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New India Silk Mills Trust, C/o. Arunbhai J. Sakkai, 4/330, 2nd Floor, Shri Krishna Niwas, Dudhara Sheri, Begampura, Surat. V/s. The Income-tax Officer, Ward 3(3), Surat.
December, 12th 2013
                 ,  Û `'

               Before Shri D.K.Tyagi, Judicial Member and
                      ^ . .×, Û  
                      Shri T.R. Meena, Accountant Member
                     ^ ..,    ¢ 

                              ITA No. 3169/Ahd/2010
                             Assessm ent Year :2007-08
     New India Silk Mills Trust,        V/s . The Income-tax Officer,
     C/o. Arunbhai J. Sakkai,                 W ard 3(3),
     4/330, 2 n d Floor, Shri Krishna         Surat.
     Niwas, Dudhara Sheri,
     Begampura, Surat.
                               P AN No. AAATN1891N
                  (Appellant)            ..           (Respondent)

                                                Shri R. N. Vepari, A.R.
         By Appellant
         ×   /By Respondent                     Shri O. P. Bhateja, Sr. D.R.
           /Date of Hearing
           /Date of Pronouncement                05.12.2013


PER : Shri T.R.Meena, Accountant Member

         This is an appeal at the behest of the assessee which has emanated

from the order of CIT(A)-II, Surat, dated 08.10.2010 for assessment year

2007-08.      The sole ground of assessee is against confirming addition of

Rs.12,76,462/- u/s. 41(1A) of the Act.

2.       The A.O. observed that assessee was a private beneficiary trust and

presently not carrying out any business activity. The A.O. noticed following

balance outstanding:

i.       Balance outstanding of Beneficiaries           Rs. 1,90,413/-
I T A No . 3 16 9 /A h d/ 1 0 A. Y. 07- 0 8                              Page 2

ii.     Balance outstanding for Depositors            Rs. 22,56,348/-

iii.    Balance Outstanding for Others                Rs. 12,76,462/-.

The A.O. gave notice u/s. 41(1)(a) of the IT Act, why outstanding in the name

of various persons should not be added in the income of the assessee. The

assessee objected the proposal made by the A.O. on the ground that liability

had not seized and certainly they had not seized during the year. He relied

upon numbers of decisions before the A.O. The A.O. held that the assessee

did not provide the details of the parties, reasons for not paying the said

amounts of interest, the efforts made, if any to pay outstanding liability. The

assessee claimed that these outstanding were related to 1990. The assessee

did not provide further details of these transactions and efforts of the payment.

The A.O. also relied upon various case laws and after considering the

assessee's reply, it was held that liability shown outstanding against the

interest amounting to Rs.12,52,592/- and other liability amounting to

Rs.23,870/- was considered to be seized as on 31.03.2007. Thus, he made

addition of Rs.12,76,462/-.

3. Being aggrieved by the order of the A.O., the assessee carried the matter

before the CIT(A) who has confirmed the addition by observing as under:

        "5.1     I have duly considered the submission of the appellant and the
        discussion made in the assessment order and find that the appellant
        has not furnished any material submission during the course
        appellate proceedings and the submission made vide letter dated
        23.08.10 is not different from the submission made during the course
        of assessment proceedings, which has been fully dealt with by the
        assessing officer in pages 2 to 8 of the assessment order. In fact,
I T A No . 3 16 9 /A h d/ 1 0 A. Y. 07- 0 8                             Page 3

        the appellant has not furnished any information either, in respect of
        interest expense of Rs.12,52,592/- which has been debited in the
        P&L account by appellant in the earlier years, viz. F.Y. 1990-91 or
        earlier, but still outstanding, or in respect of other balances
        outstanding to the extent of Rs.23,870/-. In so far as the decisions
        relied upon are concerned, on facts, they are not applicable at all. If
        a liability which is outstanding from 1990 onwards till March 2007,
        and not written off, what other reason can be than appellant not
        willing to pay taxes on that, and in that case the very purpose of
        section 41(1) is defeated and it becomes redundant in the Act, I,
        therefore, do not find any reason to deviate from the finding given by
        the assessing officer and confirm the above addition.        The first
        ground of appeal is, accordingly, dismissed."
4.      Now the assessee is before us.          Ld. Counsel for the appellant

contended that the liability is continued to be carry forwarded and it cannot be

considered to have seized. He again relied upon various case laws, which

were relied before the A.O. He further relied in case of M/s. Hardik Fabrics,

Surat vs. ITO in ITA No.58/Ahd/2011 for A.Y. 2007-08, wherein the liability

was existed on account of sundry creditor shown in the balance sheet. The

Hon'ble ITAT `C' Bench has deleted the addition u/s.41(1) of the IT Act. It

was fairly admitted by the AO that the assessee did not have any detail of

liability but the unilateral action is not permitted under the law. At the outset,

ld. Sr. D.R. relied upon the order of the CIT(A).

5.      We have heard the rival contentions and perused the material on

record. The assessee has shown liability of bank interest at Rs.12,52,592/-

in the list of creditors which pertained to 1990. The A.O. asked to furnish the

details, name, and address of the parties from the appellant. The details had
I T A No . 3 16 9 /A h d/ 1 0 A. Y. 07- 0 8                             Page 4

not been filed by the appellant before the Lower Authorities as well as before

us. In absence of details the A.O. cannot verify what treatment was given by

the recipient in its book. It is clear that the creditors are very old and reasons

for not paying has not been explained by the assessee with evidences.

Therefore, we have considered view that the liability is no longer required to

be kept when no verification can be made from the book of recipient. Thus,

we confirm the order of the A.O.

6.      In the result, the assessee's appeal is dismissed.

 This Order pronounced in open Court on 05.12.2013

          Sd/-                                                   Sd/-
    (D.K.Tyagi)                                              (T.R. Meena)
  Judicial Member                                         Accountant Member

                                              True Copy
     / Copy of Order Forwarded to:-
1.  / Appellant
2. × / Respondent
3.    / Concerned CIT
4.  -  / CIT (A)
5.  ,   ,  / DR, ITAT, Ahmedabad
6. [  / Guard file.
                                                                  By order/  ,

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