TMI Blog1999 (8) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... sad (1989) 76 CTR (SC) 40 : (1989) 176 ITR 529 (SC); and (ii) CIT vs. Mangilal Bhanraj (1984) 42 CTR (Bom) 365 : (1984) 155 ITR 71 (Bom) (2) Without prejudice to above, appellant submits that the CIT(A) is not justified in confirming the addition of Rs. 65,000 made by the ITO on the ground of that the amount was remission of liability liable to tax under s. 41(1). The addition be, therefore, deleted." 2. The brief facts of the case giving rise to this appeal are these. The original assessment for asst. yr. 1981-82 was completed vide order dt. 28th March, 1984. Subsequently, the said assessment had been reopened by issue of notice dt. 14th Feb., 1986, under s. 148 r/w s. 147(a) of the IT Act, 1961. The said assessment has been reopened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capement of income. In view of this conclusion, the AO reassessed the assessee by making addition of Rs. 65,000. 3. The matter was carried before the CIT(A). It was claimed by the assessee before him that all the material and primary facts were disclosed in the original assessment proceedings by way of lengthy correspondences between the assessee and AO. Since there was mere change of opinion, the reopening of the assessment was bad in law. The CIT(A), after considering the relevant facts on the record came to the conclusion that the liabilities payable to the agriculturists were not genuine. Accordingly, it was held by him that there was neither a change of opinion nor the opinion as furnished by the assessee during the course of origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k. Then, he took us through the letter of the AO dt. 6th March, 1984, addressed to the assessee-firm asking the assessee to submit the extract of account of the farmers with full description of each entry. The assessee was further asked to explain what prevented it from disclosing the name of the farmers in the preceding year when the details of liabilities were called for by the concerned ITO. The copy of this letter appears at p. 7 of the paper-book. He, then, drew our attention to the letter of the assessee. dt. 12th March, 1984, addressed to the AO, Jalgaon. This letter was written in response to the letter of AO dt. 6th March, 1984, read with the letter of 27th Oct., 1983. The list of the liabilities was attached as asked for. Copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year under consideration. Even on this ground, the order of CIT(A) was bad in law. 5. The learned Departmental Representative took us through the assessment order and the facts pointed out by the AO. It was submitted by him that income liable to tax under s. 41(1) has escaped on account of non-furnishing of relevant materials and, therefore, the reopening of assessment was valid. He also relied on the order of CIT(A). 6. Rival submissions of the parties and the materials produced before us have been considered carefully. The perusal of the correspondences between the assessee and the ITO, Jalgaon, clearly shows that primary facts were duly disclosed by the assessee to the AO. On the basis of the correspondence, the AO kne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the view that action of the AO under s. 147(a) was bad in law. It is interesting to note that though such stand was taken before the CIT(A), he upheld the action of the AO by coming to a different conclusion that the liabilities towards farmers were not genuine. But, in the later part of his order, he has upheld the addition on the ground that provisions of s. 41(1) were applicable since deduction in this regard was allowed to the assessee in the earlier years. In our opinion, both these legal findings are contradictory to each other. The application of s. 41(1) presupposes the genuineness of expenditure allowed in the earlier years. If that is so, the action of the AO cannot be upheld on the ground that the liabilities in this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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