If liabilities are outstanding provisions of sec.41(1) not attracted

Ld. Counsel of the assessee pointed out that detailed reply was given to the AO vide letter dated 19-12-2009 in which it was clearly explained that outstanding balance of Mala Export Corporation has gone down over the period of years and confirmation of M/s Surekha Overseas was also filed. Through this letter it was pointed out that AO was informed that Mr. Suresh Patel had been requested to give the confirmation which will also be filed. This clearly shows that assessee has filed the evidence regarding liabilities being outstanding before the AO. After considering the rival submissions, we fi...