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2015 (5) TMI 991 - AT - Income TaxAddition of addition u/s 41 - Held that:- In this case, when the liability continues, the creditor can recover the amount otherwise than a civil suit. The creditor has every right to recover the money whenever an opportunity comes to it outside the court of law. Moreover, the assessee accepts the liability in the balance sheet as on 31.3.2007. It is well settled principles of law that a liability if accepted in the balance sheet filed in the income tax proceedings is an acceptance of liability under the Limitation Act. Therefore, the period of limitation for recovery of the amount would run from the date on which the liability is accepted in the balance sheet which was filed in the income tax proceedings. Hence, at no stretch of imagination, the liability ceased to exist and the same cannot be treated as income u/s 41(1) of the Act. In those circumstances, this Tribunal is of the considered opinion that addition of is not sustainable. Accordingly the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition of ` 3,19,901/- made u/s 41(1) of the Act. - Decided in favour of assessee.
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