DCIT, New Delhi V. Shri Jagdish Prasad Gupta, New Delhi

ITA 5373/DEL/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3417 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 30-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Keywords: Opportunity of being heard; Principle of natural justice; Bad and doubtful debts
• Section: 142(1)

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH D , NEW DELHI BEFORE : SHRI S UDHANSHU SRIVASTAVA , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO S . 5373 & 4839/DEL./2010 ASSESSMENT YEAR S : 2005 - 06 & 2006 - 07 D.C.I.T. CIRCLE 22(1), NEW DELHI. (APPELLANT) V S.. JAGDISH PRASAD GUPTA, A - 2, NEW FRIENDS COLONY, NEW DELHI.(PAN - AAHPG 6016D) (RESPONDENT) ITA NO. 1885/DEL./2011 ASSESSMENT YEAR S : 2008 - 09 D.C.I.T. CIRCLE 4(1), NEW DELHI. (APPELLANT) V S.. JAGDISH PRASAD GUPTA, A - 2, NEW FRIENDS COLONY, NEW DELHI. (RESPONDENT) C.O. NO. 262/DEL./2011 (IN ITA NO. 5373/DEL./2010 ) ASSESSMENT YEAR S : 2005 - 06 JAGDISH PRASAD GUPTA, A - 2, NEW FRIENDS COLONY, NEW DELHI. (APPELLANT) V S.. D.C.I.T. CIRCLE 22(1), NEW DELHI. (RESPONDENT) ASSESSEE BY SH. RAJEEV SAXENA , ADVOCATE & MS SUMANGLA SAXENA, ADVOCATE REVENUE BY SH. UMESH CHAND DUBEY, SR. DR DATE OF HEARING 13.04.2017 DATE OF P RONOUNCEMENT 21 .04.2017 2 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 ORDER P ER BENCH : ALL THE THREE APPEALS OF THE REVENUE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE LD. CIT(APPEALS) DATED 15.09.2010, 17.08.2010 AND 10.02.2011 FOR THE ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2008 - 09 RESPECTIVELY. THE ASSESSEE HAS ALSO FILED A CROSS OBJECTION IN APPEAL FOR THE ASSESSM ENT YEAR 2005 - 06. 2. THE SOLITARY ISSUE INVOLVED IN ALL THE THREE APPEALS OF THE REVENUE, WHICH NEEDS ADJUDICATION , IS WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASES, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS OF RS. 34,31,730/ - , RS.3,40,21,302/ - AND RS. 2,78,11,677/ - RESPECTIVELY MADE BY THE AO AFTER DISALLOWING THE RENT RATE S AND TAXES. 3. THE LD. DR RELIED ON THE ORDERS OF THE ASSESSING OFFICER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDERS OF THE LD. CIT(A). 4. HAVING HEARD THE RIVAL SUBMISSIONS IN THE LIGHT OF ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE LD. CIT(APPEALS) HAVE 3 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 D ECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AFTER FOLLOWING THE DECISION OF ITAT DATED 31.07.2009 PASSED IN APPEALS OF THE REVENUE IN ASSESSEE S OWN CASES FOR THE ASSESSMENT YEARS 1997 - 98 TO 2002 - 03. NOT ONLY THIS, THE PRESENT ISSUE IS FURTHER COVERED IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE ORDER S OF ITAT DATED 22.01.2010 AND 01.02.2016 IN ASSESSEE S OWN CASES FOR ASSESSMENT YEARS 2004 - 05 AND 2009 - 10 . THEREFORE, THERE BEING NO CONTRARY MATERIAL ON RECORD FOR THE YEARS UNDER CONSIDERATION, RESPECTFULLY FOLLOWING THE DECISIONS OF CO - ORDINATE BENCHES OF ITAT PASSED IN VARIOUS ASSESSMENT YEARS, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE LD. CIT(APPEALS) ON THIS ISSUE. ACCORDINGLY, ALL THE THREE APPEALS OF THE REVENUE DESERVE TO BE DISMISSED. 5. IN THE CROSS OBJECTION OF THE ASSESSEE FOR A.Y. 2005 - 06, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : 1. ' THAT THE LD. CIT(A) HAS ERRED IN L AW AS WELL AS ON FACTS IN CONFIRMING DISALLOWANCE OF INTEREST OF RS. 33,635/ - OUT OF THE INTEREST CLAIMED IN THE BOOKS OF ACCOUNT OF M/S PRADEEP OIL CORPORATION, A PROPRIETOR CONCERN. 2. THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON FACTS IN C ONFIRMING THE DISALLOWANCE OF BAD DEBTS AMOUNTING TO RS. 4 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 5,12,541/ - UNDER THE PROPRIETORSHIP CONCERN DURING THAT YEAR M/S JINDAL SERVICE STATION. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING DISALLOWANCE OF INTEREST OF RS. 1,14,474/ - OUT OF THE INTEREST CLAIMED IN THE BOOKS OF ACCOUNT OF M/S JINDAL SERVICE STATION, A PROPRIETOR CONCERN. 4. THAT THE CIT (A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITION OF RS. 3,24,300/ - ON ACCOUNT OF SUNDRY CRED ITORS IN THE PROPRIETORSHIP CONCERN M/S JINDAL MOTORS. 6. OUT OF ABOVE GROUNDS, GROUNDS NOS. 1 & 3 ARE NOT PRESSED BY THE LD. AR OF THE ASSESSEE. THEREFORE, THESE GROUN D S ARE DISMISSED AS NOT PRESSED. 7. THE RELEVANT FACTS RELATING TO GROUND NO. 2 OF THE CROSS OBJECTION ARE THAT THE ASSESSEE HAS CLAIMED BAD DEBT OF RS.5,12,541/ - AS PER PROVISIONS OF SECTION 36(1)(VII) OF THE IT ACT. THE ASSESSING OFFICER ISSUED NOTICE U/S. 142(1) AND ASKED THE ASSESSEE TO FURNISH LEDGER ACCOUNT OF THE PARTIES (WITH NARRATION), SHOWING THE ENTRIES WHEREIN THE DEBT HAD ARISEN. HOWEVER, DESPITE SEVERAL OPPORTUNITIES, THE ASSESSEE DID NOT SUBMIT THE REQUISITE DETAILS BEFORE THE AO. THE ASSESSEE ALSO DID NOT EXPLAIN 5 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 AS TO WHAT W AS THE NATURE OF ADVANCES. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE CLAIM STATING AS UNDER : THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE ALLOWABILITY OF THE ABOVE MENTIONED BAD DEBTS AS CLAIMED. FROM THE AFORESAID IT IS CLEAR THAT THE SAID AMOUNT IS AN ADVANCE AND NOT A DEBT. THE AMOUNT HAS NOT BEEN TAKEN INTO ACCOUNT IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR. ACCORDINGLY THE SAME IS NOT ALLOWABLE AS PER THE PROVISIONS OF SECTION 36(1)(VII) OF THE INCOME TAX ACT, WHICH GOVE RNS THE ALLOWABILITY OF BAD DEBTS. HENCE, THE EXPENSE OF RS. 5,12,541/ - AS CLAIMED BY THE ASSESSEE IS DISALLOWED. 8. THIS DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A) IN APPEAL BEFORE HIM VIDE THE IMPUGNED ORDER. BEING AGGRIEVED, THE ASSESSEE HAS FILED THE CROSS OBJECTION BEFORE THE TRIBUNAL. 9. THE LD. AR OF THE ASSESSEE FURNISHED BEFORE US A WRITTEN SYNOPSIS STATING THEREIN AS UNDER : 2.3. IT IS SUBMITTED THAT THE GROUND NO. 2 RELATES TO DISALLOWANCE OF BAD DEBTS WRITTEN OFF DURING THE YEAR IN THE BOOKS OF PROPRIETORSHIP CONCERN M/S. PRADEEP OIL CORPORATION (WRONGLY STATED JINDAL SERVICE STATION). THE ASSESSING OFFICER AT PAGE 7 OF THE ASSESSMENT ORDER DISCUSSED THAT THE SAME WAS DISALLOWED ON THE GROUND OF NOT PROVIDING LEDGER ACCOUNTS SHOWING THE ENTRIES WHEREIN THE DEBT HAS ARISEN. HE FURTHER STATED THAT HE COULD NOT EXAMINE WHETHER IT IS DEBT OR ADVANCE. THE CIT (A) AT PARA 8 CONFIRM THE DISALLOWANCE IN VIEW OF SECTION 36(2) WHICH REQUIRES THAT THE SAME HAS TO BE TAKEN INTO ACCOUNT AS INCOME IN PREVIOUS YEARS. HE HELD THAT THERE IS NO EVIDENCE FURNISHED ON THIS ACCOUNT. 6 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 2.4 IT IS SUBMITTED THAT IN VIEW OF REC ENT DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS CIT 2 0 12 - TOIL - 16 - SC - IT - LB FOLLOWING EARLIER DECISIONS IN THE CASE SOUTHERN TECHNOLOGIES LTD. VS JC1T (2010) 2 SCC 54 8 WHERE IT WAS HELD THAT - 3 7. TO UNDERSTAND THE AB OVE DICHOTOMY ONE MUST UNDERSTAND 'HOW TO WRITE OFF.' IF AN ASSESSEE DEBITS AN AMOUNT OF DOUBTFUL DEBT TO THE P&L ACCOUNT AND CREDITS THE ASSET AMOUNT LIKE SUNDRY DEBTOR'S ACCOUNT, IT WOULD CONSTITUTE A WRITE - OFF OF AN ACTUAL DEBT. HOWEVER, I F AN ASSESSEE DEBITS 'PROVISION FOR DOUBTFUL DEBT' TO THE P &L ACCOUNT AND MAKES A CORRESPONDING CREDIT TO BE 'CURRENT LIABILITIES AND PROVISIONS' ON THE LIABILITY SIDE OF THE BALANCE SHEET, THEN IT WOULD CONSTITUTE A PROVISION FOR DOUBTFUL DEBTS. IN THE LATTER CASE, TH E ASSESSEE WOULD NOT BE ENTITLED TO REDUCTION AFTER 1.4.1989.' 2.5 IT IS SUBMITTED THAT THE REASONING OF THE CIT (A) AFTER PERUSING THE DETAILS FILED UNDER RULE 46A ARE CONTRARY TO THE INTERPRETATION MADE BY THE HON BLE SUPREME COURT WHERE IT WAS HELD THA T THE DOUBTFUL DEBT CAN BE WRITTEN OFF AFTER DEBITING THE P&L ACCOUNT CREDITING THE DEBTORS ACCOUNT. THE ASSESSEE HAS EXACTLY DONE SO AND THEREBY ENTITLED TO CLAIM THE BAD DEBTS. COPY OF SUBMISSIONS, BALANCE SHEET ALONG WITH RELEVANT DOCUMENTS IS PLACED IN THE PAPER BOOK SEPARATELY FILED. 2.6 IT IS THEREFORE HUMBLY REQUESTED THAT IN VIEW OF HON BLE SUPREME COURT'S DECISION THE CLAIM OF BAD DEBTS MAY KINDLY BE ALLOWED. 10. THE LD. AR ALSO RELIED ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF M/S. VIJAYA BANK VS. CIT, 2010 - TIOL - 31 - SC - IT. 7 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 11. THE LD. DR, ON THE OTHER HAND RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 12. AFTER HEARING BOTH THE SIDES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE NOTE FROM THE ORDER OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE ASSESSEE THAT IT IS NOT CLEAR WHETHER IT WAS A BUSINESS ADVANCE WHICH HAD ARISEN DURING THE ORDINARY COURSE OF BUSINESS OR NOT. THEREFORE, WE THINK IT FIT TO REMIT THIS ISSUE TO THE FILE OF THE AO FOR VERIFICATION OF THE ADV ANCES GIVEN BY THE ASSESSEE IN THE PROPRIETORSHIP CONCERN, M/S. PRADEEP OIL CORPORATION. ON VERIFICATION, IN CASE THE IMPUGNED DEBTS ARE FOUND AS BUSINESS ADVANCES, THE ASSESSING OFFICER SHALL DECIDE THE ISSUE IN VIEW OF THE PRINCIPLE OF LAW LAID DOWN BY H ON BLE SUPREME COURT IN THE CASE OF VIJAYA BANK (SUPRA) AND IF IT IS FOUND OTHERWISE, HE SHALL BE AT LIBERTY TO DECIDE THE ISSUE AS PER LAW. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, GROUND NO. 2 OF T HE CROSS OBJECTION DESERVES TO BE ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 13. THE BRIEF FACTS RELATING TO GROUND NO. 4 ARE THAT THE PROPRIETORSHIP CONCERN, NAMELY M/S. JINDAL MOTORS WAS BEING RUN BY THE ASSESSEE. IN THE BALANCE SHEET OF THIS CONCERN, THE ASSESSEE HA D SHOWN SUNDRY CREDITORS OF RS.3,24,300 / - . DURING THE YEAR, THERE WAS NO BUSINESS ACTIVITIES IN THIS UNIT UNDERTAKEN BY THE ASSESSEE AND THE ASSESSEE DID NOT SUBMIT THE DETAILS OF THE SUNDRY CREDITORS AND CONFIRMATIONS AS REQUIRED BY THE ASSESSI NG OFFICER. THE ASSESSEE HIMSELF HAS STATED THAT THIS UNIT WAS CLOSED AND THE CREDITORS HAD NOT PROVIDED ANY SERVICE NOR THE AMOUNT HAS BEEN RETURNED. THE ASSESSING OFFICER ON THE BASIS OF SUBMISSIONS OF THE ASSESSEE CONCLUDED THAT THE SAID LIABILITY NO LO NGER EXISTS. HE, THEREFORE, ADDED THE SAID AMOUNT TO HIS INCOME. THE LD. CIT(A) ASKED THE ASSESSEE TO PROVE THAT THE IMPUGNED LIABILITY STILL EXISTS. THE LD. CIT(A) , HOWEVER, HAS OBSERVED IN HIS ORDER THAT HOWEVER, THE AUTHORIZED REPRESENTATIVE OF THE AP PELLANT SUBMITTED THAT THE GROUND OF APPEAL WITH RESPECT TO THIS ADDITION IS NOT PRESSED. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED . AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE HAS CHALLENGED THE DECISION OF THE CIT(A) IN THIS CROSS OBJECTION. 9 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 14. AT THE OUTSET, THE LD. AR STRONGLY SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY NOTED IN HIS ORDER THAT THIS GROUND WAS NOT PRESSED BY THE ASSESSEE. THE LD. AR FURTHER FILED WRITTEN SYNOPSIS STATING AS UNDER : 2.7 GROUND NO.4 RELATES TO CONFIRMATION OF THE ADDITION OF RS.3,24,300/ - ON ACCOUNT OF SUNDRY CREDITORS IN THE PROPRIETORSHIP CONCERN OF JINDAL MOTORS. THE ASSESSING OFFICER DISALLOWED THE SAME ON ACCOUNT FOR NOT FURNISHING THE DETAILS OF SUNDRY DEBTORS. CIT (A) ALSO CONFIRMED THE SAME BY STATING THAT THE APPELLANT DID NOT PRESS THE GROUND OF APPEAL. 2.8 . IT IS SUBMITTED THAT THE BUSINESS OF JINDAL MOTORS WAS IN RELATION TO WORKSHOP OF THE VEHICLES AT THE PREMISES OF JINDAL SERVICE STATION WHO WAS RUNNING PETROL PUMP. M/S. JINDAL SERVICE STATION EXPANDED THE PETROL PUMP AND SO BUSINESS OF JINDAL MOTORS HAS SUFFERED AND SO THERE NOT MUCH TRANSACTIONS DURING THE YEAR. IT IS NOT A CASE THAT ASSESSEE DID NOT PRESS BUT IN THE SUBMISSIONS IT WAS ARGUED THAT NO QUE R Y HAS BEEN RAISED AND THE AO HAS NOT EXAMINED THE FACTS OF THE CASE. KINDLY REFER PAGE 5 OF THE PAPE R BOOK. 2.9 IT IS HUMBLY REQUESTED THAT IN THE AFORESAID CIRCUMSTANCES THE ADDITION MADE BE DELETED. 15. THE LD. DR SUBMITTED THAT THE ASSESSEE CANNOT RAISE THIS GROUND OF APPEAL BECAUSE HE HAS NOT PRESSED THIS GROUND BEFORE THE LD. CIT(A). THEREFORE, T HIS GROUND OF APPEAL BECOMES INFRUCTUOUS. HE RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 10 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 16. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON THE MAINTAINABILITY OF THIS GROUND, WE FIND THAT THOUGH THE LD. CIT(A) HAS MENTIONED THIS GROUND HAVING BEEN NOT PRESSED BY THE ASSESSEE, BUT THE ASSESSEE DENIES THIS FACTUM BEFO RE US. HOWEVER, WITHOUT ENTERING INTO THE OBSERVATION AND FINDING OF THE LD. CIT(A) AND COUNTER CLAIM OF THE ASSESSEE, WE DECIDE THIS GROUND ON ITS MERITS IN THE INTEREST OF NATURAL JUSTICE. THE LD. AR OF THE ASSESSEE INVITED OUR ATTENTION TO THE WRITTEN S UBMISSIONS MADE BEFORE THE LD. CIT(A) IN THIS REGARD. A PERUSAL OF THE RECORD , HOWEVER, SHOWS THAT IT IS NOT CLEAR WHETHER THE ASSESSEE HAS MADE PAYMENTS TO SUNDRY CREDITORS IN SUBSEQUENT YEARS. THE CONTENTION OF THE ASSESSEE HAS ALSO BEEN THAT THE ASSESS ING OFFICER HAS NOT PROPERLY VERIFIED THE FACTS. THERE IS NO FINDING OF THE LD. CIT(A) ON THE MERITS OF THIS ISSUE. THE ASSESSEE HAS ALSO NOT MADE CLEAR WHETHER THE LIABILITY STILL EXISTS OR NOT. IN PRESENCE OF THESE FACTS, WE DEEM IT PROPER TO RESTORE THE MATTER TO THE FILE OF AO FOR PROPER VERIFICATION OF THE SUNDRY CREDITORS AND TO DECIDE THE ISSUE AFRESH AFTER EXAMINING THE FACT WHETHER THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO SUNDRY CREDITORS IN SUBSEQUENT YEARS OR NOT OR WHETHER THE 11 ITA NOS. 5373, 4839/D/10, 1885/D/11 & CO NO. 262 LIABILITY ST ILL EXISTS OR NOT . THE ASSESS EE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THIS GROUND OF CROSS OBJECTIONS ALSO DESERVES TO BE ALLOWED FOR STATISTICAL PURPOSES. 17. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE C ROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.04.2017. SD/ - SD/ - ( SUDHANSHU SRIVASTAVA ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21.04.2017 *AKS * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR, ITAT 5. GUARD FILE ASSISTANT REGISTRAR