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2015 (9) TMI 1661 - ITAT KOLKATAAddition u/s. 41(1) - remission or cessation of liability - HELD THAT:- Section 41 (1) would apply in a case where there has been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled. Additionally, such cessation or remission has to be during the previous year relevant to the assessment year under consideration. In the present case, both elements are missing. There was nothing on record to suggest there was remission or cessation of liability that too during the previous year 2006-07 relevant to the assessment year 2007-08 which was the year under consideration. It is undoubtedly a curious case. Even the liability itself seems under serious doubt. AO undertook the exercise to verify the records of the so called creditors. Many of them were not found at all in the given address except in the case of Narayan Chandra Gorai and M/s. Stesalit Limited. These inquiries were made ex parte and in that view of the matter, the assessee would be allowed to contest such findings. Nevertheless, even if such facts were established through bi-parte inquiries, the liability as it stands perhaps holds that there was no cessation or remission of liability and that, therefore, the amount in question cannot be added back as a deemed income under section 41(1) - no alternative except to delete the addition as made by AO and confirmed by CIT(A). Appeal of assessee is allowed.
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