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Judgment
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2014-15, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1078774787(1), dated 22.07.2025 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties. Case file perused.
It transpires during the course of hearing at the outset that both the learned lower authorities have invoked section 41(1) cessation of liability addition in the assessee’s hands amounting to Rs.78,58,055/-; in assessment order dated 28.12.2016 as upheld in the lower appellate discussion.
That being the case, the Revenue vehemently supports the impugned addition on the ground that the same involving the corresponding four creditors having varying sums are outstanding in the assessee’s books since FY 2004-05 onwards giving rise to a deeming fiction of cessation thereof attracting section 41(1) addition made in both the lower proceedings. Learned department representative further seeks to buttress the point that the assessee could not get the same verified as well during scrutiny which prompted the Assessing Officer to apply section 41(1) in its case.
All these Revenue’s foregoing vehement contentions fail to evoke our concurrence. We make it clear that there is no material in the case records whatsoever indicating actual cessation of the foregoing sum(s) in the assessee’s books. We thus quote Principal Commissioner of Income Tax v. Soorajmull Nagarmull (2024) 466 ITR 248 (SC) that the impugned addition does not apply in an instance of deemed cessation only. The same stands deleted in very terms.
This assessee’s appeal is allowed.