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Issues Involved: Appeal u/s 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (Tribunal) pertaining to the block period 1.4.1995 to 21.3.2002.
Issue (e): The Tribunal's decision on the assessability of disclosed income u/s 132(4) of the Income Tax Act, 1961 regarding a liability of Rs. 40,02,180/- for the block period. The expenditure of Rs. 40,02,180/- was incurred in the financial year 1992-1993 and claimed as deductions during that year. However, as the amount was not paid, it was shown as a credit balance. The Assessing Officer (AO) held the expenditure in assessment year 1993-1994 as bogus and the liability was wiped out during the block period, thus liable to tax u/s 41(1) of the Act. The CIT(A) ruled that the bogus expenditure incurred in assessment year 1993-1994 can only be taxed in that year, as section 41(1) applies where a cessation of liability occurs for any allowed expenditure in earlier years. As the expenditure was deemed bogus, it can only be taxed in the assessment year 1993-1994, falling outside the block period, and hence cannot be taxed. The Tribunal concurred, stating that if the expenditure is considered bogus, it can only be taxed in the year it was claimed, i.e., assessment year 1993-1994, which is outside the block period of 1.4.1995 to 31.3.2002. Both the CIT(A) and the Tribunal found no material during the search to suggest the liability had ceased, and since the alleged bogus purchase was made outside the block period, it cannot be taxed in a block assessment covering the period in question. Therefore, the issue does not raise any substantial question of law and is dismissed. Issue (f): The issue was not pressed and hence not discussed in the judgment.
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