M/s. Vis-a-vis India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4770/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4034 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 02-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: NARESH SANKARIA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. R.S.SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 4770/DEL/2014 (ASSESSMENT YEAR: 2011-12) VIS - A - VIS INDIA PVT. LTD. 90, NEW MANGLA PURI, M.G.ROAD NEW DELHI PAN : AAACV8740P VS. DCIT CIRCLE-17(1) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. NARESH SANKARIA, CA REVENUE BY : SH. S.R.SENAPATI, SR. DR DATE OF HEARING : 24.01.2018 DATE OF PRONOUNCEMENT : 25.1.2018 O R D E R PER BEENA A. PILLAI, J.M : THE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAIN ST ORDER DATED 31/07/14 PASSED BY LD. CIT (A)-19, NEW DELHI FOR ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LEARNED. CIT (APPEALS)- RANGE 19, NEW DEL HI HAS ERRED IN CONFIRMING ADDITION OF RS.26,56,282/- MADE BY ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS WRITTEN OFF BY THE ASSESSE DURING THE 2 ITA NO. 4770.DEL.2014 RELEVANT PREVIOUS YEAR HAVING REGARD TO THE FACTS A ND CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED. CIT (APPEALS)- RANGE 19, NEW DELH I HAS ERRED IN CONFIRMING ADDITION OF RS.6,75,008/- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INCOME MERELY ON THE GROUND THAT DUE TO MISTAKE OF DEDUCTER THIS AMOUNT IS REFLECTIN G IN FORM 26AS OF THE COMPANY INSTEAD OF THE FORM 26AS OF PROPRIETARY FIRM OF THE DIRECTOR HARDEEP GUPTA, WHO HAS CONSIDERED THIS REC EIPT IN HER INCOME FOR THE RELEVANT PREVIOUS YEAR. 3. THAT THE ORDER WAS AGAINST THE LAW AND FACTS OF THE CASE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER ASSESSEE FI LED ITS RETURN OF INCOME ON 30/09/11 DECLARING TOTAL INCOME OF RS. 1,37,03, 310/-. THE CASE WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT AND ACCORDINGLY NOTICE UNDER SECTION 143(2) WAS ISSUED ALONG WITH A NOTICE UNDER SECTION 142 (1) OF THE ACT. 3. DURING THE YEAR UNDER CONSIDERATION ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF DESIGNER PRODUCTS. IN THE ASSESSMENT PROCEEDINGS LD. AO OBSERVED THAT ASSESSE E HAS CLAIMED BAD DEBTS WRITTEN OFF AMOUNTING TO RS.26,56 ,282/-UNDER THE HEAD SELLING EXPENSES. ASSESSEE WAS ASKED TO FU RNISH DETAILS AND JUSTIFICATION OF ITS CLAIM IN RESPONSE, TO WHIC H ASSESSEE SUBMITTED THAT ALL THE AMOUNTS WHICH WERE WRITTEN O FF WERE CONSIDERED AS INCOME IN ONE OF THE OTHER YEAR. IT W AS SUBMITTED THAT THIS AMOUNT IS LESS THAN 24% OF TOTAL TURNOVER OF ASSESSEE. LD.AO HOWEVER DISALLOWED THE SUM AND ADDED BACK TO THE TOTAL INCOME ON THE GROUND THAT ASSESSEE HAS NOT ESTABLIS HED THAT THE DEATH HAS BECOME BAD AND HENCE RETURN OF. 4. LD. AO FURTHER MADE ADDITION OF RS. 6,75,008/-ON ACCOUNT OF UNDISCLOSED INCOME ON THE GROUND THAT THE SAID S UM WAS 3 ITA NO. 4770.DEL.2014 REFLECTING IN 26 AS BUT NOT IN THE ITR/P&L ACCOUNT FILED BY ASSESSEE ALONG WITH THE RETURN OF INCOME. 