TMI Blog1996 (8) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... see during Diwali and in the stalls set up in Kartik Mela at Ujjain. The assessee pleaded that there was double expenses in view of the facts mentioned above, in the relevant assessment year. The Assessing Officer had disallowed Rs. 1,82,900 on this account. The Assessing Officer denied allowance on the ground that only two of the assessee's accountants by name Shri Ram Kumar Choubey and Niranjan Pachori were entrusted with the work of visiting branches and placing the currencies in the packet and the same was not verifiable. The Assessing Officer observed that the coupon scheme was verifiable. According to the Assessing Officer, the only two statements of these two persons did not prove the case of the assessee beyond reasonable doubt. However, in the first appeal ld. CIT(A) accepted the case of the assessee. It is seen from record that the Assessing Officer had not pointed out any error or defect in statements of the accountants, or the accounts produced. Placing currencies in the beedi packets under the scheme for promoting the sales ordinarily requires secrecy. Otherwise the scheme would have been total failure which may result in loss to the assessee. However, what is requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A) is perfectly justified in deleting the addition under this ground and we confirm the same. 5. The revenue is in appeal before us against the deletion of the addition of Rs. 69,46,154 under section 41(1) of the Act. 6. In the balance sheet, it is shown that this amount was shown as Bidi Workers outstanding liabilities (Old), This liability is the same amount as has been carried forward right from the assessment year 1980-81 till date of the end of relevant previous year. In the course of assessment proceedings for the relevant assessment year, the assessee was required to furnish the following details : (i) How this liability was worked out. (ii) List of the workers to whom it is payable and how much is payable so that it may tally with the total of the liability created. (iii) For the following year similar type of information should be given shown the opening balance of the liability, further liability created for that year, payment made during the year, balance at the end of the year. (iv) So far as the payments are concerned, if possible, furnish the details of the persons to whom the payments have been made. (v) It is clear from the figures given abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts and the case is being decided on facts. I have stated that the assessment proceedings for assessment years 1984-85 and 1989-90 were simultaneously taken up so far as the question of invoking the provision of section 41(1) is concerned and I am of the opinion that assessment year 1989-90 is the proper and appropriate year to apply the provision of section 41(1). There must, at certain time, be limit when the facts may conclusively indicate a cessation and I think it has so indicated. The legal stand taken by the assessee has on facts no legs to stand. Law can only help the facts, but if the facts clearly indicate, otherwise it is difficult to take the assistance of judicial pronouncements. " Based on such consideration and discussions, he gave his finding in para 25 as follows :-- " I hold that the liability on facts has ceased and the amount in the past allowed as deduction can be brought to tax under section 41(1) of the Act. Accordingly, the same is treated as profit of business and charged to tax as income of the year relevant to assessment year 1989-90. " 9. The assessee carried the matter to the first appellate authority. According to the ld. CIT(A), there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued at length. In a nut-shell, his argument was whether there was a cessation of liability or not is to be judged from totality of facts of the assessee's case. He submitted that liability was created during the accounting year Diwali 1973-74,1974-75 and 1975-76. Payment for part of liability was made up to Diwali 1979. There is no payment at all after Diwali 1979. The year under appeal is accounting year March 1989. Thus, from last ten years, no payment made. Added with this, there is no details of workers to whom payment is to be made and no claim of any worker is pending in dispute before any Court or Tribunal. Keeping these facts in view, the Assessing Officer was fully justified in holding that there was cessation of liability. 12. Ld. counsel for the assessee reiterated the same argument as were advanced before the CIT(A). He submitted that there was no cessation of liability.The liability of wages does not become barred by limitation. The assessee has not denied its liability. The workmen have not waived their claims. In such circumstances, there is no cessation of liability either by operation of law or by act of parties. He further submitted that as per section 41(1), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim and there was no need to ask the assessee to submit the detail relating to this liability in the year under consideration. Secondly, according to section 41 (1), the Assessing Officer has to establish that there was cessation of liability and he has also to establish that such cessation took place during the previous year relevant to assessment year. The ld. CIT(A) finally came to the conclusion that there was no cessation of liability. 15. The ld. CIT(A) had been carried away by looking into past history. It is basic principle of the Income-tax Law that every assessment is a separate proceeding and the Assessing Officer was fully empowered to call for necessary details. In fact, there is a duty cast upon every Assessing Officer to call for necessary details and to examine the same and draw the necessary inference after conducting proper enquiries. The details called for by him were relevant for determining the issue whether the liability has ceased or not and if so in which year. However, the assessee was unable to furnish the detail relating to workmen, quantum of the amount payable to them. The workmen are unidentifiable to whom the amount is allegedly payable. More ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars of the employees to whom the amount was payable by the assessee. The Assessing Officer during the course of assessment proceedings insisted the assessee to produce several particulars relating to this matter. But nothing had been furnished except filing a bald reply dated 19-3-1990, with no material particulars alleging the existence of liability for the year under consideration. It is relevant to note that the Assessing Officer had made certain specific queries apart from the others as follows : " (vi) Copies of accounts be given for all the years till this date to show as to what is the position today and how much of the liability has been paid right from the beginning till this date. (vii) What is the possibility of discharging this liability because many of the workers for whom this liability was created may have disappeared/died. None of the workers may be aware of any such liability payable to them. (viii) Has any of the workers ever filed any claim before you or before any Court or authority and if so, what was the result. In case the petition is filed by any of the workers in the Court or before any other authority, a copy of the same must be available with you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the principle laid down is, that for application of section 41(1), the onus is upon the Revenue to establish that there was cessation of liability during the year under consideration. We have also applied the same principle. Now whether such onus is discharged or not would depend upon the facts and circumstances of each case. In those cases, the Hon'ble Courts, on the basis of facts of the these cases came to the conclusion that the onus was not discharged by the Revenue. Hence section 41(1) was not applicable. However, in the case under appeal before us, we, after considering the totality of the facts of this case, as already discussed, in detail earlier, came to the conclusion that onus was discharged by the Revenue. 20. Before we conclude, we may mention that the Hon'ble Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540, at page 545, observed as under : " Taxing Authorities were not required to put blinkers while looking at documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality.... " 21. The ratio of this decision is squarely applicable to the case under consideration before us. The Ape ..... X X X X Extracts X X X X X X X X Extracts X X X X
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