Sanjay Ahuja, New Delhi V. ITO, New Delhi

ITA 391/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6497 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-01-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 27-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: RAJIV BANSAL
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.391/DEL/2016 A.Y. : 2012-13 SH. SANJAY AHUJA (PROP.) RELIANCE METAL, 26/39, WEST PATEL NAGAR, NEW DELHI 110 008 (PAN: AAGPA8717L) VS. ITO, WARD 50(1), ROOM NO. 1408, E-2 BLOCK, CIVIC CENTRE, NEW DELHI 110 002 (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJIV BANSAL, CA DEPARTMENT BY : SH. S.K. JAIN, SR. DR ORDER THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 02/12/2015 PASSED BY THE LD. COMMISSIO NER OF INCOME TAX (APPEALS)-17, NEW DELHI ON THE FOLLOWING GROUNDS:- 1. THAT THE ITO HAS ERRED BOTH ON FACTS AND IN LAW WHI LE FRAMING ASSESSMENT U/S. 143(3) OF THE ACT. 2. THAT PROPER AND MEANINGFUL OPPORTUNITY WAS NOT PROVIDED TO THE ASSESSEE WHILE FRAMING ASSESSMENT U /S. 143(3) OF THE ACT. THUS ORDER FRAMED IS UNJUSTIFIED , ILLEGAL AND VOID. 3. THAT THE DISALLOWANCE OF RS. 1,91,308/- FOR BAD DEB TS WRITTEN OFF BY THE ASSESSEE IS ILLEGAL AND IS ON SU RMISE BASIS WITHOUT REFERRING THE FACTS OF THE CASE AND L AW THUS ILLEGAL AND UNJUSTIFIED. 4. THAT THE ADDITION OF RS. 56,529/- IS WITHOUT REFERR ING THE FACTS OF THE CASE THUS UNJUSTIFIED AND LIABLE TO BE DELETED. 5. THAT THE ADDITION OF RS. 44,073/- IS ON SURMISE BAS IS THUS, ILLEGAL AND VOID. 6. THAT THE ADDITION OF RS. 28,369/- IS ALSO ON SURMIS E BASIS THUS, ILLEGAL AND VOID. 7. THAT THE ADDITION OF RS. 14,177/- FOR SHORT AND EXC ESS BALANCE WRITTEN OFF ARE IN THE NATURE OF BAD DEBTS AND ITS DISALLOWANCES IS BAD IN LAW AND UNJUSTIFIED. 2 8. THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, MODIF Y AND TO DELETE ANY GROUND OF APPEAL BEFORE OR AT THE TIM E OF HEARING. YOUR HONOUR ARE THEREFORE PRAYED THAT THE ADDITIONS MADE BY THE AO ARE SINCE ON SURMISE BASIS THUS BE DELETED F OR JUSTICE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN FURNISHED ON 18.9.2012 DECLARING TOTAL INCOME OF RS. 3,99,620/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE U/S. 143 (2) ISSUED ON 06.8.2013 FIXING THE CASE FOR 21.8.2013. IN RESPONS E THERETO, RELEVANT INFORMATION / DOCUMENTS WERE FURNISHED AND THE SAME WAS EXAMINED BY THE AO. THEREAFTER, THE INCOME OF THE ASSESSEE WA S COMPUTED AT RS. 23,53,052/- AND ASSESSMENT WAS COMPLETED U/S. 143(3 ) OF THE I.T. ACT, 1961 AND MADE VARIOUS ADDITIONS. 3. AGAINST THE ORDER OF THE AO, ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 02.12.201 5 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD. CI T(A) ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE STATED THAT THE ADD ITIONS IN DISPUTE ARE BASED ON SURMISES AND WITHOUT REFERRING THE FACTS O F THE CASE AND LAW, HENCE, THE SAME MAY BE DELETED. 6. ON THE CONTRARY, LD. DR STRONGLY OPPOSED THE REQ UEST OF THE LD. COUNSEL OF THE ASSESSEE AND STATED THAT THE LOWER AUTHORITIES HAVE 3 PASSED THE REASONABLE ORDERS WHICH DOES NOT NEED AN Y INTERFERENCE ON MY PART. 7. AFTER HEARING BOTH THE PARTIES AS WELL AS PERUSI NG THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WITH REGARD TO GROUND N O. 3 RELATING TO RESTRICTED ADDITION OF RS. 1,91,308/- FOR BAD DEBTS WRITTEN OFF BY THE ASSESSEE IS CONCERNED. THE FACT OF THE CASE IS THAT THE ASSESSEE CLAIMED BAD DEBT WRITTEN OFF AND THE SAME WAS DEBITED TO TH E P&L ACCOUNT. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE FAILED TO PROVE THE JUSTIFICATION OF THE B AD DEBT, THEREFORE, HE ADDED THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE FAILED TO PROVE THE FACT THAT THE IMPUGNED AMOUNT OF RS. 1,91,308/- WAS TAKEN INTO ACCOUNT WHI LE COMPUTING THE TOTAL INCOME OF THE EARLIER YEARS AS PROVIDED U/S. 36(2) OF THE I.T. ACT. THEREFORE, THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT EXCEPT THE CLAIM OF BAD DEBT WITH REGARD TO M/S RAMESH & CO., THE BAD D EBTS WITH REGARD TO OTHER PARTIES WAS FOUND TO BE IN ORDER. HENCE, HE R IGHTLY RESTRICTED THE ADDITION OF RS. 1,91,308/- AND THE BALANCE ADDITIO N WAS ACCORDINGLY DELETED, WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE DECISION OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE GROUND NO. 3 RAISED BY THE ASSESSEE. 7.1 WITH REGARD TO GROUND NO. 4 RELATING TO ADDITIO N OF RS. 56,529/- IS CONCERNED. THE ADDITION IN DISPUTE WAS MADE BY THE AO FOR CASH PAYMENT OF RS. 56,529/- AGAINST THE PURCHASE MADE B Y THE ASSESSEE ON 4 SAME DAY I.E. ON 28.4.2011, WHICH THE LD. CIT(A) HA S UPHELD. I FIND CONSIDERABLE COGENCY IN THE ASSESSEES COUNSEL TH AT ASSESSEE WAS TO MAKE THE URGENT SUPPLY OF SPECIFIC GOODS WHICH WAS ONLY AVAILABLE WITH THE PARTY. THE PARTY HAS DENIED TO ACCEPT THE CHEQ UE DUE TO UNFAVOURABLE ATTITUDE AND HUGE OUTSTANDING BALANC E OF RS. 18.56 LAKHS AGAINST THE ASSESSEE. HENCE, THE ASSESSEE HAS MADE THE PAYMENT IN CASH TO PROCURE THE MATERIAL FOR IMMEDIATE SUPPLY F OR THE BUSINESS PURPOSES. HENCE, THE ADDITION IN DISPUTE IS HEREB Y DELETED AND ACCORDINGLY, THE GROUND NO. 4 IS ALLOWED. 7.2 WITH REGARD TO GROUND NO. 5, 6 & 7 RELATING T O ADDITIONS OF RS. 44,073/- ON ACCOUNT OF 20% OF CAR EXPENSES; RS. 2 8,369/- ON ACCOUNT OF 10% STAFF WELFARE/TELEPHONE/CONVEYANCE AND RS. 14,1 77/- ON ACCOUNT OF SHORT AND EXCESS BALANCE ARE CONCERNED. I FIND THAT ADDITION OF RS. 44073/- ON ESTIMATE BASIS BEING 20% OF CAR EXPENS ES IS CONCERNED, I FIND CONSIDERABLE COGENCY THAT RESIDENCE OF THE AS SESSEE AT WEST PATEL NAGAR, NEW DELHI AND THE GODOWN IS AT NAWADA NEAR U TTAM NAGAR AND THE CAR WAS USED ONLY FOR BUSINESS PURPOSES AND THE RE IS NO ELEMENT OF PERSONAL USE. I ALSO FIND THAT AO HAS NOT FOUND A NY JUSTIFIED REASON WHY 20% OF CAR EXPENDITURE BE DISALLOWED FOR PERSONAL, HOWEVER, THE SAME IS ON SURMISES, WHICH IS NOT SUSTAINABLE IN THE EYES O F LAW, HENCE, THE ADDITION OF RS. 44,073/- IS HEREBY DELETED. I FURT HER FIND THAT ADDITION OF RS. 28369/- ON ACCOUNT OF 10% OF THE EXPENSES ON ST AFF WELFARE (RS. 1,02,360); TELEPHONE (RS. 57,676/-) AND CONVEYANCE (RS. 1,23,650) ARE ALSO FOR THE BUSINESS PURPOSE ONLY, HENCE, THE ESTI MATION DISALLOWANCE 5 THEREOF @10% IS NOT SUSTAINABLE IN THE EYES OF L AW, THE ADDITION IN DISPUTE IS ALSO DELETED. AS REGARDS ADDITION OF R S. 14,177/- ON ACCOUNT OF SHORT AND EXCESS BALANCES IS CONCERNED, I FIND THAT THE SAID ADDITION FOR SHORT AND EXCESS BALANCE IS NO LONGER REQUIRED DEBI TED TO THE PROFIT AND LOSS ACCOUNT AND ARE IN THE NATURE OF OF SECTION 3 6(1)(VII) OF THE ACT. THE SAID ADJUSTMENTS ARE MADE BY THE ASSESSEE EITHER FO R NEGLIGIBLE BALANCES, NO LONGER REQUIRED OR FOR SMALL OUTSTANDING BALANCE S NOT RECOVERABLE, THUS WRITTEN OFF DURING THE YEAR. HENCE, THE ADDITION O N THIS ACCOUNT IS NOT SUSTAINABLE IN THE EYES OF LAW, THEREFORE, THE SA ME IS DELETED AND ACCORDINGLY, THE GROUNDS NO. 6, 7 & 8 ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/03/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 09/03/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES