TMI Blog1984 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... The given amount was treated as income of the assessee by the assessing authority. On an appeal, the AAC held that the said amount was not the income of the assessee which order was sustained by the Tribunal. From the order of the assessing authority, it appears that the said amount was entered in the profit and loss account and against the said amount the following entry existed : Rs. 1. Amount forfeited and cane price payable 37,994 When the assessing authority asked to explain the nature of the said forfeiture, the assessee instead of offering any explanation, vide his reply dated October 28, 1971, claimed exemption and sought to amend the written statement in regard to the given item. The assessee in respect of the said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability in regard to the said amount, As to the first condition, there is no dispute. It is only regarding the second condition that the parties are not on the same wave length. In case where the assessee had treated a given amount as his own income in his profit and loss account and had also mentioned that the said amount became his own income as a result of forfeiting the same itself, then prima facie the assessing authority would be entitled to hold that the second condition in question also stood satisfied and if the assessee despite the above fact asserted that though he credited the amount to his profit and loss account, he was not entitled to do so or he was not entitled to forfeit, then the onus was upon him to establish that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity treated the said amount as the income of the assessee. In that judgment, it was held that from the mere fact that the debt had become time barred, it could not be said that the liability of the assessee in law had ceased. The learned counsel for the respondent submitted that the unilateral act of a debtor to end his liability qua-his creditor would not amount to cessation of his liability and in support of his submission he cited Kohinoor Mills Co. Ltd. v. CIT [1963] 49 ITR 578 (Bom),J. K. Chemicals Ltd. v. CIT [1966] 62 ITR 34 (Bom), Bhagwat Prasad and Co. v. CIT [1975] 99 ITR 111 (All), Gannon Dunkerley and Co. Ltd. v. CIT [1976] 102 ITR 428 (Bom), CIT v. Sadabhakti Prakashan Printing Press (P.) Ltd. [1980] 125 ITR 326 (Bom) and CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he had to transfer the said amount to the board by virtue of the provisions of s. 3 of the said Act. Such being the position, the Bombay High Court took the correct view that there had not been any cessation of liability of the assessee in regard to the said amount, even though he had entered the same in the profit and loss account. In the rest of the decisions, what came to be considered by the courts was the stand of the Revenue that a time-barred debt, on which allowance had been once claimed, became the income of the assessee. The courts took the view that there was no cessation of liability in terms of s. 41(1) of the Act of the assessee-debtor qua his creditor and, therefore, even though the assessee by his unilateral act had ente ..... X X X X Extracts X X X X X X X X Extracts X X X X
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