The ACIT, (OSD)-I, Range-4, Ahmedabad V. Kayel Syntex Ltd., Ahmedabad

ITA 1172/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5595 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S CHAUDHRY
• Assessee Lawyers: P D SHAH
• Keywords: Bad and doubtful debts; Corroborative evidences
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI N.S.SAINI, ACCOUNTANT MEMBER DATE OF HEARING :16-7-10 DRAFTED ON: 1 6-7-10 ITA NO.1172/AHD/2010 ASSESSMENT YEAR :2006-07 ASSISTANT COMMISSIONER OF INCOME TAX(OSD)-1, RANGE-4, NAVJIVAN TRUST BUILDING, OFF. ASHRAM ROAD, AHMEDABAD. VS. KAYEL SYNTEX LTD., 276, NEW CLOTH MARKET, AHMEDABAD. PAN/GIR NO. :AAACK 8589 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI D.S. CHAUDHRY, D.R. RESPONDENT BY: SHRI P.D. SHAH. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VIII, A HMEDABAD DATED 24-12-2009. 2. THE SOLE GROUND OF APPEAL RAISED BY THE REVENUE READS AS UNDER :- THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HA S ERRED IN LAW AND ON FACTS DELETING THE PENALTY OF RS.2,22,438/- AS CORRECTLY WORKED OUT BY THE ASSESSING OFFICER. - 2 - 3. THE BRIEF FACTS ARE THAT THE ASSESSEE COMPANY FI LED RETURN OF INCOME DURING THE YEAR UNDER CONSIDERATION DECLARIN G LOSS OF RS.95,64,045/-. IN THE ASSESSMENT FRAMED UNDER SECT ION 143(3) OF THE ACT. THE LEARNED ASSESSING OFFICER DISALLOWED THE C LAIM OF BAD DEBT OF RS.6,05,273/- TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH WITH SUPPORTING EVIDENCE ITS CLAIM OF BAD DEBTS DUE FROM VARIOUS PARTIES. ON APPEAL, THE TRIBUNAL IN THE AP PEAL OF THE REVENUE VIDE ORDER DATED 14-11-2007 IN ITA NO.2862/AHD/2007 FOR ASSESSMENT YEAR 2003-04 REVERSED THE ORDER OF THE L EARNED COMMISSIONER OF INCOME TAX(APPEALS) AND RESTORED B ACK THE ORDER OF THE LEARNED ASSESSING OFFICER CONFIRMING THE DI SALLOWANCE OF BAD DEBT OF RS.6,05,273/- ON THE GROUND THAT MERELY DEBITING IN THE PROFIT AND LOSS ACCOUNT THE AMOUNT OF BAD DEBT WAS NOT SUFFICIENT AND THAT THE ASSESSEE MUST ESTABLISH THAT THE DEBT HAS ACTUALLY BECOME BAD WITH SUPPORTING EVIDENCE. 4. THE LEARNED ASSESSING OFFICER THEREAFTER, LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR RS.2,22,438/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. ON AN APPEAL BY THE ASSESSEE THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) DELETED THE PENALTY. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE CAS E OF TRF LTD., VS.CIT REPORTED IN (2010) 323 ITR 397 (SC) HAS HELD THAT AFTER THE AMENDMENT MADE IN SECTION 36(1)(VII) OF THE I.T.ACT ,1961 W.E.F 1 ST APRIL,1989 IN ORDER TO OBTAIN DEDUCTION IN RELATION TO BAD DEBTS, IT IS - 3 - NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT T HE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THAT THE BAD DEBT IS WRITTEN AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. THE REFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS JUSTIFIED I N CANCELLING THE PENALTY OF RS.2,22,438/- LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 2721(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME BY CLAIM ING AS BAD DEBT, THE DEBTS WHICH COULD NOT BE SHOWN BY THE ASSESSEE TO H AVE BECOME BAD BY PRODUCING NECESSARY EVIDENCE. 6. THE LEARNED DEPARTMENT REPRESENTATIVE OF THE ASS ESSEE AGREED WITH THE SUBMISSIONS MADE BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORDS, WE FIND THAT BAD DEBT CLAIMED BY THE AS SESSEE OF RS.6,05,273/- WAS DISALLOWED BY THE LEARNED ASSESSI NG OFFICER AS THE ASSESSEE COULD NOT SHOW BY FILING NECESSARY EVIDENC ES THAT THE DEBT HAD BECOME BAD. IN APPEAL, THE TRIBUNAL CONFIRMED T HE ORDER OF THE LEARNED ASSESSING OFFICER. THEREAFTER, THE LEARNED ASSESSING OFFICER HAS LEVIED PENALTY OF RS.2,22,438/- UNDER SECTION 271(1)(C) OF THE ACT FOR FILING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. IN APPEAL, THE CIT(A) DELETED THE PENALTY. WE FIND THA T THE DISALLOWANCE OF BAD DEBT OF RS.6,05,273/- CAME TO BE MADE BY THE LEARNED ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE F AILED TO SHOW THAT THE DEBTS HAVE BECOME ACTUALLY BAD. THE HON'BLE SU PREME COURT IN THE CASE OF TRF LTD., (SUPRA) HAS HELD THAT AFTER T HE AMENDMENT IN SECTION 36(1)(VII) W.E.F. 1-4-1989 THE ONLY REQUIRE MENT IS THAT THE - 4 - DEBT SHOULD BE WRITTEN OFF AS BAD IN THE ACCOUNTS B Y THE ASSESSEE. THUS, THE VERY BASIS OF TREATING THE DEBT AS NOT BA D BY THE LEARNED ASSESSING OFFICER DOES NOT SURVIVE AFTER THE DECISI ON OF THE HON'BLE SUPREME COURT AND THEREFORE, THE LEVY OF PENALTY AL SO DOES NOT SURVIVE. WE THEREFORE, CONFIRM THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) IN DELETING THE PENALTY OF RS.2,22,438/- UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 23RD DAY OF JULY, 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 23 RD DAY OF JULY, 2010 PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD - 5 - DATE INITIALS 1. DRAFT DICTATED ON 16-7-10 2. DRAFT PLACED BEFORE AUTHORITY 16-7-10 3. DRAFT PROPOSED & PLACED 16-7-10 JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------