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TMI Blog2012 (12) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness of the papers, but did not afford an opportunity to the assessee to rebut his conclusions. As FAA should have confronted the assessee with his above findings & as the AO had no occasion to go through the paper, so, in the interest of justice,the matter remitted back to the file of the AO. Disallowance of Bad Debts – Held that:- Once assessee writes off the bad debts in his Books of Accounts he has to prove nothing - as decided in T.R.F. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee - Appeal of the assessee stands partly Allowed. - ITA No. 2261/Mum/2007 - - - Dated:- 13-6-2012 - SHRI D.K. AGARWAL, AND SHRI RAJENDRA, JJ. Assessee by : Shri Pramod Kumar Parida Mrs. Sanjukta Chowdhury Revenue by : Shri Sandeep Goyal, DR ORDER PER RAJENDRA, A.M. Out of 8 Grounds of Appeal filed by the assessee, four grounds ( i.e.1,2,7 and 8) were not pressed by the Authorised Representative (AR) before us. So, there are four effective Grounds and they read as under: On the facts and in the circumstances of the case and in law, the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n claim Rs.35,45,632/- d) Bad debts Rs.30,57,943/- 2. After considering the reply filed by the assessee, AO decided various issues. With regard to 43B claim he held as under: The assessee was trying to explain the salaries of certain categories of staff were held back till the time payments for sales were actually received. It is noted in the assessee s cases that such salaries are due and payable. The thrust of argument is that even though the same are due, it is payable on a later stage. Unfortunately, for the assessee, section 43B does not permit to defer any payment in the way the assessee would prefer to pay. If the salary is payable, the PF contribution is due and the same is payable as stipulated under the relevant provisions. The provision of section is unambiguous and there is no scope for interpretation. When that is so, the assessee cannot try to read something more than what is written in the provisions and try to widen its scope. In view of these facts, the assessee s contention in this regard is rejected and the amount of Rs.26,581/- is being added while computing the taxable income as provided u/s. 43B of the Act . 2.1. CIT(A) confirmed the order of the AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Before us, AR submitted that none of the suppliers were related to the assessee, that payments were made by cheques only in earlier and subsequent years expenses under the same head were allowed by the AO while passing orders U/s. 143(3) of the Act, that gifts were the customary gifts given on festivals like Diwali and New Year etc. He relied upon pg. 30 and 36 of the Paper Book He referred to cases of Avon Cycles Ltd.(303 ITR345) and Picker India Ltd.(22SOT504)to support his arguments that the expenditure incurred was wholly and exclusively for carrying out business. DR referring to the order of the CIT(A) submitted that evidences about expenditure were not available. 3.2. After hearing the rival submissions, we find that disallowance has been made by the AO invoking explanation to Sec. 37 of the Act, whereas First Appellate Authority (FAA) has held that documents produced before him were not reliable. He was also of the view that AO did not have opportunity to look into the matter. As per the FAA, documents produced by the appellant lacked reliability. It is found that he did not confront the assessee with his findings. There is no doubt that FAA has power coterminous with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the material, we are of the opinion that matter needs to be re-adjudicated. Though AR has claimed that necessary evidences were produced, yet from the order of the AO, it is clear that factum of rendering of service was not established. FAA has doubted the genuineness of the papers, but did not afford an opportunity to the assessee to rebut his conclusions. As held in para 3.2 and 3.3, FAA should have confronted the assessee with his above findings. As the AO had no occasion to go through the paper, so, in the interest of justice, we remit back the matter to the file of the AO. Ground No.3 is set aside. 5. Last Ground of Appeal is about bad debts amounting to Rs.30.57 lakhs.AO made inquiry about the bad debts written off during the year under consideration. After considering reply of the assessee, he held as under: From the assessee s above explanations, it transpires as under: i) The assessee s products are marketed through authorized dealers who sell the goods on behalf of the assessee. ii) Upon termination of the dealership agreements, the moneys collected from the purchasers by the dealers are not paid by them to the assess. iii) The assessee considered that leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s advocate, has pointed out that all the payments due are already paid by this clients. It is specifically mentioned in the letter as under: Subsequently discussed with your client by phone and sent a letter dtd. 5/1/99 requested your client not to present any cheque from the date of this letter and also paid due amount to your client. Since then our client have no due to your client on 9/12/99, the collection which was received from the customers also sent by DD bearing No. 809679 of Rs.25,000/- dtd. 9/2/99. No default on part of our client Further, from the list of sundry balances written off it is seen that the assessee has written off balances of some of the parties which are live and the assessee has shown transactions with the said concern. For the foregoing, I hold that the assessee s claim for bad debts are not allowable for a variety of reasons as detailed out. Accordingly, the claim is being disallowed while computing the total income. FAA confirmed the order of the AO by observing that claim of the assessee and the cases relied upon by it were purely academic. He stated that assessee had not written off the amounts in the Books of Accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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