MAHALAXMI GLASS WORKS P. LTD, V. DCIT RG 6(3),

MA 849/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3832 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 15-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Keywords: Opportunity of being heard; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI D. MANMOHAN, VP & SHRI R.K.PANDA, AM M.A. NO. 849/MUM/2009 ARISING OUT OF I.T.A. NO. 4647/MUM/2008 (ASSESSMENT YEAR 2003-04) THE MAHALAKSHMI GLASS WORKS PVT. LTD. DR. E. MOSES ROAD, MUMBAI-400 011 PAN:AAACT0213D VS. DCIT, RANGE 6(3) MUMBAI APPELLANT RESPONDENT APPELLANT BY : SHRI PRADIP KAPASI RESPONDENT BY : SHRI VIRENDRA OJHA ORDER DATE OF HEARING: 21.05.2010 DATE OF ORDER: 11.06.2010 PER R.K.PANDA, AM , THE ASSESSEE THROUGH THIS MISCELLANEOUS APPLICATIO N (MA) REQUESTS THE TRIBUNAL TO RECALL/AMEND ITS ORDER VID E ITA NO. 4647/MUM/08 ORDER DATED 31 ST JULY, 2009 WHERE THE ISSUE OF BAD DEBTS AMOUNTING TO RS.5,79,264 HAS BEEN RESTORED TO THE F ILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN THE SAID ORDER HAS RESTORED THE MATTER TO THE FI LE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF OMAN INTERNATIONAL BANK. HE SUBMITTED THAT THE ASSESSEE HAS WRITTEN OFF THE AMOUNT BASED ON THE LETTER OF THE AGENT M/S. R.K. TRADERS WHO CONVEYED ITS INABILITY TO COLLECT AND PAY MONEY IN RESPECT OF THREE CLIENTS. SINCE THIS LETT ER CLEARLY INDICATES THAT THERE WAS NO POSSIBILITY OF RECOVERY OF THE DEBTS O F THE ASSESSEE THE SAME WAS TREATED AS CONCLUSIVE EVIDENCE FOR THE ASSESSEE IN ORDER TO WRITE OFF THE SAID DEBTS AS BAD. REFERRING TO THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. TRF LTD. REPORTED IN 3 4 DTR 1, HE SUBMITTED MA NO. 32/MUM/2010 M/S. KONEGA INTERNATIONAL PVT. LTD. ============================== 2 THAT AN ASSESSEE IS NOT REQUIRED TO ESTABLISH THAT THE DEBT HAS BECOME IRRECOVERABLE AND A MERE WRITE OFF IN THE ACCOUNTS IS SUFFICIENT. THEREFORE, THE ORDER OF THE TRIBUNAL NEEDS RECTIFICATION. SINCE THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ISSUE IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT HE SUBMITTED THAT THE MATTER SHOULD BE DECIDED IN VIEW OF THE DECISION OF THE HO NBLE SUPREME COURT OR AT LEAST A DIRECTION BE GIVEN TO THE ASSESSING OFFI CER TO CONSIDER THIS DECISION. 3. THE LEARNED DR, ON THE OTHER HAND, OPPOSED THE MA F ILED BY THE ASSESSEE AND SUBMITTED THAT THE ORDER OF THE SUPREM E COURT IS DATED 9 TH FEBRUARY, 2010 AND THIS IS MUCH AFTER THE ORDER OF THE TRIBUNAL WHICH IS DATED 31 ST JULY, 2009. HE SUBMITTED THAT THE ASSESSEE IS NOW TRYING TO REQUEST THE TRIBUNAL TO REVIEW ITS OWN ORDER WHICH IS NOT PERMISSIBLE IN LAW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES. WE FIND THE ORDER OF THE HONBLE SUPREME COURT IN T HE CASE OF TRF LTD. WAS PASSED ON 9 TH FEBRUARY, 2010 WHICH IS MUCH AFTER THE ORDER OF TH E TRIBUNAL. THEREFORE, THE DECISION OF THE HONBLE S UPREME COURT WAS NOT AVAILABLE AT THE TIME OF HEARING OF THE APPEAL. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER SHOULD BE DIRECTED TO CONSIDER THE LATEST DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TRF LTD. (SUPRA). WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. WE, THEREFORE, A RE OF THE OPINION THAT THE ASSESSING OFFICER WHILE DECIDING THE ISSUE SHOU LD ALSO CONSIDER THE LATEST DECISION OF THE HONBLE SUPREME COURT. WE, THEREFORE, AMEND PARA 6 OF THE ORDER WHICH SHOULD BE READ AS UNDER: 6 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFI CER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE AS SESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE INCLUDING THE DECI SION OF THE HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT VS . OMAN INTERNATIONAL BANK HAS HELD THAT THE DECISION OF AN ASSESSEE TO TREAT A DEBT AS BAD DEBT IN HIS BOOKS HAS TO BE A BUSINESS OR MA NO. 32/MUM/2010 M/S. KONEGA INTERNATIONAL PVT. LTD. ============================== 3 COMMERCIAL DECISION AND NOT WHIMSICAL OR FANCIFUL A ND MUST BE BASED ON MATERIAL THAT THE DEBT IS NOT RECOVERAB LE. THE DECISION MUST BE BONAFIDE. IT HAS BEEN FURTHER HEL D IN THE SAID DECISION THAT POST AMENDMENT OF SECTION 36(1)(VII) AND 36(2), THE BURDEN IS NOT ON THE ASSESSEE TO SHOW THE DEBT IS BAD. IN ORDER TO DISALLOW THE ASSESSING OFFICER MUST SHOW T HAT THE DECISION OF THE ASSESSEE WAS NOT BONAFIDE. WE FIND IN THE INSTANT CASE THE ASSESSEE HAS SIMPLY REITERATED THA T BAD DEBTS WRITTEN OFF TO PROFIT AND LOSS A/C. ARE ALLOWABLE U /S. 36 AS PER AMENDED PROVISION IF THE AMOUNT IS WRITTEN OFF IN T HE ACCOUNTS. SINCE THE ASSESSING OFFICER HAS RAISED D OUBTS ABOUT THE BONAFIDES OF THE WRITE OFF OF THE DEBTS THE ASS ESSEE HAS TO DISCHARGE THE ONUS. WE, THEREFORE, DEEM IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT O F THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF OMA N INTERNATIONAL BANK (SUPRA) INCLUDING THE LATEST DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. REPORTED IN 34 DTR 1 (SC) . THE ASSESSING OFFICER SHALL GIVE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECIDE THE ISSUE AS PER LAW. WE HOLD AND DIRECT AC CORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY AL LOWED FOR STATISTICAL PURPOSES. 5. WE HOLD AND DIRECT ACCORDINGLY. 6. IN THE RESULT, THE MA FILED BY THE ASSESSEE IS ACCO RDINGLY ALLOWED. PRONOUNCED ON 11 TH JUNE, 2010 SD/- (D.K. AGARWAL) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 11 TH JUNE, 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-VI, MUMBAI 4. THE CIT, CITY-VI, MUMBAI 5. THE DR D BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES, MUMBAI TPRAO