M/s. Well Plain Engineering Co., Ahmedabad V. The ACIT.,(OSD),Circle-10, Ahmedabad

ITA 281/AHD/2011

• Counselvise Citation: 28120514 RSA 2011
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 03-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND B. P. JAIN, A M) ITA NO. 281/AHD/2011 A. Y.: 2007-08 M/S. WELL PLAIN ENGINEERING CO., 5, SEEMA SOCIETY, ST. XAVIERS ROAD, NAVRANGPURA, AHMEDABAD VS THE A. C.I. T. (OSD), CIRCLE-10, 2 ND FLOOR, VASANT NATURE BUILDING, ASHRAM ROAD, AHMEDABAD 380 009 PA NO. AAAFW 3072 A (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. DIVATIA, AR RESPONDENT BY SHRI B. L. YADAV, DR DATE OF HEARING: 21-12-2011 DATE OF PRONOUNCEMENT: 30-12-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XV I, AHMEDABAD DATED 16-12-2010, FOR ASSESSMENT YEAR 2007-08, CHAL LENGING THE CONFIRMATION OF ADDITION OF RS.3,65,111/- U/S 41 (1 ) OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THIS CASE ARE THAT IN THE ASSESSMENT ORDER THE AO HAS STATED THAT THERE ARE 8 CREDITORS OUTSTA NDING FOR MORE THAN 3 YEARS IN RESPECT OF WHICH THE TOTAL AMOUNT CAME T O RS.4,53,031/-. THE AO ASKED THE ASSESSEE AS TO WHY THE OUTSTANDING AMOUNT BE NOT CONSIDERED AS INCOME. THE ASSESSEE SUBMITTED THAT T HEY WOULD LIKE TO PAY THE AMOUNT TO THE CREDITORS AND TRYING TO SE TTLE THE MATTER FOR ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 2 PAYING THE AMOUNT TO THEM. THEREFORE, NO ADDITION S HOULD BE MADE. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESS EE AND STATED THAT THESE 8 CREDITORS WERE OUTSTANDING FOR MORE TH AN 3 YEARS AND IN RESPECT OF ONE PARTY ONLY PERMANENT ACCOUNT NUMBER IS AVAILABLE. ADDITION WAS ACCORDINGLY MADE U/S 41 (1) OF THE IT ACT CONSIDERING CESSATION OF LIABILITY. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT 3 CREDITORS ARE OF RS.3,65,111/- IN RESPECT OF PARTH STEEL CORPORATION OF RS.18,400/-, PARTH TRADING CO. OF RS.3,11,711/- AND VIJAY TRADERS OF RS.35,000/- WHICH WERE SHOWN IN THE RETURN IN ASSE SSMENT YEAR 2009-2010 AND WHICH WERE OFFERED FOR THE SAME YEAR. IT WAS FURTHER EXPLAINED THAT IN RESPECT OF 4 CREDITORS PAYMENTS W ERE MADE DURING THE ASSESSMENT YEAR 2008-09. FOR ONE MORE PARTY NO EXPLANATION WAS OFFERED. THE LEARNED CIT(A) ACCEPTED THE CONTEN TION OF THE ASSESSEE REGARDING 4 PARTIES WHICH WERE MADE PAYMEN T IN ASSESSMENT YEAR 2008-09 AND DIRECTED THE AO TO VERI FY THE SAME. FOR ONE PARTY FOR WHICH NO DETAILS WERE FILED, ADDI TION WAS CONFIRMED. 2.1 HOWEVER, IN RESPECT OF THE 3 PARTIES NOTED ABOV E ADDITION WAS CONFIRMED IN A SUM OF RS.3,65,111/- DESPITE THESE A MOUNT WAS SURRENDERED AS INCOME IN ASSESSMENT YEAR 2009-10. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THESE WERE BALANCES COMING UP FROM EARLIER YEARS AND WERE OUTSTANDING LIABILITIES IN THE BALANCE SHEET OF THE ASSESSEE, T HEREFORE, NO ADDITION U/S 41 (1) OF THE IT ACT CAN BE MADE. HE HAS REFERR ED TO THE PARTIES LEDGER ACCOUNTS IN THE PAPER BOOK. ON THE OTHER HAN D, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 3 4. ON CONSIDERATION OF THE ABOVE FACTS WE ARE OF TH E VIEW THE ISSUE IS SQUARELY COVERED BY THE ORDER OF ITAT, AHM EDABAD B BENCH IN THE CASE OF SHRI NITIN S. GARG VS ACIT REP ORTED IN 40 SOT 253 IN WHICH IN PARA 8 TO 10 THE FINDINGS ARE REPRO DUCED AS UNDER: 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. SECTION 41 (1) (A) OF THE IT A CT READS AS UNDER: 41. (1) WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF L OSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE AS SESSEE (HEREINAFTER REFERRED TO AS THE FIRST-MENTIONED PER SON) 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 SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSI ON OR CESSATION THEREOF, THE AMOUNT OBTAINED BY SUCH PERS ON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DEEME D TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR, WHETHER THE BUSINESS OR PROFESS ION IN RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEE N MADE IS IN EXISTENCE IN THAT YEAR OR NOT; OR 8.1 HONBLE MADRAS HIGH COURT IN THE CASE OF TAMILN ADU WAREHOUSING CORPORATION (SUPRA) HELD AS UNDER: THE ASSESSEE FILED ITS RETURN FOR THE ASSESSMENT Y EAR 1989-90 AND ASSESSMENT ERAS COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE HAD SURRENDERED THE GROUP GRATUITY SCHEME WITH LIC AND RECEIVED A SUM OF RS.8,22,925/- DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 198 9- 90. AS THERE WAS NO PROPER ENQUIRY MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED ON ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 4 JANUARY 21,1992, THE COMMISSIONER PASSED ORDER UNDER SECTION 263 OF THE ACT AND SET ASIDE THE ASSESSMENT WITH A DIRECTION TO THE ASSESSING OFFICE R TO ASSESS THE SAID AMOUNT UNDER SECTION 41(1) OF TH E ACT FOR THE ASSESSMENT YEAR 1989-90. THE TRIBUNAL S ET AIDE THE ORDER OF THE COMMISSIONER. ON APPEAL TO TH E HIGH COURT: HELD, THAT THE ASSESSEE HAD CONTINUED TO SHOW THE ADMITTED AMOUNT OF RS.8,22,925 AS LIABILITY IN THE BALANCE-SHEET. THE UNDISPUTED FACT WAS THAT IT WAS A LIABILITY REFLECTED IN THE BALANCE-SHEET. ONCE IT W AS SHOWN AS LIABILITY BY THE ASSESSEE, THE COMMISSIONE R WAS WRONG IN HOLDING THAT IT WAS ASSESSABLE UNDER SECTION 41(1) OF THE ACT. UNLESS AND UNTIL THERE IS A CESSATION OF LIABILITY, SECTION 41 IS NOT APPLICABL E. 8.2 HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF SMT. SITA DEVI JUNEJA (SUPRA) HELD AS UNDER: IT IS THE CONCEDED POSITION THAT IN THE ASSESSEES BALANCE SHEET THE AFORESAID LIABILITIES HAVE BEEN SHOWN, WHICH ARE PAYABLE TO THE SUNDRY CREDITORS. SUCH LIABILITIES, SHOWN IN THE BALANCE SHEET, INDIC ATE THE 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 N O BILATERAL ACT OF THE ASSESSEE AND THE CREDITORS, WH ICH INDICATES THAT THE SAID LIABILITIES HAVE CEASED TO EXIST. IN ABSENCE OF ANY BILATERAL ACT, THE SAID LIABILITI ES COULD NOT HAVE BEEN TREATED TO HAVE CEASED. 