TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 220
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..... The brief facts of the case are that there was a balance of Rs. 6,86,825/- in the name of Indian Textiles, Bombay, which is carried forward from year to year and the assessee failed to reconcile the same. The Assessing Officer called for details and the assessee filed a letter dated 7.12.2010 stating as under: "The credit balance appearing in the account of Indian Textiles, Bombay amounting to Rs. 6,86,825/-, since the assessee is not in a position to get details of a sum of Rs. 6,86,825/- from the old records, it can be added." Accordingly, the Assessing Officer added the same as 'unproved credit.' Aggrieved by this, the assessee went in appeal before the Commissioner of Income-tax(Appeals). 4. Before the Commissioner of Income-tax(....
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....ues, the creditor can recover the amount otherwise than a civil suit. In other words, the creditor has every right to recover the money whenever an opportunity comes to it outside the court of law. Moreover, the assessee accepts the liability in the balance sheet as on 31.3.2007. It is well settled principles of law that a liability if accepted in the balance sheet filed in the income-tax proceedings is an acceptance of liability under the Limitation Act. Therefore, the period of limitation for recovery of the amount would run from the date on which the liability is accepted in the balance sheet which was filed in the income tax proceedings. Hence, at no stretch of imagination, the liability ceased to exist and those circumstances, this Tri....
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....ssessee for the present assessment year, 2008-09. 7.2 Admittedly, these credits continue to be carried forward year after year. On account of this, there was a doubt in the mind of the Assessing officer regarding these credits. In the normal course, nobody would ordinarily not claim his dues and usually they take steps to recover the dues if it is a genuine liability. In this case, the liability remains to be recovered year after year. For invoking the provisions of sec. 68 of the I.T. Act, if any sum is found credited in the books of account of the assessee maintained in the previous year, then only it could be possible to make addition u/s. 68 of the I.T. Act. In the case of carry forward credit which is from earlier year, provisions of ....
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....hat it is not to be read in a restrictive manner. The tribunal explained the scope of the said Explanation in the case of Kalyani Maan Singh vs. ITO (in ITA No. 6500/Mum(A)/2011 dated 14.11.2013) to mean that the assessee, even as accounts are not sacrosanct, cannot assume a stand contrary to his own accounts. Explanation 1, accordingly, could not be interpreted to conclude that there is or could be no remission or cessation of liability unless the same is written off in accounts. The argument that there was no period of limitation in respect of a liability being disputed under the Industrial Disputes Act was also repelled by the hon'ble court in Chipsoft Technology (P.) Ltd. (supra) on the basis of the decision by the apex court in The Ned....
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.... of sec. 41(1) could be applied rather than sec. 68 of the I.T. Act. Section 68 of the Act is not applicable to the cash credits recorded in the books of account of the assessee in the earlier previous year not relevant to the assessment year under consideration. When the cash credits pertain to the earlier previous year, no addition can be made u/s. 68 of the I.T. Act in this assessment year. In this background, the applicability of sec. 41(1) is to be considered. 7.6 As rightly highlighted by the lower authorities, in the present case, the assessee has drawn balance sheet based on its books of accounts in which the above amounts were being claimed as liabilities due to the various parties as at the end of the accounting year under disput....