2025 (2) TMI 1410

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....come Tax, Appeals-15, Bangalore (the Ld. CIT(A)) wherein the Appeal filed by the Assessee against the Assessment Order passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) dated 26.12.2019 was dismissed. 2. Main Grievance of the assessee is that there are current liabilities of group companies, which are outstanding in the books of the accounts of the assessee, which are not written back by assessee or those creditors, have been considered by the ld. AO as cessation of liability, liable to tax u/s 41(1) of the Act merely because those liabilities are outstanding for long time and in statement u/s 132 (4) of the Act one of the directors of the assessee, agreed to offer the same as income. 3. Briefly stated the facts of the case sho....

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..... The Assessment Order was passed on 26.12.2019. 6. The Assessee challenged the Assessment Order before the Ld. CIT(A) wherein the Ld. CIT(A) confirmed the action of the Ld. Assessing Officer. Therefore, the Assessee is in Appeal. 7. The Ld. Authorized Representative submitted that there is no application of section 41(1) of the Act as the outstanding creditors are neither written back nor ceased to exist. He further referred to the decision of several High Courts wherein the issue is decided in favor of the Assessee. He submits that in all the decisions relied upon by the Ld. Assessing Officer, the credit balances are written back in the books of accounts of the Assessee and recognized as income but same was not offered for tax. The ....

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.... known No 4. Audit Fee Payable 60000 >2 years Not known No 5. TDS on contract 17250 >5 years Not known No 6. Rent Deposit Received 200000 >2 years Not known No 10. These sums when questioned during search to one Mr. D.A. Srinivas, he agreed to offer same as income. But, in the return of income, same were not offered. Therefore, the issue is when the sundry creditors are outstanding in the books of accounts, they can be considered as cessation of the liability because of the fact that same remain unpaid, there is no evidence of recovery being asked by those parties from the Assessee, pertaining to related parties. According to provisions of section 41(1) of the Act, we find that the....