ITO 8(3)2, MUMBAI V. SM ENERGY TEKNIK & ELECTRONICS LTD, MUMBAI

ITA 6803/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8014 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 04-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PASNKAJ KUMAR
• Keywords: Bad and doubtful debts

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , ! '# $ $ $ $ , % && , , '# ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER ./ I.T.A. NO.6803/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR :2005-06 THE ITO 8(3)-2, AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. SM ENERGY TEKNIK & ELECTRONICS LTD., SM HOUSE, 11,SAHAKAR ROAD, VILE PARLE(E), MUMBAI-400 057 #) ! ./ %* ./ PAN/GIR NO. : AAACS 7372L ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . / APPELLANT BY: SHRI PASNKAJ KUMAR ,-)+ / . / RESPONDENT BY: NONE / 01! / DATE OF HEARING :04.08.2014 23( / 01! / DATE OF PRONOUNCEMENT :08.08.2014 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-18, MUMBAI DT. 26.7.2011 PERTAINING TO A .Y. 2005-06. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE ALTHOUGH ON THE PREVIOUS DATE OF HEARING ON 21.1.2014, THE LD. COUNSEL FOR T HE ASSESSEE HAD TAKEN ITA NO. 6803/M/2011 2 THE ADJOURNMENT AND WAS WELL WITHIN THE KNOWLEDGE O F THE DATE OF HEARING. 3. THE GRIEVANCE OF THE REVENUE IS TWO-FOLD. (I) T HE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES AMOUNTING TO RS. 4,69,452/- AND (II) THE L D. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF BAD DEBT OF RS. 27.95 LAKHS. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED FOREI GN TRAVELLING EXPENSES TO ITS PROFIT AND LOSS ACCOUNT AMOUNTING TO RS. 13, 24,537/- OUT OF WHICH RS. 3,21,457/- WAS EXPENDED TOWARDS THE COST OF TIC KETS. THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE DETAILS ALONGWITH DOCUMENTARY EVIDENCES FOR THE CLAIM OF RS. 10,03,080/-. THE AS SESSEE FILED DETAILS VIDE LETTER DT. 15.11.2007. THE AO FOUND THAT THERE WAS NO DETAIL IN RESPECT OF THE EXPENSES OF RS. 4,69,452/-, THE SAME WAS DISALL OWED. 5. THE LD. CIT(A) HAS CONSIDERED THIS GRIEVANCE AT PARA 3.1 OF HIS ORDER AND AT PARA 3.2 DELETED THE ADDITIONS MADE BY THE AO ACCEPTING THE CONTENTION OF THE ASSESSEE THAT ALL THE DETAILS ARE AVAILABLE ON RECORD. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE AO. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. THE LD. CIT(A) HAS HIMSELF MENTIONED IN HIS ORDER THAT THE AO IN HIS REMAND REPORT DT. 14.3.2011 HAS STATED THAT THE ASSESSEE C OULD NOT RECONCILE THE DIFFERENCE WHEREAS THE LD. CIT(A) WHILE DELETING TH E ADDITIONS AT PARA- 3.2. OF HIS ORDER HAS OBSERVED THAT I HAVE CONSIDERED THE SUBMISSIONS OF ITA NO. 6803/M/2011 3 THE APPELLANT AND REMAND REPORT OF THE AO AND I AGR EE WITH THE CONTENTION OF THE APPELLANT THAT ALL THE DETAILS AR E AVAILABLE ON RECORD HENCE THIS DISALLOWANCE IS DELETED. ONCE THE AO HAS MENTIONED IN HIS REMAND REPORT THAT THE ASSESSEE HAS FAILED TO FURNI SH DETAILS, THEN THE LD. CIT(A) SHOULD HAVE BROUGHT THOSE DETAILS ON RECORD BEFORE DELETING THE ADDITIONS MADE BY THE AO. THIS HAS MADE THE ORDER OF THE LD. CIT(A) ERRONEOUS AS NO SUCH DETAILS HAVE BEEN BROUGHT ON R ECORD, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THAT OF THE AO. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 8. WHILE SCRUTINIZING THE RETURN, THE AO FOUND THAT THE ASSESSEE HAS WRITTEN OFF BAD DEBTS OF RS. 11.27 LAKHS AND DOUBTF UL ADVANCES OF RS. 16.68 LAKHS. THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE DETAILS, JUSTIFICATION AND ALLOWABILITY OF THE CLAIMS OF BAD DEBT AND DOUBTFUL ADVANCES WRITTEN OFF. THE ASSESSEE FURNISHED A LIS T CONTAINING 16 NAMES EXCEPT FOR THAT THE ASSESSEE DID NOT FILE ANY DETAI LS IN RESPECT OF ITS CLIAM. THE AO PROCEEDED BY MAKING AN ADDITION OF RS. 27.95 LAKHS. 9. THE LD. CIT(A) HAS CONSIDERED THIS GRIEVANCE AT PARA-6 OF HIS ORDER AND AT PARA-6.3 CONSIDERING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TRF LTD 323 ITR 397 DELETED THE ADDITIO N OF RS. 27.95 LAKHS. 10. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SU PPORTED THE FINDINGS OF THE AO. 11. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WHEN THE LD. CIT(A) CALLED FOR THE REMAND REPORT FR OM THE AO, THE AO IN HIS REMAND REPORT HAS STATED THAT THE ASSESSEE C OULD NOT EXPLAIN WHETHER THE RESPECTIVE INCOMES HAD BEEN OFFERED TO TAX IN EARLIER YEARS. ITA NO. 6803/M/2011 4 THE LD. CIT(A) HAS FOLLOWED THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD (SUPRA) AND OTHER DECI SION OF THE HONBLE BOMBAY HIGH COURT BUT HAS GROSSLY FAILED IN CONSIDE RING THE OBSERVATIONS MADE BY THE AO. NO DOUBT, THE ASSESSEE NEED NOT HA VE TO ESTABLISH THE REASONS FOR WRITING OFF THE AMOUNT AS BAD DEBT BUT ONUS IS UPON THE ASSESSEE TO FULFILL THE CONDITIONS LAID DOWN U/S. 3 6(2)(I) OF THE ACT. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AO . THE ASSESSEE IS DIRECTED TO FULFILL THE CONDITIONS TO SEC. 36(2)(I) OF THE A CT IN SUPPORT OF ITS CLAIM OF WRITE OFF OF BAD DEBTS AND ADVANCES. THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2014 . '4 / 3( ! 5 6'7 8.8.2014 3 / & SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) '# / JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 6' DATED : 8 TH AUGUST, 2014 . . ./ RJ , SR. PS ITA NO. 6803/M/2011 5 '4 '4 '4 '4 / // / ,0 ,0 ,0 ,0 8(0 8(0 8(0 8(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :& ,0 , , / DR, ITAT, MUMBAI 6. &; < / GUARD FILE. '4 '4 '4 '4 / BY ORDER, -0 ,0 //TRUE COPY// = == = / > > > > % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI