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2022 (3) TMI 289 - AT - Income TaxCessation of liability - Additions u/s 41(1) - Unsecured loans received on account of transfer entry made through banking channel - Sundry creditors for more than 4 years has not been written back in the profit & loss account - HELD THAT:- We find that the assessee had genuine business transactions with all these parties which are corroborated from the copy of ledger accounts and several confirmations as well as invoices. In fact, out of sum of ₹ 57,85,077/- outstanding amount of ₹ 28,53,423/- pertained to purchases made during the year under consideration, therefore, to this extent, AO could not have drawn any inference of cessation of liability u/s. 41(1) of the Act. Even, for the balance amount, we find that liability has been acknowledged by the assessee and duly shown in the balance sheet and since some of the creditors could not file confirmation before the AO, it cannot be held that there was a cessation of liability. Genuineness and creditworthiness does not come into play for application of section 41(1) of the Act. Assessee has submitted copies of purchase bills of each and every creditors showing their sales tax registration number, excise number, PLA number etc. Hon'ble Delhi High Court in case of CIT vs. Shri Vardhman Overseas Ltd. [2011 (12) TMI 77 - DELHI HIGH COURT] has held that if the outstanding balance in the name of sundry creditors for more than 4 years has not been written back in the profit & loss account, the same cannot be taxed u/s. 41(1) of the Act. Hon'ble Supreme Court in case of CCIT vs. Kesaria Tea Co. Ltd. [2002 (3) TMI 1 - SUPREME COURT] has laid down that resort to section 41(1) could arise only if the liability of the assessee has said to have ceased finally without having possibility of reviving it, which is not the case here. Accordingly, the order of the ld. CIT(A) deleting the said addition is upheld and the ground raised by the Revenue is dismissed. Unexplained cash deposits - HELD THAT: - It is undisputed fact that opening cash in hand was available in the books of account. There is no reason to treat the cash deposit in the bank account from unexplained sources; once the cash book and regular books of accounts have been accepted by the AO and no adverse inference can be drawn if there are sufficient availability of cash in the books of account. Hence, cash deposit made in the bank account, the addition cannot be sustained. Accordingly, the order of the ld. CIT(A) on this issue is upheld and the ground raised by the Revenue is dismissed.
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