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2016 (1) TMI 220 - AT - Income TaxAddition under sec.41(1) on account of cessation of liability - Held that:- As rightly highlighted by the lower authorities, in the present case, the assessee has drawn balance sheet based on its books of accounts in which the above amounts were being claimed as liabilities due to the various parties as at the end of the accounting year under dispute. However, the assessee failed to establish the genuineness of these liabilities by citing credible evidence. Simply the liabilities being reflected against certain names in its books of accounts would not establish the genuineness of such liabilities. The assessee chose not to reconcile the balance in the assessee’s books of accounts with the parties’ accounts and agreed to offer the above amount as income under section 41(1) of the I.T. Act. The assessee’s authorized representative accepted before the AO, the addition u/s. 41(1) of the Act. This shows that the assessee has no explanation to prove that the creditors in its books of account are genuine. To put it differently, the assessee has failed to discharge its onus cast on it to substantiate its claim. Being so, the lower authorities are justified in holding that such liabilities did not exist at the end of the accounting year under dispute and rightly added the said liabilities which had ceased to exist. Accordingly, the addition sustained by the CIT(A) is confirmed. - Decided against assessee
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