2011 (3) TMI 1553 - AT - Income Tax

Summary

Issues involved:
The judgment involves the disallowance of sundry balances and bad debts written off by the assessee company for the assessment year 2002-03.

Sundry Balances Disallowance:
The assessee claimed a deduction under section 37(1) of the IT Act for sundry balances written off. The AO requested details from the assessee, including addresses of parties, board resolution, and recovery actions. The assessee provided details of parties and explained that balances were brought forward. However, the AO disallowed the claim citing lack of evidence and doubts about the genuineness of transactions. The CIT(A) upheld the disallowance, emphasizing the lack of evidence. The tribunal dismissed the appeal, stating that the assessee failed to substantiate its claim, citing the burden of proof on the assessee.

Bad Debts Disallowance:
The assessee wrote off bad debts amounting to a significant sum. The AO sought evidence, including party addresses, board resolution, and bill-wise details. The AO disallowed the claim due to lack of board resolution during the relevant year, absence of RBI permission for foreign debts, and failure to file a lawsuit. The CIT(A) upheld the disallowance. The assessee argued citing relevant court decisions and a board resolution authorizing the write-off. The tribunal allowed the appeal, considering the Supreme Court judgment and the assessee's compliance with documentation requirements.

In conclusion, the tribunal partly allowed the assessee's appeal concerning the bad debts disallowance, emphasizing compliance with documentation and legal provisions.