The DCIT, Baroda Circle-4(1),, Baroda v. Surya Lamination Pvt. Ltd.,,

ITA 2758/AHD/2006 | 2003-2004
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 275820514 RSA 2006
Assessee PAN AACCS7502E
Bench Ahmedabad
Appeal Number ITA 2758/AHD/2006
Duration Of Justice 3 year(s) 1 month(s) 11 day(s)
Appellant The DCIT, Baroda Circle-4(1),, Baroda
Respondent Surya Lamination Pvt. Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 22-01-2010
Date Of Final Hearing 13-01-2010
Next Hearing Date 13-01-2010
Assessment Year 2003-2004
Appeal Filed On 11-12-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI MAHAVIR SINGH JM & SHRI A.N. PAHUJA A M I.T.A. NO.2758/AHD/2006 (ASSESSMENT YEAR 2003-04) DY.CIT CIRCLE-4(1) VS M/S SURYA LAMI NATION PVT LTD BARODA GUJARAT SPUN PIPE COMPOUND PADRA ROAD PO SAMIALA 381 340 TAL & DISTT. BARODA [PAN : AACCS7502E] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHELLEY JINDAL DR ASSESEE BY : SHRI VIPUL SHAH AR O R D E R AN PAHUJA : THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 05-09-2006 OF THE LD. CIT(A)-III BARODA RAISES THE FOLLOWING GR OUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF CLAIM OF BAD DEBTS OF RS.33 746/- OF ANDREW YULE & COMPANY LTD RS.47908/- OF ALSTRONG TRANSFOR LTD. RS.20 02 580/- OF RIMA TRAN SFORMERS & CONDUCTORS LTD RS.3 37 170/- OF COSMIC ENGINEERS C OMBINI AND RS.35733/- OF SHATAKSI ENGG. PVT LTD WHICH DEBTS W ERE NOT ACTUALLY FOUND TO BE BAD DEBTS AS PER FINDING OF TH E AO. EVEN THOUGH AFTER AMENDMENT U/S 36(1)(VII) ONLY DEBTS WH ICH ARE ACTUALLY BAD HAVE TO BE ALLOWED AND WHETHER DEBT IS BAD OR N OT IS A QUESTION OF FACT TO BE DECIDED ON THE BASIS OF INFORMATION F URNISHED BEFORE THE ASSESSING OFFICER . 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF THE AO. 3. IT IS THEREFORE PRAYED THAT THE O RDER OF THE CIT(A )MAY KINDLY BE CANCELLED AND THAT OF THE AO MAY BE RESTORED TO THE ABOVE EXTENT 2. FACTS IN BRIEF AS PER RELEVANT ORDERS ARE T HAT THE RETURN DECLARING INCOME OF RS.98 85 068/- FILED ON 22-10-2003 BY THE ASSESSEE MANUFACTURING AND TRADING LAMINATED STAMPINGS AFTER BEING PROCESSED ON 26.2. 2004 U/S 143(1) OF THE INCOME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] WAS TAKEN UP FOR ITA NO.2758/AHD/06 2 SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 14.10.2004.DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER[AO IN SHORT] FOUND THAT THE ASSESSEE DEBITED AN AMOUNT OF RS. 1 51 98 746/- ON ACCOUNT OF BAD DEBTS. OUT OF THESE THE ASSESSEE DID NOT SUBMI T ANY EVIDENCE THAT THE FOLLOWING AMOUNTS WERE BAD AND ACCORDINGLY THE AO PROPOSED TO DISALLOW THE