DCIT, New Delhi v. M/s. Shree Glass Containers Pvt. Ltd., New Delhi

ITA 1608/DEL/2012 | 2008-2009
Pronouncement Date: 29-04-2014 | Result: Dismissed

Appeal Details

RSA Number 160820114 RSA 2012
Assessee PAN AAGCS9461A
Bench Delhi
Appeal Number ITA 1608/DEL/2012
Duration Of Justice 2 year(s) 24 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Shree Glass Containers Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 29-04-2014
Date Of Final Hearing 17-04-2014
Next Hearing Date 17-04-2014
Assessment Year 2008-2009
Appeal Filed On 04-04-2012
Judgment Text
ITA NO. 16 08.DEL.12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G. D. AGRAWAL VICE PRESIDENT AND SMT DIVA SINGH JUDICIAL MEMBER I.T.A .NO.-1608/DEL/2012 (ASSESSMENT YEAR-2008-09) DCIT CIRCLE-8(1) ROOM NO. 163 C. R. BUILDING NEW DELHI (APPELLANT) VS SHREE GLASS CONTAINERS PVT. LTD. BHARAT BULDING FIRST FLOOR 10 DARYA GANJ NEW DELHI AAGCS9461A (RESPONDENT) APPELLANT BY: SH. GAGAN SOOD SR. DR RESPONDENT BY: SH. RAJEEV MAHAJAN F.C.A ORDER PER DIVA SINGH JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER DATED 2/1/2012 OF CIT(A) XI NEW DELHI PERTAINING TO 2008-09 ASSESSME NT ORDER ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.76 90 367/- MADE BY THE AO ON ACCOUN T OF ADVANCE RECEIVED FROM THE CUSTOMERS. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.24 20 229/- MADE BY THE AO ON ACCOUN T OF BAD DEBTS. 2. A PERUSAL OF THE RECORD SHOWS THAT THE ASSESSEE COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF GLASS BOTTLES RETURNED A LOSS OF ITA NO. 16 08.DEL.12 2 RS.28 58 717/- WHICH WAS CONVERTED TO A POSITIVE IN COME OF RS.74 54 971/- BY THE ASSESSING OFFICER VIDE HIS ORDER DATED 18/11/20 10 PASSED U/S 143(3). 2. THE ISSUE QUA THE FIRST GROUND IS FOUND DISCUSS ED IN PARA 3 OF THE ASSESSMENT ORDER AS A RESULT OF WHICH ADDITION OF R S.76 90 367/- WAS MADE BY THE AO ON THE FOLLOWING REASONING. 3. FROM THE RECORDS IT IS SEEN THAT THE ASSESSEE HAS CLAIMED A LIABILITY OF RS.76 90 367/- ON ACCOUNT OF ADVANCE RECEIVED BY TH E CUSTOMER NAMELY M/S JAI GLASS WORKS. IN COMPLIANCE TO THE SPECIFIC QUERY R AISED IN THIS REGARD THE ASSESSSEE HAS SUBMITTED AS UNDER:- IN RESPECT OF JAI GLASS WORKS- CREDIT BALANC E OF RS.76 90 367/- OF JAI GLASS WORKS IN OUR BOOKS. IN F. Y 2003-04 ADVANCE OF RS.1 00.00.000/- WAS RECEIVED FROM THE PARTY AGAINST SUPPLY OF GOODS. I N ALL GOODS WORTH RS.23 09 633/- WERE SUPPLIED AND BALANCE OF RS.76 9 0 367/- REMAINED OUTSTANDING IN OUR ACCOUNTS. HOWEVER UNDER CIRCUM STANCES BEYOND THE CONTROL OF ASSESSEE THE SAID PARTY TAKEN AN AMOUNT OF RS.1 65 00 000/- FROM A THIRD PARTY (LARSON & TURBO LTD.) ON OUR BEHALF ON 29/3/2006. L ATER ON THE ASSESSEE HAS FILED CRIMINAL COMPLAINT AGAINST BOTH THE PARTIES W ITH DELHI POLICE CRIME BRANCH (EOW) AND THE ASSESSEE HAS NOT ADJUSTED THE PAYMENT OF RS.1 65 00 000/- IN ITS BOOKS. COPY OF LETTER FROM THE PARTY AND ITS ACCOUNT IN OUR BOOKS ARE ENCLOSED AT ANNEXURES-2. THERE IS NO TRANSACTION IN THIS ACCOUNT DURING THE YEAR UNDER CONSIDERATION. 3. THE SAID ISSUE WAS AGITATED IN APPEAL BEFORE THE CIT(A) BEFORE WHOM FRESH EVIDENCE WAS RAISED ON BEHALF OF THE ASSESSEE AND A REMAND REPORT WAS OBTAINED. THE SAID FACT IS FOUND RECORDED IN PAGE 2 UNNUMBERE D PARA 1 OF THE IMPUGNED ORDER. IT IS SEEN THAT ON BEHALF OF THE ASSESSEE THE FOLLOWING EXPLANATION WAS OFFERED BEFORE THE CIT(A) THE SAME IS REPRODUCED FR OM PAGE 3 TO PAGE 4 OF THE IMPUGNED ORDER AND READS AS UNDER:- THE ASSESSEE WAS RUNNING GLASS CONTAINER MANUFAC TURING UNIT AT NEEMRANA DISTT. ALWAR RAJASTHAN WHICH WAS CLOSED IN AUGUST 2005. AFTER THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY. THE TRANSACTIONS WHICH ARE SUBJECT MATTER OF S. NO. 1 TO 3 OF GROUNDS OF APPEA L OWE THEIR ORIGIN TO PERIOD PRIOR TO AUGUST 2005. ON 26/2/2004 ASSESSSEE RECEIVED AN ADVANCE OF RS. 1 00 00 000/- FOR SUPPLY OF GLASS BOTTLES FROM M/S. JAI GLASS WORKS MUMBAI AND SUPPLIED GOODS WORTH RS.23 09 633/- AND THE BALANCE RS.76 90 367/- REMAINED OUTSTANDING IN THE BOOKS OF ASSESSEE. THE ASSESSEE AND THE SAID M /S. JAI GLASS WORKS (JGW) NEVER DENIED/CONTRADICTED THIS POSITION. JGW FURTH ER RAISED FACTITIOUS BILLS OF RS.88 07 240/- ON A/C SUPPLY OF MOULDS THE CONSIGN EE BEING HARYANA SHEET ITA NO. 16 08.DEL.12 3 GLASS LTD 14 RIIOO INDL. AREA NEEMRANA RAJASTHA ND ( THE ASSESSEE WAS RUNNING LASS CONTAINER MANUFACTURING AT NEEMRANA R AJASTHAN OWNED BY HARYANA SHEET GLASS LTD.). IN FACT THE PERIOD TO WHICH THE SAID SUPPLY AND THE CORRESPONDING BILLS PERTAIN THE NEEMRANA UNIT REMA INED THROUGH OUT CLOSED. AS A RESULT OF RAISING THIS FACTITIOUS BILL BY JGW THE BOOKS OF JGW SHOWN RS.1 64 97 607/- (76 90 367+ 88 07 240) AS DUE FROM THE ASSESSEE. THE SAID BILLS WAS NEVER ACCOUNTED FOR IN ITS BOOKS BY THE A SSESSEE. JGW RECEIVED RS.1 65 00 000/- ON BEHALF OF THE ASSESSEE FROM LAR SON & TOURBO LTD. (L&T) ON 29/3/2006 THROUGH COLLUSION AND UNFAIR MEANS AS PA YMENT OF LIABILITY BY ASSESSEE. IN SO FAR AS L &T IS CONCERNED ASSESSEE PAID RS.22 .50 CRORE TO L &T FOR TKAING VOER ITS GLASS CONTAINER MANUFACTURING UNIT AT NASIK KNOWN AS NASIK GLASS WORKS (NGW) IN TERMS OF MOU DATED 24/12/2003 CONFIRMATIOIN. THE DEAL FAILED. THE ASSESSEE APPROACHED L &T FOR REFU ND OF MONEY GIVEN BY THE ASSESSEE TO L &T. THE ASSESSEE WAS COMPELLED TO SE TTLE AT RS.12.50 CRORE ONLY AGAINST THE OUTSTANDING OF RS.22.50 CRORE. OF THE SAID RS.12.50 CORRE RS.4.50 CRORE WAS PAID TO INDIAN OVERSEAS BANK BY THE L &T AS REPAYMENT OF LOAN TAKEN BY THE ASSESSEE FROM THE SAID BANK RS.6.35 C RORE WAS PAID TO THE ASSESSEE AND THE REMAINING RS.1.65 CRORE OF JGW. IN ITS BOO KS OF ACCOUNT THE ASSESSEE ADJUSTED THE AMOUNT OF RS.4.50 CRORE AND RS.6.35 C RORE TO THE A/C OF L&T. BUT DUE TO AN IMPENDING DISPUTE OVER THE AMOUNT PAYABLE TO JGW (ASSESSEE CLAIMS AMOUNT DUE AT RS.76 90 367/-) WHILE JGW CLAIM IT TO BE RS.1 64 97 607/-) THE ASSESSEE HAS NOT ADJSUTED IN ITS BOOKS OF ACCOUNT THE AMOUNT OF RS.1.65 CRORE PAID BY L&T DIRECTLY TO JGW ON ACCOUNT OF THE ASSES SEE NEITHER TO THE A/C OF L &T NOR TO THE A/C OF JGW. AS SUCH IN THE BOOKS OF ASSESSEE BALANCE RECEIVABLE FROM L &T NOR TO AS ON 31/3/2006 RS.11 65 00 000/- (22 50 000- 6 35 00004 50 000) WAS STILL SHOWN RECEIVABLE AS O N 31/3/2008 AND BALANCE PAYABLE TO JGW AS ON 31/3/2006 RS.76 90 367/- WAS S TILL SHOWN PAYABLE AS ON 31/3/2008 PENDING ADJUSTMENT OF RS.1 65 00 000/-. THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE WAS FORCED TO MOVE OUT OF THE PR OSPECTIVE PURCHASE OF NASIK GLASS WORKS UNIT BY L &T COMPELLED TO ARRIVE AT SE TTLEMENT WITH L &T AND DIVERSION OF FUNDS BY L &T TO JGW WAS COMPLAINED BY THE ASSESSEE TO ECONOMIC OFFENCE WING OF CRIME BRANCH DELHI POLICE . 3.1 CONSIDERING THESE ARGUMENTS THE CIT(A) CAME TO THE FOLLOWING CONCLUSIONS:- I HAVE PERUSED ALL THE DOCUMENTS. NO COMMENTS HAV E BEEN GIVEN BY THE AO ON THIS ISSUE IN THE REMAND REPORT. IT IS SEEN THAT R S.76 90 367/- PAYABLE BY THE ASSESSEE TO JGW WAS NEVER DENIED BY THE ASSESSEE AN D JGW HAS ALSO CONFIRMED IT VIDE ITS LETTER DATED 30/3/2006. JGW FURTHER CO NFIRMED HAVING RECEIVED THE PAYMENT OF RS.76 90 367/- FROM L & T ON ACCOUNT OF ASSESSEE. DUE TO IMPENDING DISPUTE OVER THE AMOUNT PAYABLE TO JGW (ASSESSEE CLAIMS AMOUNT DUE AT RS.76 90 367/- WHILE JGW CLAIM S IT TO BE RS.1 64 97 607/- ) PAYMENT OF RS.1 65 00 000/- WAS MADE BY L & T TO JGW ON A/C OF THE ASSESSEE ITA NO. 16 08.DEL.12 4 AND WAS NEITHER ADJUSTED O THE A/C OF L& T NOR TO THE ACCOUNT OF JGW IN THE BOOKS OF ASSESSEE. JGW ACTUALLY RECEIVED THE MONEY DUE TO IT BY THE AS SESSEE FROM L &T AND L &T IN TURN OWED MONEY TO THE ASSESSEE. THE BALANCE STANDING CREDIT TO THE A/C OF JGW IN TH E BOOKS OF ASSESSEE IN NO WAY CAN BE TREATED AS INCOME OF THE ASSESSEE IN VIEW OF THE FACT THAT JGW HAS ACTUALLY RECEIVED THIS AMOUNT ON A/C OF THE ASS ESSEE FROM L &T. SINCE THE AMOUNT OF RS.76 90 367/- HAS ALREADY BEE N RECEIVED BY JGW FROM L &T ON A/C OF THE ASSESSEE TO GIVE EFFECT TO THIS TRANSACTION IN BOOKS OF ASSESSEE ALL THAT IS NEEDED TO BE DONE IS THAT THE SAID AMOUNT WILL BE DEBITED TO THE A/C OF JGW AND CREDITED TO THE A/C OF L &T IN T HE BOOKS OF THE ASSESSEE. IT WILL HAVE THE EFFECT OF REDUCING THE DEBIT BALANCE OF RS.11 65 00 000/- OF L &T BY RS.76 90 367/- AND BALANCE OF JGW TO NIL. RS.76 90 367/- WILL NOT BE WRITTEN BACK AND TREATED AS INCOME U/S 41 OF THE AC T BUT WILL BE ADJUSTED TO THE ACCOUNT OF L &T IN THE BOOKS OF ASSESSEE. THE OBSERVATION MADE BY THE A.O THAT NO SUCH LIABI LITY EXIST AS ON DATE IS TRUE ONLY TO THE EXTENT OF LITERAL MEANING BUT I N THIS CASE THE NON EXISTENCE OF LIABILITY WILL NOT HAVE THE EFFECT OF INCREASING TH E INCOME OF THE ASSESSEE IN VIEW OF THE FACT THAT THE AMOUNT IN QUESTION HAS ALREADY BEEN RECEIVED BY THE CREDITOR FROM THIRD PARTY ON A/C OF THE ASSESSEE. APPELLANT FILED CRIMINAL COMPLAINT WITH DELHI POLICE CRIME BRANCH EOW AND THEREFORE DID N OT ADJUST AMOUNT. IN VIEW THEREOF SECTION 41(1) WILL NOT BE ATTRACTED IN THIS CASE AS THERE HAS BEEN NO REMISSION OR CESSATION OF SUCH LIABILIT Y. THE EXPLANATION OF THE APPELLANT IS ACCEPTED AND ADDITION IS DELETED. GRO UND NO. 1 IN FAVOUR OF THE APPELLANT. 4. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. THE LD. SR. DR MR. GAGAN SOOD RELIED UPON THE ASSESSMENT ORDER. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED HEAVY RELIANC E UPON THE SUBMISSIONS MADE BEFORE THE CIT(A) ON THE BASIS OF WHICH IT WAS HIS CONTENTION THAT THE ASSESSEE WAS RUNNING GLASS CONTAINER UNIT AT NEEMRANA WHICH WAS CLOSED IN AUGUST 2005. HOWEVER THE ASSESSEE HAD RECEIVED ON ADVANCE OF RS .1 CRORE FOR SUPPLY OF GLASS BOTTLES FROM M/S JAI GLASS WORKS (SGW)MUMBAI AND H AD SUPPLIED GOODS WORTH RS.23 09 633/- AND THE BALANCE RS.76 90 367/- REMAI NED OUTSTANDING. ON THE OTHER HAND LARSON AND TOURBO OWED MONEY TO THE ASSE SSEE WHICH WAS PAID DIRECTLY TO JGW. IT WAS SUBMITTED THAT JGW HAVE CO NFIRMED THE RECEIPT OF ITA NO. 16 08.DEL.12 5 PAYMENT OF RS.76 90 367/-. ACCORDINGLY RELIANCE WA S PLACED ON THE IMPUGNED ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD IN THE ABSENCE OF ANY ARGUMENT OR REBUTTAL ON FACTS AS CONSIDERED BY THE CIT(A) WE FIND NO GOOD REASON TO INTERFERE WITH TH E FINDING ARRIVED AT IN THE IMPUGNED ORDER. BEING SATISFIED WITH THE REASONING AND FINDING GROUND NO. 1 OF THE REVENUE IS DISMISSED. 6. THE NEXT ISSUE AGITATED BY THE REVENUE IT IS SE EN IS FOUND DISCUSSED AT PAGE 2 & 3 OF THE ASSESSMENT ORDER IN PARA 5. THE SAME IS REPRODUCED HEREUNDER FOR READY REFERENCE:- 5. VIDE ORDER SHEET ENTRY DATED 19/10/2010 THE AS SESSEE WAS ASKED TO PROVIDE DETAILS OF BAD DEBTS OF RS.24 20 229/- ALONG WITH D OCUMENTARY EVIDENCES. IT WAS ALSO REQUESTED TO ESTABLISH THAT CONDITIONS MENTION ED U/S 36(2) OF THE ACT HAVE BEEN FULFILLED AND BAD DEBTS SO CLAIMED HAVE BEEN SHOWN AS TRADING/BUSINESS RECEIPTS IN EARLIER YEARS AND WERE ACCOUNTED FOR. IN THIS REGA RD THE ASSESSEE FURNISHED ITS REPLY VIDE LETTER DATED 29/10/2010 WHICH REDS AS BELOW:- BAD DEBTS OF RS.24 20 229/- IN PROFIT AND LOSS AC COUNT REPRESENT AMOUNT DUE FROM M/S JAI DRINKS PVT. LTD COPY OF ACC OUNT OF THE PARTY FOR F.Y 2005-06 AND 2007-08 AN COPY OF BAD DEBT ACC OUNT FOR F.Y 2007-08 IN THE BOOKS OF ASSESSEE IS AT ANNEXURE-4. PLEASE NOTE THAT THE AMOUNT WHICH HAS BEEN WRITTEN OFF AS BAD DEBTS DURING THE YEAR WAS INCLUDED IN ITS INCOME BY THE ASSESSEE IN F. Y 2005-06 RS.23 91 016/- AND IN F.Y 2004-05 RS.29 2133/-. 5.1 IT IS NOTICED FROM THE ANNEXURE ATTACHED TO T HE SAID REPLY THAT THE ASSESSEE HAS ENCLOSED ONLY COPY OF LEDGER ACCOUNT OF THE PAR TY JAI DRINKS PVT. LTD. FOR THE PERIOD 1/4/2005 TO 31/3/2006 AND 1/4/2007 TO 31/3/2 008. HOWEVER THE SUBMISSIONS FILED BY THE ASSESSEE DID NOT ESTABLISH HE FACT THAT HE ACCOUNT OF RS.24 20 229/- CLAIMED AS BAD DEBTS WRITTEN OFF WA S EVER INCLUDED IN ITS INCOME AND ACCORDINGLY WAS OFFERED FOR TAXATION. IN ITS R EPLY IT HAS STATED THAT EH BAD DEBTS SO WRITTEN OFF HAS BEEN INCLUDED IN INCOME BY THE ASSESSEE IN F.Y 2005-06 RS.23 91 016/- AND IN F.Y 2004-05 RS.29 213/-. BUT NO EVIDENCE HAS BEEN FILED. IT CAN BE SEEN THAT ONUS TO PROVE THAT THE PRE REQU ISITE CONDITIONS LAID DOWN U/S 36(2) OF THE ACT REMAIN UN-DISCHARGED THEREFORE B AD DEBTS OF RS.24 20 229/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE. 7. AGGRIEVED BY THIS IN APPEAL BEFORE THE CIT(A) F RESH EVIDENCES WERE FILED BY THE ASSESSEE AND REMAND REPORT WAS OBTAINED WHER EIN AGAIN THE ASSESSING OFFICER REITERATED THE POSITION TAKEN IN THE ASSESS MENT ORDER WHICH IS FOUND ITA NO. 16 08.DEL.12 6 DISCUSSED AT PAGE 3 OF THE IMPUGNED ORDER. THE ASS ESSEE ON THE OTHER HAND IN SUPPORT OF ITS CLAIM MADE