TMI Blog2011 (10) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in not deciding merit of the additions made without considering the information available in notes to assessee s audited account. 2. After hearing both the parties, we find that originally assessment was completed u/s.143[3] on 24-3-2004. Later on notice u/s.148 was served on the assessee on 18-3-2008. This notice has been issued after four years and the notice was mainly issued on the basis that the original assessment was completed u/s.143[3] but a sum of ₹ 24,43,810/- being amount written back from sundry creditors has not been offered for tax u/s.41 of the Act. [clause 10 of Part B of the notice on accounts as per Schedule 18 of the Audit Report]. Before the AO assessee objected to the re-assessment and on merits it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of 6 years. A per the provisions of section 147 reopening of assessment is permissible after a lapse of years only if any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to make a return under section 139, etc. or to disclose fully and truly all material facts necessary for his assessment for that assessment year. In this case the appellant has disclosed all material facts before the AO and in fact the reasoning for reopening is based on notes to accounts only. There is no failure on the part of the appellant to disclose truly and fully any material facts. The original assessment has been completed u/s.143(3) after examining all details, after scrutiny. There is no extraneous informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lancesheet and profit loss account and pointed out that this amount was included under the head administration expenses details of which are given in schedule 15. Then he referred to schedule 15 and pointed out that a sum of ₹ 26,97,048/- was written off and booked as expenditure. In fact, the assessee has made some advances to the suppliers which could not be recovered and, therefore, this amount was written off. The amount written off cannot be taxed u/s.41[1]. 6. We have considered the rival submissions carefully and find force in the submissions of the Ld. Counsel for the assessee. Proviso to sec.147 reads as under: Provided that where an assessment under sub-section (3) of section 143 or this section has been made for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the appellant. Accordingly, it is prayed to your honour to direct the learned assessing officer to delete the addition made of ₹ 24,43,810/-. 4.1 With regard to the said ground we are producing the submission made before the learned assessing officer vide our letter dated 10. 12.2008: With regard to first point, it may be clarified that assessee has written off the debit balances lying in the account of sundry creditors and accordingly, the amount is written off and not written back. Accordingly, reasons recorded shows that said balances are written back and not offered for tax U/s 41 of Income Tax Act, 1961, however, the said matter is factually incorrect and we would also like to reproduced the Note no. 10 in Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand the facts of the case. It is submitted that the appellant has actually written off the old debit balances of sundry creditors amounting to ₹ 24,43,810/- during the year under consideration. It is submitted that the all the details of such balances were provided to the learned assessing officer during the assessment proceeding. However it is submitted that the learned assessing officer erred in stating as under: The submission of the Assessee is found not acceptable and as the assessee has failed to write back the sundry creditors amounting to ₹ 24,43,810/- (clause 10 of part B of notes on accounts as per schedule 18 of audit report) and as the same has not been offered to tax u/s 41 of I. T. act. therefore same is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37. However since the original assessment has been completed under section 143(3) and the reopening has been held to be invalid and there is no reason to decide this issue on the merit of these additions. From the above it is clear that Ld. CIT[A] has clearly observed that debit balance cannot be treated as income u/s.41, though finally he has not adjudicated this issue on merit in view of his decision on reopening of the assessment. In our view, even on merits assessee had a very good case and the amount which was written off could not have possibly treated as income u/s.41[1]. Accordingly, we find nothing wrong in the order of the Ld. CIT[A] and confirm the same. 7. In the result, revenue s appeal is dismissed. Order pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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