The DCIT, Circle-4, Ahmedabad V. Gopala Polyplast Ltd., Ahmedabad

ITA 2989/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6766 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 02-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Keywords: Bad and doubtful debts
• Section: 2

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI M.K. SHRAWAT, JM AND D.C.AGRAWAL, AM DY. CIT, CIR.4, AHMEDABAD. VS. GOPALA POLYPLAST LTD., PROP. M/S KAILASH ASSOCIATES, 3 RAJESH APARTMENT B/H NAVGUJARAT COLLEGE, ASHRAM ROAD, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI R. K. DHANESTA, DR RESPONDENT BY:- SHRI ASEEM THAKKAR, AR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUNDS :- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.21,25,927/- MADE BY THE AO ON ACCOUN T OF THE DISALLOWANCE OF CLAIM OF BAD DEBTS. 1.2 IN DOING SO THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAD NOT SUB MITTED ANY EVIDENCE BEFORE THE AO SHOWING THAT THE AMOUNT HAS ACTUALLY BEEN WRITTEN OFF IN ITS BOOKS OF ACCOUNTS. 1.3 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE RELYING ON THE JUDGMENT OF HON. SUPREM E COURT IN THE CASE OF TRF LTD. WITHOUT VERIFYING THE FACT THAT WHETHER THE AMOUNT WAS ACTUALLY WRITTEN OFF IN THE BOOKS OR NOT AND WHETHER THE OTHER CONDITIONS RELATING TO WRITE OFF AS STIPULATED ITA NO.2989/AHD/2010 ASST. YEAR 2004-05 ITA NO.2989/AHD/2010 ASST. YEAR 2004-05 2 IN SECTION 36(1)(VII) READ WITH SECTION 36(2) OF TH E ACT WERE SATISFIED IN THE CASE OF THE ASSESSEE. 2. THE ONLY DISPUTE IN THIS APPEAL IS WHETHER LD. C IT(A) WAS JUSTIFIED IN DELETING THE ADDITION RELATING TO CLAIM OF BAD D EBTS. 3. THE FACTS RELATING TO THE ISSUE ARE THAT AO ON E XAMINATION OF PROFITS AND LOSS ACCOUNT FOUND THE CLAIM OF BAD DEBT FOR RS .21,25,927/-. HE SENT A LETTER TO THE ASSESSEE ON 18 TH DECEMBER, 2008 ASKING HIM TO FURNISH REPLY BY 19 TH DECEMBER, 2008 AS TO WHY AN ADDITION BE NOT MADE IN VIEW OF THE DECISION OF HON. GUJARAT HIGH COURT IN THE C ASE OF DHALL ENTERPRISES AND ENGINEERS (P) LTD. VS. CIT (2006) 2 07 ITR 729 (GUJ). NO REPLY WAS SUBMITTED. EVEN THOUGH THE TIME GIVEN BY THE AO WAS SHORT BUT HE DECIDED TO MAKE THE ADDITION. FURTHER HE ALS O INITIATED PENALTY PROCEEDINGS AFTER MAKING THE ADDITION. 4. THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISION OF HON. SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT 323 ITR 397 (SC) WHEREIN IT IS HELD THAT FOR CLAIM OF BAD DEBTS THE ASSESSEE JUST NEEDS TO WRITE OFF THE SAME IN THE BOOKS OF ACCOUNT AND IT I S NOT NECESSARY FOR HIM TO PROVE THAT DEBT HAS BECOME BAD. 5. BEFORE US LD. DR SUBMITTED THAT LD. CIT(A) HAS A LLOWED THE CLAIM EVEN WITHOUT VERIFYING THAT ASSESSEE HAS ACTUALLY W RITTEN OFF THE DEBT IN THE BOOKS. THOUGH NO REPLY WAS SUBMITTED BEFORE THE AO BUT LD. CIT(A) OUGHT TO HAVE VERIFIED THE SAME BEFORE ARRIVING AT THE DECISION TO ALLOW THE CLAIM. 6. AGAINST THIS, THE LD. AR SUBMITTED THAT THE CLAI M WAS WRITTEN OFF AND NECESSARY DOCUMENTARY EVIDENCES WERE FILED BEFO RE LD. CIT(A). HOWEVER, HE COULD NOT PRODUCE ANY COPY OF ACCOUNT B EFORE US CLAIMED TO ITA NO.2989/AHD/2010 ASST. YEAR 2004-05 3 HAVE BEEN SUBMITTED BEFORE LD. CIT(A) SHOWING THAT SUCH BAD DEBTS WERE ACTUALLY WRITTEN OFF IN THE BOOKS. 7. AFTER HEARING THE PARTIES WE RESTORE THE MATTER TO THE FILE OF THE AO FOR VERIFYING WHETHER DEBT HAS BEEN ACTUALLY WRITTE N OFF IN THE BOOKS IN THE RELEVANT ACCOUNTING YEAR. IF SO, THE SAME WOULD BE ALLOWED FOLLOWING THE DECISION OF HON. SUPREME COURT IN THE CASE OF T RF LTD. (SUPRA). AS A RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED BUT FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 4/5/11. SD/- SD/- (M. K. SHRAWAT) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 4/5/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ITA NO.2989/AHD/2010 ASST. YEAR 2004-05 4 1.DATE OF DICTATION 29/4/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 29/4/ 2011 MEMBER.OTHER MEMBER. 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 THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..