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TMI Blog2016 (3) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... and doubtful debts of ₹ 1,32,94,600/- and debited same to the profit and loss account but the assessee did not claim said amount in the return of income at the time of computation of income and the entire provision made for bad and doubtful debts debited to profit and loss account was added to the income shown in the profit and loss account in the computation of income. The AO has not disputed this fact while passing the impugned order u/s 154. Even before us, revenue has not disputed these facts explained by the assessee. During the year under consideration, the assessee has written off a sum of ₹ 98,00,327/- out of the total provision made for bad and doubtful debts of ₹ 1,32,94,610/-. Thus, in the books of account, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016 - Shri Vijay Pal Rao, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Petitioner : Shri Praveen Kumar, JCIT ( DR ) For the Respondent : Shri D. S. Vivek, CA. ORDER Per Vijay Pal Rao, JM This appeal by the revenue and the cross objections by the assessee are directed against the order dated 2/3/2015 of the CIT(A) arising from the order passed u/s 154 of the IT Act, 1961 [ the Act for short] for the assessment year 2009-10. 2. In this case, assessment was completed u/s 143(3) on 13/12/2011 determining the total income at ₹ 1,25,09,850/-. Subsequently, the AO proposed to rectify a mistake in the order by invoking the provisions of sec.154 on the issue of claim of bad debts written off o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was accepted by the CIT(A) without giving an opportunity to AO. Therefore, there is a violation of rule 46A of the IT Rules. He has relied upon the order passed u/s 154. 5. On the other hand, learned AR of the assessee has submitted that nothing new has been filed by the assessee before the CIT(A) except written submissions wherein assessee has explained the fact that this amount of ₹ 98,00,327/- was part of the provisions of bad and doubtful debts made by the assessee in the assessment year 2004-05 and was written off during the year under consideration. Thus, during the year under consideration, assessee has reversed the provisions to the extent of ₹ 98,00,327/- in the books of account. However, same amount has been claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Y.2004-05 marked as annexure-2. b. In the A. Y. 2009-10 the assessee company out of the total provision made for bad and doubtful debts of ₹ 1,32,94,610/- during F. Y. 2003-04 (A. Y.2004- 05(reversed an amount of Rs;98,00,3271- being the debts not recoverable and passed the entry (a) debited to provision for Bad and Doubtful Debts (b) Credited to the profit and loss account. We are enclosing herewith the computation of total and taxable income for the A. Y. 2004-05 marked as annexure-3. c. To treat the amount as bad debts, as per the accounting principles, the amount' created as provision earlier has to be reversed and the same amount has to be charged off to profit and loss account. The company has adopted the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under the Income Tax Act. h. The company during the A. Y. 2009-10 has written off debtors amounting to ₹ 98,00,327/- since the same were no longer recoverable. The actual write off is an allowable expenditure under the income tax act. Hence, the claim of the Assessee is in order. i. Since, the assessee has claimed the actual bad debts as an expense in the year, in the computation we have again not shown as reduction of profit on reversal of provision. An alternate way to represent would have been to shows as reduction from taxable profit the Reversal of Provision of ₹ 98,00,327/- and not claim a deduction in computation of the Bad debts written off of ₹ 98,00,327/-. The net effect of the final taxable income/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on the ground that the submissions are not supported by contemporary evidence. It is pertinent to note that the entire record was available with the AO and particularly the ledger accounts of the debtors wherein entries for bad debts written off has been carried out by the assessee along with provision for bad and doubtful debts made during the financial year 2003-04 relevant to assessment year 2004-05. Therefore, as per provisions of sec.36(1)(vi), the assessee is not required to establish that debts actually gone bad once the assessee has written off the amounts in the books of account. The CIT(A) has allowed the claim of the assessee by taking note of the fact that in the books of account, assessee has made entries in respect of rever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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