9911796707
TMI Blog1990 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... 961, simply because the assessment of the Commercial Tax Officer has been set aside by the appellate authorities and in that view holding that the assessee is entitled to the deduction of Rs. 17,78,887 ? " The facts as found by the Tribunal are that in the course of the assessment proceedings for the assessment year 1968-69, the assessee-company had claimed and was allowed a deduction of the sales tax liability amounting to Rs. 17,78,867 in respect of four quarters ending on August 31, 1963. This liability was fastened upon the assessee on the basis of the ex parte order dated August 16, 1967, passed by the Commercial Tax Officer, Central Section, Calcutta. The assessee did not make any provision for this sales tax liability in its books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1968-69 only on the basis of the ex parte order dated August 16, 1967, which fell within the accounting year relevant to the assessment year 1968-69. Since the said ex parte order was now set aside by the appellate authority, the said liability of Rs. 17,78,887 did not exist any longer and it ceased to exist. In that view of the matter, the Appellate Assistant Commissioner upheld the action of the Income-tax Officer having regard to the clear language of section 41(1) of the Income-tax Act, 1961. On further appeal by the assessee before the Tribunal, it was contended on behalf of the assessee that section 41(1) had no application in the instant case inasmuch as there was a distinct possibility of revival of the demand on furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide of the order and there is a distinct possibility of revival of the demand." This recording was later modified by the Tribunal through its subsequent order dated January 21, 1980, on a miscellaneous application filed on behalf of the assessee. The last sentence appearing in paragraph 4 of the Tribunal's original order dated August 8, 1979, as extracted above was substituted by the following sentence : "In the instant case, with the Assistant Commissioner of Sales Tax setting aside the order, there is a distinct possibility of revival of the demand. " In paragraph 6 of its original order dated August 8, 1979, the Tribunal had recorded, inter alia, as under : " 6. If the assessee's case is viewed in the light of the judicial princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) had no application in this case. In our view, the sales tax demand of Rs. 17,78,887 raised ex parte on August 16, 1967, having been finally set aside by the appellate order dated April 4, 1973, the Income-tax Officer was fully justified in bringing to tax the said sum of Rs. 17,78,867 in the assessment for the assessment year 1974-75, by applying the provisions of section 41(1), having regard to the admitted position that the said sum of Rs. 17,78,867 was duly allowed as a deduction in the case of the assessee-company in the assessment year 1968-69 based on the said ex parte order dated August 16, 1967, which had now ceased to exist as a result of the appellate order dated April 4, 1973. Learned counsel appearing for the assessee drew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king the income-tax assessment earlier, was ordered to be refunded on a writ petition filed by the assessee. Although such purchase tax was duly refunded to the assessee on August 5, 1967, the State of Punjab promulgated two Ordinances on September 28, 1967, by virtue of which the assessments made in the case of groundnuts under the provisions of the Punjab General Sales Tax Act, 1948, before the commencement of the aforesaid Ordinances, became valid, notwithstanding anything contained in any judgment, decree or order, etc. The Ordinances were duly followed by corresponding Acts. In view of the Amendment and Validation Act, the Punjab and Haryana High Court held that there was no cessation of the liability of the assessee-firm to pay the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n CIT v. Combined Transport Co. Pvt. Ltd. [1988] 174 ITR 528, the Madhya Pradesh High Court held that a unilateral act by a debtor cannot, by itself, bring about the cessation of a liability, This case again has no II application and is clearly distinguishable on facts. In Rameshwar Prasad Kishan Gopal v. V. K. Arora, ITO [1983] 141 ITR 763, the Allahabad High Court found that the levy of excise duty was held to be ultra vires by the High Court and the amount deposited by the assessee in pursuance of the court's order earlier was directed to be refunded. The date of refund fell in the previous year relevant to the assessment year 1974-75 and was sought to be taxed in that year under section 41(1). The court found that the State of U. P. a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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