Income Tax Appellate Tribunal - Delhi
Shri Praveen Gupta, Gurgaon vs Acit, Meerut on 3 September, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH: 'A': NEW DELHI)
BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER &
SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER
ITA No:- 1434/Del/2016
(Assessment Year: 2011-12)
Sh.Praveen Gupta, ACIT,
D-101, First Floor, Tower No.D, Vs Circle-2,
Caitriona Residential Apartment Meerut.
Complex, Ambience Island,
Gurgaon-122001.
PAN-ACJPG4777H
APPELLANT RESPONDENT
Appellant by Shri Sunil Kumar, CA
Respondent by Shri D.S.Rawat, Sr.DR
ORDER
PER ANADEE NATH MISSHRA, AM
[A]. This appeal has been filed by the assessee against the impugned order dated 16.02.2016 passed by Learned Commissioner of Income Tax(Appeals), Meerut [in short "Ld.CIT(A)"] pertaining to 2011-12 assessment year. The assessee has raised following grounds of appeal:-
1. "That each ground of appeal is with out prejudice to each other.
2. That the Ld. CIT was not correct and justified in sustaining the addition of Rs. 50.00,000/- u/s 36 (1) (viii) read with section 37 of the Income Tax Act, 1961 on the basis of facts and circumstances of the case.
ITA No:- 1434/Del/2016 (Assessment Year: 2011-12)
3. That the Ld. CIT was not correct and justified in sustaining the addition of Rs. 12,22,400/- on account of earth filing expenses on the basis of facts and circumstances of the case.
4. That the appellant reserved the right to add amends, alter and/or delete any of the grounds of appeal.
5. That on the basis of facts of the case and in view of the circumstances it is prayed that either the additions sustained by the Ld. CIT may please be deleted or the matter may please be restore back to the file of Commissioner of Income Tax (Appeals) in the interest of natural justice."
[B]. Assessment order dated 27.03.2014 was passed by the AO u/s 143(3) of the Income Tax Act, 1961 [in short "Act"] wherein the total income was assessed at Rs.3,20,49,170/- as per following computation:-
"Income as shown in return : Rs.13,02,090 Add: (i) Disallowance out of bad debt : Rs.50,00,000
(ii) Disallowance of advanced received u/s 68 : Rs.1,34,00,000
(iii) Disallowance of earth filling : Rs.12,72,400
(iv) Addition to unsecured loan : Rs.1,06,41,000
(v) Disallowance out of vehicle running expenses : Rs.45,469
(vi) Disallowance out of depreciation on car expenses : Rs.66,246
(vii) Disallowance of proportionate interest : Rs.3,21,967 Total income : Rs.3,20,49,172 Rounded off : Rs.3,20,49,170 [C]. The assessee filed appeal before the Ld.CIT(A). Vide aforesaid impugned order dated 16.02.2016 of Ld.CIT(A), the assessee was allowed substantial relief. However, Ld.CIT(A) sustained the Page | 2 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) aforesaid addition of Rs.50,00,000/- being disallowance out of bad debt written off. Further, ld.CIT(A) sustained the disallowance of Rs.12,22,400/- out of disallowance of Rs.12,72,400/- by the AO on account of disallowance of earth filing expenses. The present appeal before us has been filed by the assessee against the aforesaid disallowances sustained by Ld.CIT(A). In the course of the appeal in the appellate proceedings in Income Tax Appellate Tribunal (in short "ITAT"), the following particulars were filed from the assessee's side:-
1. Balance Sheet 31.03.2011
2. Copy of account Arshad Ahmad
3. Copy of Bad Debts account
4. Judgement 190 Taxmann 391 (SC)
5. Judgement 190 Taxmann 257 (SC)
6. Judgement 101 ITD 191 (Delhi)
7. Paper cutting dated 04.03.2015
8. Remand Report dated 05.10.2015
9. Purchase Deed
10. Sale Deed [C.1]. At the time of hearing before us, Ld.AR of the assessee relied on the aforesaid particulars filed from assessee's side in ITAT.
