Deepak Kumar, V. Income Tax Officer, Ludhiana

ITA 916/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8311 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 22-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Keywords: Opportunity of being heard; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NO. 916/CHD/2015 ASSESSMENT YEAR: 2009-10 SHRI DEEPAK KUMAR, VS THE ITO, 43, PHASE-II, WARD VI(I), URBAN ESTATE, LUDHIANA. DUGRI, LUDHIANA. PAN: AKUPK8052G (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 22.03.2016 DATE OF PRONOUNCEMENT : 29.03.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS)-III LUDHIANA DATED 28.10. 2015 FOR ASSESSMENT YEAR 2009-10 CHALLENGING THE ADDITION OF RS. 4,58,558/-. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS WRITTEN OFF BAD DEBTS AM OUNTING TO RS. 4,58,558/- IN THE ACCOUNT BOOKS OF HIS CONCE RN M/S R.K. ROAD LINES. ON FURTHER PERUSAL OF THE ACCOUNT S, IT WAS NOTICED THAT THE DEBTS WRITTEN OFF WERE AGAINST THE PARTY M/S G.L. KHANNA & CO. WHO WERE HAVING RUNNING ACCOU NT WITH THE ASSESSEE. THE ASSESSEE WAS ASKED TO EXPLA IN WHY THIS AMOUNT WAS WRITTEN OFF EVEN WHEN THE ACCOUNT O F THE 2 PARTY WAS STILL RUNNING. THE ASSESSEE EXPLAINED TH AT THE AMOUNT PERTAINED TO OLD BALANCE WHICH WAS NOT COMIN G FROM THE PARTY. THE ASSESSING OFFICER DID NOT ACCE PT CONTENTION OF THE ASSESSEE BECAUSE PARTY WAS ALIVE AND TRANSACTIONS WERE STILL GOING ON WITH THE PARTY AS PER THE LEDGER ACCOUNT OF M/S G.L. KHANNA & CO. THE ASSESS ING OFFICER, ACCORDINGLY DISALLOWED BAD DEBT AND MADE T HE ADDITION. 3. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(APPEAL S) THAT HE IS PROPRIETOR OF M/S R.K. ROAD LINES AND IN THE BOOKS OF R.K. ROAD LINES, ASSESSEE HAS ONE ACCOUNT WITH G.L. KHANNA & SONS, NEW DELHI TO WHOM SALE OF FURNA CE OIL IS MADE. THE AMOUNT HAS BEEN WRITTEN OFF AS BA D DEBTS IN THE BOOKS OF ACCOUNT UNDER SECTION 36(I)(VII) OF THE ACT. IT WAS FURTHER SUBMITTED THAT SINCE AMOUNT WAS NOT BEING RECEIVED FOR LONG PERIOD, THEREFORE, IT WAS WRITTEN OFF AS BAD DEBT. THE ASSESSEE RELIED UPON DECISION OF THE SUP REME COURT IN THE CASE OF T.R.F. LTD. VS CIT 35 DTR 156 IN WHICH IT WAS HELD THAT, AFTER 01.04.1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DE BT, INFACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT S OF THE ASSESSEE. THE LD. CIT(APPEALS), ON THE SAME REASO NING AS HAS BEEN GIVEN BY THE A.O., CONFIRMED THE ADDITION AND DISMISSED APPEAL OF THE ASSESSEE. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTIFYING THE DATE OF HEARING. WE HAVE HEARD LD. D R AND DO 3 NOT FIND ANY JUSTIFICATION FOR THE AUTHORITIES BELO W TO SUSTAIN THE ADDITION. AFTER AMENDMENT IN PROVISIONS OF SECTION 36(1)(VII) OF THE INCOME TAX ACT, BAD DEBT IS ALLOWABLE DEDUCTION WHICH IS WRITTEN OFF AS IRRECOV ERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR. MERE WRITE-OFF DEBT IS SUFFICIENT TO CLAIM DEDUCTION. E STABLISHING DEBT AS A BAD DEBT IS NOT MANDATORY. THE AUTHORITI ES BELOW WERE, THEREFORE, BOUND TO DECIDE THE ISSUE IN THE L IGHT OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF M/ S TRF LTD. (SUPRA). WE, ACCORDINGLY, SET ASIDE THE ORDER S OF AUTHORITIES BELOW AND RESTORE THE MATTER IN ISSUE T O THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE TH E ISSUE STRICTLY IN ACCORDANCE WITH PROVISIONS OF SECTION 3 6(1)(VII) OF THE INCOME TAX ACT AND IN ACCORDANCE WITH THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S TRF LTD. V CIT (SUPRA). THE ASSESSING OFFICER SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVN ESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH MARCH,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD