Shri Ravindra M. Shah, Baroda V. The ACIT., Circle-2, Baroda

ITA 761/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5563 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S CHAUDHRY
• Keywords: Depreciation; Bad and doubtful debts; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N.S. SAINI, A M) ITA NO.761/AHD/2008 A.Y.: 2004-05 SHRI RAVINDRA M. SHAH, PROP. SHAH BULK CARRIERS, CHHANI, BARODA VS THE A. C. I. T., CIRCLE 2 (2), BARODA PA NO. ALUPS 6135 M (APPELLANT) (RESPONDENT) ITA NO.880/AHD/2008 A.Y.: 2004-05 THE A. C. I. T., CIRCLE 2 (2), BARODA VS SHRI RAVINDRA M. SHAH, PROP. SHAH BULK CARRIERS, CHHANI, BARODA PA NO. ALUPS 6135 M (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI DHIREN SHAH, AR DEPARTMENT BY SHRI D. S. CHAUDHRY, DR O R D E R PER BHAVNESH SAINI: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II, BARODA DATED 4-12-2007 FOR ASSESSMENT YEAR 2004-05. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE P ARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERE D THE MATERIAL ON RECORD POINTED OUT BY THE PARTIES. THE LEARNED COU NSEL FOR THE ASSESSEE FILED A CHART OF THE GROUNDS RAISED IN THE APPEAL O F THE ASSESSEE AND THE REVENUE, FILED COPIES OF THE FOLLOWING ORDERS OF TH E TRIBUNAL IN THE CASE OF THE SAME ASSESSEE AND STATED THAT ALL THE POINTS AR E COVERED BY THE BELOW MENTIONED ORDERS. ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 2 SR. NO . ITA NO . DATE OF ORDER NAME OF THE ASSESSEE 01. 2254 AND 2256/A/07 21-05-10 SHRI RAVINDRA M. S HAH AY 2003-04 02. 2768 AND 2769/A/02 08-08-2008 SHRI RAVINDRA M. SHAH AY 1998-99 & 1999-2000 3. ON GROUND NO.1 THE ASSESSEE CHALLENGED THE DISAL LOWANCE ON ACCOUNT OF CARTING EXPENSES RESTRICTED TO 1% AND TH E REVENUE ON GROUND NO.1 CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN RESTRICTING THE DISALLOWANCE OUT OF CARTING EXPENSES TO 1% FROM 2.5 % OF HALF OF THESE EXPENSES DISALLOWED BY THE AO. 4. BRIEFLY, FACTS OF THE CASE ARE THAT THE AO DISAL LOWED CARTING EXPENSES OF RS.8,94,772/-. THE AO DISCUSSED THIS IS SUE IN PARA 4 OF THE ASSESSMENT ORDER. IT WAS NOTICED BY THE AO THAT RAT IO OF THE CARTING EXPENSES TO THE CARTING RECEIPTS THIS YEAR WAS 82.9 6% AND ON FURTHER SCRUTINY OF THE DETAILS OF CARTING EXPENSES OF RS.1 1,06, 01,826/-, A SUM OF RS.9,17,66,249/- HAD BEEN PAID TO THE TRANSPORTE RS AND SINGLE OPERATORS OTHER THAN SISTER CONCERN OF THE ASSESSEE . IT WAS FURTHER NOTICED BY THE AO THAT CERTAIN VOUCHERS ARE SELF MA DE AND ARE NOT SUPPORTED BY BILLS. EVEN ADDRESSES AND IDENTITY OF THE DRIVERS WERE NOT ESTABLISHED. IT WAS ALSO NOTICED THAT AS COMPARED T O ASSESSMENT YEARS 2001-02 AND 2000-01 SUCH INCIDENTS OF LACK OF SUPPO RTING BILLS HAS INCREASED THIS YEAR AND HE ACCORDINGLY MADE DISALLO WANCE @ 2.5% OF 50% OF THE EXPENSES IN RESPECT OF TRANSPORTERS AND SING LE OPERATORS OTHER THAN SISTER CONCERN IN PLACE OF 7% OF 50% FOR THE ASSESS MENT YEARS 2000-01 AND 2001-02. IT WAS SUBMITTED BEFORE THE LEARNED CI T(A) THAT RATIO OF THE CARTING EXPENSES THIS YEAR HAS IN FACT DECREASED AS COMPARED TO LAST YEAR FROM 90% TO 82.97%, THEREFORE, THE OBSERVATION OF T HE AO IS INCORRECT THAT RATIO HAS INCREASED AS COMPARED TO EARLIER YEA RS. IT WAS SUBMITTED THAT EACH ASSESSMENT YEAR IS A SEPARATE YEAR AND DI SALLOWANCE MADE IN PAST CANNOT BE THE BASIS FOR MAKING THE DISALLOWANC E PARTICULARLY WHEN ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 3 NO DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF AC COUNT. THE ASSESSEE RELIED UPON THE ORDER IN THE CASE OF THE SAME ASSES SEE FOR ASSESSMENT YEAR 2000-01 AND 2001-02 AND REQUESTED THAT THESE D ECISIONS MAY BE FOLLOWED AND DISALLOWANCE MAY BE RESTRICTED TO 1% A ND THE BALANCE DISALLOWANCE MAY BE DELETED. THE LEARNED CIT(A) CON SIDERING THE FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESSEE NOTED THAT THE CARTING EXPENSES OF THIS YEAR ARE NOT HIGHER AS COMPARED TO THE EARLIER YEARS. HE HAS FURTHER NOTED THAT IN THE ASSESSMENT YEAR 2000- 01 THE RATIO OF THE EXPENSES WAS 84.2% AND IN ASSESSMENT YEAR 1999-00 I T WAS 83.36%. THEREFORE, CARTING EXPENSES IN THE ASSESSMENT YEAR UNDER APPEAL WAS LOWER AS COMPARED TO EARLIER YEARS. THE LEARNED CIT (A) ALSO NOTED THAT THE AO HAS NOTED VARIOUS DEFECT IN THE VOUCHERS, BILLS AND MAINTENANCE OF RECORDS AND THE DEFECTS POINTED OUT BY THE AO HAVE NOT BEEN REBUTTED BY THE ASSESSEE. HOWEVER, THE LEARNED CIT(A) FOLLOWING HIS APPELLATE ORDERS FOR PRECEDING ASSESSMENT YEARS 2000-01, 2001-02 AND 2002-03 IN THE CASE OF THE SAME ASSESSEE RESTRICTED THE DISALLOWAN CE TO 1% INSTEAD OF 2.5% MADE BY HIM. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT SAME ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN HIS OWN CASE IN ASSESSMENT YEAR 1998-99 AND 1999-2000 IN ITA NO. 27 68 AND 2769/AHD/2002 (SUPRA) IN WHICH THE TRIBUNAL HAS REL IED UPON THE DECISION IN THE CASE OF SHRI HASMUKHBHAI M. SHAH FO R THE SAME EARLIER ASSESSMENT YEAR AND ALSO THE SAME POINT IS DECIDED IN FAVOUR OF THE ASSESSEE IN ITA NO. 2254 AND 2256/AHD/2007 FOR ASSE SSMENT YEAR 2003-04 DATED 21-05-2010 (SUPRA). HE HAS, THEREFORE , SUBMITTED THAT THE ENTIRE DISALLOWANCE MAY BE DELETED. ON THE OTHER HA ND, THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT ASSESSEES COUNSEL SUBMITTED BEFORE THE LEARNED CIT(A) TO FOLLOW HIS A PPELLATE ORDER FOR PRECEDING ASSESSMENT YEAR AND REQUESTED THAT DISALL OWANCE MAY BE RESTRICTED TO 1% AND BALANCE MAY BE DELETED. THE LE ARNED DR, THEREFORE, ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 4 SUBMITTED THAT APPEAL OF THE ASSESSEE IS NOT MAINTA INABLE AND IS LIABLE TO BE DISMISSED BECAUSE THE LEARNED CIT(A) ACCEPTED TH E CONTENTION OF THE ASSESSEE TO THAT EXTENT. THE LEARNED DR IN DEPARTME NTAL APPEAL SUBMITTED THAT THE AO HAS POINTED OUT SPECIFIC DEFE CTS IN BILLS AND VOUCHERS AND THAT HERE WAS SELF MADE VOUCHERS AND T HAT SOME OF THE VOUCHERS WERE NOT SUPPORTED BY BILLS AND OTHER EVID ENCE. EVEN THE IDENTITY AND ADDRESSES OF THE DRIVERS HAVE NOT BEEN ESTABLISHED. HE HAS SUBMITTED THAT SINCE THE AO HAS CONSIDERED PREVIOUS HISTORY OF THE ASSESSEE AND ALSO NOTED THAT THERE IS A DECREASE OF THE INCIDENTS OF LACK OF BILLS IN THE ASSESSMENT YEAR UNDER APPEAL, THERE FORE, THE AO HAS TAKEN A REASONABLE VIEW FOR MAKING THE DISALLOWANCE. HE H AS SUBMITTED THAT THE AO HAS ALSO CONSIDERED THE EXPENSES PAID TO THE SISTER CONCERN BUT NO ADVERSE VIEW IS TAKEN. HE HAS RELIED UPON PB -14 0 WHICH IS AUDIT REPORT IN WHICH IT IS SPECIFICALLY MENTIONED THAT V ERIFICATION OF VOUCHERS HAVE BEEN MADE WHEREVER EVIDENCES HAVE BEEN AVAILAB LE AND WHEREVER DOCUMENTARY EVIDENCE WERE NOT AVAILABLE, PROP. HAVE BEEN RELIED UPON BY THE AUDITORS FOR AUTHENTICATION. THE LEARNED DR, THEREFORE, SUBMITTED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION TO 1% OF THE EXPENSES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIALS AVAILABLE ON RECORD. SECTION 253 (1) OF THE IT ACT PROVIDE THAT ANY ASSESSEE AGGRIEVED BY ANY OF THE ORDERS OF THE LEAR NED CIT(A) MAY FILE APPEAL BEFORE THE TRIBUNAL. THE RIGHT TO PREFER APP EAL, IS THEREFORE, PROVIDED UNDER THE ACT IF ASSESSEE IS AGGRIEVED AGA INST IMPUGNED ORDER OF THE LEARNED CIT(A). THE ASSESSEE IN THE PRESENT CAS E SUBMITTED BEFORE THE LEARNED CIT(A) THAT HIS APPELLATE ORDER FOR EARLIER YEARS MAY BE FOLLOWED AND REQUESTED THAT DISALLOWANCE MAY BE RESTRICTED T O 1%. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND RESTRICTED THE DISALLOWANCE BY CONSIDERING HIS ORDERS FOR EARLIER YEARS AS WELL AS MATERIALS ON RECORD. THE LEARNED COUNSEL FOR THE AS SESSEE DISPUTED THE ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 5 OBSERVATION OF THE LEARNED CIT(A) IN APPELLATE ORDE R AND SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY SUCH STATEMENT BEFORE THE LEARNED CIT(A). HE HAS REFERRED TO PAPER BOOK TO SHOW THAT IN THE W RITTEN SUBMISSION THE ASSESSEE DISPUTED THE ADDITION BEFORE THE LEARNED C IT(A). HOWEVER, WE DO NOT AGREE WITH THE SUBMISSION OF THE LEARNED COUNSE L FOR THE ASSESSEE BECAUSE IF ANY OBSERVATION AND FINDING IS GIVEN BY THE LEARNED CIT(A) WHICH THE ASSESSEE DISPUTED NOW, THE ASSESSEE WAS R EQUIRED TO TAKE STEPS BEFORE THE LEARNED CIT(A) TO DISPUTE THE CORR ECTNESS OF THE OBSERVATION MADE IN THE APPELLATE ORDER. THE ASSES SEE HAS HOWEVER, NOT MADE ANY SUCH EFFORTS AND EVEN NO GROUND OF APPEAL IS RAISED IN THIS REGARD BEFORE THE TRIBUNAL. NO MATERIAL IS PRODUCED TO CONTRADICT OR REBUT THE FINDINGS OF THE LEARNED CIT(A) IN THIS REGARD. HONBLE DELHI HIGH COURT IN THE CASE OF MS. DEEKSHA SURI AND OTHERS VS ITAT AND OTHERS 232 ITR 395 HELD THAT THE STATEMENT OF FACTS RECORDED BY A COURT OR QUASI-JUDICIAL TRIBUNAL IN ITS PROCEEDINGS AS REGAR DS THE MATTERS WHICH TRANSPIRED DURING THE HEARING BEFORE IT WOULD NOT BE PERMITTED TO BE ASSAILED AS INCURRED, UNLESS STEPS ARE TAKEN BEFORE THE SAME FORUM. IT IS NOT OPEN TO THE PARTIES OR CO UNSEL TO SAY THAT THE PROCEEDINGS RECORDED BY THE TRIBUNAL ARE INCORR ECT. 6.1 THE STATEMENT OF FACT AND OBSERVATION NOTED BY THE LEARNED CIT(A) IN THE APPELLATE ORDER SHOWS THAT THE LEARNED COUNS EL MADE A STATEMENT BEFORE THE LEARNED CIT(A) THAT ADDITION MAY BE REST RICTED TO 1% OF THE ADDITION MADE BY THE AO. THEREFORE, THE ASSESSEE CA NNOT BE PERMITTED TO ASSAIL THE ABOVE FINDING OF THE LEARNED CIT(A) UNLE SS SOME STEPS HAVE BEEN TAKEN IN THE MATTER. IT IS NOT OPEN TO THE ASS ESSEE AT THIS STAGE AFTER A LAPSE OF CONSIDERABLE PERIOD THAT THE FINDING OF FACT BY LEARNED CIT(A) WAS INCORRECT OR WAS NOT BASED UPON THE CONTENTION OF THE ASSESSEES COUNSEL. ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 6 7. CONSIDERING THE FACTS OF THE CASE AND THE FINDINGS NOTED BY THE AO THAT SOME OF THE BILLS OF CARTING EXPENSES WERE ONL Y SUPPORTED BY SOME SELF MADE VOUCHERS AND SOME OF THE BILLS WERE NOT S UPPORTED BY OTHER EVIDENCE AND EVEN THE IDENTITY OF THE DRIVERS WERE NOT ESTABLISHED BY THE ASSESSEE WOULD SHOW THAT THE RECORD MAINTAINED BY A SSESSEE THE OF CARTING EXPENSES WAS NOT RELIABLE. ITAT AHMEDABAD BENCH IN THE CASE OF THE ASSESSEE IN ASSESSMENT YEAR 2003-04 IN ITA NO.2254 AND 2256/AHD/2007 (SUPRA) IN PARA 3.5 TO 3.8 HELD AS UN DER: 3.5 BEFORE US, LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE MR. DHIREN SHAH HAS PLACED AN ORDER OF ITAT AHMEDABAD BENCH B IN ASSESSEES OWN CASE (IN ITA NOS.2768 & 2769/AHD/2002 FOR ASSESSMENT YEARS 1998- 99 AND 1999-2000) DATED 08/08/2008 AND AN ANOTHER ORDER O F THIS TRIBUNAL DECIDED IN THE CASE OF SHRI HASMUKHBHAI M OHANLAL SHAH (IN ITA NOS.2770-2771/AHD/2002 FOR A.YS.1998-9 9 & 1999-2000) DATED 30/05/2008 WERE REFERRED TO, WHERE IN THE REVENUES APPEALS WERE DISMISSED AND THE RELIEF GRA NTED BY THE LEARNED CIT(APPEALS) WAS AFFIRMED. FIRST, HEREINBE LOW REPRODUCED PARAGRAPH NO.7 OF THE ORDER OF THE TRIBU NAL DATED 30/05/2008:- 7. FROM THE ABOVE FACTS AND CIRCUMSTANCES, IT IS CLEAR THAT THE MAIN REASON FOR INCREASE IN CARTING PAID IS INCREASE IN DIESEL RATES, WHICH IS SUPPORTED BY THE BILLS AND VOUCHERS. IT IS THE CASE OF THE ASSESSEE THAT SINGLE OPERATOR PAYMENTS ARE ONLY TO THE EXTENT OF RS.3,60 ,032/- FOR WHOLE OF THE YEAR WHICH COMES TO 1.2% OF TOTAL CARTING PAID AND WHICH IS APPARENT FROM THE BIFURCA TION GIVEN BY THE ASSESSING OFFICER IN HIS ASSESSMENT OR DER. THE ASSESSEES ACCOUNTS ARE AUDITED AND COMPLETE VOUCHERS ARE MAINTAINED. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY INFLATION IN FIGURES IN THE BOOKS O F ACCOUNT AND IN THE ABSENCE OF THE SAME THE BOOK RES ULT CANNOT BE DISTURBED. ACCORDINGLY, WE DO NOT WANT T O INTERFERE IN THE ORDER OF CIT(A) AND WE UPHOLD THE SAME. ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 7 3.6. NEXT, IT IS APPROPRIATE TO REPRODUCE THE ORDER OF THE TRIBUNAL DATED 08/08/2008 PRONOUNCED IN ASSESSEES OWN CASE DISMISSING THE REVENUES APPEAL AS PER THE FOLLOWIN G PARAGRAPH:- THE LEARNED DR DID NOT DISPUTE THE FACTS THAT THE BASIS OF MAKING DISALLOWANCE ON ACCOUNT OF ALLEGED INFLAT ED CARTING EXPENSES IN THE CASE OF SHRI HASMUKHBHAI MOHANLAL SHAH (SUPRA) IS ALSO THE BASIS FOR MAKING SIMILAR ADDITION IN THE CASE OF PRESENT ASSESSEE AN D THUS THE FACTS ARE VERY MUCH SIMILAR TO THAT IN THE CASE OF SHRI HASMUKHBHAI. THE LEARNED DR ALSO COULD NOT CONTROV ERT THE FINDINGS RECORDED BY THE LEARNED CIT(A) IN THE PRESENT CASE NOTED EARLIER. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE CASE OF SHRI HASMUKHBHAI MOHANLAL SHAH (SUPRA), WE DISMISS THE GROUND OF THE REVENUE AND UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE IMPUGNED ADDITION OF RS.5,70 ,076 MADE ON THE ALLEGED INFLATED CARTING EXPENSES. 