COMMISSIONER OF INCOME TAX Vs. EID MOHD NIZAMMUDIN

JUDGEMENT

(1.) THE liability of Rs. 11,80,973 written back by the assessee in P&L; a/c was treated as income in the asst. yr. 1996 -97 by the AO relying upon Expln. 1 introduced in Section 41(1) w.e.f. 1st April, 1997. The CIT(A), at the instance of the assessee set aside that finding of the AO. The Tribunal in the appeal of the Department upheld the view of the CIT(A). This is how this income -tax appeal has been preferred under Section 260A of the IT Act, 1961.

(2.) THOUGH the counsel for the Revenue sought to rely upon Section 28(iv) of the IT Act, 1961 in support of her contention that the AO was justified in treating the aforesaid amount written back by the assessee as the income, we are afraid that neither the said section was relied upon by the AO nor was pressed into service by the Revenue in appeal before the Tribunal. That section even otherwise has no application.

(3.) IT has been, thus, held in unequivocal terms by the Supreme Court that mere entry of transfer in his account by the assessee unilaterally would not enable the Department to say that Section 41(1) would apply and the amount should be included in the total income of the assessee. The Supreme Court concurred with the reasoning of the Calcutta High Court reported in the case of CIT v. Sugauli Sugar Works (P) Ltd. (1981) 23 CTR (Cal) 226 : (1983) 140 LTR 286 (Cal) where the Division Bench held thus: