The DCIT, Central Circle-2(3), Ahmedabad V. Rohra Plant & Packaging Pvt.Ltd., Ahmedabad

ITA 227/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60552 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 22-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARIMAL SHAH
• Keywords: Bad and doubtful debts

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) )* + ) )* + ) )* + ) ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.227/AHD/2010 [ASSTT.YEAR : 2006-2007] DCIT, CENT.CIR.2(3) AHMEDABAD. /VS. ROHRA PLANT & PACKAGING PVT. LTD. 27, NEW FRUIT MARKET NARODA ROAD, AHMEDABAD. PAN : AABCR 6638 K ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI SANJAY DHARIWAL 4& 1 2 )/ ASSESSEE BY : SHRI PARIMAL SHAH 5 1 &(*/ DATE OF HEARING : 21 ST MAY, 2012 678 1 &(*/ DATE OF PRONOUNCEMENT : 22-6-2012 )9 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: THIS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-2007 IS DIRECTED AGAINST THE ORDER OF THE LD CIT-III, AHMED ABAD DATED 08.10.2009. 2. THE ONLY EFFECTIVE GROUND READS AS UNDER: ITA NO.227/AHD/2010 -2- I) THE LD.CIT(A) HAS ERRED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.6,28,045/- OUT OF TOTAL ADDITION OF RS.6,79,777/ - MADE BY THE AO ON ACCOUNT OF BAD DEBTS. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF WHOLE SALE COMMISSION AGENT OF FRUITS AND ALSO DERIVES IN COME FROM COLD STORAGE. IT FILED RETURN OF INCOME FOR AY 2006-07 D ECLARING TOTAL INCOME OF RS.57,29,769/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT ORDER WAS PASSED ON 30.12.2008 U/S 143(3 ) AND THE TOTAL INCOME WAS DETERMINED AT RS.67,09,750/- AFTER MAKIN G VARIOUS DISALLOWANCES. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAD WRITTEN OF BAD DEBTS AGGREGAT ING TO RS.21,20,505/- . THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCE REGARDING THE STEPS INITIATED BY IT FOR THE RECOVER Y OF DEBTS AND EVIDENCE IN SUPPORT OF HIS CLAIM. THE ASSESSEE MADE SUBMISSIONS AND OFFERED EXPLANATION. THE AO DID NOT FOUND THE EXPLA NATION SATISFACTORY AND THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE AND DISALLOWED RS.6,79,977/- AS BAD DEBTS. AGGRIEVED B Y THE DECISION OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) . CIT(A) VIDE HIS ORDER DATED 8.10.2009 RESTRICTED THE DISALLOWANCE O F BAD DEBTS TO RS.51,932/- AND DELETED THE DISALLOWANCE TO THE EXT ENT OF RS.6,28,045/- BY HOLDING AS UNDER: 7. THE CONTENTIONS/DETAILS WERE CONSIDERED CAREFU LLY. THE GROUND RELATING TO THE DISALLOWANCE OF RS.3 LAKHS F OR THE INSURANCE IS REJECTED FOR LACK OF EXPLANATION/JUSTI FICATION AND THE ASSESSEES OWN SUBMISSIONS. IN RESPECT OF THE BAD DEBTS, IT IS SEEN THAT THE CLAIM OF RS.512,932/- BEING ADVANC ED TO ITA NO.227/AHD/2010 -3- EMPLOYEES, WAS NOT A TRADE DEBT AND HENCE WAS NOT A LLOWABLE AS SUCH. IN RESPECT OF THE OTHER DISALLOWANCES OF BAD DEBTS, IT IS SEEN THAT THE MENTIONED PARTIES APPARENTLY WERE ACK NOWLEDGED AS DEFAULTERS BY THE FRUIT MERCHANT ASSOCIATION. T HE ASSOCIATION APPARENTLY WAS MAKING EFFORTS FOR RECOV ERY FROM THESE DEFAULTERS. CONSIDERING THE TRADE PRACTICE A ND THE NATURE OF TRADE, THE AOS DECISION TO DISALLOW THE CLAIM A PPEARS TO BE ARBITRARY AND CANNOT BE UPHELD. THE DISALLOWANCE O F BAD DEBTS IS THEREFORE RESTRICTED TO RS.51,932/- AND THE BALA NCE IS DELETED. 5. AGGRIEVED BY THE DECISION OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. BEFORE US, THE LD. D.R. SUBMITTED THAT THE ASSESSEE COULD NOT ESTABLISH THE DEBT BECOMING BAD AND THE A SSESSEE COULD NOT FURNISH EVIDENCE IN SUPPORT OF HIS CLAIM. THE LD. D .R. THUS RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. A.R . SUBMITTED THAT THE DEBTS THAT WERE WRITTEN OFF HAD BECOME BAD AND IRRE COVERABLE AND THE ASSESSEE HAD WRITTEN OFF THE SAME IN ITS BOOKS OF A CCOUNTS AND THUS COMPLIED WITH THE REQUIREMENTS OF THE SECTION 36(1) (VII). HE THUS SUPPORTED THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS ON RECORDS. THE UNDISPUTED FACTS ARE THAT THE ASSES SEE WAS DOUBTFUL OF RECOVERY OF DEBTS FROM VARIOUS PARTIES AND HAD WRIT TEN OF DEBTS IN THE BOOKS OF ACCOUNTS. THE LD. CIT(A) HAS GIVEN A FINDI NG THAT THE DEBTORS WRITTEN OFF WERE NO LONGER OPERATING IN THE FRUIT MARKET AND HAD BECOME DEFAULTERS, A FACT WHICH WAS ALSO ACKNOW LEDGED BY THE FRUIT MERCHANT ASSOCIATION. IN VIEW OF THESE FACTS HE HELD THE DECISION OF THE AO IN DISALLOWING THE CLAIM OF THE ASSESSEE AS ARBITRARY. THE LD. D.R. COULD NOT CONTROVERT THE FINDINGS OF THE L D. CIT(A) NOR COULD BRING ANY FACTS TO THE CONTRARY. IN VIEW OF T HE TOTALITY OF FACTS ITA NO.227/AHD/2010 -4- WE FIND NO REASON TO INTERFERE WITH THE ORDER OF TH E CIT(A) AND ACCORDINGLY DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD ITA NO.227/AHD/2010 -5- 1. DATE OF DICTATION : SELF TYPED. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 11-06-2012 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 22-6-2012 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :