2017 (6) TMI 78 - AT - Income Tax

Deduction on account of bad debts written off denied - Assessee s claim rejected in view of the decision of Goetze (India) 2006 (3) TMI 75 - SUPREME Cour - Held that - It was incumbent for the ld CIT(A) to have examine the assessee s claim of the said deduction in appeal in view of grounds raised, and particularly when the relevant material is a part of the records of assessment, as this claim was, put forth before the AO by the assessee in the course of assessment proceeding by virtue of, inter alia, letter dated 7/3/2014. In our considered view, the decision of the Hon ble Apex Court in the case of Goetze (India) (2006 (3) TMI 75 - SUPREME Court ) does not place fetters on appellate authorities to entertain fresh claims put forth by the assessee on issues which are a part of record, and/or are material for the purpose of assessing the correct tax liabiity of an assessee in accordance with law. In coming to this finding we draw support from the ruling of the Hon ble Apex Court in the case of NTPC Ltd. (1996 (12) TMI 7 - SUPREME Court) and CIT Vs. Motor Industries Co. Ltd. (1997 (8) TMI 70 - KARNATAKA High Court). Thus we set aside the impugned order of the ld CIT(A) and after admitting the grounds raised by the assessee on its claim for being allowed write off of bad debts restore the matter to the file of the ld CIT(A) for examination, verification and adjudication on merits after affording both the assessee and the AO adequate opportunity of being heard - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Disallowance of bad debts written off in books of account for Assessment Year 2011-12.

Analysis:
The case involved an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) related to the Assessment Year 2011-12. The assessee, engaged in architectural and engineering consultancy, had filed its return declaring a loss. The dispute arose when the Assessing Officer disallowed the claim for bad debts amounting to a significant sum that was written off in the books of account but not claimed in the original return of income. The Commissioner upheld the disallowance citing a previous court decision. The assessee appealed, arguing that the claim was inadvertently omitted from the return but was raised during assessment proceedings. The Appellate Tribunal noted that the Commissioner summarily dismissed the appeal without considering the merits of the claim, solely relying on the previous court decision. The Tribunal held that the Commissioner should have examined the claim on its merits, especially since the relevant material was part of the assessment records and raised during assessment proceedings. The Tribunal referred to legal precedents allowing fresh claims during proceedings to assess the correct tax liability. Consequently, the Tribunal set aside the Commissioner's order and remanded the matter for further examination and adjudication on merits.

In conclusion, the Appellate Tribunal allowed the assessee's appeal for the Assessment Year 2011-12 for statistical purposes, emphasizing the need for a thorough examination of the claim for bad debts written off in the books of account.