ITO, New Delhi V. M/s. Ethik Enterprises Pvt. Ltd., New Delhi

ITA 1276/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7470 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

ITA NO. 1276/DEL/2014 1 1 BEFORE IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI P. MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1276/DEL/2014 ASSESSMENT YEAR: 2009 -10 ITO VS. M/S. ETHIK ENTERPRISES PVT. LTD. WARD-11 (2) 1-C/58, PHASE III, NEW DELHI. ASHOK VIHAR, NEW DELHI 110 052 PAN AABCE84138 (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI ANIL KUMAR SHA RMA, SR. DR ASSESSEE BY : SHRI R.S. SINGHVI, CA DATE OF HEARING : 22.08.2016 DATE OF PRONOUNCEMENT : O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER OF THE CIT(A)-XIII, NEW DELHI DATED 23.1.2012 PASSED I N THE FIRST APPEAL NO. 249/2011-12 FOR ASSTT. YEAR 2009-10. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- ITA NO. 1276/DEL/2014 2 2 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS. 25,00,000/- MADE BY THE AO IN RESPECT OF SHARE APPLICATION MONEY WHEN THE ASSESSEE HAS FAILED TO FURNISH THE PAN OF THE APPLICANT AS WELL AS HIS BANK ACCOUNT STATEMENT AND WHEN THE CREDITWORTHINESS & GENUINENESS OF THE TRANSACTION REMAIN UNVERIFIED. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,80,01,515/- MADE BY THE AO ON ACCOUNT OF BAD DEBTS WRITTEN OFF. GROUND NO. 1 3. APROPOS GROUND NO. 1, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERI ALS PLACED ON RECORD. THE LD. DR CONTENDED THAT CIT(A) WAS NOT CORRECT IN DELETING THE ADDITION OF RS. 25 LACS MADE BY THE AO IN RESPECT OF SHARE APPLICATION MONEY WHEN THE ASSESSE E HAS FAILED TO SUBMIT PAN OF THE APPLICANT AS WELL AS CO PY OF BANK ACCOUNT STATEMENT AND SPECIALLY WHEN THE CREDITWORT HINESS AND GENUINENESS OF THE TRANSACTION REMAIN UNVERIFIE D. THE LD. ASSESSEES REPRESENTATIVE (AR) REPLIED THAT THE ASSESSEE DISCHARGED ITS ONUS BY WAY OF FILING ALL RELEVANT D OCUMENTS BEFORE THE AO AND CIT(A) ALONGWITH COPY OF PAN, ST ATEMENT OF BANK ACCOUNT OF ASSESSEE AND ALL DETAILS TO EST ABLISH CREDITWORTHINESS AND GENUINENESS OF THE SHARE TRANS ACTION. ITA NO. 1276/DEL/2014 3 3 THUS THE CIT(A) WAS QUITE JUSTIFIED IN DELETING THE BASELESS ADDITION. 4. ON CAREFUL CONSIDERATION OF ABOVE THE STATEM ENT OF FACTS SUBMITTED BY THE AO ALONGWITH FORM NO. 36 IT IS NOTICED THAT AT PAGE 1 LAST PARA IT HAS BEEN STATED THAT D URING THE APPELLATE PROCEEDINGS THE AR OF THE ASSESSEE BROUGH T TO THE NOTICE THE RELEVANT PAGES AT PAPER BOOK WHEREIN REL EVANT CONFIRMATION OF THE SHAREHOLDER, COPY OF PAN, COPY OF STATEMENT OF INCOME, COPY OF DETAILS, CERTIFICATE O F SHAREHOLDER ARE AVAILABLE. THUS WE ARE NOT IN AGREE MENT OF THE CONTENTION OF THE LD. DR THAT THE ASSESSEE DID NOT SUBMIT SAID DOCUMENTS DURING ASSESSMENT PROCEEDINGS. SAID DOCUMENTS HAVE NOT BEEN DISPUTED BY THE AO. THUS TH E CIT(A) RIGHTLY OBSERVED AND CONCLUDED IN THE LAST PART OF PARA 3 AT PAGE 12 OF THE IMPUGNED ORDER THAT THE ASSESSEE HAD FILED CONFIRMATIONS OF THE SHAREHOLDERS, COPY OF PAN, COP Y OF THE STATEMENT OF INCOME, COPY OF DETAILS, CERTIFICATE O F SHAREHOLDER ETC. AND THE AO HAS NOT MADE ANY ENQUIR Y IN THIS REGARD TO DOUBT OR ALLEGE GENUINENESS AND CREDITWOR THINESS OF THE SHARE APPLICANTS AND PROCEEDED TO MAKE ADDIT IONS. THE CONCLUSION DRAWN BY THE CIT(A) ALSO GETS SUPPORT FR OM THE ITA NO. 1276/DEL/2014 4 4 DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF LOVELY EXPORTS (P) LTD. 239 ITR 268 (DELHI). WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED FIR ST APPELLATE ORDER ON THIS ISSUE. THUS WE UPHOLD THE S AME. CONSEQUENTLY, GROUND NO. 1 OF THE REVENUE BEING DEV OID OF MERITS IS DISMISSED. GROUND NO. 2 5. APROPOS GROUND NO. 2 THE LD. DR CONTENDED T HAT THE CIT(A) HAS GROSSLY ERRED IN DELETING THE ADDITION M ADE BY THE AO ON ACCOUNT OF BED DEBTS WRITTEN OFF. HE ALSO DRE W OUR ATTENTION TO OPERATIVE PARA AT PAGE 5-6 OF THE ASSE SSMENT ORDER AND CONTENDED THAT IN ABSENCE OF ANY JUSTIFIC ATION AND EXPLANATION AMOUNT SHOWN AS IRRECOVERABLE FROM M/S. ETA ENGINEERS (INDIA) P. LTD. WAS RIGHTLY ADDED TO THE INCOME OF THE ASSESSEE. THE LD. AR REPLIED THAT AS PER LATEST CIRCULAR NO. 12/2016 DATED 30.5.2016 IF IT IS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE FOR THAT PREVIOUS YEAR. 6. IT FULFILLS THE CONDITION STIPULATED IN THE SUB SECTION (2) OF THE SECTION 36 OF THE ACT AND IN THE APPEAL ALRE ADY FILED ITA NO. 1276/DEL/2014 5 5 BY THE REVENUE THIS ISSUE BEFORE VARIOUS COURTS/TRI BUNAL MAY BE WITHDRAWN OR NOT PRESSED UPON. 7. IN VIEW OF THE FACTS OF THE PRESENT CASE, TH E CIT(A) DELETED THE ADDITION MADE BY THE AO RELYING UPON TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF YR T LTD. VS. CIT 323 ITR 397 (SC) AND CIT VS. MORGAN SECURITIES AND CREDITS PVT. LTD. 292 ITR 339 (DEL) WHEREIN IT WAS HELD THAT UNDER THE AMENDED PROVISIONS OF THE ACT, THE ASSESS EE IS NOT REQUIRED TO ESTABLISH THAT THE DEBTS HAS BECOME BAD AND IF THE ASSESSEE HAS WRITTEN OFF THE DEBTS IN THE BOOKS OF ACCOUNTS AND HAS CLAIMED DEDUCTION. THEN THE SAME S HOULD BE ALLOWED TO HIM. THIS VIEW HAS BEEN REITERATED IN THE CBDT CIRCULAR (SUPRA). THUS WE ARE UNABLE TO SEE ANY VAL ID REASON TO INTERFERE WITH THE IMPUGNED ORDER IN THIS REGARD . THUS WE UPHOLD THE SAME. ACCORDINGLY GROUND NO. 2 OF THE RE VENUE IS ALSO DISMISSED. IN THE RESULT APPEAL IS DISMISSED. SD/- SD/- (P. MAHARISHI) (CH ANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED 23 RD AUGUST, 2016 VL/ ITA NO. 1276/DEL/2014 6 6 COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT REGISTRAR, ITAT