Multi Kilfire Pvt. Ltd., Baroda. V. The DY.CIT., Cent.Circle-1, Baroda.

ITA 500/AHD/2004

• Counselvise Citation: [2010] 137 COUNSELVISE.COM (IT) 0025 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-01-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 24-02-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD - AHMEDABAD D BENCH (BEFORE DR.O.K. NARAYANAN, VICE-PRESIDENT AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER) ITA NO.500/AHD/2004 [ASSTT.YEAR : 1999-2000] MULTI KILFIRE PRIVATE LTD. 103, SYNERGY HOUSE SUBHANPURA ROAD BARODA. VS. DCIT, CENT.CIR.1 BARODA. ASSESSEE BY : NONE REVENUE BY : SHRI C.K.MISHRA DATE OF ORDER RESERVED : 05-01-2010 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT : THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEA R IS 1999-2000. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- IV, AHMEDABAD DATED 9-12-2003 AND ARISES OUT OF THE PENALTY ORDER PASSE D UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THE AMOUNT OF PENALTY LEVIED IS RS.40,000/- 2. IN THE COURSE OF ASSESSMENT PROCEEDINGS, AN ADDI TION OF RS.1,10,528/- WAS MADE ON ACCOUNT OF DISALLOWANCE O F BAD DEBTS. THE AO LEVIED PENALTY ON THE BASIS OF THE SAID QUANTUM ADDITION ON THE GROUND THAT THE CLAIM OF DEDUCTION UNDER SECTION 36 (1)(VII) OF THE ACT WAS MADE BY THE ASSESSEE WITHOUT SATISFYING THE CON DITIONS PRESCRIBED FOR. THE ASSESSEE HAS RELIED ON A DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. ANJANI KUMAR CO. LTD, 124 TAXMA N 429 TO CLAIM DEDUCTION ON THE GROUND THAT THE AMOUNT HAS BECOME IRRECOVERABLE WHICH WAS PAID BY THE ASSESSEE TO A VENDOR FOR BUYING SEC OND-HAND MACHINERY. PAGE - 2 ITA NO.500/AHD/2004 -2- THE AO HELD THAT THE BAD DEBTS COULD BE CLAIMED AS DEDUCTION ONLY IF THE AMOUNT WAS EARLIER INCLUDED IN THE COMPUTATION OF T HE TAXABLE INCOME OF THE ASSESSEE. 3. WE CONSIDERED THE MATTER. THE QUANTUM ADDITION MADE BY THE AO COULD BE JUSTIFIED. BUT AT THE SAME TIME, IT IS TO BE SEEN THAT THE ADVANCE FOR PURCHASE OF SECOND-HAND MACHINERY WAS MADE BY T HE ASSESSEE FOR THE PURPOSE OF CARRYING ON ITS BUSINESS. THEREFORE, TH E ASSESSEE HAS A LOCUS STANDI TO ARGUE THAT IF NOT BAD DEBT PROPER, THE IRRECOVE RABLE AMOUNT COULD AT LEAST BE TREATED AS BUSINESS LOSS. ANY HOW, ALL THESE ARE MATTERS OF DISCUSSION AND INTERPRETATION. BUT FOR THE ABOVE DI FFERENCE IN VIEWS, THE ADDITION MADE BY THE ASSESSING AUTHORITY DOES NOT M AKE OUT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. ONLY THING IS THAT THE CLAIM MADE BY THE ASSESSEE A S DEDUCTION WAS NOT ACCEPTED. SUCH A SITUATION DOES NOT AUTOMATICALLY MAKE OUT A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS . IN THESE CIRCUMSTANCES, WE FIND THAT THE LEVY OF PENALTY IS NOT JUSTIFIED. IT IS DELETED. 4. IN RESULT THE PENALTY APPEAL FILED BY THE ASSESS EE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY THIS SIXTH DAY OF JAN UARY, 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (DR.O.K. NARAYANAN) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 06-01-2010 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE PAGE - 3 ITA NO.500/AHD/2004 -3- 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD