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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY, & SHRI G. PAVAN KUMAR
आदेश / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER:
This appeal is filed by the assessee aggrieved by the order of the Ld. Commissioner of Income Tax (Appeals) in dated 29.06.2016 passed u/s. 250(6) r.w.s. 143(3) of the Act.
The assessee has raised several grounds in its appeal; however the cruxes of the issues are as under: i. The Ld. CIT(A) has erred in upholding the order of the Ld. AO
who had disallowed the interest expenditure of Rs.5 lakhs allowable u/s.36(1)(iii) of the Act by holding that the assessee was not able to substantiate the expenditure. ii. The Ld. CIT(A) has erred in upholding the order of the Ld. AO who had disallowed the claim of bad debts of Rs.1,01,97,930/- by stating that the assessee was not able to establish that the debts were offered as revenue receipts during the earlier assessment years.
Since the Ld. AR did not press the first ground raised in the appeal with respect to disallowance of interest of Rs.5 lakhs, the first concise ground stated herein above is dismissed as not pressed.
The brief facts of the case are that the assessee is a private limited company engaged in the business of warehousing, filed its return of income on 29.08.2013 for the assessment year 2010-11 pursuant to notice issued u/s.148 dated 11.07.2013.
Subsequently, the assessment was completed u/s. 143(3) r.w.s., Section 147 & 148 of the Act vide order dated 31.03.2015, wherein the Ld. AO disallowed a sum of Rs.5 lakhs claimed u/s. 36(1)(iii) of the Act towards interest expenditure and Rs.1,01,97,930/- claimed as bad debts.
During the course of assessment proceedings it was observed by the Ld. AO that the assessee had debited its P&L account with a sum of Rs.1,01,97,930/- towards bad debts. On query the assessee stated that the amount was recoverable from the following persons:
R. Prabhakaran Rs.19,34,069.00 Siva. D Rs.75,68,159.00 Southern Railway Rs. 2,62,478.00 UB Engineering Pvt. Ltd. Rs. 4,33,224.40 Total Rs.1,01,97,930.40
However, the Ld. AR after examining the ledger extracts arrived at a conclusion that the assessee could not establish as to in which assessment year these amounts have been offered as revenue receipts. Therefore the Ld. AO disallowed the claim of bad debts made by the assessee for Rs.1,01,97,930/- in its return of income.
On appeal, the Ld. CIT(A) also observed that the assessee was unable to ascertain as to in which assessment year the amount claimed as bad debts was treated as revenue receipts of the assessee. Hence, he upheld the order of the Ld. AO.
Before us the Ld. AR submitted a paper book containing 1 to 329 pages to establish that the assessee had treated the bad debts claimed during the relevant assessment year as revenue receipt during the earlier assessment years. The Ld. DR strongly opposed to the submission of the Ld. AR and pointed out that at this appellate stage it would not be possible to verify the claim of the assessee. Hence he pleaded that the appeal of the assessee may be dismissed.
We have heard the rival submissions and carefully perused the materials available on record. Though the assessee submitted a paper book containing 329 pages, it is not be possible for this bench to verify the claim of the assessee. Therefore in the interest of justice we hereby remit back the matter to the file of Ld. AO in order to verify whether the assessee had treated the bad debts claimed and written off in the books of accounts during the relevant assessment year as revenue receipt in any of the earlier assessment years, and if found so allow the claim of bad debt, otherwise pass appropriate order as per merit and law. We also hereby direct the Ld. AO to accept any additional evidence furnished by the assessee during the remand proceedings. We also direct the assessee to co-operate with the Revenue in its proceedings failing which the Ld. Revenue authorities shall be at liberty to pass appropriate orders as per law and merits based on the materials available on record.
In the result appeal of the assessee is partly allowed for statistical purposes as indicated herein above.
Order pronounced on 17th March, 2017 at Chennai.