SYNGENTA CROP PROTECTION PVT. LTD., PUNE V. ADDL.CIT., RANGE-1(3), MUMBAI

ITA 3188/MUM/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3274 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Opportunity of being heard; Additional evidence; Bad and doubtful debts

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .T A NO. 3188/MUM/2011 ( / ASSESSMENT YEAR : 2006 - 07 M/S. SYNGENTA CROP PROTECTION PVT. LTD., AMAR PARADIGM, SURVEY NO. 110/11/13, BANER ROAD, PUNE - 411 045 / VS. THE ACIT - RANGE - 1(3), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. AAACZ 0193L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI NITESH JOSHI / RESPONDENT BY: SHRI LOVE KUMAR / DATE OF HEARING : 2 0 . 0 1. 201 6 / DATE OF PRONOUNCEMENT : 29 . 0 1 .201 6 / O R D E R PER C.N. PRASAD : THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 2 , MUMBAI DATED 31.01.2011 PERTAINING TO ASSESSMENT YEAR 200 6 - 0 7 . 2. THE FIRST ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT LD. CIT(A) ERRED IN DISALLOWING THE OLD BALANCES WRITTEN OFF OF RS. 1,05, 71,447/ - . 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITS THAT PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE IS FILED UNDER RULE 29 OF I.T. RULES. ITA NO. 3188/MUM/2011 2 THE LD. COUNSEL PLEADS THAT THE ADDITIONAL EVIDENCES FILED NOW SHOULD GO TO THE ROOT OF THE MATTER THEREFORE NEED FOR ADMISSION OF THESE EVIDENCES AND DECIDE THE ISSUE. HE SUBMITTED THAT THE ADDITIONAL EVIDENCES CONTAINS ONLY BREAK - UP OF MISCELLANEOUS EXPENSES AS DISCLOSED IN SCHEDUL - 14 TO THE FINANCIALS FOR FINANCIAL YEAR 2005 - 06 AND THE BREAK - UP OF LIABILITIES NO L ONGER REQUIRED AS DISCLOSED IN SCHEDULE - 11. 4. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT SINCE THESE EVIDENCES ARE NOT FURNISHED EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A), THE SAME MAY BE SENT BACK TO THE ASSESSING OFFICER FOR VERIFICATION. 5. WE HAVE PERUSED THE EVIDENCES FURNISHED BY THE ASSESSEE AND SINCE THESE EVIDENCES WHICH ARE IN THE FORM OF BREAK - UP OF DETAILS OF BAD DEBTS WRITTEN OFF , THEY ARE GOING TO THE ROOT OF THE MATTER, THEREFORE, THESE ADDITIONAL EVIDENCES ARE ADMITTED. TH E LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE AO WHILE COMPLETING THE ASSESSMENT DISALLOWED BAD DEBTS TO THE EXTENT OF RS. 1,89,40,296/ - . THE AO DISALLOWED THESE BAD DEBTS FOR THE REASON THAT THE ASSESSEE HAS NOT FURNISHED CERTAIN DETAILS I.E. PARTY - WI SE DETAILS AND NO REASON FOR WRITING OFF BAD DEBTS WERE FURNISHED THEREFORE, THE AO OPINED THAT THESE BAD DEBTS ARE NOT BONAFIDE. THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL BY SUSTAINING THE DISALLOWANCE OF BAD DE BTS TO THE EXTENT OF RS. 1,05,71,447/ - . HE SUBMITTED THAT LD. CIT(A) SUSTAIN ED THE DISALLOWANCE OF BAD DEBTS IN RESPECT OF OLD BALANCES WRITTEN OFF AS IRRECOVERABLE FOR THE REASON THAT THE ASSESSEE D ID NOT F ILE ANY DETAILS , THE NAMES OF THE PARTIES INVOL VED, THE BREAK UP FOR EACH OF THE PARTIES ETC., AND WHETHER THESE DEBTS ARISE OUT OF TRADING ACTIVITY OF THE ASSESSEE OR NOT. ITA NO. 3188/MUM/2011 3 5.1. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO PAGE - 28 & 29 OF THE PAPER BOOK AND SUBMIT T ED THAT DETAILS OF MISC ELLANEOUS BAD DEBTS WRITTEN OFF OF RS. 57,07,621/ - HAS BEEN FURNISHED BEFORE THE LD. CIT(A) WHICH CONTAINS CUSTOMER NAME, ADDRESS AND THE AMOUNT AND WHY THE SAID AMOUNT WAS WRITTEN OFF. THE LD. COUNSEL SUBMITS THAT ALL THESE DEBTS WRITTEN OF F ARE ONLY BAD DEBTS. 5.2. IN RESPECT OF THE REMAINING BAD DEBTS TO THE EXTENT OF RS. 48,63,826/ - , THE LD. COUNSEL REFERRING TO PAGE - 14 TO 37 OF THE PAPER BOOK SUBMITS THAT DURING THE ASSESSMENT YEAR, THE ASSESSEE HAS WRITTEN BACK LIABILITIES NO LONGER REQUIRED TO THE EXTENT OF RS. 1,14,54,698/ - AND IT WAS LATER FOUND THAT TO THE EXTENT OF RS. 48,63,826/ - SUCH CREDIT BALANCES WRITTEN OFF SHOULD NOT HAVE BEEN MADE AND THEREFORE INSTEAD OF REDUCING FROM CREDIT BALANCES WRITTEN BACK OF RS. 1, 14,54,698/ - WHICH WAS ALREADY CREDIT ED TO P&L ACCOUNT , T HE ASSESSEE DEBITED AN AMOUNT OF RS. 48,63,826/ - TO THE PROFIT AND LOSS ACCOUNT. THE LD. COUNSEL SUBMITTED THAT THE AO HAVING ACCEPTED THE CREDIT BALANCES WRITTEN BACK OF RS. 1,14,54,698/ - AS INCOME, HE HAS NOT ALLOWED F OR DEDUCTION OF RS. 48,63 , 826/ - WHICH WAS DEBITED TO THE P&L ACCOUNT. 5.3. THE LD. DR SUBMITTED THAT SINCE THESE DETAILS WERE NOT WITH LOWER AUTHORITIES, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE AO FOR VERIFICATION AND ADJUDICATION. 6. WE HAVE HEARD BOTH PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE EVIDENCES FURNISHED BEFORE US. IT IS THE CONTENTION OF THE ASSESSEE THAT THE DETAILS IN RESPECT OF MISCELLANEOUS BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS. 57,07,621/ - OUT OF RS. 1,05,71,4 47 / - SUSTAINED BY THE LD. CIT(A) HAVE BEEN FURNISHED ALONGWITH NAMES, ADDRESSES AND THE ITA NO. 3188/MUM/2011 4 REASONS FOR WRITE OF F BEFORE THE LD. CIT(A). THE SUBMISSION OF THE ASSESSEE THAT THESE DETAILS WERE IGNORED BY THE LD. CIT(A). 6.1. IN SO FAR AS THE BALANCE WRITE OFF OF RS. 48,63,826/ - IS CONCERNED, IT IS THE SUBMISSION OF THE ASSESSEE THAT INITIALLY THE ASSESSEE WRITTEN BACK CREDIT BALANCES NO LONGER REQUIRED TO THE EXTENT OF RS. 1,14,54,698/ - AND LATER FOUND THAT OUT OF THIS AN AMOUNT OF RS. 48,63,826/ - SH OULD NOT HAVE BEEN WRITTEN BACK AND THEREFORE INSTEAD OF REDUCING THESE AMOUNTS FROM THE CREDIT BALANCE WRITTEN OFF OF RS. 1,14,54,698/ - , IT WAS DEBITED TO PROFIT AND LOSS ACCOUNT. THUS, THE AO IS NOT JUSTIFIED IN NOT CONSIDERING THE WRITE OFF OF RS. 48,6 3,826/ - HAVING ACCEPTED THAT CREDIT OF RS. 1,14,54,698/ - AS INCOME. 6.2. AS FAR AS THE BAD DEBT WRITTEN OFF TO THE EXTENT OF RS. 57,07,620/ - IS CONCERNED, IT APPEARS THAT THE ASSESSEE HAS FURNISHED THE DETAILS BEFORE THE LD. CIT(A) THE NAME OF THE PARTY, ADDRESS AND THE AMOUNTS WRITTEN OFF. HOWEVER, THE LD. CIT(A) DID NOT CONSIDER THE SAME AND STATED THAT NO DETAILS WERE FURNISHED AND THEREFORE SUSTAIN THE DISALLOWANCE. 6.3. IN OUR CONSIDERED VIEW, THIS MATTER HAS TO BE EXAMINED BY THE AO AS NO DETAILS W ERE FURNISHED BY THE ASSESSEE BEFORE THE AO. THUS, WE RESTORE THIS ISSUE TO THE FILE OF THE AO TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW. IN RESPECT OF BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS. 48,63,826/ - ALSO VERIFICATION IS REQUIRED BY THE AO IN VIE W OF THE SUBMISSIONS OF THE ASSESSEE THAT IT HAD CREDITED THE AMOUNTS NO LONGER REQUIRED AND LATER ON REVERSED, SUCH AMOUNT BY DEBITING TO THE P&L ACCOUNTS . IN VIEW OF THE ABOVE SUBMISSIONS OF THE ASSESSEE , W E DO NOT SEE ANY REASON TO DISALLOW THE AMOUNT DEBITED TO P&L ACCOUNT BY THE ASSESSEE. HOWEVER, W E RESTORE THIS ISSUE TO THE FILE OF THE AO FOR ITA NO. 3188/MUM/2011 5 VERIFICATION AND TO DECIDE IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. THE NEXT ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN ADDING AN AMOUNT OF RS. 2,84,57,236/ - TO THE VALUE OF CLOSING STOCK ON ACCOUNT OF UNUTILIZED CENVAT CREDIT. 8. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO PARA - 5 & 6 OF THE CIT(A)S ORDER AND SUBMITS THAT THE LD. CIT(A) DIRECTED THE AO TO GRANT CREDIT FOR THE ADDITION MADE TO THE CLOSING STOCK OF THE EARLIER YEARS AS OPENING STOCK OF THE CURRENT YEAR. THE LD. COUNSEL REFERRING TO PARA - 6 OF THE LD. CIT(A)S ORDER FU RTHER SUBMITS THAT THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE EFFECT OF CENVAT CREDIT SHOULD HAVE BEEN CALCULATED IN RESPECT OF PURCHASES AND SALES AND TAKEN INTO ACCOUNT FOR MAKING THE ADDITION. THE LD. CIT(A) DIRECTED THE AO TO COM PUTE THE EFFECT IN RESPECT OF PURCHASES AS WELL AS SALES WHILE ARRIVING AT THE ADDITION TO INCOME. THE LD. COUNSEL SUBMITS THAT THE AO WHILE GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) HAS NOT CONSIDERED THE DIRECTIONS OF THE LD. CIT(A). HE FURTHER REFE RRING TO THE DETAILS OF THE DEVIATIONS FROM THE METHOD OF VALUATION PRESCRIBED U/S. 145A AND THE EFFECT ON THE PROFIT AND LOSS WHICH WAS FURNISHED ALONGWITH THE TAX AUDIT REPORT SUBMITS THAT IF THE CENVAT CREDIT IS CONSIDERED IN OPENING STOCK, PURCHASES AND SALES AND CLOSING STOCK, THERE WOULD NOT BE ANY DECREASE OR INCREASE IN THE PROFIT THEREFORE HE PLEADS THAT THE AO MAY BE DIRECTED TO EXAMINE THIS ASPECT WHICH THE LD. CIT(A) HAS ALREADY DIRECTED TO DO. ITA NO. 3188/MUM/2011 6 9. THE LD. DR HAS NO SERIOUS OBJECTION IN REMI TTING THE MATTER BACK TO THE AO FOR VERIFICATION. 10. ON HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS MATTER HAS TO BE EXAMINED BY THE AO IN VIEW OF THE DIRECTION OF THE LD. CIT(A) AND THE ASSESSEES SUBMISSION. . WE ALSO SEE FROM THE LD. CIT(A) S ORDER THAT IT HAS BEEN DIRECTED BY THE LD. CIT(A) THAT CENVAT SHOULD BE CALCULATED IN RESPECT OF PURCHASES AND SALES AND TAKEN INTO ACCOUNT FOR THE ADDITION. IT IS THE CONTENTION OF THE LD. COUNSEL THAT WHILE EFFECT TO THE ORDER OF THE LD. CIT(A), THE AO HAS NOT CONSIDER THIS. THUS, WE DIRECT THE AO TO FOLLOW THE DIRECTIONS OF THE LD. CIT(A) AND ALSO EXAMINE THE TAX AUDIT REPORT VIS - - VIS DETAILS OF DEVIATIONS FROM THE METHOD OF VALUATION FURNISHED BY THE ASSESSEE AND DECIDE THE ISSUE AFTER PROVIDING AD EQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 201 6 . SD/ - SD/ - ( RAJESH KUMAR ) ( C.N. PRASAD ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED : 29 TH JANUARY, 201 6 . . ./ RJ , SR. PS ITA NO. 3188/MUM/2011 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI