TMI Blog2014 (1) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... s account in the assessee's books for the earlier year as on 31.02.2007 shows that a sum of Rs.16.23 lakhs was debited on 31.03.2007 with the remarks "Sundry creditors written off" - This amount debited to the account of Roy Industries was credited to the 'Other income' with the remarks "Credit balance written back" totalling Rs.72,51,225.80 - This amount of Rs 72.51 lakh included a sum of Rs.16.23 lakh, which fact was observed by ld. CIT(Appeals) for deleting this addition - As per section 41(1) - Charge of income is attracted in the year in which the cessation or remission takes place - In assessee's case the cessation or remission took place in the preceding year when the assessee debited the account of this party with a sum of Rs.16.23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(Appeals) was pleased to delete this addition by observing that if the amount of purchase was to be increased, then the amount of profit would correspondingly stand reduced. 5. Having heard the rival submissions and perused the relevant material available on record, we find that the Assessing Officer observed difference in the amount of purchases recorded by assessee from Shri K.S. Ahluwalia and sales shown by that party. As per Shri K.S. Ahluwalia, he made sale to the assessee for Rs.46.04 lakhs against which the assessee recorded only Rs.3.66 lakhs. It is axiomatic that the assessee recorded short purchases to the tune of Rs.15.38 lakhs. If this difference is correct and the assessee made purchases outside the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nrecorded, then such amount is to be added but there can be no question of allowing any further deduction of this sum. If the addition is made u/s 69C for unrecorded expenses and deduction is also simultaneously allowed, it would neutralise the addition in all cases and thus defeat the very purpose of the section. We, therefore, do not approve the reasoning of the ld. First appellate authority on this count, which is hereby set aside. 6. Be that as it may, ld. A.R. contended that the Assessing Officer did not confront the assessee with the details received from Sh. K.S. Ahluwalia showing the sales made to the extent of Rs.46.04 lakh. It was put forth that the purchase shown by the assessee at Rs.30.66 lakh were correct. In our considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly stated the facts of this ground are that the assessee had shown opening balance of Rs.2,00,000/- in the account of M/s. Roy Industries and closing debit balance of Rs.14,678/-. The said party had shown opening balance at Rs.18,23,510/- and closing balance at Rs.16,23,510/-. The assessee explained the discrepancy by stating that hard coke amounting to Rs.18,14,540/- purchased from the party was bad in quality and after discussion the same was destroyed. The assessee also stated that the amount of Rs.16,23,510/- was written back in the earlier year and only a sum of Rs.2,00,000/- was carried forward as opening balance in this account. The Assessing Officer opined that there was no obligation on the part of the assessee to pay outstanding b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear in respect of loss, expenditure, or trading liability incurred by the assessee and subsequently "during any previous year" the assessee obtains whether in cash or in any other manner, the amount of such loss or expenditure etc. by way of remission or cessation thereof, the amount obtained by such person shall be deemed to be profits and gains of business or profession and accordingly chargeable to income tax as income of that previous year. It is manifest that the charge under section 41(1) is attracted in the year in which the cessation or remission takes place and not in any other year. Here is a case in which the cessation or remission took place in the preceding year when the assessee debited the account of this party with a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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