TaxTMI 
TaxTMI 
2026 (7) TMI 420
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....within 15 days of the hearing as per Circulars bearing F.No. 279/Misc 53/2003-ITJ dated 19/6/2015 and No.20/2013 dated 23/12/2003 of CBDT is in violation of Law and principals of Equity and Natural Justice, the same be quashed. 2. Without prejudice to above, Ld CIT(A) has erred in not taking into consideration submissions and enclosures filed along with submissions dated 22.03.2021, 09.11.2023, 03.01.2024, 08.02.2024,07.03.2024, 02.05.2024, 05.06.2024 & 08.07.2024 respectively. It is submitted that since Ld. CIT(A) has himself acknowledged of the Appellant having filed all the above submissions in the order itself, he ought to have taken them into consideration and adjudicated the submissions and enclosures filed therewith and ought to have allowed the Appeal. 3. Ld CIT(A) has also erred in holding that: (i) there is nothing on record to suggest that the requirement of Law that the bad debt was written-off in Appellant's accounts, (ii) the claim for bad debt is premature, (iii) the Appellant has not furnished evidences of the fact that the transactions of purchase and sale were backed by actual delivery, (iv) and th....
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....le of commodities were backed by actual delivery. The contention of the Assessee that the Assessee had furnished the Delivery Report as well as copy of the Ledger Account of M/s Chimanlal Popatlal Commodities Brokers Pvt. Ltd. [hereinafter referred to as 'the Broker'] through which transactions of purchase and sale of commodities had been undertaken was not acceptable as the Learned Principal Commissioner of Income Tax had rejected the said documents. The Assessing Officer further noted that the bad debts were written off prematurely since the recovery proceedings in relation to commodity purchase/sale transactions undertaken at National Sport Exchange Limited (NSEL) were still pending. Hence, the Assessing Officer concluded that the Assessee was not entitled to claim deduction for the same under Section 36(1)(vii) of the Act. 4. Being aggrieved Assessee carried the issue in appeal before the Learned CIT(A) and filed written submissions reiterating the stand taken before the Assessing Officer. However, the same did not find any favour with the Learned CIT(A) as the Learned CIT(A) proceeded to confirm the disallowance made by the Assessing Officer observing as under: "4.....
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....isions of Section 36(1)(vii) of the Act have not been complied with. Therefore, we are not in agreement with the reasoning given by the Learned CIT(A) for confirming the disallowance of bad debts made by the Assessing Officer. It is admitted position that the debt amounting to INR.2,69,16,348/- was due to the Assessee in respect of purchase/sale of commodities on NSEL (undertaken through the Broker) and the same was written off by debiting the Profit & Loss Account during the relevant previous year. Therefore, the Assessee was entitled to claim deduction for the same in terms of Section 36(1)(vii) of the Act. Further, the Assessee had also raised alternative contention claiming deduction under Section 28 of the Act for bad debts written off as loss suffered by the Assessee during the normal course of business on account of N. During the course of hearing the Learned Authorised NSEL scam. Representative for the Assessee had placed reliance upon the decisions of the Delhi Bench of the Tribunal in the case of Chowdray Associates Vs. Assistant Commissioner of Income Tax [ITA No.3298/Del/2019, Assessment Year 2015-2016, dated 11/03/2020], the relevant extract reads as under: "2....
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....Misc./140/2015-ITJ Government of India Ministry of Finance Department of Revenue C entral Board of Direct Taxes New Delhi, Dated 30th May, 2016 Subject: - Admissibility of claim of deduction of Bad Debt under section 36(1) (vii) read with section 36(2) of the Income-Tax Act, 1961- reg. Proposals have been received by the Central Board of Direct Taxes regarding filing of appeals/pursuing litigation on the issue of allowability of bad debt that are written off as irrecoverable in the accounts of the assessee. The dispute relates to cases involving failure on the part of assessee to establish that the debt is irrecoverable. 2. Direct Tax Laws (Amendment) Act, 1987 amended the provisions of sections 36(1)(vii) and 36(2) of the Income Tax Act 1961, (hereafter referred to as the Act) to rationalize the provisions regarding allowability of bad debt with effect from the April, 1989. 3. The legislative intention behind the amendment was to eliminate litigation on the issue of the allowability of the bad debt by doing away with the requirement for the assessee to establish that the debt, has in fact, become irrecoverable. However, despite the a....
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....of the NSEL not to allow the bad debts claim would be legally untenable owing to the provisions of the Act, Circular of the CBDT and ruling of the Hon'ble Apex Court in the case of TRF Ltd. Vs CIT (323 ITR 397). 30. Further, we have also perused the order in the case of M/s Omni Lens Pvt. Ltd. in ITA No. 2818/Ahd./2010 wherein the matter was referred back to the file of the AO to examine the issue of speculation/non-speculation business after taking note of crucial aspect of actual delivery of the commodity, if any, as claimed and to ascertain as to how the entire debt has turned bad when the assessee was purportedly in possession of the goods purchased. The issue before us is clear on this aspect. 31. The matter before us deals with the non-recovery of the advances given to the brokers. The AO, for the instant year held that the assessee is dealing in speculative transactions and invoked provisions Section 43(5) of the Act. The AO has also held that the assessee has been carrying trade in commodity derivatives. Section 43(5)(e) considers an eligible transaction in respect of trading in commodity derivatives carried out in a recognized association shall not be dee....