Income Tax Officer, Dhar V. Shri Sunil Kumar Jain Prop. M/s Sunil Traders, Kanwan, Badnagar

ITA 793/Ind/2018

AI Insights

The case involves an appeal by the Income Tax Officer, Dhar against Shri Sunil Kumar Jain, concerning the addition of Rs.6,41,59,626 to the assessee's income under Section 41(1) of the Income Tax Act, 1961, for the Assessment Year 2014-15. The addition was initially made by the ITO, Dhar, on the grounds that the liabilities to the creditors were time-barred and thus ceased to exist. However, the CIT(A) deleted this addition after finding that the assessee had made payments to the creditors in the succeeding years and that the liabilities were disclosed in the balance sheet, indicating that they were not time-barred. The Tribunal upheld the CIT(A)'s decision, agreeing that there was no cessation of liability and that the additions made under Section 41(1) were not justified.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 122537 (ITAT-INDORE)
• Duration Of Justice: 7 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2022
• Assessment Year: misc
• Appeal Filed On: 27-12-2014
• Other Referred Cases: CIT vs. Shri Vardhman Overseas Ltd., CIT v/s Alvares & Thomas, CIT vs Combined transport, CIT v/s Shri Vardhman Overseas Ltd., CIT v/s Alvares&Thomos, CIT v/s Sugauli Sugar Works (P). Ltd., CCIT v/s Kesaria Tea Co..Ltd., CIT vs Compaq Electric Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Additional evidence
• Section: 143(3); 142(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER & SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I .T .A . N o .7 9 3 /I n d / 2 0 1 8 ( A s se ss m e n t Y e a r : 2 0 1 4 - 1 5 ) I n c o m e - ta x O f f ic e r A a ya k a r B h a w a n , D h a r V s. Sh r i Su n i l K u m a r J a in Pr o p . M /s . Su n i l T r a d e r s , K a n w a n , T e h si l- B a d n a w a r , D i stt . D h a r ( M . P.) Su r v e y N o . 3 1 4 / 3 , SD A C o m p o u n d , L a su d i ya M o r i , I n d o r e , M a d h ya Pr a d e s h - 4 5 2 0 0 1 PA N N o . A F SP J4 8 8 1 P (Appellant) .. (Respondent) Appellant by : Shri Ashish Porwal, Sr.DR Respondent by : Shri Pankaj Shah, A.R. D a t e o f H e a r i ng 14.09.2022 D a t e o f P r o no un c e m e nt 21 .11.2022 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the Revenue is directed against the deletion of addition of Rs.6,41,59,626/- made by the Ld. Commissioner of Income Tax (Appeals)-II, Indore (in short ‘CIT(A)’) under Section 41(1) of the Act, arising out of the order dated 26.12.2016 passed by the ITO, Dhar under ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 2 - section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2014-15. 2. The brief facts leading to the case is this that during the course of scrutiny proceedings, assessee was asked to provide full details of sundry creditors mainly PAN number, name & address, mode of transaction and their credibility. The assessee was further directed to show cause as to why addition under Section 41(1) of the Act to the tune of Rs.6,41,59,626/- should not be made after disallowing creditors shown on the ground that liability has ceased to exist. The assessee submitted that trading transaction in this case is not covered under Section 41(1) of the Act. Further that, on 16.12.2016, notice under Section 142(1) of the Act was further issued to the assessee asking for the details already asked for mentioned hereinabove alongwith confirmation of those parties. As no reply was forthcoming, the Ld. AO proceeded to deal with the matter ex parte. Upon examining the document, 35 sundry creditors amounting to Rs.6,41,59,626/- have been found to have entered in the balance sheet in support of which the assessee furnished the copy of ledger wherein the details, namely, PAN No., name, complete address were not found. Mode of transaction and their credibility of the creditors were also not up to the satisfaction of the Ld. AO. Further that on the finding of the fact that the amount of creditors has been time barred as per the provision of Section 41(1) of the Act, the entire amount of Rs.6,41,59,626/- has been added to the total income of the assessee under Section 41(1) of the Act. ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 3 - 3. We have heard the parties and perused the materials available on record. 4. In fact, it is the case before the authorities below that the assessee has made the payments to the creditors in succeeding year. An amount of Rs.56,09,55,867/- was paid to this effect on or before 30.03.2017. Apart from that the assessee produced Form 31A of VAT Rules, Madhya Pradesh, establishing that business transaction has actually taken place. The name of the parties to whom the advances were given, amount of bill, date of bill and advances reflecting in the balance sheet were duly furnished. The statement of SBI, Badnawar was duly furnished showing payments made to certain parties. Before the First Appellate Authority, assessee made the following submission when a Remand Report was called for: “2. The assessee in the ground No. 4 of the present appeal, has challenged the addition of Rs. 6,41,59,626/- u/s 41(1) made to the income of the assessee on account of same balances of £5 creditors carried forward from last three years. 3. During the course of assessment, the Ld AO called upon the assessee produce ledger copies, confirmation letters of all sundry creditors whose same. balance are carried forward in A.Y. 2012-13, 2013-14 and 2014-15. Further he asked to produce copy of bank statements if payments were made in next succeeding year's. The assessee filed ledger copies of all such creditors. However, before filing of the remaining documents, an addition of Rs. 6, 41,59,626/- was made u/s 41(1) to the income of the assessee on the ground that since creditors and outstanding for more than three years, therefore they are time barred under Limitation Act. The ledger copies of creditors and bank statements to prove payments made to them in next year which could not be filed before assessing officer but enclosed as per Paper Book ( Page No. 31 to 80 ) filed along with Application u/r 46A,with a request to accept the same as additional evidence under rule 46A of the Income Tax Act. 4. From the ledger copies and Bank statements enclosed as above, it is evident that the assessee has paid to most of the creditors in succeeding years. Details of payments are given as per the following chart:- ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 4 - NAME OF THE PARTY BALANCE AS ON 31.03.2014 DATE OF PAYME NT AMOUNTPA ID MODE OF PAYMENT BALANCE Dahisar Trading co. Indore 47,03,127/- 16.1.15 16.1.15 47,00,056/- 3071/- Che.92315 5 Cash Bhumiya Trading co. Ashta 35,05,056/- 07.1.15 07.1.15 35,00,056/- 4994/- Che.92315 2 Cash Deepak Traders, Ujjain 30,61,260/- 16.1.15 19.1.15 24.1.15 04.2.15 10.2.15 30,00,056/- 18,500/-- 18,500/- 18,000/- 6204/- Che.92315 6 Cash Cash Cash Cash Jagdamba Oil Flower Mill 61,56,490/- 16.6.14 24.2.15 24.2.15 30,00,000/- 31,50,056/- 6434/- Che.66310 7 Che. 923545 Cash Maa Annapurna Traders, Dhar 17,59,725/- 07.1.17 10.1.17 17,50,000/- 9725/- RTGS Cash NIL Mewati Trading Co. Bhind 28,26,563/- 06.1.15 06.1.15 12.1.15 25,00,0567 15,000/ 11,507/ Che.92315 3 Cash Cash NIL Nandi Enterprises , Indore 11/69,600/- 10.2.15 15.2.15 11,50,600/ 19, 600 / Che. 923533 Cash NIL NAME OF THE PARTY BALANCE AS ON 31.03.2014 DATE.OF PAYMENT AMOUNT MODE OF PAYMENT BALANC E Navin Trading Company, Bidwal 2,47,065/- 14.2.17 2,35,700/ 11,365/- RTGS Discount NIL Pankaj Kumar Anil Kumar, Indore 9; 05,374/ - 10.1.17 13.1.17 9, 00, 000 / 5,374/ RTGS Cash NIL ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 5 - Piyush Traders, Mandsaur 2,09,725/- 04.02.15 08.02.15 14.02.15 20.02.15 27.02.15 03.03.15 07.03.15 13.03.15 19.03.15 25.03.15 29.02.15 19500/- 19000/- 19000/- 19500/- 19500/- 19000/- 18500/- 19000/- 19500/- 19000/- 19225/- Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash NIL Raj Traders Ratlam 1,50,667/- 04.2.15 11.2.15 14.2.15 17.2.15 26.2.15 03.3.15 07.3.15 17.3.15 19000/- 18500/- 18500/- 19000/- 19000/- 19000/- 18500/- 19167/- Cash Cash Cash Cash Cash Cash Cash Cash NIL R.R. Agro Industries, Dewas 10,63,800/- 10.2.15 15.2.15 10,50,000 13,800 Che. 923532 Cash NIL Ratan Lal & Sons, Indore 8,27,326/ 21.3.17 25.3.17 28.3.17 8,00,000 15,000 12,326 RTGS Cash Cash NIL Ravi Traders, Indore 2,10,960/- 07.3.17 2,10,960 RTGS NIL Shivam Trading Company, Indore 15,00,000/- 24.2.15 15,00,000 Che. 923546 NIL Shri.Kamna.th traders Murena 23,45,200/- 10.2.15 10.2.15 23,40,000 5,200 Che. 923531 Cash NIL Shri Traders, Dhar 19,70,640/- 22.5.14 20,00,000 Che. 000051 NIL Siddhi Vinayak Enterprises, Indore 10,20,720/- 10.2.15 10.2.15 10,20,000 720 Che. 923529 Cash NIL Sonu Traders Beena, sagar 1,43,875/- 04.2.15 11.2.15 19.2.15 26.2.15 04.3.15 11.3.15 17.3.15 27.3.15 19500/- 9400/- 18500/- 1 8500/- 13500/- 19500- 19000/- 10975/- Cash Cash Cash Cash Cash Cash Cash Cash NIL ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 6 - Surbhi Traders, Bhikangav 1,03,357/- 07.2.15. 17.2.15 28.2.15 07.3-.15 14.3.15 20.3.15 19500/- 19500/- 18500/- 18500/- 18000/- 9357/- Cash Cash Cash Cash Cash Cash NIL Surbhi Traders, Murena 1, 84,12, 756/ 09.6.14 16.12.14 16.1,2.14 22.12.14 22.12.14 35,00,000 50,09,056 50,00,056 49,00,056 . 12,587 Che.663100 Che.923514 Che, 923513 Che. 923521 Cash NIL Swastik Trading Company, Dewas 8,47,300/- 10.02.15 8,40,000/ 7300/ Che.923530 cash NIL Vidhya Trading Company, Astha 47,36,700/ 16.01.17 25,00,000 RTGS 22,36,700/ - Vinod Kumar Anil Kumar, Mandsaur 4,79,334/- 94,97,250/- ( Soyabean purchased) During the year the assessee has purchased goods of Rs. 94,97,250/ - from the party. Therefore, balance of Rs. 24,334/- is, related to current year. The above chart clearly indicates that the assessee has paid Rs.5,60,95,586/- till 31/03/2017. Regarding balance payment of Rs.80,64,040/- it is submitted that the assessee has been facing liquidity crunch and gradually paying to the creditors as and when fund available with him. 5. The Ld AO has acted arbitrarily in holding that since the creditors are outstanding for more than 3 years, therefore required to be added u/s 41(1) to the income of the assessee. The assessee has disclosed balance payable to all such creditors in his balance sheet as on 31.03.2014 and as explained in point No.3 above most of the creditors were paid in succeeding year. Therefore, your good ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 7 - self will kindly appreciate the fact that neither balance of these creditors was time barred for the assessee had any intention to not pay them in future. In this regard we draw your attention to the decision of the Hon’ble Delhi High Court in the case of CIT vs. Shri Vardhman Overseas Ltd. [2011] 16 taxmann.com 350(Delhi) wherein referring to various judgments it has been held that' the disclosure by the assessee company in the Balance Sheet of the accounts of the sundry creditors amount to an acknowledgement of the debts in their favour for the purpose of section 18 of the Limitation Act (para 17). Further we draw your attention to the decision of the Hon'ble High Court of Kamataka High Court in the case of CIT v/s Alvares & Thomas[2016] 69 taxmann.com 257 (Karnataka) wherein by referring to the judgment of Hon'ble Supreme Court in the case of Bombay Dyeing &Mfg. co. Ltd. v. State of Bombay AIR 1958 SC 328, it has been held that when a debt becomes time barred, it does not become extinguished, but only unenforceable in court of law. (Para 13). 6. It is humbly submitted that section 41(1) will not be attracted for an assessee( being entitled to make payment in respect of a debt) when debts become time barred. But it shall be attracted if a liability or a time barred liability is written off in the books of accounts. Conversely sundry creditors appearing in Balance Sheet ( Not written off unilaterally) for a period longer than 3 years can not be taken as deemed income under section 41(1) if there is no indication that the said liability ceased to exist. In this connection attention is drawn to the following cases . i DSA Engineers( Bombay) v. ITO [2009] 30 SOT 31 (Mum), ii CIT v Puridevi MahendrakumarChaudhary[2014] 221 Taxman 375 (Guj). ". ; . 7. It is humbly submitted that that there are two requirements for invoking the provisions of Section 41. The'sine qua non is, the remission or cessation of the trading liability and the additional requirement -is some benefit in respect of such trade liability is taken by the assessee. If the aforesaid conditions are satisfied, then only section.4.1(1) could be invoked by the assessing officer. In the present case the assessee has been regularly paying to the 'creditors and meanwhile neither there is any cessation or remission of liability by the creditors nor the assessee has taken any benefit by writing off any liability in his books of accounts. It is thus submitted that the additions made u/s 41(1) are bad in law and deserve to be deleted. In this connection attention is drawn to the following cases. i CIT vs Combined transport 174 ITR 528( M.P. High Court) ii CIT v/s Shri Vardhman Overseas Ltd. [2011] 16 taxmann.com 350(Delhi) Hi CIT v/s Alvares&Thomos [2016] 69 taxmann.com 2 5 7( Karnataka) ivCIT v/s Sugauli Sugar Works (P). Ltd.[1999]236ITR 518/102 Taxman 713(SC) * . v CCIT v/s Kesaria Tea Co..Ltd.[2002]254ITR 434/112 Taxman 91(SC) vi Abha Devi Agrawal (ITAT-Indore ) ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 8 - vii CIT vs Compaq Electric Ltd [2O11] 16 taxmann.com 385 (Karnataka)." 5. After the remand report has been provided to the appellant whereupon the following rejoinder on this issue has been furnished before the First Appellate Authority: “Additions of Rs. 6,41,59,626/- made as per the provisions of section 41(1) of the Income tax , Act, 1961: 1. The assessee in this ground of the present appeal, has challenged the addition of Rs. 6,41,59,626/- u/s 41(1) made to the income of the assessee on account of same balances of 35 creditors carried forward from last three years. 2. The appellant had submitted additional evidences such as copies of Bank statement and ledger copies of suppliers for the period in which payments were made. The above evidences were submitted to justify the fact that most of the creditors were paid in succeeding years. Therefore, neither balances of these creditors were time barred nor the assessee had any intention to not pay them in future. 3. That since all evidences are additional evidences, therefore, your good self has sent the same to the Income Tax Officer, Dhar for his remand report. Further, during the course of remand proceedings the assessee had produced copies of VAT Form 31 A, .Bills for purchase of goods from creditors Confirmation letters from creditors and bank statement in support of the fact that payments were made to them in succeeding years. 4. The Income Tax. officer , Dhar has mentioned in his remand report that he has verified copies of Form 3TA of VAT Rules Madhya Pradesh to check the business transactions of the assessee with the said parties. Further, he has also checked the purchase bills. Bank statements has been called from the banks and he also checked the amount paid to creditors in the succeeding years. He also mentioned that confirmation letters were .received from , . creditors during the course of remand proceedings. 5. That the Ld AO has checked the identity of the creditors and also payments made to them . Further, foe has not recorded any adverse comments on the above evidences. From the, above facts , it is evident that the assessee has proved that identity of the creditors and payments made to them. ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 9 - 6. Regarding observation of the Ld AO in his remand report that cessation of liability is to be verified not existence of such parties, in this regard our submissions are as below:- i) The Ld AO has assumed that since the liability is outstanding for more than 3 years old,, therefore it is time barred and ceased to exist, therefore required to be added u/s 41(1) to the income .of the assessee. However, the assessee has disclosed balance payable to all such creditors in his balance Sheet as on 31.03.2014 and as explained before most of the creditors were paid in succeeding year. Therefore, your good self will kindly appreciate the fact that neither balances of these creditors were time barred nor the assessee had any intention to not pay them in fu.tu.re. In this regard we draw your attention to the decision of the Hon'ble Delhi High Court in the case ofCIT v/s Shri Vardhman Overseas Ltd. [2011] 16 taxma.nn.com 350(Delhi) wherein referring to various judgments it has been held that the disclosure by the assessee company in the Balance Sheet of the accounts of the sundry creditors amount to an acknowledgement of the debts in their favour for the purpose of section 18 of the Limitation Act.( para 17). Further we draw your attention to the decision of the Hon'ble High Court of Karnataka High Court in the case of CIT v/s Alvares& Thomas[2016]' 69 taxmann.com 257 ( Karnataka)wherein by referring to the judgment of Hon'ble Supreme Court in the case of Bombay Dyeing &Mfg. co. Ltd. v. State of Bombay AIR • 1958 SC 328, it has been held that when a debt becomes time barred, it does not become extinguished but only unenforceable in court of law. ( 1 Para 13). The judgements of the above cases are squarely applicable to the case of the assessee. The assessee's books of accounts were duly audited by a chartered Accountant and the assessee had duly disclosed the balances 'of all such creditors in his balance sheet and this amount to an acknowledgement of the debts in their favour for the purpose of- section 18 of the Limitation Act. ii) It is humbly submitted that section 41(1) will not be attracted for an assessee (being entitled to make payment in respect of a debt) when debts become time barred. But it shall be attracted if a liability or a time barred liability is written off in the books of accounts. Conversely sundry creditors appearing in Balance Sheet ( Not written off unilaterally) for a period longer than 3 years can not be taken as deemed, income under section 41(1) if there is no indication that the said liability ceased, to exist. iii) Further, it is humbly submitted*that that there are two requirements for invoking the provisions of Section 41. The sine qua non is, the remission or cessation of the trading liability and the additional requirement is some benefit in respect of such trade liability is taken by ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 10 - the assessee. If the aforesaid conditions are satisfied, then only section 41(1) could be invoked by the assessing officer. In the present case the assessee has been regularly paying to the creditors and meanwhile neither there is any cessation or remission of liability by the creditors nor the assessee has taken any benefit by writing off any liability in his books of accounts. It is thus submitted that the additions made u/s 41(1) are bad in law and deserve to be deleted. In this connection attention is drawn to the following cases. i. CIT vs Combined transport 174 ITR 528( M.P. High Court) ii. CIT v/s Sugauli Sugar Works (P). Ltd.[1999J236ITR 518/102 Taxman 713(SC) iii. CIT vs Compaq Electric Ltd [2011] 16 taxmann.com 385 (Karnataka) In view of the-above, we kindly request your honour to please consider the facts and evidences on record and kindly delete the addition of Rs.6,41,59,626/- u/s 41(1) of the Income Tax Act, 1961.” 6. Before the First Appellate Authority, the assessee furnished the detailed list and ledger account of current year and preceding two years along with the details of the creditors. However, the case of the Revenue is this that the debt was time barred and there was a cessation of liability. The Ld. CIT(A) ultimately granted relief by deleting the addition with following observations: “8.1 I have gone through the assessment order as well as the submissions of the appellant in this regard. It has been submitted that most of the creditors were paid in succeeding years. Therefore, the AO had erred in holding that since the creditors were outstanding for more than 3 years, they were time barred and required to be added u/s 41(1) to the income of the appellant. 8.2 The case of the appellant had been remanded to the assessing officer. During the course of remand proceedings, the appellant had produced copies of VAT Form 31A, bill's, for purchase of goods from creditors, confirmation letters from creditors and bank statement to prove that the payments has already been made to creditors in succeeding years. The Income Tax officer, Dhar has categorically mentioned in his remand report that he had verified copies of Form 31A of VAT Rules Madhya Pradesh to check the business transactions of the appellant with the said parties. Further, he had also checked the purchase bills. Bank statements had been called from the banks and he had also checked the amount paid to creditors in the succeeding years. The AO had also mentioned in ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 11 - his remand report that the confirmation letters were received from creditors during the course of remand proceedings. The AO had checked the identity of the creditors and also the payments made to them. Further, the AO has not recorded any adverse comments on the above evidences in his remand report. From the above facts, it is evident that the appellant has proved that identity of the creditors and payments made to them. 8.3 It was also pleaded that the Ld AO had acted arbitrarily in holding that since the creditors were outstanding for more than 3 years, therefore were required to be added u/s 41(1) to the income of the appellant had disclosed balance payable to all such creditors in his balance Sheet as on 31.03.2014 and most of the creditors were paid in succeeding year. Therefore, it is evident that neither balances of these creditors were time barred nor the appellant had any intention to not to pay them in future. 8.4 The Hon’ble Delhi High Court in the case of CIT v/s Shri Vardhman Overseas Ltd. [2011] 16 toxmann.com 350(Delhi) wherein referring to various judgments held that the disclosure by the appellant company in the Balance Sheet of the accounts of the sundry creditors amounted to an acknowledgement of the debts in their favour for the purpose of section 18 of the Limitation Act.( para 17). 8.5 It was also submitted that Section 41(1) would not be attracted for an appellant (being entitled to make payment in respect of a debt) when debts become time barred. But it would be attracted if a liability or a time barred liability was written off in the books of accounts. Conversely, sundry creditors appearing in Balance Sheet (Not written off unilaterally) for a period longer than 3 years could not be taken as deemed income under section 41(1) if there was no indication that the said liability and ceased to exist. The appellant has relied for this proposition on the following cases:- (i) DSA Engineerst Bombay) v. ITO [2009] 30 SOT 31 (Mum), ; (ii) CIT v Puri devi Mahendra kumar Chaudhary [2014] 221 Taxman 375(Guj). (iii) CIT vs Combined transport 174 ITR 528( M.P. High Court) (iv) CIT v/s Shri Vardhman Overseas Ltd. [2011] 16 taxmann.com 35O(Delhi) (v) CIT v/s Alvares&Thomos [2016] 69 taxmann.com 257( Karnatdka) (vi) CIT v/s Sugauli Sugar Works (P). Ltd.[1999]236ITR 518/102 Taxman 713(SC) (vii) CCIT v/s Kesaria Tea Co..Ltd.[2002]2S4ITR 434/112 Taxman 91(SC) (viii) Abha Dvi Agrawal (ITAT-Indore) ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 12 - (ix) CIT vs Compaq Electric Ltd. [2011] 16 taxmann.com 385 (Karnataka) 8.6 On the basis of the facts of the case, it is clear that the appellant had already made payments to creditors in succeeding years, therefore neither there was any recession or remission of liability by the creditors nor the appellant had taken any benefit by writing off any liability in his books of accounts. Hence, respectfully following the decisions of the Hon'bie Delhi High Court in the case of CJT u/s Shri Vardhman Overseas Ltd. [2011] 16 taxmann.com 350(Delhi), the addition so made is hereby deleted and the appeal of the appellant is allowed on this point.” 7. It is evident from the remand report that the Ld. AO has checked identity of the creditors and also verified the payments made to them by the appellant. That has been done upon verification of the copies of Form 31A of VAT Rules, Madhya Pradesh which further establishes the business transactions between these parties and the appellant. There was no recording of adverse comment on the evidences adduced by the assessee is forthcoming from the remand report. Thus, it establishes that the assessee has proved the identity of the creditors and payments made to them. 8. Thus, under this circumstance, merely because the outstanding was more than three years, the amount cannot be added under Section 41(1) of the Act, particularly, when the same has been disclosed in the balance sheet and the payment was made in succeeding years. On this issue relying upon the judgment passed by the Hon’ble Delhi High Court in the matter of CIT vs. Shri Vardhman Overseas Ltd. reported in [2011] 16 taxmann.com 350 (Delhi), the Ld. CIT(A), therefore, granted relief by deleting the addition made by the Ld.AO as there was no cessation of liability by the creditors has been found and neither the assessee has taken any benefit by writing off ITA No. 793/Ind/2018 (ITO vs. Shri Sunil Kumar Jain) A.Y.– 2014-15 - 13 - liability in his books of accounts. We do not find any ambiguity in such order passed by the First Appellate Authority so as to warrant interference. The same is therefore upheld. Revenue’s appeal, thus, found to be devoid of any merit and dismissed. 8. In the result, Revenue’s appeal is dismissed. This Order pronounced on 21/11/2022 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 21/11/2022 S. K. Sinha, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Indore 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Dy./Asstt.Registrar) ITAT, Indore 1 . D a t e o f d i c t a t i o n o n 0 3 . 1 1 . 2 0 2 2 2 . D a t e o n w h i c h t h e t y p e d d r a f t i s p l a c e d b e f o r e t he D i c t a t i n g M e m b e r 0 9 . 1 1 . 2 0 2 2 3 . D a t e o n w h i c h t h e a p p r o v e d d r a f t c o m e s t o t h e S r .P . S . / P . S . 4 . D a t e o n w h i c h t h e f a i r o r d e r i s p l a c e d b e f o r e t h e D i c t a t i n g M e m b e r f o r p r o n o u n c e m e n t 5 . D a t e o n w h i c h t h e f a i r o r d e r c o m e s b a c k t o t h e S r. P . S . / P . S 6 . D a t e o n w h i c h t h e f i l e g o e s t o t h e B e n c h C l e r k 7 . D a t e o n w h i c h t h e f i l e g o e s t o t h e H e a d C l e r k ... ... ... .... 8 . T h e d a t e o n w h i c h t h e f i l e g o e s t o t h e A s s t t . R e gi s t r a r f o r s i g n a t u r e o n t h e o r d e r ... ... ... ... ... ... ... ... 9 . D a t e o f D e s p a t c h o f t h e O r d e r ... ... ... Date on which the typed draft is placed before the Dictating Member 19.12.2019Other Member..................Date on which the approved draft comes to