Saha Textile Vs DCIT (ITAT Kolkata)
Liability Written Back Already Taxed – Double Taxation Unsustainable – ITAT Kolkata Deletes 41(1) Addition
Kolkata ITAT allowed assessee’s appeal by deleting addition of ₹8.74 lakh made u/s 41(1), holding that the liability written back was already offered to tax by assessee in its return, & CPC’s adjustment amounted to double taxation.
Assessee filed return on 31.10.2022, processed u/s 143(1) on 08.03.2023. CPC added ₹8,74,412/- as deemed income u/s 41(1), based on tax audit report (Para 25), which showed cessation of liability. AO & CIT(A) upheld addition, holding it taxable u/s 41(1).
Assessee argued that the liability written back had already been credited to P&L under “other income” & taxed in ROI. Hence, CPC’s adjustment led to double addition. Relied on Tribunal’s order in its own case for AY 2021-22 (ITA No. 465/KOL/2025), where identical issue was decided in assessee’s favour.
Tribunal examined P&L & audit schedule & confirmed that sundry balances written back of ₹8.74 lakh were already included in “other income” in ROI. Addition by CPC under 143(1) led to taxing same income twice, which is impermissible. Referred to its earlier ruling in assessee’s own case for AY 2021-22, where identical adjustment was deleted. When trade liability written back is already offered to tax, CPC cannot again add it u/s 41(1). Double taxation of same income is impermissible. CIT(A)’s order set aside & AO was directed to delete addition of ₹8.74 lakh.
