TaxTMI 
TaxTMI 
2019 (9) TMI 305
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....the case. 4. That the appellant reserved the right to add amends, alter and/or delete any of the grounds of appeal. 5. That on the basis of facts of the case and in view of the circumstances it is prayed that either the additions sustained by the Ld. CIT may please be deleted or the matter may please be restore back to the file of Commissioner of Income Tax (Appeals) in the interest of natural justice. " [B]. Assessment order dated 27. 03. 2014 was passed by the AO u/s 143(3) of the Income Tax Act, 1961 [in short "Act"] wherein the total income was assessed at Rs. 3, 20, 49, 170/- as per following computation:- "Income as shown in return : Rs. 13, 02, 090 Add: (i) Disallowance out of bad debt : Rs. 50, 00, 000 (ii) Disallowance of advanced received u/s 68 : Rs. 1, 34, 00, 000 (iii) Disallowance of earth filling : Rs. 12, 72, 400 (iv) Addition to unsecured loan : Rs. 1, 06, 41, 000 (v) Disallowance out of vehicle running expenses : Rs. 45, 469 (vi) Disallowance out of depreciation on car expenses : Rs. 66, 246 (vii) Disallowance of proportionate interest....
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....iven for the purchase of land of Khasra no. 155 at Begum Pur (Malvinas' Nagar, Delhi) to Mr. Arshad Ahamad is not denied by the assessing officer arid therefore it is-established beyond doubt That the amount was advanced only for business purposes and therefore the provisions of section 36 (1) (vii) of the Income Tax Act, is clearly applicable. That the condition precedent to section 36 (1) (vii) is that the assessee has actually written off the amount as Bad Debts in his books of accounts or not and since the assessee has actually written off the amount in his books of accounts during the year under consideration as bad debt, the amount is allowable u/s 36 (1) (vii) of The I Tax Act, 1961. That here it is also submitted that Mr. Arshad Ahamad is a cheater and to further prove that the advance was for purchase of land, we are enclosing herewith copy of News paper dated 04. 03. 2015. Now it is a settled law that if the assessee has written off the amount in his books of accounts as bad debt, he is not require to prove further as held by Hon'ble Supreme Court in the case of TRF Ltd. v/s CI reported in 190 Taxmann 391(SC) and in the case of Vijaya Bank L....
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....en submissions we have filed the copy of accounts of Shri Arshad Ahmed and at page-5 copy of bad debts accounts, which proves that the assessee has actually written off the amount as bad debts in his books of accounts and at page 12A which is a newspaper clipping is vital proof that Shri Arshad Ahmed has cheated not only to the assessee but to other peoples of Meerut. Hence, on the basis of page no-4, 5 and 12A and the decisions cited supra the amount of Rs. 50 lakhs actually written off by the assessee as bad debts is an allowable expenditure and may please be allowed. ............................... . .................. B. Ground No-3. Addition of Rs. 12, 72, 400 In the remand report the only objection of the assessing officer is that the vouchers are not available/produced, he nowhere doubted the expenditure In this regard it is submitted that this expenditure relates to earth filling and leveling of the land for which no external vouchers are possible to obtain. That the total expenditure was incurred on various dates and duly entered in the books of accounts. The assessing officer has not rejected my books of accounts and h....
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....ere attempted by the assessee for recovery of the aforesaid amount of Rs. 50, 00, 000/- from Mr. Arshad Ahmad. In view of the foregoing assessee's claim for business loss or for deduction u/s 37 of the Act is not sustainable. There is, further, no material on record to show that aforesaid amount of Rs. 50, 00, 000/- or any part thereof has been taken into account in computing income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year; and thus, mandatory condition u/s 36(2)(i) of the Act is not fulfilled for claim of bad debt. At the time of hearing before us, Ld. AR for the assessee also expressed inability to bring any further material on record in support of the assessee's claim for the aforesaid amount of Rs. 50, 00, 000/-. In the forgoing facts and circumstances, the assessee's claim for deduction of the aforesaid amount of Rs. 50, 00, 000/- deserves to be rejected whether this claim is made as bad debt written off u/s 36 of the Act or alternatively u/s 37 of the Act. In any case, in Ground No. 2 of appeal, the assessee refers to section 36(1)(viii) of the Act which is not applicable to the facts a....
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....e disputed issues back to the file of Ld. CIT(A). The prayer made in Ground No. 5 of this appeal, therefore, deserves to be rejected. [G]. In view of the foregoing, all the grounds of appeal are dismissed. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 03/09/2019. ============= Document 1 Decision and Reasons:- Ground No. 1 disallowance of expenditure of Rs. 50,00,000/- Assessee company had written off bad debts amounting to Rs.50 lacs during this year and has claimed the amount as allowable under section 36 (1) (vii). During assessment proceedings assessee submitted that Rs. 50 Lacs was advanced to Mr. Arshad Ahemad for purchase of land Kharsa No. 155 situated at VIII Begumpur, New Delhi. Asseeee submitted that Arshad Ahmed is a cheater and lodged an FIR on asking for the payment. Assessing officer disallowed the amount claimed by assessee as bad debts. During appeal proceedings, assessee submitted that as already submitted above that the assessee was engaged in the business of trading of immovable properties and this amount was given for the purchase of land of Khasra no. 155 at Begum Pur (Mal....
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....t entry has been made, no proof is required. Under section 143(2) of the Act, Assessing Officer is empowered to require the assessee to produce the evidence in support of the return, as such where respondent-assessee has claimed as bad debt or part thereof, written off as irrecoverable in the accounts of the assessee under the provision of section 36(1)(vii) of the Income-tax Act, 1961, then on the strength of the amendment made on 1-4-1989 it cannot be said, that an inquiry is not permissible under the provision of Income-tax Act to see and satisfy that there is some semblance of the genuineness in the entry, which had been made, same is not at all totally fake entry as respondent-assessee would be entitled for deduction only if its bad debt, or part thereof. Hon'ble Apex Court in the case of Travancore Tea Estates Co. Ltd. v. CIT [1998] 233 ITR 203 has taken the view, that as to whether a debt has become bad or at what point of time it became bad, are pure question of fact. Though standard of proof of proving the same is bad debt, is not required to be adopted and is to be decided on the wisdom of the respondent-assessee and not on the wi....
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....tablished the bonafides with regard to the transaction with Arshad Ahmad. The Appellant's attention is drawn to the Latin term Caveat emptor which means "let the buyer beware." Assessee is claiming that he is a trader in properties. Before entering into a transaction neither he verified the antecedents of property proposed to be purchased nor he entered into any written agreement and advanced Rs. 50 Lacs which is not acceptable Prior to entering into the transaction, assessee did not inquire about the location of land and also did not verify whether it was Kabristan land cannot be accepted., The general reputation of the Arshad Ahmed (a local person) is also not known to assessee before giving huge advance of Rs. 50 Lacs without any agreement also cannot be accepted. The nature of advance given by assessee is also not clear; no evidence in this regard has been filed. It is quite possible, that assessee was to pay Rs. 50 Lacs to Arshad Ahmed for any earlier transaction and he could have repaid the same. In toto, assessee has failed to establish the genuineness, nature of transaction and also that the said transaction is for business purpo....