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2022 (9) TMI 106 - AT - Income TaxAddition u/s. 41(1) - liability towards sundry creditors - assessee has not been able to prove that the liability - Assessee submitted liability was existing and company has to pay the same, but due to financial crisis and acute liquidity problems faced by the company, these creditors have not been paid - HELD THAT:- The actual liability of the creditors was Rs. 8,97,893/- and not Rs. 10,21,420/-. Further we note that the fact that assessee had paid back a sum of Rs. 6,21,182/- back to the creditors in the subsequent years and an amount of Rs. 2,76,726/- was written off in the subsequent period and offered to income in the subsequent year demonstrates that there was an existing liability of Rs. 8,97,893/- against the assessee as that the end of the financial year under consideration. Therefore, in our considered view, in the instant facts, CIT(Appeals) erred in facts and law in confirming the addition on the ground that the assessee has not been able to prove that the liability was actually subsisting at the end of the financial year. Appeal of the assessee is allowed.
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