M/s. ACM Metal , Ahmedabad V. The Income Tax Officer, Ward-3(1), Ahmedabad

ITA 2193/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9906 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-11-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 23-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALA PHILIPS
• Keywords: Bad and doubtful debts
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.2193/AHD/2015 ASST. YEAR: 2011-12 M/S A. C. M. METAL MEHTA LODHA & CO., CHARTERED ACCOUNTANTS, 105, SAKAR-1, ASHRAM ROAD, AHMEDABAD. VS. INCOME-TAX OFFICER, WARD 3(1), AHMEDABAD. APPELLANT RESPONDENT AAQFA 1373G APPELLANT BY SHRI PRAKASH D. SHAH, AR RESPONDENT BY MR. LALA PHILIPS, SR. DR DATE OF HEARING: 17/11/2015 DATE OF PRONOUNCEMENT: 04/01/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-3, AHMEDABAD DATED 20.5.2015 RELATING TO ASS T. YEAR 2011-12 FOR WHICH ASSESSMENT WAS FRAMED ON 23.1.2014 U/S 14 3(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) BY ITO WARD -3(1), AHMEDABAD. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACTS B Y CONFIRMING THE ADDITION OF RS.3,50,000/- U/S 68 OF THE INCOME-TAX ACT, 1961 ITA NO. 2193/AHD/2015 ASST. YEAR 2011-12 2 AND THEREFORE THE LEARNED ASSESSING OFFICER BE DIRE CTED TO DELETE THE SAID ADDITION, WHILE COMPUTING THE TOTAL INCOME. 2. THAT THE APPELLANT CRAVES LIBERTY TO ADD, AMEND, ALTER AND DELETE ANY GROUNDS OF APPEAL BEFORE THE FINAL HEARI NG. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TRADING IN ALLUMINIUM SC RAPS. ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB OF THE ACT. INCOME-TAX RETURNS HAS BEEN FILED ON 2/9/2011 SHOWING TOTAL IN COME AT RS.1,22,886/-. THE CASE WAS SELECTED FOR SCRUTINY S TATEMENT AND NOTICE U/S 143(2) DATED 28/9/2012 WAS ISSUED AND SE RVED UPON THE ASSESSEE. BOOKS OF ACCOUNTS AND RELATED DOCUMENTS I NCLUDING CASH LEDGER WERE PRODUCED AND EXAMINED BY THE ASSESSING OFFICER. ONLY ONE ADDITION OF RS.3,50,000/- U/S 68 OF THE ACT HAS BEEN MADE BY AO FOR UNSECURED LOAN FROM M/S LAXMINARAYAN METAL. INC OME OF THE ASSESSEE IS ASSESSED AT RS.4,72,886/-. 3. APPEAL BEFORE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE AND NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. ITA NO. 2193/AHD/2015 ASST. YEAR 2011-12 3 4. THE LD. AR SUBMITTED THAT ASSESSEE FIRM IS REGUL ARLY FILING ITS RETURN OF INCOME AND ENGAGED IN THE BUSINESS OF TRA DING ALLUMINIUM SCRAPS AND ITS BOOKS OF ACCOUNTS ARE REGULARLY AUDI TED U/S 44AB OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER ASKED TO FURNISH CONFIRMATION OF UNSECURED LOAN FROM M.S LAXMINARAYAN METAL SHOWN AT RS.3,50,000/-. IN THIS REGARD LD. AR FURTHER SUBMITTED THAT THE AMOUNT OF RS.3,50,000/- IS NOT UNSECURED LOAN BUT THE FACT IS THAT ASSESSEE HAS GIVEN ADVANC E IN THE PREVIOUS YEAR TO M/S MAJED ALLHEQ TOWARDS IMPORT OF MATERIAL FOR WHICH ASSESSEE TRANSFERRED US $ 15,840 (INR 7,39,693/-) B UT THE PARTY NAMELY M/S MAJED ALLHEQ DEFAULTED IN SUPPLYING THE RAW MATERIAL AND REPAYING THE ADVANCE. DUE TO SERIOUS EFFORTS MADE B Y THE ASSESSEE RS.3,50,000/- WAS RECEIVED DURING THE YEAR UNDER AP PEAL FROM M/S MAJED ALLHEQ THROUGH M/S LAXMINARAYAN METAL. THE AS SESSEE FIRM RATHER THAN REDUCING THIS AMOUNT FROM ADVANCE STAND ING IN THE NAME OF MAJED ALLHEQ AT RS.7,39,693/- SHOWED RS.3,50,000 /- AS UNSECURED LOAN FROM M/S LAXMINARAYAN METAL WITH A THOUGHT THA T WHENEVER THE ADVANCE IS ROLLED BACK FROM M/S MAJED ALLHEQ THEN T HE ASSESSEE WILL REPAY THIS AMOUNT TO M/S LAXMINARAYAN METAL. BUT LA TER ON THERE WAS NO POSSIBILITY LEFT FOR THE REFUND OF REMAINING ADV ANCE AND ASSESSEE, ITA NO. 2193/AHD/2015 ASST. YEAR 2011-12 4 THEREFORE, WRITE OFF THE REMAINING AMOUNT OF RS.3,8 9,693/- AS BAD DEBTS DURING THE ASST. YEAR 2013-14. THE LD. AR SUB MITTED THAT ASSESSEE HAS RECEIVED THE SUM OF RS.3,50,000/- THRO UGH BANK TRANSFER AND IS IN POSSESSION OF BANK STATEMENT REF LECTING TRANSACTION, PAN OF M/S LAXMINARAYAN METAL AND IT IS PROVED ON F ILING OF RETURN AND ALL THE TRANSACTIONS BEING GENUINE. THEREFORE, THE ADDITION MADE U/S 68 OF THE ACT MAY BE DELETED OR IN THE ALTERNAT IVE MAY DIRECT THE LD. AO TO ALLOW ADDITIONAL CLAIM OF RS.3,50,000/- A S TRADING LOSS OR BAD DEBTS IN ASST. YEAR 2013-14 BECAUSE THE ADVANCE TO SUPPLIER MAJED ALLHEQ STANDS SHOWN IN THE BALANCE SHEET AT RS. 7,3 9,693/-. 