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Facts
The Revenue appealed against the CIT(A)'s order deleting a disallowance of Rs. 71,03,572/- out of a total bad debt disallowance of Rs. 7,58,74,347/- for Assessment Year 2011-12. The appeal challenged whether the assessee had discharged its onus for the bad debt claim and if the CIT(A) was justified in admitting additional evidence.
Held
The tribunal dismissed the Revenue's appeal, noting that the computed tax effect of the disputed amount, Rs. 23,59,629/-, was below the Rs. 60 lakh monetary limit specified by CBDT circulars for filing appeals. The dismissal includes a rider allowing for restoration if the case falls under exceptions to low tax effect appeals or for other valid reasons.
Key Issues
Whether the CIT(A) was legally justified in deleting the bad debt disallowance of Rs.71,03,572/- under Section 36(1)(vii) and admitting additional evidence under Rule 46A, especially when the assessee had not discharged its onus for the bad debt claim.
Sections Cited
Section 36(1)(vii) of the Income Tax Act, 1961, Section 36(a) of the Income Tax Act, 1961, Rule 46A of the Income Tax Rules, 1962
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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI MAHAVIR SINGH & SHRI BRAJESH KUMAR SINGH
PER BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER
This appeal by the Revenue is directed against the order of the Ld. CIT(Appeals)-33, New Delhi, dated 15.11.2016 pertaining to Assessment Year 2011-12.
Grounds of appeal raised by the Department are as under:-
1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs.71,03,752/- out of total disallowance of bad debt of Rs.7,58,74,347/- even when the assessee had not 36(1)(vii) r.w.s. 36(a) of the Income Tax Act 1961 (the Act)? 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs.71,03,572/- out of total disallowance of bad debt of Rs.7,58,74,347/- u/s 36(1)(vii) of the Act ignoring the fact that the assessee had not furnished any evidence either before the AO or CIT(A) that bad debts of Rs.71,03,572/- were actually written off in the books of accounts? 3. Whether in facts and circumstances of the case and in law, the Ld. CIT(A) is legally justified in admitting additional evidence under Rule 46A of the Income Tax Rules 1962 (the Rule) even when the case of the assessee did not fall in clause (a) to (D) of Rule 46A of the Rule? 2.1. During the course of hearing, the Ld. AR submitted a computation of tax effect in respect of the disputed amount of Rs.71,03,572/- as under:-
Particulars Reference Amount (in INR) Returned Loss (-)3,04,13,254 Assessed Loss (-)2,95,52,230
Disputed addition (A) 71,03,572 Tax @30% (B=30%*A) 21,31,072 Surcharge @7.5% (C=7.5%*B) 1,59,830 Cess @ 3% [D=3%*(B+C) 68,727 Notional Tax Effect on (E=B+C+D) 23,59,629 Disputed Addition 2.2. On perusal of the above computation of the tax effect and grounds, it was noticed that in the appeal filed by the Revenue, admittedly, has a tax less than Rs.60 lakhs and the same falls into the category of low tax effect appeals after the enhanced monetary limits of Rs.60 lacs, for which the appeal is to be filed by the Department before this Tribunal, as laid down by the CBDT vide Circular Nos.5/2024 dated 15.03.2024 and 09/2024 dated 17.09.2024. The Ld. DR did not controvert to the above fact.
3 In the light of the aforesaid, the appeal of the Revenue is dismissed being a low tax effect appeal with a rider that in case the issue falls in the category of exceptions to the low tax effect appeals or if there is any valid reason, the Department shall be entitled for restoration of the appeal.
In the result, the appeal filed by the department is dismissed.
Order pronounced in the open court on 11/11/2024.