SANJAY BHANDARI,DELHI vs. INCOME TAX OFFICER (ITO), WARD- 29(1), DELHI, DELHI

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ITA 5914/DEL/2025Status: DisposedITAT Delhi29 June 2026AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that there was no material to indicate actual cessation of liability. Relying on the Supreme Court decision in Principal Commissioner of Income Tax v. Soorajmull Nagarmull, the Tribunal stated that the addition under section 41(1) does not apply in cases of deemed cessation only.

What were the facts?

The assessee's appeal concerns an addition of Rs. 78,58,055/- made under section 41(1) of the Income-tax Act, 1961, for AY 2014-15. This addition was based on the outstanding liabilities to four creditors since FY 2004-05.

What were the issues?

Whether the addition under Section 41(1) is sustainable when there is no material to indicate actual cessation of liability, only a deemed cessation.

Which sections of the Income-tax Act were involved?

Section 41(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

For Appellant: CA Sh. Manesh Upneja, CA
Hearing: 13.05.2026Pronounced: 13.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘G’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.5914/Del/2025 Assessment Year: 2014-15 Sh. Sanjay Bhandari, Vs. Income tax Officer, B-5/110, Ward-29(1), Safdarjung Enclave, Delhi New Delhi -110029 PAN: ACTPB4856C (Appellant) (Respondent) Assessee by Sh. Baldev Raj, CA Sh. Manesh Upneja, CA Department by Sh. Choudhary N.C. Roy, Sr. DR Date of hearing 13.05.2026 Date of pronouncement 13.05.2026 ORDER 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.

ITA No.5914/Del/2025

2.

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. 3. 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. 4. 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

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ITA No.5914/Del/2025

instance of deemed cessation only. The same stands deleted in very terms. 5. This assessee’s appeal is allowed. Order pronounced in the open court on 13th May, 2026 Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29th June, 2026. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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