Vinitee Electronics Pvt. Ltd, New Delhi V. DCIT, New Delhi

CO 420/DEL/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5581 (ITAT-DELHI)
• Duration Of Justice: 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2002-2003
• Appeal Filed On: 31-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S KRISHNAN
• Assessee Lawyers: AMRENDRA KUMAR
• Keywords: Reopening of assessment
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 5065/DEL/10 ASSTT. YEAR 2002-03 DCIT CIRCLE 17(1), ROOM NO.221, C.R. BUILDING, NEW DELHI. VS. VINITEE ELECTRONICS PVT. LTD. A-56, RING ROAD MARKET, RAJOURI GARDEN, NEW DELHI. (APPELLANT) (RESPONDENT) AND C.O NO. 420/DEL/10 ASSTT. YEAR 2002-03 VINITEE ELECTRONICS PVT. LTD. A-56, RING ROAD MARKET, RAJOURI GARDEN, NEW DELHI. VS. DCIT CIRCLE 17(1), ROOM NO.221 C.R. BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AMRENDRA KUMAR, SR. DR RESPONDENT BY: SHRI S. KRISHNAN, ADVOCATE ORDER ITA NO. 5065/DEL/10 CO NO. 420/DEL/10 ASSTT. YEARS 2002-03 2 PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 6 TH SEPTEMBER, 2010 PASSED FOR ASSTT. YEAR 2002-03. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, ASSESSEE HAS FILED CROSS OBJECTION BEARING NO. 420/D/10. THE GROUNDS OF APPEAL TAKEN B Y THE REVENUE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. THEY A RE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF, THE GRIEVANCE OF REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 45,15,802/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31.10.2002 DECLARING AN INCOME OF ` 17,61,572/-. AN ASSESSMENT ORDER WAS PASSED U/S 143(3) ON 25 TH FEBRUARY, 2005 WHEREBY TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT ` 48,18,556/-. THE AO ON PERUSAL OF THE ASSTT. RECORDS FOUND THAT ASSESSEE HAD CLAIMED A DEDUCTION OF ` 48,18,174/- ON THE GROUND THAT THIS AMOUNT REPRESENT BAD DEBT WHICH HAS BEEN WRITTEN OFF IN TH E P & L ACCOUNT. ACCORDING TO THE AO, ON PERUSAL OF THE DETAILS, IT REVEALS THAT A SUM OF ` 45,15,802/- WAS WRITTEN OFF AS BAD DEBT. THIS AMOUN T IS IN RESPECT OF INDIAN BANK FOR WHICH A LITIGATION TO RECOVER WAS P ENDING WITH THE HONBLE MADRAS HIGH COURT FOR DECISION. THUS THE AO OBSERVED THAT THE ITA NO. 5065/DEL/10 CO NO. 420/DEL/10 ASSTT. YEARS 2002-03 3 DEBT WAS NOT BECOME BAD. THEREFORE, HE REOPENED THE ASSESSMENT BY ISSUANCE OF A NOTICE U/S 148 ON 31 ST MARCH, 2009. IN THE REASSESSMENT ORDER, HE DISALLOWED THE CLAIM OF ASSESSEE IN RESPE CT OF THE BAD DEBT AMOUNTING TO ` 45,15,802/-. 3. DISSATISFIED WITH THE ACTION OF AO, ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT CHALLENGED THE REO PENING OF ASSESSMENT AS WELL AS ON MERIT IT CHALLENGED THE DISALLOWANCE OF BAD DEBT. LD. FIRST APPELLATE AUTHORITY HAS TAKEN COGNIGENCE OF THE FIN DING RECORDED BY THE AO AS WELL AS THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. AFTER FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GLOBAL CAPITAL 306 ITR 332 AS WELL AS OF THE HONBL E SUPREME COURT IN THE CASE OF TRF LIMITED VS. CIT REPORTED IN 323 IT R 397. LD. CIT(A) DELETED THE ADDITION. 4. WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HA VE GONE THROUGH THE RECORD CAREFULLY. THE AO IS OF THE OPINION THAT IN ORDER TO CLAIM BAD DEBT, ASSESSEE HAS TO BRING DEMONSTRATIVE PROOF ON RECORD THAT DEBT HAS ACTUALLY BECOME BAD. BY MAKING REFERENCE OF THE ARB ITRATION LITIGATION PENDING IN THE HIGH COURT IN RESPECT OF INDIAN BANK HE WAS OF THE ITA NO. 5065/DEL/10 CO NO. 420/DEL/10 ASSTT. YEARS 2002-03 4 OPINION THAT DEBT HAS NOT BECOME BAD AND THERE WERE CHANCES FOR RECOVERY. THEREFORE, HE DISALLOWED THE CLAIM OF ASS ESSEE. IN A SERIES OF DECISION NAMELY CIT VS. MORGAN SECURITIES AND CREDI T PRIVATE LTD. REPORTED IN 292 ITR 339, CIT VS. BRILLIANT TUTORIAL S 292 ITR 399, (DELHI H.C) 1 CIT VS. GLOBAL CAPITAL LTD. 306 ITR 332 (DEL) 2 DCIT VS. OMAN INTERNATIONAL BANK 286 ITR (AT) 8 ( MUM SB) 3 CIT VS. STAR CHEMICALS (BOMBAY)(P) LTD. 313 ITR 1 26 (BOM) 4 LAWLYS ENTERPRISES (P) LTD. VS. CIT 314 ITR 297 ( PAT) IT HAS BEEN HELD THAT AFTER 1.4.89 IF THE DEBTS HAV E BEEN WRITTEN OFF IN THE BOOKS THEN DEDUCTION WILL BE AVAILABLE TO THE ASSES SEE U/S 36(1)(VII) AND (2) OF THE ACT. ASSESSEE IS NOT SUPPOSED TO BRING O N RECORD THE DEMONSTRATIVE PROOF THAT DEBTS HAVE ACTUALLY BECOME BAD. LD. FIRST APPELLATE AUTHORITY HAS APPRECIATED THE CONTROVERSY IN THIS PROSPECTIVE AND THEN DELETED THE ADDITION. WE DO NOT FIND ANY E RROR IN HIS ORDER. 5. LD. CIT(A) HAS NOT ADJUDICATED THE GROUND IN RES PECT OF REOPENING OF ASSESSMENT. THE ASSESSEE HAS CHALLENGED THIS ACT ION IN ITS CROSS ITA NO. 5065/DEL/10 CO NO. 420/DEL/10 ASSTT. YEARS 2002-03 5 OBJECTION. HOWEVER, LD. COUNSEL FOR THE ASSESSEE DI D NOT PRESS THE CROSS OBJECTION. 6. WE DO NOT FIND ANY MERIT IN THE APPEAL OF REVENU E IN VIEW OF VARIOUS AUTHORITATIVE PRONOUNCEMENTS. KEEPING IN VI EW THE STAND TAKEN BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING, WE DO NOT GO INTO THE QUESTION OF REOPENING AS NO ARGUMENTS WERE ADVANCED ON THIS ISSUE. THE CROSS OBJECTION IS ALSO DISMISSED FOR ST ATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL AS WELL AS CROSS OBJECTION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2011. SD/- SD/- [K.G. BANSAL] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST JANUARY, 2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT