Lease Deposits and Booking Advances Cannot Be Treated as Ceased Liability Under Section 41(1) of IT Act

ITAT ruled against treating lease deposits and booking advances as cessation of liability under Section 41(1) of Income Tax Act. The 3 crore lease deposit was temporary, interest-free security for a 21-year lease period, properly documented and acknowledged. The 2.20 crore booking advances (1.20 crore opening balance plus 1 crore received) were standard business transactions through banking channels. AO failed to establish basic conditions for Section 41(1) or Section 68 applicability, as transactions predated AY 2020-21. The tribunal upheld CIT(A)'s deletion of additions, noting that mere doubts about transaction genuineness without substantive evidence cannot trigger Section 41(1) or 68. Ruling favored assessee, confirming deposits and advances remained valid liabilities. .....

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