THAT THE ASSESSEE WAS ACTUALLY GRANTED REMISSION OF TRADING LIABILITIES FOR WHICH DEDUCTION WAS EARLIER ALLOWED. THE HIGH COURT FURTHER HELD THAT IT WAS NOT ENOUGH THAT THE ASSESSEE DERIVED SOME BENEFIT O F TRADING LIABILITY BUT SUCH BENEFIT SHOULD NECESSARILY ARISE ON ACCOUNT OF REMI SSION OF THE LIABILITY. THE COURT NOTED THAT THE ASSESSEE HAD NOT TRANSFERRED T HE OUTSTANDING AMOUNTS FROM THE CREDITORS' ACCOUNT TO ITS PROFIT & LOSS AC COUNT BUT THE AMOUNTS WERE SHOWN AS ' LIABILITIES ' IN THE BALANCE SHEET AND THE ASSESSEE HAD ACKNOWLEDGED THE DEBTS AS DUE TO THE CREDITORS. THE HIGH COURT THEREFORE HELD THAT SECTION 41(1) WAS NOT APPLICABLE. I FIND THAT THE FACTS INVOLVED IN THE DECISION OF DELHI HIGH COURT WERE SIMILAR RATHER FA CTS INVOLVED IN ASSESSEE'S CASE BRINGS ITS CASE ON MUCH STRONGER FOOTING BECAU SE IN THIS CASE THE ASSESSEE NOT ONLY ACKNOWLEDGED LIABILITY IN THE BAL ANCE SHEET BUT WAS ABLE TO FILE CONFIRMATIONS FROM CREDITORS AS WELL. THE DECI SION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF VARDHAMAN OVERSEAS LTD IS THEREFORE FULLY APPLICABLE IN THE PRESENT CASE. 11. THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH C OURT IN THE CASE OF CIT VS VARDHAMAN OVERSEAS LTD (SUPRA) WAS REITERATED BY CO ORDINATE BENCH OF THE SAME COURT IN A SUBSEQUENT DECISION IN THE CASE OF CIT VS JAIN EXPORTS (P) LTD (217 TAXMAN 43) WHICH WAS RENDERED AFTER THE DE CISION OF THE SAME COURT IN THE CASE OF CIT VS CHIPSOFT TECHNOLOGY (P) LTD ( SUPRA). IN VIEW OF. THIS FACTUAL & LEGAL POSITION AND THE D ECISIONS DISCUSSED IN THE FOREGOING, I THEREFORE FIND THAT THE LONE DECISION IN THE CASE OF CIT VS CHIPSOFT TECHNOLOGY (P) LTD (SUPRA) RELIED UPON BY THE AO IN FACTS WAS NOT APPLICABLE TO APPELLANT'S CASE. INSTEAD THE RELIANCE PLACED BY THE LD. A.RS ON THE SUBSEQUENT DECISIONS OF HON'BLE KARNATAKA HIGH COUR T IN THE CASE OF CIT VS ALVARES & THOMAS (SUPRA), HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS LAIN EXPORTS (P) LTD (SUPRA) WERE MORE APPROPRIATE IN THE APPELLANT'S CASE. 12.IT IS TO BE FURTHER OBSERVED THAT THE PROPOSITIO N PUT FORTH BY THE HON'BLE DELHI & KARNATAKA HIGH COURTS WAS ALSO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SITA DEVI LUNEJA (325 ITR 593) WHEREIN THE HON'BLE HIGH COURT WHILE ALLOWING THE A SSESSEE'S CLAIM OBSERVED AS FOLLOWS: 'AFTER HEARING LEARNED COUNSEL FOR THE APPELLANT AN D GOING THROUGH THE IMPUGNED ORDER, WE DO NOT FIND ANY MERIT IN THE INS TANT APPEAL. IT IS THE CONCEDED POSITION THAT IN THE ASSESSEE'S BALANCE SH EET, THE AFORESAID LIABILITIES HAVE BEEN SHOWN, WHICH ARE PAYABLE TO T HE SUNDRY CREDITORS. SUCH LIABILITIES, SHOWN IN THE BALANCE SHEET, INDICATE T HE ACKNOWLEDGEMENT OF THE DEBTS PAYABLE BY THE ASSESSEE. MERELY BECAUSE, SUCH LIABILITY IS OUTSTANDING FOR THE LAST SIX YEARS, IT CANNOT BE PRESUMED THAT THE SAID LIABILITIES HAVE CEASED TO EXIST. IT IS ALSO CONCEDED POSITION THAT THERE IS NO BILATERAL ACT OF THE ASSESSEE AND THE CREDITORS, WHICH INDICATES THAT TH E SAID LIABILITIES HAVE CEASED TO EXIST. IN ABSENCE OF ANY BILATERAL ACT, T HE SAID LIABILITIES COULD NOT HAVE BEEN TREATED TO HAVE CEASED. IN VIEW OF THESE FACTS, THE CIT(A) AS WELL AS THE ITAT HAVE RIGHTLY COME TO THE CONCLUSION THA T THE ASSESSING OFFICER HAS WRONGLY INVOKED THE EXPLANATION I OF SECTION 41 (1) OF THE ACT AND MADE THE AFORESAID ADDITION ON THE BASIS OF PRESUMPTION, CONJECTURES AND SURMISES. IT HAS BEEN FURTHER FOUND THAT THE ASSESSING OFFICE R FAILED TO SHOW THAT IN ANY EARLIER YEAR, ALLOWANCE OF DEDUCTION HAD BEEN IN RE SPECT OF ANY TRADING LIABILITY INCURRED BY THE ASSESSEE. IT WAS ALSO NOT PROVED TH AT ANY BENEFIT WAS ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 16 OBTAINED BY THE ASSESSEE CONCERNING SUCH TRADING LI ABILITY BY WAY OF REMISSION OR CESSATION THEREOF DURING THE CONCERNED YEAR. THUS, THERE DID NOT ACCRUE ANY BENEFIT TO THE ASSESSEE WHICH COULD BE D EEMED TO BE THE PROFIT OR GAIN OF THE ASSESSEE'S BUSINESS, WHICH WOULD OTHERW ISE NOT BE THE ASSESSEE'S INCOME. IT HAS BEEN FURTHER FOUND AS FAC T THAT THE ASSESSEE HAD FILED THE COPIES OF ACCOUNTS OF SUNDRY CREDITORS SI GNED BY THE CONCERNED CREDITORS. IN VIEW OF THIS FACT, IN OUR OPINION, TH E ITAT HAS RIGHTLY COME TO THE CONCLUSION THAT CONFIRMATION FROM THE CREDITORS WER E PRODUCED. 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ILLEGAL ITY IN THE IMPUGNED ORDER PASSED BY THE ITAT AND IN OUR OPINION, NO SUBSTANTI AL QUESTIONS OF LAW, AS RAISED BY THE REVENUE IN THIS APPEAL, ARISE FROM TH E ORDER OF THE ITAT.' 13. THIS DECISION OF THE PUNJAB & HARYANA HIGH COUR T WAS FOLLOWED BY ANOTHER BENCH OF THE SAME HIGH COURT IN THE SUBSEQU ENT JUDGMENT RENDERED IN THE CASE OF CIT VS SPEEDWAYS TYRE LTD (364 ITR 4 01). MOREOVER, IT IS TO BE NOTED THAT THE HON'BLE GUJARAT HIGH COURT IN THE CA SE OF CIT VS NITIN 5 GARG (208 TAXMAN 16) CAME TO IDENTICAL CONCLUSIONS. IN T HE CASE DECIDED BY THE HON'BLE GUJARAT HIGH COURT FACTS INVOLVED WERE ALMO ST SIMILAR TO FACTS INVOLVED IN THE APPELLANT'S CASE. WHILE DECIDE THE APPEAL THE HIGH COURT TOOK NOTE OF THE FACT THAT THE ASSESSEE HAD NOT WRITTEN BACK THE OUTSTANDING LIABILITIES IN ITS BOOKS BUT CONTINUED TO DISCLOSE THE OUTSTANDING AMOUNTS AS LIABILITIES IN THE BALANCE SHEET FROM YEAR ON YEAR. ACCORDING TO THE HON'BLE HIGH COURT MERELY BECAUSE THE AMOUNTS REMAINED OUTS TANDING FOR MANY YEARS, IT COULD NOT BE INFERRED THAT THE LIABILITIE S HAD CEASED TO EXIST. MERELY BECAUSE THE ASSESSEE WAS ALLOWED THE DEDUCTION OF T RADING LIABILITIES IN THE EARLIER YEARS AND THE BALANCES WERE CARRIED FORWARD IN THE SUBSEQUENT YEARS, DID NOT PROVE THAT THE TRADING LIABILITIES HAD CEAS ED TO EXIST. THIS DECISION WAS FOLLOWED BY THE COORDINATE BENCHES OF THE SAME HIGH COURT WHILE DECIDING THE APPEALS IN THE CASES OF CIT VS PURIDEVI M. CHAU DHARY (41 TAXMANN.COM 329), CIT VS BHOGILAL RAMJIBHAI ATARA (222 TAXMAN 3 13) & CIT VS MATRUPRASAD C PANDEY (59 TAXMANN.COM 428). 14.THE LD. A.RS RELIANCE ON THE DECISION OF THE HON 'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS TAMIL NADU WAREHOUSING CORPORATION ( 292 ITR 310) ALSO APPEARS TO BE RELEVANT SINCE THE FACTS OF THE ASSESSEE'S CA SE WERE SIMILAR TO THE FACTS OF THE DECIDED CASE. THE HIGH COURT IN THE DECIDED CAS E FOUND THAT THE ASSESSEE HAD DISCLOSED IN ITS BALANCE SHEET THE LIABILITIES OUTSTANDING TO THE TRADE CREDITORS WHICH WERE OLD AND BROUGHT FORWARD FROM EARLIER YEA RS. THE AO ASSESSED THE OUTSTANDING LIABILITIES U/S 41(1). THE HON'BLE HIGH COURT UPHELD THE ITAT'S ORDER ALLOWING RELIEF ON THE GROUND THAT THERE WAS NO EVI DENCE THAT THERE WAS CESSATION OF LIABILITY. THE COURT FOUND THAT IN FACT THE ASSE SSEE HAD ACKNOWLEDGED THE LIABILITIES BY DISCLOSING THEM AS PAYABLES IN THE B ALANCE SHEET. FOLLOWING THE FOREGOING DECISION OF THE MADRAS HIGH COURT, THE HO N'BLE JURISDICTIONAL ITAT, KOLKATA BENCHES IN THE FOLLOWING CASES DELETED ADDI TIONS MADE U/S 41(1) IN RESPECT OF THE OLD & OUTSTANDING CREDITORS. ITO VS M.L. SARKAR & BROS (ITA NO. 1550/KOI/2010) ITO VS AMUSAR SERVICES & SUPPLIERS PVT LTD (ITA NO . 609/KOI/2012) ITO VS MULTIWYN INDUSTRIAL CORPORATION (ITA NO. 21 65/KOI/2010) ON CLOSE EXAMINATION OF THE FOREGOING HON'BLE ITAT DECISIONS, I FIND THAT IN ALL THE 3 CASES THE ASSESSING OFFICERS HAD INVOKED SECTION 41(1) OF THE INCOME TAX ACT; 1961 IN RESPECT OF OLD TRADE CREDITORS ON THE GROUN D THAT EITHER THE ASSESSEE DID NOT FURNISH THE COMPLETE PARTICULARS OF THE CREDITO RS BROUGHT FORWARD FROM THE EARLIER YEARS OR THAT THE NOTICES ISSUED U/S 133(6) REMAINED UN-SERVED OR NON- ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 17 COMPLIED. THE CIT(A) & ITAT HOWEVER HELD THAT SO LO NG AS THE ASSESSEE DISCLOSED THE AMOUNTS OUTSTANDING IN ITS BALANCE SH EET AND HAD ACKNOWLEDGED THE LIABILITIES AS DUE, PROVISIONS OF SECTION 41(1) HAD NO APPLICATION AND THEREFORE ADDITIONS WERE NOT TENABLE. FROM THE LEGAL PRINCIPLES AS CULLED OUT IN THE ABOV E JUDGMENTS, THE POSITION WHICH EMERGES IS THAT BEFORE THE DEEMING PROVISIONS OF SE CTION 41(1) ARE INVOKED, THE BURDEN IS CAST ON THE LD.AO TO BRING ON RECORD SOME TANGIBLE AND CREDIBLE MATERIAL TO PROVE THAT THE ASSESSEE HAD IN FACT ENJ OYED BENEFIT IN THE FORM OF REMISSION GRANTED BY THE CREDITOR(S). MOREOVER IT I S ALSO NECESSARY FOR THE ASSESSING AUTHORITY TO SHOW THAT BENEFIT IN THE FOR M OF REMISSION WAS DERIVED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. IT IS OBSERVED THAT IN THE PRESENT CASE THE ASSESSEE HAS NEVER DENIED ITS OBLIGATION T O PAY THE OUTSTANDING AMOUNTS TO THE CREDITORS. THE MATERIAL FACT WHICH W AS APPARENT FROM THE AUDITED ACCOUNTS WAS THAT THE ASSESSEE NEVER CLAIMED THAT I T HAD NO LEGAL OBLIGATION TO PAY TO THE SUNDRY CREDITORS. APPLYING THE RATIO LAI D DOWN IN THESE DECISIONS TO THE APPELLANT'S CASE, I THEREFORE FIND THAT BOTH ON FAC TS AS WELL AS IN LAW THE ASSESSEE HAS PROVED THAT NO MATERIAL WAS AVAILABLE WITH THE LD.AO WHICH IN ANY MANNER WHICH ESTABLISHED THAT THE CREDITORS HAD GRANTED RE MISSION OF LIABILITIES TO THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2001-02. THE LD. AO DID NOT BRING ON RECORD ANY TANGIBLE MATERIAL TO PROVE THAT THE CREDITORS HAD GRANTED REMISSION OF LIABILITIES DURING THE RELEVANT PREVIO US YEAR BECAUSE OF WHICH THE ASSESSEE'S LIABILITIES CEASED TO EXIST IN FY 2000-0 1. I THEREFORE AGREE WITH THE SUBMISSIONS OF THE LD.A.RS, AND HOLD THAT ADDITION OF RS.12,97,47,322/- U/S 41(1) WAS NOT SUSTAINABLE IN LAW. THE LD. AO IS ACCORDING LY DIRECTED TO DELETE THE ADDITION MADE U/S 41(1) OF THE ACT. THESE GROUNDS ARE THEREFORE ALLOWED IN FAVOUR OF TH E APPELLANT-ASSESSEE. 3. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF IMPUGNED SECTION 41(1) REMISSION / CE SSATION OF LIABILITY INVOLVING THE AMOUNT OF 12,97,47,322/-. THE INSTANT PROCEEDINGS APPEAR TO B E SECOND ROUND OF LITIGATION BETWEEN THE PARTIES QUA THE VERY ISSUE B EFORE THIS TRIBUNAL. EARLIER CO- ORDINATE BENCH HAD REMITTED THE INSTANT ISSUE BACK TO THE ASSESSING AUTHORITIES FOR AFRESH ADJUDICATION (SUPRA). 4. THE ASSESSING OFFICER TOOK UP CONSEQUENTIAL PROC EEDINGS. THERE IS NO DISPUTE ABOUT THE ASSESSEE TO HAVE BEEN CARRYING FO RWARD THE IMPUGNED LIABILITY IN ITS BOOKS FOR A TIME SPAN OF ALMOST THREE DECADES. IT I S AN ADMITTED FACT THAT THE DEPARTMENT DID NOT RAISE ANY ISSUE IN ALL INTERVENI NG ASSESSMENT YEARS IN QUESTION. IT EMERGES THAT ASSESSING OFFICER HAD ISSUED SUMMONS T O SIX DIRECTORS OF THE CONCERNED ENTITIES ON TEST CHECK BASIS IN THE INSTA NT SECOND ROUND. FOUR OF THE SAID SIX ENTITIES DIRECTORS PUT IN APPEARANCE. THEY EXP RESSED THEIR IGNORANCE ABOUT ANY SUCH TRADING TRANSACTIONS WITH THE ASSESSEE IN THEI R RESPECTIVE STATEMENTS. THIS MADE THE ASSESSING OFFICER TO ISSUE A SHOW-CAUSE DA TED 12.03.2015 PROPOSING TO TREAT THE ABOVE SUM AS A MERE BOOK ENTRY AS CEASED U/S 41(1) OF THE ACT. THE ASSESSEE STATED REITERATED THE FACT OF HAVING CLAIM ED THE IMPUGNED LIABILITY IN ITS BOOKS ALMOST THREE DECADES EARLIER FOR THE FIRST TI ME FOLLOWED BY SIMILAR TREATMENT IN THE INTERVENING ASSESSMENT YEARS WITHOUT ANY CHANGE RELEVANT IN FACTS. ITS CASE WAS THAT NONE OF ITS CREDITORS HAD EVER REMITTED THEIR RESPECTIVE SUMS SO AS TO ATTRACT SECTION 41(1) OF THE ACT. IT HIGHLIGHTED THE FACT T HAT ABOVE RANDOM CREDITORS HAD SUPPORTED ITS CASE AS PER THEIR WRITTEN REPLIES IN RESPONSE TO THE RESPECTIVE SUMMONS. ALL THIS FAILED TO CONVINCE THE ASSESSING OFFICER. HE NOTICED THAT ONE OF THE SAID WRITTEN REPLIES DID NOT CONTAIN EVEN CONCERNED PARTYS SIGNATURES. HE THEREAFTER ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 18 NARRATED THE ENTIRE BACKDROP AND QUOTED FOUR OF THE TESTED CHECK PARTIES STATEMENTS TO CONCLUDE THAT THE IMPUGNED LIABILITY WAS NOT GEN UINE ONE SO AS TO BE TAKEN AS SUBSISTING UPTO IMPUGNED ASSESSMENT YEAR. HE TOOK C OGNIZANCE OF THE FACT THE THAT SAID FOUR DIRECTORS HAD EXPRESSED THEIR COMPLETE IG NORANCE ABOUT ANY CORRESPONDING TRANSACTIONS TO HAVE TAKEN PLACE IN THE PAST. RELEV ANT INTERVENING PERIOD HAD ALSO NOT SEEN ANY PAYMENT FROM THE TAXPAYERS SIDE FOR A VER Y LONG PERIOD OF TIME AS PER THE ASSESSING OFFICER. HE WAS THEREFORE OF THE VIEW THA T NEITHER THE CREDITORS IN QUESTION HAD TAKEN ANY STEPS TO RECOVER THEIR RESPECTIVE DUE S NOR THE INSTANT TAXPAYER HAD DISCHARGED EVEN A SINGLE PENNY OF THE IMPUGNED LIAB ILITY. ALL THIS FORMED SUFFICIENT REASON FOR HIM TO OPINE THAT THE ASSESSEE HAD NO IN TENTION TO PAY THAT MONEY IN QUESTION. HE ALLEGED CREDITORS NON CONFIRMATION AS WELL AS LACK OF THEIR IDENTITY IN HIS ASSESSMENT ORDER BASED ON AN ASSUMPTION THAT THEY H AD EITHER VANISHED OR THERE WAS NO EFFORT AT THEIR BEHEST TO CLAIM THIS LIABILI TY SUM. THE ASSESSING OFFICER WAS FURTHER OF THE OPINION THAT HON'BLE DELHI HIGH COUR TS DECISION IN CIT VS. CHIPSOFT TECHNOLOGY PVT. LTD. ON 20.07.2012 IN ITA NO. 598/2011 HAD MADE IT CLEAR THAT SECTION 41(1) EXPLANATION SUFFICIENTLY INDICATED TH E SAME TO BE INCLUSIVE PROVISION SINCE THE LEGISLATURE HAD NOT USED MEANS CLAUSE THEREIN. HE THEREFORE MADE THE IMPUGNED ADDITION U/S 41(1) ON CESSATION OF TRADING LIABILITY OF 12,97,47,322/- IN QUESTION. 5. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) HAS RE VERSED THE ASSESSING OFFICERS ACTION IN HIS ABOVE EXTRACTED DETAILED DI SCUSSION. THIS LEAVES THE REVENUE AGGRIEVED. 6. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY A RGUES IN THE LIGHT OF ASSESSING OFFICERS FINDINGS THAT ASSESSEES IMPUGN ED LIABILITY IS NOT A GENUINE ONE FIRST OF ALL AS PER THE FOUR PARTIESS DIRECTORS S TATEMENTS. HE THEREAFTER SUBMITS THAT IT CAN BE SAFELY ASSUMED THAT THE LIABILITY IN QUESTIO N AS CEASED U/S. 41(1) OF THE ACT. WE DO NOT FIND MERIT IN EITHER OF THESE TWO ARGUMEN TS. CASE FILE REVEALED THAT THE ASSESSEE HAS THROUGHOUT BEEN CLAIMING THE IMPUGNED LIABILITY FOR A TIME SPAN OF ALMOST THREE DECADES WITHOUT ANY SUCH OBJECTION FRO M DEPARTMENT. RELEVANT SUNDRY CREDITORS LIST RUNS INTO 96 PARTIES; AMOUNT AND ADD RESS-WISE, PARTICULARLY IN PAPER BOOK PAGES 55 TO 56 AS ON 31.03.2001. THE ASSESSEE PARTLY PAID THE SUM IN CASE OF FIVE OF THE SAID PARTIES INVOLVING GROSS AMOUNT OF 21,95,04,000/-. PAPER BOOK PAGES 93 TO 95 AND 57 TO 59 CONTAINS THE SUMMARIZED STATE MENT OF LIABILITY IN QUESTION AS TO 31.03.2000 AND FROM 01.04.1989 TO 31.03.2013 INVOLV ING THE SUM OF 12,87,24,079/-; RESPECTIVELY. 7. CASE FILE FURTHER SUGGESTS THAT THE IMPUGNED LI ABILITY CLAIM HAS NOWHERE BEEN DOUBTED IN PRECEDING OR SUCCEEDING ASSESSMENT YEARS INVOLVING REGULAR ASSESSMENT AT LEAST IN ASSESSMENT YEARS 1998-99, 20 00-01, 2003-04 AND 2004-05. THE CIT(A)S CLINCHING FINDINGS THAT FOUR DIRECTORS OF CORRESPONDING ENTITIES HAVE BEEN APPOINTED IN FINANCIAL YEAR 2001 -02 ONLY WHEREAS THE IMPUGNED LIABILITY DATES BACK TO ALMOST 30 YEARS; H AVE GONE UNREBUTTED FROM THE REVENUE SIDE. WE THEREFORE DO NOT SEE ANY MERIT IN REVENUES ABOVE TWIN SUBMISSIONS. ITS FORMER PLEA THAT THE IMPUGNED LIABILITY IS NOT GENUINE AT THIS BELATED STAGE CARRIES NO WEIGHT. HON'BLE KARNA TAKA HIGH COURTS DECISION IN CIT VS. ALVARES & THOMAS (2010) 69 TAXMAN 257 (K AR) HOLDS THAT MERE NONE VERIFICATION OF SUCH A LIABILITY FOR OR FOR TH AT ANY DOUBT RAISED THEREUPON DOES NOT ATTRACT CESSATION OF LIABILITY PRINCIPLE U /S 41(1) OF THE ACT AS THE SAME HAS TO BE A CASE OF CESSATION IN LAW ONLY. HON'BLE GUJARAT HIGH COURTS JUDGMENT IN CIT VS. NITIN S GARG (2012) 22 TAXMAN 5 9 (GUJ) HAS PLACED RELIANCE ON MUCH A CELEBRATE JUDGMENT OF HON'BLE AP EX COURT IN CIT VS. SUGAULI SUGAR WORKS (P) LTD. (1999) 236 ITR 518 (SC ) TO HOLD THAT THE MERE FACT OF A LIABILITY HAVING CONTINUED TO BE SHOWN FO R VERY MANY YEARS WOULD NOT ATTRACT SECTION 41(1) SINCE IT IS FOR THE ASSESSING OFFICER HAS WHO HAS TO SHOW ITA NO.1360/KOL/2017 A. Y. 2013-14 ITO WD-3(3), KOL. VS. M/S C.D. STEEL PVT . LTD. PAGE 19 THAT CONCERNED ASSESSEE HAS DRAWN ANY BENEFIT BY WA Y OF CESSATION OR REMISSION THEREOF. WE FURTHER MAKE IT CLEAR THAT CI T(A)S ABOVE EXTRACTED DETAILED DISCUSSION HAS EXAMINED ALL THE FACTS AS W ELL AS THE RELEVANT LEGAL POSITION AT LENGTH WHICH HAS NOWHERE BEEN REBUTTED FROM THE REVENUE SIDE. WE THEREFORE CONCLUDE THAT THE CIT(A) HAS RIGHTLY R EVERSED THE ASSESSMENT FINDINGS HOLDING THE AMOUNT IN QUESTION OF 12,97,47,322/- TO BE A CASE OF CESSATION OF LIABILITY U/S 41(1) OF THE ACT. LEARNED DEPARTMENTAL REPRESENTATIVE AT THIS STAGE S UBMITS THAT THE CIT(A) NOWHERE CALLED FOR REMAND REPORT IN COURSE OF LOWER APPELLATE PROCEEDINGS FROM ASSESSING OFFICER. WE FIND THERE IS NO DISCUSS ION IN THE LOWER APPELLATE ORDER QUA SUCH AN ADDITIONAL EVIDENCE FILED OR ADMITTED BY T HE CIT(A). WE THUS REJECT THE REVENUES INSTANT LAST GROUND AS WE LL. 7. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 29/08/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 29 / 08 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-3(3), AAYAKAR BHAVAN, P-7, CHOW RINGHEE SQ. KOLKATA-69 2. /RESPONDENT-M/S C.D. STEEL PVT. LTD., COMMERCE HOUS E, 2A GANESH CHANDRA AVENUE, 9 TH FLOOR, ROOM NO. 8E, KOLKATA-13 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,