2013 (4) TMI 177

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.... petitioner submits that it has used its business judgment in coming to the conclusion that the debts incurred during the year have turned bad in the same year. 2. The Ld. CIT has erred in confirming the above disallowance of bad debts. 3. The order appealed against is bad in law and is against the principle of natural justice. 4. The order appealed against is based on surmises and conjectures. 5. Your petitioner reserves the right to add, to delete and/or amend any of the foregoing grounds. 2. Appellant-company, engaged in the business of broking services in commodities and investment, filed its return of income on 25-11-2006 declaring total income of Rs. 13.18 Lakhs. Initially, the return was processed u/s.143(1) of the Inc....

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....ot taken any follow-up measures, could not be treated as bad debts. As a result, he made an addition of Rs. 3.87 Lakhs to the total income of the assessee-company. 4. Assessee preferred an appeal before the First Appellate Authority (FAA) and relied upon the decisions of the Hon'ble Supreme Court in the case of TRF Ltd. (323 ITR 397), Shreyas S. Morakhiya (ITAT Mumbai Spl. Bench) and Star Chemicals Pvt. Ltd., delivered by the Hon'ble Supreme Court and Hon'ble High Court of Bombay respectively. A copy of the Board resolution passed on 29-03-2006 in this regard was also submitted before the FAA. After considering the submissions of the assessee and the assessment order, FAA held that facts of the case of Shri Shreyas S. Morakhiya (supra) w....

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....o Agencies Rs. 2.54 Lakhs & Mustyala Ramesh Rs. 1.32 Lakhs. II. Assessee has written-off the bad debts in the Books of Accounts. III. A Board resolution was passed in this regard. IV. AO made the dis-allowance because the debts were not more than two years old and the assessee had not taken any follow- up measure. V. FAA upheld his action stating that specific condition of 36(2) were not fulfilled. 7. We find that AO has not made any enquiry as what happened in the subsequent years about the debtors. It appears that the AO of the debtors were also not contacted in this regard. We are of the opinion that when debts were held to be bad in the same year, further enquiries were to be carried out by AO to reach at a logical conclu....