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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 ..... essment year 2001-02. The department has preferred this appeal on substantial questions of law as follows:- "(1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in coming to the conclusion that jurisdiction for framing re-assessment u/s 147 is bad in law by holding that the reopening on the ground that the excise duty of Rs.88 lacs chargeable to tax u/s 41 (1) has escaped assessment has no nexus with the formation of belief of escaped income as the provision of Section 41 (1) are not applicable to such excise duty of Rs.88 lacs? (2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in coming to the conclusion that excise duty collected in 1991-92 to 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing income from manufacturing and trading of 'puria tobacco'. Audited copies of final accounts and tax audit report on Form 3CB and 3CD as required under Section 44AB were filed along with the return of income. The balance sheet tallies and was not subject matter of any comments. It was, however, found that there is dispute with the Central Excise Department regarding the classification of goods during the period 23.10.1990 to 15.3.1995 as per Central Excise & Tariff Act, 1985. During the course of adjudication matter on the deferment of excise, provisional assessment was framed on the assessee by the Central Excise Department and subsequently final assessments were made. In view of the provisional assessment the petitioner started depositi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable to tax u/s 41 (1) of the Income Tax in the year in which such refund is granted to assessee. The released bonds (FDRs) became the property of the assessee during the previous year relevant to A.Y. 2001-02. d) On the basis of facts I have reason to believe that income chargeable to tax amounting to Rs.8800000/- under section 41 (1) of the Income Tax Act, 1961 has escaped assessment in A.Y. 2001-02 by reason of failure on the part of hte assessee to disclose fully and truly and truly all material facts for A.Y. 2001-02. Accordingly notice u/s 148 is issued. Copy of the reasons recorded is enclosed." On the basis of the reasons recorded the A.O. assessed the income, which is escaped assessment and computed for unpaid liability of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e FDRs is confirmed for this assessment year. As a result, out of the addition made of Rs.1,45,40,000/-, addition to the extent of Rs.85,68,089/- (Rs.26,39,484/- excise duty paid + Rs.59,28,605/- confirmations received) is deleted and the balance is confirmed." The Tribunal has allowed the appeal and dismissed the cross-appeals of the revenue on the reasoning given in paragraph 8 as follows:- "We have considered the rival submission. The facts that emerges are that the assessee was collecting the amount towards excise duty by way of security as there was dispute of classification of goods. This amount was collected admittedly during the financial year relevant to assessment years 1991-92 till 1995-96. Even for those years the amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the impugned reassessment order as also the appellate order." Shri Sambhu Chopra learned counsel submits that Section 41 (1) (a) is applicable to the present case as the amount, which was not disclosed as trading receipts in the returns filed by the assessee in the relevant year would amount to allowance or deduction made in the assessment for that particular year. In respect of loss expenditure for trading liability and that whenever the assessee benefits in respect of such trading liability by way of permission or thereby amount obtained by such person or value or benefit accruing to him shall be deemed to be profits and gains of business of profession and accordingly chargeable to tax as income of that previous years whether busin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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