Empee Distilleries Ltd., CHENNAI V. ACIT Corporate Circle 2(1), CHENNAI

ITA 2699/CHNY/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6619 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: N ARJUN RAJ; M KAUSHIK
• Keywords: Reopening of assessment; Principle of natural justice; Bad and doubtful debts; Reassessment proceedings
• Section: 264; 13; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, CH ENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ITA NOS.2699/CHNY/2017 /ASSESSMENT YEAR: 2005-06 M/S. EMPEE DISTILLERIES LTD., EMPEE TOWER, NO.59, HARRIS ROAD, PUDUPET, CHENNAI 600 002. VS. THE ACIT, CORPORATE CIRCLE 2(1), CHENNAI 600 034. PAN: AAACE 1687N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI M. KAUSHIK, ADVOCATE & SHRI N. ARJUN RAJ, CA /RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 16.10.2019 /DATE OF PRONOUNCEMENT : 13.01.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX(APPEALS)-9, CHENNAI IN I TA NO.61/CIT(A)-9/2013-14 DATED 29.08.2017 FOR THE ASS ESSMENT YEAR 2005-06. ITA NOS.2699/CHNY/2017 - 2 - 2. M/S. EMPEE DISTILLERIES LTD., THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF IMFL PRODUCTS. THE ASSESSMENT U/S.143(3) WAS COMPLETED ON 28.12.2007. ON RECEIPT OF INFORMATION FROM DEPUTY COMMISSIONER OF INCOME T AX, CIRCLE 7, PUNE ON 04.04.2008 THAT M/S. BRIHAN MAHARASHTRA SUG AR SYNDICATE LTD., (BMSSL) HAD SETTLED RS.1,04,37,072/- TO THE ASSESSEE AFTER CONSIDERING ASSESSEES OBJECTIONS ON ACCOUNT OF RA TE DIFFERENCE ON SUPPLY OF CONCENTRATED SPIRIT SUPPLIED BY M/S. BMS SL TO THE ASSESSEE IN THE PAST YEAR. THEREFORE, THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE HAD NOT DISCLOSED ANY SUCH INCOME IN THIS REGARD AND HENCE REOPENED THE ASSESSMENT U/S.1 47 ISSUING A NOTICE U/S.148 DATED 26.03.2012. THE ASSESSEE SOUG HT THE REASONS FOR THE REOPENING FROM THE ASSESSING OFFICER AND A FTER RECEIPT OF IT CHALLENGED IT AND THE ASSESSING OFFICER DISPOSED TH EM BY A SEPARATE ORDER. THEREAFTER, HE ISSUED THE NOTICE U/2.143(2) AFTER CONSIDERING ASSESSEES REPLY ETC., THE ASSESSING OFFICER HELD, INTER ALIA, THAT THE CARDINAL PRINCIPLE OF TAXATION IS THAT THE INCOME A CCRUED IS TAXABLE IN THE YEAR OF ACCRUAL, NEITHER BEFORE NOR AFTER, AND IN THE ASSESSEES CASE RS.1,04,37,072/- HAD ACCRUED IN ASSESSMENT Y EAR 2005-06 ITA NOS.2699/CHNY/2017 - 3 - AND HENCE ASSESSEES ADMISSION OF SUCH SUM IN THE A SSESSMENT YEAR 2007-08 WOULD NOT ALTER THE SITUATION AND ACC ORDINGLY ASSESSED THE SUM. AGGRIEVED THE ASSESSEE FILED AN APPEAL BE FORE THE CIT(A) CHALLENGING THE REOPENING AND ON MERITS. THE LD. CI T(A) DISMISSED THE APPEAL . AGAINST THE ORDER OF THE LEARNED CIT(A ), THE ASSESSEE FILED THIS APPEAL WITH FOLLOWING GROUNDS : 1) THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS)-9, CHENNAI DATED 29.08.2017 IN I.T.A. NO.61/CIT(A)-9/2013-14 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS AND IN TH E CIRCUMSTANCES OF THE CASE. 2) THE CIT (APPEALS) ERRED IN CONFIRMING THE RE-ASS ESSMENT ORDER COMPLETED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR OVERLOOKING THE PROVISO BELOW SECTION 47 OF THE ACT WITHOUT ASSIGNI NG PROPER REASONS AND JUSTIFICATION. 3) THE CIT(APPEALS WENT WRONG IN RECORDING THE FIND INGS IN THIS REGARD FROM PARA 7.3.1 TO PARA 7.3.11 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 4) THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE U NDERSTANDING OF THE INFORMATION RECEIVED FROM PUNE INCOME TAX COMMISSIONERATE WAS CONTRADICTORY THEREBY VITIATING THE FINDINGS RECORDED IN RELATION THERETO WHILE UPHOLDING THE CORRECTNESS OF THE RE-ASSESSMENT COMPLETED. 5) THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE O RDER OF THE RE-ASSESSMENT UNDER CONSIDERATION WAS PASSED OUT OF TIME, INVALID, PASS ED WITHOUT JURISDICTION AND SUSTAINABLE BOTH ON FACTS AND IN LAW. 6) THE CIT(APPEALS) ERRED IN SUSTAINING THE ADDITIO N OF RS.1,04,37,072/- ON THE PRESUMPTION OF CESSATION OF LIABILITY BASED ON THE INFORMATION RECEIVED FROM THE PUNE INCOME TAX COMMISSIONERATE PERTAINING TO THE T RANSACTION WITH M/S. BMSSL WITHOUT ASSIGNING PROPER REASONS AND JUSTIFIC ATION. ITA NOS.2699/CHNY/2017 - 4 - 7) THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE B OOK ENTRIES IN THE ORDER ENTITY WERE WRONGLY RELIED UPON TO PRESUME THE CESSATION O F LIABILITY IN THE HANDS OF THE APPELLANT THEREBY, VITIATING THE RELATING FINDINGS. 8) THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE C ONDITIONS PRESCRIBED IN SECTION 41(1) OF THE ACT WERE WRONGLY CONSIDERED AS COMPLIE D WITH TO COME TO THE CONCLUSION ON THE CESSATION OF LIABILITY THEREBY VI TIATING THE RELATED FINDINGS. 9) THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE I NFORMATION RECEIVED FROM PUNE INCOME TAX COMMISSIONERATE WAS NOT FULLY SHARED WIT H THE APPELLANT AND OUGHT TO HAVE APPRECIATED THAT THE VIOLATION OF THE PRINC IPLES OF NATURAL JUSTICE WOULD VITIATE THE RE-ASSESSMENT COMPLETELY. 10) THE CIT(APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING THE IMPUGNED ORDER AND ANY ORDER PAS SED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WOULD BE NULLITY IN L AW. 11) THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL G ROUNDS / ARGUMENTS AT THE TIME OF HEARING. 3. THE LD.AR ARGUED THE CASE ON THE ABOVE LINES AND HENCE PLEADED TO ALLOW THE APPEAL. 4. PER CONTRA, THE LD. DR SUBMITTED THAT ON THE ISSUE OF VALIDITY OF THE REOPENING , THE LD. CIT(A) FOUND THAT THE APPELLA NT IS A LONG STANDING CUSTOMER OF M/S. BMSSL AND BUYS SPIRITS FROM IT. DURING THE ACCOUNT YEAR 1999-2000 AND THEREAFTER, THE APPELLANT REQU ESTED M/ S. BMSSL TO SUPPLY IT WITH HIGH CONCENTRATED SPIRIT SO AS TO SA VE TRANSPORT COST FROM COMPANY'S FACTORY TO CHENNAI BECAUSE HIGHLY CONCENT RATED SPIRIT IS EASIER FOR TRANSPORTATION AS ITS VOLUME IS LESS. M/ S. BMSSL ACCEPTED THIS ITA NOS.2699/CHNY/2017 - 5 - REQUEST AND CONSEQUENTLY RAISED ITS SELLING PRICE P ER LITRE. THE COMPANY RAISED ITS -PRICE DISPROPORTIONATELY HIGHER THAN TH E RISE IN THE CONCENTRATION LEVELS OF SPIRIT WARRANTED. THE APPEL LANT COMPANY DID NOT REALIZE THIS AND ACCEPTED THE BILLS PREFERRED BY M/ S. BMSSL. LATER THE APPELLANT DISCOVERED THE MISTAKE, AND TOOK UP THE M ATTER WITH M/ S. BMSSL IN SEPTEMBER 2001. AFTER PROLONGED DISCUSSION S AND DELIBERATIONS, M/ S. BMSSL ACCEPTED THE APPELLANT'S CLAIM TO THE TUNE OF RS.1,04,37,072/- AS OVERCHARGING IN THE EARLIER YEA RS, SO AS TO PROTECT ITS BUSINESS INTEREST AND MAINTAIN A LONG STANDING CUST OMER RELATIONSHIP WITH THE APPELLANT. THE SAID SUM WAS WRITTEN OFF IN THE BOOKS OF M/ S. BMSSL DURING THE ASSESSMENT YEAR 2005-06 AND THEREFORE TH E LIABILITY TO THAT EXTENT AGAINST THE APPELLANT COMPANY IS INCOME FOR THE APPELLANT IN THE ASSESSMENT YEAR 2005-06. THE APPELLANT COMPANY DID NOT OFFER RS.1,04,37,072/- AS INCOME IN THE PREVIOUS YEAR RE LEVANT TO THE ASSESSMENT YEAR 2005-06 AND THEREFORE INCOME TO TH AT EXTENT ACTUALLY ESCAPED ASSESSMENT FOR THE RELEVANT YEAR. DURING TH E COURSE OF APPEAL PROCEEDINGS, THE AR OF THE APPELLANT ARGUED THAT R EOPENING BEYOND 4 YEARS IS NOT POSSIBLE AS THE APPELLANT IS SAID TO H AVE DISCLOSED ALL THE MATERIAL FACTS RELEVANT FOR THE ASSESSMENT. THE CO NTENTION OF THE AR IS NOT ACCEPTABLE BECAUSE THE ABOVE FACTS REVEAL THAT THE INCOME OF THE ITA NOS.2699/CHNY/2017 - 6 - APPELLANT WAS NOT OFFERED TO TAX . IN THIS REGARD, THE LD. CIT(A) RELIED ON VARIOUS DECISIONS VIZ., INDIAN HOME PIPE CO. LTD., 348 ITR 439 (BOM), AND A SIEL POWER PRODUCTS LTD., 340 ITR 53 (DEL), K ANTAMANI VENKATESH NARAYANA & SONS V. ADDL. ITO 63 ITR 638 SC, ITO V. ELECTRO STEEL CASTINGS LTD., 264 ITR 410 (CAL), RAJESH JHAVERI ST OCK BROKERS P. LTD., 291 ITR 500 SC, KELVINATOR OF INDIA 187 TAXMAN 312 SC ETC . IN VIEW OF THE ABOVE JUDGEMENTS, THE