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2015 (1) TMI 1429 - ITAT KOLKATAAddition u/s. 41(1) - cessation of liability on account of sundry creditors and advance from customers - HELD THAT:- In the present case, it is an admitted fact that assessee was showing the impugned liabilities year after year in its balance sheets which were accepted by the Department and there was no new liability during the year under consideration. The assessee was also making the payments whenever funds were available with it but due to want of funds amount could not be repaid after 31st March 2005. In the instant case, the assessee reflected the liabilities in its books of account when those were incurred, those liabilities were accepted as genuine by the Department in the earlier years, assessee did not write off liabilities to its profit and loss account and there was no cessation of liability. Therefore the provisions of Sec. 41(1) were not applicable because the liabilities ceases only when the assessee equivocally expresses its intention not to honour of the liability as and when demanded. In the present case, nothing was brought on record to substantiate that the assessee expressed its intention not to honour the liability when the creditors demanded the same, rather the assessee had continued to acknowledge its liability which who evident from its audited balance sheets furnished along with returns of income for the earlier years which were accepted as genuine by the Department. No valid ground to interfere with the findings of Ld. CIT(A). Accordingly, we do not see any merit in the appeal of Department.
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