ITAT MUMBAI: ITO VS. SAJJANKUMAR DIDWANI. S. 41(1): UNCLAIMED & UNPROVEN LIABILITIES ARE DEEMED TO HAVE CEASED AND ARE ASSESSABLE AS INCOME. (iii) It could be argued that even where the assessee is unable to prove the existence of a trade liability as at the relevant year-end, which though continues to outstand in books, would yet not exhibit that the remission or cessation of the liability during the relevant year, and which is a prerequisite for the application of section 41(1). The argument, attractive at first sight, in-as-much as the same represents a primary ingredient of the relevant provision, fails on scrutiny. This is for the reason that the assessee reflecting the amount as a liability in his books for the immediately preceding year, has confirmed it as so as at the end of that year, i.e., 31.03.2008 in the present case. It does not therefore lie in his mouth or is not open for him to say or contend that it was not so, and that the amount was in fact not outstanding even on that date. The Revenue has merely proceeded by accepting the assessee’s claims and books for that year. The principle of approbate and reprobate would therefore apply to estopp the assessee from taking such a stand, i.e., legally. The anomaly stands explained famously by the hon’ble apex court in Phool Chand Bajrang Lal vs. ITO [1993] 203 ITR 456 (SC) in the context of reopening of reassessment u/s.147, which requires the assessee to disclose all material facts fully and truly: ‘You accepted my lie, now your hands are tied and you can do nothing.’ It clarified that it would be a travesty of justice to allow the assessee that latitude. DATED OCTOBER 26, 2014.
Posted on: Tue, 28 Oct 2014 05:00:00 +0000
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