AMOUNTS: 1. ANDREW YULE & CO LTD. 33 746 2. ALSTOM INSTRUMENT TRANSFORMER LTD. 47 908 3. RIMA TRANSFORMERS & CONDUCTORS LTD .20 02 5 80 4. EMCO TRANSFORMERS LTD 13 88 159 5. KIRLOSKAR ELECTRIC CO LTD 12 37 077 6. COSMIC ENGINEERS COMBINE 3 37 170 7. SHATAKSHIENGG. PVT LTD 35 733 TO A QUERY BY THE AO THE ASSESSEE EXPLAINED THAT D EBTS REMAINED OUTSTANDING IN RESPECT OF ANDREW YULE & CO. LTD AND ALSTOM TR ANSFOR LTD. BECAUSE OF SHORT PAYMENTS WHILE THE OTHER COMPANIES WERE FINANCIALL Y SICK AND THEREFORE COULD NOT MAKE PAYMENTS. HOWEVER THE AO IN THE LIGHT OF DECISIONS REFERRED TO IN THE ASSESSMENT ORDER CONCLUDED THAT UNLESS THE DEBT INC IDENTAL TO BUSINESS HAS BEEN TAKEN IN TO ACCOUNT IN COMPUTING THE ASSESSABL E INCOME AND THE ASSESSEE PROVIDES REASONS TO INFER THAT THESE DEBTS WERE BAD CLAIM COULD NOT BE ALLOWED. SINCE THE ASSESSEE FAILED TO PROVIDE SUFFICIENT REA SONS FOR TERMING THE AFORESAID AMOUNTS AS BAD DEBTS THE AO DISALLOWED AN AMOUNT O F RS.51 39 955 BEING THE AGGREGATE OF THE ABOVE. 3. ON APPEAL THE ASSESSEE SUBMITTED THAT M/S ANDR EW YULE & CO LTD AND M/S ALSTOM INSTRUMENT TRANSFORMER LTD. WITHHELD PAY MENTS ON ACCOUNT OF DISPUTE REGARDING QUALITY OF MATERIAL SUPPLIED BY THE ASSES SEE AND THE AMOUNTS INVOLVED BEING VERY MEAGRE COMPARED TO THE TRANSACTIONS OF A PPROX. RS.2.50 CRORES AND RS.90 LAKHS RESPECTIVELY ENTERED INTO WITH THESE T WO PARTIES THEY HAD WRITTEN OFF THE AMOUNTS. IN RESPECT OF RIMA TRANSFORMERS & CON DUCTORS P. LTD IT WAS ITA NO.2758/AHD/06 3 STATED THAT THE PARTY HAD BECOME FINANCIALLY SICK A ND WAS ALSO NOT TRACEABLE. THE PARTY WAS LOCATED AT BANGALORE AND DESPITE ALL EFFORTS THE PARTY COULD NOT BE TRACED OUT. THE TRANSACTIONS BEING OLD RELATING T O FINANCIAL YEAR 2001-02 FULL RECOVERY OF THE OUTSTANDING AMOUNT COULD NOT BE MAD E. IN RESPECT OF EMCO TRANSFORMERS AND KIRLOSKAR ELECTRIC CO. LTD. THE ASSESSEE SUBMITTED THAT ALTHOUGH NO RECOVERY WAS POSSIBLE DURING THE YEAR F ROM THESE TWO PARTIES AND THE AMOUNTS WERE WRITTEN OFF; IN THE SUBSEQUENT YEA R I.E. ASSESSMENT YEAR 2004- 05 FULL RECOVERY OF THE SAID AMOUNTS WAS MADE AND T HE SAME WERE WRITTEN BACK AS CREDIT TO THE PROFIT AND LOSS ACCOUNT. AS REGAR DS COSMIC ENGINEERS AND SHARAKSHI ENGG P LTD IT WAS SUBMITTED THAT FACTORI ES HAD BEEN CLOSED DOWN AND THERE WAS NO RECOVERY TILL DATE. INTER ALIA THE A SSESSEE PLACED RELIANCE ON THE DECISION OF ITAT MUMBAI SPECIAL BENCH IN THE CASE OF DCIT VS OMAN INTERNATIONAL BANK IN ITA NO.7431/MUM/1997 AND DECI SION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS GIRISH BHAGWAT PRA SAD 256 ITR 772. 4. IN THE LIGHT OF AFORESAID SUBMISSIONS THE LD. C IT(A) DELETED THE DISALLOWANCE HOLDING AS UNDER: 3.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED AUTHORISED REPRESENTATIVE AND THE FACTS OF THE CASE . THE PROVISIONS CONTAINED IN SECTION 36(1)(VII) RELATING TO WRITING OFF OF BAD DEBTS HAVE BEEN AMENDED WITH EFFECT FROM 1-4-19 89. PRIOR TO THIS DATE ONLY THOSE DEBTS WHICH HAD BECOME IRREC OVERABLE DURING THE COURSE OF THE ACCOUNTING YEAR UNDER CONSIDERATI ON COULD BE WRITTEN OFF AFTER ESTABLISHING THAT THE DEBTS HAD B ECOME IRRECOVERABLE DURING THE COURSE OF THE ACCOUNTING Y EAR UNDER CONSIDERATION COULD BE WRITTEN OFF AFTER ESTABLISHI NG THAT THE DEBTS HAD BECOME BAD AND UN-RECOVERABLE. HOWEVER FROM 1 -4-1989 ALL THAT THE ASSESSEE NEED DO WHILE WRITING OFF A DEBT IS TO SHOW THAT : (A) THERE WAS A DEBT IN EXISTENCE (B) THE DEBT RELATED TO AN AMOUNT WHICH HAD BEEN BROUGHT TO TAX IN ANY EARLIER YEAR AND (C) THAT THE DEBT HAD BEEN ACTUALLY WRITTEN OFF IN THE BOOKS OF THE ASSESSEE DURING THE YEAR. ITA NO.2758/AHD/06 4 3.4 THE ASSESSEE HAS FURNISHED DETAILS OF ALL THE Y EARS IN WHICH THE AMOUNTS IN QUESTION HAVE BEEN OFFERED FOR TAXAT ION. FURTHER IN THE CASE OF EMCO TRANSFORMERS LTD. AND KIRLOSKAR EL ECTRIC CO. LTD. THE AMOUNTS WRITTEN OFF HAVE BEEN SUBSEQUENTLY RECO VERED AND OFFERED FOR TAXATION IN ASSESSMENT YEAR 2004-05. I N THE CASE OF ANDREW YULE & CO. AND ALSTOM INSTRU.TRANSFOR LTD. THE SHORT PAYMENTS WERE MADE BY CENTRAL GOVERNMENT UNDERTAKIN GS ON ACCOUNT OF POOR QUALITY OF MATERIAL SUPPLIED. THEY WERE MAJOR CUSTOMERS OF THE ASSESSEE. SUCH SHORT PAYMENT DUE TO QUALITY DISPUTE IS A NORMAL INCIDENT OF BUSINESS. THE AMOU NTS INVOLVED ARE ALSO INSIGNIFICANT. SO FAR AS RIMA TRANSOFRMERS & CONDUCTORS P. LTD. COSMIC ENGINEERS AND SHATAKSHI ENGINEERING P. LTD. IT APPEARS THAT THE AMOUNTS HAD BEEN WRITTEN OFF IN TH E NORMAL COURSE OF BUSINESS. IN THIS VIEW OF THE MATTER I AM INCL INED TO THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOW ING THE CLAIM OF BAD DEBTS AGGREGATING TO RS.51 39 955/-. ACCORDING LY THE DISALLOWANCE OF RS.51 39 955/- IS DIRECTED TO BE DE LETED. 5. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORES AID FINDING OF THE LD. CIT(A). SHRI SHELLY JINDAL THE LD. DR SUPPORTED TH E FINDINGS OF THE AO WHILE RELYING UPON DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF DHALL ENTERPRISED AND ENGINEERS P. LTD. V. CIT 295 ITR 481 (GUJ) AND THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDINGS OF THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISION RELIED UPON. WE FIND THAT THE LD. CIT(A) WHILE REFERRING TO THE AMENDED PROVISIONS CONCLUDED THAT MERE WRITING OFF THE AMOUNTS WITHOUT THEREBEING ANY EVIDENCE THAT THE DEBTS WERE BAD WO ULD ENABLE THE ASSESSEE TO DEDUCT THE AMOUNTS. BEFORE THE AO THE ASSESSEE DI D NOT ADDUCE ANY EVIDENCE AND REASONS IN SUPPORT OF THEIR CLAIM THAT THE DEBT S WERE BAD WHILE THE LD. CIT(A) IN THE IMPUGNED ORDER DID NOT RECORD ANY FINDINGS T HAT THE AFORESAID DEBTS HAD BECOME BAD EVEN WHEN THE ASSESSEE IN SUBSEQUENT YE ARS RECOVERED THE FULL AMOUNT FROM THE AFORESAID REPUTED COMPANIES LIKE EMCO TRANSFORMERS LTD. AND KIRLOSKAR ELECTRIC CO. LTD . . WE ARE OF THE OPINION THAT THE ONUS IS ON THE ASS ESSEE TO ESTABLISH THAT HIS CLAIM FALLS WITHIN THE PROVIS IONS OF SEC. 36(1)(VII) READ WITH SEC. 36(2) OF THE ACT. WHILE ADJUDICATING A SIMILAR CLAIM HONBLE JURISDICTIONAL ITA NO.2758/AHD/06 5 HIGH COURT IN THE CASE OF DHALL ENTERPRISED AND EN GINEERS P. LTD. V. CIT 295 ITR 481 (GUJ) HELD THAT EVEN IF WE GO BY THE PLAIN READING OF CLAUSE (VII) THE REQUIREMENT FOR ALLOWING DEDUCTION ON ACCOUNT OF BA D DEBT IS THAT THE BAD DEBT SHOULD BE WRITTEN OFF AS IRRECOVERABLE . MERE DEBITING THE AMOUNT IS NOT SUFFICIENT. THE REQUIREMENT IS TH AT THE ASSESSEE SHOULD ALSO PROVE THAT THE DEBT HAS BECOME BAD IN T HAT PARTICULAR YEAR. AS POINTED OUT RIGHTLY BY THE TRIBUNAL THERE WAS CORRESPONDENCE REGARDING THE AMOUNT IN QUESTION THA T DUE TO SOME DIFFERENCES THE AMOUNT WAS NOT PAID IN THAT PARTICU LAR YEAR. BUT WHEN CORRESPONDENCE WAS THERE TO THE EFFECT THAT TH E ASSESSEE WAS INSISTING FOR PAYMENT FOR RECOVERY OF THE DEBT IT CANNOT BE SAID THAT THE DEBT HAS BECOME BAD IN THE RELEVANT ASSESSMENT YEAR. WE THEREFORE SEE NO INFIRMITY IN THE ORDER OF THE TRI BUNAL AND WE ANSWER THE FIRST QUESTION AGAINST THE ASSESSEE. 6.1. IN A RECENT JUDGMENT DATED 5.11.2009 IN THE CASE OF CIT VS. KOHLI BROTHERS COLOR LAB (P) LTD IN ITA NO.2 OF 2007 AFTER CONSI DERING AN EARLIER DECISION OF THE HONBLE GUJRAT HIGH IN THE CASE OF CIT VS. GIRISH BHAGWAT PRASAD 256 ITR 772 RELIED UPON ON BEHALF OF THE ASSESSEE BEFO RE THE LD. CIT(A) HONBLE ALLAHBAD HIGH COURT O BSERVED AS UNDER: THE INTENTION OF LEGISLATURE IS CLEAR THAT ONCE IN ASSESSMENT YEAR IN QUESTION DEBT OR PART THEREOF HAS BEEN WRITTEN OFF AS IRRECOVERABLE QUA THE SAME DEDUCTIONS ARE TO BE ACCORDED AS PER PROVISION OF SECTION 36(1)(VII) OF THE ACT SUBJECT TO THE PROVISIONS OF 36(2) OF T HE ACT. PRIOR TO AMENDMENT IN THE AFOREMENTIONED SECTION W.E.F. 1.4.1989 THE W ORDS ' ANY BAD DEBT OR PART TO HAVE BECOME A BAD DEBT IN THE PREVIOUS YEA R' WERE USED AND AFTER THE AMENDMENT W.E.F. 1.4.1989 SAME HAS BEEN SUBSTITUTED BY ANY BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF ASSESSEE FOR THE PR EVIOUS YEAR. EFFECT OF SAID AMENDMENT IS THAT NOW IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT DEBT HAD BECOME BAD IN THE PREVIOUS YEAR BEFORE GETTING DEDUCTIONS AND MERE WRITING OF AS IRRECOVERABLE OF DEBT OR PART THEREOF IS SUBSTANTIAL COMPLIANCE OF THE SAME. THE QUESTION IS IS SAID ENTRY OF WRITING OF BAD DEBT OR PART THEREOF MADE IN BOOKS OF ACCOU NTS CONCLUSIVE AND ASSESSING OFFICER IS PRECLUDED FROM MAKING INQUIRIE S BEFORE ACCORDING/REFUSING DEDUCTIONS. UNDER THE SCHEME AS PROVIDED FOR UNDER INCOME TAX ACT THE ENTRIES WHICH HAVE BEEN MADE A S TO WHETHER SAME ARE GENUINE ENTRY AND NOT IMAGINARY AND FANCIFUL EN TRY QUA THE SAME ASSESSING OFFICER IS FULLY EMPOWERED TO MAKE INQUIR Y HOWEVER WISDOM OF ITA NO.2758/AHD/06 6 THE RESPONDENT-ASSESSEE CANNOT BE IN SUCH MATTER QU ESTIONED AND NO DEMONSTRATIVE OR INFALLIBLE PROOF OF BAD DEBT HAVIN G BECOME BAD IS REQUIRED AND COMMERCIAL EXPEDIENCY IS TO BE SEEN F ROM THE POINT OF VIEW OF ASSESSEE DEPENDING ON NATURE OF TRANSACTION CA PACITY OF DEBTOR ETC. BUT QUA ENTRY SEMBLANCE OF GENUINENESS HAS TO BE T HERE AND SAME SHOULD NOT BE MERE PAPER WORK. ALL THE JUDGMENT WHICH HAV E BEEN CITED AT THE BAR GENUINENESS OF ENTRIES HAVE NEVER BEEN DOUBTE D THEREIN WHEREAS IN THE CASE IN HAND SPECIFIC QUERY HAS BEEN MADE FROM RESPONDENT- ASSESSEE TO FURNISH I.E. (A) COMPLETE NAMES AND A DDRESSES OF THE PERSONS (WITH REFERENCE TO WHOM BAD DEBTS WRITTEN OFF CLAIMED MENTIONING AGAINST EACH AMOUNT.(B) COPIES OF LEDGER ACCOUNT OF THESE PERSONS FOR THE RELEVANT AS SESSMENT YEAR AND THREE PRECEDING YEARS. (C) EFFORTS MADE TO REALIZE THESE DUES. ADMITTED POSITION IS THAT SAID QUERIES HAVE NOT AT ALL BEEN REPLIED AND REQUISITE INFORMATION HAS NOT AT ALL BEEN FURNISHED RATHER S TAND HAS BEEN TAKEN THAT ENTRY HAS BEEN MADE NO PROOF IS REQUIRED. UNDER S ECTION 143(2) OF THE ACT ASSESSING OFFICER IS EMPOWERED TO REQUIRE THE ASSESSEE TO PRODUCE THE EVIDENCE IN SUPPORT OF THE RETURN AS SUCH WHER E RESPONDENT-ASSESSEE HAS CLAIMED AS BAD DEBT OR PART THEREOF WRITTEN OF F AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE UNDER THE PROVISION OF SEC TION 36(1)(VII) OF THE INCOME TAX ACT 1961 THEN ON THE STRENGTH OF THE A MENDMENT MADE ON 1.4.1989 IT CANNOT BE SAID THAT AN INQUIRYIS NOT P ERMISSIBLE UNDER THE PROVISION OF INCOME TAX ACT TO SEE AND SATISFY THAT THERE IS SOME SEMBLANCE OF THE GENUINENESS IN THE ENTRY WHICH HA D BEEN MADE SAME IS NOT AT ALL TOTALLY FAKE ENTRY AS RESPONDENT- ASSESS EE WOULD BE ENTITLED FOR DEDUCTION ONLY IF ITS BAD DEBT OR PART THEREOF. HON'BLE APEX COURT IN THE CASE OF TRAVANCORE TEA ESTATES CO. LTD. VS. CIT (19 99) 151 CTR (SC) 231; (1998) 233 ITR 203 (SC) HAS TAKEN THE VIEW THAT AS TO WHETHER A DEBT HAS BECOME BAD OR AT WHAT POINT OF TIME IT BEC AME BAD ARE PURE QUESTION OF FACT. THOUGH STANDARD OF PROOF OF PROVI NG THE SAME IS BAD DEBT IS NOT REQUIRED TO BE ADOPTED AND IS TO BE DECIDED ON THE WISDOM OF THE RESPONDENT ASSESSEE AND NOT ON THE WISDOM OF ASSESS ING OFFICER BUT TO SHOW THAT ENTRY WHICH HAD BEEN MADE AS BAD DEBT THE RE HAS TO BE SOME MATERIAL IN SUPPORT OF THE SAME GIVING SOME SEMBLA NCE OF GENUINENESS AND TRUTHFULNESS TO THE SAME IN THE DIRECTION OF FO RMING OPINION THAT SAID DEBT WAS ARISING OUT OF TRADING ACTIVITY THERE WAS RELATIONSHIP OF DEBTOR OR CREDITOR SAME WAS IRRECOVERABLE. MERELY BECAUSE EN TRIES HAVE BEEN MADE IN RESPECT OF BAD DEBT OR PART THEREOF WRITI NG IT OFF CLAIMING DEDUCTION THE SAID ENTRIES CAN ALWAYS BE EXAMINED BY THE ASSESSING OFFICER BEFORE PROCEEDING TO AWARD DEDUCTIONS AND NOT BY MERELY BLINDLY FOLLOWING THE SAME BUT STAND OF THE ASSESSEE HAS T O BE TESTED FROM THE POINT OF VIEW OF ASSESSEE AND ASSESSEE CANNOT COME FORWARD AND SAY THAT ON ACCOUNT OF CHANGE BROUGHT IN BY WAY OF AMEN DMENT W.E.F. ITA NO.2758/AHD/06 7 1.4.1989 UNDER SECTION 36(1)(VII) INQUIRY IS NOT P ERMISSIBLE. THUS IN THE PRESENT CASE ON THE SUBSTANTIAL QUESTION OF LAW P OSED PROVISION OF SECTION 143 (2) OF INCOME ACT VIZ-A-VIZ SECTION 36( 1)(VII) OF THE INCOME TAX ACT 1961 READ WITH SECTION 36(1) BOTH WOULD BE HAR MONIZED TO GIVE PURPOSEFUL MEANING TO BOTH THE STATUTORY PROVISIONS AS ONE EXTENDS BENEFIT TO THE RESPONDENT-ASSESSEE OF DEDUCTION FOR THEIR DEBT OR PART THEREOF BECOMING BAD AND OTHER AUTHORIZES ASSESSING OFFICER TO SEE THAT PROVISION OF INCOME TAX ACT ARE NOT FLOUTED BY ANY MEANS. CONSEQUENTLY IMPUGNED ORDER DATED 04.08.2006 PASSED BY THE INCOM E TAX APPELLATE TRIBUNAL LUCKNOW BENCH LUCKNOW IS HEREBY QUASHED AND SET ASIDE. AS IN THE PRESENT CASE NO REPLY HAD BEEN SUBMITTED TO THE QUERY MADE AS SUCH IN CASE SUCH REPLY IS SUBMITTED THEN IN THAT EVENT ASSESSING OFFICER IS DIRECTED TO TAKE FRESH DECISION IN ACCORDANCE WI TH LAW AFTER AFFORDING OPPORTUNITY OF THE RESPONDENT-ASSESSEE ON THE BASIS OF THE RECORD PRODUCED. 6.2. AS ALREADY MENTIONED IN THE INSTANT CASE THE AO ASKED DETAILED REASONS FOR WRITING OFF BAD DEBTS. THE ASSESSEE DID NOT SU BMIT SUFFICIENT REASONS IN SUPPORT OF THEIR CLAIM THAT THE DEBTS WERE BAD. THE LD. CIT(A) WITHOUT ADVERTING TO ANY EVIDENCE THAT THE DEBTS WERE BAD ALLOWED THE CL AIM OF THE ASSESSEE. AS IS EVIDENT FROM THE VIEW TAKEN IN AFORESAID DECISION S IN KOHLI BROTHERS COLOR LAB (P) LTD.(SUPRA) AND HONBLE JURISDICTIONAL HIGH CO URT IN DHALL ENTERPRISED AND ENGINEERS P. LTD.(SUPRA) MERE DEBITING THE AMOUNT IS NOT SUFFICIENT AND THE ASSESSEE HAS TO BE PROVE THAT THE DEBT HAS BECOME B AD AND WRITTEN OFF AS IRRECOVERABLE. THE REQUIREMENT IS THAT THE ASSESSEE SHOULD ALSO PROVE THAT THE DEBT HAS BECOME BAD IN THAT PARTICULAR YEA R. SINCE ONUS IS ON THE ASSESSEE FOR CLAIMING DEDUCTION THE ASSESS EE IS REQUIRED TO SHOW THAT ENTRY WHICH HAD BEEN MADE AS BAD THERE HAS TO BE SOME MATERIAL IN SUPPORT OF THE SAME GIVING SOME SEMBLA NCE OF GENUINENESS AND TRUTHFULNESS TO THE SAME IN THE DIRECTION OF FO RMING OPINION THAT SAID DEBT WAS ARISING OUT OF TRADING ACTIVITY THERE WAS RELATIONSHIP OF DEBTOR OR CREDITOR SAME WAS IRRECOVERABLE. MERELY BECAUSE EN TRIES HAVE BEEN MADE IN RESPECT OF BAD DEBT OR PART THEREOF WRITI NG IT OFF CLAIMING DEDUCTION WOULD NOT ENTITLE THE ASSESSEE FOR THE D EDUCTION. THE SAID ENTRIES CAN ALWAYS BE EXAMINED BY THE ASSESSING OFF ICER BEFORE ITA NO.2758/AHD/06 8 PROCEEDING TO AWARD DEDUCTION AND NOT BY MERELY BL INDLY FOLLOWING THE SAME . IN VIEW OF THE FOREGOING ESPECIALLY WHEN THE ASSESSEE DID NOT FURNISH ANY EVIDENCE BEFORE THE AO IN SUPPORT OF THEIR CLA IM FOR DEDUCTION OF BAD DEBTS WHILE THE LD. CIT(A) DID NOT HAVE THE BENEFIT OF AF ORESAID DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT AND OF HONBLE ALLAHABAD HIGH COURT NOR WE HAVE BEEN REFERRED TO ANY MATERIAL AS TO WHETHER OR NOT THE AFORESAID AMOUNTS REPRESENTED BAD DEBTS IN THE INTEREST OF JUSTICE AND FAIR PLAY WE VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE ISSUE BACK TO HIS FILE WIT H THE DIRECTIONS TO RE-EXAMINE THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW AF TER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ESTABLISH HIS CLAIM KEEPING IN VIEW INTER ALIA THE AFORESAID DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DHALL ENTERPRISED AND ENGINEERS P. LTD.(SUPRA) AND OF THE HONBLE ALLAHABAD HIGH COURT. WITH THESE DIRECTIONS GROUND NO. 1 IN THE APPEAL OF THE REVENUE IS DISPOSED OF. 7. GROUND NOS. 2 & 3 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE ACCORDINGLY DISMISSED. 8. IN THE RESULT APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. . ORDER PRONOUNCED ON THIS 22 ND DAY OF JANUARY 2010. SD/- SD/- (MAHAVIR SINGH) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED: 22ND JANUARY 2010 PK/- COPY TO: 1. THE ASSESSEE 2. DY.CIT CIRCLE-4(1 ) BARODA 3. CIT(A)-III BARODA 4. CIT-II BARODA 5. DR C BENCH BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD