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TMI Blog2013 (10) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... which he was liable to pay Rs.26,39,484/-. The assessee thereafter started returning excise duty to the persons from whom they were collected and the remaining amount to tax in the assessment year 2004-05. In the circumstances, it cannot be said that the assessee was allowed any allowance or deduction in the assessment year in question in respect of expenditure or trading liability incurred by the assessee. Every security in pursuance to provisional assessment in respect of which final assessment were passed and in which amount collected were offerred as security by way of FDs to collect excise duty would not fall within the meaning of trading liability incurred by assessee, thus provision of Section 41 (1) is not applicable. There was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected in 1991-92 to 1995-96 is not a trading receipt merely because it was not offered by the assessee as income in these years? (3) Whether on the facts and in the circumstances o the case, the Tribunal is justified in law in coming to the conclusion that provision of Section 41 (1) of the IT act, 1961, are not applicable as the disputed excise duty collected by the assessee was neither offered as income nor claimed as deduction, despite the fact that the excise duty collected is part of trading receipt and liability to pay is deduction deemed to have been allowed under income tax in the year 1991-92 to 1995-96? (4) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in coming to the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner started depositing the amount equal to excise duty in dispute from the distributors as security on the condition that the amount would be returned once the dispute was resolved. The amount collected as security of Rs.1,45,40,000/- were placed in bank. The interest thereon were disclosed as income. As regards excise duty fixed deposits were placed as collateral for bonds furnished as security in lieu of payment. The dispute was resolved in the year 2000 on which the assessee was held liable for payment of excise duty only to the extent of Rs.26,39,484/-. The department abandoned the claim to the extent of Rs.88 lacs. The A.O. in the notice under Section 148 recorded reasons on the ground that he believed that income as esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d computed for unpaid liability of Rs.1,45,40,000/-. The assessment was made on the total income including income as declared at Rs.13,75,394/- of total amount of Rs.1,59,15,390/-. The CIT (A) found that during appellate proceeding it has paid excise duty of Rs.28,56,723/- and nine parties have confirmed regarding receipt of payment amounting to Rs.74,28,605/-. The assessee declared Rs.48,84,260/- in the return of income for the assessment year 2004-05 and thus addition made by A.O. is not justified. He, thereafter, observed while partly allowing the appeal as follows:- "With regard to the second contention that 9 parties have duly confirmed receipt of payment of Rs.74,28,605/-, the A.O. after verification has reported in his report tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 995-96. Even for those years the amount was not offered as income. This fact was even in the knowledge of Assessing Officer and hence assessment was sought to be reopened for assessment year 1992-93, 96-97 on earlier occasions. However, after the reply of asessee the actions of reopening were dropped. The only event that happened during the relevant financial year is that dispute was settled and the assessee was held liable for payment of excise duty only to the extent of Rs.26,39,484/-. It was also even in the knowledge of Assessing Officer that the interest on fixed deposits made out of security deposits in the form of excise duty collected were offered for taxation. The abandonment of the claim of central excise to the extent of Rs.88 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s income of that previous years whether business or profession in respect of which allowance or deduction has been made is existence in that year or not. The short question that arise for consideration in this case is whether in the facts and circumstances notice under Section 148 was valid and that reasons contained in the notice that provision of Section 41 (1) are attracted in the present case are applicable. As noticed above from the findings recorded by the A.O. and CIT (A) we find reasoning given by the Tribunal to be entirely justified. A provisional assessment was made in pursuance to which the assessee started depositing the amount collected as excise duty from customers and offerred the same as security to the Central Excise D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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