9911796707
TMI Blog2012 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... garwal (also known as Garg) family of Surat and Vadodara, engaged mainly in the business of transportation of petro-product and trading of sarees, bitumen etc. A search operation was conducted under Section-132 of the Act at the residential premise of the assessee on 31/05/2006. During the course of assessment proceedings under Section-143 (3) read with Section-153 of the Act, the Assessing Officer noticed from the balance sheet that various creditors (other than family concerns) are very old and no interest has been paid on these loans. Despite the fact, the Assessing Officer gave various opportunities to the assessee to furnish details of such creditors viz. confirmation as well as creditworthiness, the assessee failed to produce the necessary information and details in this regard. The assessee also failed to furnish the postal addresses, PAN, confirmations of outstanding balance etc. Accordingly the Assessing Officer held that the liability incurred in regard to the purchase from the parties as claimed (i.e. Rs.38,17,601/-, Rs.1,65,090/-, Rs.40,032/- and Rs.1,32,118/- for the Assessment Year 2001-02, 2002-03, 2003-04 and 2006-07 respectively) have seized to exists. 4. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details or whereabouts of alleged sellers. Learned Senior Counsel Mr. Bhatt further contended that the Tribunal below has committed a substantial error of law in holding that Section-41(1) of the Act was not applicable from the material on record. 9. In order to appreciate the aforesaid question, it will be profitable to refer to the provisions contained in Section-41(1) of the Act which is quoted below: "41. Profits chargeable to tax. - [(1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,:- (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income tax as the income of that previous year, whether the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counting followed by the assessee is of no relevance or consequence. We have to go by the language used in S. 41(1) to find out whether or not the amount was obtained by the assessee or whether or not some benefit in respect of trading liability by way of remission or cessation thereof was obtained by the assessee and it is in the previous year in which the amount or benefit, as the case may be, has been obtained that the amount or the value of the benefit would become chargeable to income-tax as income of that previous year. "12. We fully agree with the view taken by the Division Bench in CIT v. Rashmi Trading, 1977 Tax LR 520 (Gujarat) (supra) that the only meaning that can be attached to the words "obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure" incurred in any previous year clearly refer to the actual receiving of the cash of that amount. The amount may be actually received or it may be adjusted by way of an adjustment entry or a credit note or in any other form when the cash or the equivalent of the cash can be said to have been received by the assessee. But it must be the obtaining of the actual amount wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of reviving it. On the facts found by the Tribunal, the Tribunal as well as the High Court were well justified in coming to the conclusion that the purchase tax liability of the assessee had not ceased finally during the year in question. Despite the finality attained by the judgment in Neroth Oil Mills' case, the other issues having bearing on the exigibility of purchase tax still remained and the dispute between the assessee and the sales-tax department was still going on. There is no material on record to rebut these factual observations made by the Tribunal. Nor can it be said that the reasons given by the Tribunal are irrelevant. The learned senior counsel appearing for the Income-tax Department has contended that the assessee itself took steps to write-off the liability on account of purchase tax by making necessary adjustments in the books, which itself is indicative of the fact that the liability ceased for all practical purposes and therefore, the addition of amount of Rs.3,20,758/- deeming the same as income of the year 1985-86 under Section 41(1) is well justified of the Act. But, what the assessee has done is not conclusive. As observed by the Tribunal, an uni ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
