TaxTMI 
TaxTMI 
2013 (2) TMI 551
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....debts. The assessing officer concluded that the assessee has failed to file the account copies in respect of debts claimed as 'written off' and did not file any information to justify the claim. She accordingly disallowed the claim of the assessee and made the addition of Rs.7,24,82,000. 4. On appeal before the CIT(A), the assessee submitted that the bad debts had been written off during the year and, therefore, the claim was to be allowed in view of the decision of the Tribunal in the case of DCIT V/s. Oman International Bank (SAOG), and also submitted ledger copies in respect of bad debts written off with a request to admit the same as additional evidence. In view of the additional evidence filed, the CIT(A) called for a remand report from the assessing officer. The assessing officer filed a remand report dated 15.11.2010, wherein she submitted that since the assessee has filed only the account copies of the bad debts written off, she issued a letter to the assessee company dated 28.9.2010, calling for the certain information, which, as extracted by the CIT(A) from the said letter of assessing officer, is as follows- "..... (a) Addre....
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....itten off as irrecoverable in the accounts of the assessee. The CIT(A) further noted from the said decision that when a bad debt occurs, the bad debt account is debited and the customer account is credited, thus closing the account of the customer, and similarly, in the case of the companies, the provision is deducted from the Sundry debtors. Considered in the backdrop of the above decision, since in the facts of the present case, the amount of Sundry Debtors has not under gone any change on account of closing of the accounts of the respective debtors, whose debts have become bad, the CIT(A) concluding that the assessee has not written off the relevant debts as bad in the books of account, upheld the view taken by the assessing officer in rejecting the assessee's claim and making the addition of Rs.7,24,82,000/-. 6. Aggrieved by the order of the CIT(A) on this issue, assessee preferred the present appeal before us. 7. The learned Authorised Representative for the assessee submitted before us that the amounts due from the relevant debtors have actually been written off as bad during the relevant financial year and this fact has also been disclosed in the revised return field b....
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....tion required under sub-section (2) is to be made only after the debt is written off in the books of account. In the absence of such entries made in the books of account, the process of examining the claim with reference to sub-section (2) of S.36 will not commence. Therefore, the first requirement to be satisfied is that the debt must be written off in the books of accounts as per S.36(1)(vii) of the Act. Though it is the contention of the assessee before the lower authorities that the debts were actually written off in its books of account, no proof was produced either before the Assessing Officer or before the CIT(A) to establish such fact. Even during the remand proceedings taken up by the Assessing Officer as per the directions of the CIT(A), the assessee failed to furnish any information in response to the queries made by the Assessing Officer to establish the fact of having written off the debts in the books of account, which has been enumerated in para 10.1 of the order of the CIT(A). A perusal of the order of the CIT(A) and the assessment order reveals the fact that the assessee has repeatedly failed to prove the fact that the bad debts claimed have actually been written o....
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....editors and the genuineness of the transactions, treated the total unsecured loans received during the year as unexplained, and accordingly made an addition of Rs.2,18,80,000 under S.68 of the Act in that behalf. 12. On appeal before the CIT(A), the Authorised Representative for the assessee submitted that the assessee had maintained all the details regarding the increase in the amount of unsecured creditors, such as confirmato0ry statements to verify their identity and copies of bank statements for verifying the genuineness of the transactions. He also furnished a paper book containing the confirmati0on letters from all the creditors, duly requesting for admission of the same by way of additional evidence. It was pleaded that the addition as made without considering the explanation given by the assessee. Forwarding the paper-book filed by the assessee to the assessing officer, the CIT(A) called for a remand report. The assessing officer vide remand report dated 10.8.2010 submitted that though the assessee had been required to furnish confirmations from he loan creditors and information regarding mode of receipt and the sources of the loan creditors to verify their creditworthin....
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....estionnaire to the assessee, and the matter was posted on several occasions, there was no compliance from the assessee, and ultimately, the assessee furnished only incomplete confirmation letters, and even those were furnished at the last stage of the assessment proceedings. The CIT(A) noted from the conduct of the assessee that there was a conscious attempt to ward off any investigation into the genuineness of the loans and it was for this reason that the details were furnished at the fag end of the proceedings and even those details were only incomplete and cannot be accepted, since even a confirmation letter without the addresses, PAN numbers, assessment particulars etc. is indeed of no value. 16. Dealing with the admissibility of the additional evidence filed before him, the CIT(A) noted that there was no explanation of the assessee for its failure to furnish such evidence during the assessment proceedings, despite more than sufficient opportunity having been given by the assessing officer. The CIT(A) concluded that the assessee has not been able to demonstrate that there was sufficient cause for its failure to submit the requisite details during the assessment proceedings. ....
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....), submitted that the assessee having failed to discharge the onus of proving the cash credits, the addition made is liable to be sustained. 20. We have heard the rival submissions and perused the materials on record. The assessing officer, while completing the assessment added the amount of unsecured loans as unexplained cash credits, since the assessee has failed to produce copies of the bank statements, income-tax particulars and the creditworthiness of the alleged creditors. The CIT(A) also sustained the addition without taking into consideration the confirmation letters by observing that the assessee has failed to substantiate the creditworthiness and genuineness of the transaction. From the confirmation letters produced before us in the paper-book, we find that during the year, the assessee has taken additional unsecured loans aggregating to Rs.2,18,80,00 from 21 persons. A list of the creditors is placed at page 41 of the paper-book. The said list reveals that the assessee had taken substantial amounts of loans from them in earlier years also. The assessee has produced confirmation letters from the persons who have extended unsecured loans to the assessee. Ongoing thro....
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....e, and restrict the addition to be made under S.68 of the Act, only to such amounts, in respect of which the assessee has either not furnished the relevant details, or the enquiries based on the particulars so furnished proved the falsity of the assessee claim. Assessee's grounds on this issue are allowed for statistical purposes. 21. The next effective grievance of the assessee in this appeal is against the action of CIT(A) in confirming the disallowance of Rs.11,18,376 made in terms of S.40a(ia) of the Act. 22. Facts of the case in brief relating to this issue are that the assessing officer noted hat the assessee had incurred the following expenditure, without deducting the taxes at source as per Chapter XVII B of the Act- (i) Audit Fee - Rs. 45,000 (ii) Rent - Rs.4,65,425 (iii) Advertisement - Rs.6,03,951 In terms of the provisions of S.40a(ia) of the Act, the assessing officer disallowed the assessee's claim for deduction in respect of the above expenditure. 23. On appeal before the CIT(A), the assessee submitted that the provisions of S.40(a)(ia) are applicable only in respect of the payments remaini....
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....in accordance with law and after giving reasonable opportunity of hearing to the assessee. Assessee's grounds on this issue are also allowed for statistical purposes. 25. The next effective grievance of the assessee in this appeal relates to disallowance of Rs.1,46,57,679 on the ground of excess depreciation claimed by the assessee. 26. Facts in brief relating to this issue are that the assessing officer noted from the details of depreciation claimed, as provided by the assessee, that the assessee had claimed depreciation on Rs.2,25,50,275, being plant and machinery, working out the same at 80%. Observing that the eligible rate depreciation on plant and machinery is only 15%, the Assessing Officer worked out the depreciation allowable at Rs.33,82,541 only, and accordingly disallowed the excess depreciation claimed of Rs.1,46,57,679. On appeal, the CIT(A), confirmed the disallowance made by the assessing officer in the following manner- "12. During the course of appellate proceedings, however, no further submissions were made on this issue. Accordingly, finding no reason to interfere with the contention of the Assessing officer, the disallowance of Rs.1,4....