TaxTMI 
TaxTMI 
2025 (7) TMI 1774
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....der Bad In Law And On Facts 1.1. The order passed by the Learned Commissioner of Income Tax (Appeals) (hereinafter referred to as (CIT(A)) u/s 250 of the Income-tax Act, 1961 (the Act) is bad in law and on facts. 2. SECOND GROUNDS OF APPEAL: ERRONEOUS CONFIRMATION OF DISALLOWANCE U/S 36 Of the Act 2.1. The learned (CIT(A)) has erred in confirming the order of Assessing Officer (AO), by confirming the addition of Rs. 43,61,237/- without considering the facts. 2.2. The learned CIT(A) has erred in upholding the disallowance of bad debt arising due to non-payment of amount by the debtor, holding the same to be in the provision for bad debt not allowable under section 36 of the Income-tax Act, 1961 without appreciating the details submitted by the Appellant 2.3. The learned CIT(A) has failed to appreciate the fact that the receivable has arisen on account of sale of goods which was offered to tax during the Financial Year (FY) 2008-09 and has overlooked circular no. 12/2016 dated 30-5-2016 issued by the Central Board of Direct Taxes (CBDT). 4. The learned CIT(A) failed to verify whether the debt has actually been written off as per t....
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....come of Rs. 50,22,980/-. The return was revised by declaring a total income of Rs. 661,740/-. The reason for revision was that in the original return, the assessee had not claimed bad debts of Rs. 43,61,237/- but in revised return the bad debt is claimed U/s 36(1)(vii) of the Act. 5. The assessee claimed that the amount to Rs. 87,22,474/- was receivable from party. M/s Tag Engineers Private Limited (hereinafter referred to as 'debtor') since April 2006. The debtors initiated the payment but it is found that the issued cheques were dishonoured by the banker. Thereafter, the assessee and the debtor entered into a Memorandum of Understanding (MOU) dated 24/06/2009 for the payment of the outstanding amount of Rs. 87,22,474/- and issued various cheques drawn on the Shamrao Vithal Co-op Bank Limited in discharge of its liability as below and the debtor further agreed to pay interest for the delay in payment. Sl. No. Cheque No. Date Amount 1. 425044 25 July 2009 500,000 2. 425045 25 August 2009 500,000 3. 425046 25 September 2009 500,000 4. 425047 25 October 2009 500,000 5. 425048 25 November 2009 500,000 ....
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....le writing off the amount, instead of debiting write-off account, it inadvertently debited provision for doubtful debts account. 10. The Ld. AO passed an order u/s 143(3) of the Act, disallowing the amount written off. The contention of the Ld. AO is that the term used is provision for doubtful trade receivable and the same needs to be added back while computing the income of the assessee. The assessing officer has further contended that a debt will turn bad either wholly or it will not 11. Aggrieved by the order, the assessee filed an appeal before the Ld. CIT(A), and the CIT(A) dismissed the case stating that the assessee did not write-off the amount and it had merely made a provision for doubtful trade receivable. Being aggrieved assessee filed an appeal before ITAT. 12. The ITAT-Mumbai bench "E" passed the order dated 20/09/2019 bearing ITA No. 3332/Mum/2019 and had taken the considered view that there is substantial force in the claim of the assessee that though the bad debt was written off as irrecoverable in the accounts of the assessee, however, inadvertently the wordings 'provision for bad debt were wrongly used and restored the file back to the assessing offi....
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....orities on the ground that the assessee had merely made a provision for doubtful debts and had not actually written off the debt in the books of account. It is an undisputed fact that the debt of Rs. 87,22,474/- arose out of sales made to M/s Tag Engineers Pvt. Ltd. (TEPL), and the amount remained unpaid despite the issuance of post-dated cheques. These cheques were dishonoured, and legal action under section 138 of the Negotiable Instruments Act, 1881 was initiated. Subsequently, the Metropolitan Magistrate Court, Bandra, Mumbai passed an order dated 28/12/2012 convicting the debtor and ordering compensation of Rs. 11.80 lakhs. Pursuant to this, the assessee entered into a settlement with the debtor for 50% of the total outstanding amount, and accordingly, wrote off the remaining 50%, i.e. Rs. 43,61,237/-, in its books during FY 2011-12. The only basis for disallowance by the Ld. AO and confirmation by the Ld. CIT(A) was that the assessee used the term "provision for doubtful debts" instead of "bad debts written off." However, this issue was already considered by the Coordinate Bench of this Tribunal in assessee's own case in ITA No. 3332/Mum/2018 vide order dated 20/09/2019, wher....