ITO, Trichy V. Shri T.P.Rajendran, Trichy

ITA 640/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6980 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-11-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: V A LAGAP
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 640/MDS/2011 (ASSESSMENT YEAR : 2001-02) THE INCOME TAX OFFICER, WARD II(1), TIRUCHIRAPALLI. (APPELLANT) V. SHRI T.P. RAJENDRAN, 55A, NORTH PILLAIYAR KOIL STREET, VARAGANERI, TIRUCHIRAPALLI. PAN : AAKHR1418P (RESPONDENT) APPELLANT BY : DR. I. VIJAYAKUMAR, CIT-DR RESPONDENT BY : SHRI V. A LAGAPPAN, CA DATE OF HEARING : 02.11.2011 DATE OF PRONOUNCEMENT : 04.11.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANC E IS THAT THE CIT(APPEALS) ALLOWED THE CLAIM OF ASSESSEE WITH REG ARD TO BAD DEBTS TO THE TUNE OF ` 25,94,880/-. AS PER THE REVENUE, THE DEBT WRITTEN OFF WAS NOT BONAFIDE AND WAS NOT OUT OF HONEST JUDGEMEN T. THEREFORE, IN I.T.A. NO. 640/MDS/11 2 VIEW OF THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. MORGAN SECURITIES & CREDITS (P) LTD. (292 ITR 339) AND THAT OF DIT V. OMAN INTERNATIONAL BANK SAOG (313 ITR 128), THE CLA IM COULD NOT HAVE BEEN ALLOWED. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN THE BUSINESS OF MONEY LENDING, HAD WRITTEN OFF BAD DEBTS OF ` 89,69,000/- IN ITS ACCOUNTS DURING THE RELEVANT PREVIOUS YEAR. ASSESS ING OFFICER, DURING THE COURSE OF ASSESSMENT, REQUIRED THE ASSESSEE TO FURNISH DETAILS OF BAD DEBTS CLAIMED WHICH, IT SEEMS, WAS NOT PROVIDED BY THE ASSESSEE. HENCE, SHE MADE A DISALLOWANCE THEREOF I N THE ASSESSMENT. 3. IN HIS APPEAL BEFORE LD. CIT(APPEALS), SUBMISSIO N OF THE ASSESSEE WAS THAT EACH OF THE DEBTOR WAS CLEARLY VE RIFIABLE AND THERE WAS EFFECTIVE WRITE-OFF OF THE AMOUNTS IN THE ACCOU NTS. AS PER THE ASSESSEE, THE MONEY LENT TO THE BORROWERS HAD BECOM E IMPOSSIBLE TO RECOVER AND THEREFORE, THE AMOUNTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNTS. LD. CIT(APPEALS) REQUIRED A REMAND REPOR T FROM THE A.O. AND IT SEEMS, IN THE REMAND REPORT, THE A.O. DID NO T DOUBT THE I.T.A. NO. 640/MDS/11 3 GENUINENESS OF CLAIM OF THE ASSESSEE REGARDING DEBT ORS. THE ASSESSING OFFICER ALSO CONFIRMED IN THE REPORT THAT ASSESSEE HAD WRITTEN OFF THE DEBTS IN THE BOOKS OF ACCOUNTS. LD . CIT(APPEALS) CONSIDERING THIS ALLOWED THE PLEA OF THE ASSESSEE. ACCORDING TO HIM, THE DEBTS HAD BECOME UNRECOVERABLE AND BAD AND THE ASSESSEE HAVING WRITTEN OFF SUCH AMOUNTS IN HIS BOOKS, DISAL LOWANCE WAS NOT WARRANTED. 4. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE ASSESSEE WAS UNABL E TO ESTABLISH THAT THE DEBTS HAD REALLY BECOME BAD AND THE WRITE- OFF WAS EFFECTED NOT IN A BONAFIDE MANNER. ACCORDING TO HIM, IN VIE W OF THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CIT V. COATES OF INDIA LTD. (232 ITR 324), IRRECOVERABILITY HAD TO BE EXAMINED AND I T COULD NOT BE LEFT AT THE CONVENIENCE OF THE ASSESSEE TO EFFECT A WRIT E-OFF. 5. PER CONTRA, LEARNED A.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. IN OUR OPINION, THE MATTER IS NO MORE RES INTEGRA IN VIEW OF THE DECISION I.T.A. NO. 640/MDS/11 4 OF HON'BLE APEX COURT IN THE CASE OF TRF LTD. V. CI T (323 ITR 397) (SC). IN THIS DECISION, HON'BLE APEX COURT HELD TH AT AFTER 1 ST APRIL, 1989, IT WAS NOT NECESSARY FOR AN ASSESSEE TO ESTAB LISH THAT DEBT, IN FACT, HAD BECOME IRRECOVERABLE. IT WAS ENOUGH IF T HE BAD DEBTS WERE WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF THE AS SESSEE. IN THE GIVEN CASE, ADMITTEDLY, ASSESSEE HAD WRITTEN OFF THE BAD DEBTS IN THE BOOKS. THEREFORE, IN VIEW OF THE DECISION OF HON'BLE APEX COURT IN THE CASE OF TRF LTD. (SUPRA), THE CLAIM COULD NOT HAVE BEEN DISALLOWED. LD. CIT(APPEALS) WAS, THEREFORE, JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE A.O. NO INTERFERENCE IS CALLED FOR. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 4 TH NOVEMBER, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 4 TH NOVEMBER, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A), TIRUCHIRAPALL I/ CIT-I, TIRUCHIRAPALLI/D.R./GUARD FILE