2013 (12) TMI 654

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....g the assessment, the AO noticed from the balance-sheet of the assessee that the balance-sheet shows outstanding liability towards the creditors amounting to Rs.1,66,53,143/- in respect of 28 creditors. The AO further noticed that these liabilities were outstanding from the assessment year 2001-02. Notices under section 133(6) were issued to all the creditors. But the notices returned unserved in case of 20 creditors having outstanding liability of Rs.1,04,06,600/-. The assessee filed confirmation in respect of some of the creditors but the AO treated all these creditors to be bogus and non- existent and ceased to exist and accordingly made the addition under section 41(1). When the matter went before the CIT(A), the CIT(A) deleted the addi....

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....er or not the amount was obtained by the assessee or whether or not some benefit in respect of trading liability by way of remission or cessation thereof was obtained by the assessee and it is in the previous year in which the amount or benefit, as the case may be, has been obtained that the amount or the value of the benefit would become chargeable to income tax as income of that previous year A cessation of liability for the purposes of section 41(1) of the Act would mean irrevocable cessation so that there is no possibility of the liability being revived in future. 12. The appellant has continued to show the amounts as admitted liability in the balance sheet. The AO has brought no material on record to show that there is any cessation o....