Sanjeev Chhabra, New Delhi vs Department Of Income Tax

This appeal, at the instance of the department, is directed against

the CIT(A)'s order dated 24.12.2012. The relevant assessment year is

2009-10.

ITA No.1378/Del/2013

2. The solitary issue that is raised in this appeal is whether the

CIT(A) is justified in deleting the addition made by applying section 41

of the Act.

3. Brief facts of the case are as follows. The assessee had shown

sundry creditors of Rs.2,27,09,357/- in the balance sheet. In the course

of assessment proceedings, AO had asked the assessee to furnish the

details of the sundry creditors which has been static for the last three

years. Since details were not forthcoming from the assessee, the AO on

ad hoc basis held that 7% of the total sundry creditors have ceased to

exist and added the same to the total income (7% of Rs.2,27,09,357/-

being Rs.15,89,655/-).

4. On appeal, the CIT(A) deleted the addition. The relevant finding

of the CIT(A) reads as follows:-

"In this case, there was no remission on cessation of liability in respect of any of the persons. No benefit accrued to the appellant which could be deemed to be the profit and gain of the appellant business, which would otherwise not be the appellants income. The AO failed to show that there was a deduction in respect of a trading liability in an earlier year and remission or cessation of such liability in this year

2 ITA No.1378/Del/2013

resulted in a benefit to the appellant. Since there is no case of cession/remission of liability due to the parties, therefore, provisions of section 41(1) of the Act are not applicable. The above mentioned cases of CIT v. Sugauli Sugar Works (P) Ltd. (SC), CIT v Smt. Sita Devi Juneja (2010) 325 ITR 593 (P&H) & CIT vs. Auto Kashyap India (P) Ltd., 330 ITR 435 (2010) (Delhi) are clearly applicable to the facts of the case.

The addition of Rs.15,89,655/- made is, therefore, deleted. Ground No.1 is ruled in favour of the appellant."

5. The Revenue being aggrieved is in appeal before us.

6. The ld. DR supported the assessment order. On the other hand, the

ld. AR placed reliance on the findings and conclusions of the CIT(A).

7. We have heard the rival submissions and perused the relevant

material on record. The CIT(A) has categorically found that the amount

sought to be added was never claimed as a deduction in respect of a

trading liability in the earlier year. The CIT(A) further held that the

same has not ceased to exist as a liability in the current assessment year

resulting in a benefit to the assessee. This categoric finding of the

CIT(A) has not been dispelled by the Revenue. Hence, we uphold the

order of the CIT(A) as correct and as in accordance with law and no

interference is called for. It is ordered accordingly. 3 ITA No.1378/Del/2013

8. In the result, the appeal of the Revenue is dismissed.

The order pronounced in the open court on 05.03.2015.

Sd/- Sd/-

[G.D. AGRAWAL] [GEORGE GEORGE K.] VICE PRESIDENT JUDICIAL MEMBER

Dated, 05th March, 2015. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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