ACIT, CHENNAI V. SPL Infrastructure Pvt. Ltd., CHENNAI

ITA 2488/CHNY/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2639 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 28-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Keywords: Period of limitation; Accommodation entries
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , . ! , ' !# $ [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.2488/MDS/2014 / ASSESSMENT YEAR : 2010-11 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE VI(3) CHENNAI VS. M/S SPL INFRASTRUCTURE PVT. LTD NO.15, KASTHURI RANGAN STREET ALWARPET, CHENNAI - 18 [PAN AAICS 0881 N ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI A B KOLI, JCIT /RESPONDENT BY : SHRI PHILIP GEORGE, ADVOCATE / DATE OF HEARING : 28 - 1 2 - 2015 / DATE OF PRONOUNCEMENT : 14 - 01 - 2016 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, CHENN AI, DATED 30.6.2014 FOR ASSESSMENT YEAR 2010-11. 2. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO S USTAINING DISALLOWANCE OF ` 44,40,831/- OUT OF ` 4,41,08,210/- WHICH WORKS OUT TO 10%, MADE BY THE ASSESSING OFFICER. ITA NO. 2488/14 :- 2 -: 3. FACTS OF THIS ISSUE ARE THAT THE ASSESSEE CLAIMED AN EXPENDITURE OF ` 4,41,08,210/- UNDER THE HEAR SUB-CONTRACT EXPENSES . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HA S CLAIMED TOTAL CONTRACT EXPENSES OF ` 6.09 CRORES TOWARDS SUB-CONTRACT EXPENSES. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FUR NISH CONFIRMATION ALONGWITH THE COPIES OF INCOME-TAX RECORDS FROM 15 PARTIES IN WHOSE NAME THE EXPENSES ARE DEBITED AND ALSO THE DETAILS OF THE SERVICES PROVIDED BY THEM ALONGWITH INVOICES. THE ASSESSEE VIDE LETTER DATED 10.2.2013 FURNISHED CONFIRMATION LETTERS FROM EACH OF 15 PARTIES, THE COPIES OF BANK STATEMENT OF THE ASSESSEE EXPLAININ G THE NATURE OF WORK CARRIED ON BY IT AS FORMATION OF INTERNAL ROAD WITH GRAVEL AS SUBBASE INCLUDING CUTTING, DOZING, FILLING TO REQUI RED LEVEL, REMOVAL OF LOOSE SOIL ETC AND ALSO EXPLAINING THAT THE PAYMENT IS MADE TO RESPECTIVE PERSONS BASED ON THE QUANTITY OF THE WOR K EXECUTED BY EACH OF THEM AS RECORDED IN THE M. BOOK. ON VERIFI CATION OF THE M. BOOK PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER FOUND THAT THE ENTRIES MADE IN TH E M.BOOK WAS WITHOUT ANY SEPARATE BILL OR INVOICE, BUT WERE FOUN D TO BE BASED ON SELF-MADE HAND WRITTEN BY THE ASSESSEE ITSELF. TH EREAFTER, THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 TO EACH O F THE 15 PARTIES TO APPEAR PERSONALLY WITH THE RELEVANT DETAILS. IN RE SPONSE TO THE SUMMONS, NONE APPEARED BEFORE THE ASSESSING OFFICER . HOWEVER, THE ITA NO. 2488/14 :- 3 -: SUMMON LETTERS IN RESPECT OF THE TWO PARTIES WERE R ETURNED STATING THAT NO SUCH PERSONS WERE EXISTING IN THE ADDRESSES PROV IDED. THE ASSESSING OFFICER ACCEPTED THE LETTER OF CONFIRMATI ON RECEIVED FROM M/S SAKTHI KANNA CONSTRUCTION PVT. LTD AS GENUINE AND HELD THAT THE EXPENSES DEBITED IN THE NAME OF OTHER 14 PARTIES AS NON-GENUINE. THE ASSESSING OFFICER HELD THAT THE 14 PARTIES HAVE PRO VIDED ACCOMMODATION ENTRIES TO THE ASSESSEE ON THE BASIS OF THE INFERENCES DRAWN FROM THE COPIES OF THE INCOME-TAX RETURNS PRO DUCED. THE ASSESSING OFFICER OBSERVED THAT ALL THE INDIVIDUALS ARE RELATED TO THE ASSESSEE-COMPANY AND HAVE DONE WORK ONLY WITH THE A SSESSEE- COMPANY. THE INCOME RETURNED IS MATCHED TO THEIR T DS CLAIM TO SERVE THE PURPOSE OF THE ASSESSEE TO INFLATE THE EXPENSE S. ONE OF THE SUB- CONTRACTOR IS AGED 94 YEARS AND BY PAYING 1% OF THE ENTIRE TRANSACTION AS TDS THE ASSESSEE-COMPANY HAS BENEFITED. HE FURT HER OBSERVED THAT THE PAN NUMBER QUOTED BY TWO INDIVIDUALS IN CONFIRM ATION LETTER IS NOT BELONGING TO THE SAME INDIVIDUAL BUT TO THE DIFFERE NT PERSONS. ON THE BASIS OF THE ABOVE, THE ASSESSING OFFICER HELD THE EXPENSES DEBITED BY THE ASSESSEE-COMPANY TO THE TUNE OF ` 4,41,08,210/- IN THE NAME OF 14 PARTIES AS NON-GENUINE AND DISALLOWED THE SAME. 4. ON APPEAL, THE CIT(A) HAS RESTRICTED THE DISALLOWAN CE TO ` 44,10,821/- AS AGAINST THE DISALLOWANCE OF ` 4,41,08,210/- BY OBSERVING AS UNDER: ITA NO. 2488/14 :- 4 -: 6.1.2. I HAVE CONSIDERED THE FINDINGS OF THE ASSE SSING OFFICER AND ALSO SUBMISSION MADE BY THE AR OF THE APPELLANT IN THE COURSE OF APPELLATE PROCEEDINGS ALONG WITH THE CITE D CASE LAWS ON THIS ISSUE CAREFULLY. IT IS NOT DISPUTED THAT ALL T HE 14 PERSONS HAVE FURNISHED THE CONFIRMATION AND SOME OF THE PARTIES IN RESPONSE TO THE SUMMONS ISSUED TO THEM HAVE FURNISHED THE COPIE S OF THE INCOME TAX RETURNS AND ALSO COPIES OF THE BANK ACCO UNTS. SOME OF THE PARITIES HAVE ALSO CONFIRMED THAT THEY DO NO T HAVE INVOICE COPIES AND MAINTAIN ONLY M. BOOK WHICH WAS RETAINED BY THE ASSESSEE I.E M/S SPL INFRASTRUCTURE PRIVATE LIMITED. THE COPY OF THE M. BOOK PLACED BEFORE ME GIVE THE DETAILS OF WO RK DONE FOR PARTICULAR PERIOD, MEASUREMENT UPTO DATE OF WORK DO NE WITN SIGNATURE OF THE SUPERVLSOR OF ME COMPANY.11 PARTIES H AVE SENT THE DETAILS FROM FAR OF PLACES TO THE ASSESSIN G OFFICER THROUGH COURIER. ONE PARTY NAMELY M/S SAKTHI KANNA CONSTRUCTIONS PRIVATE LIMITED APPEARED BEFORE THE A SSESSING OFFICER AND THE TRANSACTIONS WITH THIS PARTY WERE A CCEPTED BY THE ASSESSING OFFICER. THE LETTERS ISSUED BY ASSESSING OFFICER WERE REMAIN UN- COMPLIED WITH ONLY TWO PARTIES. IT IS AL SO FACT THAT THE APPELLANT CARRIED OUT THE SUB CONTRACT WORK WITH ED AC ENGINEERING LIMITED FOR LAYING THE ROAD WORK AT THE REMOTE PLACES FOR THE PURPOSE OF THERMAL POWER PLANT, JSW ENERGY (RATHNAGIRI LIMITED), NANDIWADI MAHARASHTRA STATE. FOR LAYING OUT ROAD WORK MAN POWER IS NECESSARILY REQUIRED. THERE IS NO EVIDENCE AVAILABLE ON THE RECORD THAT THE APPELLANT HAD NOT EXECUTED THE ROAD WORK AT THERMAL POWER PLANT, RATH NAGIRI. THE MOST OF THE LABOUR CONTRACTORS WERE EITHER RELATIVE S OF THE APPELLANT OR KNOWN TO THE APPELLANT. THE ENTIRE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECTIVE EXPENSE DEBITED IN THE NAME 14 PARTIES CANNOT BE ACCEPTED WITHOUT DISP ROVING THE CONFIRMATIONS RECEIVED, DISPROVING THE PAYMENTS MAD E TO THEM BEYOND DOUBT, DISPROVING THE EXECUTION OF THE WORK ORDER. HOWEVER THERE IS A POSSIBILITY OF THE INFLATION OF THE EXPENSES IN RESPECT OF ROAD WORK CARRIED OUT BY THE APPELLANT A S A WHOLE. IN THE EARLIER A.YS, THE DEPARTMENT ACCEPTED THE 5% OF THE TURNOVER DECLARED BY THE APPELLANT AFTER DETECTION OF THE IN FLATION OF THE EXPENSES BY CARRYING OUT SURVEY ACTION. IN THE YEAR UNDER CONSIDERATION, THERE WAS INCREASE IN GP AND NET PRO FIT RATIO DECLARED BY THE APPELLANT AS COMPARED TO THE GP AND NET PROFIT RATIO DECLARED IN THE EARLIER YEARS. HOWEVER THE NE T PROFIT DECLARED BY THE APPELLANT AT 3.83% IS LESS THAN THE 5% OF THE NET PROFIT ACCEPTED BY THE DEPARTMENT IN THE EARLIER YE ARS. THE 5% OF THE NET PROFIT ON THE TURNOVER OF RS. 3334.16 LACS COMES TO RS. 166.7 LACS. THE APPELLANT HAD DECLARED RS. 127.53 L ACS AS NET PROFIT. THE DIFFERENCE COMES TO ABOUT RS. 39.178 LA CS. IN THE COURSE OF THE APPELLANT PROCEEDINGS, THE AR OF THE APPELLANT HAD COME OUT TO OFFER 10% OF THE DISALLOWANCE OF RSA,41 ,08,210.00 WHICH COMES TO ABOUT RS. 44,10,821.00 ON THE BASIS OF THE DECISION OF THE HONORABLE !TAT, CHENNAI B BENCH REP ORTED IN ITA NO. 2488/14 :- 5 -: (2014) 159 TTJ (CHENNAI) 526 AND ALSO ON THE BASIS OF THE DECISION OF THE HONORABLE GUJARATH HIGH COURT REPOR TED IN [ 2013 ] 355 TR290 (GUJ). IN THE CASE CITED BY THE AR OF T HE APPELLANT DECIDED BY CHENNAI B BENCH, THE SIMILAR ROAD WORK W AS ENTRUSTED TO TWO PERSONS NAMELY SRI. N.ERULAPPAN AN D SRI S. KESAVAN BY EDAC ENGINEERING LIMITED AND THE ASSESSI NG OFFICER RECORDED THE STATEMENT OF THE TWO PERSONS WHO ADMIT TED THAT THEY HAD NOT CARRIED OUT ANY WORK OF THE NATURE MEN TIONED. IN SPITE OF THE DENIAL OF THE WORK CARRIED OUT BY SRI N. ERULAPPAN AND SRI S. KESAVAN, ON EXAMINATION OF THE FACTS, TH E HONORABLE TRIBUNAL CAME TO CONCLUSION THAT THE ENTIRE DISALLO WANCE MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED AND RESTR ICTED THE DISALLOWANCE TO 25% OF THE TOTAL CLAIM OF RS. 22.10 CRORES. THE HONORABLE GUJARATH HIGH COURT IN THE CASE OF BHOLAN ATH POLI FAB PVT. LTD., REPORTED IN [2013] 355 ITR 290 HELD THAT TRIBUNAL HAVING EXAMINED THE EVIDENCE ON THE RECORD CAME TO THE CON CLUSION THAT ASSESSEE DID PURCHASE CLOTH AND SELL THE FINIS HED FABRICS, AS A NATURAL COROLLARY, NOT THE AMOUNT COVERED UNDER S UCH PURCHASE BUT THE PROFIT ELEMENT EMBEDDED WOULD BE S UBJECT TO TAX. IN THE INSTANT CASE THE PARTIES HAVE NOT DENIE D THE PAYMENTS MADE TO THEM AND ALSO HAVE NOT DENIED THE WORK CARR IED OUT BY THEM. THE EXISTENCE OF THE PARTIES AND THE PAYMENTS ARE ALSO NOT DISPROVED. THE ONLY FACT WAS THAT THE PARTIES HAVE NOT APPEARED BEFORE ASSESSING OFFICER FOR THE SUMMONS ISSUED TO THEM BUT HAVE GIVEN CONFIRMATION TO THE ASSESSING OFFICE R. SINCE ALL THE PARTIES ARE KNOWN TO THE APPELLANT, THE APPELLANT W OULD HAVE TAKEN TO THE ADEQUATE STEPS FOR PRODUCING BEFORE TH E ASSESSING OFFICER FOR EXAMINATIONS. THE NET PROFIT RATIO DECL ARED BY THE APPELLANT IN THE YEAR UNDER CONSIDERATION IS ALSO L ESS AS COMPARED TO THE NET PROFIT COMPUTED BY THE ASSESSIN G OFFICER IN THE EARLIER YEARS WHICH WAS ALSO ACCEPTED BY THE AP PELLANT. LOOKING TO THE FACTS OF THE CASE IN TOTALITY AND LE GAL POSITION ON THIS ISSUE, I AM CONVINCED THAT THE OFFER OF THE 10 % OF THE TOTAL DISALLOWANCE OF RS4,41,08,210.00 MADE BY THE APPELL ANT DURING THE COURSE OF THE APPELLATE PROCEEDINGS AS ADDITION AL INCOME OVER AND ABOVE RETUNED INCOME IS REASONABLE. THE OF FER OF THE 10% OF THE TOTAL DISALLOWANCE WOULD LEAD TO NET PRO FIT RATIO MORE THAN 5% OF THE TURNOVER WHICH WAS ANY WAY ACCEPTED BY ASSESSING OFFICER IN THE EARLIER YEARS. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE TO RS. 44,10,821.00 AS AGAINST THE DISALLOWANCE OF RS4,41,08,210.00. TH E GROUNDS OF APPEAL RAISED BY THE APPELLANT ON THIS ISSUE ARE TREATED AS DISPOSED OFF ACCORDINGLY. AGAINST THE ABOVE, THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 2488/14 :- 6 -: 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE, IT IS ADMITTED FACT THAT 14 PERSONS HAVE FURNISHED CONFIRMATION AND SOME OF THE PARTIES IN RESPONSE TO SUMMONS ISSUED TO THEM HAVE FURNISHED THE COPIES OF INCOME-TAX RET URN AND ALSO COPIES OF BANK ACCOUNT. SOME OF THE PARTIES ALSO C ONFIRMED THAT THEY DO NOT HAVE INVOICE COPIES AND MAINTAIN ONLY METHOD BOOK WHICH WAS RETURNED BY THE ASSESSEE. THE COPY OF M.BOOK GAVE DETAILS OF WORK DONE FOR A PARTICULAR PERIOD, MEASUREMENT UPTO THE DATE OF WORK WITH THE SIGNATURE OF SUPERVISOR OF THE COMPANY. 11 PAR TIES HAVE SENT THE DETAILS FROM FAR OFF PLACES TO THE ASSESSING OFFICE R THROUGH COURIER. HOWEVER, THERE WAS NO RESPONSE FROM TWO PARTIES. T HE ASSESSEE HAS TAKEN THE ROAD LAYING WORK AND ALSO COMPLETED THAT WORK. MOST OF THE PAYMENTS ARE NOT SUPPORTED BY BILLS ISSUED BY THE A BOVE PARTIES. ON THE ABOVE REASONS, THE ASSESSING OFFICER DISALLOWED ` 4,41,08,210/-. HOWEVER, THE CIT(A) CONSIDERING THE NATURE OF BUSIN ESS OF THE ASSESSEE AND ALSO CHANCES OF INFLATED EXPENSES, SUS TAINED THE DISALLOWANCE TO 10% OF ABOVE EXPENDITURE. AS SEEN FROM THE FACT BROUGHT ON RECORD THAT THE ASSESSEES TOTAL TURNOV ER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS AT ` 3334.16 LAKHS AGAINST WHICH THE ASSESSEE DECLARED GROSS PROFIT OF 14.21% AND NET PROFIT AT 3.83%. WHEN WE COMPARE THE TURNOVER OF GROSS PROFI T AND NET PROFIT ITA NO. 2488/14 :- 7 -: OF THE PRESENT ASSESSMENT YEAR WITH OTHER ASSESSMEN T YEARS IT IS AT HIGHER SIDE. THIS CAN BE SEEN FROM THE BELOW MENTI ONED TABLE: ` IN LAKHS Y.E 31.3.05 31.3.06 31.3.07 31.3.08 31.3.09 31.3.10 TURNOVER 3133.38 2760.71 3527.99 6680.59 11585.30 3 334.16 G.P 253.47 247.37 352.46 436.04 625.25 473.93 DEPN 52.96 57.65 87.09 104.58 96.44 159.49 INTEREST 68.94 80.95 166.81 197.47 190.04 186.91 N.P 131.57 108.77 98.56 133.99 338.77 127.53 GP AS % OF T.O 8.09 8.96 9.99 6.52 5.40 14.21 N.P AS % OF T.O 4.20 3.94 2.79 2.01 2.92 3.83 FURTHER, IT IS ALSO ADMITTED FACT THAT THE PAYMENT TO ABOVE PARTIES WAS SUBJECT TO TDS AND PAID BY CHEQUES AND THE ASS ESSEE HAS MAINTAINED THE M. BOOK WHICH IS SIGNED BY THE SUB-C ONTRACTORS. THE ONLY DISCREPANCY NOTICED BY THE ASSESSING OFFICER I S THAT THE PAYMENTS ARE NOT SUPPORTED BY THE BILLS RAISED BY THE PARTIE S AND ONLY SELF-MADE VOUCHERS WERE MAINTAINED BY THE ASSESSEE. IN OUR O PINION, CONSIDERING THE NATURE OF WORK CARRIED ON BY THE A SSESSEE, THERE IS NO QUESTION OF NOT INCURRING OF EXPENDITURE BY THE AS SESSEE TO CARRY ON THE ROAD WORK CONTRACTS AND THE WORK IS MENTIONED I N THE M BOOK MAINTAINED BY THE ASSESSEE AND COUNTER SIGNED BY T HE SUB- ITA NO. 2488/14 :- 8 -: CONTRACTORS. HOWEVER, THERE IS CHANCES OF INFLATIN G THE EXPENDITURE FOR WHICH THE CIT(A) HAS ALREADY DISALLOWED 10% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE TO THE EXTENT OF ` 4,41,08,210/-. HENCE, THE CONTENTION OF THE LD. DR THAT THE ENTIRE AMOUNT OF ` 4,41,08,210/- IS TO BE DISALLOWED CANNOT BE APPRECIATED AS HELD BY THE TRIBUNAL IN THE CASE OF EDAC ENGINEERING LTD VS ACIT, 149 ITD 341, WHEREIN HELD THAT IF EXPENDITURE CLAIMED WAS NOT SUPPORTED BY PROPER EVIDENCE AND SOME DEFICIENCY PERSIST IN EVIDENCE, PART EXPENDITU RE IS DISALLOWED ON ESTIMATED BASIS. BEING SO, BY PLACING RELIANCE O N THE ABOVE DECISION OF THE TRIBUNAL, THE CIT(A) IS JUSTIFIED IN DISALL OWING ONLY 10% OF THE SUB-CONTRACT EXPENSES NOT SUPPORTED BY PROPER BILLS . THIS GROUND OF THE REVENUE IS DISMISSED. 6. THE NEXT GROUND IS WITH REGARD TO DELETION OF ADDIT ION MADE U/S 41(1) OF THE ACT AS CESSATION OF LIABILITY. 7. THE FACTS OF THIS ISSUE ARE THAT THE ASSESSING OFFI CER MADE AN ADDITION OF ` 18,16,728/- TOWARDS CREDITORS AS THEY ARE OUTSTAND ING FOR MORE THAN THREE YEARS AND ANY CLAIM BEYOND THREE YE ARS IS NOT GOOD IN LAW AS PER LIMITATION ACT. HOWEVER, THE CIT(A) OBS ERVED THAT THERE IS NO CESSATION OF LIABILITY AS ON THE DATE OF THE ACC OUNTS SINCE THE ASSESSEE HAS NOT WRITTEN OFF THESE AMOUNTS IN ITS B OOKS OF ACCOUNT. ACCORDING TO THE CIT(A), EXPLANATION 1 SEC. 41(1)(4 ) ALSO TO APPLY TO ITA NO. 2488/14 :- 9 -: THE FACTS OF THIS CASE. ACCORDINGLY, HE DELETED TH E ADDITION AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, THE ASSES SING OFFICER HAS NOT ISSUED ANY NOTICE TO THE CREDITORS TO CONFIRM FROM THEM WHETHER THEY HAVE GIVEN UP THEIR DUES FROM THE ASSESSEE. THE ASSESSEE HAS ALSO NOT WRITTEN BACK THESE AMOUNTS IN ITS BOOKS OF ACCO UNT. EXCEPT FOR THE FACT THAT THE AMOUNTS ARE OUTSTANDING, THERE WAS NO MATERIAL EVIDENCE TO SHOW THAT THERE WAS REMISSION OR CESSATION OF LI ABILITY. IT IS THE ASSESSING OFFICER WHO HAS PRESUMED THAT THE LIABILI TY IN RESPECT OF THESE CREDITORS WAS CEASED TO EXIST. BEFORE COMING TO THE CONCLUSION BY THE ASSESSING OFFICER THAT THE CREDITORS WERE NO MORE EXISTING, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO MAKE NECESS ARY ENQUIRY TO BRING ON RECORD MATERIAL THAT THE CREDITORS WERE CE ASED TO EXIST. HE COULD HAVE MADE NECESSARY ENQUIRY TO THIS EFFECT. THE ASSESSEE HEREIN IS A LIMITED COMPANY AND AS PER THE LEGAL PO SITION THE ACKNOWLEDGEMENT OF THE LIABILITY IN FAVOUR OF THE C REDITORS IN ITS BALANCE SHEET EXTENDS THE PERIOD OF LIMITATION FOR THE PURPOSE OF SEC. 18 OF THE LIMITATION ACT. IT IS THE ASSESSEES CL AIM THAT THE DEBTS ARE SUBSISTING AND IT CONTINUES TO BE LIABLE TO PAY THE CREDITORS. THEREFORE, IT IS NOT OPEN TO THE ASSESSING OFFICER TO DRAW THE CONCLUSION THAT THE CREDITORS HAVE REMITTED THE LIABILITY OR THAT THE L IABILITY HAS OTHERWISE ITA NO. 2488/14 :- 10 -: CEASED WITHOUT EVIDENCE OR MATERIAL WHEN THE ASSES SEE ACKNOWLEDGES A LIABILITY IN THE BALANCE SHEET AND EXPLANATION 1 IS NOT APPLICABLE. SINCE THE CREDITORS ARE CONTINUED TO BE APPEARING I N THE BALANCE SHEET FROM YEAR TO YEAR AND THE ACCOUNTS OF THE CREDITOR S HAVE NOT BEEN WRITTEN BACK, THE CONCLUSION OF THE ASSESSING OFFIC ER THAT IT WAS CEASED TO EXIST IS NOT PROPER. ACCORDINGLY, IN OUR OPINIO N, THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASS ESSING OFFICER U/S 41(1) OF THE ACT. THIS VIEW OF OUR IS FORTIFIED BY THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS HOTLINE ELEC TRONICS LTD, [2012] 80 CCH 156, AND PUNJAB & HARYANA HIGH COURT JUDGMEN T IN THE CASE OF CIT VS GP INTERNATIONAL LTD, 325 ITR 25. ACCORD INGLY, THE DELETION MADE BY THE CIT(A) IS CONFIRMED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (G. PAVAN KUMAR) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' / CHENNAI #$ / DATED: 14 TH JANUARY, 2016 RD ITA NO. 2488/14 :- 11 -: $%&& '(&)( / COPY TO: & 1 . / APPELLANT 4. & * / CIT 2. / RESPONDENT 5. (+,& - / DR 3. & *&./ / CIT(A) 6. ,0&1 / GF