5. THE LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORI TIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE REVOLVES ROUND THE FACT THAT T HE ASSESSEE HAS SHOWN RS.3,50,000/- AS UNSECURED LOAN FROM M/S LAXM INARAYAN METAL AND DURING ASSESSMENT PROCEEDINGS THE ASSESSE E COULD NOT FURNISH ANY CONFIRMATION OF LOAN AND PROVE THE CRED ITWORTHINESS AND NO REPLY WAS RECEIVED FROM M/S LAXMINARAYAN METAL I N RESPONSE TO ITA NO. 2193/AHD/2015 ASST. YEAR 2011-12 5 NOTICE U/S 133(6) OF THE ACT AS THE SAME WAS RETURN ED BACK UNSERVED BY THE POSTAL AUTHORITIES.THEREAFTER IT WAS SUBMITT ED BY ASSESSEE THAT THE ADVANCE FOR SUPPLY OF RAW MATERIAL WAS GIVEN TO M/S MAJED ALLHEQ IN US $ 15,840 (INR 7,39,693/-) ON 30.9.2010 BUT T HE SUPPLIER DEFAULTED IN SUPPLY OF GOODS AS WELL AS RETURN BACK THE ADVANCE GIVEN BY THE ASSESSEE. THEREAFTER RIGOROUS EFFORTS WERE M ADE BY THE ASSESSEE TO OBTAIN BACK THE ADVANCE OF RS. 7,39,693 /- AND PARTLY SUCCEEDED BY RECEIVING RS.3,50,000/- THROUGH M/S LA XMINARAYAN METAL ON BEHALF OF MAJED ALLHEQ BUT ASSESSEE WHILE PREPARING ITS BALANCE SHEET HAS NOT REDUCED THE BALANCE STANDING IN THE NAME OF MAJED ALLHEQ RATHER IT SHOWED ADVANCE GIVEN TO MAJE D ALLHEQ AT RS. 7,39,693/- ON THE ASSET SIDE AND RS.3,50,000/- RECE IVED FROM M/S LAXMINARAYAN UNDER THE HEAD UNSECURED LOAN. DUE TO THIS VERY REASON THE ASSESSING OFFICER PROCEEDED TO INVOKE TH E PROVISIONS OF SECTION 68 OF THE ACT AND IN LACK OF INFORMATION OF IDENTITY, CREDITWORTHINESS OF M/S LAXMINARAYAN METAL ONE HAD TO MAKE ADDITION AT RS.3,50,000/-. 7. IT SEEMS THAT ASSESSEE HAS COME ACROSS THIS SITU ATION IN ITS REGULAR COURSE OF BUSINESS AND DUE TO WRONG TREATME NT IN ACCOUNTS ITA NO. 2193/AHD/2015 ASST. YEAR 2011-12 6 BOOK AND BALANCE SHEET THIS SITUATION HAS ARISEN. T HE ASSESSEE HAS REFERRED TO MANY FACTS IN VARIOUS DOCUMENTS WHICH S EEMS TO BE NOT PUT FORTH BEFORE THE ASSESSING OFFICER DURING ASSES SMENT PROCEEDINGS ESPECIALLY THE FACT THAT THE ADVANCE AT RS. 7,39,69 3/- SHOWN IN THE BALANCE SHEET IN THE NAME OF MAJED ALLHEQ. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IT WILL BE JUSTIFIED TO RE MIT BACK THE ISSUE TO THE FILE OF ASSESSING WITH THE DIRECTION TO GIVE PROPER OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND EXAMINE THE FACTS DISCU SSED ABOVE IN THE LIGHT OF BANK STATEMENT SHOWING TRANSFER OF US $ 15,840 ON 30.9.2010, DETAILS OF SUPPLIER MAJED ALLHEQ AND DOC UMENTARY EVIDENCES SHOWING EFFORTS MADE BY THE ASSESSEE FOR PROCURING BACK THE ADVANCE AND ALSO TO EXAMINE THE PROOF OF IDENTI TY AND BANK STATEMENT AND INCOME-TAX RETURN OF M/S LAXMINARAYAN METAL AND IF THE ASSESSEE IS ABLE TO SATISFY THE ASSESSING OFFIC ER WITH THE ABOVE SAID DETAILS, THEN THE ADDITION FOR RS.3,50,000/- M AY BE DELETED. THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPO SE. 8. THE OTHER GROUND IS OF GENERAL NATURE, WHICH NEE DS NO ADJUDICATION. ITA NO. 2193/AHD/2015 ASST. YEAR 2011-12 7 9. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 04/01/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 11/12/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 14/12/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 4/1/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: