COMMISSIONER OF INCOME TAX,RAIPUR vs. V.K.JAIN PROPRIETOR,RAIPUR

ORDER (ORAL) - (Passed on thus 15‘“ day of July, 201 1) , Theinstant appeal was admitted on the following question of law: “Whether'on the facts and in the circumstances of the case, learned L r Income Tax Appellatr; Tribunal was justified in holding that none of the . two conditions stipulated in explanation l to Section-410) ie ‘writing off’ the relevant liabilities in his books of account so as to constitute it remis3ion or cessation and derivmg any benefit from such remission or . cessgtion washsawtisfied so as toattract the provisions of Section 41(I) ? The brief facts as prejected by the appehant are that the assessee respondent No 1 filed income tax return on 29 10 1997 showmg his total income of Rs.10,70,000. 50. The assessment was completed on ‘ , 29.03.2000, determining the total income of Rs.49,96,444/—. The ' Assessment Officer, inter alia, made an addition of Rs. 15,67,071l- on account of cessation of trading liabilities under Section 41(1) of the I. income Tax Act 1961. (hereinafter referred to as ”I TAct") Rs 47 828/- 3 on account of unpaid purchases under Section 37 ano Rs 7 461l- on c account of delayed ESI/PF payments The assessee, being aggrieved, preferred an appeai Vbefore the Commissioner of income Tax (Appeals) (for short “the CIT(A)"). The CIT(A)’ deleted the additions. The second appeal preferred ‘ thereagainst by the ReVenue, was dismissed by the impugned order h 1 I.T:.A.-No.,'2.6‘0F'2oo4v APPELLANT ' ‘ i Commissioner, Income Tax, Raipur Versus RESPONDENT ShnVK Jam

dated 17‘1 1.2003, confirming the observation and order of the CIT(A). Thus, this appeal on the above—stated substantial question of law‘ ‘ Shri Neeiabh Dubey, learned counsel appearing for the respondent assessee submits that it is a pure question of facts, which has attained finality by the order of CIT(A). There is no question of law, as the same has been settled by the Supreme Court in Commissioner of Income Tax v. Sugauli Sugar Works (P.) Ltd.’ . l The assessing authority on verification of the assessee’s books of accounts found that in case of seven creditors from whom material was purchased, part payment was shown to have been made by way of - Demand Draft, whereas the balance amount was shown as paid in cash. The assessee had stated in his statement that the amount paid by’ DD was full and final settlement of the accounts of the said creditors as agreed with them \and’ the cash ,payment amounting to Rs.15,67,071l- was shown to have been paid, just to square up their accounts when no such payments were actually made. The assessing officer further relied on the statement of the assessee, wherein he agreed to surrender the said amount, as his income under Section 41(1) of the l.T.Act and further amount of Rs.47,828/— on account of purchase allegedly made from one of said creditors. The assessee, thereafter, retracted from his statement saying that he had no knowledge of legal position and as such, the initial statement in respect of income on account of remission: of liability under Section 41(1) of the l.T.Act was made due to misunderstanding of facts and law arising from mental depression for want of proper legal advise and knowledge. The assessee fiied copies of his account extract from the books of account of the concerned creditors, showing that the relevant , liabilities were still appearing in their books of account in the name of the assessee. The liability in respect of four creditors namely M/s. Mehul Enterprises, M/s. Lehum-Markiv; M/s. M.P.Petro Chem(P) Ltd. .. 1 1999 Vol.236 ITR 518

a ,ken il C. tang to R.;74,242/— a tl te assess in the subsequent period by making the actual payment and ‘ ' the aSsertion made by the assesseevin this regard has not been dispgted. by the Revenue . As regards the liability in respect of the remaining three creditors Ie M/s Paper Conductors M/s Vardhman Udyog and M/s K S Metals amounting to Rs 3 02 633I- the dispute ,_ was settled which was supported by the reievant documentar vrdence placed rn the assessees paper book an amount to the xtent of Rs 6O 643I- was paid or adjusted In their accounts and the balance amount of Rs.2,52,040/— finally stood remitted in the preVIous , )year relevant to A.Y. 2000-2001. The Tribunal and the CIT(A) have accepted the statement of the a'ssessee that he ‘had neither obtained any cash nor derived any beneft in respect of the said trading liabilities c d by way of remisSion and cessation and as such no amount was taxable under section 41 (1) of the l.T. Act. The CIT(A), came to the conclusion that the assessing officer has not examined all the relevant documents and on the basis 'of first y statement of the assessee, made addition of liabilities. Thus, the order . passed by CIT(A) of deletion of the addition was confirmed by the Income Tax Tribunal by dismissmg the appeal referred b the Revenue i . In CIT v. Sugauli Sugar Works (P.) Ltd. (supra) observed as under: “We fully agree with the View taken by the Division Bench in CIT v. Rashmi Trading that the only meanin that can be attached to the words obtained Whether I ‘cash or in any other manner whatsoever any amount in respect of such loss or expenditure Incurred In any ’V preVIous year clear/y refer to the actual receIVIng of the cash of that amount The amount may be actually received or it may be’adjusted by way-of an adillstment entry or a credit note or In any other form when the .cash or the equivalent of the cash can be said to have been received by the assessee But It must be the V obtaining of the actual amount which Is contemplated -:> by the legislature when It used the words ‘has obtained whether In cash or In any other manner whatsoever any amount In respect of such loss or expenditure In 'the past’ As rightly obsen/ed by the DIVISIon Bench In _ the context In which e os occu no the meaning Is possibl , nd Tasht O o toH s12 ws seted by h * y e e . qr , p y g n I thse wrd r or e

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