ACIT, BIKANER V. M/s. Gee El Woolen Ltd., BIKANER

ITA 400/JODH/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8004 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANIDR
• Assessee Lawyers: N O N E
• Keywords: Bad and doubtful debts; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 400/JODH/2011 [ASSESSMENT YEAR 2007-08] ACIT, CIRCLE-1 VS M/S. GEE EL WOOLEN LTD., CIRCLE-1, RANI BAZAR, INDUSTRIAL AREA BIKANER. BIKANER. (APPELLANT) (RESPONDENT) ASSESSEE BY : N O N E DEPARTMENT BY : SHRI G.R. KOKANI(DR) DATE OF HEARING : 21.11.2012 DATE OF PRONOUNCEMENT : 12.12.2012 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007 -08 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) DAT ED 22/09/2011. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-COMPANY DERIVED ITS INCOME FROM THE MANUFA CTURING AND SALE OF CARPET YARN. THE ASSESSEE FILED ITS RET URN OF INCOME FOR A.Y. 2007-08, ELECTRONICALLY, ON 30.10.2 007. ASSESSMENT WAS COMPLETED ON 29.12.2009 U/S 143(3) R .W.S. 144 OF THE ACT. THE CONTENTION OF THE COMPANY IS TH AT IT HAS SHIFTED ITS REGISTERED OFFICE FROM BIKANER TO NEW D ELHI DURING F.Y. 2004-05 AND HAD APPLIED U/S 127 OF THE ACT FOR THE TRANSFER OF ITS ASSESSMENT RECORDS TO NEW DELHI VID E LETTER DATED 15.10.2005. BUT, INSTEAD AN EX-PARTE ASSESSME NT ORDER WAS MADE. THE ASSESSEE CHALLENGED THIS EX-PARTE OR DER BEFORE LD. CIT(A), WHO HAS GIVEN PART RELIEF TO THE ASSESSEE. THE REVENUE IS NOW AGGRIEVED. WE WERE INFORMED THAT THE ASSESSEE HAD NOT FILED APPEAL AGAINST SUSTAINED ADD ITIONS. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE I N ITS APPEAL:- I) DELETING THE DISALLOWANCE OF RS. 36542 MADE BY THE A.O. ON ACCOUNT OF MANUFACTURING EXPENSES CLAIMED BY THE ASSESSEE. 3 II) DELETING THE ENTIRE DISALLOWANCE OF RS. 1,77,267 OUT OF RS. 196964 MADE BY THE A.O. ON ACCOUNT OF ADMINISTRATIVE EXPENSES CLAIMED BY THE ASSESSEE. III) DELETING THE DISALLOWANCE OF RS. 48,93,298 MADE BY THE A.O. ON ACCOUNT OF RS. 48,93,298 MADE BY THE A.O. ON ACCOUNT OF WRITING OFF BAD DEBTS CLAIMED BY THE ASSESSEE. 3. EVEN BEFORE US, NOBODY CAME PRESENT TO REPRESENT THE CASE OF THE ASSESSEE [RESPONDENT] NOR ANY APPLICATI ON OR REQUEST FOR ADJOURNMENT WAS MADE, DESPITE BEING DUL Y SERVED. THEREFORE, WE WERE LEFT WITH NO OPTION BUT TO HEAR THE APPEAL EX-PARTE. WE HEARD LD. D.R. AT LENGTH. W E HAVE CIRCUMSPECTED THE ENTIRE RECORD AVAILABLE BEFORE US . THE FOLLOWING PARAGRAPH EXTRACTED FROM LD. CIT(A)S ORD ER WILL GIVE A BIRDS EYE VIEW OF THE FACTS OF THE IMPUGNED ISSUES: A PERUSAL OF THE AUDITED ACCOUNTS SHOW THAT IN THE MANUFACTURING EXPENSES MAJORITY OF THE SAME PERTAIN TO POWER AND FUEL. THE OTHER EXPENSES UNDER THIS HEAD WERE ONLY NOMINAL. IF THE A.O. HAD ANY DOUBTS INDEPENDENT INQUIRY OUGHT TO HAVE BEEN MADE WHICH 4 WAS NOT DONE. THE ADDITION MADE UNDER THIS HEAD IS, THEREFORE, DELETED. THE ADMINISTRATIVE EXPENSES WER E ALSO LISTED IN THE AUDITED ACCOUNTS. A PERUSAL OF T HE SAME SHOWS THAT ALL THE EXPENSES UNDER THIS HEAD WE RE NOT WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. CONSIDERING THE FACTS OF THE CASE IT WOULD BE APPROPRIATE OF 10% OF THESE EXPENSE WERE DISALLOWED . THE ADDITION MADE UNDER THIS HEAD IS SUSTAINED ONLY TO THIS EXTENT. AS REGARDS BAD DEBTS A PERUSAL OF THE PROFIT AND LOSS ACCOUNT SHOWS THAT BAD DEBTS TO THE TUNE O F RS. 48,93,298/- WERE WRITTEN OFF. THE HONBLE SUPRE ME COURT IN THE CASE OF TRF LTD. V/S CIT (323 ITR 397) HAD HELD THAT AFTER 1 ST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, H AS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE. IN THE INSTANT CASE IT IS SEEN THE BAD D EBTS HAD IN FACT BEEN WRITTEN OFF IN THE PROFIT AND LOSS ACCOUNT BY THE APPELLANT. THE GROUND ON WHICH THE A .O. DISALLOWED WAS NOT APPROVED AS PER RATIO IN THE CAS E CITED ABOVE. THE ADDITION MADE ON THIS SCORE IS, THEREFORE, DELETED. AS REGARDS THE DISALLOWANCE OF RS. 2,80,000/- THE SAME IS SUSTAINED HAVING BEEN ADMITT ED BY THE A/R DURING THE ASSESSMENT PROCEEDINGS. 5 4. AFTER CONSIDERING THE ABOVE FINDING IN THE LIGHT OF ORAL SUBMISSION OF LD. D.R., WE HAVE FOUND THAT THERE IS NO ERROR IN THE IMPUGNED ORDER. THE DECISION APPEALED AGAINS T IS FAR AND BALANCE IS WELL REASONED. WHEN MOST OF THE EXPE NSES ARE MANUFACTURING EXPENSES AS PER THE AUDITED ACCOUNTS, AND NO MATERIAL DEFECT HAS BEEN POINTED OUT IN THEM BY THE A.O, HOW THE EXPENSES NOT INCURRED TOWARDS POWER AND FUE L CAN BE DISALLOWED. ACCORDINGLY, THERE IS NO MERIT IN GR OUND NO. (I). 4.1 THE LD. CIT(A) HAS DISALLOWED 10% OUT OF TOTAL EXPENSES CLAIMED IN THE ACCOUNT OF ADMINISTRATIVE EXPENSES FOR ANY PART THEREOF MAY NOT HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS. THIS IS A JUST DECISION AND NO INTERFERENCE IS CALLED FOR. THUS GROUND NO. (II) IS ALSO DISMISSED. 4.2 REGARDING BAD-DEBTS WRITTEN OFF, AFTER 1.4.1989 , THE ASSESSEE IS NOT REQUIRED TO PROVE THAT THE DEBT, IN FACT, BECAME BAD. IF THE CONDITIONS OF SEC. 36(1)(VIIA) OF THE ACT 6 ARE SATISFIED BY THE ASSESSEE, BY WRITING BAD-DEBT IN THE PROFIT AND LOSS ACCOUNT, AS HAS BEEN DONE BY THIS A SSESSEE, NO FURTHER PROOF IS REQUIRED. ALL THE CONDITIONS H AVE BEEN SATISFIED BY THE ASSESSEE IN THIS REGARD. THE LD. CIT(A) HAS FOLLOWED THE LAW AND THE DECISION OF THE HON'BLE SU PREME COURT GIVEN IN THE CASE OF TRF LTD. [SUPRA]. ACCOR DINGLY, THIS GROUND OF THE REVENUE IS ALSO MERITLESS. 5. ACCORDINGLY, THE REASONS GIVEN BY LD. CIT(A) IN ARRIVING AT HIS CONCLUSION ARE APPROVED BY US AS WELL. IN TH E RESULT THIS APPEAL DESERVES TO BE ACCEPTED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH DECEMBER, 2012. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 TH DECEMBER , 2012 VL/- 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) BY ORDER 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR