TaxTMI 
TaxTMI 
2009 (2) TMI 29
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 133-A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). The aforesaid survey was conducted on the business premises of the applicant-assessee. During the course of the aforesaid survey, discrepancies of stocks were found. In order to get over the aforesaid discrepancies, the applicant-assessee accepted to disclose the goods/ stock to the tune of Rs.1 lac. Accordingly, the applicant assessee acknowledged an additional income of Rs.1 lac. This acceptance at the hands of the applicant-assessee took place on the date of survey, namely, on 20.1.1984. 2. On 14.3.1984 the applicant-assessee filed a revised return for the financial year 1982-1983 (assessment year 1983-84). In the aforestated revised return submitted by the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onging to the applicant-assessee were destroyed on account of a fire while they were stored in the godowns of the PSWC on 26.3.1978. It is therefore, the case of the respondent-revenue that the instant loss had taken place during the financial year 1977-78 (assessment year 1978-79), and as such, in terms of the mandate of Section 71 of the Act, the same could have been set off as loss, only during the said assessment year i.e. 1978-79. 5. As against the aforesaid claim of the respondent-revenue, the case of the applicant-assessee is, that applicant-assessee filed a civil suit on 15.11.1978, wherein, the applicant-assessee had impleaded the PSWC as defendant No.1, and the General Insurance Company (with whom the goods stored in the godown....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s were debited in the purchaser's account and the sale proceeds were credited in the account of the respondent-assessee. The purchaser of the goods did not accept the goods. Thereafter, on the instructions of the respondent-assessee, the goods were sold. The assessee received the sale proceeds in the same assessment year, namely, 1966-67. Instead of reversing the entries of the previous year relevant to the assessment year 1967-68, the respondent-assessee credited the sales account and debited the stores account. On account of the aforestated mistake, the respondent-assessee was shown to have made a profit, and when, this mistake was detected in the previous year relevant to the assessment year 1969-70, the respondent-assessee attempt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rces" would have to be computed according to the method of accounting employed by the respondent-assessee. Since the respondent-assessee had admittedly adopted the mercantile system of accounting, it was held that the respondent-assessee could not claim deduction during the assessment year 1971-72. 7. Having considered the judgments relied upon by the learned counsel for the rival parties, we are of the view that controversy in the instant reference cannot be adjudicated upon on the basis of either of the aforesaid judgments. We are of the view that the facts and circumstances of every case will have to be taken into consideration to determine the date when the liability was incurred. In the controversy in hand if the liability is accept....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in spite of fire on 26.3.1978 where his stock/goods were destroyed. The reason for the applicant-assessee to entertain the aforesaid belief was, because the responsibility/liability of the destruction of the stock/goods in the fire which took place in the godowns of the PSWC on 26.3.1978, was that of the PSWC itself, as the PSWC was the custodian of the stock/goods while they were stored in the godowns of the PSWC. It is therefore, that the applicantassessee even filed a civil suit on 15.11.1978 claiming compensation for the said goods/stock. It is only when the claim raised by the applicant-assessee for reimbursement of the loss on account of the fire at the godowns of PSWC failed, that the applicant-assessee accepted for the first time t....