TMI Blog1997 (4) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... out having filed the revised return and also the earlier return. After taking note of both the returns filed, the assessment was completed at a total income of Rs. 38,68,610 on 21-5-1992. 3. Since both the returns had been filed beyond the time-limit prescribed under section 139(4), the legality of the assessment thereon was challenged before the CIT(Appeals) on the plea that in the eyes of law, they were no returns at all. The CIT(Appeals), however, negatived the plea of the assessee on the ground that the assessee's letter dated 13-5-1991 contained an implicit request for treating the earlier returns as filed in response to notice under section 148. The CIT(Appeals) further observed that section 292B took care of such irregularities. Thus, holding the assessment to be valid, the CIT(Appeals) then proceeded to dispose of the appeal on merits. 4. The plea of the ld counsel before us is also the same and has relied on the decisions reported in Maya Debi Bansal v. CIT [1979] 117 ITR 125 (Cal.), CIT v. Smt. Phoolmati Devi [1983] 144 ITR 954/15 Taxman 126 (All.) and P.N. Sasi Kumar v. CIT [1988] 170 ITR 80/[1987] 35 Taxman 131 (Ker.). The ld counsel also submitted that section 292B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and created reasons for him to believe that the assessee was having income which had escaped assessment. However, as the returns filed by the assessee were not valid returns in the eyes of law, the Assessing Officer could not proceed to make the assessment on the basis of those returns. Had he done so, his action would have been void ab initio. But instead, he issued notice under section 148 asking the assessee to furnish a return. This is one stage of the proceedings and in our opinion, the Assessing Officer has acted well within his powers up to this stage. 7. Once notice was issued to the assessee, it was under obligation to file a return. However, instead of doing so, the assessee, vide its letter dated 31-5-1991 informed the Assessing Officer about its having filed the two returns. This action of the assessee, in our opinion, did not have the effect of validating its otherwise invalid returns, but, for all intents and purposes, it was a request to treat those returns as having filed in compliance of the notice under section 148. We do agree that the assessee's letter does not say in so many words to treat those returns as having filed in compliance of the notice. It simply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to the weavers, which was taken over by the Corporation, amounted to Rs. 23,33,268. This yarn was given to about 250 weavers for weaving. Nearly half of the yarn was received by the Corporation during the accounting years 1984-85 and 1985-86. The weavers from whom yarn could not be recovered were scattered over the entire State in remotest villages. Considerable efforts have been made to recover the yarn but most of the weavers are no longer traceable. It was contended by the ld counsel that by allowing the said deduction the interest of the revenue will not be prejudiced in view of the provisions of section 41 of the Act. With regard to the contention of the Assessing Officer that the loss of the predecessor Board cannot be allowed to the assessee, reliance was placed by Shri Jhanwar on the decisions reported at S.N.A.S.A. Annamalai Chettiar v. CIT [1968] 67 ITR 584 (Mad.), Jethabhai Hirji Jethabhai Ramdas v. CIT [1979] 120 ITR 792 (Bom.), T.N. Shah (P.) Ltd. v. Addl. CIT [1979] 120 ITR 354 (All.), Vithaldas H. Dhanjibhai Bardanwala v. CIT [1981] 130 ITR 95/6 Taxman 105 (Guj.), Sarangpur Cotton Mfg. Co. Ltd. v. CIT [1983] 143 ITR 166/12 Taxman 259 (Guj.) and CIT v. T. Vee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effort has been made to recover the yarn from the various weavers. It is evident from the record that despite best efforts and despite repeated reminders to the persons who were in charge of various Depots, the Corporation could not get the required information. This is also corroborated by Note No. 3 in Schedule 'B' forming part of Balance Sheet as at 31st March, 1986 (published accounts). The Note mentions that no confirmation of stock of yarn and other stocks lying with weavers, printers and others have been received. However, while claiming loss on account of something which is irrecoverable, be it a debt or any other asset, it is the reasonable belief of the person who has to recover the same, that will form the basis for writing it off in the accounts. This view was also expressed by the Jurisdictional High Court in the decision in CWT v. Shree Bhagpatia Food Industries [1994] 207 ITR 1045 (Raj.). If the said belief falls short of any reasonability, for whatever reason, the said debt or asset will not be considered to be irrecoverable. Note No. 3 on the Notes on Accounts referred to earlier, inter alia, includes the following sentence : " Although action against them is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.75, Rs. 46.75 and Rs. 106.05 are also disallowable. Considering the submissions of both the parties, we restrict the disallowance to the aggregate of the six items mentioned above amounting to Rs. 560.51. The balance disallowance is deleted. 16. The next ground relates to the disallowance of Rs. 50,000 out of exhibition expenses. The assessee had made a provision of Rs. 1,59,000 in respect of exhibition expenses. However, allegedly there was no evidence to prove that the liability related to this head arisen or accrued during the year, the Assessing Officer disallowed the entire sum. The CIT(Appeals) restricted the disallowance to Rs. 50,000. 17. It was submitted by the ld counsel that certain details and vouchers could not be produced on account of the death of an employee, who was looking after these details. In view of this, the CIT(Appeals) made a fair estimate and restricted the disallowance to Rs. 50,000. In our opinion, it would be quite fair to restrict the disallowance to Rs. 20,000. We direct accordingly and, hence, the balance addition of Rs. 30,000 is deleted. 18. The next ground relates to the disallowance of ex gratia amount of Rs. 80,000. This amount also re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