THE FOLLOWING SUBMISSIONS WHICH ARE EXTRACTED FROM THE IMPUGNED ORDER AT PAGE 6 & 7 AND READ AS UNDER:- AMOUNT OF RS.24 20 229/- WAS RECEIVABLE FROM M/S. JAI DRINKS PVT. LTD. ON ACCOUNT OF GLASS BOTTLES SUPPLIED BY THE ASSESSEE TILL AUGUST 2005 TO JAI DRINKS PVT. LTD. IN A.Y 2008-09 RELEVANT TO F.Y 2007-08 THE SAID AMOUNT OF RS.24 20 229/- WAS WRITTEN OFF AS BAD DEBTS AS THE ASSESSEE FORMED CONFIRMED OPINION BY THEN THAT THE AMOUNT WILL NOT BE RECOVERED AT ALL IN FUTURE. THE ASSESSEE ON ITS PA RT FOLLOWED THE PROVISIONS OF SECTION 36(2) OF THE INCOME TAX ACT 1961 TO CLAIM THE DEBT S OF RS.24 20 229/- AS BAD. IT HAS ACTUALLY WRITTEN OFF THE DEBT AS BAD DEBTS IN ITS A CCOUNTS. THE ACCOUNT WHICH WAS WRITTEN FF AS BAD DEBT WAS TAKEN INTO ACCOUNT IN CO MPUTING THE INCOME OF THE ASSESSEE FOR A.Y 2006-07 (F.Y 2005-06) RS.23 91 016/- AND FO R A.Y 2005-06(F.Y 2004-05) RS.29 213/-. TOTAL RS.24 20 229/-. COPY OF ACCOUN T OF THE PARTY M/S. JAIL DRINKS PVT. LTD. FOR F.Y 2005-06 & F.Y 2007-08 AND COPY OF BAD DEBTS A/C FOR F.Y 2007-08 WERE SUBMITTED TO A.O DURING ASSESSMENT PROCEEDINGS AND EXPLAINED. THE FACTS AND DOCUMENTS PLACED BEFORE THE LD. A.O WERE NOT PROPER LY INTERPRETED/APPRECIATED. SUFFICIENT OPPORTUNITY WAS NOT PROVIDED TO THE ASSE SSEE AS THE CASE WAS ABRUPTLY CLOSED WITHOUT COMPLETING THE DISCUSSION. THE LEDGER ACCOUNT OF JAI DRINKS PVT. LTD FOR THE P ERIOD FROM 1/4/2005 TO 31/3/2006 IN THE BOOKS OF ASSESSEE CLEARLY INDICATES WITHOUT ANY SAYING THAT OUT OF RS.24 20 229/- WRITTEN OFF AS BAD DEBTS RS23 91 016/- WAS INCLUDE D IN AND WAS PART OF THE SALES OF THE ASSESSEE FOR THE PERIOD 1/4/2005 TO 31/3/2006 AND T HE BALANCE RS.29 213/- FOR THE PERIOD PRIOR TO 1/4/2005. IT IS A WELL KNOWN FACT IN THE DOUBLE ENTRY SYSTEM OF ACCOUNTANCY FOR EVERY DEBIT THERE WILL BE AN EQUAL CREDIT AND FOR EVERY CREDIT THERE WILL BE AN EQUAL DEBIT. SO WHEN IN THE LEDGER A/C IS C REDITED WITH THE SAME AMOUNT. THIS FACT IS VERY MUCH CLEAR FORM THE LEDGER A/C SUBMITT ED. MOREOVER THE RELEVANT BILL NO AND QUANTITY SUPPLIED TO JAI DRINKS PVT. LTD. HAVE BEEN CLEARLY STATED IN THE ENCLOSED LEDGER A/C. SINCE THE AMOUNT WRITTEN OFF AS BAD DE BTS WAS INCLUDED IN SALES MADE TO JAI DRINKS LTD. IN THE F.Y 2005-06 RS.23 91 016/- AND I N F.Y 2004-05 RS.29 213/- AS A NATURAL COROLLARY IT WAS INCLUDED IN ITS INCOME FO R THOSE YEARS AND OFFERED FOR TAXATION ACCORDINGLY. IT IS IMPORTANT TO NOTE HERE THAT THE ASSESSMENT FOR A.Y 2006-07 (F.Y 2005-06) AND A.Y 2005-06 (F.Y 2004-05) WERE COMPLET ED U/S 143(3) AND COPY OF THE ASSESSMENT ORDERS FOR THESE YEARS WERE SUBMITTED TO THE A.O VIDE LETTER DATED 19/10/2010. IN APPEAL BEFORE YOUR HONOR IT IS SUBMITTED THAT TH E SAID AMOUNT OF RS.24 20 229/- WAS WRITTEN OFF AS BAD DEBTS AS THE ASSESSEE FORMED CON FIRMED OPINION BY THEN THAT THE AMOUNT WILL NOT BE RECOVERED AT ALL IN FUTURE. THE ASSESSEE ON ITS PART FOLLOWED THE PROVISIONS OF SECTION 36(2) OF THE INCOME TAX ACT 1961 TO CLAIM THE DEBTS OF RS.24 20 229/- AS BAD. IT HAS ACTUALLY WRITTEN OFF THE DEBT AS BAD DEBTS IN ITS ACCOUNTS. THE ACCOUNT WHICH W AS WRITTEN OFF AS BAD DEBT WAS TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE FOR A.Y 2006-07 (F.Y 200 5-06) RS.23 91 016/- AND FOR A.Y 2005-06 (F.Y 2004-05) RS.29 213/- TOTAL RS.24 20 22 9/-. COPY OF THE ACCOUNT OF THE PARTY M/S. JAI DRINKS PVT. LTD. FOR F.Y 2005-06 AND F.Y 2007-08 ALONG WITH COPY OF BAD DEBT ACCOUNT FOR F.Y 2007-08 WERE SUBMITTED TO OTH E A.O AND EXPLAIEND. HOWEVER THE ITA NO. 16 08.DEL.12 7 FACTS AND DOCUMENTS PLACED BEFORE THE LD. A.O WERE NOT PROPERLY INTERPRETED/APPRECIATED. THE LEDGER ACCOUNT OF JAI DRINKS PVT. LTD FOR THE PERIOD FROM 1/4/2005 TO 31/3/2006 IN THE BOOKS OF ASSESSEE PLAC ED AT PAGE NO. 4 OF PAPER BOOK DATED 21/10/2010 CLEARLY INDICATES WITHOUT ANY SAYI NG THAT OUT OF RS.24 20 229/- WRITTEN OFF AS BAD DEBTS RS.23 91 016/- WAS INCLUD ED IN AND WAS PART OF THE SALES OF THE ASSESSEE FOR THE PERIOD 1/4/2005 TO 31/3/2006 A ND THE BALANCE RS.29 213/- FOR THE PERIOD PRIOR TO 1/4/2005. IT IS A WELL KNOWN FACT IN THE DOUBLE ENTRY SYSTEM OF ACCOUNTANCY FOR EVERY DEBIT THERE WILL BE AN EQUAL CREDIT AND FOR EVERY CREDIT THERE WILL BE AN EQUAL DEBIT. SO WHEN IN THE LEDGER A/C PART Y JAI DRINKS PVT. LTD IS DEBITED BY AN AMOUNT SIMULTANEOUSLY SALE A/C SUBMITTED. MOREOVE R THE RELEVANT BILL NO AND QUANTITY SUPPLIED TO JAI DRINKS PVT. LTD HAVE BEEN CLEARLY S TATED IN THE ENCLOSED LEDGER A/C. SINCE THE AMOUNT WRITTEN OFF AS BAD DEBTS WAS INCLU DED IN SALES MADE TO JAI DRINKS LTD. IN THE F.Y 2005-06 RS.23 91 016/- AND IN F.Y 2004-0 5 RS.29 213/- AS A NATURAL COROLLARY IT WAS INCLUDED IN ITS INCOME FOR THOSE Y EARS AND OFFERED FOR TAXATION ACCORDINGLY. 7.1 CONSIDERING THE SAME THE CIT(A) CAME TO THE FO LLOWING CONCLUSION AT PAGE 7 & 8 PARA C REPRODUCED AS UNDER:- I HAVE PERUSED ALL THE DOCUMENTS PRODUCED BY THE A PPELLANT. THE DOCUMENTS WERE PRODUCED BY THE APPELLANT AT THE TIME OF REMAND PRO CEEDING ALSO. SECTION 36(2)(I) STATES NO SUCH DEDUCTION SHALL BE ALLOWED UNLESS SUCH DEB T OR PART THEREOF HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IN WHICH THE AMOUNT OF SUCH DEBT OR PART THEREOF IS WRITTEN OFF OR OF AN EARLIER PREVIOUS YEAR OR REPR ESENTS MONEY LENT IN THE ORDINARY COURSE OF THE BUSINESS OF BANKING OR M ONEY-LENDING WHICH IS CARRIED ON BY THE ASSESSEE. THE AO STATED IN THE REMAND REPORT THAT THE AMOUNT OF RS.24 20 229/- CLAIMED AS BAD DEBT WAS PART OF THE SALES OF THE AP PELLANT IN THE PREVIOUS YEARS. HOWEVER THE AO FURTHER STATES THAT THE PREREQUISITE S OF SECTION 36(2) ARE NOT SATISFIED. I AM UNABLE TO AGREE WITH THE CONTENTIO NS OF THE AO. IF THE APPELLANT HAS SHOWN AN AMOUNT AS SALES IN THE PREVIOUS YEAR THE AMOUNT WOULD NATURALLY FORM PART OF ITS INCOME. TO CLAIM IT AS BAD DEBT T HEREOF WOULD BE IN COMPLIANCE WITH 36(2)(I) COMPLIED WITH. IN THIS CASE THE AMOUNT OF RS.24 20 229/- HAS BEEN CLAIMED AS BAD DEBT AND HAS BEEN SHOWN BY THE APPELLANT AS SALES/INCOME IN THE PREVIOUS YEARS. SECTION 36(2)(I) IS THEREFORE CLEARLY APPLICABLE AN D THE ADDITION MADE IS DELETED. GROUND NO. 3 IS UPHELD. 8. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. THE LD. SR. DR PLACED RELIANCE ON THE ASSESSMENT ORDER HOW EVER NO ARGUMENT ASSAILING THE FINDING ARRIVED AT IN THE IMPUGNED ORDER ON THE SUBMISSIONS ADVANCED BY THE ASSESSEE WERE BROUGHT TO THE NOTICE TO THE BENCH. THE LD. AR ON THE OTHER HAND ITA NO. 16 08.DEL.12 8 RELYING UPON THE IMPUGNED ORDER AND THE DETAILED SU BMISSIONS ADVANCED BEFORE THE CIT(A) SUBMITTED THAT THE DEPARTMENTAL GROUND H AS NO MERIT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE ARGUMENTS ADVANCED AND THE MATERIAL AVAILABLE ON RECORD WE FIND NO INFIRMITY ARRIVED AT IN THE IMPUGNED ORD ER AS ADMITTEDLY THE ASSESSEE HAS SHOWN THE AMOUNT AS SALES IN THE PREVIOUS YEARS WHICH HAS FORMED PART OF ITS INCOME. THUS WHEN THE BAD DEBTS CLAIMED HAVE FORM ED PART OF SALES OF THE ASSESSEE IN THE PREVIOUS YEAR THE OCCASION FOR IT N OT FORMING PART OF ITS INCOME DOES NOT ARISE. IN THESE CIRCUMSTANCES ITS CLAIM OF BAD DEBTS CANNOT BE DISALLOWED AND ADDED TO ITS INCOME AS IT FULLY MEET S THE REQUIREMENT OF SECTION 36(2) (I) OF THE ACT. THE CIT(A) HAS RIGHTLY ALLOWE D THE ASSESSEES CLAIM. BEING SATISFIED BY THE REASONING AND FINDING ON FACTS WHI CH ARE NOT UNDER DISPUTE THE DEPARTMENTAL GROUND IS REJECTED. 11. IN RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH OF APRIL 2014. SD/- SD/- (G. D. AGRAWAL) (DIVA SINGH) VICE PRESIDENT J UDICIAL MEMBER DATED: 29/04/2014 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO. 16 08.DEL.12 9