ITO 8(3)2 MUMBAI vs SM ENERGY TEKNIK & ELECTRONICS LTD MUMBAI

आयकर यकर यकर यकर अपीलीय अपीलीय अपीलीय अपीलीय अिधकरण अिधकरण अिधकरण अिधकरण, मुंबई मुंबई मुंबई मुंबई यायपीठ यायपीठ यायपीठ यायपीठ ‘ई’ मुंबई मुंबई मुंबई मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL “ E” BENCH, MUMBAI सवौी नरेि कुमार ब लै या, लेखा सदःय एवं एवं एवं एवं , संजय गग,, याियक सदःय के सम' BEFORE SHRI N.K.

BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER आयकर अपील सं./I.T.A.

No.6803/Mum/2011 (िनधारण िनधारण िनधारण िनधारण वष वष वष वष / Assessment Year :2005-06 The ITO 8(3)-2, Aayakar Bhavan, Mumbai-400 020 बनाम बनाम बनाम बनाम/ Vs.

M/s.

SM Energy Teknik & Electronics Ltd., SM House, 11,Sahakar Road, Vile Parle(E), Mumbai-400 057 ःथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACS 7372L (अपीलाथ+ /Appellant) .. (ू-यथ+ / Respondent) अपीलाथ+ ओर से/ Appellant by: Shri Pasnkaj Kumar ू-यथ+ क/ ओर से/Respondent by: None सुनवाई क/ तार1ख / Date of Hearing :04.08.2014 घोषणा क/ तार1ख /Date of Pronouncement :08.08.2014 आदेश / O R D E R PER N.K.

BILLAIYA, AM: This appeal by the Revenue is preferred against the order of the Ld.

CIT(A)-18, Mumbai dt.

26.7.2011 pertaining to A.Y.

2005-06.

2.

None appeared on behalf of the assessee although on the previous date of hearing on 21.1.2014, the Ld.

Counsel for the assessee had taken ITA No.

6803/M/2011 2 the adjournment and was well within the knowledge of the date of hearing.

3.

The grievance of the Revenue is two-fold. (i) The Ld.

CIT(A) erred in deleting the disallowance made on account of foreign travel expenses amounting to Rs.

4,69,452/- and (ii) the Ld.

CIT(A) erred in deleting the addition on account of bad debt of Rs.

27.95 lakhs.

4.

During the course of the assessment proceedings, the Assessing Officer noticed that the assessee has debited foreign travelling expenses to its profit and loss account amounting to Rs.

13,24,537/- out of which Rs.

3,21,457/- was expended towards the cost of tickets.

The assessee was asked to furnish the complete details alongwith documentary evidences for the claim of Rs. aim of Rs.

10,03,080/-.

The assessee filed details vide letter dt.

15.11.2007.

The AO found that there was no detail in respect of the expenses of Rs.

4,69,452/-, the same was disallowed.

5.

The Ld.

CIT(A) has considered this grievance at para 3.1 of his order and at para 3.2 deleted the additions made by the AO accepting the contention of the assessee that all the details are available on record.

6.

Departmental Representative relied upon the findings of the AO.

7.

We have carefully perused the orders of the lower authorities.

CIT(A) has himself mentioned in his order that the AO in his remand report dt.

14.3.2011 has stated that the assessee could not reconcile the difference whereas the Ld.

CIT(A) while deleting the additions at para- 3.2. of his order has observed that “I have considered the submissions of ITA No.

6803/M/2011 3 the appellant and remand report of the AO and I agree with the contention of the appellant that all the details are available on record – hence this disallowance is deleted”.

Once the AO has mentioned in his remand report that the assessee has failed to furnish details, then the Ld.

CIT(A) should have brought those details on record before deleting the additions made by the AO.

This has made the order of the Ld.

CIT(A) erroneous as no such details have been brought on record, we set aside the findings of the Ld.

CIT(A) and restore that of the AO.

Ground No.

1 is accordingly allowed.

8.

While scrutinizing the return, the AO found that the assessee has written off bad debts of Rs.

11.27 lakhs and doubtful advances of Rs.

16.68 lakhs.

The assessee was asked to furnish the complete details, justification and allowability of the claims of bad debt and doubtful advances written off.

The assessee furnished a list containing 16 names except for that the assessee did not file any details in respect of its cliam.

The AO proceeded by making an addition of Rs.

9.

CIT(A) has considered this grievance at para-6 of his order and at para-6.3 considering the decision of the Hon’ble Supreme Court in the case of TRF Ltd 323 ITR 397 deleted the addition of Rs.

10.

Departmental Representative strongly supported the findings of the AO.

11.

We have carefully perused the orders of the authorities below.

When the Ld.

CIT(A) called for the remand report from the AO, the AO in his remand report has stated that the assessee could not explain whether the respective incomes had been offered to tax in earlier years.

ITA No.

6803/M/2011 4 The Ld.

CIT(A) has followed the ratio laid down by the Hon’ble Supreme Court in the case of TRF Ltd (supra) and other decision of the Hon’ble Bombay High Court but has grossly failed in considering the observations made by the AO.

No doubt, the assessee need not have to establish the reasons for writing off the amount as bad debt but onus is upon the assessee to fulfill the conditions laid down u/s.

36(2)(i) of the Act.

We, therefore, restore this issue to the file of the AO.

The assessee is directed to fulfill the conditions to Sec.

36(2)(i) of the Act in support of its claim of write off of bad debts and advances.

This ground of the Revenue is allowed for statistical purpose.

12.

In the result, the appeal filed by the Revenue is partly allowed for statistical purpose.

Order pronounced in the open court on 8th August, 2014 . आदेश क/ धोषणा खुले यायालय म5 6दनांकः 8.8.2014 को क/ गई । Sd/- Sd/- (SANJAY GARG ) (N.K.

BILLAIYA) याियक सदःय / JUDICIAL MEMBER लेखा सदःय / ACCOUNTANT MEMBER मुंबई Mumbai; 6दनांक Dated : 8th August, 2014 व.िन.स./ RJ , Sr.

PS ITA No.

6803/M/2011 5 आदेश आदेश आदेश आदेश क/ क/ क/ क/ ूितिल प ूितिल प ूितिल प ूितिल प अमे षत अमे षत अमे षत अमे षत/Copy of the Order forwarded to : 1. अपीलाथ+ / The Appellant 2. ू-यथ+ / The Respondent.

3. आयकर आयु9(अपील) / The CIT(A)- 4. आयकर आयु9 / CIT 5. वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 6.

Mumbai 6. गाड फाईल / Guard file. आदेशानुसार आदेशानुसार/ BY ORDER, स-या पत ूित //True Copy// उप उप उप उप/सहायक सहायक सहायक सहायक पंजीकार पंजीकार पंजीकार पंजीकार (Dy./Asstt.

Registrar) आयकर आयकर आयकर आयकर अपीलीय अपीलीय अपीलीय अपीलीय अिधकरण अिधकरण अिधकरण अिधकरण, मुंबई / ITAT, Mumbai