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2014 (3) TMI 366 - AT - Income TaxAddition made on outstanding liability - Labour charges as bogus – Held that:- The decision in CIT Vs. Bhogilal Ramjibhai Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT] followed - For invoking the provisions of section 41(1), there has to be cessation or remission of liability during previous year relevant to the Assessment Year under consideration - where the liability itself seems to be under serious doubt, the liability as it stands, perhaps holds that there was no cessation or remission or liability and therefore the amount in question cannot be added back as deemed income u/s 41(1) of the Act - The outstanding labour charge which was added by the Assessing Officer to the income of the assessee was the brought-forward opening balance of earlier years - No material was brought on record by the Revenue to show that either the liability was actually discharged by the assessee during the year from some undisclosed source or the liability ceased to exist or remitted during the year under consideration –Additions made are set aside. Addition of labour charges – Held that:- Both the lower authorities have doubted that the liability for labour charges was bogus as the same was outstanding for more than one month - the suspicion, they have brought no material on record after examination that the liability was not genuine or that the assessee did not make the payments for the same in the subsequent years - suspicion howsoever grave, cannot take place of proof - the payment outstanding was of labour contractor and not labour - there cannot remain outstanding liability to labour contractor for more than one month – thus, disallowance sustained by the CIT(A) out of labour charges cannot sustained – Decided in favour of Assessee.
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