Shri. Mukesh Kumar, Bangalore V. Income-Tax Officer, Bangalore

ITA 362/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5256 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMESH KUMAR JT
• Assessee Lawyers: H N KHINCHA
• Keywords: Opportunity of being heard; Non-deduction of tax; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.361 & 362/BANG/2017 ASSESSMENT YEARS: 2009-10 & 2010-11 SHRI MUKESH KUMAR, # 33/1 & 2, PADAM PLAZA, C.T. STREET, GANIGARPET, BENGALURU 560 002. PAN: ADKPK 5780C VS. THE INCOME TAX OFFICER, WARD 5(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, CA RESPONDENT BY : SHRI A. RAMESH KUMAR, JT. CIT(DR)(ITAT) DATE OF HEARING : 15.06.2017 DATE OF PRONOUNCEMENT : 23.06.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGA INST THE RESPECTIVE ORDER OF CIT(APPEALS). SINCE CERTAIN GR OUNDS ARE COMMON IN THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 2. THE FIRST ISSUE IN ITA NO.361/BANG/2017 AND THE SOLE ISSUE IN ITA NO.362/BANG/2017 RELATE TO DISALLOWANCE U/S 40(A)(I A) ON THE GROUND THAT ITA NOS.361 & 362/BANG/2017 PAGE 2 OF 5 APPELLANT HAD NOT DEDUCTED TAX AT SOURCE ON THE INT EREST PAYMENTS. THE FACTS BORNE OUT FROM THE RECORD IN THIS REGARD ARE THAT ASSESSEE HAS MADE THE PAYMENT OF INTEREST TO VARIOUS DEPOSITORS WITHO UT DEDUCTING TAX AT SOURCE. THE AO HAD DISALLOWED PAYMENT OF INTEREST O N ACCOUNT OF NON- DEDUCTION OF TAX AND DISALLOWANCE WAS ALSO CONFIRME D BY THE CIT(APPEALS). NOW THE ASSESSEE IS BEFORE US AND DURING THE COURSE OF HEARING, IT WAS CONTENDED THAT ASSESSEE HAS TAKEN A PLEA BEFORE THE LOWER AUTHORITIES THAT RECIPIENT HAS OFFERED THE INTEREST RECEIVED TO TAX AND PAID TAXES THEREON. THEREFORE, ASSESSEE CANNOT BE HELD TO BE IN DEFAULT . BUT THIS ASPECT WAS NOT EXAMINED BY THE LOWER AUTHORITIES. THEREFORE, DISALLOWANCE MADE BY THE AO ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE IS NOT SUSTAINABLE. 3. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED TH AT IN CASE THE TAX WAS NOT PAID IN TIME, ASSESSEE IS LIABLE TO PAY INT EREST LIABILITY U/S. 201(1A) OF THE ACT. IT IS FOR THE ASSESSEE TO FILE EVIDENC E BEFORE THE LOWER AUTHORITIES THAT RECIPIENT HAS PAID THE TAXES ON TH E RECEIPTS, BUT NO EVIDENCE WAS FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES DURING THE COURSE OF HEARINGS, AS THE SAID FACTS ARE NOT EVIDE NT FROM THE ORDERS OF LOWER AUTHORITIES. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES AND DOCUMENTS PLACED ON RECORD, WE FIND THAT THE LOWER AUTHORITIES HAVE NOT DISCUSSED ABOUT THE FILING OF EVIDENCE WITH REGARD TO PAYMENT OF TAXES BY THE RECIPIENT, BUT FROM A CAREFUL PERUSAL OF WRITTE N SUBMISSIONS FILED BY THE ITA NOS.361 & 362/BANG/2017 PAGE 3 OF 5 ASSESSEE BEFORE THE CIT(APPEALS), WE FIND THAT ASSE SSEE HAS TAKEN A PLEA THAT RECIPIENT OF INTEREST HAS PAID THE TAXES ON RE CEIPT OF INTEREST AND ASSESSEE HAS ALSO FILED EVIDENCE IN SUPPORT OF HIS CONTENTIONS, BUT THIS ASPECT WAS NOT EXAMINED BY THE CIT(APPEALS). WE AR E THEREFORE OF THE VIEW THAT THE ISSUE REQUIRES FRESH ADJUDICATION BY THE CIT(APPEALS) IN THE LIGHT OF EVIDENCE FILED BY ASSESSEE WITH REGARD TO PAYMENT OF TAXES BY THE RECIPIENT OF INTEREST. WE ALSO FIND FORCE IN THE C ONTENTIONS OF LD. DR THAT IN CASE PAYMENT OF TAXES WAS NOT MADE IN TIME, ASSESSE E IS LIABLE FOR INTEREST LIABILITY U/S. 201(1A) OF THE ACT. SINCE WE ARE RE STORING THE MATTER TO THE FILE OF CIT(APPEALS) FOR READJUDICATION OF THE ISSUE, TH E CIT(APPEALS) MAY ALSO EXAMINE THE LIABILITY OF INTEREST ON DELAYED PAYMEN TS U/S. 201(1A) OF THE ACT. ACCORDINGLY, THE ORDER OF CIT(APPEALS) IS SET ASIDE AND THE MATTER IS RESTORED TO HIS FILE WITH A DIRECTION TO READJUDICA TE THE ISSUE AFRESH, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSE E IN THE TERMS INDICATED ABOVE. 5. THE NEXT GROUND RELATING TO DISALLOWANCE OF BAD DEBTS WRITTEN OFF AMOUNTING TO RS.38,39,978 IS RAISED ONLY IN ITA NO. 361/BANG/2017 AND THE FACTS IN THIS REGARD BORNE OUT FROM THE RECORD ARE THAT ASSESSEE HAS WRITTEN OFF THE SAID AMOUNT AT THE END OF FINANCIAL YEAR IN ITS BOOKS OF ACCOUNT, BUT THE LOWER AUTHORITIES HAVE DISALLOWED THE CLAIM OF WRITING OFF OF BAD DEBTS ON THE GROUND THAT IT WAS NOT WRITTEN OFF IN THE BO OKS OF ACCOUNT. ITA NOS.361 & 362/BANG/2017 PAGE 4 OF 5 6. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS FILED A COPY OF BALANCE SHEET AS WELL AS LEDGER ACC OUNT TO DEMONSTRATE THAT THIS AMOUNT WAS DULY WRITTEN OFF IN THE BOOKS OF AC COUNT, THEREFORE NO DISALLOWANCE SHOULD BE MADE. 7. THE LD. DR PLACED HEAVY RELIANCE UPON THE ORDER OF CIT(APPEALS). 8. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES AND DOCUMENTS PLACED ON RECORD IN THE LIGHT OF RIVAL SU BMISSIONS, WE FIND THAT ASSESSEE HAS DULY WRITTEN OFF THE BAD DEBTS IN HIS BOOKS OF ACCOUNT, BUT COGNIZANCE OF THESE FACTS WAS NOT TAKEN BY THE LOWE R AUTHORITIES. THE AO AND THE CIT(APPEALS) HAD DISALLOWED THE CLAIM OF BA D DEBTS ON THE SOLE GROUND THAT THERE IS NO WRITING OFF OF THIS AMOUNT IN THE BOOKS OF ACCOUNT, WHEREAS THE FACTS ARE OTHERWISE. IN THESE CIRCUMST ANCES, WE ARE OF THE VIEW THAT LET THIS MATTER BE RE-EXAMINED BY THE CIT (APPEALS) AND IF HE IS SATISFIED THAT BAD DEBT WAS DULY WRITTEN OFF IN THE BOOKS OF ACCOUNT, NO DISALLOWANCE IS PERMISSIBLE UNDER LAW, AS MERE WRIT ING OFF OF BAD DEBT IN THE BOOKS OF ACCOUNT IS PERMISSIBLE. WE ARE, HOWEVER, OF THE VIEW THAT IF PAYMENT OF TAX WAS LATE, ASSESSEE MAY BE LIABLE FOR THE INTEREST LIABILITY U/S. 201(1A) OF THE ACT. WE THEREFORE SET ASIDE THE ORD ER OF CIT(APPEALS) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO READJUDICATE THE ISSUE AFRESH, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NOS.361 & 362/BANG/2017 PAGE 5 OF 5 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JUNE, 2017. SD/- SD/- ( A.K. GARODIA ) (SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDI CIAL MEMBER BANGALORE, DATED, THE 23 RD JUNE, 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.