|CORAM:||Chandra Poojari (AM), D. Manmohan VP|
|CATCH WORDS:||cessation, remission, unexplained cash credit|
|DATE:||March 5, 2015 (Date of pronouncement)|
|DATE:||March 16, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 41(1)/68: Failure to establish genuineness of old liabilities means that there is a remission/ cessation of such liabilities|
The assessee failed to furnish the details in respect of sundry creditors amounting to Rs.23,34,721/-. Admittedly, these credits continued to be carried forward year after year. In the normal course everybody would ordinarily claim the dues and usually they take steps to recover the dues if it is a genuine liability. In this case, the liability remains to be recovered year after year. For invoking provisions of section 68 of the Act, if any sum is to be found credited in the books of the assessee maintained during the previous year, only then it would be possible to make addition under section68 of the Income tax Act. In the case of carried forward credit, which is from earlier year, provisions of section 68 cannot be applied. In the present case, the liabilities outstanding in the books of account of the assessee for the assessment year under consideration and only the provisions of the section 41(1) of the Act could be applied. In the present case the assessee failed to establish the actual existence of the impugned disputed amount in the books of account of the assessee. The assessee has drawn its balance sheet based on its books of account, in which the above amount, were being claimed as liabilities due, to various parties, as at the end of the accounting year under dispute. However, the assessee failed to establish the genuineness of these liabilities by producing supporting evidence. Simply the liabilities being reflected against certain names in the books of account would not establish the genuineness of liabilities (ITO vs. Shailesh D. Shah/ Yusuf R Tanwar vs. ITO (ITAT Mumbai) & ITO vs. Sajjan Kumar Didwani 65 SOT 179 followed)
Horrible Orders on same issue, be this order or Genre Exports, both on 41. This is the reason people take adjournments before certain members. Admittedly, there are orders on both the sides by Mumbai Bench, Matter must have to be sent to special bench. And at the end, ITAT has made the addition which was neither done by AO nor by CIT Appeal. This is nothing but enhancement.