No Section 41 Disallowance if no Cogent Evidence of Cessation of Liability

Jain Peripherals Pvt. Ltd. Vs DCIT (ITAT Delhi) Section 41 postulates disallowance of cessation of liability for expenditure incurred in trading account earlier. In the present case, disallowance has been made by the AO and confirmed by the ld. CIT(A) on the plank that the purchases are not genuine. In our considered opinion, the issue of the genuineness of the purchases will be applicable only if the purchases belong to the current year and in that case, disallowance cannot be done u/s 41 of the Act. Similarly, if the authorities below are of the opinion that purchases were done in earlier ye...