M/s RADHIKA METALS & MINERALS, Nagpur V. THE ADDL. CIT-RANGE-1, Nagpur

ITA 323/NAG/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1562 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 25-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RUPVANTARAM
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause; Bad and doubtful debts
• Section: 2

Judgement Text

1 ITA NO S . 323 & 324 NAG/201 3 . IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NOS. 323 & 324/NAG/2013 ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10.. M/S RADHIKA METALS & MINERALS, ADDL. COMMISSIONER OF NAGPUR. VS. INCOME - TAX, RANGE - 1, PAN AABFR2796R NAGPUR. APPELLANT. RESPONDENT. APPELLANT BY : SHRI MUKESH AGRAWAL. RESPONDENT BY : SMT. ANITA RUPVANTARAM. DATE OF HEARING : 30 - 11 - 2015. DATE OF PRONOUNCEMENT : 30 TH NOV., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF LEARNED CIT(APPEALS) FOR THE CONCERNED ASSESSMENT YEARS . SINCE COMMON ISSUES HAVE BEEN RAISED, THESE WERE HEARD TOGETHER AND HAVE BEEN DISPOSED OF BY THIS COMMON ORDER. 2. THE COMMON ISSUE RAISED IS THAT THE CIT(APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF THE AMOUNT DEBITED TO PROFIT & LOSS ACCOUNT AS BAD DEBTS IN THE BOOKS OF THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE HAD SUPPLIED MANGANESE ORE TO DIFFERENT PARTIES DURING THE YEAR. CERTAIN AMOUNTS WERE NOT RECEIVABLE FROM THE PARTIES DUE TO BAD QUALITY. HENCE THE ASSESSEE WROTE OFF THE AMOUNTS AS BAD DEBTS IN ITS BOOKS. HOWEVER, THE AO FOUND THAT THERE IS NOTHING ON THE RECORD TO 2 ITA NO S . 323 & 324 NAG/201 3 . SHOW THAT THE DEBTS WERE BAD. THE ASSESSEE WAS CONTINUING TO DO BUSINESS WITH THESE PARTIES AND WAS REGULARLY RECEIVING THE PAYMENTS FROM THEM ALSO THE AO ALSO NOTED THAT THE ASSESSEE HAS NOT PROVIDED ANY DETAIL OF THE BILLS IN WHICH DEDUC TIONS/NON - PAYMENTS HAVE BEEN DONE BY THE BUYERS/DEBTORS NOR THERE IS ANY DOCUMENT ON RECORD THAT THE ASSESSEE WILL NOT RECEIVE THESE PAYMENTS. THE ASSESSEE ONLY CONTENDED THAT SINCE THE ASSESSEE HAS WRITTEN OFF THE DEBTS UNDER THE PROVISIONS OF SECTION 36( 1)(VII), NO ENQUIRY IS PERMISSIBLE AND THE CLAIM SHOULD BE ALLOWED. THIS PLEA OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND THE CIT(APPEALS). THE AUTHORITIES BELOW IN THIS REGARD PLACED RELIANCE UPON THE ALLAHABAD HIGH COURT DECISION IN THE CASE OF CIT V S. KOHLI BROS. COLOR LAB (P) LTD. (2010) 228 CTR (ALL) 84. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE OUTSE T LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THE FOLLOWING ADDITIONAL EVIDENCES : I) CONFIRMATION OF ACCOUNT FROM PAR TIES. II) BILL WISE DETAILS OF AMOUNT DEDUCTED BY PARTIES FROM SALE BILLS. LEARNED COUNSEL PLEADED THAT THE AO HAD NOT SPECIFICALLY REQUIRED THESE DOCUMENTS DURING THE COURSE OF ASSESSMENT BUT HE HAS MADE THESE AS REASONS FOR DISALLOWING ASSESSEES CLAIM . HENCE LEARNED COUNSEL PLEADED THAT THESE ADDITIONAL EVIDENCES SHOULD BE ADMITTED UNDER RULE 29 IN THE INTEREST OF JUSTICE AND OBLIGE. 6. LEARNED D.R. IN THIS REGARD OBJECTED THAT THESE CONFIRMATIONS ARE DATED PRIOR TO THE DATE OF ASSESSMENT ORDER AND W ITHOUT REASONABLE CAUSE THE ASSESSEE HAS FAILED TO PRODUCE THE SAME BEFORE THE AO. HENCE THESE ADDITIONAL EVIDENCES SHOULD NOT BE ADMITTED. 7. UPON CAREFUL CONSIDERATION, WE FIND THAT IT IS TRUE THAT THE AO HAD NOT MADE ANY SPECIFIC REQUISITION OF THESE D OCUMENTS FROM THE ASSESSEE. HE HAS 3 ITA NO S . 323 & 324 NAG/201 3 . ONLY ASKED THE ASSESSEE ABOUT THE LEDGER DETAILS AND THE ASSESSEE WAS UNDER THE IMPRESSION THAT ONCE HAVING WRITTEN OFF THE DEBT THERE WAS NO NECESSITY TO GIVE ANY FURTHER DETAIL. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, INTEREST OF JUSTICE WILL BE SERVED IF THESE DOCUMENTS ARE ADMITTED. ACCORDINGLY WE ADMIT THE SAME. 8. WE FURTHER FIND THAT THE LOWER AUTHORITIES HAD DISMISSED THE ASSESSEES CLAIM ON THE GROUND THAT THERE WAS NO EVIDENCE WHATSOEVER THAT THESE SA LE AMOUNTS WERE NOT RECEIVED BY THE ASSESSEE . T HE AMOUNTS PERTAIN TO THE SALE OF CURRENT YEAR AND THE ASSESSEE CONTINUED TO DO TRANSACTION AND RECEIV E PAYMENTS FROM THE CONCERNED PARTIES, SALE AMOUNT AGAINST WHOM HAD PURPORTEDLY BECOME UNRECOVERABLE. I N OUR CONSIDERED OPINION THE ASSESSEE CANNOT DEDUCT ANY AMOUNT FROM THE SALE OF THE YEAR WITHOUT PRIMA FACIE SHOWING ANY THING THAT THERE HAS ACTUALLY BEEN LOSS OF THE SALE AMOUNT. THE REASON FOR THIS HAS BEEN ATTRIBUTED TO THE FACT THAT THE MANGANESE ORE SUPPLIED BY THE ASSESSEE WERE OF INFERIOR QUALITY AND THAT THE BUYERS HAVE DEDUCTED THE PAYMENT. THE RELEVANT DETAILS ARE NOW BEING SUBMITTED AS ADDITIONAL EVIDENCE WHICH WERE NOT SHOWN TO AUTHORITIES BELOW . SINCE ADJUDICATION ON THIS ISSUE REQUIRES EXAMI NATION OF THE VERACITY OF THE DOCUMENTS SUBMITTED AS ABOVE, WE DEEM IT APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF THE AO. THE AO SHALL EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THESE DOCUMENTS SUBMITTED BY THE ASSESSEE. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 4 ITA NO S . 323 & 324 NAG/201 3 . 9. IN THE RESULT, THESE APPEALS BY THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOV., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 30 TH NOV., 2015. COPY FORWARDED TO : 1. M/S RADHIKA METALS & MINERALS, 3 RD FLOOR, RAJKAMAL COMPLEX, DANTHOLI, NAGPUR. 2. A DDL. CIT, RANGE - 1, NAGPUR. 3. C.I.T., CONCERNED 4. CIT(APPEALS) - , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.