8.3 ITAT AHMEDABAD BENCH IN THE CASE OF N. R. CHAUH AN (SUPRA) HELD AS UNDER: THE LD. COUNSEL FOR THE ASSESSEE SPECIFICALLY DRAW N OUR ATTENTION TO THE ACCOUNT COPIES AND STATED THAT THESE ARE OUTSTANDING AS ON DATE AND THIS AMOUNT AR E ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 5 NOT WRITTEN OFF IN THE BOOKS OF ACCOUNT. ACCORDINGL Y, THE SAME CANNOT BE ADDED U/S. 41(1) OF THE ACT AS T HE LIABILITY OF OUTSTANDING AND THE PARTIES ARE IN EXISTENCE. WE ARE IN FULL AGREEMENT WITH THE ARGUME NT OF THE LD. COUNSEL FOR THE ASSESSEE, AS IS SEEN FRO M THE DOCUMENTS AND PAPERS FILED BEFORE US THAT THE PARTIES DO EXIST AND THESE AMOUNTS ARE OUTSTANDING IN THE BOOKS OF THE ASSESSEE AS PAYABLE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE FEEL THAT THESE AMOUNTS CANNOT BE ADDED EITHER U/S. 68 OR 41(1) OF THE ACT. WE DELETE THE ADDITION AND THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 8.4 ITAT LUCKNOW BENCH IN THE CASE OF DCIT VS ALLIE D LEATHER FINISHERS (P) LTD. (SUPRA) HELD AS UNDER: 21.7 A LIABILITY COULD NOT BE TREATED AS A CESSATION IF IT WAS BEING MERELY CARRIED FORWARD FO R YEARS. A NON-GENUINE NON-TRADING LIABILITY STANDING IN THE BALANCE SHEET CAN BE TAXED BUT UNDER SECTION 68 IF IT CAME IN THE BOOKS IN THE CURRENT YEAR. IF SUCH N ON- GENUINE NON-TRADING LIABILITY CAME IN THE BOOKS IN AN EARLIER YEAR THAN SAME CANNOT BE TAXED IN THE CURRE NT YEAR EVEN UNDER SECTION 68. A NON-GENUINE TRADING LIABILITY CAN BE CONSIDERED IN THE CURRENT YEAR IF IT IS RELATED TO CURRENT YEARS TRADING/MANUFACTURING OR PROFIT & LOSS ACCOUNT BUT NOT UNDER SECTION 41(1) O R UNDER SECTION 68. IT CAN BE CONSIDERED ONLY UNDER SECTION 28, I.E. IT CAN BE CONSIDERED FOR DISALLOWA NCE WHILE EXAMINING THE CLAIM OF EXPENSES OR OUTGOINGS AGAINST REVENUE RECEIPTS. CURRENT YEARS GENUINE TRADING LIABILITIES, WAVED/REMITTED OR CEASED TO EX IST IN THE CURRENT YEAR ITSELF WILL NOT FORM PART OF TRADING/MANUFACTURING OR P/L ACCOUNT EXCEPT A NOTE APPENDED TO THEM AS DISCLOSURE OF INFORMATION. 21.10 EVEN IN A CASE WHERE A LIABILITY CEASED TO EXIST DUE TO LIMITATION I.E. THE CLAIM OF THE CREDI TOR IS BARRED BY LIMITATION UNDER LIMITATION ACT OF 1963 BUT IF THE LIABILITY SUBSIST OR HAS NOT BEEN WRITTEN OF F BY ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 6 THE ASSESSEE, OR THE ASSESSEE DOES NOT ABSOLVE HIMSELF FROM THE LIABILITY, THOUGH NOT LEGALLY ENFORCEABLE, IT CANNOT BE TAXED UNDER SECTION 41(1) . 8.5 THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS PRAMESHWAR BOHRA (SUPRA) HAS HELD AS UNDER: THE ASSESSEE ON THE FIRST DAY OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1993-94 I.E. ON APR IL 1, 1992, CREDITED AN AMOUNT OF INVESTMENT/CASH CRED IT OF RS.1,55,316 IN HIS BOOKS OF ACCOUNT. THE ASSESSING OFFICER ADDED THIS AMOUNT IN THE INCOME O F THE ASSESSEE AS UNEXPLAINED INVESTMENT IN THE ASSESSMENT YEAR 1993-94. THE TRIBUNAL HELD THAT THI S WAS NOT A CASE OF CASH CREDIT ENTERED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE DURING THE YEAR BUT IT WAS A CASE IN WHICH THE ASSESSEE HAD INVESTED THE CAPITAL IN THE BUSINESS AND THIS AMOUNT WAS SHOWN AS A CLOSING CAPITAL AS ON MARCH 31, 1992 AND ON APRIL 1 , 1992, IT WAS AN OPENING BALANCE. THEREFORE THE TRIBUNAL HELD THAT WHAT WAS ALREADY CREDITED IN THE BOOKS OF ACCOUNT ENDING ON MARCH 31, 1992, FOR FINANCIAL YEAR 1991-92 RELEVANT TO ASSESSMENT YEAR 1992-93 COULD NOT BE UNEXPLAINED CASH CREDIT OR INVESTMENT IN THE BOOKS OF ACCOUNT MAINTAINED FOR THE FINANCIAL YEAR 1992-93, THE ACCOUNTING PERIOD F OR WHICH ENDED ON MARCH 31, 1993. ON APPEAL: HELD, DISMISSING THE APPEAL, THAT THE CARRIED FORWARD AMOUNT OF THE PREVIOUS YEAR DID NOT BECOME AN INVESTMENT OR CASH CREDIT GENERATED DURING THE RELEVANT YEAR 1993-94. THIS ALONE WAS SUFFICIENT TO SUSTAIN THE ORDER OF THE TRIBUNAL IN DELETING THE AMOUNT OF R.1,55,316 FROM THE ASSESSMENT FOR THE ASSESSMENT YEAR 1993-94. 8.6 ITAT MUMBAI BENCH IN THE CASE OF ACIT VS VIP INDUSTRIES (SUPRA) HELD AS UNDER: ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 7 SECTION 41(1) IS ATTRACTED WHEN THERE IS CESSATION FOR REMISSION OF A TRADING LIABILITY. SIMPLY BECAUSE A PERIOD OF THREE YEARS HAS EXPIRED AND THE CREDITOR CANNOT LAWFULLY ENFORCE HIS CLAIM, IT DOES NOT MEAN THAT THERE IS A CESSATION OR REMISSION OF LIABILITY . THERE MAY BE SEVERAL SITUATIONS WHEN THE MONEY IS NOT CLAIMED OR PAID BY ONE PARTY TO ANOTHER WITHIN THREE YEARS AND THEREAFTER THE CLAIM IS MADE AND HONOURED BY THE OTHER. SO, SIMPLY BECAUSE A PARTICULAR AMOUNT IS OUTSTANDING FOR A PERIOD OF MO RE THAN THREE YEARS, THAT DOES NOT CONSTITUTE INCOME UNDER SECTION 41(1). 9. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ABOVE PROVISIONS AND THE DECISION REFERRED TO ABOVE, IT I S CLEAR THAT THE EXPENDITURE CLAIMED AS DEDUCTION IN THE EARLIER YEA R HAVE NOT BEEN DISALLOWED IN THE EARLIER YEAR IN WHICH THEY W ERE CLAIMED. EVEN THE AO IN THE EARLIER YEAR HAS NOT DOUBTED THE EXISTENCE OF THE PARTIES. THE LEARNED COUNSEL FOR THE ASSESSE E FILED COPIES OF BALANCE SHEET OF THE ALL YEARS UNDER APPE AL, AS WELL AS PROCEEDINGS EARLIER ASSESSMENT YEARS WHICH PROVE THAT THE OUTSTANDING LIABILITIES FROM EARLIER YEARS WERE CAR RIED FORWARDED TO THE ASSESSMENT YEARS UNDER APPEAL STARTING FROM ASSESSMENT YEAR 2001-02. THE LIABILITIES IN ASSESSM ENT YEAR 2000-01 WERE IN A SUM OF RS.1,29,83,564/-. THE PART ICULARS OF THOSE PARTIES AGAINST WHOM THE LIABILITIES WERE SHO WN IS MENTIONED AT PB-3, 4 AND 5. THE SAME PARTIES CONTIN UED IN THE ASSESSMENT YEAR 2001-02 UNDER APPEAL BUT THE BALANC ES OF SOME OF THE PARTIES HAVE REDUCED WHICH WOULD SHOW T HAT PART PAYMENTS HAVE BEEN MADE TO THEM. THE ABOVE FACTS WO ULD SHOW THAT THE LIABILITIES SHOWN IN THE BALANCE SHEE T IN THE ASSESSMENT YEAR UNDER APPEAL I.E. 2001-02 WHICH ARE OPENING BALANCES WHICH ARE CARRIED FORWARD FRO THE PRECEDIN G ASSESSMENT YEAR. THE LIABILITIES HAVE BEEN SHOWN IN THE BALANCE SHEET OF THE ASSESSEE WHICH WOULD SHOW THAT THE ASSESSEE ACKNOWLEDGED THE LIABILITIES OF THE OUTSTA NDING AMOUNTS. THE BALANCES WERE THUS CARRIED FORWARD FRO M EARLIER YEARS. IN ASSESSMENT YEAR 2002-03, THE AO MADE ADDI TION OF RS.1,60,590/- IN RESPECT OF ROYAL ENGINEERING WORK WHOSE BALANCE WAS ALSO OUTSTANDING IN THE ASSESSMENT YEAR 2000-01 ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 8 AND 2001-02. IT WOULD, THEREFORE, SHOW THAT SIMIL AR ADDITION IS MADE IN THE ASSESSMENT YEAR 2002-03 WHICH WOULD AMO UNT TO DOUBLE ADDITION IN RESPECT OF THE SAME PARTY. IN AS SESSMENT YEAR 2003-04 THE AO MADE ADDITION OF RS.40,032/- IN RESPECT OF SANJAY SPAL , RS.32/-, ANKIT ENGINEERING RS.20,000/ - AND MOTILALJI RS.20,000/-. THESE AMOUNTS WERE NOT CARRI ED FORWARD FROM EARLIER YEARS AS PER THE DETAILS FILED IN THE PAPER BOOK. IT WOULD SHOW THAT THESE ARE THE CURRENT LIABILITIES O F THE ASSESSEE IN THE ASSESSMENT YEAR 2003-04. SIMILARLY, IN ASSES SMENT YEAR 2006-07 THE AO MADE ADDITION OF RS.1,32,118/- IN RE SPECT OF AMOUNT OF RS.45,409/- AND RS.86,709/- IN RESPECT OF MAHALAXMI ROADWAYS AND NIHAL ROADWAYS. THESE WERE THE CREDIT BALANCES IN THE ASSESSMENT YEAR UNDER APPEAL WHICH WERE CARRIED FORWARD IN THE PRECEDING ASSESSMENT YEAR 20 05-06 AND IN THAT YEAR THERE WERE DEBIT BALANCES AGAINST THES E PARTIES AS PER THE DETAILS SUBMITTED BY THE LEARNED COUNSEL FO R THE ASSESSEE. THESE FACTS WOULD SHOW THAT THE AUTHORITI ES BELOW HAVE NOT APPLIED THEIR MIND TO THE FACTS OF THE CAS E THAT THESE ARE NOT THE FIT CASES FOR INVOKING THE PROVISIONS O F SECTION 41(1) OF THE IT ACT IN THE MATTER AS DONE BY THE AO. 9.1 CONSIDERING THE FACTS OF THE CASE AS NOTED ABOV E IT IS CLEAR THAT THE ASSESSEE HAD CONTINUED TO SHOW THE A DMITTED AMOUNTS AS LIABILITIES IN ITS BALANCE SHEET. THE LI ABILITIES REFLECTED IN THE BALANCE SHEET CANNOT BE TREATED AS CESSATION OF LIABILITIES. MERELY BECAUSE THE LIABILITIES ARE OUT STANDING FOR LAST MANY YEARS, IT CANNOT BE INFERRED THAT THE SAID LIA BILITIES HAVE CEASED TO EXIST. IT IS ALSO A FACT THAT THE ASSESSE E 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 TH E BOOKS OF ACCOUNT. SECTION 41(1) OF THE IT ACT IS ATTRACTED W HEN THERE IS CESSATION OR REMISSION OF A TRADING LIABILITY. THE AO SHALL HAVE TO PROVE THAT THE ASSESSEE HAS OBTAINED THE BENEFIT S IN RESPECT OF SUCH TRADING LIABILITIES BY WAY OF REMISSION OR CESSATION THEREOF. MERELY BECAUSE THE ASSESSEE OBTAINED BENEF IT OF DEDUCTION IN THE EARLIER YEARS AND BALANCES ARE CAR RIED FORWARD IN THE SUBSEQUENT YEAR, WOULD NOT PROVE THAT THE TR ADING LIABILITIES OF THE ASSESSEE HAVE BECOME NON-EXISTEN T. IT MAY ALSO BE NOTED HERE THAT THE ASSESSEE HAS NOT CLAIME D ANY ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 9 DEDUCTION OF THE EXPENDITURE IN ALL THE ASSESSMENT YEARS UNDER APPEAL. THE DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE SQUARELY APPLY TO THE FACTS OF THE CASE. T HEREFORE, WE ARE OF THE VIEW THAT PROVISIONS OF SECTION 41 (1) ( A) OF THE IT ACT HAVE BEEN WRONGLY APPLIED IN THE MATTER. WE MAY ALS O NOTE HERE THAT THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED DETAILS OF PARTICULARS OF PAYMENTS OF LIABILITIES IN SUBSEQ UENT YEARS WHICH ARE IN THE NATURE OF ADJUSTMENT THROUGH JOURN AL ENTRY, CASH PAYMENT AND SOME PAYMENTS BY BANKING CHANNEL. THE LEARNED DR OBJECTED TO THE FILING OF SUCH DETAILS A T THIS STAGE AND FURTHER SUBMITTED THAT THE PAYMENT BY CASH AND JOURNAL ENTRY WOULD NOT PROVE GENUINENESS OF THE PAYMENTS. WE DO NOT AGREE WITH THE SUBMISSION OF THE LEARNED DR BECAUSE THOSE DETAILS WERE CALLED FOR BY THE BENCH DURING THE COU RSE OF HEARING AND EVEN PAYMENT BY CHEQUES AND/OR JOURNAL ENTRY WOULD NOT ABSOLVE THE AO FOR MAKING OUT A CASE U/S 41 (1) (A) OF THE IT ACT. THE LAST CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT SINCE INCOME OF THE ASSESSEE IS C OMPUTED U/S 44AE OF THE IT ACT, THEREFORE, PROVISIONS OF SE CTION 41(1) OF THE IT ACT WOULD NOT APPLY. HOWEVER, CONSIDERING TH E FINDING GIVEN ABOVE THAT PROVISIONS OF SECTION 41 (1) WOULD NOT APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE; THERE IS N O NEED TO GIVE FURTHER FINDINGS ON THIS ISSUE. 10. ON CONSIDERATION OF THE ABOVE DISCUSSION, WE FI ND THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE ADDITIONS AGAINST THE ASSESSEE IN ALL THE ASSESSMENT YEARS UN DER APPEAL OF THE ABOVE AMOUNTS WITH THE AID OF SECTION 41(1) (A) OF THE IT ACT. AS A RESULT, WE SET ASIDE THE ORDERS OF THE AU THORITIES BELOW AND DELETE THE ENTIRE ADDITIONS. 5. CONSIDERING THE FACTS OF THE CASE NOTED ABOVE IT IS CLEAR THAT THE ASSESSEE HAD CONTINUED TO SHOW THE ADMITTED AMOUNTS AS LIABILITY IN ITS BALANCE SHEET, THEREFORE, THE SAME CANNOT BE TR EATED AS CESSATION OF LIABILITY. WE ACCORDINGLY, FOLLOWING THE ORDER O F THE TRIBUNAL IN THE CASE OF SHRI NITIN S. GARG (SUPRA) SET ASIDE THE OR DERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. ITA NO.281/AHD/2011 M/S. WELL PLAIN ENGINEERING CO. VS ACIT (OSD), CIR- 10, AHMEDABAD 10 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B. P. JAIN) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE 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 D Y. REGISTRAR, ITAT, AHMEDABAD