SHAH INVESTMENTS, FINANCIALS, DEVELOPMENTS & CONSULTANTS PVT. LTD., MUMBAI V. DCIT RANGE 1(3)(1), MUMBAI

ITA 5997/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0158 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 07-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: H N MOTIWALLA SHRI S K MITRA
• Keywords: Bad and doubtful debts; Set aside
• Section: 142(1); 115JB; 37(1); 143(1); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5997 /MUM/201 6 ( / ASSESSMENT YEAR: 20 12 - 13 ) SHAH INVESTMENTS, FINANCIALS, DEVELOPMENTS & CONSULTANTS PVT. LTD. C/O. H.N. MOTIWALLA & CO. 508 SHARDA CHAMBERS, 33, NEW MARINE LINES MUMBAI - 400020 . / VS. DCIT 1(3)(1) AAYAKAR BHAWAN, MUMBAI ./ ./ PAN/GIR NO. : AACCS0489G ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 08 / 0 5 / 201 9 / DATE OF PRONOUNCEMENT : 26 / 06 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 22 . 0 7 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 12 - 1 3 . 2 . THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS: - 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3, MUMBAI, ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN RESPECT OF DISALLOWANCE OF RS. ASSESSEE BY : SHRI H.N. MOTIWALLA REVENUE BY: SHRI S.K. MITRA ITA NO. 5997 / M/201 6 A.Y.20 12 - 13 2 15,97,433/ - AND RS.4.00 ,000/ - , BEING BUSINESS ADVANCES WRITTEN OFF, UNDER SECTION 28 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX HAS ALSO ERRED IN CONFIRMING THE DISALLOWANCE OF RS.15,97,433/ - , BUSINESS ADVANCE WRITTEN OFF BY THE APPELLANT, WHICH WAS GIVEN BY THE APPELLANT TO DEVELOP THE BUSINESS OF THE APPELLANT VIZ PLASTIC CONTAINERS TO M/S CHARANIYA ELECTRONICS PVT. LTD., WHO WAS MANUFACTURING PLASTIC CONTAINERS. HOWEVER, DUE TO ITS WEAK FINANCIAL CONDITION IT COULD N OT HELP THE APPELLANT TO DEVELOP THE BUSINESS. HENCE, THE APPELLANT HAS WRITTEN OFF THE SAME. 3. THE APPELLANT HAD ADVANCED RS. 4,00.000/ - VIDE DEMAND DRAFT NO. 433196 DATED JANUARY 15.2011 TO FINANCE MR. SALIM SHAIKH, ON HIS CLAIM, THAT HE CAN MANUFACTURE NON - FUEL BASED TWO WHEELERS. HOWEVER, THE SAID PROJECT COULD NOT HAVE MATERIALIZED. THEREFORE, THE SAID ADVANCE WAS WRITTEN OFF UNDER SECTION 28 OF THE ACT. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RE TURN OF INCOME FOR THE A.Y. 2012 - 1 3 ON 24 .09 .201 2 DECLARING TOTAL INCOM E TO THE TUNE OF RS . NIL. THE ASSESSEE DECLARED BOOK PROFIT OF RS.1,13,91,173/ - U/S 115JB OF THE ACT. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT, FINANCIALS, DEVELOPMENTS & CONSULTANTS SERVICES. THE NOTICE WAS ISSUED TO THE ASSESSEE . ON VERIFICATION, TH E AO ARRIVED AT THIS CONCLUSION THAT BAD DEBTS WERE NOT RELATED TO THE BUS INESS, THEREFORE, THE CLAIM OF THE ASSESSEE IN CONNECTION WITH BAD DEBTS IN SUM OF RS. 19,97,433/ - WAS DISALLOWED U/S 37(1) OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE. F EELING AGGRIEVED, THE A SSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED T HE ADDITION , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 TO 3 ITA NO. 5997 / M/201 6 A.Y.20 12 - 13 3 4. ALL THE ISSUES ARE IN CONNECTION WITH THE NON - ALLOWANCE OF RETURN OF BUSINESS ADVANCES IN SUM OF RS. 15,97,433/ - . THE LD. REPRESENTATIVE OF THE ASSESSEE HAS AR GUED THAT THE