TaxTMI 
TaxTMI 
2026 (1) TMI 1109
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a) Order passed without jurisdiction and; b) Assessment required to be completed u/s 153C and; c) No reasons recorded for notice u/s 143(2) 2. That the Ld. CIT (A) was not justified in giving the finding that NA additional evidence were filed by the assessee. The same were Furnished as per the directions of the Ld. CIT (A). 3. That the Ld. CIT (A) was not justified in travelling beyond the powers given u/s 251 of the Tax Act, 1961 in giving various directions which are not permissible. 4. That the Assessment order passed by the LD. AO and sustained by the CIT (A) deserves to be quashed as void ab initio since the same was passed a) without providing proper opportunity of hearing; and b) by ignoring the article 141 of the Constitution of India; and c) by not following the orders of the Courts and Tribunals; and d) in contravention of various CBDT Instructions; and e) without following the Principals of Natural Justice; and f) without disposing off the Objections raised by the assessee; and g) without application of mind and biasly. 5 That under the facts and circumstances of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4, consequently, ground of appeal no. 1 to 4 are dismissed as not being pressed. 4. Ground of appeal no.5 is regarding the addition of Rs. 5,75,38,704/- made by the ld. Assessing Officer invoking the provisions of section 36(1)(vii) of the Act and its confirmation by the ld. CIT(A) and ground of appeal no.6 is regarding the non-acceptance of the revised computation qua bad dates. 5. Brief factual matrix of the case is that the assessee company has been engaged in the business of trading of gems and jewellery including its exports. During the year under consideration, the assessee had claimed an amount of Rs. 5,75,38,704/- as bad debts under section 36(1)(vii) of the Act. Before the Assessing Officer, the assessee had further claimed that due to some clerical error an amount of Rs. 16,40,175/- was omitted to be added back to the computation of income. In support of its claim for bad debts, the assessee had submitted that amounts qua two entities M/s MSM Gems LLC and M/s Allure Jewells LLC were claimed as bad debts in view of mediation order of the Hon'ble High Delhi High Court as the assessee's efforts to recover even after mediation proceedings failed, the assessee was compel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(1)(vii) and 36(2) of the Act. "36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- ....................................................................................... (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year: Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause: Provided further that where the amount of such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof becomes irrecoverable or of an earlier previous year on the basis of income computation and disclosure standards notified under sub-section (2) of section 145 without re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is satisfied that such debt or part became a bad debt in any earlier previous year not falling beyond a period of four previous years immediately preceding the previous year in which such debt or part is written off, the provisions of sub-section (6) of section 155 shall apply; (v) where such debt or part of debt relates to advances made by an assessee to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the assessee has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause. 9. A perusal of the above statutory prescription provides that an assessee is entitled u/s 36(1)(vii) of the Act to claim an amount as bad debts subject to satisfaction of condition in section 36(2). The assessee has placed on records through its paper book to adduce that the amount of receipts have been offered qua sale proceeds made in FY 2005-06 and 2006-07 respectively. We have noted that Hon'ble Apex Court in its decision in the case of TRF Limited has observed as under:- ".... 36.(1) The deductions provided for in the following clauses shall be allowed in re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uthorities and direct the ld. AO to conduct a limited verification into the Returns of Income of the assessee AY 2006- 07 and 2007-08 and ascertain as to whether the impugned amounts qua which bad debts have claimed u/s 36(1)(vii) were indeed offered as income for the said years. In the event of assessee having been offered the same, then to delete the addition of Rs. 5,75,37,804/-. The ground of appeal no.5 raised by the assessee is therefore allowed for statistical purposes. 11. As regards the issue raised by the assessee through ground of appeal no.6 regarding non-consideration of its revised computation filed during the assessment proceedings, 12. We have noted that the Ld.AO has denied the claim by placing reliance upon the decision of Hon'ble Apex Court in the case of Goetz India. As regards assessee's revised claims, the Ld.CIT(A) in his order held that claims made in the Return of Income can only be considered for allowance. He has further proceeded to hold that the assessing officer does not have any power to entertain any claims not made in the Return of Income and further that the CIT(A) enjoys only those powers which are available to an assessing officer. We have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere shall be no order as to costs.....". 13. A plain reading of the above shows that no doubt their Lordship have mandated that claims of the assessee cannot be entertained by the Ld. AO, which are made otherwise then through a Return of Income - original or revised, however they have excluded consideration of such claims made before the tribunal. Thus, a tribunal would be well within its rights to consider entertaining such claims. The claim of the assessee is therefore directed to be accordingly considered. The ground of appeal no.6 raised by the assessee is therefore allowed. 14. Ground of appeal no.7 raised by the assessee is regarding disallowance of an amount of Rs. 44,15,227/- on account of loss on sale of assets. The assessee had made the impugned claim by filing the revised computation during assessment proceedings. The ld. AO had disallowed the impugned claim as the Return of Income was not filed u/s 139(1) of the Act. The ld. CIT(A) concurred with the findings of the AO holding that the impugned claim was made by revising the belated return. While doing so he relied upon his decision that the benefit of decision of Hon'ble Apex Court in the case of Goetze India was....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ld. AO with the directions of verification from records and to draw consequent conclusions. It was submitted that after a long gap of nearly five year no effect has been given by the Revenue authorities. 21. We have considered rival submissions in the light of material available on record. Non-compliance to the directions of a superior appellate authority by an Assessing Officer is a case of serious concern and cannot be summarily ignored. On the impugned matter, we have also noted that the ratio laid down by Hon'ble Apex Court in the case of Checkmate Services may also be applicable qua some of the disputed amounts. Be that as it may be in the interest of justice, we direct the ld. AO to adjudicate the matter de novo considering documents and evidences placed by the assessee as well as the ratio laid down by Hon'ble Apex Court in the case of Checkmate Services by way of a speaking order and after giving due opportunity of being heard. The ld. AO shall ensure that an order in this regard is passed within three months of the receipt of this order by his PCIT concern. Any deviation to these directions shall be adversely viewed. The ground of appeal no.8 raised by the Revenue ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4-15 and hence cannot be added back. The said reply of the assessee has been considered by the ld. CIT(A) on page 33 and 34 of his order. 27. Per Contra, the ld. DR relied upon the orders of the lower authorities. 28. The ld. Counsel for the assessee reiterated the arguments made before lower authorities. 29. We have heard rival submissions in the light of material available on record. The impugned advances from customers were appearing as liability in the financials of the assessee. Section 68 casts responsibility upon the taxpayer to establish identity, creditworthiness and genuineness of transactions qua liabilities appearing in its financial during a particular year. We have noted from the order of the ld. AO that the assessee did not discharge this responsibility before him. We have also noted that even before the ld. CIT(A), the assessee merely harped upon the issue of the impugned liabilities having connected with earlier years and that therefore they cannot be added. We have noted that apart from making this bald statement, the assessee did not come forward with any specific details to establish that impugned liabilities were indeed pertaining to earlier years. Thu....