2009 (5) TMI 842 - AT - Income Tax

Additional claim for clerical/ arithmetical error occurred in the return filed by the assessee - deduction for bad debts - business of manufacturing and marketing of bulk drugs formulations - AO initially processed the return u/s 143(1) and thereafter completed the assessment u/s 143(3) - AO rejected the claim - CIT(A) also rejected the claim of the assessee relying on the Supreme Court's decision in the case of Goetze (India) Ltd. v. CIT 2006 (3) TMI 75 - SUPREME COURT by observing that the assessee had to file a separate revised return of income to make such a claim - assessee not only made the claim for allowance of additional amount but has also an application under rule 29 for admission of additional evidence. During the course of assessment proceedings on July 10, 2006, submitted that the correct claim and the wrong claim was due to the fact that the figure was taken net of the provisions - an amount has been used against the provision for bad debts made during the financial year 2001-02 and been written back - said provision has been reversed on account of which the bad debt figure has come down but whereas, the correct figure of bad debt claimed. HELD THAT - We hold that the decision of the hon'ble Supreme Court in the case of Goetze (India) Ltd. makes it clear that the powers of the Tribunal as laid down in the case of National Thermal Power Co. Ltd. v. CIT 1996 (12) TMI 7 - SUPREME COURT are not affected by this decision. Thus, the Tribunal has the power to admit an additional ground or claim made by the assessee, when all the facts are on record. In this case, the facts have been brought on record before AO by the assessee in the letter itself. Thus, as the facts are on record, we admit this claim of the assessee made before us by applying the ratio of the decision of the hon'ble Supreme Court in the cases of National Thermal Power Co. Ltd. v. CIT as well as case of Jute Corporation of India Ltd. v. CIT. 1990 (9) TMI 6 - SUPREME COURT .Thus, alternative argument of the assessee is allowed. As neither AO nor CIT(A), had considered the issue on the merits, we set aside the issue to the files of AO for fresh adjudication. AO shall consider the additional claim of the assessee for deduction of bad debts which has been admitted by us and dispose of the same denovo after giving reasonable adequate opportunity. In the result, appeal of the assessee is allowed for statistical purposes.

Summary

The Appellate Tribunal ITAT MUMBAI delivered an order regarding an appeal by the assessee against the Commissioner of Income-tax (Appeals) for the assessment year 2004-05. The assessee, involved in manufacturing and marketing bulk drugs formulations, initially declared a total income of Rs. 24,57,20,103. The Assessing Officer later assessed the total income at Rs. 24,73,96,400. The assessee claimed a deduction for bad debts due to a clerical error in the return. Both the Assessing Officer and the Commissioner of Income-tax (Appeals) rejected this claim, citing the need for a revised return to make such a claim.

During the appeal, the sssessee's counsel argued that recent decisions by the Tribunal and Punjab and Haryana High Court allowed claims made by way of a letter during assessment proceedings, even without a revised return. The counsel also referred to various decisions supporting the Assessing Officer's duty to allow deductions suo motu. The counsel further sought to make a fresh claim before the Tribunal, emphasizing that the Supreme Court's decision in Goetze (India) Ltd. did not limit the Tribunal's power to admit additional claims.

The Tribunal, after considering all arguments and case law presented, held that the Tribunal's powers were not restricted by the Goetze decision and admitted the assessee's additional claim. The case was remanded to the Assessing Officer for fresh adjudication on the merits of the deduction claim. The appeal was allowed for statistical purposes. The order was pronounced on May 14, 2009.