ITO, New Delhi V. M/s. Feedback Turnkey Engineers (P) Ltd., New Delhi

ITA 184/DEL/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5484 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE G.E. VEERABHADRAPPA, HON'BLE VICE-PRESIDENT AND SHRI RAJPAL YADAV : HONBLE JUDICIAL MEMBER I.T.A. NO. 184/DEL/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, VS. M/S. FEEDBACK TURNKEY WARD 12(2), ENGINEERS (P) LTD., NEW DELHI. 7-LOCAL SHOPPING CENTRE, PANCHSHEEL PARK, N.DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MANISH GUPTA, DR ASSESSEE BY: NONE ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LEARNED COMMISSIONER OF INCOME-TAX DATED 03.11.2009 PASSED FOR ASSESSMENT YEAR 2006-07. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LE ARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.24,81,297 WHICH WAS ADDED BY THE A.O. BY MAKING A DISALLOWANCE OUT OF CLAIM OF BAD DEBTS. 3. THE NOTICE ISSUED TO THE ASSESSEE DID NOT RECEIV E BACK, SERVED OR OTHERWISE. HOWEVER, ON PERUSAL OF THE LEARNED CIT(A )S ORDER, WE DO NOT 2 FIND ANY MERIT IN THE APPEAL OF THE REVENUE, THEREF ORE, WE DID NOT DEEM IT NECESSARY TO EXPLORE THE SERVICE OF NOTICE UPON THE ASSESSEE BY ALTERNATIVE MODE I.E. AFFIXTURE ETC. 4. WITH THE ASSISTANCE OF LEARNED DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF RENDERING ENGINEERING SERVICES AT THE RELEVANT TIME. IT HAS F ILED ITS RETURN OF INCOME ON 30 TH NOVEMBER, 2006 DECLARING AN INCOME OF RS.32,17,053 . LEARNED AO FOUND THAT ASSESSEE HAD GROSS RECEIPTS OF RS.11.44 CRORES AND A NET PROFIT OF RS.59.83 LACS. AFTER CARRYING OUT ADJUSTMENT FOR TA XABLE INCOME AND SETTING OFF BROUGHT FORWARD LOSSES IT HAS SHOWN INCOME OF R S.32,17,053 IN THE RETURN. THE ASSESSEE HAD CLAIMED A BAD DEBT OF RS.2 4,81,297. IT WAS CONTENDED BY IT THAT THESE AMOUNTS WERE BOOKED AS A INCOME DURING FINANCIAL YEAR 2003-04 BY RAISING INVOICES FOR THESE AMOUNTS. THE CLIENTS HAD DEDUCTED THE AMOUNT TO THE EXTENT CLAIMED AS DEDUCT ION DURING THE YEAR UNDER CONSIDERATION. ASSESSING OFFICER DISALLOWED T HE CLAIM OF THE ASSESSEE ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE EVIDE NCE SUGGESTING THAT DEBTS HAVE REALLY BECOME BAD. 5. ON APPEAL, LEARNED CIT(A) DELETED THE DISALLOWAN CE BY OBSERVING THAT W.E.F. 1.4.1989, THERE IS AN AMENDMENT IN SECTION 3 6(1)(VII) OF THE ACT. 3 ACCORDING TO THE LATEST PROVISION, ASSESSEE IS NOT SUPPOSED TO BRING EVIDENCE ON RECORD IN SUPPORT OF HIS BELIEF THAT DEBT HAS BE COME BAD. IT IS SUFFICIENT FOR THE ASSESSEE TO INDICATE THAT DEBT WAS SHOWN AS INCOME IN ANY PREVIOUS YEAR AND IT HAS WRITTEN OFF IN THE ACCOUNTS AS BAD DEBTS. THE LEARNED CIT(A) FOR THE ABOVE VIEW PUT RELIANCE UPON THE SPECIAL BE NCH DECISION OF THE ITAT IN THE CASE OF DCIT VS. OMAN INTERNATIONAL BANK REP ORTED IN 100 ITD 285. THE LEARNED DR WAS UNABLE TO CONTROVERT THE FINDING S OF THE LEARNED CIT(A). THE ASSESSEE HAS SHOWN THESE AMOUNTS AS INCOME IN F INANCIAL YEAR 2003-04. THIS CONSIDERATION OF THE ASSESSEE WAS NOT DISPUTED BY THE A.O. THE ASSESSEE HAS WRITTEN OFF THE AMOUNT IN THE ACCOUNTS AS BAD D EBTS. IN VIEW OF THE SPECIAL BENCH DECISION AND THE LATEST POSITION OF T HE LAW, ASSESSEE WAS NOT SUPPOSED TO BRING EVIDENCE IN SUPPORT OF ITS BELIEF THAT DEBTS HAS BECOME BAD. THUS, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 19.03.2010 ( G.E. VEERABHADRAPPA ) ( RAJPAL Y ADAV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 19/03/2010 MOHAN LAL 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR