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TMI Blog2013 (10) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... o that the decision for write off is based on the events up to the relevant year-end (31.03.2008), the fact of passing the entries after the said date, becomes irrelevant. Matter being essentially factual, is accordingly restored to the file of the first appellate authority to decide the same in light of our foregoing observations, by issuing definite findings of fact, and after hearing the parties, including on the satisfaction of s. 36(2) (qua the claim for bad debts). - I.T.A. Nos. 5663 & 5786/M/2011 - - - Dated:- 20-9-2013 - Shri I. P. Bansal, JM And Shri Sanjay Arora, AM,JJ. For the Appellant : Srs. Prakash Jhunjhunwala Shri Sagar Glosar For the Respondent : Shri Surinder Jit Singh ORDER Per Sanjay Arora, A. M.: These two Appeals by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-40, Mumbai ('CIT(A)' for short) dated 14.06.2011, for two assessment years (A.Y.) 2006-07 2008-09, dispose the assessee's appeals contesting its assessment u/s.143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the said order. 2. At the very outset, it was inquired by the Bench of the learned DR if the Revenue is in appeal; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional income, i.e., separate and apart from Rs.16.79 lacs made and sustained for A.Y. 2006-07, for that year, i.e., A.Y. 2008-09. The director may have offered the additional income, what is though required to be seen is the reason for which he does so. If the basis of the same, as explained to us during hearing by the ld. AR, to no rebuttal by the ld. DR, is the said cash vouchers, addition qua which stands already made for A.Y. 2006-07, there is no scope or merit in sustaining another addition for the current year. The Revenue has not been able to make out any case in the matter. We, accordingly, have not hesitation in directing its deletion. We decide accordingly, confirming and deleting the addition for the two successive years respectively. We decide accordingly. 6. The third issue, which arises for A.Y. 2008-09, is in respect of the claim for audit fees, consultancy fees and bad debts written off, at Rs.11,236/-, Rs. 70,000/- and Rs.36,70,138/- respectively. The basis of the said disallowances is that the assessee's final accounts (P L A/c for the year ending and balance-sheet as on 31/3/2008), as found during the course of survey on 09.07.2008, are at variance with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law in passing entries as on 31.03.2008 after the close of the year (on that date), i.e., as long as there is basis thereto. The final statements found in survey were unsigned. The process of finalization of accounts can only be regarded as complete only on the signing of the balance-sheet. There is no basis or substance in the Revenue's allegation of the impugned differences being tainted with mala fides. 7.2 In our considered view, there is little merit in the case of either party before us. The issue involved is primarily factual, i.e., whether the expenditure in the impugned sums stands, in fact, incurred by the assessee during the relevant year or not. Why, even as observed during hearing itself, an expenditure even not booked could be claimed where actually incurred and otherwise deductible? The passing of the entries in the books of account only implies recognizing the same in accounts. Also, there is no bar per se in passing the accounting entries pertaining to a transaction during the year after the close of the year, and what would become relevant, i.e., from the verification stand point, is the genuineness of those transactions and matters incidental thereto; viz. how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears to us to be on account of audit expenses, though only verification could lead to a firm statement in the matter. The consultancy fee is, again, contractual, so that it would need to be verified with reference to the relevant contract, and the obligations arising therefrom, viz., the rendering of the services, etc., and which could only be determined on the basis of the evidence/s adduced or led by the assessee. As regards the claim for bad debts written off (Rs.36.70 lacs), the law, post amendment by Direct Tax Laws (Amendment) Act, 1987, w.e.f. 01.04.1989, it is by now well settled, only mandates the write off of a debt as irrecoverable in his accounts to entitle the assessee a claim in its respect. The same, thus, is itself an evidence of the debt being, in the view of the Management, not recoverable, and which is deemed sufficient, so as to be admissible and allowed as an expense for the relevant year, i.e., subject to the satisfaction of section 36(2). The passing of the entry in the accounts, and its timing, thus assumes vital significance. We have already clarified that an accounting entry as on the year-end (as, say, 31.03.2008) could be passed, or for that matter fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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