ITO 6(1)-1, MUMBAI V. AAGAM DESIGN BRODERIES P. LTD, MUMBAI

ITA 653/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3425 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2005-2006
• Appeal Filed On: 24-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, M UMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND RAJENDRA (AM) . . , , ./I.T.A. NO.653/MUM/2011 ( / ASSESSMENT YEAR:2005-06) INCOME TAX OFFICER - 6(1) - 1 ROOM NO.503, AAYAKAR BHAVAN, MUMBAI-400020 / VS. M/S AAGAM DESIGN BRODERIES PVT.LTD., 331, KEWAL INDL. ESTATE, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI-400013 ./ ./PAN/GIR NO. : AAACA9045Q ( ( / APPELLANT) .. ( ) ( / RESPONDENT) ( / APPELLANT BY : NONE ) ( + /RESPONDENT BY : MS.NEERAJA PRADHAN + - / DATE OF HEARING : 12.6.2013 + - /DATE OF PRONOUNCEMENT : 12.6.2013 / O R D E R PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSME NT YEAR 2005-06 AGAINST ORDER OF LD. CIT(A)-XIV, MUMBAI DATED 12.11.2010 ON FOLLO WING GROUNDS: 2. NOTICE WAS SENT TO THE ASSESSEE BY REGISTERED A D. AS PER AD CARD ON RECORD IT IS OBSERVED THAT THE NOTICE HAS BEEN SERVED ON THE ASSESSEE FOR THE DATE OF HEARING FIXED ON 12.6.2013 I.E. TODAY. HOWEVER, NONE APPEA RED ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FOR ADJOURNMENT. CONSIDERING THE FACTS OF THE CASE, WE HAVE DECIDED TO DISPOSE OF THE APPEAL AFTER CONSIDERING THE SUBMISSIONS OF THE LD. DR AND THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.653/MUM/2011 2 3. WE OBSERVE THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURER AND EXPORT OF KNITTED GARMENTS. DURING THE YEAR, THE ASSESSEE DE BITED NET SUNDRY BALANCES WRITTEN OFF AMOUNTING TO RS.32,90,131/- UNDER THE HEAD SELLIN G AND DISTRIBUTION EXPENSES HOWEVER, AS PER THE DETAILS FURNISHED , THE TOTAL S UNDRY BALANCES WRITTEN OFF DURING THE YEAR IS SHOWN AS RS.45,76,544/- WHICH IS ADJUSTED A GAINST THE CREDIT ITEMS WRITTEN BACK DURING THE YEAR TO THE EXTENT OF RS.12,86,412/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO JUSTIFY THE CLAIM OF SUNDRY BALANCES WRITTEN OFF A ND ASKED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS: I) TO PRODUCE THE LEDGER ACCOUNTS OF ALL THE PARTI ES IN RESPECT OF SUNDRY BALANCES WRITTEN OFF FOR THE LAST THREE YEARS AND T HE YEAR IN WHICH ACCOUNTED FOR; II) SPECIFY THE NATURE OF SUNDRY BALANCES W/OFF III) COMPLETE ADDRESS OF ALL THE REMAINING PARTIES AGAINST WHOSE NAMES SUNDRY BALANCES WERE CLAIMED (MENTIONED ABOVE); IV) EXPLAIN HOW THE SUNDRY BALANCES W/OFF HAVE BECO ME BAD DURING THE YEAR AND CLAIMED IN THE LIGHT OF THE FOLLOWING DECISIONS ALONG WITH SUPPORTING DOCUMENTARY EVIDENCE; (A) GUJARAT HC DECISION IN THE CASE OF DHALL ENTE RPRISES AND ENGINEERS P.LTD-207 CTR 729; B) MADRAS HC DECISION IN THE CASE OF SOUTH INDI A SURGICALS -287 ITR 62 V) PRODUCE THE BOOKS OF ACCOUNTS ALONG WITH BILLS/V OUCHERS THE AO HAS STATED THAT THE ASSESSEE FURNISHED THE C OPY OF LEDGER ACCOUNT FOR THE CURRENT AND PRECEDING YEAR BUT FAILED TO FILE THE R EMAINING DETAILS CALLED FOR JUSTIFYING THE SUNDRY BALANCES WRITTEN OFF AMOUNTING TO RS.45 ,76,544/- EVEN AFTER GIVING SO MANY OPPORTUNITIES TO THE ASSESSEE. THE AO IN PARAGRAPH 5.2.1 HAS STATED THAT AFTER ANALYZING THE FACTS THE FOLLOWING FINDINGS ARE REC ORDED : A. THE ASSESSEE HAS NOT PRODUCED THE LEDGER ACCOUN TS OF THE PARTIES FOR THE CORRESPONDING YEARS IN WHICH THE SUNDRY BALANCES WR ITTEN OFF WAS CONSIDERED WHILE COMPUTING THE INCOME DESPITE SEVERAL OPPORTUN ITIES GRANTED AS MENTIONED ABOVE; ITA NO.653/MUM/2011 3 B. THE ASSESSEE HAS NEITHER SPECIFIED THE NATURE O F SUNDRY BALANCES WRITTEN OF NOR PRODUCED THE BOOKS OF ACCOUNTS ALONG WITH BI LL TO EXAMINE THE NATURE OF SUNDRY BALANCES WRITTEN OFF; C. THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE AS TO WHAT EFFORTS WERE MADE TO RECOVER THE SAID AMOUNTS; D. THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE TO SUS TAIN ITS CLAIM THAT THE SAID BALANCES HAVE BECOME A BAD DEBT DURING THE YEAR; E. THE ASSESSEE FAILED TO FURNISH THE COMPLETE ADD RESSES OF THE 15 PARTIES MENTIONED ABOVE DESPITE SEVERAL OPPORTUNITIES GRANT ED AS MENTIONED ABOVE. IT IS RELEVANT TO STATE THAT THE AO HAS STATED THA T THE ASSESSEE HAS NOT FURNISHED COMPLETE ADDRESSES IN RESPECT OF 15 PARTIES, THE D ETAILS OF WHICH ARE MENTIONED BY HIM AT PAGE OF 2 OF THE AO AS UNDER : S.N O. NAME AMOUNT 1 ASHWIN C ASHER, TIRUPUR 5 , 640 2 M.A.SURESH,TIRUPUR 9 , 158 3 MOHAMED BASHEER,TIRUPUR 2 , 000 4 SRI LAXMI KRISHNA EXPORTS,TIRUPUR 2 , 898 5 VADANAYAKI PACKING IRONING,TIRUPUR 4 , 150 6 WELL KNOWN SYNDICATE, TIRUPUR 16 , 119 7 D. MANIRAMAN, TI RUPUR 4 , 12 , 235 8 ABDULLA TRADING CO.,TIRUPUR 32 , 970 9 INDIA OVERSEAS HOSIERIES,TIRUPUR 33 , 251 10 MR.JAYARAM,TIRUPUR 30 , 660 11 MR.RAJ, TIRUPUR 10 , 038 12 MR.RAJU,TIRUPUR 25 , 872 13 MR.RAMCHANDRAN, TIRUPUR 22 , 662 14 MR.THANKAVELU, TIRUPUR 2 , 10 , 998 15 NAVJYOT, EXPORTS, TIRUPUR 10 , 78 , 082 TOTAL 18 , 96 , 733 CONSIDERING THE ABOVE FACTS, THE AO DISALLOWED AN AMOUNT OF RS.45,76,544/- U/S 36(1)(VII) RWS 36(2) OF THE INCOME TAX ACT, 1961 (T HE ACT) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED THE ASSESSE E FILED APPEAL BEFORE THE LD.CIT(A). 5. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND AFTER SEEKING REMAND REPORT FROM THE AO HAS STATED THAT THE AMOUNT INVOLVED IN RESPECT OF 15 PARTIES IS AMOUNTING TO RS.1,08,928/-. THEREFO RE, THE LD.CIT(A) AFTER CONSIDERING THE DECISION OF THE HONBLE APEX COURT IN THE CAS E OF TRF LTD (323 ITR 397) (SC) HAS ITA NO.653/MUM/2011 4 CONFIRMED THE DISALLOWANCE OF BAD DEBTS TO THE EXT ENT OF RS.1,08,928/- AND DELETED THE BALANCE AMOUNT OF RS.44,67,616/- (RS.45,76,54 4-RS.1,08,928). HENCE, THIS APPEAL BY THE DEPARTMENT. 6. DURING THE COURSE OF HEARING, THE LD. DR SUBMITT ED THAT THE FACTUAL POSITION AS STATED BY THE LD. CIT(A) IN RESPECT OF AMOUNT OF 15 PARTIES IS NOT CORRECTLY STATED BY HIM. SHE REFERRED PAGE 2 OF THE ASSESSMENT ORDER AND S TATED THAT THE DETAILS GIVEN BY THE AO IN RESPECT OF 15 PARTIES AGGREGATING TO RS. 18,9 6,733/- AND WHEREAS THE LD. CIT(A) HAS STATED AT PAGE 7 OF THE IMPUGNED ORDER AGGREGAT ING AMOUNT OF RS.1,08.928/-. IT COMES IN RESPECT OF 8 PARTIES, THE DETAILS WHICH A RE GIVEN BY HIM INSTEAD OF 15 PARTIES FOR WHICH THE LD. CIT(A) HAS STATED THAT THE ASSE SSEE COULD NOT FURNISH THE DETAILS OF 15 PARTIES OUT OF 69 PARTIES INVOLVED FOR WHICH THE ASSESSEE HAS WRITTEN OFF THE AMOUNT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE L D. DR SUBMITTED THAT THE FACTS HAVE NOT BEEN CONSIDERED IN PROPER PERSPECTIVE BY THE L D. CIT(A).THEREFORE THE DISALLOWANCE MADE BY HIM IS NOT ON CORRECT FACTS. 7. ON CONSIDERATION OF THE ORDERS OF THE AUTHORITIE S BELOW AND IN THE LIGHT OF THE SUBMISSIONS OF THE LD. DR, WE FIND SUBSTANCE IN HE R SUBMISSIONS THAT THE AO AT PAGE 2 HAS STATED THAT THE AMOUNT IN RESPECT OF 15 PARTIE S AT RS.18,96,733/-, DETAILS OF WHICH HAVE BEEN MENTIONED IN PARAGRAPH 4 HEREINABOVE; AND WHEREAS THE LD. CIT(A) HAS STATED AGGREGATED AMOUNT IN RESPECT OF THESE 15 P ARTIES AT RS.1,08,928/-. HOWEVER, WE ALSO AGREE WITH THE LD. DR THAT THE SAID AMOUNT OF RS.1,08,928/- COMES IN RESPECT OF 8 PARTIES WHICH ARE REFLECTED AT SR.1,2,3,4,10 ,11,12 AND 13 OF THE ABOVE TABLE IN PARAGRAPH 4. WE OBSERVE THAT THE LD. CIT(A) HAS NO T STATED OTHER DETAILS WHILE DELETING THE AGGREGATING AMOUNT OF RS.44,67,616/ OUT OF THE TOTAL DISALLOWANCE OF RS.45,76,544/- MADE BY THE AO. IN VIEW OF THE ABO VE FACTS, WE CONSIDER IT PRUDENT TO SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIM FOR HIS FRESH CONSIDERATION WITH A DIRECTION TO DECIDE THE SAME AFTER GIVING DUE OPPORTUNITY TO THE PARTIES AND AFTER CONSIDERING SUCH EVIDENCE AS MAY BE PLACED BEFORE HIM. HENCE, WE, SET ASIDE THE ORDER OF THE LD.CIT(A) BY RESTORI NG THE ISSUE TO HIS FILE FOR HIS FRESH ADJUDICATION AFTER GIVING DUE OPPORTUNITY OF HEARIN G TO THE PARTIES AND BY A REASONED ORDER AS PER LAW. THE GROUNDS OF APPEAL TAKEN BY T HE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.653/MUM/2011 5 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED AFTER HEARING LD.DR IN THE OPEN COURT ON 12 TH JUNE, 2013 + 1 2 12 TH JUNE, 2013 + SD/- SD/- ( /RAJENDRA ) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 2 DATED 12/ 06/2013 . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. ( / THE APPELLANT 2. ) ( / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 7 )9 , - 9 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, $ //TRUE COPY// (ASSTT. REGISTRAR) - 9 , /ITAT, MUMBAI