ITO, NEW DELHI vs. M/S. ETHIK ENTERPRISES PVT. LTD., NEW DELHI

The Revenue has filed this appeal against the order of the CIT(A)-XIII, New Delhi dated 23.1.2012 passed in the first appeal No. 249/2011-12 for asstt. year 2009-10.

The grounds raised by the Revenue read as under :-

Apropos ground No. 1, we have heard arguments of both the sides and carefully perused the relevant materials placed on record. The Ld. DR contended that CIT(A) was not correct in deleting the addition of Rs. 25 lacs made by the AO in respect of share application money when the assessee has failed to submit PAN of the applicant as well as copy of bank account statement and specially when the creditworthiness and genuineness of the transaction remain unverified. The Ld. Assessee’s representative (AR) replied that the assessee discharged its onus by way of filing all relevant documents before the AO and CIT(A) alongwith copy of PAN, statement of bank account of assessee and all details to establish creditworthiness and genuineness of the share transaction. 2 Thus the CIT(A) was quite justified in deleting the baseless addition.

On careful consideration of above the statement of facts submitted by the AO alongwith Form No. 36 it is noticed that at page 1 last para it has been stated that during the appellate proceedings the AR of the assessee brought to the notice the relevant pages at paper book wherein relevant confirmation of the shareholder, copy of PAN, copy of statement of income, copy of details, certificate of shareholder are available. Thus we are not in agreement of the contention of the Ld. DR that the assessee did not submit said documents during assessment proceedings. Said documents have not been disputed by the AO. Thus the CIT(A) rightly observed and concluded in the last part of para 3 at page 12 of the impugned order that the assessee had filed confirmations of the shareholders, copy of PAN, copy of the statement of income, copy of details, certificate of shareholder etc. and the AO has not made any enquiry in this regard to doubt or allege genuineness and creditworthiness of the share applicants and proceeded to make additions. The conclusion drawn by the CIT(A) also gets support from the decision of Hon’ble High Court of Delhi in the case of Lovely Exports (P) Ltd. 239 ITR 268 (Delhi). We are unable to see any valid reason to interfere with the impugned first appellate order on this issue. Thus we uphold the same.

Apropos ground No. 2 the Ld. DR contended that the CIT(A) has grossly erred in deleting the addition made by the AO on account of bed debts written off. He also drew our attention to operative para at page 5-6 of the assessment order and contended that in absence of any justification and explanation amount shown as irrecoverable from M/s. ETA Engineers (India) P. Ltd. was rightly added to the income of the assessee. The Ld. AR replied that as per latest circular No. 12/2016 dated 30.5.2016 if it is written off as irrecoverable in the books of accounts of the assessee for that previous year.

It fulfills the condition stipulated in the Sub Section (2) of the Section 36 of the Act and in the appeal already filed by the Revenue this issue before various courts/Tribunal may be withdrawn or not pressed upon.

In view of the facts of the present case, the CIT(A) deleted the addition made by the AO relying upon the decision of Hon’ble Supreme Court in the case of YRT Ltd. vs. CIT 323 ITR 397 (SC) and CIT vs. Morgan Securities and Credits Pvt. Ltd. 292 ITR 339 (Del) wherein it was held that under the amended provisions of the Act, the assessee is not required to establish that the debts has become bad and if the assessee has written off the debts in the books of accounts and has claimed deduction. Then the same should be allowed to him. This view has been reiterated in the CBDT Circular (supra). Thus we are unable to see any valid reason to interfere with the impugned order in this regard. Thus we uphold the same. Accordingly ground No. 2 of the Revenue is also dismissed.