TaxTMI 
TaxTMI 
2017 (1) TMI 48
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.... 2. The Ld. CIT(A has erred in deleting the additions made on account of unconfirmed sundry creditors, when the onus of discharging the existence of such liability has not been proved by the assessee. 3. The Ld. CIT(A) has erred in deleting the addition in account of bad debts written off as the assessee itself has submitted that the amount involved is outstanding as on 31/03/2015 which literally means that the amount is not written off as on 31/03/2013 which is an essential requirement as per section 36(1)(vii). 4. The Ld. CIT(A) has erred in deleting addition on account of cash payment of expenses even when the payments are not covered by exceptions allowed by Rule 6DD relating to ships, and when the assessee has not produced any evidence of commercial exigency. 5. Appellant craves leave to amend or alter any of the grounds of appeal or add to the same, if deemed necessary. 3. The brief facts of the case are that the assessee is engaged in the business of plying of Barges. 4. The first ground of appeal is general in nature and does not require separate adjudication. 5. Ground No. 2 of appeal relates to the additions made u/s.41(1) of the Ac....
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.... course of time. The assessee relied upon the decisions in the case of ACIT, Central Circle Chennai v. Istiaq Ahmed 2016(2) TMI 168 , Mahabir Cold Storage v. CIT 1990(12) TMI (SC) and other judicial precedents. 7. The Ld. CIT(A) allowed the appeal of the assessee by accepting the contentions of the assessee and allowed the appeal, wherein the learned CIT(A) observed that the assessee has contended that it is going through the financial crises and could not make the payments to the trade creditors . Further, the learned CIT(A) observed the contention of the assessee that an amount of Rs. 26,746/- was written back by the assessee as on 31/03/2014 and the balances of Rs. 25,445/- is still payable by the assessee. The Ld. CIT(A) further observed the contention of the assessee that if the amount is appearing as credit entry in the books of accounts of the tax payer , Section 41(1) of the Act cannot be invoked and also observed that the AO has not held that the entries in the books of accounts of the assessee are bogus. The creditors had also not waived their right to get the payment and hence the addition of Rs. 51,191/- was deleted by the ld. CIT(A) vide appellate order dated 14/03/....
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....445/- is still payable and the payment could not be made due to financial crisis faced by the assessee due to mining recession and closure of the mines in Goa. We have perused the financial statement of the assessee for the year ended 31-03-2012 filed in the paper book before the tribunal (pages 1-10) which shows a healthy financial position of the assessee as the Share Capital is of 70 lakhs while Reserves and Surplus are to the tune of Rs. 4.06 crores. No evidence is placed before us to substantiate that Rs. 26,746/- was written back during the financial year ended 31-03-2014 . The assertions made by the assessee as to write back in the financial year ended 31-03-2014 and existence of liability as on 31-03-2012 requires verification by the AO. The Ld. CIT(A) had accepted the contentions of the assessee without verification and without making any enquiries by him or caused to be made by the AO. Thus, the assertions of the assessee that due to financial crisis faced by the assessee due to mining recession and closure of mining in Goa , these payments of Rs. 51,191/- could not be made and also that Rs. 26,746/- was written back in the financial year ended on 31-03-2014 requires veri....
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..../s.143(3) of the Act. 11. Aggrieved by the assessment order dated 19/03/2015 passed by the AO u/s.143(3) of the Act, the assessee filed first appeal before the Ld. CIT(A). The assessee, before the Ld. CIT(A) submitted complete ledger account of the party Surface Tech for the period till 31/03/2015 and submitted that the amount is still outstanding to be receivable and there is only requirement u/s.36(1)(vii) of the Act that the debt must be written off in the books of accounts and there is no requirement to show that debt has become bad. The Ld.CIT(A) accepted the contentions of the assessee on the ground that the assessee has written off the amount of Rs. 10,69,509/- as bad debt in its books of accounts during the previous year under consideration. The assessee relied upon the decision of the ITAT, Ahmadabad Bench in the case of Arvind Products Limited v. DCIT dated 19.02.2016 reported in 2016(2) TMI 628-ITAT, Ahmadabad, wherein the tax-payer submitted in that case that due to heavy cost involved in litigation, the tax-payer did not pursue any legal action against the debtor and made provision for bad debts . The tax- payer had not even written off the debt in its book of accou....
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....t. The invoices for JCB hiring was raised in the previous year relevant to the impugned assessment year and were written off in this previous year itself. The assessee did not furnish any details of the party or any other relevant details before the AO. The AO could not made any necessary enquiry/verifications as no details were submitted by the assessee before the AO. The ld. CIT(A) accepted the contentions of the assessee on the ground that the debt was written off in the books of accounts of the assessee as required under section 36(1)(vii) of the Act, the ld.CIT(A) did not made any enquiry or caused any enquiry to be made by the AO to verify the genuineness and bonafide of the claim of the assessee and the claim of the assessee was accepted as it is by learned CIT(A) without any substantiation . The assessee had claimed that it is due to recession in mining and due to closure of mines , the amount has become bad and irrecoverable , this contentions of the assessee has also remained unsubstantiated as no financials of Surface Tech were brought on record. We have perused the financial statement of the assessee for the year ended 31-03-2012 filed in the paper book before the tribu....
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....ages 16. 02.01.2012 75,000/- Paid to Gracious Fernandes - Salary and wages 17. 02.01.2012 50,000/- Paid to Pankaj Saroj - Salary and wages 18. 02.01.2012 40,568/- Paid towards repairs 19. 02.01.2012 65,000/- Paid to Basu Chalwadi - Salary & wages 20. 08.01.2012 60,000/- Paid to Mehboob Sayeed - Salary and wages 21. 09.01.2012 75,000/- Paid to Ashirwad Dhuri - Salary and wages 22. 10.01.2012 80,000/- Paid to Felester Fernandes -Salary and wages 23. 16.01.2012 34,994/- Paid towards repairs 24. 18.01.2012 70,000/- Paid to Manjunath Goankar - Salary and wages 25. 20.01.2012 45,000/- Paid to Rajkamal Pal - Salary and wages 26. 22.01.2012 45,000/- Paid to patric Cardoz - Salary and wages 27. 24.01.2012 47,651/- Paid towards repairs 28. 26.01.2012 45,000/- Paid to Prashanth pednekar - Salary and wages 29. 30.01.2012 25,000/- Paid to Ramakan Naik - Salary and wages 30. 30.01.2012 85,000/- Paid to Vivek Komarpanth - Salary and wages 31. 30.01.2012 35,000/- Paid to Savio Fernandes - salary and wages ....
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....ne go and hence exigencies is not a factor. The AO further observed that it is not clear how the employees worked without receipt of salary for six months and are working for months without being paid. The AO observed that government ban on mining was w.e.f. 07-09-2012 and the cash crunch as contended by the assessee does not pertain to the previous year under consideration. Thus addition of Rs. 28,67,936/- was made by the Assessing Officer u/s 40A(3) of the Act as the payments were made in cash, otherwise through account payee cheques as mandatorily required u/s.40(A)(3) of the Act and the case of the assessee was not covered by exceptions to Rule 6DD of Income-tax Rules, 1962, , vide assessment order dated 19/03/2015 passed by AO u/s. 143(3) of the Act. 15. Aggrieved by the assessment order dated 19/03/2015 passed by the AO u/s.143(3)of the Act, the assessee filed first appeal before the ld.CIT(A) and the assessee contented as under: The assessee relied upon the decision of the Hon'ble Supreme Court in the case of Attar Singh Gurumukh Singh v. ITO (191 ITR 667). The assessee submitted that the AO has not disputed that the payments are not genuine. The assessee also produced....
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....the salary payments have been made through cheques and it is only when it is not been possible to issue cheque, the payments were made in cash and every entry was made in the ledger. It was observed by the learned CIT(A) that the assessee is contending that the entire operation would be hampered if the salary payments are not made in cash in time to workers working in jetties and barges where there is no banking facility available. The Ld. CIT(A) restricted the additions/disallowance to 10% made by the AO i.e. to Rs. 2,56,463/- as the assessee has not kept individual employee wise vouchers and the payments remained unproved and accordingly balance additions were ordered by learned CIT(A) to be deleted , vide appellate order dated 14/3/2016 passed by the ld.CIT(A) . 16. Revenue being aggrieved by the appellate orders of the ld.CIT(A) has filed an appeal before us. It was contended by the ld. DR that payments have been made in cash in violation of Section 40 A (3) of the Act and he relied upon the assessment order of the AO. Further it was submitted that detailed explanation has not been submitted by the assessee before the Assessing Officer which contain the details of urgency an....
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....urn have distributed the cash to the actual workers and payment to each worker is less than Rs. 20,000/-. 18. We have considered the rival contentions and perused the material on record including case laws relied upon by rival parties . The assessee is in business of plying barges in the inland waters. We have observed that assessee has made payment in cash of Rs. 28,67,936/- during the relevant previous year towards 'Repairs and Maintenance' and also towards 'Salaries and wages' , out of which Rs. 5,00,000/- was paid to the Abhishek Engineers in cash for repair and maintenance. The assessee could not produce before the Assessing Officer proper details and justifications for making payment in cash as to urgency and contingency in making payments in cash instead of cheques. The AO observed that the assessee is in the business of plying barges and is not covered by exceptions to Rule 6DD of Income-tax Rules, 1962 as the assessee is not plying ships. Similarly, the employees have bank accounts and there was no urgency to make payments in cash. The Ld. CIT(A) accepted the contention of the assessee that the assessee has made the payments beyond banking hours and there was exigencies....