ACIT, Trivandrum V. Kerala State Electricity Board, Trivandrum

ITA 55/COCH/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69113 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 05-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 17-01-2011
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: PREETHA S NAIR
• Keywords: Opportunity of being heard; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 55/COCH/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), TRIVANDRUM. VS. M/S. KERALA STATE ELECTRICITY BOARD, VYDHUTI BHAVAN, PATTOM P.O., TRIVANDRUM. [PAN: AABCK 5896J] (REVENUE-APPELLANT) (ASSESSEE -R ESPONDENT) REVENUE BY SHRI M. ANIL KUMAR, CIT(DR) ASSESSEE BY SMT. PREETHA S. NAIR, ADV. DATE OF HEARING 05/12/2013 DATE OF PRONOUNCEMENT 20/12/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 05-10-2010 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND IT RELAT ES TO THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF BAD DEBTS BY ACCEPTING THE CONTENTI ONS OF THE ASSESSEE. 3. THE FACTS RELATING TO THE SAID ISSUE ARE STATED IN BRIEF. THE ASSESSEE-COMPANY IS ENGAGED IN GENERATION AND SUPPLY OF ELECTRICITY. D URING THE COURSE OF ASSESSMENT PROCEEDINGS RELATING TO THE YEAR UNDER CONSIDERATIO N, THE ASSESSEE CLAIMED A SUM OF RS.5,79,27,386/- AS DEDUCTION UNDER THE HEAD BAD D EBTS WRITTEN OFF. THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO FURNISH THE BREAK UP DETAILS OF THE BAD DEBTS SO WRITTEN OFF. HOWEVER, THE ASSESSEE EXPRESSED ITS I NABILITY TO FURNISH THE BREAK UP DETAILS ON THE REASONING THAT THE SAME CONSISTS OF MORE NUM BER OF ACCOUNTS SPREAD OVER IN VARIOUS BRANCHES. NOT SATISFIED WITH THE SAID EXPL ANATION, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF BAD DEBTS. I.T.A. NO.55 /COCH/2011 2 4. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) ACCE PTED THE CONTENTIONS OF THE ASSESSEE THAT IT WOULD BE PRACTICALLY DIFFICULT FOR THE ASSESSEE TO PROVIDE CUSTOMER-WISE DETAILS OF DEBTS THAT HAVE WRITTEN OFF AS BAD. ACC ORDINGLY, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY WHETHER THE AMOUNT CLAI MED BY THE ASSESSEE REPRESENTS THE BAD DEBTS WRITTEN OFF OR IT WAS MERELY A PROVISI ON AND ALLOW THE CLAIM IF IT REPRESENTS THE AMOUNT ACTUALLY WRITTEN OFF IN THE BOOKS OF ACC OUNTS. AGGRIEVED BY THE SAID DECISION, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 5. THE LD. DR SUBMITTED THAT THE RESPONSIBILITY TO PROVE THE CLAIM OF ANY EXPENDITURE LIES UPON THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE HAS EXPRESSED ITS INABILITY TO FURNISH THE BREAK UP DETAILS OF BAD DE BTS WRITTEN OFF BY IT AND HENCE, THE ASSESSEE HAS FAILED TO DISCHARGE ITS RESPONSIBILITY . IN THIS SITUATION, THE LD. CIT(A) WAS NOT CORRECT IN OBSERVING THAT IT WOULD BE PRACTICAL LY DIFFICULT FOR THE ASSESSEE TO PROVIDE CUSTOMER-WISE DETAILS OF THE DEBTORS. THE LD. DR S UBMITTED THAT THE ASSESSEE IS A PUBLIC SECTOR COMPANY AND ITS ACCOUNTS ARE SUBJECTE D TO AUDIT BY C&AG, KERALA AND HENCE, IT WOULD BE MAINTAINING PROPER ACCOUNTS. AC CORDINGLY, THE LD D.R SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT IT WOULD BE DIFFICUL T TO SUBMIT THE BREAK UP DETAILS IS NOT ACCEPTABLE. THE LD. DR FURTHER SUBMITTED THAT THE LD. CIT(A) HAS EXCEEDED HIS POWER OF SETTING ASIDE THIS MATTER TO THE FILE OF THE ASS ESSING OFFICER FOR VERIFICATION. 6. ON THE CONTRARY, THE LD. AR SUBMITTED THAT THE A SSESSEE HAS WRITTEN OFF THE AMOUNTS WHICH COULD NOT BE RECOVERED BY IT ONLY AS BAD DEBTS. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT FURNISH THE B REAK UP DETAILS AT THE TIME OF THE ASSESSMENT PROCEEDINGS BUT SUBSEQUENTLY, IT HAS COL LATED THE DETAILS FOR THE ENTIRE AMOUNT OF RS. 5.79 CRORES REFERRED ABOVE. THE LD. AR HAS ALSO FURNISHED A COPY OF THE BREAK-UP DETAILS BEFORE THE BENCH. INVITING OUR AT TENTION TO THE SAID STATEMENT, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS ALSO CO-RELATED THE AMOUNT WRITTEN OFF WITH THE FINANCIAL YEAR IN WHICH THE SAME WAS BOOKED AS INCO ME. SHE FURTHER SUBMITTED THAT THE MAJOR AMOUNT WRITTEN OFF WAS RS. 4.14 CRORES PERTAI NING TO A CONSUMER NAMED M/S. SREELEKSHMI ELECTRO SMELTORS (P) LTD. WITH CONSUMER CODE NO. 31/3312 AND THE SAID AMOUNT HAS BEEN BOOKED AS INCOME OF THE ASSESSEE IN THE FINANCIAL YEAR 2004-05. ACCORDINGLY, THE LD. AR SUBMITTED THAT THERE IS NO INFIRMITY IN THE CLAIM MADE BY THE I.T.A. NO.55 /COCH/2011 3 ASSESSEE AND FURTHER SUBMITTED THAT SHE HAS NO OBJE CTION IN SETTING ASIDE THIS MATTER FOR VERIFICATION TO THE FILE OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSE THE RECORD. ADMITTEDLY, THE ASSESSEE DID NOT FILE THE BREAK UP DETAILS OF B AD DEBTS CLAIM TO THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. HOWEVER, LD CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY ACCEPTING THE SUBMISSIONS OF THE AS SESSEE THAT IT WOULD BE VERY DIFFICULT FOR IT TO COLLATE THE NECESSARY DETAILS. AS CONTEN DED BY THE LD D.R, THE RESPONSIBILITY TO PROVE THE CLAIM FOR DEDUCTION ALWAYS LIES UPON THE ASSESSEE AND HENCE, IN OUR VIEW, THE LD CIT(A) WAS NOT LEGALLY CORRECT IN ALLOWING THE C LAIM OF THE ASSESSEE WITHOUT CAUSING ANY EXAMINATION. IN ANY CASE, NOW THE LD. AR HAS F URNISHED THE BREAK UP DETAILS OF THE BAD DEBTS CLAIMED BY THE ASSESSEE BEFORE US AND ACC ORDING TO LD A.R, THE ASSESSEE HAS DULY COMPLIED WITH THE PROVISIONS OF SEC. 36(1)(VII ) BY DULY OFFERING THE AMOUNTS SO WRITTEN OFF AS ITS INCOME IN VARIOUS YEARS. WE NOT ICE THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM MADE BY THE ASSESSEE ONLY ON T HE REASONING THAT THE ASSESSEE DID NOT FURNISH THE BREAK UP DETAILS OF BAD DEBTS CLAIM . SINCE THE ASSESSEE HAS FURNISHED THE BREAK UP DETAILS FOR THE FIRST TIME BEFORE THE TRIBUNAL, WE ARE OF THE VIEW THAT THE CLAIM OF BAD DEBTS MADE BY THE ASSESSEE SHOULD BE E XAMINED AFRESH AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE O RDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING O FFICER WITH A DIRECTION TO EXAMINE THIS ISSUE AFRESH AND TAKE APPROPRIATE DECISION IN ACCOR DANCE WITH LAW AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 20-12-2 013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 20TH DECEMBER, 2013 GJ I.T.A. NO.55 /COCH/2011 4 COPY TO: 1. M/S. KERALA STATE ELECTRICITY BOARD, VYDHUTI BHAV AN, PATTOM P.O., TRIVANDRUM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(1), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, TRIVA NDRUM. 4.THE COMMISSIONER OF INCOME-TAX,TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN