KRANT NARAIN AGNANI,MUMBAI vs. ACIT 4(3), MUMBAI

The appellant has raised the following grounds:- “a) The Ld. CIT Appeals has erred in law and in facts by confirming the additions of bad debts for Rs.1,50,313/- were as per the law and as per the various citation relied upon and stated in the appellate order may writing of the bad debts Assessment Year: 2004-05 was sufficient compliance for 36(1)(7). The appellant craves leave to move separate application to take additional evidence on record under Rule 29 of the Income Tax Appellate Tribunal Rules 1963 relying on the public documents of public records of the National Stock Exchange. b) The Ld. CIT Appeal has erred in law and in facts by confirming the addition of an application software which was nothing but a back office accounting software and which has life span below two years and it was a revenue expenditure squarely covered in the judgment of Amway India Enterprises reported in 114 TTJ 476 Delhi special bench and hence it has to be treated as a revenue expenditure. The ground with the Ld. CIT is totally mislaid and the judgement relied upon by the Ld. CIT is not at all applicable to the facts of the case. c) The Ld. CIT Appeals has erred in law and in facts by disallowing the computer expenses as which is much more detailed out in para 1.31 without appreciating the facts that these were purchased to replace the original monitors etc. or which the full computer unit was based and formed and the replacement cost is a revenue expenditure. The appellant will crave to refer and rely upon the various judgements during the time of hearing. d) The learned assessing officer has erred in law and infact by taking into the consideration the market value of the property as per the stamp office valuation without considering the encumbrances related to the property in question. e) The appellant disputes the total tax liability.”

Under this issue the assessee has challenged the confirmation of addition of bad debts of Rs.1,50,313/-. According, to the finding of the Assessing Officer he added the said bad debts in the income of the assessee on the ground that the Assessing Officer issued the notice to Dr.D.B.Lohana against whom an amount of Rs.1,25,313/- was outstanding. The Assessing Officer issued the notice to him who denied the outstanding amount. Therefore, the said bad debts was added to the income of the assessee. Accordingly, the Assessing Officer also issued the notice to Shri Manish Joshi against whom an amount of Rs.25,000/- was outstanding. The notice returned unserved, no new address was given, therefore, the said income was also added to the income of the assessee. The said addition was confirmed by (CIT(A)). The learned representative of the assessee moved an application for admission of additional evidence saying therein that the accounts of the assessee were not perused while confirming the addition of the amount due against Dr. D.B.Lohana and the police compliant was not produced before the Assessing Officer. The assessee has also attached the copy of the ledger with the application wherein it seems that the amount has been paid 3 Assessment Year: 2004-05 through cheque. The transactions were continuing further in the accounts up to the year 2005-06. It is not in dispute that while rejecting the claim of the assessee the ledger accounts were not examined by the Assessing Officer. So far as the outstanding debt with regard to Shri Manish Joshi is concerned the claim of the bad debts has been declined merely on the facts that Shri Manish Joshi was not residing at the given address however, no new address was remitted and no accounts books of the assessee was examined. Anyhow the Assessing Officer did not examine this issue properly. The account of the assessee and police complaint etc. were not properly examined before declining the claim of the assessee. The application for additional evidence accompanied by the relevant documents seems relevant for the proper adjudication of the case and is required to be examined to achieve the justice and to decide this issue properly. Therefore, in the said circumstances we admit the application of additional evidence on this issue and direct the Assessing Officer to re-examine this issue in view of the evidence adduced by the assessee by giving him an opportunity of being heard. Accordingly this issue has been decided in favour of the assessee.

According to these issues the assessee has challenged the confirmation of computer expenses which has been treated by the Assessing Officer as capital in nature. The assessee moved an application for admission of additional evidence by which he wanted to adduce the purchase certificates from Comptek Software Services Ltd. certifying that the applicant purchased derivatives back office 4 Assessment Year: 2004-05 accounting software by claiming that this certificates and bills would be necessary to decide the matter of controversy in the interest of justice. It is also argued that the computer expenses are revenue in nature and are liable to be treated accordingly in the interest of justice. In support of this contention the learned representative of the assessee has placed reliance on the law settled in Tek Ram (Dead) Through LRs Vs. Commissioner of Income Tax, Supreme Court of India [2013] 93 DTR (SC) 350. Since the bills and the certificates issued by the Comptek Software Services are on record which were not considered at the time of deciding the issue by the Assessing Officer. Therefore, in view of the said circumstances and by relying upon the law mentioned above we admit the present application for additional evidence and direct the Assessing Officer to decide the issue afresh in the light of the above said additional evidence by giving an opportunity of being heard to the assessee. Accordingly, these issues are decided in favour of assessee against the revenue.

Under this issue the assessee has challenged the consideration of the market value of the property as per the Stamp Office Valuation whereas the market value of the property in question was not considered. However, this issue has not challenged before the CIT(A). The contention of the assessee is that the assessee has got the sufficient material with him on record to show that the stamp valuation of the shop sold is not reflecting the correct price. Therefore, he wanted to challenge the said addition of the Long Term Capital Gain before the 5 Assessment Year: 2004-05 CIT(A). The learned representative of the assessee has argued that no doubt this ground has not challenged before the CIT(A) but the assessee can challenge this ground on the basis of the settled principle of law as held in 349, ITR 336 CIT vs. Pruthvi Brokers & Shareholders Pvt. Ltd (Bombay High Court) para 23 of this judgment is hereby reproduced below: - “23. It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254.” In case titled as Tek Ram (Dead) Through LRs Vs. Commissioner of Income Tax, Supreme Court of India [2013] 93 DTR (SC) 350. The documents were first time produced before the Hon’ble Supreme Court which were accepted and the Hon’ble Supreme Court remanded the case to the High Court to consider the new evidence and decide the matter afresh in accordance with law. In view of the said law we are of the view that the assessee can raise the ground which he has not challenged before the CIT(A), therefore the contention of the assessee has been accepted on this ground. In view of the said circumstances the assessee wanted to adduce some evidence before Assessing Officer such as 6 Assessment Year: 2004-05 Valuation report, comparable registration etc. which were not produced earlier before the Assessing Officer while deciding this issue, therefore, we are of the view that this issue is required to be again adjudicated afresh in view of the additional evidence by giving an opportunity of being heard to the assessee. We remit this issue before Assessing Officer to decide this issue afresh in view of the observations made above and in accordance with law.

In the result, the appeal of the Assessee is hereby allowed.