TaxTMI 
TaxTMI 
2012 (2) TMI 81
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....,390/-. In the course of the assessment proceedings under Section 143(3) of the Act, the Assessing Officer made several additions and disallowances to the returned income. Included in them was an amount of Rs. 17,39,263/-. This amount represented the aggregate of several items written back by the assessee in the books of accounts for the relevant previous year and as per para 15.2 of the assessment order they are as follows:- "15.2. As discussed above the amounts written back include the following amounts: (i) Miscellaneous Income a. Salary & wages 59,088 b. Relating to parties 10,72,329 c. Security forfeited - d. Unencashed cheques 1,97,758 e. Excess dividend paid In earlier year written back 14,916 (i) Excess provision for doubtful debts And advances written back 17,133 (ii) Unclaimed bonus written back Disallowed in the earlier assessment year 14,133 &nb....
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....of the Income-tax Act, and writing back of these amounts in the profit & Loss Account definitely establishes that there has been a cessation of liability on the part of the assessee. The assessee has written back the amount only after the expiry of the period of limitation available under the limitation Act. When the so called creditors have no legal remedy or enforceable right on the assessee to make any recovery then it is legitimate cessation of liability and writing back of these amounts in the profit & Loss Account makes it taxable." Thus the aggregate amount of Rs. 17,39,263/- was brought to assessment. In support of the addition, the Assessing Officer referred to and relied upon the judgment of the Supreme Court in CIT v. T.V.Sundaram Iyengar & Sons Ltd. [1996] 222 ITR 344. 5. The assessee appealed to the CIT(A) against the aforesaid addition. It would appear that before the CIT(A) the following breakup of the addition was given:- 1. Salaries, wages and bonus 59088/- 2. Supplier's credit balances 639005/- 3. Customer's credit balances 433324/- 4. Uncashed cheques 197758/- 5. Cash advance 1219/- 1330394....
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.... back: Rs. 14,133/- 3. Excess provision for excise duty for Assessment years 1986-87 to 1989-90 written back: Rs. 2,95,200/- 4. Excess provision for sales tax For assessment year 1990-91 written back: Rs. 63,757/- TOTAL Rs. 3,76,820/- 10. It was submitted before the CIT(A) that none of the aforesaid items of expenditure had been claimed as a deduction in the earlier years in which the provision for the payments had been created because of Section 43B of the Act and, therefore, the writing back of the provisions in the books of account for the year under appeal on the ground that those provisions were no longer required, does not attract Section 41(1). This contention of the assessee was accepted by the CIT(A) with regard to the first, third and fourth items aggregating to Rs. 3,62,687/- and the addition to this extent was deleted. However, in respect of the unclaimed bonus of Rs. 14,133/-, the CIT(A) held that it must have been claimed and allowed as a deduction in the earlier year, presumably because Section 43B did not apply to provision created for bonus. He accordingly upheld the addition unde....
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....d discussed the facts relating to the additions in some detail and had given separate findings in respect of each of them with appropriate reasons. It is, however, seen that the Tribunal disposed of the dispute relating to unclaimed credit balances etc. in a summary manner by observing that in the proceedings remanded by the Tribunal to the Assessing Officer, in respect of the earlier years, the Assessing Officer has himself deleted the additions/disallowances and in the light of this development, the unilateral write back of the unclaimed credit balances etc. cannot be brought to tax under Section 41(1) of the Act. It has also been observed that in respect of the addition relating to uncashed cheques and securities forfeited, there had been no claim for deduction for the provisions of Section 41(1) to be invoked. The Tribunal having been constituted by the Income Tax Act as the ultimate fact-finding authority, we would have expected it to pass reasoned orders, setting out the relevant facts, figures and contentions in a manner in which parties to the dispute can readily appreciate the reasoning and the conclusions. There should be clarity and the factual matrix lucidly stated. It ....
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....n 23rd December, 2011. For the reasons stated in that judgment, we hold that the addition is not in accordance with law. 15. So far as the suppliers' credit balances of Rs. 6,39,005/- and the customers' credit balances of Rs, 4,33,324/- are concerned, the same reasoning is applicable for the year under consideration. Accordingly, those two additions made by the Assessing Officer are also not in accordance with law. 16. In the case of the uncashed cheques amount to Rs.1,97,758/-, the finding of the Tribunal is that that there was no claim for deduction in any of the earlier years and, therefore, the amount cannot be added under Section 41(1) of the Act. It is not in dispute, as it cannot be, that the amount of uncashed cheques was not allowed as deduction in any of the earlier assessment years. As per the assessee this represents the cheques received and remaining on hand on the last day of the accounting period. Tribunal has accepted this stand. The Assessing Officer and the CIT(A) have not stated why the stand of the assessee was not acceptable. Revenue has also not stated and averred that the assessment order now passed, this aspect was not considered and examined. In these....
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....76 2. Customer's credit balances 3,93,958 3. Supplier's credit balances 5,68,768 4. Un-cashed cheques 20,849 10,54,551 967/2009 1991-92 1. Salary, wages and Bonus Unclaimed Balances Written Back 98,189 2. Customer's credit balances 6,50,550 3. Supplier's credit balances 1,50,997 4. Un-cashed cheques 28,395 9,28,131 1015/2009 1993-94 1. Salary, wages and Bonus Unclaimed Balances Written Back 72,636 2. Customer's & Supplier's credit balances 3,54,508 3. Un-cashed cheques 21,712 4,48,856 1003/2009 1994-95 1. Salary, wages and Bonus Unclaimed Balances Written Back 47,931 2. Customer's & Supplier's credit balances 3,83,306 3. Un-cashed cheques 46,514 4,77,751 1013/2009 1996-97 1. Customer's & Supplier's credit balances U....