Ravi Mohan Bhutra (HUF), JAIPUR V. CIT, JODHPUR

ITA 80/JODH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59558 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Bad and doubtful debts; Assessment record; Prejudicial to interest; Revenue expenditure; Capital expenditure
• Section: 143(3); 37(1); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 80/JODH/2010 ASSESSMENT YEARS: 2006-07 PAN: AAAHR 9517 H SHRI RAVI MOHAN BHUTRA (HUF) VS. THE LD. CIT C/O KALANI & CO. CHARTERED ACCOUNTANT JODHPUR 5 TH FLOOR, MILESTONE GANDHI NAGAR BAPUNAGAR, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING: 13-12-2011 DATE OF PRONOUNCEMENT: 13-01-2012 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD CIT(A)-JODHPUR DATED 4-2-2011 PASSED U/S 263 OF THE ACT 2.1 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ORDER ASSED U/S 263 IS ILLEGAL AND BAD IN LAW. 2. THE LD. CIT HAS ERRED IN FACTS AND IN LAW IN HOL DING THE ORDER PASSED BY THE AO U/S 143(3) AS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE. 2.1 THE LD CIT(A) HAS ERRED IN FACTS AND IN LAW IN HOLD ING THAT THE CLAIM OF BAD DEBTS OF RS. 9,30,285/- IS NOT ALLOWAB LE DURING THE YEAR UNDER CONSIDERATION. 2 2.2 THE FACTS IN THIS CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROCESSING OF CLOTH ON JOB BASIS UNDER THE NAME AND STYLE OF S ONU GROUP OF INDUSTRIES. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS CLAIMED A DEDUC TION OF RS.9,30,285/- ON ACCOUNT OF BAD DEBTS. DURING COURSE OF ASSESSMENT PROCEEDINGS , THE AO VIDE LETTER DATED 29.05.2008 IN QUERY NO. 27, REQUIRED THE ASSESSEE T O FILE COPY OF ACCOUNT IN RESPECT OF BAD DEBTS WRITTEN OFF AND EFFORTS MADE TO REALIZE T HE DEBTS. IN RESPONSE TO SAME ASSESSEE FILED THE COPY OF ACCOUNT OF BAD DEBTS WRITTEN OFF, BASIS FOR CLAIM OF SUCH BAD DEBTS AND PRODUCED THE BOOKS OF ACCOUNTS. CONSIDERING THE SAM E LD. AO COMPLETED THE ASSESSMENT VIDE ORDER DATED 14.10.2008 BY ACCEPTING THE RETURN ED INCOME. THE SAID CLAIM WAS MADE BY THE ASSESSEE BECAUSE THERE WAS A FIRE AT THE PRE MISES OF THE ASSESSEE ON 14.04.2002 WHEREIN CERTAIN STOCK/ GOODS WERE DESTROYED FOR WHI CH ASSESSEE LODGED A CLAIM OF RS.70,21,397/- WITH THE INSURANCE COMPANY BY DEBIT TO THE INSURANCE COMPANY AND CREDITING TO THE PURCHASE ACCOUNT. THE INSURANCE CO MPANY PASSED THE CLAIM IN JULY2002 FOR RS.60,49,850/-. AGAINST REDUCTION IN THE CLAIM BY RS.9,71,547/-, ASSESSEE FILED A PETITION BEFORE THE DISTRICT CONSUMER PROTECTION FO RUM. THIS PETITION WAS REJECTED VIDE ORDER DATED 21.10.2005 FOR THE REASON THAT THEY DO NOT HAVE POWER TO DECIDE SUCH ISSUE AND SUCH ISSUE CAN BE DECIDED ONLY BY THE CIVIL COU RT. THE ASSESSEE DID NOT PREFER APPEAL TO THE CIVIL COURT IN VIEW OF THE ADVICE OF THE ADV OCATE AND THEREFORE IT CLAIMED THE SAID AMOUNT IN THE PROFIT AND LOSS ACCOUNT BY DEBIT TO T HE BAD DEBTS ACCOUNT. 2.3 THE LD. CIT(A) VIDE NOTICE DATED 29.11.2010 INI TIATED THE PROCEEDINGS U/S 263 ON THIS ISSUE. IN THE SHOW CAUSE NOTICE HE ACCEPTED TH AT THOUGH THE LOSS ON ACCOUNT OF FIRE IS A REVENUE LOSS AND ALLOWABLE U/S 37(1) BUT SINCE SUCH LOSS HAS ARISEN IN AY 2003-04, IT 3 CANNOT BE ALLOWED IN AY 2006-07 AND THEREFORE THE A SSESSMENT ORDER DATED 14.10.2008 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. 