LD. CIT(A) HELD THAT U NTIL OTHERWISE A CASE IS MADE OUT THAT THE A O EXAMINED THE SAID ISSUE AN D ACCEPTED, MERELY FURNISHING OF SUCH 'INFORMATION WHICH IS FOUND TO B E FALSE AT THE TIME OF INITIATION OF REOPENING OF ASSESSMENT, THE ASSESSME NT CAN BE REOPENED EVEN IN RESPECT OF ASSESSMENT YEARS BEYOND THE LIMI T OF FOUR YEARS. THE QUESTION OF POWER OF REVIEW COMES ONLY IF THE AO APPLIED HIS MIND TO THE FACT OF THE CASE AND TOOK A COURSE OF ACTION AN D SUBSEQUENTLY HE CANNOT CHANGE HIS COURSE OF ACTION WITHOUT ANY TANG IBLE MATERIAL AS THAT WOULD AMOUNT TO POWER OF REVIEW. IN THE CASE OF THE APPELLANT, THERE IS NO INFORMATION THAT THE A O EXAMINED THE ISSUE IN THE ORIGINAL ASSESSMENT ORDER OR ANY QUESTIONNAIRE WAS ISSUED OR ANY SUBMIS SION WAS FURNISHED ON THE SAID ISSUE BY THE ASSESSEE INVITING THE ATTE NTION OF THE AO. NO CASE IS MADE OUT TO SHOW THAT THERE WAS OPINION ALR EADY EXPRESSED BY THE AO ON THE MATTER WHICH IS SOUGHT TO BE REVIEWED UNDER THE ITA NOS.2699/CHNY/2017 - 7 - REASSESSMENT PROCEEDINGS. THE APPELLANT ALSO CONTEN DED THAT THE ORIGINAL ASSESSMENT GOT MERGED WITH THE APPELLATE O RDERS, THEREFORE REOPENING IS NOT POSSIBLE. THIS CONTENTION OF THE A PPELLANT IS NOT CORRECT. THE ASSESSMENT CAN BE REOPENED IRRESPECTIVE OF WHET HER THE ORIGINAL ASSESSMENT IS IN APPEAL OR NOT, AS LONG AS THE COND ITIONS REQUIRED U/S 147 ARE SATISFIED. IN THIS CASE, THE CONDITIONS AS REQUIRED U/S 147 ARE SATISFIED. THEREFORE, THE CONTENTION OF THE APPELLA NT IS NOT ACCEPTABLE. THEREFORE, THE LD DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES ON THIS ISSUE. 4.1 WITH REGARD TO THE MERITS OF THE ISSUE, THE DR INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE ORDER OF THE CIT( A) WHICH IS EXTRACTED AS UNDER : 8.3.1 I HAVE CONSIDERED THE AO'S OBSERVATION IN PA RA 8.1 AND THE APPELLANT'S SUBMISSION IN PARA 8.2. VIDE THIS O FFICE LETTER DATED 20.03.2017 THE AO WAS REQUESTED TO FORWARD TH E NATURE OF EVIDENCE AVAILABLE IN HIS POSSESSION SUBSTANTIAT ING THAT A SUM OF RS.L,04,37,072J- WAS FINALLY SETTLED. IN RES PONSE TO WHICH, THE AO FORWARDED HIS REPORT DATED 03.07.2017 DULY ENDORSED BY THE ADDL. CIT VIDE HIS LETTER DATED 05. 07 2017 ENCLOSING THEREWITH THE LETTER DATED 23.08.2007 SUB MITTED BY THE AR OF M/ S. BMSSL DURING THE COURSE OF ASSESSME NT PROCEEDINGS IN THEIR CASE FOR THE ASSESSMENT YEAR 2 005-06, WHEREIN IT WAS MENTIONED THAT SO AS TO PROTECT ITS BUSINESS INTEREST AND TO MAINTAIN A LONG STANDING CUSTOMER R ELATIONSHIP, IT WAS DECIDED TO ACCEPT THE CLAIM OF M/ S. EMPEE DIST ILLERIES LTD. M/S. BMSSL ACCEPTED THE DEBIT NOTES OF THE APPELLAN T TO THE TUNE OF RS.1,04,37,072/-. IT IS ALSO MENTIONED THER EIN THAT SINCE THE ASSESSEE COMPANY REJECTED ITS LIABILITY TO PAY THESE ITA NOS.2699/CHNY/2017 - 8 - AMOUNTS AND THEIR IRRECOVERABILITY IS NOT IN DOUBT , THE COMPANY HAD THEREFORE NO OPTION BUT TO WRITE OFF THIS AMOUN T AS A BAD DEBT IN ITS BOOKS. FURTHER, IT WAS ALSO MENTIONED T HAT THE COMPANY CLUBBED THIS WRITE OFF WITH ITS OTHER BAD D EBTS BUT CHOSE TO REFLECT IT SEPARATELY AND SPECIFICALLY AS 'PRICE DIFFERENCE SETTLEMENT A/C IN THE GROUPING GENERAL EXPENSES. T HEREFORE, M/ S. BMSSL REQUESTED ITS AO TO ALLOW ITS CLAIM OF BAD DEBTS 'SINCE ALL THE CONDITIONS LAID DOWN U/S 36(1)(VII) HAVE BE EN FULFILLED. 8.3.2 A COPY OF THE ABOVE REFERRED LETTER DATED 23 .08.2007 WAS FORWARDED TO THE APPELLANT VIDE THIS OFFICE LET TER DATED 21.07.2017 REQUESTING FOR ITS COMMENTS AND TO CLARI FY WHY THE SAID SUM SHOULD NOT BE TREATED AS INCOME IN THE HAN DS OF THE APPELLANT. IN RESPONSE TO THE ABOVE, THE AR OF THE APPELLANT APPEARED ON 29.08.2017 AND FILED A SUBMISSION STATI NG THAT THOUGH THE PRICE DIFFERENCE SETTLEMENT ACCOUNT PERT AINING TO THE APPELLANT THE APPELLANT WAS WRITTEN OFF AS BAD DEBT BY M/S. BMSSL, HOWEVER, THERE WAS ABSOLUTELY NO INDICATION OF THE ACCEPTANCE OF THE STAND TAKEN BY THE APPELLANT IN T HE ASSESSMENT PROCEEDINGS TAKEN UP FOR THE ASSESSMENT YEAR 2005-06. HOWEVER, VERIFICATION OF THE LEDGER ACCOU NTS OF THE APPELLANT IN THE BOOKS OF M/S. BMSSL AS FORWARDED BY THE AO CLEARLY REVEALS THAT A SUM OF RS.1,04,37,072/- BEIN G THE PRICE DIFFERENCE SETTLEMENT AMOUNT WAS CREDITED ON 31.03. 2005 AGAINST THE INVOICE RAISED THEREBY WRITING OFF OF T HE SAME IN THE BOOKS OF M/S. BMSSL FOR THE PREVIOUS YEAR 2004-05 R ELEVANT TO ASSESSMENT YEAR 2005-06, BY PASSING JOURNAL ENTRY. BY THIS ENTRY, THE AMOUNT DEBITED BY THE INVOICE WAS NEUTRA LIZED BY CREDITING THE SAME TO THE EXTENT OF RS.1,04,37,072/ -. BASICALLY, THE PRICE DIFFERENCE SETTLEMENT AMOUNT OF RS.1,04,3 7,072/- WAS WRITTEN OFF IN THE BOOKS OF M/S. BMSSL IN THE PREVI OUS YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. IN VIE W OF THE ABOVE FACTS AND CIRCUMSTANCES, THE AMOUNT FOREGONE BY M/ S. BMSSL DURING THE ASSESSMENT YEAR 2005-06 ACCRUES AS INCOME TO THE APPELLANT IN THE SAME ASSESSMENT YEAR 2005-06. THE APPELLANT'S CONTENTION THAT THE SAID AMOUNT WAS OFFERED AS INCOME DURING THE ASSESSMENT YEAR 2007-08 AND THERE FORE THERE IS NO REVENUE LOSS IS NOT ACCEPTABLE, BECAUSE THE INCOME OR LOSS MUST BE ASSESSED TO TAX IN THE YEAR IN WHIC H IT ACCRUES. THE IMPUGNED SUM OF RS.1,04,37,072/- ACCRUED TO THE APPELLANT DURING THE PREVIOUS YEAR 2004-05 RELEVANT TO THE AS SESSMENT YEAR 2005-06 BECAUSE IT IS DURING THIS YEAR THE SAI D SUM WAS WRITTEN OFF IN THE BOOKS OF M/S. BMSSL SETTLING TH E CLAIM IN FAVOUR OF THE APPELLANT. THEREFORE, THE ADDITION OF RS.1,04,37,072/- IS HEREBY CONFIRMED. ITA NOS.2699/CHNY/2017 - 9 - THUS THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPO RTED THE ABOVE ORDER. 5. WE HEARD THE RIVAL SUBMISSIONS. IT IS CLEAR FRO M THE ABOVE, THAT ON RECEIPT OF INFORMATION FROM THE DEPUTY COMMISSIO NER OF INCOME TAX, CIRCLE 7, PUNE ON 04.04.2008 THAT M/S. BRIHAN MAHAR ASHTRA SUGAR SYNDICATE LTD., (BMSSL) HAD SETTLED RS.1,04,37, 072/- TO THE ASSESSEE AFTER CONSIDERING THE ASSESSEES OBJEC TIONS ON ACCOUNT OF RATE DIFFERENCE ON SUPPLY OF CONCENTRATED SPIRIT S UPPLIED BY M/S. BMSSL TO THE ASSESSEE IN THE PAST YEAR. THEREFORE, THE A SSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NOT DISCLOSED ANY SUCH INCOME IN THIS REGARD AND HENCE REOPENED THE ASSESSMENT U/S.147 IS SUING A NOTICE U/S.148 . THE ASSESSEE SOUGHT THE REASONS FOR THE REOPENING FROM THE ASSESSING OFFICER AND AFTER RECEIPT OF IT CH ALLENGED IT AND THE ASSESSING OFFICER DISPOSED THEM BY A SEPARATE ORDER . THE ASSESSEE HAS NOT CHALLENGED THAT ORDER BEFORE ANY AUTHORITY. HO WEVER, IT RAISED THE VALIDITY OF REOPENING PLEA BEFORE THE CIT(A) . THE LD CIT(A) HELD , INTER ALIA, THAT THE ASSESSEE HAS NOT DISCLOSED THE PRIM ARY FACTS AND THAT THE IMPUGNED INCOME OF THE ASSESSEE WAS NOT OFFERED TO TAX . THERE IS NO INFORMATION THAT THE AO EXAMINED THE ISSUE IN THE ORIGINAL ASSESSMENT ORDER OR ANY QUESTIONNAIRE WAS ISSUED OR ANY SUBMISSION ITA NOS.2699/CHNY/2017 - 10 - WAS FURNISHED ON THE SAID ISSUE BY THE ASSESSEE INV ITING THE ATTENTION OF THE AO. NO CASE IS MADE OUT TO SHOW THAT THERE WAS OPINION ALREADY EXPRESSED BY THE AO ON THE MATTER WHICH IS SOUGHT T O BE REVIEWED UNDER THE REASSESSMENT PROCEEDINGS ETC. SINCE THE ASSE SSEE HAS NOT PLACED ANY MATERIAL TO DISLODGE THE FINDINGS RECORDED B Y THE LD CIT(A) IN THIS REGARD IN HIS ORDER , WE DO NOT FIND ANY REASON T O INTERFERE WITH HIS ORDER ON THIS ISSUE . 6. ON THE MERITS, AFTER CONSIDERING THE ASSESSE ES SUBMISSIONS, THE LD. CIT (A) OBTAINED A REPORT FROM THE ASSESSING O FFICER AND ALONG WITH LETTER DATED 23.08.2007 SUBMITTED BY THE AR OF M/ S. BMSSL AT THE TIME OF THEIR ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06, HE FORWARDED THEM TO THE ASSESSEE REQUIRING TO SHOW AS TO WHY THE IMPUGNED SUM SHOULD NOT BE TREATED AS INCOME AND AFTER CONSIDERING ASSESSEES REPLY ETC., DISMISSED THE APPEAL IN THE ABOVE PARAS, EXTRACTED SUPRA. THE LD CIT(A) RECORDS THE FINDIN G THAT THE VERIFICATION OF THE LEDGER ACCOUNTS OF THE APPELLANT IN TH E BOOKS OF M/S. BMSSL AS FORWARDED BY THAT A O CLEARLY REVEALED THAT RS.1,04,37,072/- BEING THE PRICE DIFFERENCE SETTLEMENT AMOUNT WAS CREDITED ON 31.03.2005 AGAINST THE INVOICE RAISED THEREBY WRITING OFF OF THE SAME IN THE BOOKS OF ITA NOS.2699/CHNY/2017 - 11 - M/S. BMSSL FOR THE PREVIOUS YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06 , BY PASSING JOURNAL ENTRY. BY THIS EN TRY, THE AMOUNT DEBITED BY THE INVOICE WAS NEUTRALIZED BY CREDITI NG THE SAME TO THE EXTENT OF RS.1,04,37,072/-. BASICALLY, THE PRICE DI FFERENCE SETTLEMENT AMOUNT OF RS.1,04,37,072/- WAS WRITTEN OFF IN THE B OOKS OF M/S. BMSSL IN THE PREVIOUS YEAR 2004-05 RELEVANT TO ASSESSMEN T YEAR 2005-06. THEREFORE, THE AMOUNT FOREGONE BY M/ S. BMSSL IS A CLEAR CESSATION OF LIABILITY DURING THE ASSESSMENT YEAR 2005-06, ACCR UED AS INCOME TO THE APPELLANT IN THE SAME ASSESSMENT YEAR 2005-06. THER EFORE, THE APPELLANT'S CONTENTION THAT THE SAID AMOUNT WA S OFFERED AS INCOME DURING THE ASSESSMENT YEAR 2007-08 AND THEREFORE THERE IS NO REVENUE LOSS IS NOT ACCEPTABLE, BECAUSE THE INCOME OR LOSS MUST BE ASSESSED TO TAX IN THE YEAR IN WHICH IT ACCRUES. THE IMPUGNED SUM OF RS.1,04,37,072/- ACCRUED TO THE APPELLANT DURING THE PREVIOUS YEAR 2004-05 RELEVANT TO THE ASSESSMENT YEAR 2005-06 B ECAUSE IT IS DURING THIS YEAR THE SAID SUM WAS WRITTEN OFF IN THE BOOKS OF M/S. BMSSL SETTLING THE CLAIM IN FAVOUR OF THE APPELLANT. THER EFORE, THE ADDITION OF RS.1,04,37,072/- IS HEREBY CONFIRMED. THOUGH THE ASSESSEE PLEADED THAT IT HAD NO INDICATION OF THE ACCEPTANCE OF THE ASSESSEES STAND, IT HAS NOT PLACED ANY INDEPENDENT MATERIAL IN SU PPORT OF ITS STAND AND ITA NOS.2699/CHNY/2017 - 12 - FURTHER IT HAS NOT PLACED ANY MATERIAL AS TO HOW A ND ON WHAT BASIS IT ADMITTED THE IMPUGNED INCOME IN THE SUBSEQUENT ASSESSMENT YEAR IE IN AY 2007-08 ALSO. IN THE ABOVE FACTS AND CIRCUMS TANCES, THE CASE LAWS RELIED ON BY THE ASSESSEE IS NOT APPLICABLE TO THIS CASE AND HENCE WE DISMISS THE CORRESPONDING GROUNDS OF THE ASSESSE E. 7. IN THE RESULT, THE ASSESSEES APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 13 TH JANUARY, 2020 IN CHENNAI. $ /CHENNAI, % /DATED: 13 TH JANUARY, 2020 JPV &' (' /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( ) /CIT(A) 4. , /CIT 5. ' / /DR 6. /GF SD/- ( ... ) (N.R.S. GANESAN) $ 4/ JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER ITA NOS.2699/CHNY/2017 - 13 -