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TMI Blog1986 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasons for it exclusion. These were not given. He then pointed out that the very fact that the assessee had credited the balances showed that there was a cessation of liability. He pointed out that the accounts were audited and the very fact that the auditors allowed such amount to be shown to the profit and loss account is a clear case of evidence for cessation of liability. He then made the addition under section 41(1) of the Income-tax, 1961 ('the Act'). 2. The assessee appealed. The Commissioner (Appeals) held that in view of the Bombay High Court decisions and Gannon Dunkerley Co. Ltd. v. CIT [1976] 62 ITR 34 in the cases of J. K. Chemicals Ltd. v. CIT [1966] 102 ITR 428 it is well settled that mere writing back the credit bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount was transferred to the provision for taxation account and further the assessee had made payments from such account as and when the creditors made their claim. It was on these facts that the High Court in that case came to a finding that the amount never became the property of the assessee. The Bombay High Court decision in the case of J. K. Chemicals Ltd. has been considered by the Punjab and Haryana High Court in the case of CIT v. Haryana Co-operative Sugar Mills Ltd. [1985] 154 ITR 751 and it held that the ratio would not apply to such cases. He then submitted that the facts are similar to the decision of the Bombay High Court in the case of CIT v. Batliboi Co. (P.) Ltd. [1984] 149 ITR 604. 4. For the assessee, Smt. Vissanj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the excess deposits. In the accounting year under the consideration before the High Court, some of the deposits not returned were transferred to the profit and loss account. As in this case before us, the assessee claimed that the sums so transferred did not represent taxable receipts. The Tribunal had accepted the assessee's submission. The Bombay High Court pointed out that the excess deposits were not held by the assessee for the benefit of depositors. The deposit was in respect of a specific transaction of sale and was adjusted towards the purchase price of the machinery sold and had a close connection with the transaction of sale. Since the assessee transferred the excess deposit remaining with them to the profit and loss account, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excess has got the character of a trading receipt, in the case before us the deficit has also the character of a trading receipt. That is because the purchase price payable by the assessee to the villagers is reduced by that extent. Therefore, it goes to reduce the debits in the trading account and increases the profit. 7. The above finding has been given on the basis of the facts submitted before us at the time of hearing. But it is an admitted position that this fact was not before the ITO nor the Commissioner (Appeals). If that is so then the position is that the nature of this write back has at no time been made clear by the assessee. Therefore, it is not open for the assessee, when no facts are given, to urge that at the time of gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliers and it had written back an amount of Rs. 37,994. As in the case before us, the assessing authority asked for an explanation regarding the income and such write back and the assessee instead of explanation claimed exemption. At page 754 it was observed 'as the assessing authority mentioned that instead of bringing any material on record, the assessee proceeded to claim exemption regarding the said amount and desired to amend the return. So far as the facts which led to him to forfeit the amount are concerned they are within the personal knowledge of the assessee which he had not disclosed. If he held disclosed them, then it could be seen whether in law he was right in forfeiting the said amount and treating the same as his own income' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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