RR Warehousing Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2683/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7495 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Bad and doubtful debts
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! . , % !& BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER, AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO.2683/MDS/2016 / ASSESSMENT YEAR : 2011-12 M/S. RR WAREHOUSING PRIVATE LIMITED C/O. M/S. RAMESH AND RAMACHANDRAN, CHARTERED ACCOUNTANTS, NEW NO.39, OLD NO.29/3, VISWANATHAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 24 V. THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE RANGE 5, CHENNAI PAN: AACCR0240E ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI Y. SRIDHAR /RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT /DATE OF HEARING : 06.03.2017 /DATE OF PRONOUNCEMENT : 17.03.2017 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ITA NO. 99/2015-16/CIT(A)-3 DATED 29.06.2016 PASSED U/S. 25 0(6) R.W.S. 143(3) OF THE ACT. 2 I.T.A. NO.2683/MDS/2016 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL; HOWEVER THE CRUXES OF THE ISSUES ARE AS UNDER: I. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE INTEREST EXPENDITURE OF RS.5 LAKHS ALLOWABLE U/S.36(1)(III) OF THE ACT BY HOLDING THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE EXPENDITURE. II. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE CLAIM OF BAD DEBTS OF RS.1,0 1,97,930/- BY STATING THAT THE ASSESSEE WAS NOT ABLE TO ESTABL ISH THAT THE DEBTS WERE OFFERED AS REVENUE RECEIPTS DURING THE E ARLIER ASSESSMENT YEARS. SINCE THE LD. AR DID NOT PRESS THE FIRST GROUND RAI SED IN THE APPEAL WITH RESPECT TO DISALLOWANCE OF INTEREST OF RS.5 LAKHS, THE FIRST CONCISE GROUND STATED HEREIN ABOVE IS DISMISS ED AS NOT PRESSED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF WAREHOUS ING, FILED ITS RETURN OF INCOME ON 29.08.2013 FOR THE ASSESSMENT Y EAR 2010-11 PURSUANT TO NOTICE ISSUED U/S.148 DATED 11.07.2013. 3 I.T.A. NO.2683/MDS/2016 SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED U/S. 143 (3) R.W.S., SECTION 147 & 148 OF THE ACT VIDE ORDER DATED 31.03 .2015, WHEREIN THE LD. AO DISALLOWED A SUM OF RS.5 LAKHS CLAIMED U /S. 36(1)(III) OF THE ACT TOWARDS INTEREST EXPENDITURE AND RS.1,01,97 ,930/- CLAIMED AS BAD DEBTS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT W AS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD DEBITE D ITS P&L ACCOUNT WITH A SUM OF RS.1,01,97,930/- TOWARDS BAD DEBTS. ON QUERY THE ASSESSEE STATED THAT THE AMOUNT WAS RECOV ERABLE FROM THE FOLLOWING PERSONS: R. PRABHAKARAN RS.19,34,069.00 SIVA. D RS.75,68,159.00 SOUTHERN RAILWAY RS. 2,62,478.00 UB ENGINEERING PVT. LTD. RS. 4,33,224.40 TOTAL RS.1,01,97,930.40 HOWEVER, THE LD. AR AFTER EXAMINING THE LEDGER EX TRACTS ARRIVED AT A CONCLUSION THAT THE ASSESSEE COULD NOT ESTABLISH AS TO IN WHICH ASSESSMENT YEAR THESE AMOUNTS HAVE BEEN OF FERED AS REVENUE RECEIPTS. THEREFORE THE LD. AO DISALLOWED T HE CLAIM OF BAD DEBTS MADE BY THE ASSESSEE FOR RS.1,01,97,930/- IN ITS RETURN OF INCOME. 4 I.T.A. NO.2683/MDS/2016 5. ON APPEAL, THE LD. CIT(A) ALSO OBSERVED THAT THE ASSESSEE WAS UNABLE TO ASCERTAIN AS TO IN WHICH ASSESSMENT Y EAR THE AMOUNT CLAIMED AS BAD DEBTS WAS TREATED AS REVENUE RECEIPTS OF THE ASSESSEE. HENCE, HE UPHELD THE ORDER OF THE LD . AO. 6. BEFORE US THE LD. AR SUBMITTED A PAPER BOOK CONT AINING 1 TO 329 PAGES TO ESTABLISH THAT THE ASSESSEE HAD TREATE D THE BAD DEBTS CLAIMED DURING THE RELEVANT ASSESSMENT YEAR A S REVENUE RECEIPT DURING THE EARLIER ASSESSMENT YEARS. THE LD. DR STRONGLY OPPOSED TO THE SUBMISSION OF THE LD. AR AND POINTED OUT THAT AT THIS APPELLATE STAGE IT WOULD NOT BE POSSIBLE TO VE RIFY THE CLAIM OF THE ASSESSEE. HENCE HE PLEADED THAT THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. THOUGH THE ASSE SSEE SUBMITTED A PAPER BOOK CONTAINING 329 PAGES, IT IS NOT BE POS SIBLE FOR THIS BENCH TO VERIFY THE CLAIM OF THE ASSESSEE. THEREFO RE IN THE INTEREST OF JUSTICE WE HEREBY REMIT BACK THE MATTER TO THE F ILE OF LD. AO IN ORDER TO VERIFY WHETHER THE ASSESSEE HAD TREATED TH E BAD DEBTS CLAIMED AND WRITTEN OFF IN THE BOOKS OF ACCOUNTS DU RING THE RELEVANT 5 I.T.A. NO.2683/MDS/2016 ASSESSMENT YEAR AS REVENUE RECEIPT IN ANY OF THE EA RLIER ASSESSMENT YEARS, AND IF FOUND SO ALLOW THE CLAIM O F BAD DEBT, OTHERWISE PASS APPROPRIATE ORDER AS PER MERIT AND L AW. WE ALSO HEREBY DIRECT THE LD. AO TO ACCEPT ANY ADDITIONAL E VIDENCE FURNISHED BY THE ASSESSEE DURING THE REMAND PROCEED INGS. WE ALSO DIRECT THE ASSESSEE TO CO-OPERATE WITH THE REV ENUE IN ITS PROCEEDINGS FAILING WHICH THE LD. REVENUE AUTHORITI ES SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDERS AS PER LAW AND M ERITS BASED ON THE MATERIALS AVAILABLE ON RECORD. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON 17 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( . ) )) ) (G. PAVAN KUMAR) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED, THE 17 TH MARCH, 2017. JR. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT, 5. /DR 6. /GF.