Ld.AR for the assessee drew our particular attention to paper cutting dated 04.03.2015 in support of aforesaid second ground of appeal and contended that the aforesaid loss of Rs.50,00,000/- is allowable u/s 36(1)(viii) of the Act as bad debt written off; and also alternatively u/s 37 of the Act as business loss. Ld.AR for the Page | 3 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) assessee placed strong reliance on the case of Minda (HUF) vs JCIT [2006] 101 ITD 191 (Del.).
[C.2]. In support of all the grounds of appeal, Ld.AR for the assessee also placed strong reliance on the submissions made before Ld. CIT(A) in respect of the aforesaid disallowance of Rs.50,00,000/- and Rs.12,22,400/-. The relevant discussion is at the following portion of the aforesaid impugned order dated 16.02.2016 of Ld.CIT(A) reproduced hereunder:-
"GROUND NO. 1 Addition of Rs. 50,00,000.00 "That as already submitted above that the assessee was engaged in the business of trading of immovable properties and this amount was given for the purchase of land of Khasra no. 155 at Begum Pur (Malvinas' Nagar, Delhi) to Mr. Arshad Ahamad is not denied by the assessing officer arid therefore it is-established beyond doubt That the amount was advanced only for business purposes and therefore the provisions of section 36 (1) (vii) of the Income Tax Act, is clearly applicable.
That the condition precedent to section 36 (1) (vii) is that the assessee has actually written off the amount as Bad Debts in his books of accounts or not and since the assessee has actually written off the amount in his books of accounts during the year under consideration as bad debt, the amount is allowable u/s 36 (1) (vii) of The I Tax Act, 1961.
That here it is also submitted that Mr. Arshad Ahamad is a cheater and to further prove that the advance was for Page | 4 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) purchase of land, we are enclosing herewith copy of News paper dated 04.03.2015.
Now it is a settled law that if the assessee has written off the amount in his books of accounts as bad debt, he is not require to prove further as held by Hon'ble Supreme Court in the case of TRF Ltd. v/s CI reported in 190 Taxmann 391(SC) and in the case of Vijaya Bank Ltd v/s CIT reported in 190 Taxmann 257 (SC).
In view of the brief on the issue as narrated above the addition is baseless, beyond the fact of the issue and therefore not tenable in the eyes of law and therefore your honour is very earnestly requested to please delete the addition.
Supporting documents
1. Copy of Audited B/S&P & L A/c of M/s Aviraj Enterprises Page 1-3 2 Copy of account of Arshad Ahmad Page 4
3. Copy of Bad debts a/c Page 5
4. Copy of 190 Taxman 391 (SC) Page 6-7
5. Copy of 190 Taxman 257 (SC) Page 8-12
6. Copy of News Paper cutting Page 12A ..........................
.........................
.........................
Page | 5 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) GROUND NO. 3 Addition of Rs. 12,72,400.00 That the assessee has purchased plot no 485/2 situated at Vill. Noor Nagar. Meerut on 15.03.2004 and sold on 31.01.2011.
That the facts are that when the assessee has purchased the plot it was not developed but when the plot was sold during the year it was developed and duly surrounded with boundary walls, which is evident from the purchase and sale deeds.
Supporting documents
1. Purchase deed dated 15.03.2004 Page 26-42
2. Sale deed dated 31.01.2011 Page 43-60"
[C.3]. Ld.CIT(A) also obtained Remand Report of the AO in respect of the aforesaid submissions made by the assessee before Ld.CIT(A). The assessee made further submissions before Ld.CIT(A) on Remand Report of the AO. The relevant discussion is at the following portion of aforesaid impugned order dated 16.02.2016 of Ld.CIT(A) reproduced hereunder:-
"NOW GROUND WISE SUBMISSIONS ON REMAND REPORT ARE AS UNDER:-
"Ground No-1. Addition of Rs.50 lakhs In this regard the assessing officer has objected that the assessee has not taken any efforts for its recovery. In this regard we have to submit, firstly that section 36(1 )(vii) do not require to demonstrate that the assessee has taken any efforts to recover the amount written off as bad debts. As per Page | 6 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) the decisions of Hon'ble Supreme Court reported in 190 taxman 391 (SC) and in the case reported in 190 taxman 257(SC) the only requirement is that the assessee has actually written off the amount as bad debts in his books of accounts, which the assessee has done and to prove it at page-4 of our written submissions we have filed the copy of accounts of Shri Arshad Ahmed and at page-5 copy of bad debts accounts, which proves that the assessee has actually written off the amount as bad debts in his books of accounts and at page 12A which is a newspaper clipping is vital proof that Shri Arshad Ahmed has cheated not only to the assessee but to other peoples of Meerut.
Hence, on the basis of page no-4, 5 and 12A and the decisions cited supra the amount of Rs.50 lakhs actually written off by the assessee as bad debts is an allowable expenditure and may please be allowed. .................................................. B. Ground No-3. Addition of Rs.12,72,400 In the remand report the only objection of the assessing officer is that the vouchers are not available/produced, he nowhere doubted the expenditure In this regard it is submitted that this expenditure relates to earth filling and leveling of the land for which no external vouchers are possible to obtain.
That the total expenditure was incurred on various dates and duly entered in the books of accounts. The assessing officer has not rejected my books of accounts and hence no addition could be made for the entries found entered in regular books of accounts of assessee and in particular when the assessing officer neither in his assessment order nor in his Page | 7 ITA No:- 1434/Del/2016 1434 (Assessment Year: 2011-12) 201 remand report doubted the expenditure and the books of accounts have been accepted."
[C.4]. Ld.CIT(A) considered the submissions of the assessee and decided the issues as under:
under:-
Page | 8 ITA No:- 1434/Del/2016 1434 (Assessment Year: 2011-12) 201 Page | 9 ITA No:- 1434/Del/2016 1434 (Assessment Year: 2011-12) 201 Page | 10 ITA No:- 1434/Del/2016 1434 (Assessment Year: 2011-12) 201 Page | 11 ITA No:- 1434/Del/2016 1434 (Assessment Year: 2011-12) 201 Page | 12 ITA No:- 1434/Del/2016 1434 (Assessment Year: 2011-12) 201 ...................
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Page | 13 ITA No:- 1434/Del/2016 1434 (Assessment Year: 2011-12) 201 [C.5]. Ld.DR placed reliance on the aforesaid impugned order dated 16.02.2016 of Ld.CIT(A).
[D]. We have heard both sides sides, patiently. We have perused the materials available on record record, carefully. We have considered judicial precedents mentioned in the records or brought to our notice at the time of hearing before us. Although,, the assessee has filed d five grounds of appeal, essentially there are disputes in respect of two disallowance disallowances/additions.. The first dispute is regarding disallowance of assessee's claim of Rs.50 Rs.50,00,000/- on account of bad debt written off. During appellate proceedings, it was contended from the assessee's side that this amount is also alternatively allowable u/s 37 of the Act. On careful perusal of the records, we find that there is nothing to prove that the aforesaid amount of Rs.50,00,000/ ,00,000/- was paid by the assessee for business purposes. There is also nothing on record to prove that this amount of Rs.50,00,00 ,00,000/- was paid by the assessee for purchase of land. From perusal of records, we find no evidence regarding land Page | 14 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) purchased by the assessee-either proposed to be purchased or actually purchased. Although Ld.AR of the assessee vehemently contended that the amount was paid by the assessee to Mr. Arshad Ahmad through banking channels; Ld.AR could not point out any material on the record to prove that this amount was paid for business purposes or for the purpose of purchase of land. We heard Ld. AR of the assessee with concern when he submitted at the time of hearing before us that the aforesaid Mr. Arshad Ahmad (to whom the assessee claims to have made payment of aforesaid Rs.50,00,000/-) is a politically influential person and also not a law abiding person (for which purpose Ld.AR of the assessee referred to news paper cutting dated 04.03.2015 from Meerut Edition of Hindi daily newspaper "Hindustan"). However, we decline to make any comment on whether the aforesaid Mr. Arshad Ahmad is politically influential or not; and whether he is law abiding person or not; because these aspects are irrelevant for the purposes of this appeal in ITAT. What is relevant is that the assessee has failed to prove that the aforesaid amount of Rs.50,00,000/- was paid by the assessee to Mr. Arshad Ahmad for business purposes or for purchase of land. We also find nothing on record to show that any legal remedies were attempted by the assessee for recovery of the aforesaid amount of Rs.50,00,000/- from Mr. Arshad Ahmad. In view of the foregoing assessee's claim for business loss or for Page | 15 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) deduction u/s 37 of the Act is not sustainable. There is, further, no material on record to show that aforesaid amount of Rs.50,00,000/- or any part thereof has been taken into account in computing income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year; and thus, mandatory condition u/s 36(2)(i) of the Act is not fulfilled for claim of bad debt. At the time of hearing before us, Ld.AR for the assessee also expressed inability to bring any further material on record in support of the assessee's claim for the aforesaid amount of Rs.50,00,000/-. In the forgoing facts and circumstances, the assessee's claim for deduction of the aforesaid amount of Rs.50,00,000/- deserves to be rejected whether this claim is made as bad debt written off u/s 36 of the Act or alternatively u/s 37 of the Act. In any case, in Ground No. 2 of appeal, the assessee refers to section 36(1)(viii) of the Act which is not applicable to the facts and circumstances in the case of the assessee. [Section 36(1)(viii) of the Act, is instead applicable for claims in respect of any separate reserve created and maintained by a specified entity.] In view of the foregoing, we are of the view that the assessee's claim for the aforesaid amount of Rs.50,00,000/- is unsustainable in law. [E]. As far as the aforesaid disallowance of Rs.12,22,400/- on account of earth filling expenses is concerned, we find from the Page | 16 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) records that the AO had disallowed the assessee's entire claim of earth filling expenses amounting to Rs.12,72,400/- stating that inspite of repeated opportunity, no document or evidence was filed by the assessee before the AO during assessment proceedings. However, Ld.CIT(A) deleted an amount of Rs.50,000/- out of this disallowance and sustained remaining addition amounting to Rs,12,24,400/-. This relief of Rs.50,000/- was allowed by Ld.CIT(A) on the basis of Stamp Valuation Authority who had valued the cost of boundary wall for Rs.50,000/-. The assessee had filed no evidences before Ld.CIT(A) to explain how the assessee claimed an amount of Rs.12,72,400/- when the valuation of the boundary wall by the Stamp Valuation Authority was only for Rs.50,00,000/-. Even in the appellate proceedings in ITAT, the assessee has not adduced any evidences to support the claim of having actually incurred the aforesaid expenditure amounting to Rs.12,72,400/- towards cost of earth filling/boundary wall. The assessee has failed to bring any material for our consideration to justify any further relief in addition to relief of Rs.50,000/- already allowed by Ld.CIT(A) on the basis of the valuation of boundary wall by Stamp Valuation Authority. In the absence of any supporting evidences in support of assessee's claim of the aforesaid amount of Rs.12,22,400/- [disallowance of which has been sustained by Page | 17 ITA No:- 1434/Del/2016 (Assessment Year: 2011-12) Ld.CIT(A)], we are of the view that this claim of the assessee for aforesaid Rs.12,24,400/- is unsustainable in law. [F]. As all the relevant evidences submitted by the assessee have already been appraised by the lower authorities [CIT(A) & AO] and moreover, as no further material has been placed before us from assessee's side in support of the assessee's claim for deduction of aforesaid amount of Rs.50,00,000/- & Rs.12,22,400/-, no useful purpose will be served by restoring the disputed issues back to the file of Ld. CIT(A). The prayer made in Ground No.5 of this appeal, therefore, deserves to be rejected.
[G]. In view of the foregoing, all the grounds of appeal are dismissed. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 03/09/2019.
Sd/- Sd/-
(H.S.SIDHU) (ANADEE NATH MISSHRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 03/09/2019
* Amit Kumar *
Page | 18
ITA No:- 1434/Del/2016
(Assessment Year: 2011-12)
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
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