9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (6) TMI 190 - AT - Income TaxDisallowance of bad debt - as per assessee claim of bad debt for the A.Y. 2011-12 has been allowed in similar fact and circumstances - onus to prove - HELD THAT - The assessee does not have any direct evidence in support of his contention that these bad debts were offered to tax in the respective assessment years, but the circumstantial evidences in the form of audited financial statements cannot be neglected wherein the assessee has classified such bad debts as the debtors. In this connection we draw support and guidance from the judgment of the Hon ble Supreme Court in the case of Sumati Dayal vs. CIT 1995 (3) TMI 3 - SUPREME COURT We are also not oblivion to the fact that the assessee has shown such bad debts as debtors in the assessment years 2006-07 and 2007-08 which was subject to the assessment under section 143 (3) of the Act and the revenue has accepted the same. Further the learned CIT (A) had allowed the claim of Bad debt for A.Y. 2011-12 with regard to debt pertaining to similar period. In view of the above and after considering the circumstantial evidences, we hold that such bad debts were offered to tax. Accordingly the assessee is entitled for the deduction under section 36 of the Act. Hence the ground of appeal of the assessee is allowed. Nature of land sold - agricultural land v/s capital asset - HELD THAT - It is the settled law that there cannot be any kind of income tax on the sale of the agricultural land. As such the income of the assessee is exempted from the tax on the sale of the agricultural land. However the onus is on the assessee to prove that the land is agricultural in nature within the meaning of the provisions of section 2(14) of the Act. However we find that the necessary details are not arising from the order of the authorities below. Accordingly, we restore the impugned issue to the file of the AO for fresh adjudication as per the provisions of law. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI
Issues Involved:
1. Disallowance of bad debts. 2. Classification of land as agricultural land for tax exemption. Issue-wise Detailed Analysis: 1. Disallowance of Bad Debts: The primary issue raised by the assessee was the disallowance of bad debts amounting to ?6,75,359/- for the Assessment Year (A.Y.) 2012-13. The assessee argued that similar bad debt claims were allowed in the A.Y. 2011-12 under identical circumstances. The assessee, proprietor of M/s V.G. Automobile, claimed a total bad debt deduction of ?39,16,563/-, out of which ?6,75,359/- pertained to Financial Years (F.Y.) 1999-2000 and 2000-2001. The Assessing Officer (AO) disallowed this portion as the assessee failed to prove that the bad debt was offered to tax in earlier years due to the lack of ledger accounts from those years. The assessee contended before the Commissioner of Income Tax (Appeals) [CIT(A)] that the bad debts were genuine and supported by audited accounts, and similar deductions were allowed in previous years. The CIT(A) upheld the AO's decision, stating that the burden of proof lies on the assessee to justify the claim, and mere listing of debtors is insufficient without documentary evidence. Upon appeal, the Tribunal noted that although the assessee failed to produce direct evidence, the circumstantial evidence in the form of audited financial statements indicated that the bad debts were classified as sundry debtors, implying they were offered to tax in the relevant years. The Tribunal referenced the Supreme Court's judgment in Sumati Dayal vs. CIT, emphasizing the importance of considering circumstantial evidence and human probabilities. Consequently, the Tribunal allowed the assessee's claim for bad debts, reversing the CIT(A)'s decision. For subsequent years (A.Y. 2013-14 and A.Y. 2014-15), the Tribunal followed the same reasoning and allowed the bad debt claims of ?6,59,939/- and ?4,13,212/-, respectively. 2. Classification of Land as Agricultural Land: The additional issue for A.Y. 2013-14 involved the classification of land sold by the assessee as agricultural land, which would exempt the income from tax. The Tribunal admitted this additional ground based on the Supreme Court's judgment in NTPC Ltd vs. CIT, which allows legal issues to be raised at any stage. The Tribunal acknowledged that the onus is on the assessee to prove the agricultural nature of the land under section 2(14) of the Income Tax Act. However, due to the lack of necessary details in the orders of the authorities below, the Tribunal remanded the issue back to the AO for fresh adjudication as per the law. Conclusion: The Tribunal allowed the appeals concerning the disallowance of bad debts for A.Y. 2012-13, 2013-14, and 2014-15, and remanded the issue of the classification of land for A.Y. 2013-14 back to the AO for further examination. The Tribunal also noted the exceptional circumstances due to the COVID-19 pandemic, which justified the delay in pronouncing the order beyond the standard 90-day period.
|
