TMI Blog2016 (11) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into account totality of all the facts and circumstances of the case and the aforesaid judgments we find that the addition made by the Assessing Officer was not sustainable in the eyes of law and, therefore, it is directed to be deleted. - Decided in favour of assessee - I. T. A. No. 5936/Mum/2011 - - - Dated:- 29-4-2016 - Joginder Singh (Judicial Member) And Ashwani Taneja (Accountant Member) For the Appellant : Sanjiv M. Shah, Authorised Representative For the Respondent : Rajguru, Departmental Representative ORDER Ashwani Taneja (Accountant Member) 1. This appeal has been filed by the assessee against the order of the learned Commissioner of Income- tax (Appeals), Mumbai-3 (in short CIT(A) ), dated July 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased to exist and, accordingly, he made addition under section41(1). 3.2. Being aggrieved, the assessee filed an appeal before the learned Commissioner of Income-tax (Appeals) wherein it was contended that merely because the outstanding was for more than three years, it cannot be concluded that the assessee is not liable to pay these amounts. It was further submitted that there were no basis with the Assessing Officer to presume that these liabilities ceased to exist. But the learned Commissioner of Income-tax (Appeals) was not convinced with the submissions of the assessee and, therefore, he confirmed the order of the Assessing Officer and dismissed the appeal of the assessee. 3.3. Being aggrieved, the assessee filed an appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acknowledge these liabilities in its books of account. Under these circumstances, even if more than three years have passed, then at the best these liabilities may be termed as not enforceable in the court of law but that alone would not finally exonerate the assessee from these liabilities. The assessee is carrying in the business and for its respectful and peaceful existence in the business as well as in the society ; he may prefer to pay off all the liabilities from social, moral, commercial or many other angles. The decision to pay or not to pay a liability can be taken by the businessman alone. So long as the liabilities are acknowledged in the books of account, no presumption should be drawn that the liability ceased to exist that to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not enable the Department to say that section 41(1) would apply and the amount should be included in the total income of the assessee. The principle that expiry of the period of limitation prescribed under the Limitation Act could not extinguish the debt but it would only prevent the creditor from enforcing the debt, has been well settled. If that principle is applied, it is clear that mere entry in the books of account of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end. Apart from that, that will not by itself confer any benefit on the debtor as contemplated by the section. 3.7. From the above judgment, it may be seen that the honou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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