https://www.taxtmi.com/caselaws?id=445757 The Gujarat HC upheld the Tribunal's decision to delete an addition made under Section 41(1) for cessation of liability. The AO had added an outstanding credit balance claiming the assessee failed to prove its genuineness. However, the same transaction with the creditor was found genuine in the preceding assessment year after proper inquiry by the AO. The court held that no addition under Section 41(1) can be made unless the liability actually ceased to exist and was written off in the books. Since the assessee made payment to the creditor in the subsequent year, the liability had not ceased to exist during the relevant year under consideration. en-us Wed, 06 Sep 2023 00:00:00 +0530 Sat, 18 Nov 2023 08:40:32 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=445757 The Gujarat HC upheld the Tribunal's decision to delete an addition made under Section 41(1) for cessation of liability. The AO had added an outstanding credit balance claiming the assessee failed to prove its genuineness. However, the same transaction with the creditor was found genuine in the preceding assessment year after proper inquiry by the AO. The court held that no addition under Section 41(1) can be made unless the liability actually ceased to exist and was written off in the books. Since the assessee made payment to the creditor in the subsequent year, the liability had not ceased to exist during the relevant year under consideration. Case-Laws Income Tax Wed, 06 Sep 2023 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=445757