ATOP PRODUCTS PRIVATE LIMITED,DELHI V. AU, ITD, MINISTRY OF FINANCE,GOVERNMENT OF INDIA, DELHI

ITA 5012/DEL/2025

AI Insights

The case involves ATOP Products Pvt. Ltd, a company engaged in manufacturing and selling auto components, which appealed against the order of the National Faceless Appeal Centre (NFAC) confirming the disallowance of a deduction for bad debts amounting to 27,86,561. The primary legal issue was whether the NFAC was justified in upholding the disallowance made by the Assessing Officer (AO) under section 143(3) of the Income-tax Act, 1961. The AO had initially disallowed the claim because the assessee failed to prove that the debts had become irrecoverable. However, the Tribunal found that the assessee had satisfied the legal requirements for claiming the deduction as per the amended provisions of the Act and relevant CBDT circular.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 842125 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2023-2024
• Appeal Filed On: 18-08-2025
• Other Referred Cases: TRF Limited vs. CBDT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUSH KALRA
• Assessee Lawyers: RAJNEESH BEHARI MATHUR
• Keywords: Revised return; Bad and doubtful debts; Corroborative evidences
• Section: 143(3); 142(1)

Judgement Text

"INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 5012/Del/2025 (Assessment Year: 2023-24) ATOP Products Pvt. Ltd, A-118, Brotherhood Housing Society, Plot No. 17, Bodela, Phase-II, Vikashpuri, New Delhi Vs. DCIT, Circle-1(1), New Delhi (Appellant) (Respondent) PAN: AAACA7693Q Assessee by : Shri Rajneesh Behari Mathur, CA Revenue by: Ms. Ankush Kalra, Sr. DR Date of Hearing 17/02/2026 Date of pronouncement 17/02/2026 O R D E R PER M. BALAGANESH, AM 1. The appeal in ITA No.5012/Del/2025 for AY 2023-24, arises out of the order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 19.06.2025 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 03.04.2025 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as ‘ld. AO’). 2. The only effective issue to be decided in this appeal is as to whether the ld NFAC was justified in confirming the disallowance of ₹ 27,86,561/- on account of bad debts written of in the facts and circumstances of the instant case. Printed from counselvise.com ITA No. 5012/Del/2025 ATOP Products Pvt. Ltd Page | 2 3. We have heard the rival submissions and perused the materials available on record. The assessee is a private limited company engaged in the business of manufacturing and sale of auto components to Auto Majors like Mahindra and Mahindra, Ashok Leyland and Hero Motocorp. The return of income was filed u/s 139(1) of the Act on 30.10.2023, declaring total income of ₹11,96,60,159/-, which was revised on 29.12.2023, declaring revised income of ₹11,65,27,020/-. The revised return was duly processed u/s 143(1) of the Act on 29.12.2023. The ld AO observed that the assessee had claimed deduction on account of bad debts written off in the sum of ₹27,86,561/- in the profit and loss account and in the return. Vide notice u/s 142(1) of the Act, the ld AO asked the assessee to provide the details of bad debts, name and address, amount, etc, and in which year, the income of such transaction was offered to tax with supporting evidences. The ld AO noted that the said details were not furnished. Accordingly, he issued a show cause notice dated 05.03.2025 show causing the assessee as to why the bad debts of ₹27,86,561/- should not be disallowed in the assessment. In response to the show cause notice, the assessee uploaded the details on 10.03.2025. The reply of the assessee is reproduced at page 7 of the assessment order, which is as under:- Printed from counselvise.com ITA No. 5012/Del/2025 ATOP Products Pvt. Ltd Page | 3 Printed from counselvise.com ITA No. 5012/Del/2025 ATOP Products Pvt. Ltd Page | 4 Printed from counselvise.com ITA No. 5012/Del/2025 ATOP Products Pvt. Ltd Page | 5 Printed from counselvise.com ITA No. 5012/Del/2025 ATOP Products Pvt. Ltd Page | 6 4. The ld AO proceeded to disallow the claim of bad debts written off on the ground that the assessee was not able to prove that the bad debts have become irrecoverable. This action of the ld AO was upheld by the ld CIT(A). 5. We find that after the amendment effective from 01.04.1989, the assessee need not to establish that the debts had become bad. After 01.04.1989, the assessee should only have to prove that the bad debts has been actually written off as irrecoverable in the books of account and the income in respect of which had been duly offered to tax either in earlier years or during the year under consideration. Once these two conditions are satisfied, post 01.04.1989, the assessee would be entitled for deduction on account of bad debts written off. These two conditions have been duly satisfied by the assessee in the instant case, which is not even disputed by the ld AO. Even the CBDT had issued a Circular No. 12/2016 dated 30.05.2016, accepting the view of the Hon'ble Supreme Court in the case of TRF Limited reported in 190 taxman 391. For the sake of convenience, the said Circular is reproduced below:- Printed from counselvise.com "