ASSESSEE PAID THE ADVANCE IN SUM OF RS.15,97,433/ - TO M/S. CHARANIY A ELECTRONICS PVT. LTD. WHO WAS THE MANUFACTURING PLASTIC CONTAINERS BUT FAIL TO COMPLY THE ORDER . IT IS ALSO ARGUED THAT THE ASSESSEE HAS PAID IN SUM OF RS.4,00,000/ - TO MR. SALIM SHAIKH W H O COME UP WITH THE IDEA OF MANUFACT URE OF NON - FUEL BASED TWO WHEELERS . THE SAID PROJECT COULD NOT BE MATERIALIZED AND THE ADVANCE BECOME IRRECOVERABLE SO THE SAME WAS SET - OFF BUT THE AO HAS WRONGLY DISALLOWED THE CLAIM OF THE ASSESSEE, THERE FORE, THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE, HENCE, IS LIABLE TO BE SET ASIDE AND THE CLAIM OF THE ASSESSEE IN SUM OF RS.19,97,433/ - IS LIABLE TO BE ALLOWED IN THE INTEREST OF JUSTICE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPART MENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. THE AO DECLINED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THIS FACT THAT THE ADVANCE WAS NOT FOR THE BUSINESS ACTIVITY WHICH BECAME BAD DEBTS. MOREOVER, IT IS ON RECORD THAT IT IS NO T THE BAD DEBTS RATHER ADVANCE PAID TO THE OTHER PARTY FOR SOME SPECIFIC PURPOSE WHICH IS NOT CLEAR ON RECORD . T HE ASSESSEE S MEMORANDUM OF ASSOCIATION AND BALANCE - SHEET AND COPY OF LEDGER ACCOUNT OF CHARANYA PVT. LTD FOR THE PERIOD OF W.E.F. 1 ST APRIL, 20 04 TO MARCH 31, 2012. CONFIRMED THAT THE ADVANCES HAS BEEN PAID TO CHARANYA PVT. LTD. AND SALIM SHAIKH BIKE PROJECT. THERE IS NO EVIDENCE ON RECORD TO WHICH IT CAN BE ASSUMED THAT THE SAME WAS FOR BUSINESS PURPOSE. THERE IS NO IOTA OF EVIDENCE ON RECORD TO WHICH IT CAN BE ASSUMED THAT THE ADVANCE WAS PAID FOR BUSINESS PURPOSE. MEMORANDUM OF ASSOCIATION IS ON THE FILE BUT THERE SHOULD BE SOME AGREEMENT BETWEEN THE PARTIES TO WHICH IT CAN BE ASSUMED ITA NO. 5997 / M/201 6 A.Y.20 12 - 13 4 THAT THE SAID ADVANCE WAS PAID FOR BUSINESS PURPOSE . NO AGRE EMENT BETWEEN THE PARTIES OR ANY UNDERSTANDING BETWEEN THE PARTIES IS ON RECORD TO WHICH IT CAN BE ASSUMED THAT THE ADVANCE WAS GIVEN FOR BUSINESS PURPOSE. NO DOUBT , THE ASSESSEE PAID THE AMOUNT IN SUM OF RS.19,97,433/ - TO CHARANYIA ELECTRONICS PVT. LTD. A ND RS.4,00,000/ - TO M/S. SALIM SHAIKH PROJECT BUT THERE IS NO EVIDENCE IS ON THE FILED TO WHICH IT CAN BE ASSUMED THAT THE SAID AMOUNT WAS ADVANCE D FOR THE BUSINESS PURPOSE. MOREOVER, IT HAS BEEN CLAIMED AS BAD DEBT B UT NO DEBTS OF ANY KIND WAS GIVEN WHICH BECAME BAD DEBTS AND REQUIRED WRITTEN OFF IN ACCORDANCE WITH LAW. THE EVIDENCE PRODUCED BEFORE US HAS ALREADY BEEN PRODUCED BEFORE THE LOWER AUTHORITIES. NO NEW EVIDENCE HAS BEEN PRODUCED BEFORE US TO WHICH IT CAN BE ASSUMED THAT THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE. THE EVIDENCE GIVEN BY ASSESSEE HAS ALREADY DISCUSSED AND DECIDED BY CIT(A) IN ITS ORDER. IN VIEW OF THE DISCUSSION MADE ABOVE, W E ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THESE ISSUE S ARE DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE . 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OP EN COURT ON 26 /06 /2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACC OUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 26 /06 /2019 V IJAY ITA NO. 5997 / M/201 6 A.Y.20 12 - 13 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) , / ITAT, MUMBAI