COMMISSIONER OF INCOME TAX Vs. MANJUNATHA COTTON AND GINNING FACTORY

JUDGEMENT

(1.) A batch of appeals where different facets of Section 271 of the Income Tax Act, 1961 are involved, were placed before us. Therefore, we heard all the learned counsel appearing in the batch of cases, considered all the arguments addressed and interpreted Section 271 in its different facets and have laid down the law.

(2.) Likewise in I.T.A. 2565/2005, the assessee had filed the return of income for the assessment year 2000-2001 declaring total income of Rs. 1,49,250/-. The assessee during the course of survey declared Rs. 17,03,731/- as income representing cessation of liabilities towards creditors. In the course of the assessment proceedings, the assessee was asked to file confirmation letter in respect of the creditor M/s. Sri. Gururaghavendra Cotton Ginning Factory, Bellary against whom Rs. 1,00,000/- credit balance was outstanding. The assessee was requested to get the confirmation letter, to which the assessee expressed its inability. The department directly wrote a letter to the said creditor. The creditor in his reply dated 14.02.2003 stated that there is no balance receivable from the assessee. When the assessee was confronted with the said letter, he asserted that the said amount was outstanding at the end of the accounting period ended on 31.03.2000 in the books and the creditor may have stated on the date of enquiry. His explanation was not accepted and an addition of Rs. 1,00,000/- was made. Thereafter the assessee filed a revised return of income on 8-12-2000 declaring the total income of Rs. 18,52,980/-.

(3.) In view of the assessees having admitted to declare the amounts above referred to as income representing cessation of liabilities towards creditors, these amounts were added as income of the assessee and tax demand was raised thereto vide assessment orders dated 26.02.2003. Assessee did not pursue the said orders and accepted the quantum proceedings. It is on the basis of the said revised return, the additions were made.