3.7. IN THE LIGHT OF ABOVE FACTUAL BACKGROUND AS WE LL AS THE PRINCIPLE LAID DOWN BY THE RESPECTED CO-ORDINATE B ENCH, WHEREIN REVENUES APPEALS WERE DISMISSED, THEREFORE , WE HEREBY FOLLOW THE SAID VIEW AND DIRECT THE ASSESSI NG OFFICER TO ALLOW THE CLAIM AS PER LAW. 3.8. IN THE RESULT, REVENUES GROUND IS HEREBY DI SMISSED, WHEREAS ASSESSEES GROUND NO.1 IS ALLOWED . 8. THE TRIBUNAL CONSIDERING THE EARLIER YEARS FINDI NG OF FACT RECORDED BY THE TRIBUNAL IN WHICH IT WAS SPECIFICALLY NOTED THAT THE AO HAS NOT POINTED OUT ANY INFLATION IN THE FIGURES IN THE BOO KS OF ACCOUNT AND THAT ASSESSEE MAINTAINED COMPLETE DETAILS AND VOUCHERS, THEREFORE, IN THESE PREMISES, THE TRIBUNAL FOLLOWED THE ORDER OF THE VA RIOUS BENCHES AND DELETED THE ADDITION. HOWEVER, AS NOTED ABOVE, THE FACTS OF THIS CASE ARE CLEARLY DISTINGUISHABLE BECAUSE THE AO HAS POINTED OUT SPECIFIC DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT AND THAT LEARNE D CIT(A) HAS ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 8 SPECIFICALLY NOTED THAT THE DEFECTS POINTED OUT BY THE AO HAVE NOT BEEN REBUTTED BY THE ASSESSEE WOULD SHOW THAT THE DETAIL S OF CARTING EXPENSES MAINTAINED BY THE ASSESSEE WERE NOT RELIABLE. HOWEV ER, CONSIDERING THE ORDER OF THE TRIBUNAL IN EARLIER YEARS IT WOULD BE REASONABLE AND JUSTIFIED TO RESTRICT THE ADDITION TO 1% AS IS MADE BY THE LE ARNED CIT(A) ON THE BASIS OF THE SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. 9. CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE BECAUSE THE ASSESSEE AGREED FOR ADDITION OF 1% OF THE CARTING EXPENSES BEFORE THE L EARNED CIT(A). HOWEVER, THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL ON THI S ISSUE. 10. AS A RESULT, APPEAL OF THE ASSESSEE AS WELL AS THE APPEAL OF THE REVENUE ON GROUND NO.1 EACH IS DISMISSED. 11. ON GROUND NO.2, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF ACCIDENT EXPENSES OF RS.34,647/-. THE AO NOTED THAT THE ASSESSEE DEBITED RS.34,647/- TOWARDS ACCIDENT EXPENSES. THE AO NOTED THAT PRIMARY LIABILITY OF THE EXPENSES WAS OF THE OWNER OF THE V EHICLE AND NO EVIDENCE HAS BEEN FILED AS TO WHY THE LIABILITY WAS DISCHARG ED BY THE ASSESSEE. IT WAS CONTENDED BEFORE THE LEARNED CIT(A) THAT IN THI S LINE OF BUSINESS, THE TRANSPORTER IS RESPONSIBLE TO LOAD AND UNLOAD THE M ATERIALS IN THE TRUCKS AND TO DELIVER THE SAME AT THE REQUIRED DESTINATION SAFELY. IT WAS, THEREFORE, SUBMITTED THAT IT WAS THE RESPONSIBILITY OF THE TRANSPORTER TO INCUR THE EXPENSES ON ACCOUNT OF THE SAME, HOWEVER, EVEN IF THE TRUCKS ARE NOT OWNED BY THE TRANSPORTER. THE LEARNED CIT(A) HO WEVER, FOLLOWING HIS OWN APPELLATE ORDER FOR ASSESSMENT YEAR 2000-01 DIS MISSED THE APPEAL OF THE ASSESSEE AND NOTED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE CLAIM OF BUSINESS EXIGENCY TO DISCHARGE THE LIABILI TY OF A THIRD PARTY. ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 9 12. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ITAT AHMEDABAD BENCH IN THE CASE OF THE SAME ASSESSEE IN ASSESSMENT YEAR 2003-04 VIDE ORDER DATED 21-05-2010 IN ITA NO.2254 AND 2256/AHD/2007 UPHELD THE ORDER OF THE LEARNED CIT(A) AND DISMISSE D THE APPEAL OF THE ASSESSEE. HE HAS THEREFORE, SUBMITTED THAT THE ISSU E IS COVERED AGAINST THE ASSESSEE. 13. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE TRIBUNAL FOR ASSESSMENT YEAR 2003-0 4 (SUPRA) IN WHICH ALSO THE TRIBUNAL NOTED THAT THE ASSESSEE HAS NOT C ONTESTED THIS CLAIM SERIOUSLY, THEREFORE, CONSIDERING THE PREVIOUS HIST ORY OF THE ASSESSEE THIS GROUND OF APPEAL OF THE ASSESSEE WAS DISMISSED. IN THIS VIEW OF THE MATTER, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 14. ON GROUND NO.3, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF 10% OUT OF TELEPHONE EXPENSES AND DEPRECIATION AMOUNTIN G TO RS.42,309/-. IT WAS NOTICED BY THE AO THAT THE ASSESSEE WAS HAVING ONLY ONE VEHICLE AT ITS DISPOSAL AND PERSONAL USER OF THE SAME IS NOT RULED OUT. 10% OF THE TOTAL EXPENSES WERE ACCORDINGLY DISALLOWED. IT WAS SUBMIT TED THAT THE VEHICLE IS MAINLY USED FOR BUSINESS PURPOSES AND IF ANY ADDITI ON IS TO BE MADE THE SAME MAY BE RESTRICTED TO REASONABLE SUM. THE LEARN ED CIT(A) NOTED THAT PERSONAL USER OF THE VEHICLE IS NOT RULED OUT AND T HAT IN ASSESSMENT YEAR 2000-01 DISALLOWANCE OUT OF VEHICLE EXPENSES AND DE PRECIATION WAS CONSIDERED AND IN ASSESSMENT YEAR 2001-02, 10% WAS DISALLOWED ON THE SAME ISSUE BY CONSIDERING PAST RECORDS OF THE ASSES SEE. 15. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ITAT AHMEDABAD BENCH IN THE CASE OF THE SAME ASSESSEE FO R ASSESSMENT YEAR 2003-04 IN ITA NO.2254 AND 2256/AHD/2007 (SUPRA) CO NFIRMED THE ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 10 DISALLOWANCE AND DISMISSED THE APPEAL OF THE ASSESS EE. HE HAS SUBMITTED THAT THE ISSUE IS THEREFORE, COVERED AGAINST THE AS SESSEE. 16. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE ASSESSEE DID NOT CONTEST THIS ISSUE BEFORE THE TRIBUNAL IN EARLIER Y EAR. CONSIDERING THE STATUS OF THE ASSESSEE BEING A CARRIER AND THAT PER SONAL USER IS NOT RULED OUT, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMI SSED. THIS ISSUE IS COVERED AGAINST THE ASSESSEE AS IS CONFIRMED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THIS GROUND OF APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. 17. ON GROUND NO.4, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF TELEPHONE EXPENSES OF RS.31,841/- AND ON GROUND NO. 5 CHALLENGED THE DISALLOWANCE OF SHORTAGE RESTRICTED TO RS.8,000/-. THE AO DISALLOWED 10% OUT OF THE TELEPHONE EXPENSES BECAUSE THE TELEPHONE WAS ALSO INSTALLED AT THE RESIDENCE OF THE ASSESSEE. IT WAS PLEADED BEFOR E THE LEARNED CIT(A) THAT DISALLOWANCE MAY BE RESTRICTED TO REASONABLE SUM. T HE LEARNED CIT(A) FOLLOWING HIS APPELLATE ORDER FOR ASSESSMENT YEAR 2 001-02 CONFIRMED THE DISALLOWANCE OF 10% OUT OF TELEPHONE EXPENSES. ON A CCOUNT OF SHORTAGE, THE AO MADE DISALLOWANCE OF RS.15,291/- WHICH WAS O N ACCOUNT OF LOSS FOR EVAPORATION OF CHEMICALS TRANSPORTED BY THE ASSESSE E AT VARIOUS DESTINATIONS. IT WAS SUBMITTED BEFORE THE LEARNED C IT(A) THAT SHORTAGE WAS CAUSED DUE TO VARIOUS REASONS SUCH AS LEAKAGE IN TA NKERS AND EVAPORATION ETC. IT WAS SUBMITTED THAT IN ASSESSMENT YEAR 1999- 2000 SIMILAR DISALLOWANCE WAS DELETED. THE LEARNED CIT(A) HOWEVE R, FOUND THAT CONTENTION OF THE ASSESSEE IS NOT CORRECT BECAUSE T HE LEARNED CIT(A) CONSIDERED THE ISSUE IN ASSESSMENT YEAR 2000-01 AND RESTRICTED THE DISALLOWANCE TO RS.8,000/- ON THIS ISSUE FOLLOWING THE DECISION IN EARLIER ASSESSMENT YEAR 2000-01 AND 2003-04. THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE OF TELEPHONE EXPE NSES HAS ALREADY BEEN ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 11 DECIDED AGAINST THE ASSESSEE IN ASSESSMENT YEAR 200 3-04 BY THE TRIBUNAL IN ITA NO.2254 AND 2256/AHD/2007 (SUPRA). HE HAS FU RTHER SUBMITTED THAT IN THE SAME ORDER THE SHORTAGE ADDITION RESTRICTED TO RS.8,000/- HAS BEEN CONFIRMED BY THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, CONCEDED THAT THE ISSUE IS SQUARELY COVE RED AGAINST THE ASSESSEE. ON CONSIDERATION OF THE ABOVE FACTS AND S UBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND IN THE LIGHT OF THE EARLIER ORDER OF THE TRIBUNAL IN THE CASE OF THE SAME ASSESSEE FOR ASSES SMENT YEAR 2003-04 (SUPRA) WE DO NOT FIND ANY MERIT IN THESE GROUNDS O F APPEAL OF THE ASSESSEE. THE SAME ARE ACCORDINGLY DISMISSED. 18. ON GROUND NO.6, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF BAD DEBT OF RS.3,30,301/-.THE AO ASKED THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE IN RESPECT OF EFFORTS MADE TO REALIZE THE DEBTS AND AS TO HOW THE CONDITIONS LAID DOWN IN THE ACT ARE FULFILLED. THE ASSESSEE HOWEVER, COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE AND COULD NOT PROVE THAT THERE WAS NO HOPE OF RECOVERY OF THE DEBTS. THE AO ACCORDINGL Y DISALLOWED THE BAD DEBTS. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) T HAT THERE WERE OUTSTANDING AMOUNTS IN THE BOOKS OF ACCOUNT ON ACCO UNT OF TRANSPORTATION CHARGES FOR SERVICES RENDERED TO VARIOUS COMPANIES AND THE DEBTS WERE WRITTEN OFF WHEN THE DEBTS REMAINED OUTSTANDING FOR A PERIOD OF MORE THAN 2 /3 YEARS. THE ASSESSEE RELIED UPON AMENDED PROVIS IONS OF SECTION 36(1) (VIII) OF THE IT ACT. THE LEARNED CIT(A) HOWEVER, C ONFIRMED THE ADDITION ON THE REASONS GIVEN BY THE AO. THE LEARNED CIT(A) NOT ED THAT WHAT WAS WRITTEN OFF WAS DEBTS AND NOT BAD DEBTS AND THAT NO EVIDENCE HAS BEEN FILED AS TO WHAT EFFORTS WERE MADE FOR RECOVERY OF THE AMOUNT IN QUESTION. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT AC CORDING TO AMENDED PROVISIONS OF SECTION 36(1) (VII) WHEN AMOUNT OF BA D DEBT WAS PART THEREOF AS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR, THE DEDUCTION IS ALLOWABLE. HE HAS R ELIED UPON THE RECENT ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 12 DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F T. R. F. LTD. VS CIT DATED 09-02-2010 IN CIVIL APPEAL NO.5294 REPORTED I N 323 ITR 397. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. THE HONBLE SUPREME COURT IN THE CASE OF T. R. F. LTD. (SUPRA) HELD AS UNDER: THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1 ST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH T HAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOU GH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACC OUNTS OF THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER THE DEBT HAS, IN FACT, BEEN WRITTEN OFF IN ACCOUNTS OF THE A SSESSEE. WHEN BAD DEBT OCCURS, THE BAD DEBT ACCOUNT IS DEBIT ED AND THE CUSTOMERS ACCOUNT IS CREDITED, THUS, CLOSI NG THE ACCOUNT OF THE CUSTOMER. IN THE CASE OF COMPANIES, THE PROVISION IS DEDUCTED FROM SUNDRY DEBTORS. AS STATE D ABOVE, THE ASSESSING OFFICER HAS NOT EXAMINED WHETH ER, IN FACT, THE BAD DEBT OR PART THEREOF IS WRITTEN OF F IN THE ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEE N UNDERTAKEN BY THE ASSESSING OFFICER. HENCE, THE MAT TER IS REMITTED TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE ABOVE-MENTIONED ASPECT ONLY AN D THAT TOO ONLY TO THE EXTENT OF THE WRITE OFF. 20. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO AND THE LEARNED CIT(A) HAVE NOT GIVEN ANY FINDING IF TH E ASSESSEE ACTUALLY WRITTEN OFF THE BAD DEBTS AS IRRECOVERABLE IN THE B OOKS OF ACCOUNTS. THEREFORE, THE MATTER SHOULD BE REMANDED TO THE FIL E OF THE AO FOR RECONSIDERATION AS PER DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF T. R. F. LTD. (SUPRA). WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FIL E OF THE AO WITH THE DIRECTION TO RE-DECIDE THIS ISSUE IN THE LIGHT OF T HE AMENDED PROVISIONS OF SECTION 36(1) (VII) OF THE IT ACT AND AS PER DECISI ON OF THE HONBLE ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 13 SUPREME COURT IN THE CASE OF T. R. F. LTD. (SUPRA). THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 21. ON GROUND NO.7, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF TRAVELING EXPENSES OF RS.43,081/-. THE AO DISALLOWE D 10% OUT OF THE TRAVELING EXPENSES OF 4,30,812/-. THE AO NOTED THAT PERSONAL TRAVELING EXPENSES DEBITED UNDER THIS HEAD CANNOT BE RULED OU T. THE ASSESSEE WAS ALSO FOUND NOT MAINTAINING ANY SEPARATE REGISTER IN THIS REGARD. THE LEARNED CIT(A) ON THE SAME REASONS CONFIRMED THE AD DITION. 22. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE ADDITION IS EXCESSIVE IN NATURE. THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT NO ADDITION IS MADE OF THE SIMILAR N ATURE IN THE PAST AND THAT THE ASSESSEE HAS SPENT THE EXPENDITURE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. HOWEVER, WE FIND THAT THE AO H AS NOTED IN THE ASSESSMENT ORDER THAT SOME OF THE VOUCHERS ARE NOT SUPPORTED BY ANY COGENT AND DOCUMENTARY EVIDENCES. THE LEARNED COUNS EL FOR THE ASSESSEE HAS NOT POINTED OUT ANY SPECIFIC DETAILS AND VOUCHE RS ON THIS ISSUE TO SHOW THAT THE ASSESSEE EXPENDED ALL TRAVELING EXPEN SES FOR BUSINESS PURPOSE. THE STATUS OF THE ASSESSEE IS THAT OF AN I NDIVIDUAL, THEREFORE, PERSONAL TRAVELING EXPENSES DEBITED UNDER THIS HEAD ALSO CANNOT BE RULED OUT. HOWEVER, IT IS ALSO A FACT THAT THE AO HAS NOT POINTED OUT AND HAS ALSO NOT QUANTIFIED AS TO HOW MANY TRAVELING EXPENSES HA S NOT BEEN SUPPORTED BY DOCUMENTARY EVIDENCE. CONSIDERING THE BUSINESS O F THE ASSESSEE AND IN THE ABSENCE OF SPECIFIC FINDING BY THE AO, WE RESTR ICT THE ADDITION ON THIS HEAD TO RS.10,000/- IN ALL AS AGAINST RS.43,081/- T O MEET THE ENDS OF JUSTICE. THE AO IS ACCORDINGLY DIRECTED TO MAKE ADD ITION OF RS.10,000/- ONLY. AS A RESULT, THIS GROUND OF APPEAL OF THE ASS ESSEE IS ALLOWED PARTLY. 23. NO OTHER POINT IS RAISED IN BOTH THE APPEALS. ITA NO.761 AND 880/AHD/2008 SHRI RAVINDRA M. SHAH VS ACIT, CIRCLE 2(2), BARODA 14 24. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED ON 23-07-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 23-07-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD