S. 41(1) : Profit Chargeable to tax – Remission or cessation of trading liability-Amounts not written off-matter sub-judice before Hon’ble High Court – No addition can be made- Department should be more careful while filing the appeal before the Appellate Tribunal where the facts are undisputed.

The Hon’ble ITAT Mumbai in a Departmental appeal challenging addition made under section 41(1) of the Income-tax Act, 1961 (Act) held that at the relevant point of time proceedings for recovery of the said amount were still in progress therefore the said amount cannot be treated as ceased liability u/s. 41(1) of the Act.

It was further observed by the Bench that it’s a pity that sometimes the departmental appeals are filed without carefully looking at undisputed foundational facts in a routine manner. In the present case, even though the Assessing Officer is in appeal, the foundational facts are not even in disputes and these foundational facts indicate that there was no remission or cessation of liability in the relevant previous year. Yet, the Assessing Officer is in appeal. That does not make any sense. It is hope that the Income Tax Authorities are more careful in taking a call on which decisions needs to be pursued in further appeals. (ITA No. 3027/Mum/2019, Assessment Year: 2014-15, dt. 17/09/2021)

[Coram: Pramod Kumar (Vice President) and Saktijit Dey (Judicial Member)]