The ITO, Ward-4(1)m, Ahmedabad V. Gopal Iron & Steel Co.(Guj.) Ltd., Ahmedabad

ITA 360/AHD/2012

• Counselvise Citation: 36020514 RSA 2012
• Duration Of Justice: 3 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: S N SOPARKAR

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO. 360/AHD/2012 / ASSESSMENT YEAR: 2008-09 THE INCOME-TAX OFFICER, WARD-4(1), AHMEDABAD VS. GOPAL IRON & STEEL CO. (GUJ.) LTD., PLOT NO.1401/2, GIDC KERALA INDUSTRIAL ESTATE, TAL: DHOLKA AHMEDABAD PAN : AAACG 7013 L / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI NARENDRA SINGH, SR DR ASSESSEE(S) BY : SHRI S.N. SOPARKAR, AR !' / DATE OF HEARING : 10/09/2015 / DATE OF PRONOUNCEMENT: 29/09/2015 / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, AHMEDABAD DATED 18.11.2011 FOR ASSESSMENT YEAR 2008-09. 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER:- THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION MADE OF RS.24,88,035/- ON ACCOUNT OF DISALLOWANCE OF VATAV AND KASAR EXPENSES, WITHOUT APPRECIATING FACT THAT THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVIDENCES TO SUPPORT ITS CLAIM IN FORM OF ANY CORRE SPONDENCE IN THIS REGARD WITH THOSE PARTIES. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DEBI TED THE SUM OF RS.24,88,035/- TO THE PROFIT & LOSS ACCOUNT UNDER T HE HEAD VATAV KASAR, ITA NO. 360/AHD/2012 ITO VS. GOPAL IRON & STEEL CO. LTD. AY: 2008-09 2 I.E., REBATE AND DISCOUNT. HOWEVER, BEFORE THE ASSE SSING OFFICER, THE ASSESSEE CLAIMED THE SAME TO BE BAD DEBT. THE ASSESSING OFF ICER DID NOT ACCEPT THE ASSESSEES CLAIM ON THE GROUND THAT THE ASSESSEE HA S SEPARATELY DEBITED TO THE PROFIT AND LOSS ACCOUNT THE AMOUNT OF BAD DEBT WHICH IS SHOWN AT RS.39,85,284/-. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION RELYING UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF T .R.F. LTD. VS. CIT, (2010) 323 ITR 397. THE REVENUE, AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING BEFORE US, LEARNED DEPART MENTAL REPRESENTATIVE HAS POINTED OUT THAT WHEN THE ASSESS ING OFFICER ASKED THE ASSESSEE TO PROVE THE CLAIM OF VATAV KASAR, THE ASSESSEE CHANGED ITS STAND VIDE LETTER DATED 15.12.2010 IN WHICH THE AMOUNT DE BITED TO THE PROFIT AND LOSS ACCOUNT WAS CLAIMED TO BE BAD DEBT. AS PER AS SESSING OFFICER, THE ASSESSEE FAILED TO FURNISH ANY DETAILS IN SUPPORT O F ITS CLAIM. BEFORE THE CIT(A), IT WAS CLAIMED BY THE ASSESSEE THAT THE DET AILS WERE ALREADY FURNISHED BEFORE THE ASSESSING OFFICER ALONG WITH L ETTER DATED 15.12.2010. THE LD. DEPARTMENTAL REPRESENTATIVE REFERRED TO THE DETAILS FURNISHED BY THE ASSESSEE WITH REGARD TO LEDGER ACCOUNT OF VARIOUS P ARTIES. AT PAGE NO.19 OF THE ASSESSEES PAPER-BOOK, THERE IS A LEDGER ACCOUN T OF M/S. LAXCON STEEL PVT LTD., WHICH READS AS UNDER:- DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 1.4.2007 CR. OPENING BALANCE 4,33,920.00 1.4.2007 DR. VATAV KASAR BEING THE AMOUNT IRRECOVERABLE/WRITTEN OFF JOURNAL 3 45,556.00 23.5.2007 DR. PUNJAB NATIONAL BANK CH NO. 114492 - IOB RECEIPT 248 50,000.00 31.3.2008 DR. PUNJAB NATIONAL BANK RECEIPT 1435 3,38,364.00 4,33,920.00 4,33,920.00 ITA NO. 360/AHD/2012 ITO VS. GOPAL IRON & STEEL CO. LTD. AY: 2008-09 3 5. FROM THE ABOVE ACCOUNT, IT WAS POINTED OUT BY TH E LD. DEPARTMENTAL REPRESENTATIVE THAT THE OPENING BALANCE WAS RS.4,33 ,920/-. ON 01.04.2007, THE ASSESSEE CREDITED TO THE PARTYS ACCOUNT A SUM OF RS.45,556/-, WITH THE NARRATION BEING THE AMOUNT IRRECOVERABLE/WRITTEN O FF. HE SUBMITTED HOW OUT OF THE TOTAL DEBIT BALANCE OF RS.4,33,920/-, ON LY RS.45,556/- IS HELD TO BE IRRECOVERABLE AND BALANCE RECOVERABLE IS NOT AT ALL CLEAR. HE STATED THAT THE PARTIAL WRITE OFF CANNOT BE SAID TO BE WRITING OFF OF BAD DEBT. IF THIS AMOUNT IS DISCOUNT, THEN IT IS CERTAINLY RELEVANT TO PRECE DING YEAR BECAUSE DURING THE YEAR UNDER CONSIDERATION NO SALE WAS AFFECTED. HE, THEREFORE, STATED THAT THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION AT FACE V ALUE WITHOUT VERIFYING ANY FACT. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF ASSESSING OFFICER MAY BE RESTO RED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT ALONG WITH LETTER DATED 15.12.2010, ALL THE DETAILS IN THE FORM OF VATAV KASAR LEDGER ACCOUNT AS WELL AS LEDGER ACCOUNT OF ALL THE PARTIES WERE F URNISHED BEFORE THE ASSESSING OFFICER. IT IS THE ASSESSING OFFICER WHO DID NOT LOOK INTO THOSE DETAILS AND OBSERVED THAT NO DETAILS WERE FURNISHED BY THE ASSESSEE. HE REFERRED TO THE LEDGER ACCOUNT OF VARIOUS OTHER PAR TIES AND POINTED THAT THE WRITE OFF WAS CLEARLY IN THE NATURE OF BAD DEBT. H E REFERRED TO ACCOUNT OF M/S. PADAMPRIYA ALLOYS (P) LTD, WHICH IS PLACED AT PAGE NOS.48-50 OF THE ASSESSEES PAPER-BOOK, FROM WHICH HE POINTED OUT TH AT M/S. PADAMPRIYA ALLOYS (P) LTD WAS DEBITED AN AMOUNT OF ROLLING CH ARGES DURING THE FINANCIAL YEAR 2005-06. NO RECOVERY COULD BE MADE DURING THE FINANCIAL YEAR 2006-07 AND 2007-08; AND ACCORDINGLY, THE AMOUNT WA S WRITTEN OFF IN FINANCIAL YEAR 2007-08. HOWEVER, HE WAS UNABLE TO EXPLAIN THE PARTIAL WRITE OFF OF THE DEBIT BALANCE IN THE CASE OF M/S. LAXCON STEEL PVT LTD. POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND STAT ED THAT HE WILL HAVE TO CALL FOR THE DETAILS FROM THE PARTIES. ITA NO. 360/AHD/2012 ITO VS. GOPAL IRON & STEEL CO. LTD. AY: 2008-09 4 7. AFTER CONSIDERING THE FACTS OF THE CASE AND THE ARGUMENTS OF BOTH THE SIDES, WE ARE OF THE OPINION THAT THE MATTER NEEDS PROPER EXAMINATION AT THE END OF THE ASSESSING OFFICER. THERE IS NO DISPUTE W ITH REGARD TO THE LEGAL PROPOSITION AS HELD BY THE HONBLE APEX COURT IN TH E CASE OF T.R.F. LTD. VS. CIT, (2010) 323 ITR 397. HOWEVER, THE FACTS RELATI NG TO WRITING OFF OF EACH PARTY NEEDS TO BE EXAMINED SO AS TO ASCERTAIN WHETH ER IT IS A WRITING OFF OF THE BAD DEBT AND WHETHER OTHER CONDITIONS OF SECTIO N 36(1)(VII) ARE FULFILLED. THE ASSESSING OFFICER HAS NOT EXAMINED THE DETAILS AND DISALLOWED THE ENTIRE CLAIM UNDER THE HEAD VATAV KASAR WHICH IS NOW CHANGED TO BAD DEBT. THE CIT(A) ACCEPTED THE ENTIRE CLAIM AGAIN W ITHOUT EXAMINING THE FACTS OF EACH CASE. FROM THE TWO CONTRARY EXAMPLES AS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND THE ASSESSE ES COUNSEL, WE ARE OF THE OPINION THAT THE MATTER NEEDS PROPER EXAMINATIO N AT THE END OF THE ASSESSING OFFICER. WE, THEREFORE, SET ASIDE THE OR DER OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO THE ASSESSING OFFICE R. WE DIRECT HIM TO EXAMINE THE LEDGER ACCOUNT OF EACH AND EVERY PARTY AND RE-ADJUDICATE THE ISSUE IN THE LIGHT OF SECTION 36(1)(VII) AND THE DE CISION OF HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITED (SUPRA). NEEDL ESS TO MENTION THAT WHILE RE-ADJUDICATING THE ISSUE, HE WILL ALLOW ADEQUATE O PPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE REVENUES APPEAL IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 29 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 29/09/2015 BIJU T., PS ITA NO. 360/AHD/2012 ITO VS. GOPAL IRON & STEEL CO. LTD. AY: 2008-09 5 %!&'(')! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' / CONCERNED CIT 4. ! ' ( ) / THE CIT(A) 5. %&' , , / DR, ITAT, AHMEDABAD 6. ', -. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD