The ITO, Ward-4(3),, Ahmedabad v. M/s. Hardik Fintrade Pvt.Ltd.,, Ahmedabad

ITA 312/AHD/2011 | 2005-2006
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 31220514 RSA 2011
Assessee PAN AAACI3674H
Bench Ahmedabad
Appeal Number ITA 312/AHD/2011
Duration Of Justice 9 month(s) 13 day(s)
Appellant The ITO, Ward-4(3),, Ahmedabad
Respondent M/s. Hardik Fintrade Pvt.Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 18-11-2011
Date Of Final Hearing 21-10-2011
Next Hearing Date 21-10-2011
Assessment Year 2005-2006
Appeal Filed On 04-02-2011
Judgment Text
. .. . . .. . ! !! ! . .. .'# !'# '# !'# '# !'# '# !'# $ $ $ $ % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE HONBLE SHRI D.K.TYAGI J.M. & HONBLE SHRI A.MOHAN ALANKAMONY A.M.) ! ! ! !. ITA NO. 312/AHD./2011 : # &'- 2005-2006 I.T.O. WARD-4(3) AHMEDABAD VS- M/S. HARD IK FINTRADE PVT. LTD. AHMEDABAD (PAN : AAACI 3674H) (*+ /APPELLANT) ( *+ /RESPONDENT ) *+ - . / APPELLANT BY : SHRI SAMIR TEKRIWAL SR.D.R. *+ - . / RESPONDENT BY : SHRI S.N.DIVATIA A.R. / #0 - 1$ / DATE OF HEARING : 21/10/2011 2'& - 1$ / DATE OF PRONOUNCEMENT : 18/11/2011 3 3 3 3 / ORDER PER SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XX AHMEDABAD I N APPEAL NO.CIT(A)- XX/58/10-11 DATED 09.11.2010 FOR THE ASSESSMENT YEA R 2005-2006 PASSED UNDER SECTION 250 R.W.S.143(3) OF THE I.T. ACT 1961. 2. THOUGH THE REVENUE HAS IN ITS GROUNDS OF APPEAL RAISED FOUR GROUNDS THE CRUX OF THE ISSUE IS CONFINED TO THE FOLLOWING ISSUE: THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS.8 78 230/- MADE BY THE LD. AO ON ACCOUNT OF BAD DEBTS. 3. BRIEFLY STATED THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF SHARES AND STOCK BROKER FURNISHED ITS RETURN OF INCOME FO R THE ASSESSMENT YEAR UNDER APPEAL DECLARING A TOTAL INCOME OF RS.2 24 490/- WHICH WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT AND SUBSEQUENTLY SUBJECTED TO REGULAR ASS ESSMENT U/S 143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE LD. AO THAT THE ITA NO. 312-AHD-11 2 ASSESSEE HAD CLAIMED BAD DEBTS AMOUNTING TO RS.8 78 230/- DURING THE YEAR UNDER CONSIDERATION. FURTHER IT WAS OBSERVED BY THE LD. AO FROM THE DETAILS FURNISHED THAT ALL THE ACCOUNTS OF THE PARTIES IN WHOSE NAMES CLAI MED OF BAD DEBTS WERE RUNNING ACCOUNTS AND THE AMOUNTS OF BAD DEBTS WERE NOTHING BUT CLOSING BALANCES OF THE SAID ACCOUNTS WHICH CAN BE CATEGORIZED AS DEBTORS FOR TH E YEAR. AFTER CONSIDERING THE ASSESSEES CONTENTIONS COUPLED WITH VARIOUS CASE LA WS ON THE ISSUE AND ALSO DELIBERATING THE PROVISIONS OF SECTION 36 SUB-CLAUS E 2 SCRUTINIZING THE ACCOUNTS OF THE SAID PARTIES AND ALSO TAKING INTO ACCOUNT THE SUBMI SSION OF THE ASSESSEE ON SPECIFIC QUERIES THE LD. AO HAD OBSERVED AS UNDER: 4.7. FURTHER THE ASSESSEE HAS NOT CLARIFIED THE F ACTS WHETHER THE AMOUNT WHICH CLAIMED AS BAD DEBTS IN THE YEAR UNDER CONSID ERATION HAS SHOWN AS INCOME IN THE CONCERNED YEAR. IN THIS REGARD THE ASSESSEE HAS ALSO NOT MADE PROVISIONS FOR DOUBTFUL DEBTORS IN THE PREVIOUS YEA R. EVEN THOUGH THE ASSESSEE HAS CLAIMED THAT DEBTS OF TWO PARTIES I.E. NAYANAB EN RS.4 733/- AND KRISHNANLAL NANJI-RS.30 726/- ARE TWO YEARS OLD IT HAS FAILED TO SUBSTANTIATE WITH EVIDENCES TO SHOW THAT ANY EFFORTS HAVE BEEN M ADE FOR RECOVERY OF THE DEBTS. 