The Tax Publishers2021 TaxPub(DT) 0485 (Pune-Trib)

INCOME TAX ACT, 1961

Section 41(1)

Where CIT(A) had doubted the genuineness of the transactions on the ground that cash payments could not have been made because all such parties were coming from other State and once assessee furnished ledger accounts of parties evidencing making of payments in a succeeding year that established the existence of liability at the end of year non-justifying the applicability of section 41(1), further, AO simply doubted genuineness of e-mails without bringing anything concrete on record as to their non-genuineness, therefore, addition under section 41(1) could not be made.

Business income - Certain creditors which remained outstanding from preceding year - AO simply doubted genuineness without brining anything concrete on record -

Assessee was engaged in manufacturing of wooden boxes. AO observed that there were certain creditors which remained outstanding from preceding year. Assessee submitted that balances remained outstanding due to disputes regarding materials not having been sent as per orders or shortage of materials sent by parties, etc. AO caused inquiries conducted under section 133(6) in relation to the seven creditors. Two creditors confirmed the assessee's contention. Regarding the remaining five creditors, AO noticed that the letters under section 133(6) sent to three creditors were returned unserved by Postal Authorities, which fact when brought to the notice of assessee could not be sorted out. AO treated such five creditors as ceasing to be payable attracting the provisions of section 41(1). Held: Assessee paid the amounts to some of parties in financial year 2014-15, whose copies have also been reproduced. CIT(A) had doubted genuineness of transactions on the ground that cash payments could not have been made because all such parties were coming from other State. Once assessee furnished ledger accounts of parties evidencing the making of payments in a succeeding year that established the existence of liability at the end of year non-justifying the applicability of section 41(1). Some of parties sent confirmations with their ledger accounts to AO through assessee. AO simply doubted genuineness of e-mails without bringing anything concrete on record as to their non-genuineness. Thus, case was not covered under section 41(1).

Relied:Pramila Jayaram Sharma v. Asstt. CIT [ITA No.1691/PUN/2018, dt. 7-2-2019].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14



IN THE ITAT, PUNE BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT