2014 (4) TMI 1002 - AT - Income Tax

Rejection of bad and doubtful debts u/s 36(1)(viia) of the Act Admission of additional ground No materials produced - Held that - Relying upon Goetze (India) Limited Versus Commissioner of Income-Tax 2006 (3) TMI 75 - SUPREME Court - additional claim cannot be made before the AO, as there is no provision under the IT Act to make amendment in the return without filing a revised return - the assessee s additional ground claiming deduction u/s 36 (1)(viia) has been declined only for the reason that there was no materials placed on record there was no opportunity forthcoming to have been granted specifically asking to produce the materials - the factual position as it appears is that the assessee had raised additional ground of relief u/s 36(1)(viia) without any material - Nor the CIT(A) has directed it to produce the same - there seems to be some communication gap in lower appellate proceedings thus, it would be proper to take the paper book filed by the assessee on record comprising of the above said material - the documents have not been examined either by the AO or the CIT(A), the matter is required to be remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues Involved:
1. Disallowance of provision for bad and doubtful debts under section 36(1)(viia).
2. Rejection of additional plea for deduction under section 36(1)(viia) by the CIT(A).
3. Communication gap in lower appellate proceedings regarding additional grounds raised by the assessee.

Analysis:

Issue 1: Disallowance of provision for bad and doubtful debts under section 36(1)(viia)
The assessee's appeal challenged the rejection of a provision of Rs.2,93,09,329 under section 36(1)(viia) for bad and doubtful debts. The CIT(A) disallowed the claim stating that it was not specifically raised in the return of income or during assessment proceedings. The assessee contended that the claim was permissible as per CBDT circular No.14(XI-35) dated 11.04.1955. During the hearing, the assessee submitted various documents to support the claim. The Revenue supported the CIT(A)'s decision, citing lack of material on record. The ITAT Chennai, after considering the arguments, allowed the appeal for statistical purposes and remitted the issue back to the Assessing Officer for a fresh decision.

Issue 2: Rejection of additional plea for deduction under section 36(1)(viia) by the CIT(A)
The assessee raised an additional plea for deduction under section 36(1)(viia) during the appeal, which was dismissed by the CIT(A) on the grounds that it was a new issue raised without any material on record. The CIT(A) referred to previous legal judgments to support the dismissal, emphasizing that the grounds could have been raised earlier. The ITAT Chennai noted a communication gap in the lower appellate proceedings and allowed the appeal, directing the Assessing Officer to re-examine the issue based on the documents submitted by the assessee.

Issue 3: Communication gap in lower appellate proceedings regarding additional grounds raised by the assessee
The ITAT Chennai observed a communication gap in the lower appellate proceedings regarding the additional grounds raised by the assessee for deduction under section 36(1)(viia). The lack of specific direction to produce material led to confusion. In the interest of justice, the ITAT Chennai decided to consider the documents submitted by the assessee and remit the issue back to the Assessing Officer for a fresh decision after providing adequate hearing opportunities.

In conclusion, the ITAT Chennai allowed the appeal for statistical purposes, emphasizing the importance of proper consideration of all relevant materials and providing adequate opportunities for presenting arguments in tax assessment proceedings.