S. 147 — Differences in account balances of various creditors added to the income of the assessee in re-assessment — Since neither the reassessment order nor the order of CIT(A) gave details of nature of differences in accounts, amount could not be ‘any o

Nuware India Ltd.
v.
DCIT

A.Y. : 1994-95. Dated : 31-1-2008

 

Facts :

The AO had found differences in the account balances of
various creditors on comparison of accounts of the assessee and concerned
creditors. Differences were found in the accounts of 20 parties totalling to
Rs.4,20,949. As these differences were not reconciled, the same was added to
assessee’s income. The Commissioner (Appeals) upheld the addition. On appeal
before the Tribunal, it was held :

(1) That neither the assessment order, nor the order of
the CIT(A) gave details of the nature of differences in the accounts, so to
say, whether the credit balances were more or less or both in the books of
the assessee when compared with the confirmed accounts received from the
parties.

(2) If it is the case of the AO that these liabilities
ceased to exist, it was for him to prove so by bringing the case within the
four corners of the provisions contained in S. 41(1). Reference was made to
the SC decision in the case of CIT v. Suguali Sugar Works (P) Ltd. in
which it was held that the entries made in the accounts of the debtor,
unilaterally writing off the debt, without any action on the part of the
creditor will not enable the debtor to say that the liability had come to an
end. Therefore, it was held that the amounts written off by the debtor would
not constitute income u/s.41(1).

(3) Thus, as the details of the differences were not
given, as also, it is not shown as to how the sum total of these differences
would be income of the assessee, the impugned amount cannot be said to be
income, and the CIT(A) has erred in upholding the additions.