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2009 (6) TMI 630 - AT - Income TaxAddition - on account of understatement of profits on coal in transit - the impugned reversal entries pertained to sale which had been recognized in subsequent earlier year on the basis of railway receipts and if the action of the AO was to be confirmed, then, the sale entries recorded in subsequent year were to be deleted therefrom - once the impugned entries have to be recognized as sales of the year under consideration, hence, the same are required to be deleted from the next year - Appeal is dismissed Regarding disallowance of ascertained liability of ₹ 3,128.07 lakhs on account of the provisions made for incremental wages under National Coal Wage Agreement (NCWA) - it is also noted that the assessee is following mercantile system of accounting which it is required to follow mandatorily being a company, hence, as a matter of prudence and taking into consideration the provisions of AS-4 also it is obliged to make such provision - if the assessee does not make such provision, then, in the subsequent year, the AO may take a view that it is a case of prior period expenses which would also result into litigation and may disturb the finality of concluded assessment - It is also pertinent to note that such provision may be less or more and depending upon the criteria on the basis of which such provision is made, however, the excess expenditure provided can be written back in subsequent year and may be offered as income under s. 41(1) of the Act or the short provision can be claimed as expenditure in that year - It is also noted that making of such provision is also in consonance with the principle of matching of cost with the revenue - Appeal is allowed Regarding disallowance in respect of overloading charges, underloading charges and credit notes issued by the assessee to its customers for stones, shells, etc., contained in the consignment sent to them at various points of time - As far as underloading charges and credit notes are concerned, these expenses have been incurred by the assessee as a consequence of agreement with its customers and these have not been paid to railways like overloading charges, hence, at the very outset, these are not covered within the ambit of Explanation to s. 37(1) of the Act - Appeals are allowed Revision u/s 263 - It is noted that during the course of assessment proceedings, the AO has made specific inquiries regarding this issue and the assessee has submitted detailed reply along with the documentary evidences to support its claim - hence, it was a case of lack of inquiry with which we are not in agreement for the reason that generally positive findings are not given in the assessment order on numerous inquiries made by the AO and rather in the present case the reproduction of such reply and acceptance of the claim, thereafter, clearly indicates the mind frame of the AO - it is neither a case of lack of inquiry nor a case of a view taken by the AO which is not possible in law, hence, the order cannot be termed as erroneous as well as prejudicial to the interests of Revenue - Appeal is allowed
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