TaxTMI 
TaxTMI 
2008 (1) TMI 267
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....961. The respondent-assessee is a private limited company deriving income from chitty business. During the verification of accounts in the course of assessment for the assessment year 1990-91, the Assessing Officer noticed an outstanding credit balance of Rs. 4,55,863 shown as liability in the balance-sheet for kuries that were terminated during 1977 to 1983. The Assessing Officer was of the opinion that the credit balance represents the auction discounts, which were forgone by defaulting subscribers and, therefore, there was no subsisting liability for payment of these amounts to the said subscribers. Therefore, the Assessing Officer found that these amounts were the income of the year, which was carried over as liability by the assessee i....
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....essing Officer has not established the nature of concealed income assessed by him in respect of which penalty is levied. 3. The undisputed fact in the case is that the assessee who has been engaged in the chitty business, showed a credit balance of Rs. 4,55,863 in the balance-sheet in respect of kuries terminated during 1977 to 1983. During the accounting year relevant to the assessment year 1990-91, the assessee from the same account transferred an amount of Rs. 2,41,328 to the profit and loss account and offered the same to tax. However, the balance for Rs. 4,55,863 was still retained as credit balance in the liabilities side of the balance-sheet. In the course of assessment, the Assessing Officer requested explanation from the assessee ....
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....tedly did not offer any explanation except by stating that the credits in the balance-sheet represent liabilities. On the appellant's side the decision of the Supreme Court in K. P. Madhusudhanan v. CIT reported in [2001] 251 ITR 99, the decisions of this court in Deputy CIT v. K. Suresh Kumar reported in [2000] 253 ITR 640 and in ITO v. C. D. Joseph (Late) reported in [2004] 266 ITR 609 (Ker) are relied on. Learned counsel appearing for the assessee contended that even though the assessee did not offer any explanation, the assessee offered the amounts as income and as per the assessment remitted the tax, though the assessment was under contest. It is not a case where the assessee did not offer any explanation but the assessee explained the....
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....he reason that the Assessing Officer failed to explain the nature of concealed income. We are of the view that the Tribunal wrongly cast the burden on the Department and against the statutory provision. Only the assessee can explain the entries in the balance-sheet and in the absence of any explanation, the Assessing Officer is free to draw reasonable inference. Having regard to the nature of business, there is nothing wrong in the Assessing Officer treating the income as auction discount forgone by defaulter-subscribers. In fact on this specific query raised by the Assessing Officer in the course of assessment, the assessee kept silent. Besides this, the assessee itself transferred part of the amount credited under the liabilities side tow....