I.T.O., V. Sri Anup Kr. Modi,

ITA 270/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0440 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 20-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK ROUSHAN SR S C
• Assessee Lawyers: M L MODI ADVICATE
• Keywords: Bad and doubtful debts

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL: CIRCUIT BENCH : RANCHI [BEFORE HONBLE S/SHRI N. S. SAINI, AM AND GEORGE M ATHAN, JM] ITA NO.270/RAN/2014 ASSESSMENT YEAR: 2005-06 THE INCOME TAX OFFICER, WARD -1 (1), RANCHI -1 VS SRI ARUP KUMAR MODI, EAST MARKET ROAD, UPPER BAZAR, RANCHI -1 PAN:ABGPM5306A (APPELLANT) (RESPONDENT) APPELLANT BY SHRI DEEPAK ROUSHAN, SR. SC RESPONDENT BY SHRI M. L. MODI, ADVICATE DATE OF HEARING: 29-10-2015 DATE OF PRONOUNCEMENT: 29-10-2015 O R D E R PER GEORGE MATHAN, JM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A), RANCHI (JHARKHAND) IN APPEAL NO.392 /RAN/OTH/07-08 DATED 13-06-2014, FOR THE ASSESSMENT YEAR 2005-06. 2. SHRI DEEPAK ROUSHAN, LEARNED SR. STANDING COUNSE L REPRESENTED ON BEHALF OF THE REVENUE AND SHRI M. L. MODI, ADVOC ATE REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DR THAT IN THE C OURSE OF THE ASSESSMENT, THE AO HAD DISALLOWED 60% OF THE WEAVIN G CHARGES PAID BY THE ASSESSEE ON THE GROUND OF THAT NONE OF THE W EAVERS RESPONDED TO THE NOTICES ISSUED BY THE AO TO THEM OTHER THAN TWO. IT WAS A SUBMISSION THAT ON APPEAL, THE LEARNED CIT(A) GRANT ED RELIEF BY REDUCING THE DISALLOWANCE FROM 60% TO 10%. IT WAS A SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE RE VERSED. IT WAS ALSO A ITA NO.266/RAN/2014 (AY: 2009-10) 2 SUBMISSION THAT THE ASSESSEE HAS CLAIMED WRITE OFF OF BAD DEBTS WHICH HAD BEEN VERIFIED BY THE AO FROM M/S. M/S. SAMUNJAL A SYNTEX WHERE DEBT HAS BEEN WRITTEN OFF BY THE ASSESSEE AND SUBMI TTED THAT THE MATTER HAS NOT BEEN FINALIZED OR SETTLED AS YET. IT WAS ALSO A SUBMISSION THAT AS THE SAID BAD DEBT WAS PRE-MATURE , THE AO HAD DISALLOWED THE SAME AND THE LEARNED CIT(A) HAD ALLO WED THE CLAIM. IT WAS A SUBMISSION THAT THE ORDER OF THE LEARNED CIT( A) BE REVERSED. 4. IN REPLY, THE LEARNED AR VEHEMENTLY SUPPORTED TH E ORDER OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ORDER OF THE LEARNED CIT(A) CLEARLY SHOWS THAT THE LEARNE D CIT(A) HAS TAKEN INTO CONSIDERATION THE FACT THAT THE AO HAD NOT GIV EN ANY FINDING THAT THE CLAIM OF EXPENSES WAS EXCESSIVE. IT WAS ALSO NO TICED THAT THE AO HAS ACCEPTED THE SALES OF THE ASSESSEE AND BY TAMPE RING WITH THE WEAVING CHARGES THE AO ATTEMPTED TO REDUCE THE COST OF MANUFACTURE AND ON THE SAID SMALL TURNOVER OF THE ASSESSEE ATTA INING SUCH HIGH MARGINS WOULD BE PRACTICALLY IMPOSSIBLE. IT IS NOTI CED THAT THE EXPENSES RELATES TO THE ASSESSMENT YEAR 2005-06 WHE REIN THE PREVIOUS YEAR ENDS ON 31-03-2005 AND THE VERIFICATI ON HAS BEEN DONE IN LATE 2007. THE WEAVERS ADMITTEDLY ARE SMALL TYPE OF JOB WORKERS WHO DEPENDING UPON THE WORK AVAILABILITY WOULD BE S HIFTING THEIR BASE. FURTHER, SUCH SMALL PEOPLE WOULD NORMALLY NOT LIKE TO HAVE ANYTHING TO DO WITH INCOME TAX AUTHORITIES. IT WOULD BE BECAUSE OF THIS THAT THE WEAVERS HAVE NOT ACCEPTED THE NOTICES OR RESPONDED TO THE SAME. KEEPING THIS ASIDE, IF WE ALSO LOOK AT THE GROSS PR OFIT THAT WOULD BE DERIVED BY MAKING THIS DISALLOWANCE IT WOULD BE IN A PRACTICALLY IMPOSSIBLE RANGE. IN THE CIRCUMSTANCES, CONSIDERING THE ABOVE FACTS WE ARE OF THE VIEW THAT THE DELETION IS MADE BY THE LEARNED CIT(A) AND ITA NO.266/RAN/2014 (AY: 2009-10) 3 THE REDUCTION OF THE DISALLOWANCE TO 10% IS FOUND T O BE REASONABLE AND THE SAME IS UPHELD. 6. IN REGARD TO THE ISSUE OF BAD DEBT, IN VIEW OF T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS CIT REPORTED IN 323 ITR 397 (SC), AS THE ASSESSEE HAS WRITTEN OFF T HE BAD DEBT IN HIS BOOKS, NO DISALLOWANCE OF THE SAME CAN BE MADE. CON SEQUENTLY, THE FINDINGS OF THE LEARNED CIT(A) ON THIS ISSUE STANDS UPHELD. 7. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CLOSE OF HEARING ON 29-10-2015. SD/- SD/- ( N .S. SAINI ) ACCOUNTANT MEMBER (GEORG E MATHAN ) JUDICIAL MEMBER DATE : 29 .10 .1 5 LK DEKA/SR.PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER ITA NO.266/RAN/2014 (AY: 2009-10) 4 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 29.10.15 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 29.10.15 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 29.10.15 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 29.10. 15 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 29.10.15 S R.PS 6. DATE OF PRONOUNCEMENT 29.10.15 SR.PS 7. FILE SENT TO THE BENCH CLERK 29.10.15 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER