RAJESH BINDAL, J. - (1.) FOLLOWING question of law has been referred for opinion of this Court by the Tribunal, Chandigarh Bench, Chandigarh (for yr. 1975 -76. "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law and on facts in deleting disallowance of Rs. 3,41,747 made by the AO on account of expenditure not pertaining to the accounting period relevant to the asst. yr. 1975 -76 -
(2.) THE facts, as noticed by the Tribunal in the statement of the case, are that the assessee filed his return of income for Rs. 2,28,296. Search and seizure operation under s. 132 of the IT Act, 1961( for short 'the Act') was carried out at the premises of assessee wherein certain books of accounts and other documents were seized. On the basis thereof proceedings under s. 147(a) of the Act were initiated. During the course of re -assessment proceedings, the AO noticed that as per seized books of accounts total expenditure was to the tune of Rs. 22,27,061/57 under various heads. the assessee firm was constituted. It was also noticed that there was a credit balance of Rs. 53,847 in the account leaving a debit balance of Rs. 3,41,747. These expenditure were disallowed by the AO with the observations that the same do not relate to the assessment year in question.
(3.) DISALLOWANCE was contested by the assessee before the CIT(A) (for short 'the CIT(A)') by raising contention that even contention of the assessee. In further appeal before the Tribunal, the contention of the assessee was accepted and the expenditure in question was allowed as a deduction in the year in question with the following observations: "We have given our careful consideration to the rival submissions. In our opinion, the assessee is entitled to these Department could take was that the return should have been filed in the status of AOP. In our opinion, even this is not correct inasmuch as there could be no commencement of business unless there were sales. In the present case, the sales have to be equated with receipts from the contracting Department. It is an admitted fact that receipts against the claimed and, therefore, the same had to be carried forward and allowed in the accounting period relevant to the assessment year under appeal. The ITO and the CIT(A) were, therefore not justified in not allowing these claims. Their orders on this account are, therefore, reversed." We have heard learned counsel for the Revenue and perused the record.;