4.8. IT IS CLEARED (SIC) CLEAR FROM THE AFORESAID DISCUSSION THAT THE ASSESSEE HAS NOT FULFILLED THE ESSENTIAL CONDITION FOR CLAIMING THE AMOUNT AS BAD DEBTS IN THE YEAR UNDER CONSIDERATION. HENCE NO SUCH AMOUNT CA N BE ALLOWED AS BAD DEBTS AND THE AMOUNT CLAIMED BY THE ASSESSEE DURING THE Y EAR AS BAD DEBTS OF RS.8 78 230/- IS DISALLOWED AND ADDED BACK TO THE T OTAL INCOME U/S 36(2) OF THE IT ACT. 4. THE MATTER WAS CARRIED BY THE ASSESSEE BEFORE TH E FIRST APPELLATE AUTHORITY. TAKING NOTE OF THE BRIEF CONTENTION OF THE ASSESSEE THE LD. CIT (A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 3.2 (II). I HAVE GONE THROUGH THE ASSESSMENT ORD ER AS ALSO THE SUBMISSION OF THE AR CAREFULLY. IT IS SEEN THAT THE DEBTS HAVE A CTUALLY BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. THE RELIANCE O F THE AO IN THE CASE OF DHALL ENTERPRISES AND ENGINEERS PRIVATE LIMITED (SUPRA) I S NOT CORRECT IN VIEW OF THE RECENT DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD V. CIT REPORTED IN 323 ITR 397 (SC) WHEREIN THE HONBLE SU PREME COURT HAS HELD THAT IT DOES NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FACT HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEB T WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE. IN VIEW OF THE AB OVE THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. THE SAME IS DELETED. ITA NO. 312-AHD-11 3 5. AGITATED WITH THE DELETION BY THE LD. CIT (A) T HE REVENUE HAS COME UP BEFORE THIS BENCH WITH THE PRESENT APPEAL. 6. DURING THE COURSE OF HEARING THE LD. D.R. SUBMI TTED THAT THE LD. CIT (A) HAD ERRED IN DELETING THE DISALLOWANCE OF RS.8.78 LAKHS WITHOUT PROPER APPRECIATION OF FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY T HE AO. THE LD. D.R. FURTHER SUBMITTED THAT THE CIT (A) HAD ERRED IN APPRECIATIN G THAT THE ACCOUNTS OF MOST OF THE PARTIES WERE STARTED FROM 1.4.2004 ONLY AND THAT RE GULAR BUSINESS TRANSACTIONS WERE MADE BY THE ASSESSEE WITH THESE PARTIES DURING THE YEAR UNDER CONSIDERATION AND THEREFORE THE WRITING OFF OF THE DEBTS AS BAD DEBT S WAS NOT JUSTIFIED; AND THAT IN DOING SO THE CIT (A) HAD ERRED IN LAW ON FACTS IN NOT VE RIFYING WHETHER THE CONDITIONS LAID DOWN IN SECTION 36(1)(VII) OF THE ACT WERE SATISFIE D. IT WAS THEREFORE PLEADED BY THE LD. D. R. THAT THE IMPUGNED ORDER OF THE LD. CIT (A ) DESERVES TO BE ANNULLED AND THAT OF THE LD. A R BE RESTORED. 7. ON THE OTHER HAND THE LD. AR REITERATED MORE OR LESS WHAT WAS REPRESENTED BEFORE THE LD. CIT (A) AND EARNESTLY SUBMITTED TH AT THE FINDING OF THE FIRST APPELLATE AUTHORITY REQUIRES TO BE SUSTAINED. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PE RUSED THE MATERIALS FROM THE RECORD AND ALSO THE RULING OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF DHALL ENTERPRISES AND ENGINEERS PRIVATE LTD V. CIT REPORT ED IN 295 ITR 481 (GUJ) WHEREIN THE HONBLE COURT OBSERVED THE FOLLOWING: MERE DEBITING THE AMOUNT IS NOT SUFFICIENT. THE REQ UIREMENT IS THAT THE ASSESSEE SHOULD ALSO PROVE THAT THE DEBT HAS BECOME BAD IN THAT PARTICULAR YEAR. AS POINTED OUT RIGHTLY BY THE TRIBUNAL THERE WAS C ORRESPONDENCE REGARDING THE AMOUNT IN QUESTION THAT DUE TO SOME DIFFERENCES THE AMOUNT WAS NOT PAID IN THAT PARTICULAR YEAR. BUT WHEN CORRESPONDENCE WAS THERE TO THE EFFECT THAT THE ASSESSEE WAS INSISTING FOR PAYMENT FOR RECOVERY OF THE DEBT IT CANNOT BE SAID THAT THE DEBT HAS BECOME BAD IN THE RELEVANT ASSESS MENT YEAR. 8.1 HOWEVER THE HONBLE HIGHEST JUDICIARY IN ITS R ECENT VERDICT IN THE CASE OF TRF LIMITED V. CIT REPORTED IN 323 ITR 397 (SC) PROCLAI MED THAT IT DOES NOT NECESSARY FOR ITA NO. 312-AHD-11 4 THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FACT H AS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE. 8.2. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AND IN CONFORMITY WITH THE RULING OF THE HONBLE APEX COURT CITED SUPRA WE ARE OF THE CONSIDERED VIEW THAT THE FINDING OF THE LD. CIT (A) REQUIRES NO INT ERVENTION BY THIS BENCH. IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT THE REVENUES APPEAL IS DISMISSE D. 4 3 - 2'& 5#!' 18 / 11 /2011 ' 6 - 0 7 THIS ORDER PRONOUNCED IN COURT ON 18/11/2011. SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMON Y) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 18/11/2011 3 3 3 3 - -- - 18 18 18 18 98&1' 98&1' 98&1' 98&1'- -- - 1. *+ 2. *+ 3. !! 1 /= 4. /=- - 5. 8@ 1# 7 6. B4 3 C/ !E 7 TALUKDAR/ SR. P.S.