THE ITO-4(2)(3), MUMBAI v. M/S. JATTA SHANKAR INDUSTRIES LTD., MUMBAI

ITA 5973/MUM/2008 | 2004-2005
Pronouncement Date: 30-04-2010 | Result: Dismissed

Appeal Details

RSA Number 597319914 RSA 2008
Bench Mumbai
Appeal Number ITA 5973/MUM/2008
Duration Of Justice 1 year(s) 6 month(s) 29 day(s)
Appellant THE ITO-4(2)(3), MUMBAI
Respondent M/S. JATTA SHANKAR INDUSTRIES LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 30-04-2010
Date Of Final Hearing 22-04-2010
Next Hearing Date 22-04-2010
Assessment Year 2004-2005
Appeal Filed On 01-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI T.R. SOOD (AM) ITA NO.5973/MUM/2008 ASSESSMENT YEAR : 2004-05 THE INCOME TAX OFFICER WARD- 4(2)(3) ROOM NO.647 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. JATTA SHANKAR INDUSTRIES LTD. ROOM NO.15 4 TH FLOOR ENGINEER BUILDING 265 PRINCESS STREET MUMBAI-400 002. ..( RESPONDENT ) P.A. NO. (AAACJ 6040 J) APPELLANT BY : SHRI L.K. AGRAWAL RESPONDENT BY : SHRI SA TISH JAIN O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 2.7.2008 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF TEXTURIZING AND TWISTING OF YARN FILED RETURN DECLARING TOTAL LOSS OF RS.2 04 76 431/-. DURING THE COU RSE OF ASSESSMENT IT WAS INTERALIA OBSERVED BY THE AO THAT THE ASSESSEE HAS ITA NO.5973/M/08 A.Y:04-05 2 CLAIMED BAD DEBTS WRITTEN OFF AMOUNTING TO RS.28 01 41 6/-.THE ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS ALONG WITH DOCUMENTARY PROOF IN RESPECT OF BAD DEBTS CLAIMED. IT WA S ALSO ASKED TO FURNISH WHAT STEPS COMPANY HAS TAKEN FOR RECOVERY OF BAD DEBTS. IN RESPONSE THE ASSESSEE FILED LIST OF DEBTORS. THE AO AFTER CONSIDERING ASSESSEE'S EXPLANATION WHILE OBSERVING THAT THE ASSESSEE HAS F AILED TO ESTABLISH THAT THE DEBTORS HAVE BECOME BAD AND IRRECOVE RABLE AND THE ASSESSEE HAS NOT PROVED THAT THE DEBTS WRITTEN OFF WERE O FFERED AS REVENUE INCOME IN ANY OF THE PREVIOUS YEAR DISALLOWED THE CLAIM OF BAD DEBTS RS.28 01 416/- AND ADDED TO THE INCOME OF TH E ASSESSEE AND ACCORDINGLY COMPLETED THE ASSESSMENT AT A LOSS OF RS.1 76 75 015/- VIDE ORDER DATED 29.11.2006 PASSED U/ S. 143(3) OF THE INCOME TAX ACT 1961(THE ACT). ON APPEAL THE LD . CIT(A) AFTER EXAMINING THE DETAILS COPY OF WHICH WAS ALSO FILED BEFO RE THE AO CONTAINING THE NAME OF THE PARTY NAME OF THE AGENT INVOICE NUMBER AND DATE INVOICE AMOUNT AMOUNT WRITTEN OFF WITH RE SPECT TO PARTIES TO WHOM SALE OF YARN HAS BEEN MADE OBSERVED THAT THE AMO UNTS HAVE NOT BEEN RECEIVED BY THE APPELLANT SINCE 2002-03 AND HENCE THE APPELLANT CAME TO THE CORRECT CONCLUSION THAT THE AMOUNTS ARE NOT RECOVERABLE AND HAVE BECOME BAD CONDITIONS OF SECTION 36 (I)(VII) R.W.S. 36(2) ARE MET AND THUS THE BAD DEBTS WITH RESPE CT TO SUCH ITA NO.5973/M/08 A.Y:04-05 3 PARTIES IS ALLOWABLE AND ACCORDINGLY DELETED THE ADDITI ON MADE BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE D ELETION OF DISALLOWANCE OF BAD DEBTS RS.28 01 416/-. 4. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT SIN CE THE ASSESSEE HAS FAILED TO PROVE THE BONAFIDE OF THE BAD DEBTS THEREFORE THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF BAD DEBTS MADE BY THE AO. HE THEREFORE SUBMITS THAT THE DISALLO WANCE MADE BY THE AO BE RESTORED. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THE ISSUE N OW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONB LE SUPREME COURT IN TRF LTD. VS. CIT (2010) 230 CTR (SC) 14. HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHE LD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED COMPLETE DETAILS CONTAI NING THE NAME OF THE PARTY NAME OF THE AGENT INVOICE NUMBER AND DATE INVOICE AMOUNT AMOUNT WRITTEN OFF WITH RESPECT TO PAR TIES TO WHOM ITA NO.5973/M/08 A.Y:04-05 4 SALE OF YARN AND ALSO SUBMITTED THAT THE AMOUNTS HAVE NOT BEEN RECEIVED BY THE ASSESSEE SINCE 2002-03. THE LD. CIT(A) AFT ER CONSIDERING THE ABOVE DELETED THE DISALLOWANCE OF BAD DEBTS MADE BY THE AO. IN THE ABSENCE OF ANY CONTRARY MATERIAL TO SHO W THAT THE SAID DETAILS FILED BY THE ASSESSEE ARE NOT VERIFIABLE OR UNT RUE OR THE DECISION TAKEN BY THE ASSESSEE IS NOT A COMMERCIAL OR BUSINESS DECISION WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE LD. DR THAT THE ASSESSEE HAS FAILED TO PROVE THE BONAFIDE OF THE CLAIM. THIS BEING SO AND RESPECTFULLY FOLLOWING THE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN T.R.F. LIMITED (SUPRA) WHEREIN IT HAS BEEN HELD THAT THIS POSITION IN LAW IS WELL SETTLED. AFTER 1 ST APRIL 1989 IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FA CT HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE WE ARE INCLI NED TO UPHOLD THE FINDING OF THE LD. CIT(A) IN DELETING TH E DISALLOWANCE MADE BY THE AO. THE GROUNDS TAKEN BY THE REVENUE ARE THE REFORE REJECTED. 7. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.4.2010. SD/- SD/- (T.R. SOOD) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 30.4.2010. JV. ITA NO.5973/M/08 A.Y:04-05 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 22.4.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 24.4.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 30.4.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 30.4.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER