ITAT Bangalore: Mere Long Outstanding Sundry Creditors Not Taxable u/s 41(1) – No Cessation of Liability Without Write-Back

Hassan Power Supply Company Ltd Vs DCIT (ITAT Bangalore)

Assessee company challenged addition made u/s 41(1) on account of long outstanding sundry creditors of ₹5,62,187. AO treated liabilities as ceased merely because they were stagnant for several years & director had admitted income during search u/s 132(4). CIT(A) confirmed addition.

Before ITAT, assessee argued that liabilities were still shown in books, never written back & hence no remission or cessation in law. Tribunal held that for invoking s.41(1), there must be actual cessation of liabi

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