2015 (1) TMI 297 - AT - Income Tax

Tribunal upholds CIT(A) decision on bad debts claim, stresses financial document reconciliation. Legal issue not addressed.

The Tribunal upheld the CIT (A)'s decision to delete the addition related to bad debts claim discrepancy, emphasizing the importance of reconciling ... Allowability of claim of bad debts – Held that:- The AO noted that the bad debts claim allowed in the assessment order was much higher than those shown by the bank in NPA return furnished to RBI - The AO noted that the bad debts claim by the assessee were ₹ 86.68 crores while the bad debts shown in the NPA return filed with the RBI were of ₹ 16.91 crores - the CIT(A) has considered the reconciliation of the amounts shown in the NPA return with the RBI as well as annual accounts and return of income and found that the figure tallied with the amount in the audited P&L account and balance sheet – CIT(A) rightly found that there is no reference of the figure of ₹ 16.91 crores in the return - There is no evidence anywhere in the record from which it can be ascertained as to how the figure of ₹ 16.91 crores has been arrived at by the AO - Revenue has not pointed out any error in the facts recorded by the CIT(A) in the order – the order of the CIT(A) is upheld – Decided against revenue. Issues:1. Allowance of bad debts claim discrepancy between assessee and NPA return filed with RBI.2. Reassessment proceedings legality beyond the statutory period.Analysis:1. The first issue revolves around the discrepancy in the bad debts claim between the assessee and the NPA return filed with RBI. The Assessing Officer added back the difference of Rs. 69.77 crores to the total income of the assessee, which was challenged in appeal. The CIT (A) found that the amounts claimed by the assessee and reported in the NPA return were the same, leading to the deletion of the addition. The Tribunal upheld the CIT (A)'s decision, emphasizing the reconciliation of figures between the NPA return, annual accounts, and income tax return. The Tribunal noted that the Assessing Officer failed to provide a basis for the discrepancy and ultimately upheld the deletion of the addition.2. The second issue pertains to the legality of the reassessment proceedings conducted beyond the statutory period of four years. The assessee contended that all material facts were disclosed during the original assessment proceedings, rendering the reassessment invalid. However, since the Tribunal had already decided in favor of the assessee on the merit of the case, the cross objection challenging the reassessment proceedings was deemed academic and not addressed further. Consequently, both the appeal and cross objection were dismissed by the Tribunal.In conclusion, the Tribunal upheld the CIT (A)'s decision to delete the addition related to bad debts claim discrepancy, emphasizing the importance of reconciling figures between different financial documents. The reassessment proceedings legality issue was not addressed due to the academic nature of the cross objection after the main issue was decided in favor of the assessee.