TaxTMI 
TaxTMI 
2014 (5) TMI 962
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....nbsp; 3. "Bad debts written off:- The assessee has claimed bed debts written off during the year amounting to Rs.95,00,228/-. The assessee was required to file details and to justify the basis of claim in the year under consideration. It has been stated by the assessee vide letter dated 18/12/06 that various bad debts in respect of debtors outstanding for more than three years have been written off. On verification of the details filed by the assessee it is found that the assessee has also claimed the amount outstanding in creditors misc. balances of Rs.10,98,944/-, details of which are as under:- Sr. No. Name of the Party Amount 1. Fair Bank Morse India 361920 2. Ascent Technologies 2052 3. Satyam Infoway Ltd. 64800 4. Tanvi Internet Communication 76045 5. Arora Enterprises 11880 6. Jasbir Enterprises Corp. 11403 7. Renuka Art Press 14117 8. Sri Samwat Transport 9000 9. S. Vidya Krishan 7500 10. Central Instructions 12989 11. Dhingra Guest House 2000 12. Hten Brothers 3120 13. Kryfs Lamination 9186 14. Mehra Electronics 27500 15. Swami & Co. 7544 16. TCI Seaways 18929 17. Spares Ind....
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....nses totalling 3,42,02,610/-including the addition on account of bad debts which was the only subject matter in the penalty proceedings the resultant income of the assessee was still assessed at Nil. In the circumstances the assessee in its wisdom or advise did not agitate the issue further it was also his submission that even in the subsequent years also the assessee has been assessed at a loss and the position remained the same till date. In support of the claim factual position of 2006-07 A.Y 2007-08 was referred to. In this background it was argued that the claim of the assessee was a bonafide claim as there was no motive whatsoever for the assessee to make an incorrect claim. Notwithstanding that even on merits it was argued that had the assessee been correctly advised the assessee could have got necessary relief in the quantum proceedings itself as the expenditure could have been claimed u/s 37 as a business expenditure and would have been allowed. It was argued that simply because the claim was made under bad debts it has been disallowed the fact remains that these were advances given to the creditors for supplies and since they were continuing over the years the assessee as....
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.... covered by the judgement of the Supreme Court in the case of CIT vs Reliance Petroproducts (P.) Ltd., 322 ITR 158 (SC), where it was held that the assessee must be found to have failed to prove that his explanation is not only bona fide, but all the facts relating to the same and material to the computation of his income were also not disclosed by him. It was further held that the explanation must be preceded by finding as to how and in what manner the assessee had furnished inaccurate particulars of his income. 9. In fact, had the assessee pressed his claim in a proper manner during the assessment proceedings, he might have even succeeded in getting the said deduction allowed. Be as it may, in such a case, the assessee cannot be fastened with penalty also." 4.1 Reliance was also placed upon the order of the Co-ordinate Bench in the case of ITO Bata Steel (P.) Ltd. (2010) 33 DTR (Chd.) (Trib) 219; CIT vs Mahavir Irrigation P. Ltd. 61 DTR 218 (Del.); Amruta Orghanics P. Ltd. Vs ITO (Pune) rendered by Pune Bench of the Tribunal on 22.03.2013 in ITA No-1121/PN/2011. 4.2 Addressing the reasons for not being present before the AO during the penalty proceedings att....
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....rrecoverable and were hence written off. These irrecoverable amounts resulted in revenue loss to the assessee and were deductible in computing the business income of the assessee as per the provision of section 37(1). This fact has been stated in the assessment order also at Para 3 where the assessing officer has stated: "on verification of the details filed by the assessee, it is found that the assessee has claimed the amount outstanding in creditors misc. balances of Rs.10,98,944/-..." Further enclosed are the flowing as evidence of the aforestated facts:- 1. Copies of ledger account of all the parties whose balance were written off during the year showing that they were parties with whom assessee was having business transaction and advances made for these business transactions were written off during the relevant assessment year. The ledger account also demonstration the fact that the amounts were outstanding for a long period and hence were written off when they became irrecoverable. 2. Copy of assessment ord....