Mr. Gokaldas Popatlal Patel,, Ahmedabad v. The Dy.CIT.,Circle-9,, Ahmedabad

ITA 3150/AHD/2010 | 2007-2008
Pronouncement Date: 25-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 315020514 RSA 2010
Assessee PAN ACKPP9436H
Bench Ahmedabad
Appeal Number ITA 3150/AHD/2010
Duration Of Justice 2 year(s) 10 month(s) 26 day(s)
Appellant Mr. Gokaldas Popatlal Patel,, Ahmedabad
Respondent The Dy.CIT.,Circle-9,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 25-10-2013
Date Of Final Hearing 10-10-2013
Next Hearing Date 10-10-2013
Assessment Year 2007-2008
Appeal Filed On 29-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD BEFORE SHRI D.K.TYAGI JUDICIAL MEMBER AND SHRI T.R. MEENA ACCOUNTANT MEMBER ITA NO. 3150/AHD/2010 ASSESSMENT YEAR :2007-08 SHRI GOKALDAS POPATLAL PATEL PROP. OF M/S G.P. PATEL 21 SUJAN BUNGLOWS NR. SHREYANSH TEKRA AMBAWADI AHMEDABAD V/S . DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-9 AHMEDABAD. PAN NO. ACKPP9436H (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI SANJAY R. SHAH A.R. /BY RESPONDENT SHRI O. P. BATHEJA SR. D.R. /DATE OF HEARING 10.10.2013 /DATE OF PRONOUNCEMENT 25.10.2013 O R D E R PER : SHRI T.R.MEENA ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF ASSESSEE WHICH H AS EMANATED FROM THE ORDER OF CIT(A)-XV AHMEDABAD DATED 22.09.2010 FOR ASSESSMENT YEAR 2007-08. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UN DER: 1.0 LEARNED C1T(A) ERRED IN LAW AND ON FACTS I N CONFIRMING DISALLOWANCE OF RS.48 73 961/-BEING THE CLAIM OF TH E APPELLANT FOR THE BAD DEBTS WRITTEN OFF IN HIS BOOKS OF ACCOUNTS. IT IS SUBMITTED THAT IT BE SO HELD NOW AND DISALLOWANCE CONFIRMED BE DEL ETED. 1.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THA T THE APPELLANT HAS ALREADY OFFERED THE INCOME IN RESPECT OF WHICH THE BAD DEBTS ARE CLAIMED IN THE EARLIER ASSESSMENT YEARS AND THE NE CESSARY COPIES OF ACCOUNTS OF THE PARTY FROM THE BOOKS OF ACCOUNTS WERE FILED NOT ITA NO. 3150/AHD/10 A.Y. 07-08 PAGE 2 ONLY BEFORE THE LEARNED A.O. BUT ALSO BEFORE THE C IT(A) TO CORROBORATE THE SAME. 1.2 THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF BAD DEBTS WRITTEN OF F ON THE BASIS OF THE CERTIFICATE FROM THE PARTY EXECUTIVE ENGINEER NADIAD IRRIGATION DIVISION WITHOUT CALLING FROM THEM THE COPY OF THE ACCOUNTS OF THE ASSESSEE FROM THEIR BOOKS AND WITHOUT KNOWING AS TO ON WHAT BASIS THEY HAVE MAINTAINED THEIR BOOKS OF ACCOUNTS AND WH ETHER THE BILLS RAISED BY THE ASSESSEE IN THE EARLIER YEARS WERE AC COUNTED FOR BY THEM IN THEIR BOOKS OF ACCOUNTS. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT FOR THE PURPOSE OF CLAIMING BAD DEB TS THIS IS NOT THE RELEVANT CRITERIA AS FAR AS THE APPELLANT IS CONCER NED. 1.3 THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF CLAIM OF BAD DEBTS O N THE IRRELEVANT CONSIDERATIONS VIZ THE APPELLANT HAS NOT APPROACHED PROPER FORUM LIKE ARBITRATION COURT THE PARTY AS PER ITS CERTIF ICATE IS NOT SHOWING THIS AMOUNT AS OUTSTANDING ETC. FORGETTING THAT TH E RELEVANT CONDITIONS NECESSARY FOR THE CLAIMS OF SUCH BAD DEB TS ARE THAT THE AMOUNT IS OFFERED AS INCOME IN THE EARLIER YEAR / C URRENT YEAR AS WELL AS ITS ACTUAL WRITE OFF IN THE BOOKS OF ACCOUNTS IN THE YEAR UNDER CONSIDERATION ARE DULY FULFILLED AND HENCE THE CASE OF APPELLANT IS FULLY COVERED BY THE RATIO OF THE HON'BLE SUPREME C OURT DECISION IN THE CASE OF TRF LIMITED 323 ITR 397. IT IS SUBMITTE D THAT IT BE SO HELD NOW. 2.0 THE LEARNED CIT (A) GROSSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE DISALLOWANCE OF RS.33 790/- BEING 10 % OF THE TOTAL EXPENSES OF LABOUR WELFARE EXPENSES AGAINST RS.50 0 00/-DISALLOWED ON AD-HOC BASIS OUT OF LABOUR WELFARE EXPENSES BY T HE LEARNED A.O.. YOUR APPELLANT RESPECTFULLY SUBMITS THAT THE DISALL OWANCE CONFIRMED IS WITHOUT ANY BASIS AND WITHOUT REJECTING BOOKS OF ACCOUNTS THE SAME IS LIABLE TO BE DELETED. IT IS SUBMITTED THAT IT BE SO HELD NOW. ITA NO. 3150/AHD/10 A.Y. 07-08 PAGE 3 2. THE APPELLANT IS DOING CONSTRUCTION CONTRACT MAI NLY FOR THE CIVIL CONSTRUCTION WORK AWARDED BY SARDAR SAROVAR NARMADA NIGAM LIMITED (SSNL) A STATE GOVERNMENT OWNED COMPANY RELATING T O MAIN/MINOR CANAL/DISTRIBUTOR CANALS ETC. OF DIFFERENT DIVISION S AND ALSO OF SUJALAM PROJECT OF STATE GOVERNMENT IRRIGATION DEPARTMENT. THE ASS ESSEE HAD SHOWN GROSS RECEIPTS OF RS.1351.72 LAKHS DISCLOSING GROSS PROFI T OF RS.249.35 LAKHS WHICH IN TERMS OF PERCENTAGE WORKS TO 18.45% AS AGAINST 1 6.98% SHOWN IN PRECEDING YEAR FROM THE RECEIPT OF RS.1124.24 LAKH. THE NET PROFIT WAS WORKED OUT AT 6.38% FOR THE YEAR AGAINST 5.49% OF T HE PRECEDING YEAR. THE ASSESSEE HAD FURNISHED THE RELEVANT DETAILS. THE A SSESSEE HAD WRITTEN OFF BAD DEBTS OF RS. 48 73 961/- AND DEBITED THE SAME T O P&L ACCOUNT. THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE DETAILS IN RESPECT OF AMOUNTS OF BAD DEBTS WRITTEN OFF. THE ASSESSEE HAD FILED WRIT TEN SUBMISSION DATED 17.07.2009 WHICH IS REPRODUCED IN PAGE NOS. 2 & 3 OF THE ASSESSMENT ORDER. THE ASSESSEE HAD FURNISHED COPIES OF ACCOUNTS FOR T HE PERIOD FROM 1998 TO 31.03.2007. ON PERUSAL OF THE ACCOUNTS IN THE NAME OF EXECUTIVE ENGINEER NADIAD IT WAS SEEN THAT THE ASSESSEE DEBITED THE A MOUNTS IN THE ACCOUNT OF ABOVE PARTY ON RAISING THE CONTRACT BILLS FOR THE C ONTRACT WORK BEING CARRIED OUT BY HIM AND THE ASSESSEE WAS RECEIVING THE AMOUNT FR OM THE CONTRACTEE. THE ASSESSEE HAD RECEIVED TWO PAYMENTS OF RS.4 00 000/- EACH LASTLY ON 17.04.2002 AND THE BALANCE AMOUNT OF RS.48 73 961/- REMAINED OUTSTANDING THEREAFTER. THE ASSESSEE HAD NOT RECEIVED THE PAYM ENTS AFTER 01.04.2003. THE ASSESSEE HAD NOT FURNISHED ANY OTHER EVIDENCE E XCEPT COPY OF ACCOUNT IN ITA NO. 3150/AHD/10 A.Y. 07-08 PAGE 4 SUPPORT OF WRITING OFF THE DEBT AS BAD DEBT. DURIN G THE COURSE OF HEARING THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 17.07.2009 WA S ASKED TO SHOW CAUSE WHY THE BAD DEBT SHOULD NOT BE DISALLOWED. IN REPL Y THE ASSESSEE FILED HIS WRITTEN SUBMISSION DATED 22.07.2009 WHICH IS REPRO DUCED ON PAGE NOS. 4 TO 7 OF THE ASSESSMENT ORDER. AFTER CONSIDERING ASSESSE ES REPLY AND DETAILED DISCUSSION THE A.O. FINALLY DISALLOWED THE ASSESSE ES CLAIM FOR BAD DEBT. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) WHO HAD UPHELD THE A.OS. ORDER AFTER CONSIDERING THE A.RS. WRITTEN S UBMISSION AND POINTS WHICH ARE EMERGED FROM RIVAL SUBMISSIONS. THE OPERATIVE PORTION OF THE ORDER IS AS UNDER: 10. IN VIEW OF THE AFOREMENTIONED DISCUSSION ESPEC IALLY THAT CONTAINED IN PARA 9 ABOVE HONBLE SUPREME COURT DEC ISION IN THE CASE OF TRF LTD . REPORTED IN 230 CTR 14 IS NOT APPLICABLE TO THE FACTS OF THIS CASE. THE APPELLANT HAS NOT BEEN ABL E TO PROVE THAT THE AMOUNT WRITTEN OFF IN AY. 2007-08 OF RS.48 73 961/- AS BAD DEBT ( AMOUNT RECEIVABLE FOR CONTRACT WORK DONE FOR EXECUT IVE ENGINEER NADIAD IRRIGATION DIVISION NADIAD ) HAS BEEN SHOWN AS INCOME IN AY 2007-08 OR IN ANY EARLIER AY AND THUS FAILS THE STATUTORY R EQUIREMENT OF SECTION 36(2)(I) OF THE IT ACT. ALSO WHY SHOULD TH E DEPARTMENT NOT TRUST THE INFORMATION FURNISHED BY THE EXECUTIVE EN GINEER NADIAD IRRIGATION DIVISION NADIAD VIDE HIS LETTERS DATED 19.7.2010 AND 13.8.2010 WHICH SPECIFICALLY STATES THAT BUT FOR SE CURITY DEPOSIT OF RS.74 089 NOTHING ELSE IS TO BE PAID BY NADIAD IRRI GATION DIVISION TO THE APPELLANT. THE ADDITION MADE BY THE AO OF RS.4 8 73 961/- IS THEREFORE UPHELD. 4. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE APPELLANT CONTENDED THAT BAD DEBT HAD BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT FOR THE ITA NO. 3150/AHD/10 A.Y. 07-08 PAGE 5 YEAR UNDER CONSIDERATION. THE HONBLE SUPREME COUR T IN CASE OF TRF LIMITED 323 ITR 397 HAS HELD THAT FOR CLAIMING OF BAD DEBT U/S. 36(1)(VII) ONLY REQUIREMENT IS WRITE OFF THE BAD DEBT IN THE BOOKS OF ACCOUNT AS IRRECOVERABLE WHICH HAS BEEN DONE BY THE ASSESSEE. LD. CIT(A) HA D NOT ALLOWED THE BAD DEBT ON THE BASIS OF INQUIRY MADE FROM THE EXECUTIV E ENGINEER IRRIGATION DEPARTMENT BUT ASSESSEE DID NOT RECEIVE ANY AMOUNT FROM THE IRRIGATION DEPARTMENT EXCEPT RS. 8 LACS. HE PRAYED TO ALLOW T HE APPEAL. AT THE OUTSET LD. SR. D.R. RELIED UPON THE ORDER OF THE CIT(A) AN D ARGUED THAT IT SHOULD BE UPHELD AS THE IRRIGATION DEPARTMENT HAS GIVEN THE C ERTIFICATE ON OUTSTANDING BALANCE IT MEANS THE ASSESSEE HAS RECEIVED REMAININ G AMOUNT FROM THE IRRIGATION DEPARTMENT. THUS THE BAD DEBT CLAIMED BY THE ASSESSEE SHOULD NOT BE ALLOWED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS WRITTEN OFF THIS BAD DEBT IN THE BOOKS OF ACCOUNT BUT ANNEXURE ENCLOSED BY THE CIT(A) ALONGWITH ORDER SHOWS THAT ONLY OUTSTANDING AMOUNT OF THE ASSESSEE WAS RS.74 089/- IN RESPONSE TO QUERY MADE BY THE CIT(A) FROM THE EXECUTIVE ENGINEER IRR IGATION DEPARTMENT NADIAD. THEREFORE THE A.O. IS DIRECTED TO VERIFY THE FACTUAL POSITION FROM THE EXECUTIVE ENGINEER NADIAD WHETHER REMAINING AMOUN T HAS BEEN SHOWN OUTSTANDING OR PAID BY THE IRRIGATION DEPARTMENT TO THE ASSESSEE IN SUBSEQUENT YEAR. AFTER ASCERTAINING THE FACTS OF T HE CASE THE A.O. IS DIRECTED TO ALLOW THE BAD DEBT IF NO AMOUNT IS OUTSTANDING WITH THE IRRIGATION DEPARTMENT U/S. 36(1)(VII) OF THE IT ACT. ITA NO. 3150/AHD/10 A.Y. 07-08 PAGE 6 6. GROUND NO.2 IS NOT PRESSED BY THE LD. COUNSEL FO R THE APPELLANT. THUS THIS GROUND OF APPEAL IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 25.10.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ) ) 12( / DR ITAT AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ 8/ 1 ': ) 12( ;