Shri Kamal Pat Surana, Delhi V. ITO, New Delhi

ITA 1669/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58974 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 25-01-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 15-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Business expenditure; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1669/DEL./2010 (ASSESSMENT YEAR : 2001-02) SHRI KAMAL PAT SURANA, VS. ITO, WARD 30(2), PROP. M/S RISHAV UDYOG, NEW DELHI. 19A, ANSARI ROAD, DARYA GANJ, NEW DELHI. (PAN/GIR NO.AEQPS8091D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADV. REVENUE BY : MS. Y. KAKKAR, DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A)- XXV, DATED 12.10.2010, RELEVANT TO ASSESSMENT YEAR 2001-02, WHEREBY BESIDES CONFIRMATION OF FOREIGN TRAVEL EXPENSES IN THE SUM OF RS.8,44,951/-, ASSESSEE HAS ALSO CHALLENGED CONFIRMATION OF NOT ALLOWING THE CLAIM O F BAD DEBT IN THE SUM OF RS.4,04,498/- 2. FACTS INDICATE ASSESSMENT IN THIS CASE WAS ORIGI NALLY FRAMED U/S 143(3) ON 29.03.2004 WHEREIN, BOTH THE IMPUGNED ADDITIONS, AS AGITATED IN THIS APPEAL, WERE MADE BY THE ASSESSING OFFICER AGAINST WHICH ASSESSEE PRE FERRED APPEAL AND CIT(A) DELETED BOTH THESE ADDITIONS VIDE ORDER DATED 11.10.2004. AGAINST WHICH DEPARTMENT WENT IN APPEAL BEFORE ITAT IN APPEAL AND ITAT VIDE DATED 1 2.10.2007 SET ASIDE THE ORDER OF CIT(A) AND DIRECTED THE ASSESSING OFFICER TO DECIDE ALL THE ISSUES AFTER GIVING OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. I.T.A. NO.1669/DEL./2010 (A.Y. : 2001-02) 2 3. CONSEQUENT UPON ITATS DIRECTION, MATTER WITH RE GARD TO FIRST ISSUE, WAS TAKEN UP BY THE ASSESSING OFFICER AND ASSESSING OFFICER AFTE R HAVING GIVEN DUE OPPORTUNITY TO THE ASSESSEE AND CONSIDERING THE MATERIAL PLACED BY THE ASSESSEE OBSERVED THAT NEITHER AT THE TIME OF ORIGINAL ASSESSMENT NOR DURING THE COURSE O F ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER, CONSEQUENT UPON ITATS ORDER REM ANDING THE ISSUES BACK, ASSESSEE COULD BRING ON RECORD THAT PERSONS WHO TRAVELED ABR OAD WERE REPRESENTATIVES OF THE ASSESSEE AND TRAVELED FOR THE PURPOSE OF BUSINESS. IT WAS FURTHER OBSERVED THAT THE DEPARTMENT IS NOT DENYING THAT THE TOUR WAS NOT UND ERTAKEN BY THESE PERSONS BUT THESE PERSONS WERE REPRESENTATIVES AND UNDERTOOK FOREIGN TOUR FOR THE PURPOSE OF ASSESSEES BUSINESS, HAS NOT BEEN PROVED. SO, IT IS CLEAR THA T THESE PERSONS ARE RELATIVES OF THE ASSESSEE AND TRAVELED ABROAD FOR PERSONAL REASONS. SO, DISALLOWANCE EARLIER MADE WAS CONFIRMED. SIMILARLY, WITH RESPECT TO RS.4,04,493/ - CLAIMED AS BAD DEBT IN THE CASE OF BATA INDIA LTD., THE ASSESSING OFFICER OBSERVED WHI LE MAKING THE IMPUGNED ADDITION CONSEQUENT UPON ITATS DIRECTION AS UNDER: THE ASSESSEE HAS NEITHER PRODUCED ANY SALE BILL T HROUGH WHICH SALE WAS MADE TO BATA INDIA LTD. NOR COPY OF ACCOUNT FROM BA TA INDIA LTD. HAS BEEN FILED. THE ASSESSEE HAS CLAIMED THAT THE SUM OF RS.4,04,49 8/- WAS A DEBT DUE TO THE ASSESSEE FROM BATA INDIA LTD. THIS WAS CLAIMED BAD DEBT AND DEDUCTION ON THIS COUNT WAS CLAIMED. THE ASSESSEE HAS NOT PRODUCED A NY EVIDENCE TO PROVE THAT THIS WAS AN AMOUNT STANDING AS BAD DEBT IN THE BOOKS OF THE ASSESSEE. NO EVIDENCE WITH REGARD TO THE ISSUE OF CHEQUES HAS BEEN FILED BEFORE THE ASSESSING OFFICER. EVEN IF THE REPLY OF THE ASSESSEE IS ACCEPTED, THE CONDITIONS ARE NOT SATISFIED AS LAID DOWN IN SECTION 36(2) OF THE ACT. THE SUM IN QUESTION WAS MERELY AN ADVANCE WHICH WILL NOT BE TAKEN INTO ACCOUNT FOR CO MPUTING THE INCOME. THE ASSESSEE HAS NOT FILED ANY CORRESPONDENCE WITH BATA INDIA TO PROVE THAT THE ASSESSEE WAS TRYING TO RECOVER THE AMOUNT. IT IS A LSO NOT CLEAR THAT THE ABOVE AMOUNT IS INCIDENTAL TO HIS BUSINESS. I.T.A. NO.1669/DEL./2010 (A.Y. : 2001-02) 3 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASS ESSEE TOOK UP THE MATTER IN APPEAL AND CIT(A) DID NOT ACCEPT THE APPEAL OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON BOTH THE COUNTS WHILE DISM ISSING THE APPEAL OF THE ASSESSEE. 5. STILL AGGRIEVED, ASSESSEE HAS COME UP IN FURTHER APPEAL. LD.COUNSEL FOR THE ASSESSEE, WHILE ARGUING ON FIRST ISSUE, HAS STRONGL Y PLEADED THAT ASSESSEE HAS FURNISHED ALL THE DOCUMENTARY EVIDENCE AND MATERIAL ALONG WITH DE TAILS IN THIS CASE WITH REGARD TO FOREIGN TRAVEL EXPENSES TO THE EXTENT OF RS.8,44,65 1/-, WHICH WAS UNDERTAKEN NOT BY THE ASSESSEE OR HIS EMPLOYEES, BUT BY THE MEMBERS OF TH EIR FAMILIES, THOUGH THEY WERE HAVING THEIR SEPARATE BUSINESSES. THE ASSESSEE HAS ALSO D ISCLOSED THE NAMES OF THE PERSONS, WHO TRAVELED ABROAD ALONG WITH OTHER DETAILS, SO ASSES SING OFFICERS OBSERVATIONS THAT NO MATERIAL WAS BROUGHT ON RECORD EVIDENCING THE TRAVE LERS AS REPRESENTATIVE OF THE ASSESSEE IS NOT CORRECT. THE ASSESSEE CLAIMED THE TRAVELERS AS CONSULTANT OR DEAL NEGOTIATORS. IT WAS ALSO SUBMITTED THAT THE BUSINESS HAS BEEN DONE BY T HE ASSESSEE IN PLACES/SITES BY THESE PERSONS AND HENCE EXPENSES ON FOREIGN TRAVEL WERE A LLOWABLE. IT WAS ALSO SUBMITTED THAT AFFIDAVITS OF ALL THESE PERSONS WERE ATTEMPTED TO B E FILED BEFORE THE ASSESSING OFFICER IN DE NOVO PROCEEDINGS ON 31.12.2008, BUT ASSESSEE WAS TOLD THAT ASSESSMENT ORDER HAS ALREADY BEEN PASSED ON THE SAME DAY. SO, THE ASSES SEE FILED THESE AFFIDAVITS BEFORE CIT(A), WHO DID NOT MENTION ABOUT THESE AFFIDAVITS. THEREFORE, ASSESSEE HAS BEEN DENIED OPPORTUNITY TO LEAD EVIDENCE. SO, ORDERS OF ASSESS ING OFFICER AND THE CIT(A) ARE NOT IN CONFORMITY WITH LAW WHICH SHOULD BE SET ASIDE AND BE DIRECTED TO DELETE THE IMPUGNED ADDITION. AT THIS JUNCTURE, WHEN ASSESSEES COUNSE L WAS ASKED THAT SINCE AFFIDAVITS OF VARIOUS PERSONS WAS STATED TO BE NOT ACCEPTED BY TH E ASSESSING OFFICER AND WAS STATED TO BE FILED BEFORE THE CIT(A), WHETHER ANY APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE I.T.A. NO.1669/DEL./2010 (A.Y. : 2001-02) 4 WAS FILED BEFORE CIT(A), IF SO, THERE IS ANY MENTIO N ABOUT HAVING PRODUCED BEFORE HIM SUCH DOCUMENTS IN THE ORDER OF CIT(A). LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT NEITHER ANY SUCH APPLICATION WAS FILED BEFORE CIT(A ) FOR ADMISSION OF ADDITIONAL EVIDENCE NOR THERE IS ANY MENTION IN THE IMPUGNED O RDER ABOUT ALL THIS, BUT FACT OF THE MATTER IS THAT THESE DOCUMENTS WERE FILED BEFORE CI T(A) AGAINST WHICH ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE FOR HAVING PRESENT ED/FILED SUCH DOCUMENTS BEFORE THE ASSESSING OFFICER OR CIT(A). THE ASSESSEES COUNSE L INSISTED THAT THESE WERE ATTEMPTED TO BE FILED BEFORE THE ASSESSING OFFICER IN ASSESSM ENT PROCEEDINGS AND THESE SHOULD BE ADMITTED AS EVIDENCE AND MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION OF THE CLAIM OF THE ASS ESSEE WITH REGARD TO FOREIGN TRAVEL EXPENSES. RELIANCE WAS PLACED ON ITAT, DELHI DECIS ION IN THE CASE OF RELAXO FOOTWEARS LIMITED VS. JCIT IN I.T.A. NO.717/DEL./2001 FOR ASS ESSMENT YEAR 1997-98 DATED 29.09.2004. 6. LD.DR STRONGLY RELIED UPON THE ORDERS OF THE AUT HORITIES BELOW AND PLEADED THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE ACTUAL INCURRIN G OF EXPENSES ON FOREIGN TRAVEL FOR THE PURPOSE OF BUSINESS OR INCIDENTAL TO BUSINESS. SO, ADDITION WAS CALLED FOR AND RELYING UPON THE DECISION REPORTED IN 335 I.T.R. 170 (CAL.) , IT WAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ADDITION AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 7. HAVING HEARD BOTH THE SIDES, CONSIDERING THE MAT ERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON, WE FIND THAT SO FAR AS COPI ES OF AFFIDAVITS ARE CONCERNED, WE FIND THAT SAME CANT BE CONSIDERED AS NO VALID REASON HA S BEEN GIVEN AS TO WHY THESE WERE NOT FILED BEFORE LOWER AUTHORITIES AND THERE IS NO APPL ICATION HAVING BEEN FILED BEFORE LD.CIT(A) OR BEFORE THIS BENCH FOR ADMISSION OF SUC H MATERIAL, HENCE IT IS IGNORED. I.T.A. NO.1669/DEL./2010 (A.Y. : 2001-02) 5 OTHERWISE ALSO, THE ASSESSEE IN THIS CASE HAS MISE RABLE FAILED TO ESTABLISH THAT FOREIGN TRAVEL EXPENSES, AS CLAIMED, HAVE ACTUALLY BEEN INC URRED FOR BUSINESS PURPOSES OR WERE EVEN INCIDENTAL TO BUSINESS OF THE ASSESSEE. THERE FORE, IN OUR CONSIDERED VIEW, ADDITION IN THIS REGARD WAS CALLED FOR WHICH HAS RIGHTLY BEE N MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A), WHOSE ACTION IS FURTHER C ONFIRMED AND APPEAL OF THE ASSESSEE IN THIS REGARD IS DISMISSED. 8. AS REGARDS SECOND ISSUE IN RELATION TO CLAIM OF RS.4,04,498 AS BAD DEBT WRITTEN OFF, IT IS CLAIMED BY THE ASSESSEE THAT ADVANCE GIV EN TO BATA INDIA LTD., CLAIMED AS BAD DEBT WAS FLATLY REFUSED TO CONSIDER SUCH AMOUNT TO BE DUE TO THE ASSESSEE AND IF AMOUNT WAS NOT ALLOWABLE AS BAD DEBT OR AS A BUSINESS LOSS , THE ADVANCE PAID BY THE ASSESSEE TO BATA INDIA LTD. IN THAT CONNECTION WAS FORFEITED RE SULTING IN BUSINESS LOSS AND ASSESSING OFFICER DID NOT ACCEPT THE PLEA OF THE ASSESSEE MAI NLY ON THE GROUND THAT IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT THE SAID AMOUNT HAD BEEN TAKEN INTO ACCOUNT WHILE COMPUTING THE INCOME IN THE PREVIOUS YEAR OR ANY EARLIER YEAR , DEDUCTION ON ACCOUNT OF BAD DEBT IS NOT PERMISSIBLE AND ASSESSEES COUNSEL SUBMITTED TH AT SINCE BATA INDIA LTD. HAS DENIED THAT IT DID NOT OWE ANYTHING TO THE ASSESSEE, SO IT IS EVEN A GOOD GROUND TO ALLOW THE CLAIM OF THE ASSESSEE BECAUSE DEBT IS COMING FROM EARLIER YEARS AND OTHERWISE IF BAD DEBT IS NOT TO BE ALLOWED, THEN SUCH A CLAIM OF THE ASSESSEE CA N BE ALLOWED U/S 37(1). IT WAS THUS PLEADED FOR DELETION OF THE IMPUGNED ADDITION. 9. LD.DR WHILE REFERRING TO PAGE 5 AND PARA. 6 OF E ARLIER ORDER OF ITAT, IT WAS CONTENDED THAT ADVANCE IS NOT BUSINESS EXPENDITURE AND EVEN CIT(A) IN SECOND ROUND IT HAS BEEN CLEARLY HELD THAT NO BUSINESS NEXUS HAS BE EN PROVED AND WHILE REFERRING TO PARAS.4.2, 4.3, & 4.4 OF CIT(A) ORDER AND RELYING UPON THE DECISION REPORTED IN 294 I.T.A. NO.1669/DEL./2010 (A.Y. : 2001-02) 6 I.T.R. 91 (KER.) AND TRIBUNAL DECISION IN THE CASE OF ACIT VS. M/S IDS SYSTEMS PVT. LTD., REPORTED IN 2011-TIOL-268, ITAT, BANGALORE DATED 8. 4.2011 IN I.T.A. NO.2251/MUM/2010 AND M/S AVIAS CORPORATE SERVICES P VT. LTD. VS. ITO, REPORTED IN 2011-TIOL-300, ITAT, MUMBAI DATED 23.12.2010 AND JC IT(OSD) VS. M/S VIDEOCON INDUSTRIES LTD., REPORTED IN 20011-TIOL-406, ITAT, MUMBAI DATED 20.05.2011, IT WAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ADDITION. 10. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON AND FIND THAT IN VIEW OF LAT EST DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT, IN CIVIL APP EAL NO.5293 OF 2003, DATED 09.02.2010, IF THE AMOUNT HAS BEEN WRITTEN OFF FROM THE BOOKS OF ACCOUNT, IT IS ALLOWABLE. AS THE AMOUNT HAS ACTUALLY BEEN WRITTEN OFF IN THIS YEAR AS ADMITTED BY THE ASSESSEE AND NOT REBUTTED BY REVENUE, SO, WE HOLD THAT THERE IS NO JUSTIFICATION IN MAKING THE IMPUGNED ADDITION AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD.CIT(A). AS SUCH, WHILE ACCEPTING THE APPEAL OF THE ASSESSEE ON THIS ISSUE, WE DIRECT TO DELETE THE IMPUGNED ADDITION. 6. AS A RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED.. ORDER PRONOUNCED IN OPEN COURT ON 23/3/2012. SD/- SD/- (B.C. MEENA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : MARCH 23, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT I.T.A. NO.1669/DEL./2010 (A.Y. : 2001-02) 7