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TMI Blog2015 (1) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... . 41(1) of the I.T. Act, 1961 as cessation of liability on account of sundry creditors and advance from customers. 2. Ld. CIT(A) has erred on the facts & circumstances of the case, in accepting the assessee's explanation that merely because the liabilities were brought forwarded from earlier years without any change, the said liability did not cease to exist and there was no remission or cessation of such liabilities with the meaning of section 41(1) of the IT Act without appreciating the facts that the assessee company did not furnish addresses or other details and produce books of accounts that failed to prove the existence of said sundry creditors. 3. Ld. CIT(A) has erred on the facts & circumstances of the case, in accepting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1) of the Act. 5. Being aggrieved, the assessee carried the matter to the Ld. CIT(A) and submitted that it had filed its return of income for assessment years 1998-99 to 2007-08 along with its audited balance-sheet and profit and loss account and also submitted a summarised statement of balance-sheet containing the list of sundry creditors for goods, sundry creditors for other and advance from customers. It was stated that right from year ending 31st March 2002 those credit balances remained static and the assessee paid some of them whenever funds were available but from 31st March, 2005 onwards hardly any amount could be repaid by the assessee due to want of funds. It was further stated that assessee had acknowledged the fact of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt grouped under the head "Sundry creditors for Goods", "Sundry Creditors for other" and "Advances from customers" were brought forward by the assessee in its balance-sheet and obviously in its books of account from earlier years. Therefore, the AO could not have not not have doubted the genuineness of the sundry creditors as there was no further credit appearing in these years. He further observed that the assessee continued to acknowledge its liability which was evident from the audited balance-sheet and in any case the liability of the assessee did not cease in this year. He also observed that even where a debt became barred by time and the creditor was not able to recover the amount by enforcing his right in court, such right did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. The assessee was also making the payments whenever funds were available with it but due to want of funds amount could not be repaid after 31st March 2005. In the instant case, the assessee reflected the liabilities in its books of account when those were incurred, those liabilities were accepted as genuine by the Department in the earlier years, assessee did not write off liabilities to its profit and loss account and there was no cessation of liability. Therefore the provisions of Sec. 41(1) of the Act were not applicable because the liabilities ceases only when the assessee equivocally expresses its intention not to honour of the liability as and when demanded. In the present case, nothing was brought on record to substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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