5. AGGRIEVED BY THE ORDER OF LD.AO, ASSESSEE PREFER RED APPEAL BEFORE THE LD.CIT (A) CONFIRMED THE ADDITIONS MADE BY LD.AO. AGGRIEVED BY THE ORDER OF LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. GROUND NO. 1 LD. AR ARGUED THAT AS PER THE AMENDMENT IN SECTION 36 (1) (VII) OF THE ACT ASSESSEE IS NOT REQUIRED TO FURNISH ANY DET AILS. FURTHER LD. AR SUBMITTED THAT 75% OF THE BAD DEBTS CLAIMED RELATE TO ASSESSMENT YEAR 2009-10 AND 2010-11 WHERE THE SALES PERTAINING TO THOSE HAD BEEN SHOWN ON WHICH THE PRO FIT HAS BEEN TAXED. HE SUBMITTED THAT BAD DEBTS FOR THE CURRENT FINANCIAL YEAR ALSO HAS BEEN SHOWN AS SALE, AND PROFIT BOOKED ON T HE SAME AS WELL. LD. AR PLACED RELIANCE UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF THE T.R.F. LTD VS CIT REPORTED IN 323 ITR 397 WHEREIN HONBLE COURT HELD AS UNDER: THIS POSITION IN LAW IS WELL SETTLED. AFTER 01/04/ 89 IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE DEATH IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF ASSESSEE. 6. FURTHER LD. AR SUBMITTED THAT SOME OF THE PARTIE S MENTIONED BY ASSESSING OFFICER PERTAINS TO FINANCIA L YEAR 2008-09 AND 2009-10 AND FOR THOSE THE SALES HAVE ALREADY BE EN BOOKED. ON THE CONTRARY LD. DR SUBMITTED THAT THE ASSESSEE HAD SHOWN SUNDRY DEBTORS AMOUNTING TO RS. 1.14 CRORES ONLY ON THE SALES OF ABOUT RS. 16.84 CRORES. SHE SUBMITTED THAT CONSIDER ING THE LINE OF BUSINESS THE SUNDRY DEBTORS SHOWN BY ASSESSEE SU BSTANTIALLY 4 ITA NO. 4770.DEL.2014 LESS AND IT IS INCUMBENT ON THE ASSESSEE TO SHOW TH AT CONDITIONS LAID DOWN UNDER SECTION 36 (2) ARE SATISFIED IN THI S CASE. LD. DR SUBMITTED THAT IN MOST OF THE CASES SALES WERE MADE DURING THE CURRENT YEAR UNDER CONSIDERATION FOR WHICH NO COPY OF LEDGER/INVOICES FOR THE SALES HAVE BEEN PROVIDED IN CERTAIN CASES. SHE THEREFORE SUBMITTED THAT THE AUTHORITIES BELOW HAVE RIGHTLY DISALLOWED THE CLAIM OF BAD DEBTS BY ASSESSING. 7. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES AND THE LIGHT OF THE RECORDS PLACED BEFORE US . 8. ADMITTEDLY, ASSESSEE IN THE PRESENT CASE HAS BO OKED PROFIT ON THE SALES MADE. THUS ASSESSEE HAS ALREADY PAID T AX ON THE ENTIRE INVOICES RAISED UPON THE PARTIES WHO HAS MAD E PURCHASES. FURTHER RATIO LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF TRF LTD VERSUS CIT (SUPRA) SUPPORTS THE CONTENTIONS OF ASSESSEE. WE ARE THEREFORE INCLINED TO DELETE THE ADDITION MA DE BY LD. AO IN RESPECT OF BAD DEBTS. ACCORDINGLY GROUND NO. 1 R AISED BY THE ASSESSEE STANDS ALLOWED. GROUND NO. 2 LD. AR SUBMITTED THAT THERE WAS A CLERICAL ERROR ON THE PART OF ACCOUNTANT DUE TO SIMILARITY OF NAMES IN RESPECT OF PAYMENT OF RS. 6, 75, 008/-. HE SUBMITTED THAT IT HAS BEEN WRO NGLY SHOWN AS PAID TO ASSESSEE AND GOT REFLECTED IN FORM 26 A-S W HEREAS THE FACT WAS THE WORK WAS DONE BY DIRECTOR MRS. HARDEEP GUPT A IN HER PERSONAL CAPACITY IN HER PROPRIETORSHIP CONCERN BEI NG M/S.VIS A VIS LIVING. HE SUBMITTED THAT THE CORRECTED COPY OF FORM 26 A-S OF BOTH THE ENTITIES WHICH SHOWS THE AMOUNT OF RS. 6,7 5,008/-BEING REDUCED FROM THE TOTAL AMOUNT PAID TO THE COMPANY A ND INCLUDED IN THE PERSONAL FORM 26 A-S OF MRS HARDEEP GUPTA WE RE FILED 5 ITA NO. 4770.DEL.2014 BEFORE THE AUTHORITIES BELOW. HE REFERRED TO PAGES 15, 20, 29 OF PAPER BOOK. LD. AR SUBMITTED THAT SERVICES WERE REN DERED TO M/S UNITECH HIGH DEVELOPERS BY SMT. HARDEEP GUPTA IN H ER PERSONAL CAPACITY AND TO SUBSTANTIATE THESE, ASSESSEE PROVI DED AT THE TIME OF ASSESSMENT PROCEEDINGS VARIOUS DETAILS LIKE COPY OF INVOICE BY VIS A VIS LIVING TO UNITECH HIGH DEVELOPERS LTD, LE DGER ABSTRACT OF THE PARTIES THEREIN, BANK STATEMENTS OF VIS A VIS L IVING REFLECTING THE NET PAYMENT RECEIVED, AFFIDAVIT FROM SMT. HARDE EP GUPTA STATING THAT THE AMOUNT BELONG TO HER PROPRIETORSHI P CONCERN AND NOT TO ASSESSEE UNDER CONSIDERATION BEFORE US AND F ORM 26 A-S OF MRS HARDEEP GUPTA SHOWING EXCESS CLAIM OF TEDIOUS O N RS.6,75,008/-. LD. AR SUBMITTED THAT ALL THESE DETA ILS ARE FILED IN THE PAPER BOOK AT PAGES 17 TO 30. HE THUS SUBMITTED FOR THE DELETION OF ADDITION WRONGLY MADE IN RESPECT OF AN INCOME WHICH WAS NOT AT ALL EARNED BY ASSESSEE. 9. LD. DR ON THE CONTRARY SUPPORTED THE ORDER PASSE D BY AUTHORITIES BELOW. 10. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOT H THE SIDES AND THE LIGHT OF THE RECORDS PLACED BEFORE US . ON GOING THROUGH THE RELEVANT DOCUMENTS RELIED UPON BY ASSES SEE IT IS APPARENT THAT THE MISTAKE WAS A CLERICAL MISTAKE AN D ASSESSEE CANNOT BE PENALISED FOR AN INCOME WHICH WAS NOT EAR NED BY IT AT ALL FOR THE YEAR UNDER CONSIDERATION. AS THE ERRORS HAVE BEEN RECTIFIED WHICH IS REFLECTED IN THE RESPECTIVE FORM 26 A-S OF SUBSEQUENT DATES, WE ARE INCLINED TO DELETE THE ADD ITION MADE BY LD. AO. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED. 6 ITA NO. 4770.DEL.2014 11. IN THE RESULT APPEAL FILED BY ASSESSEE STA NDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25. 01.2018. SD/- SD/- (R.S.SYAL) (BEENA A. PILLAI) VICE PRESIDENT JUDICIAL MEMBER DATE: 25.01.2018 BINITA COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER I TAT, NEW DELHI S.NO. DETAILS DATE 1 DRAFT DICTATED ON 24 .0 1 .201 8 2 DRAFT PLACED BEFORE AUTHOR 2 5 .0 1 .201 8 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 2 5 .01.2018 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE A.R. 10 DATE OF DISPATCH OF ORDER 7 ITA NO. 4770.DEL.2014 8 ITA NO. 4770.DEL.2014