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TMI Blog2014 (5) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in para 3 of the assessment order as a result of which addition of Rs.76,90,367/- was made by the AO on the following reasoning. "3. From the records, it is seen that the assessee has claimed a liability of Rs.76,90,367/- on account of advance received by the customer namely M/s Jai Glass Works. In compliance to the specific query raised in this regard the assesssee has submitted as under:- " In respect of Jai Glass Works- Credit balance of Rs.76,90,367/- of Jai Glass Works in our books. In F. Y 2003-04 advance of Rs.1,00.00.000/- was received from the party against supply of goods. In all goods worth Rs.23,09,633/- were supplied and balance of Rs.76,90,367/- remained outstanding in our accounts. However, under circumstances beyond the control of assessee the said party taken an amount of rs.1,65,00,000/- from a third party (Larson & Turbo Ltd.) on our behalf on 29/3/2006. Later on, the assessee has filed criminal complaint against both the parties with Delhi Police, Crime Branch (EOW) and the assessee has not adjusted the payment of Rs.1,65,00,000/- in its books. Copy of letter from the party and its account in our books are enclosed at Annexures-2. There is no transaction i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore was paid to Indian Overseas Bank by the L &T as repayment of Loan taken by the assessee from the said Bank, Rs.6.35 crore was paid to the assessee and the remaining Rs.1.65 crore of JGW. In its books of account, the assessee adjusted the amount of Rs.4.50 crore and Rs.6.35 crore to the a/c of L&T. But due to an impending dispute over the amount payable to JGW (assessee claims amount due at Rs.76,90,367/-) while JGW claim it to be Rs.1,64,97,607/-) the assessee has not adjsuted in its books of account, the amount of rs.1.65 crore paid by L&T directly to JGW on account of the assessee, neither to the a/c of L &T nor to the a/c of JGW. As such, in the books of assessee, balance receivable from L &T nor to as on 31/3/2006 Rs.11,65,00,000/- (22,50,000- 6,35,00004,50,000) was still shown receivable as on 31/3/2008 and balance payable to JGW as on 31/3/2006 Rs.76,90,367/- was still shown payable as on 31/3/2008 pending adjustment of Rs.1,65,00,000/-. The circumstances under which the assessee was forced to move out of the prospective purchase of Nasik Glass Works unit by L &T, compelled to arrive at settlement with L &T and diversion of funds by L &T to JGW was complained by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d addition is deleted. Ground NO. 1 in favour of the appellant." 4. Aggrieved by this the revenue is in appeal before the Tribunal. The Ld. Sr. DR Mr. Gagan Sood relied upon the assessment order. The authorized representative of the assessee placed heavy reliance upon the submissions made before the CIT(A) on the basis of which it was his contention that the assessee was running glass container unit at Neemrana which was closed in August 2005. However, the assessee had received on advance of Rs.1 crore for supply of Glass Bottles from M/s Jai Glass Works, (SGW)Mumbai and had supplied goods worth Rs.23,09,633/- and the balance Rs.76,90,367/- remained outstanding. On the other hand Larson and Tourbo owed money to the assessee which was paid directly to JGW. It was submitted that JGW have confirmed the receipt of payment of rS.76,90,367/-. Accordingly reliance was placed on the impugned order. 5. We have heard the rival submission and perused the material available on record, in the absence of any argument or rebuttal on facts as considered by the CIT(A), we find no good reason to interfere with the finding arrived at in the impugned order. Being satisfied with the reasoning and fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 6 & 7 and read as under:- "Amount of Rs.24,20,229/- was receivable from M/s. Jai Drinks Pvt. Ltd. on account of glass bottles supplied by the assessee till August 2005 to Jai Drinks Pvt. Ltd. In A.Y 2008-09 relevant to F.Y 2007-08, the said amount of Rs.24,20,229/- was written off as bad debts as the assessee formed confirmed opinion by then that the amount will not be recovered at all in future. The assessee on its part, followed the provisions of Section 36(2) of the Income Tax Act, 1961 to claim the debts of Rs.24,20,229/- as bad. It has actually written off the debt as bad debts in its accounts. The account which was written ff as bad debt was taken into account in computing the income of the assessee for A.Y 2006-07 (F.Y 2005-06) Rs.23,91,016/- and for A.Y 2005-06(F.Y 2004-05) Rs.29,213/-. Total Rs.24,20,229/-. Copy of account of the party M/s. Jail Drinks Pvt. Ltd. For F.Y 2005-06 & F.Y 2007-08 and copy of Bad debts a/c for F.Y 2007-08 were submitted to A.O during assessment proceedings and explained. The facts and documents placed before the Ld. A.O were not properly interpreted/appreciated. Sufficient opportunity was not provided to the assessee as the case was abruptly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book dated 21/10/2010 clearly indicates without any saying, that out of Rs.24,20,229/- written off as bad debts, Rs.23,91,016/- was included in and was part of the Sales of the assessee for the period 1/4/2005 to 31/3/2006 and the balance Rs.29,213/- for the period prior to 1/4/2005. It is a well known fact in the double entry system of accountancy, for every debit there will be an equal credit and for every credit there will be an equal debit. So, when in the ledger a/c party Jai Drinks Pvt. Ltd is debited by an amount, simultaneously Sale a/c submitted. Moreover, the relevant bill no and quantity supplied to jai Drinks Pvt. Ltd have been clearly stated in the enclosed ledger a/c. Since the amount written off as bad debts was included in sales made to Jai Drinks Ltd. in the F.Y 2005-06 Rs.23,91,016/- and in F.Y 2004-05 Rs.29,213/- as a natural corollary it was included in its income for those years and offered for taxation accordingly." 7.1 Considering the same, the CIT(A) came to the following conclusion at page 7 & 8 para C reproduced as under:- "I have perused all the documents produced by the appellant. The documents were produced by the appellant at the time of remand p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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