2003 (8) TMI 195 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the revised return filed by the assessee.
2. Allowability of the claim of bad debt.
3. Alternative plea regarding deduction under section 80HHC.
4. Disallowance of training expenses incurred on Mr. Afaq Husain.

Detailed Analysis:

1. Validity of the Revised Return:
The assessee filed a revised return on 21-2-1994, which showed a net profit of Rs. 9,36,991, significantly lower than the original return due to a claimed bad debt. The Assessing Officer (AO) rejected this revised return, stating it was filed beyond the time prescribed under section 139(5) of the Income-tax Act, 1961, and was not filed voluntarily. The CIT(A) upheld this decision, noting that a return filed under section 148 cannot be revised under section 139(5). The Tribunal agreed with the AO and CIT(A), reiterating that the revised return was not valid as it was filed after the permissible period and was not a bona fide act.

2. Allowability of the Claim of Bad Debt:
The AO examined the claim of bad debt and concluded that the debt became bad in the assessment year 1992-93, not in 1991-92. The AO noted that the assessee became aware of the irrecoverability of the debt from M/s. J.V. Finn, U.K., only in 1993. The CIT(A) agreed, stating that the accounting standards permitting reopening of closed accounts are not binding on the AO. The Tribunal upheld this view, emphasizing that the debt should have been written off in the year it became bad, which was 1992-93. The Tribunal also noted that the assessee's actions indicated a mala fide intention to reduce the net profit for the year under consideration.

3. Alternative Plea Regarding Deduction Under Section 80HHC:
The assessee argued that if the bad debt claim was not allowed, the amount should be excluded from the total turnover for computing the deduction under section 80HHC. The Tribunal noted that this plea was not raised before the AO or CIT(A) and was not specifically raised as an additional ground before the Tribunal. Therefore, the Tribunal did not entertain this plea, suggesting the assessee seek redressal at a proper forum.

4. Disallowance of Training Expenses:
The assessee claimed Rs. 1,19,300 as training expenses for Mr. Afaq Husain. The AO and CIT(A) disallowed this claim, noting that Mr. Afaq Husain was neither a partner nor an employee of the firm and there was no evidence that the training was exclusively for business purposes. The Tribunal upheld this disallowance, stating that no evidence was provided to show that Mr. Afaq Husain rendered any services to the firm after the training.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the decisions of the AO and CIT(A) on all grounds. The revised return was deemed invalid; the bad debt claim was disallowed as it pertained to a different assessment year, and the training expenses were not substantiated as business expenses. The alternative plea regarding section 80HHC was not entertained due to procedural reasons.