Smt. Mamta Gupta, Bhavnagar V. The Dy.CIT.,Circle-1, Bhavnagar

ITA 915/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0904 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.915/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) SMT. MAMTA GUPTA 602, SHANTIVAN APARTMENT NR.JAIN DERASAR RUPANI CIRCLE BHAVNAGAR 364 001 / VS. THE DCIT CIRCLE-1 BHAVNAGAR $ ./ ./ PAN/GIR NO. : ACDPG 4647 G ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $&) / APPELLANT BY : WRITTEN SUBMISSION '($&*) / RESPONDENT BY : SHRI JAMES KURIAN, SR.DR +* / DATE OF HEARING 03/08/2016 ,-./* / DATE OF PRONOUNCEMENT 22/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XX, AHMEDABAD D ATED 15/02/2012 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ITA NO.915/AHD/ 2012 SMT. MAMTA GUPTA VS. DCIT ASST.YEAR 2008-09 - 2 - 2.1. ASSESSEE IS PROPRIETOR OF M/S.SATNARAYAN STEE L INDUSTRIES WHICH IS IN THE BUSINESS OF IRON AND STEEL RE-ROLLING MILL A ND WEIGHBRIDGE. ASSESSEE FILED HER RETURN OF INCOME FOR AY 2008-09 ON 27/08/2009 DECLARING TOTAL INCOME OF RS. 11,20,690/-. THE CAS E WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' ) VIDE ORDER DATED 27/12/2010 AND THE TOTAL INCOME WAS DETERMINED AT RS.27,90,270/-. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO ), ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DAT ED 15/02/2012 (IN APPEAL NO.CIT(A)/XX/614/10-11) DISMISSED THE A PPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), A SSESSEE IS NOW IN APPEAL BEFORE US. 2.2. ON THE DATE OF HEARING, NONE APPEARED ON BEHAL F OF APPELLANT- ASSESSEE, HOWEVER, ASSESSEE HAS FILED WRITTEN SUBMI SSIONS. WE THEREFORE PROCEED TO DISPOSE OF THE APPEAL ON THE BASIS OF MA TERIAL ON RECORD EX- PARTE QUA THE ASSESSEE. 2.3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O NOTICED THAT ASSESSEE HAD CLAIMED RS.16,69,583/- AS BALANCES WR ITTEN OFF. ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM FOR WRITE OFF. TH E CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE AO FOR THE FOLLOWING REASONS: - ITA NO.915/AHD/ 2012 SMT. MAMTA GUPTA VS. DCIT ASST.YEAR 2008-09 - 3 - (I) ASSESSEE DID NOT FILE THE DETAILS AND ACCORDIN G TO AO THE BALANCES WRITTEN OFF WERE WITH RESPECT TO THE BAL ANCES RECOVERABLE FROM THE SISTER-CONCERN OF THE ASSESSEE AND ASSESSEE HAD NOT FILED ANY PROOF OF WRITTEN OFF IN THE BOO KS OF ACCOUNTS. (II) THOUGH ASSESSEE HAD CLAIMED THAT THE PARTY TO WHOM THE BALANCE WAS RECEIVABLE WAS CLOSED SINCE LAST 10 YEA RS BUT ON PERUSAL OF THE LEDGER , AO NOTICED THAT AS ON 1.4.2 002 THERE WAS A BROUGHT FORWARD BALANCE OF RS.34,50,889/- AND OF RS .18,5000/- WAS ADDED AS ON 31.03/2003. (III) ASSESSEES CLAIM THAT NO MONEY WAS RECEIVED WAS WRONG BECAUSE ACCORDING TO AO ASSESSEE HAD RECEIVED MORE THAN 17 LACS IN SEPTEMBER/OCTOBER-2005. (IV) ASSESSEE DID NOT PROVIDE ANY EVIDENCE THAT TH E AMOUNTS REPRESENTED DEBTORS AND THE EFFORTS PUT IN BY THE A SSESSEE TO RECOVER THE DEBTS. 2.4. HE ACCORDINGLY DENIED THE CLAIM OF WRITE OF F OF ASSESSEE AND MADE ADDITION BY DISALLOWING THE CLAIM OF BALANCE WRITT EN OFF RS.16,69,583/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 2.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A.R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER. FOR THE DETAILED REASONS MENTION ED AT PARA-5 OF THE ASSESSMENT ORDER, AO DISALLOWED THE BALANCE WRI TTEN OFF IN RESPECT OF M/S.SATYANARAN STEEL ROLLING MILL. IN T HE WRITTEN SUBMISSIONS IT IS CLAIMED THAT PART OF THE AMOUNT W RITTEN OFF ITA NO.915/AHD/ 2012 SMT. MAMTA GUPTA VS. DCIT ASST.YEAR 2008-09 - 4 - REPRESENTED SALES MADE TO THE PARTY AND THE BALANCE REPRESENTED ADVANCES TOWARDS PURCHASES FROM THE PARTY. AS REGA RDS ALLEGED SALES MADE, APPELLANT HAS NOT BEEN ABLE TO SUBSTANT IATE THAT SUCH SALES FORMED PART OF APPELLANTS INCOME IN THE EARL IER YEARS. HENCE THE PROVISIONS OF SEC. 36(2) ARE NOT SATISFIE D. SIMILARLY IN RESPECT OF ADVANCES MADE, THERE IS NOTHING ON RECOR D TO SHOW THAT THESE WERE TRADE ADVANCES AND NOT CAPITAL ADVANCED. IF THESE WERE TRADE ADVANCES, THEY NEVER FORMED PART OF APPELLANT S INCOME IN EARLIER YEARS. HENCE THE PROVISIONS OF SEC.36(2) A RE NOT SATISFIED. IF THE ADVANCES WERE CAPITAL IN NATURE, SINCE THE A PPELLANT IS NOT A MONEY-LENDER, THE LOSS CANNOT BE REVENUE LOSS. THE REFORE, I DO NOT SEE ANY MERIT IN THE CONTENTIONS OF THE APPELLANT. IMPUGNED DISALLOWANCE OF RS.16,69,583/- IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), ASSESSE E IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XX AHMEDABAD HAS ERRED IN LAW AND ON FACTS:- (1) IN CONFIRMING ADDITION OF RS.16,69,583/- MADE BY T HE ASSESSING OFFICER. (2) IN NOT APPRECIATING THE FACT THAT THE ADDITION OF R S.16,69,583/- MADE BY THE ASSESSING OFFICER INCLUDES RS.5,13,088/- ON ACCOUNT OF SALE OF GOODS AND ELIGIBLE FOR CLAIMED AS BAD DEBTS U/S.36( I)(VII). HE HAS ALSO NOT APPRECIATED THAT SALE SUBJECT MATTER OF CL AIM OF BAD DEBTS IS CREDITED TO PROFIT & LOSS ACCOUNT AND THERE IS NO N EED TO FURTHER SUBSTANTIATE THAT BESIDES COPY OF INVOICES AND ANNU AL ACCOUNTS OF THE RELEVANT YEAR. 4. BEFORE US, IN THE WRITTEN SUBMISSIONS ASSESSEE H AS SUBMITTED THAT THE AMOUNT WRITTEN OFF INCLUDES RS.5,13,088/- ON ACCOUNT OF SALE OF ITA NO.915/AHD/ 2012 SMT. MAMTA GUPTA VS. DCIT ASST.YEAR 2008-09 - 5 - WASTE AND SCRAP WHICH COULD NOT BE RECOVERED BY THE ASSESSEE AND THE SALES OF WHICH WERE CREDITED IN THE BOOKS OF ACCOUN TS IN EARLIER YEARS. AS FAR AS THE WRITING OFF OF BALANCES AMOUNT OF RS.16 ,69,583/- IS CONCERNED, IT WAS SUBMITTED THAT IT REPRESENTS THE ADVANCES GI VEN BY THE ASSESSEE TOWARDS PURCHASES OF RAW-MATERIALS IN EARLIER ASSES SMENT YEARS WHICH COULD NOT BE RECOVERED. ASSESSEE ALSO RELIED ON TH E DECISION OF HONBLE APEX COURT IN THE CASE OF TRF LTD. VS. CIT REPORTED IN 323 ITR 397 AND SUBMITTED THAT THE ASSESSEES CLAIM BE ALLOWED. LD.SR.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF AO & LD.CIT(A) AND SU BMITTED THAT ASSESSEE HAS NOT FURNISHED ANY DETAILS BEFORE ANY O F THE AUTHORITIES INCLUDING THE TRIBUNAL ABOUT THE COMPLIANCES OF THE CONDITIONS REQUIRED FOR CLAIMING DEDUCTION U/S.36(1)(VII) R.W.S. 36(2) OF THE ACT. HE THUS SUPPORTED THE ORDERS OF THE AO AND LD.CIT(A). 5. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ALLOWABILITY OF DEDUCTION ON ACCOUNT OF WRITE OFF OF BAD DEBTS. SECTION 36(2)(I) OF THE ACT ALLOWS DEDUCTION ON ACCOUNT OF SATISFACTION OF ANY OF ONE OF THE TWO CO NDITIONS; NAMELY (A) BAD DEBTS OR PART THEREOF TAKEN INTO ACCOUNT IN COM PUTING THE INCOME OF THE ASSESSEE FOR AN EARLIER ASSESSMENT YEAR BEFORE SUCH DATE OR PART THEREOF IS WRITTEN OFF OR (B) THE DEBTS REPRESENT S MONEY LEND IN THE ORDINARY COURSE OF BUSINESS OF BANK OR MONEY LENDIN G WHICH IS CARRIED ON ITA NO.915/AHD/ 2012 SMT. MAMTA GUPTA VS. DCIT ASST.YEAR 2008-09 - 6 - BY THE ASSESSEE. THEREFORE EVEN IF ONE OF THE TWO CONDITIONS OF SECTION 36(2)(I) IS SATISFIED, THEN BAD DEBTS CLAIMED U/S.3 6(1)(VII) HAS TO BE ALLOWED. SO FAR AS FIRST PART OF SECTION 36(2)(I) OF THE ACT IS CONCERNED, IN THE PRESENT CASE IT IS ASSESSEES SUBMISSION THAT T HE AMOUNT OF RS.5,13,088/- REPRESENTS THE SALE OF WASTE AND SCRA P WHICH WAS CREDITED TO THE P&L A/C. IN THE YEAR OF SALE. WE FIND THAT NO DETAILS OF THE YEAR OF SALE HAS BEEN FURNISHED BY THE ASSESSEE EITHER BEFO RE AO OR LD.CIT(A) OR BEFORE US. ASSESSEE HAS MERELY MADE A SUBMISSION THAT THE AMOUNT REPRESENTS SALE. SIMILARLY, AS FAR AS THE ASSESSEE S CLAIM OF HAVING GIVEN ADVANCE PAYMENT FOR PURCHASE OF RAW-MATERIAL OF RS. 11,56,495/- IS CONCERNED, NO DETAILS OF THE SAME HAVE BEEN FURNIS HED BY THE ASSESSEE. FURTHER, IN THE PRESENT CASE, ASSESSEE HAS NOT FURN ISHED DETAILS IN SUPPORT OF ITS CONTENTION OF HAVING FULFILLED THE CONDITION S SPECIFIED U/S.36 OF THE ACT FOR CLAIMING DEDUCTION. WE FURTHER FIND THAT B EFORE US, ASSESSEE HAS CLAIMED THAT THE ISSUE IS COVERED IN HER FAVOUR BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF TRF LTD.(SUPRA). WE FIND THAT THERE IS NO FINDING ON THE SAME BY LD.CIT(A) IN HIS ORDER. WE FIND THAT HONBLE SUPREME COURT IN THE CASE OF TRF LTD.(SUPRA), HAS O BSERVED THAT AFTER THE AMENDMENT OF SECTION 36(1)(VII) W.E.F. 01/04/1989 I N ORDER TO OBTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECES SARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FACT HAS BECOME IRRECOVE RABLE AND IT IS ENOUGH IF THE BAD DEBTS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE IN THE PRESENT CASE, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE ITA NO.915/AHD/ 2012 SMT. MAMTA GUPTA VS. DCIT ASST.YEAR 2008-09 - 7 - ASSESSEE BE GRANTED ONE MORE OPPORTUNITY TO PLACE O N RECORD ABOUT THE SATISFACTION OF THE REQUIRED CONDITIONS FOR CLAIMIN G DEDUCTION OF WRITE OFF. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE AFORESAID DECISION OF HO NBLE APEX COURT IN THE CASE OF TRF LTD. (SUPRA) AND IN ACCORDANCE WITH LAW . NEEDLESS TO STATE THAT THE AO SHALL GRANT ADEQUATE OPPORTUNITY OF HEA RING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PROMPTLY FURNISH A LL THE REQUIRED DETAILS CALLED FOR BY THE AO. IN CASE, THE ASSESSEE FAILS TO FURNISH THE REQUIRED DETAILS, THE AO SHALL BE FREE TO PROCEED AND DECIDE THE ISSUE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THUS, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 22/08/2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 22/ 08 /2016 3..,.../ T.C. NAIR, SR. PS ITA NO.915/AHD/ 2012 SMT. MAMTA GUPTA VS. DCIT ASST.YEAR 2008-09 - 8 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-XX, AHMEDABAD 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 11.8.16 (DICTATION-PAD 11 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.8.16/17.8.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.22.8.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.8.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER