Assessee, engaged in Basmati rice trading, declared sundry creditors in its balance sheet. The AO issued summons\u00a0 which creditors did not respond.\u00a0 The\u00a0 inspection report\u00a0 stated\u00a0 that those entities were not found at stated addresses.\u00a0 The AO\u00a0\u00a0 treated the entries as fictitious and made addition under section. 41 (1) of the Act. Order of the AO is affirmed by the CIT(A). On appeal the Tribunal held that\u00a0 creditors had valid trading transactions with assessee in prior years, verified and accepted in previous assessment. Additionally, balance sheets, tax returns, and scrutiny orders for those creditors demonstrated continuous, genuine business relationships with assessee and liabilities were also settled in subsequent year, negating claim of cessation.\u00a0 When amounts were shown as payable in balance sheet of assessee and debt got acknowledged by assessee, there couldnot be any remission or cessation of liability in terms of section 41(1). Further if any discrepancy was found with confirmation and balance sheet of those sundry creditors, suitable action should be taken in hands of those sundry creditors and no adverse inference could be drawn on assessee. Addition is deleted.\u00a0\u00a0 (AY.\u00a0 2015-16)<\/p>\n
\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" S. 41(1) : Profits chargeable to tax-Remission or cessation of trading liability-Sundry Creditors-Balance sheet-Discrepancy in confirmation and balance sheet-Addition is deleted. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-55074","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-eki","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/55074","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=55074"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/55074\/revisions"}],"predecessor-version":[{"id":55075,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/55074\/revisions\/55075"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=55074"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=55074"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=55074"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}