2.4 THE ASSESSEE FILED A DETAILED REPLY DATED 02.02 .2011 AGAINST THE SAID SHOW CAUSE NOTICE WHICH IS REPRODUCED AT PAGE 2-5 OF THE ORDER . THE LD CIT HOWEVER HELD THAT AO SHOULD HAVE MADE FURTHER ENQUIRIES BEFORE ACCEPTING THE CLAIM OF THE ASSESSEE AND THEREFORE THE ORDER PASSED BY THE AO IS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE MADE FOLLOWING ISSUES FOR TREATING THE ORDER OF THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE: A. BOOKS OF ACCOUNTS WERE NOT PRODUCED BY THE ASSESSEE BEFORE HIM IN SUPPORT OF HIS SUBMISSIONS. B. ASSESSEE HAS ACCEPTED THE CLAIM OF LOSS POF RS.60,4 9,850/- SANCTIONED BY THE INSURANCE COMPANY IN JULE2002. C. ASSESSEEE INSTEAD OF PREFERRING AN APPEAL AGAINST T HE ORDER OF CONSUMER FORUM TO THE CIVIL COURT HAS CLAIMED BAD DEBTS OF R S.9,30,285/- WHICH IS ACCEPTED BY THE AO IGNORING THAT POSSIBILITY OF APP EAL IN TRIBUNAL CANNOT BE RULED OUT AND THEREFORE THE CLAIM OF BAD DEBTS IS N OT ALLOWABLE. D. THE LOSS ON ACCOUNT OF FIRE WAS SUFFERED IN AY 2003 -04 AND THEREFORE IT CANNOT BE ALLOWED IN AY 2006-07. E. THE ASSESSEE VIDE LETTER DATED 15.04.2002 HAS INFOR MED THE INSURANCE COMPANY ABOUT ESTIMATED LOSS OF RS.60 LACS BUT HAS CLAIMED SUCH LOSS AT RS.72 LACS AND THEREFORE SUCH LOSS IS INFLATED AND INCORR ECT. 2.5 THE LD.AR SUBMITTED THAT THE AO DURING THE COUR SE OF ASSESSMENT PROCEEDINGS HAS MADE ENQUIRY REGARDING CLAIM OF BAD DEBTS AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE HAS ALLOWED THE SAME. THIS IS NOT DISPUTED BY THE L D. CIT. HIS OBJECTION IS THAT AO SHOULD HAVE MADE FURTHER ENQUIRIES BEFORE ACCEPTING THE CL AIM MADE BY THE ASSESSEE IN THE RETURN. FOR MAKING FURTHER ENQUIRIES, THE LD. CIT(A) CANNO T CONSIDER THE ORDER OF THE AO TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE AS HELD IN THE FOLLOWING CASES:- CIT VS. GANPAT RAM BISHNOI 296 ITR 292 (RAJ.) (HC) 4 WHEN ENQUIRY HAD BEEN CONDUCTED AND THE ASSESSING O FFICER HAD REACHED A PARTICULAR CONCLUSION, THOUGH REFERENCE T O SUCH ENQUIRIES HAD NOT BEEN MADE IN THE ORDER OF ASSESSMENT, IT WAS APPARE NT FROM THE RECORD, WITHOUT ANYTHING TO SHOW HOW AND WHY THE ENQUIRY CO NDUCTED BY THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH LAW, T HE INVOCATION OF JURISDICTION BY THE COMMISSIONER WAS UNSUSTAINABLE. THE FINDING OF THE TRIBUNAL THAT THE ASSESSING OFFICER HAD PASSED THE ASSESSMENT ORDER AFTER RELEVANT ENQUIRIES AND CONSIDERING THE ASPECTS OF T HE MATTER REQUIRED BY THE COMMISSIONER TO BE CONSIDERED BY HIM WAS A FIND ING OF FACT. THE BASIS ON WHICH THE JURISDICTION WAS ASSUMED BY THE COMMIS SIONER BEING NON- EXISTENT HIS ORDER MUST BE HELD TO BE NOT SUSTAINAB LE. RAJIV ARORA VS. CIT 131 ITD 58 (JP.) (TRIB.) (2011) DT. 09.07.2010 ASSESSEE FILED ITS INCOME TAX RETURN. AN ORDER OF A SSESSMENT WAS PASSED BY AO U/S 143(3). THEREAFTER, A PROPOSAL WAS MOVED BY SUCCESSOR AO THROUGH ADDITIONAL COMMISSIONER TO REVISE ORDER OF ASSESSMENT U/S 263. ACTING UPON SAID PROPOSAL, CIT SET ASIDE ASSES SMENT ORDER TAKING A VIEW THAT IN COURSE OF ASSESSMENT PROCEEDINGS, AO H AS NOT RAISED ANY QUERIES & MOREOVER DETAILS SUO MOTO MADE AVAILABLE BY ASSESSEE WERE NOT EXAMINED BY AO & NO INVESTIGATION WAS MADE. ON INST ANT APPEAL, IT WAS SEEN THAT CIT HAD NOT EXAMINED THE DETAILED RECORDS SUBMITTED BY ASSESSEE IN RESPONSE TO NOTICE U/S 263 & HAS ACTED ONLY UPON PROPOSAL RECEIVED FROM AO. MOREOVER, CIT COULD NOT POINT OUT ANY FACT UAL MISTAKE OR ANY LEGAL ERROR OR ANY INSTANCE WHICH COULD HAVE SHOWN AS TO HOW ORDER OF AO WAS ERRONEOUS & PREJUDICIAL TO INTERESTS OF REVENUE . THEREFORE, CIT WAS NOT JUSTIFIED IN INITIATING PROCEEDINGS U/S 263. CIT VS. SUNBEAM AUTO LTD. 31 DTR 1/ 227 CTR 133 (DE LHI) (HC) ACCORDING TO CIT NO DETAILED INVESTIGATION HAD BEEN CARRIED OUT BY THE AO WHILE MAKING THE ASSESSMENT. IT WAS HELD THA T THE AO WHILE PASSING THE ASSESSMENT ORDER IS NOT REQUIRED TO GIV E DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. O NE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE CLAIM MADE BY THE ASSESSEE. IT WAS FURTHER HELD THA T THERE IS A DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF G IVE OCCASION TO THE CIT TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY, IN CAS ES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. ALSO HELD TH AT THE CIT CONCEDED THE POSITION THAT THE AO HAD MADE THE INQUIRIES, EL ICITED REPLIES AND THEREAFTER PASSED THE ASSESSMENT ORDER, HOWEVER THE GRIEVANCE OF CIT WAS 5 THAT THE AO SHOULD HAVE MADE FURTHER INQUIRIES RATH ER THAN ACCEPTING THE EXPLANATION. THEREFORE, IT CANNOT BE SAID THAT IT I S A CASE OF LACK OF INQUIRY.' HELD FURTHER THAT EVEN THE CIT IN HIS ORD ER U/S 263 DID NOT GIVE A CLEAR FINDING AS TO WHETHER THE EXPENDITURE CAN BE TREATED AS CAPITAL EXPENDITURE OR IT IS REVENUE IN NATURE. IN CERTAIN CASES, IT MAY NOT BE POSSIBLE TO COME TO SUCH A DEFINITE FINDING AND THE REFORE, IT IS NOT NECESSARY THAT IN ALL CASES THE CIT IS BOUND TO EXP RESS FINAL VIEW, AS HELD IN THE CASE OF GEEVEE ENTERPRISE BUT, THE LEAST THA T WAS EXPECTED FROM CIT WAS TO RECORD A FINDING THAT ORDER SOUGHT TO BE REV ISED WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. M/S VODAFONE ESSAR SOUTH LTD. VS. CIT 2011-TIOL-417 -ITAT- DEL DT. 24.07.2011 CIT WHILE EXAMINING ASSESSMENT RECORDS OF THE ASSES SEE FOUND THAT ASSESSEE HAS MADE PAYMENT TOWARDS REGULATORY FEES, ADVERTISING AND PUBLICITY EXPENSES ON THE LAUNCHING OF PRODUCTS AND EXPENSES ON STAMP DUTY UNDER BANK CHARGES AND GUARANTEE COMMISSION. C IT WAS OF THE VIEW THAT ALL THESE EXPENSES ARE OF CAPITAL NATURE. ACCO RDINGLY, HE ISSUED NOTICE PROPOSING TO DISALLOW THESE EXPENSES. HOWEVER, WHIL E FRAMING THE ORDER OF THE 263 HE NOTED THAT AO HAD ALLOWED THESE EXPEN SES WITHOUT DOING ADEQUATE ENQUIRES. BEFORE ITAT THE AR OF THE ASSESS EE PRODUCED THE QUESTIONNAIRE ISSUED BY AO & REPLIES FILED BY ASSES SEE. ITAT HELD THAT CIT IN THE NOTICE ISSUED HAS MENTIONED THAT THE EXP ENDITURES WERE CAPITAL IN NATURE. HOWEVER, IN THE REVISION ORDER HE HAS HE LD THAT THE THERE WAS PATENT LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICER. THIS LACK OF ENQUIRY IN HIS OPINION, HAS RENDERED THE ASSESSMENT ORDER PASSED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF JUSTIC E. IT TRANSPIRES THAT THE ASSESSING OFFICER HAD ASKED FOR THE DETAILS. DETAIL S WERE INTER-ALIA SOUGHT FROM THE ASSESSEE, REGARDING OTHER REGULATORY FEE, CIRCLE WISE, BANK CHARGES AND GUARANTEE COMMISSION. ASSESSEE HAS GIVE N REPLY IN THIS REGARD TO THE ASSESSING OFFICER. THE DETAILED BREAK-UP OF THESE EXPENDITURE WAS DULY GIVEN. NO FURTHER ENQUIRY WAS MADE BY THE AO. IN THIS REGARD, THE ASSESSEES CONTENTION IS THAT IF ASSESSING OFFICER HAD MADE ENQUIRIES AND THE ENQUIRIES ARE NOT ADEQUATE, THE ORDER CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS REG ARD, APEX COURT DECISION IN THE CASE OF C.I.T. VS. SUNBEAM AUTO LTD. IS RELE VANT. ASSESSING OFFICER DID ENQUIRE ON ALL THE ITEMS AND ASSESSEE RESPONDED BY GIVING THE BREAKUP OF EXPENDITURE. THOUGH, ASSESSMENT ORDER DOES NOT G IVE REASON FOR ALLOWING THE EXPENDITURE AND ASSESSING OFFICER DID NOT MAKE FURTHER ENQUIRY, IT CANNOT BE SAID THERE WAS LACK OF ENQUIR Y IN THIS CASE. IN THIS VIEW OF THE MATTER, THE RATIO FROM THE HONBLE JURI SDICTIONAL HIGH COURT DRAWN ABOVE IS APPLICABLE FULLY. THERE IS DUE ENQUI RY BY THE ASSESSING OFFICER, THOUGH IT HAS BEEN CONSIDERED TO BE INADEQ UATE BY THE C.I.T., RECOURSE U/S 263 CANNOT BE MADE. 6 CIT VS. GABERIL INDIA LTD. 203 ITR 108, 113, 114 (B OM.): HELD THAT THE INCOME-TAX OFFICER IN THIS CASE HAD M ADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION IN THAT R EGARD BY A LETTER IN WRITING. ALL THESE WERE PART OF THE RECORD OF THE C ASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATI SFIED WITH THE EXPLANATION OF THE ASSESSEE. THIS DECISION OF THE I NCOME-TAX OFFICER COULD NOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, I N THE INSTANT CASE, THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PROCEED INGS FOR REVISION AND HEARING THE ASSESSEE, COULD NOT SAY THAT THE ALLOWA NCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. H E SIMPLY ASKED THE INCOME-TAX OFFICER TO RE-EXAMINE THE MATTER. THAT W AS NOT PERMISSIBLE. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORD ER PASSED BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263. 2.6 THE VARIOUS OTHER OBSERVATIONS MADE BY THE LD. CIT ARE IRRELEVANT AND INCORRECT IN HOLDING THAT ORDER PASSED BY THE AO IS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF THE REVENUE. HIS OBSERVATION THAT BOOKS OF ACCOUNTS WER E NOT PRODUCED BEFORE HIM IS IRRELEVANT IN AS MUCH AS WHEN HE HIMSELF DISCUSSED THE ENTIRE FACTS OF THE ISSUE IN HIS ORDER, NON-PRODUCTION OF BOOKS HAS NOTHING TO DO IN HOLDING THE ORDER OF AO AS ERRONEOUS. IT MAY BE NOTED THAT BOOKS WERE EXAMINED BY THE AO IN ASSESSMENT PROCEEDINGS AND IF THE LD CIT WAS PARTICULAR ABOUT THE BOOKS OF ACCOUNTS HE COULD HAVE VERY WELL REQUIRED THE ASSESSEE TO PRODUCE THE SAME . SIMILARLY THE OBSERVATION OF THE LD CIT THAT ASSESSEE HAS ACCEPTED THE CLAIM PASSED BY THE INSURANCE COMPANY IN JULY 2002 IS CONTRADICTORY WHEN HE HIMSELF STATES THAT ASSESS EE FILED THE APPLICATION BEFORE THE DISTRICT CONSUMER PROTECTION FORUM, PALI. AGAIN HIS OBSERVATION THAT THERE IS POSSIBILITY OF APPEAL IN TRIBUNAL IS NO GROUND IN NOT ALLOWING THE CLAIM OF THE ASSESSEE. THE CIT HIMSELF HAS ACCEPTED THAT THIS LOSS IS ALLOWABLE AS REVENUE LOSS BUT HIS OBSERVATION THAT SAME IS ALLOWABLE IN YEAR 2002-03 IS NOT CORRECT IN AS MUCH AS WHEN THE ASSESSEE HAS 7 DECIDED NOT TO CONTEST THE MATTER FURTHER AFTER THE ORDER OF DISTRICT CONSUMER FORUM DATED 21.10.2005, THE RELEVANT YEAR FOR ALLOWABLITY OF TH IS CLAIM WOULD BE ONLY ASSESSMENT YEAR 2006-07 AND NOT ASSESSMENT YEAR 2002-03. OTHER WISE ALSO ON SUCH ISSUES WHERE AO HAS ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW W ITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE AO IS E RRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE AS HELD BY HONBLE SUPREME COURT IN CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83 . AGAIN HIS OBSERVATION THAT INITIALLY ASSESSEE HAS I NTIMATED ABOUT THE ESTIMATED LOSS AT RS.60 LACS IS INCORRECT IN AS MUC H AS ASSESSEE VIDE LETTER DATED 15.04.2002 TO THE INSURANCE COMPANY AS WELL AS TO T HE POLICE DEPARTMENT HAS INTIMATED SUCH LOSS AT RS.70 LACS. 2.7 THE LD DR HAS REFERRED TO THE ORDER OF THE LD C IT PASSED U/S 263 OF THE ACT IN PARA 4.1, THE LD. CIT HAS MENTIONED THAT THE ORDER OF TH E DISTRICT CONSUMER FORUM IS NOT FINAL AND THE ASSESSEE CAN FILE THE APPEAL BEFORE THE TRI BUNAL. THE EXPENDITURE IS ALLOWABLE WHEN IT IS FINALLY HELD THAT THE AMOUNT WILL NOT BE RECEIVED. THE LD. CIT WAS OF THE OPINION THAT THE CLAIM OF THE ASSESSEE WAS INFLATED AND THEREFORE, THE EXCESSIVE CLAIM SHOULD HAVE BEEN DISALLOWED IN THE YEAR IN WHICH TH E ASSESSEE CREDITED A SUM OF RS. 70.00 LACS AND ODD AS RECEIVABLE FROM THE INSURANCE COMP ANY. 2.8 WE HAVE HEARD BOTH THE PARTIES. THE REVENUE ACC EPTED THE CREDIT OF RS. 72.00 LACS MADE BY THE ASSESSEE IN THE YEAR IN WHICH THE CLAIM WAS MADE BEFORE INSURANCE COMPANY. ONCE THAT CREDIT HAS BEEN ACCEPTED THEN TH E ASSESSEE CAN WRITE OFF THE DEBT RECOVERABLE FROM THE INSURANCE COMPANY IN THE YEAR WHEN THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE DISTRICT CONSUMER FORM. MOREOVER, W .E.F. 1-4-1989, THE CLAIM OF BAD DEBT IS ALLOWABLE IF THE SAME IS WRITTEN OFF. WHEN THE A SSESSEE HAS MADE THE CLAIM THEN 8 ACCORDING TO THE ASSESSEE, IT WAS A DEBT. IT WAS NO T LEGALLY ENFORCEABLE WHEN THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE DISTRICT CONSUMER FORUM. IT IS NOT THE CASE OF REVENUE THAT A SUM OF RS. 70,21,397/- WAS NOT CREDITED TO T HE PURCHASE ACCOUNT AND DEBITED TO THE INSURANCE COMPANY IN THE F.Y. 200203. MOREOVER, THE AO HAS TAKEN ONE OF THE POSSIBLE VIEW AND FOR THAT PURPOSE, THE ORDER CANNOT BE TERM ED AS ERRONEOUS. WE THEREFORE, HOLD THAT THE LD CIT WAS NOT JUSTIFIED IN PASSING THE OR DER U/S 263 OF THE ACT. THUS THE ORDER OF THE LD. CIT IS CANCELLED AND THE APPEAL OF THE ASSE SSEE IS ALLOWED. 3 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER IS PRONOUNCED ON 13-01-2012 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 13 /01/2012 *MISHRA COPY FORWARDED TO :- 1. SHRI RAVI MOHAN BUTHRA, HUF 2. THE LD. CIT BY ORDER 3. THE LD. CIT(A) 4. THE LD.DR 5. THE GUARD FILE (ITA NO.80/JODH /11) A.R, ITAT, JAIPUR