ACIT CEN CIR 45, MUMBAI V. PARAMSHAKTI STEELS LTD, MUMBAI

ITA 5587/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4257 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Bad and doubtful debts

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5587/MUM/2013 ASSESSMENT YEAR:2008-09 ACIT-CC-45, 6 TH FLOOR, ROOM NO.658, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S PARAMSHAKTI STEEL, 203, LOHA BHAVAN, PD MELLO ROAD, MUMBAI-400009 ( / REVENUE ) ( ! ' /ASSESSEE) PAN. NO . AAFCS7494A / REVENUE BY SHRI C.N. ANGOLKAR ! ' / ASSESSEE BY SHRI SANJAY PARIKH # $ % ' & / DATE OF HEARING : 11/04/2016 % ' & / DATE OF ORDER: 11/04/2016 ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 05/06/2013 OF THE FIRST APPELLATE AUTHORITY, MUMBAI . THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO DELET ING THE ADDITION MADE ON ACCOUNT OF BAD DEBTS WITHOUT APPRE CIATING THE FACT THAT THE ASSESSEE HAS NOT FULFILLED THE CO NDITIONS CONTAINED U/S 36(1)(VII) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER THE ACT) FOR CLAIMING THE ALLOWABILITY OF BAD DEBTS AND FURTHER WITHOUT PROVIDING OPPORTUNITY TO THE LD . ASSESSING OFFICER, AS PER THE PROVISIONS OF RULE 46 A OF THE INCOME TAX RULES, 1962(HEREINAFTER THE RULES). 2. DURING HEARING, THE LD. DR, SHRI C.N. ANGOLKAR, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE , SHRI SANJAY PARIKH, DEFENDED THE CONCLUSION ARRIVED AT I N THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE DECISIO N FROM HONBLE APEX COURT IN T.R.F. LTD. VS CIT (2010) 323 ITR 397 (SC). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUS INESS OF TRADING OF IRON AND STEEL PRODUCTS DECLARED INCOME OF RS.2,47,06,898/- ON 30/09/2008 IN ITS RETURN. THE A SSESSEE IN ITS PROFIT & LOSS ACCOUNT DEBITED RS.69,22,538/- CLAIMING ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 3 THE SAME AS BAD DEBTS WRITTEN OFF. THE LD. ASSESSI NG OFFICER FOLLOWING THE DECISION IN KASHMIR TRADING COMPANY V S DCIT (2007) 291 ITR 288 (RAJ.) AND CIT VS AHMADABAD ELEC TRICITY COMPANY LTD. (2003) 262 ITR 97 (GUJ.) DISALLOWED TH E SAME BY HOLDING THAT AS PER SECTION 36(2) OF THE ACT, ME RELY WRITING OFF OF ANY AMOUNT AS BAD DEBT AS IRRECOVERABLE IS N OT ENOUGH. ON APPEAL, BEFORE THE COMMISSIONER OF INCOME TAX (A PPEAL) , THE APPEAL OF THE ASSESSEE WAS ALLOWED, WHICH IS UN DER CHALLENGE BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE CASE O F THE ASSESSEE IS SQUARELY COVERED THE DECISION OF THE TR IBUNAL IN THE CASE OF ACIT VS M/S BANK OF BARODA FOR A.Y. 200 5-06 (ITA NO.2927/MUM/2011 ETC.) ORDER DATED 25/07/2014. THE FOLLOWING CASES ALSO SUPPORTS THE CASE OF THE ASSES SEE. I) SOUTH INDIAN BANK V/S CIT, 262 ITR 579 (KAR.); II) DCIT V/S CATHOLIC SYRIAN BANK LTD., 267 ITR 52, ITAT COCHIN SPECIAL BENCH; III) STATE BANK OF BIKANER & JAIPUR V/S DCIT, [2001 [ 74 ITD 203 (JAIPUR BENCH); IV) BANK OF BARODA V/S JCIT, ITAT B BENCH, MUMBAI , FOR A.Y. 199697, 199798 AND 200001; ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 4 V) TRF LTD. V/S CIT, 323 ITR 397 (SC) AND VIJAYA BA NK V/S CIT (SC) 323 ITR 167. 2.3. EVEN OTHERWISE, IN VIEW OF THE AMENDMENT IN T HE TAXATION LAWS WITH EFFECT FROM 01 ST APRIL, 1989, THE REQUIREMENT OF DEMONSTRATING THAT THE DEBTS HAS BEC OME BAD HAS BEEN DISPENSED WITH AND ONLY REQUIREMENT REMAIN S THAT IT SHOULD BE WRITTEN OFF IN BOOKS OF ACCOUNTS OF THE ASSESSEE, WHICH HAS BEEN FURTHER CLARIFIED BY CBDT CIRCULAR N O.551 DATED 23/01/1990. OUR VIEW FIND SUPPORT FROM THE RA TIO LAID DOWN IN CIT VS BRILLIANT TUTORIALS PVT. LTD. 292 IT R 399 (MAD.), CIT VS MORGAN SECURITIES AND CREDITS PVT. L TD. (210 CTR 336)(DEL.), DCIT VS OMAN INTERNATIONAL BANK SAO G. (313 ITR 128)(BOM.), CIT VS STAR CHEMICALS (BOM.) PVT. L TD. 220 CTR 319 (BOM.), CIT VS GLOBAL CAPITAL LTD. 201 TAXA TION 210 (DEL.), CIT VS M/S EXCEL FASHION PVT. LTD. (201 TAX ATION 216)(DEL), CIT VS AUTO METERS LTD. 292 ITR 345 (DEL .). SO FAR AS, THE RELIANCE UPON THE DECISION IN KASHMIR TRADI NG COMPANY VS DCIT AND AHAMADABAD ELECTRICITY COMPANY LTD. (SUPRA), THE DECISION FROM HONBLE RAJASTHAN HIGH C OURT AND GUJARAT HIGH COURT ARE CONCERNED, THE HONBLE APEX COURT, LATER ON, IN T.R.F. LTD. VS CIT 323 ITR 397 (SC), CONSIDERING THE PROVISION OF SECTION 36(1)(VII), PRIOR TO APRIL , 1, 1989 AND POST AMENDMENT HELD THAT IT IS NOT NECESSARY FOR TH E ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRR ECOVERABLE. MERE WRITTEN OFF IN ITS ACCOUNTS IS ENOUGH, THUS, F OLLOWING THE AFORESAID DECISION FROM HONBLE APEX COURT, WE FIND NO ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 5 INFIRMITY IN THE CONCLUSION DRAWN BY THE COMMISSION ER OF INCOME TAX (APPEAL). 2.4. SO FAR AS, THE CONTENTION OF THE LD. DR THAT THERE IS VIOLATION OF RULE 46A OF THE RULES IS CONCERNED, WE FIND THAT THERE IS NO SUCH VIOLATION BY THE COMMISSIONER OF I NCOME TAX (APPEAL) AND THE ISSUE HAS BEEN DELIBERATED UPON IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. IT IS NO T THE CASE THAT ANY ADDITIONAL EVIDENCE WAS FILED BY THE ASSES SEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL), THUS, THER E IS NO MERIT IN THE CONTENTION OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESEN CE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 11/04/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ( DATED :11/04/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 # 1' ( *+ ) / THE CIT, MUMBAI. 4. 0 0 # 1' / CIT(A)- , MUMBAI 5. 23 .' , 0 *+& * 4 , # $ / DR, ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 6 ITAT, MUMBAI 6. 5 6$ / GUARD FILE. / BY ORDER, /2+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI