Bina Metal Way Pvt. Ltd., Kolkata V. ITO, Ward-1(3), Asansol, Kolkata

ITA 2121/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1577 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Principle of natural justice; Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI A.T. VARKEY, JM & DR. A.L.SAINI, AM ./ ITA NO.2121/KOL/2014 ( / ASSESSMENT YEAR : 2006-07 BINA METAL WAY PVT. LTD. AH-138, SECTOR-II, SALT LAKE, KOLKATA-700091. VS. ITO, WARD-1(3), KOLKATA. ./ ./PAN/GIR NO. : AABCB 1511 D ( /ASSESSEE ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI MANISH TIWARI, FCA /REVENUE BY : NONE. / DATE OF HEARING : 13/06/2017 !'# /DATE OF PRONOUNCEMENT : 07/ 07/2017 / O R D E R PER DR.ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAI NING TO ASSESSMENT YEAR 2006-07, IS DIRECTED AGAINST THE O RDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-1, KOLKATA, IN APPEAL NO. 547/ CIT(A)-I/W-1(3)/2008-09 DATED 28.08.2014, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE AO U/S 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 26.12 .2008. 2. BRIEF FACTS QUA THE ASSESSEE ARE THAT THE ASSESS EEFILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 29.11.2006 S HOWING TOTAL INCOME NIL. THE ASSESSEES CASE WAS SELECTED FOR SC RUTINY U/S 143(2) OF THE ACT AND THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT BY ITA NO.2121/14 BINA METAL WAY PVT. LTD. 2 MAKING ADDITION ON ACCOUNT OF CONTRIBUTION TO GRATU ITY FUND OF RS. 3,75,120/- AND SUNDRY BALANCE WRITTEN OFF, OF RS. 3 0,910/-. 3. AGGRIEVED FROM THE ORDER OF THE ASSESSING OFFICE R THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS) WHO HAS DISMISSED THE APPEAL OF THE ASSESSEE. THE LD. CIT(A ) OBSERVED THAT THE ASSESSEE DID NOT GET THE APPROVAL FROM THE COMMISSI ONER OF INCOME TAX FOR GRATUITY FUND, THEREFORE, THE ASSESSEES CLAIM FOR PAYMENT OF GRATUITY U/S 40A(7) WAS DENIED BY THE COMMISSIONER OF INCOME TAX (APPEAL).THAT IS, THE ASSESSEES CLAIM FOR PAYMENT OF GRATUITY U/ S 40A(7) WAS ONLY ALLOWABLE IF THERE WAS APPROVAL OF THE GRATUITY FUN D BY THE COMMISSIONER OF INCOME TAX, BUT THERE WAS NO APPROVAL AVAILABLE ON RECORD THEREFORE, ASSESSEES CLAIM WAS DENIED BY THE LD. CIT(A) AND T HEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AT RS. 3,75,120/- WAS CONFIRMED. REGARDING SUNDRY ADVANCES WRITTEN OFF AT RS. 30,910 /-, IT HAS BEEN MENTIONED BY THE ASSESSING OFFICER THAT THE ASSESSE E HAD CLAIMED 30,910/- ON ACCOUNT OF SUNDRY BALANCES WRITTEN OFF. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE EVIDENCES REGARDI NG UN-REALISIBILITY OF SUCH ADVANCES. THE ASSESSEE COULD NOT PRODUCE THE R ELEVANT REASONS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), TH EREFORE, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. NOT BEING SATISFIED WITH THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFF ICER WHO DISALLOWED RS. 3,75,120/- TOWARDS EMPLOYERS CONTRIBUTION TO GRATUI TY FUND U/S 40A(7) OF INCOME TAX ACT, 1961. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING THE ACTION OF A SSESSING OFFICER WHO DISALLOWED RS. 30,910/- TOWARDS BAD DEBT WRITTEN OF F. ITA NO.2121/14 BINA METAL WAY PVT. LTD. 3 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE APPR OVAL LETTER OF THE COMMISSIONER OF INCOME TAX IN RESPECT OF GRATUITY F UND. THE APPROVAL LETTER OF GRATUITY FUND WAS NOT AVAILABLE WHEN THE APPELLATE PROCEEDINGS WAS GOING ON AND NOW THE ASSESSEE HAS OBTAINED THE APPROVAL LETTER OF GRATUITY FUND FROM THE COMMISSIONER OF INCOME TAX A ND THE SAID APPROVAL LETTER HAS BEEN SUBMITTED BEFORE US. REGARDING SUND RY BALANCES RETURN OFF, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IT IS A PREROGATIVE RIGHT OF THE ASSESSEE TO WRITE IT OFF SUNDRY BALANC ES IF IT SEEMS TO HIM THAT THESE ARE IRRECOVERABLE. FOR BOTH THE GROUNDS OF AP PEAL RAISED BY THE ASSESSEE THE LD. COUNSEL REQUESTED THE BENCH TO REM IT THE CASE BACK TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFRESH. 6. THE LD. DR FOR THE REVENUE DID NOT OBJECT TO REM IT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. 7. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTICE THAT THE ASSESSEE WAS UNABLE TO P RODUCE THE APPROVAL LETTER FOR GRATUITY FUND BEFORE THE LD. CIT(A) BECA USE IT WAS NOT AVAILABLE TO HIM AT THE TIME OF PROCEEDINGS BEFORE LD CIT(A). SINCE, NOW THE APPROVAL LETTER OF GRATUITY FUND OF COMMISSIONER OF INCOME TAX IS AVAILABLE BEFORE THE ASSESSEE AND THEREFORE, WE ARE OF THE VI EW THAT BY FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE AND EQUITY WE REMI T THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISS UE AFRESH. REGARDING SUNDRY BALANCES WRITTEN OFF, WE NOTE THAT THE HON`B LE SUPREME COURT RULING IN CASE OF BAD DEBTS IN THE LANDMARK JUDGMEN T OF T.R.F. LTD.( 2010) 230 CTR 0014, IS RELEVANT. THIS IS WHAT THE H ON`BLE SUPREME COURT HELD, IN THIS CASE: AFTER 1ST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECO VERABLE. IT IS ITA NO.2121/14 BINA METAL WAY PVT. LTD. 4 ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERA BLE IN THE ACCOUNTS OF THE ASSESSEE. THEREFORE, THE ASSESSEE HAS A GENUINE REASON TO WRI TE IT OFF AND ASSESSING OFFICER SHOULD ALLOW APPROPRIATE RELIEF T O THE ASSESSEE AS PER THE PROVISIONS OF THE ACT AND AS PER THE RULING OF SUPREME COURT. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO CONSI DER THE SUBMISSIONS OF THE ASSESSEE AND GIVE APPROPRIATE RELIEF AS PER THE PROVISION OF THE ACT. THEREFORE, WE ALLOW THIS APPEAL FOR STATISTICAL PUR POSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE , IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07/ 0 7/2017. SD/ - (A.T. VARKEY) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 07/ 07/2017 SB , SR.PS. / COPY OF THE ORDER FORWARDED TO : SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, I.T.A.T., KOLKATA BENCHES, KOLKATA 1. / THE ASSESSEE- BINA METAL WAY PVT. LTD. 2. / THE RESPONDENT.- ITO, WARD-1(3), KOLKATA 3. ( ( ) / THE CIT(A), :KOLKATA. 4. ( / CIT 5. )* +, , ,# , / DR, ITAT, KOLKATA 6. + -. / GUARD FILE. ) //TRUE COPY// BY ORDER