Case Law Details
ACIT Vs M/s. Mackintosh Burn Ltd (ITAT Kolkata)
The issue is whether the addition in question can be made u/s 41(1). The ld. CIT(A) has already concluded that no additions can be made u/s 41(1) of the Act. He agreed that the propositions of law cited by the assessee are in its favour and hence addition u/s 41(1) of the Act is bad in law. While doing so, the ld. CIT(A) has surprisingly restricted the disallowance to 50% of the outstanding balance on an ad hoc basis. This is not permitted in law. The ld. CIT(A) rejected the books of accounts. When the Assessing Officer has not rejected the books of accounts of the assessee, we find no proper reason recorded by the ld. CIT(A) for rejecting the books of accounts. No defects have been pointed out in the books of accounts. The company is a Government company and its accounts are audited both by the statutory auditors as well as C&AG. Such audited books cannot be rejected in such a casual manner. Ad hoc disallowances are arbitrary and cannot be upheld. Under the circumstances, we are of the considered opinion that the entire disallowance made by the Assessing Officer of Rs.61,18,91,390/- on the ground of cessation of unascertained liability is hereby deleted.
FULL TEXT OF THE ITAT JUDGEMENT
These are cross-appeals directed against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata (hereinafter the ‘ld. CIT(A)’) passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’). The delay of one day in filing of the appeal by the Revenue is condoned.
2. The grounds raised by the Revenue are as follows:
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