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TMI Blog2011 (12) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... rectifying the said mistake apparent on the face of record, which is nothing more than a mistake of fact and even if it is construed to be a mistake of law, it is apparent mistake of law, which would also fall within the scope of rectifiable mistake under s. 254(2) - Petition is allowed - Writ Petn. No. 8428 of 2010 - - - Dated:- 19-12-2011 - Vineet Kothari, J. Anurag Kalavatiya for Sanjay Jhanwar and Arun Bhansali for the Petitioner K.K. Bissa for the Respondent ORDER Vineet Kothari, J:- 1. The petitioner-assessee has filed this writ petition before this Court aggrieved by the order Annex. 1 dt. 27th April, 2010 passed by Tribunal, Jodhpur rejecting its MA No. 22/Jd/2009 in ITA No. 929/Jd/2007 for asst. yr. 1999-2000 filed by the assessee under s. 254(2) of the IT Act, 1961 (for short, hereinafter referred to as 'Act'). 2. For the asst. yr. 1999-2000, the assessee claimed deduction of Rs. 2,29,70,959 on account of bad advances written off to the extent of Rs. 1,82,89,333 and bad debts written off to the extent of Rs. 46,81,625.88. The assessing authority vide his assessment order Annex. 3 dt. 26th Dec., 2006 disallowed the said deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of efforts/steps taken for the recovery of alleged advances. Advances to the tune of Rs. 60,12,792 shown in respect of concerns belonging to Rajendra Porwal Group has been proved as entry provider and advances to the tune of Rs. 67,20,000 have been shown in respect of concerns which are not traceable. Reiterating the same facts and reasoning in the case of advance for raw material, the AO disallowed Rs. 2,29,70,959 and added to total income of the assessee. 13. The learned CIT(A), by considering the appeal of the assessee found that the advance for raw material has been given in accounting years 1993-94, 1994-95, 1996-97 and 1997-98, advances for consumable in accounting year 1996-97, advance for professional fees paid in the accounting year 1997-98, cancellation, visa and miscellaneous in accounting year 1993-94, advance against energy consumption to Tamil Nadu Electricity Board in 1993-94, advances in cases of sundry debtors persons in accounting years 1993-94, 1994-95, 1996-97 and 1997-98. Hire charges received in accounting year 1995-96, sale of advance licences in 1995-96. Advances to M/s Jalkanta Technical and Financial Services (P) Ltd., M/s Anu Construction and M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-IC while computing tax on income in the hands of the assessee. Thus concluding, he found that the disallowance made by the AO is not sustainable and accordingly he allowed the claim of the assessee directing the AO to delete the same. Aggrieved by that, this appeal is filed by the Department contending inter alia that the observation of the learned CIT(A) that all these are pertaining to advances made by the assessee and that too for a very very long time back to the period under consideration of 10 years when the Department has not objected to the period in which they were made or till the present period under consideration cannot be taken into account for the simple reason that when the advances were made the Department need not examine the same as the assessee will not claim an allowable expenditure during these periods. But at the same time, during the period under consideration as the Department can examine the sustainability of advance sought by the assessee and at the same time the Department has also to see whether the assessee has proved that all these are related to the business activities carried on by the assessee. If the AO is satisfied with the above ingredients, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the ingredients required for claiming the deduction in question, is not entitled for the same. [Amendment in law w.e.f. ast April, 1989 not even considered by Tribunal even though the same was taken into account by CIT(A)]. Therefore, in this view of the matter as the learned CIT(A) rested his decision on the basis of unreasonable findings we find that the learned CIT(A)'s order in directing the deletion of disallowance made by the AO is not sustainable for legal scrutiny. Hence we set aside the same by holding that the assessee having not proved the claim made by it as required under law, is not entitled for the same. Accordingly, the issue is answered in favour of the Department by accepting the ground in appeal raised by it." 3. The learned Tribunal held that such bad advances or bad debts could not be claimed as deduction since the assessee has failed to establish primarily that such advances are related and having a nexus to the business carried out by it and also while computing the income for the period when they were given and that these transactions were taken into account while computing the profit chargeable to tax. Both the ingredients were not satisfied by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Tribunal and the Tribunal again erred in rejecting said miscellaneous application by the impugned order Annex. 1 dt. 27th April, 2010. He, therefore, submitted that the writ petition deserves to be allowed and the impugned order Annex. 1 dt. 27th April, 2010 deserves to be quashed. 8. Further elaborating the submissions, learned counsel for the petitioner submitted that even the assessing authority was not justified in rejecting the said claim of bad advances and bad debts on the ground that the said advances were partly made to concerns of one Rajendra Porwal Group against whom upon search operation carried out under s. 132 of the Act, the said assessee purportedly admitted before the Revenue authorities that he was merely a name-lender and gave accommodation entries in various names in his books of accounts. Learned counsel for the assessee urged that even if one goes by assessing authority's premise, though he denied that such a course was permissible in law, the assessee's case in the present, was absolutely reverse and the assessee had not taken any advances from any such alleged name lender of the said Rajendra Porwal group but on the contrary had made business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee can file an appeal under s. 260A of the Act against the said order and in view of such availability of alternative remedy to the petitioner-assessee, the present writ petition cannot be maintained. He also relied upon paras 36 and 37 of the judgment rendered by Co-ordinate Bench of this Court in the case of Apex Metchem (P) Ltd. vs. ITAT and Ors. (2009) 224 CTR (Raj) 488 : (2009) 26 DTR (Raj) 1 : (2009) 318 ITR 48 (Raj). 10. I have heard learned counsel for the parties at length and given my thoughtful consideration to the submissions made at the Bar and judgments relied upon by the learned counsel for the assessee. 11. The last contention of the learned counsel for the Revenue may be dealt with first. The contention that appeal would have lied before this Court under s. 260A of the Act against the order passed under s. 254(2) of the Act, by which the miscellaneous application for rectification was rejected by the Tribunal, is not correct in law. The said order does not decide the rights of the parties finally at the hands of the Tribunal; and it is only for substantial questions of law arising out of any order of the Tribunal under s. 254(1) of the Act that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances/bad debts under s. 36(1)(vii) of the Act, after its amendment w.e.f. ast April, 1989, the position of law seems to have been settled by the apex Court in the case of T.R.F. Ltd. vs. CIT (2010) 230 CTR (SC) 14 :(2010) 35 DTR (SC) 156 : (2010) 323 ITR 397 (SC) wherein the Hon'ble the Chief Justice of India for the Bench held as under:- "4. This position in law is well-settled. After ast April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has became irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. However, in the present case, the AO has not examined whether the debt has, in fact, been written off in accounts of the assessee. When bad debt occurs, the bad debt account is debited and the customer's account is credited, thus closing the account of the customer. In the case of companies, the provision is deducted from sundry debtors. As stated above, the AO has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the AO. Hence, the matter is remitted to the AO for de novo consideration of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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