ITO 6(1)(3), MUMBAI vs. BASANTI GOLD P.LTD, MUMBAI

In the aforesaid appeal for Assessment Year 2010-11, the revenue is aggrieved by deletion of addition of Rs.772.92 Lacs by Ld. Commissioner of Income Tax (Appeals)-12, Mumbai vide impugned order dated 07/02/2017. The addition was made while framing an assessment u/s 143(3) r.w.s. 147 on 30/03/2015.

The Ld. DR assailed the impugned order by drawing attention to the findings rendered by Ld. AO in the assessment order. The Ld.AR, on 2 the other hand, drew support from impugned order to submit that the bad debts claim was allowable to the assessee. 3. We find that assessee’s case was reopened since no return of income was filed by the assessee. In response, the assessee filed return of income on 21/01/2014 declaring Nil income. The assessee reflected loss of Rs.26.07 Lacs on turnover of Rs.2533.98 Lacs. The assessee claimed bad debts of Rs.772.92 Lacs in view of the fact that the assessee supplied gold coins valuing at Rs.791 Lacs to certain persons on behalf of an entity namely M/s Godrej Consumer Products Ltd. However, the entity denied having placed any such order with the assessee. The Ld. AO observed that the assessee failed to substantiate the delivery of gold coins. It also transpired that the bad debts claimed by the assessee were actually cash transactions. Accordingly, the bad debt claim was disallowed and added back to the income of the assessee. 4. The Ld. CIT(A), in para-6 of the impugned order, opined that the assessee fulfilled conditions prescribed u/s 36(1)(vii) r.w.s. 36(2) and therefore, the claim was allowable. However, the observations made by Ld. AO were not controverted in the impugned order. 5. We find that the issue has not been clinched in the proper perspective by Ld. CIT(A) and the issue has not been adjudicated by a speaking order. The correct factual matrix was not brought on record and the conclusions in the impugned order were not backed by actual facts. The findings are cryptic one without appreciating the observations of Ld. AO. Therefore, the impugned order, on this issue, is set-aside and the matter is restored back to the file of Ld. CIT(A) for re-adjudication who is directed to appreciate correct factual matrix as well as the observations of Ld. AO in the assessment order.