Enrich Industries Ltd., Ahmedabad V. The Income tax Officer, Ward-4(1), Ahmedabad

ITA 2814/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0151 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 13-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: S N DEVETIA
• Keywords: Bad and doubtful debts; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2814/AHD/2006 ASSESSMENT YEAR:2002-03 DATE OF HEARING:7.9.09 DRAFTED:13.10.09 ENRICH INDUSTRIES LIMITED, 10, SAHAJANAND COMPLEX, NR. SWASTIK CHAR RASTA, NAVARANGOPURA, AHMEDABAD PAN NO.AAACE4174E V/S . THE INCOME TAX OFFICER, WARD-4(1), AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S.N. DEVETIA, AR RESPONDENT BY:- SMT. NEETA SHAH, SR. DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, AHMEDABAD IN APPEAL NO. CIT(A)-VIII/ITO/4(1)/171/04-05 DATED 11-10-2006. THE ASSESSMENT WAS FRAMED BY THE INCOME-TAX OFFICER, WARD- 4(1), AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 23-02-2005 FOR THE ASSESSMENT YEAR 2002-03. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF DISALLOWANCE OF CLAIM OF BAD DEBTS AMOUNTING TO RS.9,39,600/- IN TH E CASE OF SHRI JAGDISH K SHAH. ITA NO.2814/AHD/2006 A.Y. 2002-03 ENRICH INDS. LTD. V. ITO, WD-4(1), ABD PAGE 2 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, WE FIND THAT THE CIT(A) WITHOUT DELIBERATING ON MERITS HAS DECIDED THIS ISSUE JUST ON THE BASIS OF ASSESSMENT ORDER. THE RELEVANT FINDING OF CIT(A) IN PARA-3.1 , WHICH READS AS UNDER:- 3.1 THE APPELLANT BY REASON OF NON-COMPLIANCE HAS NOT SUBSTANTIATED THEIR CLAIM. THE FINDING GIVEN BY THE AO ARE LUCID AND CA NNOT BE DOUBTED. EVEN IN THE APPEAL PAPERS, THE APPELLANT HAS NOT CONTROVERT ED THE FINDINGS OF THE AO. MERELY FILING ON APPEAL PAPER DOES NOT PROVE THEIR CASE. DISALLOWANCE OF BAD DEBT HAS BEEN MADE BY THE AO AFTER THROUGH AND ADEQ UATE EXAMINATION OF THE RELEVANT FACTS. IN THIS PERSPECTIVE, THE ACTION OF THE AO IS JUSTIFIABLE AND THE CLAIM OF THE APPELLANT IS REJECTED AS UNSUBSTAN TIATED. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS MADE THE CLAIM OF BAD DEBT ON THE BASIS OF SUFFICIENT EFFORTS MADE TO REC OVER THE DEBTS AND THE TRANSACTION ENTERED INTO BY THE ASSESSEE-COMPANY IS DURING THE COURSE OF NORMAL BUSINESS TRANSACTIONS AND ALL THE CONDITIONS FOR CLAIMING BA D DEBTS HAS BEEN SATISFIED. THE AO SIMPLY GOING THROUGH THE PROVISION OF SECTION 36 HAS DISALLOWED THE CLAIM OF THE ASSESSEE. EVEN OTHERWISE, THE CIT(A) HAS NOT DELIBE RATED ON MERITS. IN VIEW OF THESE FACTS, AND ON AGREEING BY BOTH THE SIDES, WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR AFRESH ADJUDICATION AND THE A SSESSEE WILL LEAD THE EVIDENCES THAT THE DEBTS HAVE ACTUALLY BECOME BAD. ACCORDING LY, THIS ISSUE OF THE ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF ASSESSING OFFICE R AS INDICATED ABOVE. 4. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES OF RS.4,79,856/-. 5. AFTER HEARING THE RIVAL CONTENTIONS AND GONE THO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) SIMILARLY, AS IN THE ABOVE ISSUE, HAS CONFIRMED THE DISALLOWANCE BY GIVING FOLLOWING FINDING IN PARA-4.1 OF HIS APPELLATE ORDER:- 4.1 IN THE APPEAL PAPERS THE APPELLANT HAD JUST ST ATED THAT EXPLANATIONS OFFERED BY THE APPELLANT WERE NOT APPRECIATED WHILE MAKING ADDITION TO THE RETURNED INCOME. BEYOND THAT THE APPELLANT DID NOT EVINCE ANY INTEREST IN PROVING THEIR CLAIM. AS THE AO HAS GIVEN CATEGORICA L FINDING THAT ADVANCE FREE OF INTEREST WERE MADE THROUGH BANK ACCOUNTS, THERE IS NO MATERIAL TO HELD THAT ITA NO.2814/AHD/2006 A.Y. 2002-03 ENRICH INDS. LTD. V. ITO, WD-4(1), ABD PAGE 3 SUCH ADVANCES WERE MADE OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE APPELLANT. RELIEF CANNOT BE ALLOWED ON MERE PRESUMP TION. IT IS THE ONUS ON THE APPELLANT TO PROVE THE NEXUS BETWEEN BORROWINGS AND USE FOR BUSINESS PURPOSE AS HELD BY THE HONBLE PUNJAB AND HARYANA H IGH COURT IN THE CASE REPORTED IN 286 ITR 1. IN THIS VIEW OF THE MATTER, NO RELIEF IS PERMISSIBLE ON THIS GROUND AND HENCE THE SAME IS DISMISSED AS NOT PROVE D. SIMILAR BEING THE FACTS AS IN THE ABOVE, THE CIT(A) HAS NOT DELIBERATED ANYTHING ON MERITS, BOTH THE PARTIES FAIRLY AGREED THAT THIS IS SUE NEEDS VERIFICATION AT THE LEVEL OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE T HIS ISSUE TO THE FILE OF ASSESSING OFFICER AS INDICATED ABOVE. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 30/10/2009 SD/- SD/- (P.K.BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 30/10/2009 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- VIII, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD