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Income Tax Officer v/s Kaka Biscuits Manufacturing Company

    ITA No. 957 (Alld)/80 & C.O. No. 94 (Alld)/80; Asst. yr. 1977-78 Dt. 31 January 1981

    Decided On, 31 January 1981

    At, Income Tax Appellate Tribunal ITAT Calcutta


    K. Chakravorty : B.L. Sharma

Judgment Text

The Order of the Court was as follows :


ITA No. 957 (Alld)/80 is an appeal by the Revenue against a reduction of Rs.34, 129 given by the ld. CIT (A). The cross objection is by the assessee against the refusal of the ld. CIT (A) to grant a relief of Rs. 6, 940 claimed to be sales-tax liability relating to the asst. yr. 1970-71 but payable during the accounting year relevant to the asst. yr. 1977-78.

2. The assessee was served with demand notices by the STO to pay Rs. 7, 982, Rs. 1, 400 and Rs. 14, 399 relating to the asst. yrs. 1971-72 1973-74 and 1974-75. The assessments were completed by the STO rejecting the assessee's book results and enhancing the turnover. Thus, additional Sales-tax demands were raised and notices were served on the assessee during the financial year 1976-77. The ld. CIT (A) held that the case of Kedarnath Jute Mfg. Co. 19 7182 ITR 363 (SC) would apply and allowed the amounts referred to above as deductions from the total income. There was another amount of Rs. 10, 232, being the remission allowed to the customers by the assessee on 1st April, 1976. The Revenue is in appeal.

3. The ld. Deptl. Rep. submitted that the liabilities relating to the asst. yrs. 1971-72, 1973-74 and 1974-75 could not be allowed in the asst. yrs. 1977-78 as the assessee was following the mercantile system of accounting and the liabilities arose when sales were made. The ld. Authorised Representative relied on the order of the CIT (A).

It is seen that these demands arose as a result of the assessments made by the ST Authorities who rejected the books of the assessee. Therefore, these demands did not arise when sales took place but later when the assessments were made. Since these assessments were made and demand notices served on the assessee in the previous year for the asst. yrs. 1977-78 we hold that the order of the CIT(A) does not require any interference. Similarly, we see no reason to disagree with the decision of the CIT (A) regarding the remission allowed by the assessee to its customers on 1st April, 1976.

4. Coming to the cross objection, we find that the assessment for the year 1970-71 was made on 25th March, 1973 itself. The fact that it was set aside and the reassessment was

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made later on does not in any way affect the liability which arose on 25th March, 1973 itself. We, therefore, uphold the decision of the ld. CIT (A). 5. In the result, both the departmental appeal and the assessee's cross objection are dismissed.