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2023 (6) TMI 431 - AT - Income TaxCessation of liability u/s 41(1) - As contented liability existed in the books of account and therefore provisions of Section 41(1) cannot be invoked - AO based on non service of notice under Section 133(6) concluded that the liability has ceased to exist - HELD THAT:- The assessee in the instant case, has continued to recognize the liability and one cannot say that the liability is not unenforceable against the assessee without its discharge or reversal. A mere fact of expiry of period of limitation to enforce it does not, by itself, constitute cessation of liability. In the case of Dattatray Poultry [2019 (4) TMI 1171 - GUJARAT HIGH COURT] as similarly observed that where the existence of liability was doubted, same could have been disallowed in the year in which it is claimed or could have been treated as unexplained credit in that relevant year - while the assessee has continued to declare the trading liability in its books of account, no benefit can be said to have been obtained in respect of such trading liability by way of remission or cessation thereof and thus the requirement of Section 41(1) are not satisfied. The additions made u/s 41(1) is thus set aside and reversed. Decided in favour of assessee.
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