DCIT Vs Shreekrishan Goswami (ITAT Kolkata)
ITAT Kolkata upheld the decision of the CIT(A) to delete the additions made by the Assessing Officer (AO) under Section 41(1) of the Income Tax Act, 1961, for the Assessment Year 2014–15. The AO had treated certain outstanding liabilities as ceased to exist due to the non-receipt of replies from creditors during assessment proceedings. These liabilities, totaling ₹3.92 crore, pertained to three parties: Oliya Steel Pvt. Ltd., Rashmi Metallinks Ltd., and Rashmi Cement Ltd. The AO concluded that the assessee failed to prove the existence of liabilities, invoking Section 41(1) to add them to the income.
The assessee provided supporting documentation, including confirmations, ledgers, and bank statements, to demonstrate that these liabilities were legitimate and had not ceased. Payments to the creditors were either fully or partially made in subsequent financial years. The CIT(A), considering the evidence, ruled that there was no cessation of liability, a decision upheld by the ITAT. The Tribunal found no merit in the revenue’s appeal, dismissing it. This judgment highlights the importance of assessing liability cessation based on concrete evidence and subsequent financial transactions.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The captioned appeal has been preferred by the revenue against the order dated 29.11.2023 of the Ld. Commissioner of Income Tax, (Appeal), National Faceless Appeal centre (NFAC), Delhi [hereinafter referred to as the “Ld. CIT(A)”] passed u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2014-15.
