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2019 (1) TMI 1761 - HC - Income TaxAddition u/s 41 - Cessation of liability - sundry creditors towards whom the assessee had not repaid - Tribunal deleted the addition and noted that the assessee was unable to repay the creditors because of weak financial position and further that the assessee had never completely stopped making repayments - HELD THAT:- It is well settled through series of judgments that merely because a debt has not been repaid for over three years, would not automatically imply cessation of liability. Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased. Going by this logic itself, the Assessing Officer, in our opinion, committed an error invoking Section 41(1) of the Act. Further the assessee had produced additional evidence on record before the Appellate Authority after following the procedure and pointed out that substantial portion of the debt was cleared in later assessment years. - Decided agaist revenue.
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