TMI Blog2012 (10) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 15,98,148/- offered by it in the return of income u/s 41(1) of the Act. It was explained by the assessee that as on 1.4.2005, ₹ 53,78,236/- was payable by the assessee to M/s. Hindustan Lever Limited [HLL] and since the said amount was in dispute, the same was shown as outstanding in the books of the assessee for the last two years. According to the assessee, as HLL had not confirmed for waiver of such amount, the assessee decided to write back the said sum into three installments of ₹ 15,98,150/- each in three years and, accordingly, had written back ₹ 15.98 lakhs in the books of accounts per AYs. 2006-07, 2007-08 and 2008-09 and offered the same for taxation u/s 41(1) of the Act in the return of income for the AY under consideration. 3.1 This has been disputed by the AO that in the absence of any confirmation of HLL, added the balance amount u/s 41(1) of the Act after holding that as per the provisions of s. 41(1) of the Act, the entire sum was required to be added as deemed profit. Likewise, a sum of ₹ 5,42,177/- being the amount outstanding to M/s. Radiant Trading Company u/s 41(1) of the Act was also added to the income of the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. Thus, I hold that the assessee has furnished inaccurate particulars of income and, hence, liable for penalty u/s 271(1)(c) of the I. T. Act, 1961. 3.4 Aggrieved, the assessee took up the issue before the CIT (A) for relief. After due consideration of the assessee s submission as recorded in his impugned order under dispute, the ld. CIT (A) had cancelled the penalty for the following reasons, namely: 5 .The core facts of the case is that the appellant had written back the disputed amount of ₹ 53,78,236/- payable to M/s. Hindustan Lever Ltd in three equal installments of ₹ 15,98,148/- in the AYs 2006-07, 2007-08 and 2008-09. The AO held that since the amount was written back due to the dispute and the appellant was not liable to pay to M/s. Hindustan Lever Ltd any more, the entire amount needs to be added to the income of the first year of write back i.e., AY 2006-07. Therefore, the AO made further addition of ₹ 37,38,477/- in the AY 2006-07. The AO treated such additions as furnishing inaccurate particulars and invoked sec. 271(1)(c) of the Act. It is necessary to understand that sec. 271(1)(c) is attracted wherein, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferment of offering of income on the written back liabilities; - that there is no provision in the Act for such deferment and as per the provisions of s. 41(1), on cessation of liability the same should be deemed to be profit and gain of the business of that year; - that the contentions of the assessee that the amount in question has been offered in the subsequent year has nothing to do with the proceedings of the current year; and that in the income-tax proceedings, every assessment is a separate assessment and principle of res-judicata does not apply to the income-tax proceedings; - that the claiming of excessive deduction also amounts to concealment of income either suppression of receipts or exaggeration of expenditure both are attempt to reduce the taxable income and penalty u/s 271(1)(c) may be imposed for either or both such attempts. Relies on the case laws: (i) CIT v, India Sea Foods 105 ITR 708 (Ker); (ii) Naginchand Shiv Sahal v. CIT 61 ITR 534; (iii) CIT v. Gates Foam Rubber Co. 91 ITR 467 (Ker) - had not the Revenue detected the inaccurate particulars of income of the assessee, the assessee could have got away ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a natural corollary. In conclusion, it was argued that penalty cannot be levied merely on the basis of addition made on account of difference of opinion and pleaded that on this count also, the penalty deserves to be deleted. Strong reliance was placed on the following case laws: (i) Shri Rajesh Mukundlal Shah v. ITO ITA NoS.424 609/Ahd/2006 Dated 8.1.2010; (ii) Reliance Petro 322 ITR 158 (SC) 6. We have carefully considered the rival submissions, perused the relevant case records and also the case laws on which the learned AR had reposed his confidence. 6.1 The crux of the issue in this case was that the assessee had written back the disputed amount of ₹ 53.78 lakhs payable to HLL in three equal installments of ₹ 15.98 lakhs each in the AYs 2006-07, 2007-08 and 2008-09 respectively as it appears that there was a dispute between the assessee and the said company. However, the AO took a divergent view that since the amount was written back due to the dispute and the assessee was not liable to pay to HLL any more, the entire amounts ought to have been added to the income of the first year of write back i.e., AY 2006-07 and accordingly added th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. In the instant case, there is nothing to suggest that the assessee has obtained any benefit either by way of remission or cessation of any liability while the aforesaid liabilities are continually admitted by the assessee in their balance sheet. In these circumstances, we have no alternative but to vacate the findings of the ld. CIT (A) and delete the addition sustained by the ld. CIT (A) .. 6.5 In conformity with the findings of the Hon ble earlier Bench of this Tribunal (supra), the provisions of s. 41(1) may not be applicable in the case of present assessee. For record, the assessee, according to the ld. A R, had not made any appeal (quantum) against such addition by the AO in order to buy peace with the Department. Be it as it may, in the present case, it is apparent that unless there is a cessation of liability or there is a remission of liability by the creditor, the liability subsists and, therefore, even if the entries were made to write back the expenditure, the amounts so written back cannot be added in the income of the assessee as per the provisions of s. 41(1) of the Act. The addition has been made by the AO on misconception and, thus, the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
