DEO COMETCH P. LTD, MUMBAI V. ITO 8(10(3), MUMBAI

ITA 2414/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59764 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 28-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SENTHIL KUMAR
• Keywords: Business expenditure; Opportunity of being heard; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, D, MUMBAI BEFORE SHRI D.K.AGARWAL (JM) AND SHRI T.R.SOOD(AM) ITA NO.2414/MUM/2011 (ASSESSMENT YEAR: 2006-07) M/S DEO COMTECH PVT.LTD., 26, SETHI INDUSTRIAL ESTATE, SUREN ROAD, ANDHERI (EAST), MUMBAI-400093. PAN:AAACD4118R INCOME TAX OFFICER 8(1)(3), MUMBAI. APPELLANT V/S RESPONDENT DATE OF HEARING : 18.1.2012 DATE OF PRONOUNCEMENT : 20.1.2012 APPELLANT BY : SHRI KUNAL GOKHALE RESPONDENT BY : SHRI B.SENTHILKUMAR O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22.2.2011 PASSED BY THE LD . CIT(A) FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND DEALING IN ELECTRONICS PLASTIC COMPONENT AND PA RTS FILED RETURN DECLARING TOTAL INCOME OF RS.1,84,704/ -. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS INTERALIA OBSERVED BY THE AO THAT THE ASSESSEE HA S ITA NO.2414/MUM/2011 (ASSESSMENT YEAR: 2006-07) 2 DEBITED AN AMOUNT OF RS.91,323/- AS BAD DEBTS. ON BEING ASKED TO FURNISH DETAILS ALONG WITH THE DOCUMENTARY EVIDENCE AND THE JUSTIFICATION FOR WRIT ING OFF THE AMOUNT, THE ASSESSEE FURNISHED THE DETAIL OF BAD DEBTS AND EXPLAINED THAT THESE ENTRIES ARE NOT ACTUALLY BAD DEBTS BUT SHORT PAYMENT RECEIVED FROM ITS CLIENT M/S INTEGRA HINDUSTAN CONTROL LTD. IN THE ABSENCE OF ANY RELEVANT INVOICES AND DEBIT NOTES ISSUED BY THE CONSIGNEE, THE AO DISALLOWED THE CL AIM OF BAD DEBTS OF RS.91,323/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. ON APPEAL, THE LD. CIT(A) WHILE AGREEING WITH TH E VIEWS OF THE AO CONFIRMED THE DISALLOWANCE MADE BY THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. GROUND NO.1.1 IS AGAINST THE VALIDITY OF THE ORD ER PASSED BY THE LD. CIT(A) WITHOUT PROVIDING AN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. ITA NO.2414/MUM/2011 (ASSESSMENT YEAR: 2006-07) 3 6. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRE SS THE GROUND NO.1.1 WHICH WAS NOT OBJECTED TO BY THE LEARNED DR . 7. THAT BEING SO AND IN THE ABSENCE OF ANY OTHER SUPPORTING MATERIALS PLACED ON RECORD BY THE LEARNE D COUNSEL FOR THE ASSESSEE, THE GROUND NO.1.1 TAKEN B Y THE ASSESSEE IS THEREFORE, REJECTED BEING NOT PRESS ED. 8. GROUND NOS.2.1 TO 7 ARE AGAINST THE SUSTENANCE OF DISALLOWANCE OF BAD DEBTS OF RS.91,323/-. 9. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT AGAINST THE SUPPLIES MADE BY THE ASSESSEE TO M/S INTEGRA HINDUSTAN CONTROL LTD., THE SAID PARTY REJECTED SOME GOODS AND MADE SHORT PAYMENT TO THE ASSESSEE. IN SUPPORT HE REFERS THE S ALE BILLS NO.265 DATED 15.1.2002 FOR RS.1,56,811/- FOR 50000 PIECES APPEARING AT PAGE 12 OF THE ASSESSEES PAPER BOOK AND AGAINST WHICH THE ASSESSEE RECEIVED PAYMENT OF RS.1,08,890/- AS PER COPY OF PAYMENT ADVICE DATED 11.6.2002 APPEARING AT PAGE 15 OF THE ASSESSEES PAPER BOOK. HE FURTHER SUBMITS THAT TH E ITA NO.2414/MUM/2011 (ASSESSMENT YEAR: 2006-07) 4 REJECTED PIECES WERE THROWN INTO THE WASTE BOXES B Y THE CUSTOMERS. THUS, THE ASSESSEE RECEIVED SHORT PAYMENT OF RS.91,323/- FROM THE CUSTOMER. IN SUPPORT, HE ALSO REFERS THE COPY OF THE CONFIRMATIO N FROM M/S INTEGRA HINDUSTAN CONTROL LTD. TO SHOW TH AT THE CUSTOMER HAS NOT MADE THE PAYMENT OF RS.91,323.38 AGAINST THE BILLS OF THE ASSESSEE, APPEARING AT PAGE 24 OF THE ASSESSEES PAPER BOOK. HE, THEREFORE, SUBMITS THAT THE DEDUCTION CLAIMED BY THE ASSESSEE BE ALLOWED. 10. ON THE OTHER HAND, THE LD. DR, SUPPORTS THE ORD ER OF THE AO AND THE LD. CIT(A). 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT TH E ASSESSEE HAS CLAIMED THE DEDUCTION OF RS.91,323/- A S SHORT PAYMENT AGAINST THE BILL ISSUED TO M/S INTEGR A HINDUSTAN CONTROL LTD. THIS SHORT PAYMENT WAS MAD E BY THE PARTY ON ACCOUNT OF REJECTION OF MATERIAL SUPPLIED BY THE ASSESSEE AND IT WAS DULLY CONFIRME D BY THE SAID PARTY VIDE HIS LETTER DATED 25.2.2011 APPEARING AT PAGE 24 OF THE ASSESSEES PAPER BOOK. ITA NO.2414/MUM/2011 (ASSESSMENT YEAR: 2006-07) 5 SINCE, THE ASSESSEE HAS DULY ACCOUNTED FOR THE CORRESPONDING SALES IN THE RELEVANT ACCOUNTING PER IOD AND HAS CLAIMED THE DEDUCTION OF SHORT PAYMENT MADE BY THE SAID PARTY ON ACCOUNT OF REJECTION OF MATERI AL OF RS.91,323/- DURING THE YEAR UNDER CONSIDERATION, WE ARE OF THE VIEW THAT THE SAID DEDUCTION IS ALLOWAB LE AS BUSINESS EXPENDITURE TO THE ASSESSEE AND ACCORDINGL Y, THE DISALLOWANCE OF RS.91,323/- MADE BY THE AO AN D SUSTAINED BY THE LD. CIT(A) IS DELETED. THE GROUNDS NO.2.1 TO 7 TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH JAN., 2012. SD S D (T.R.SOOD) (D.K.AGA RWAL) ACCOUNTANT MEMBE R JUDICIAL MEMBER MUMBAI, JANUARY, 2012 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. ITA NO.2414/MUM/2011 (ASSESSMENT YEAR: 2006-07) 6 BY ORDER TRUE COPY ASSTT. 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