TMI Blog2020 (6) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences, we hold that such bad debts were offered to tax. Accordingly the assessee is entitled for the deduction under section 36 of the Act. Hence the ground of appeal of the assessee is allowed. Nature of land sold - agricultural land v/s capital asset - HELD THAT:- It is the settled law that there cannot be any kind of income tax on the sale of the agricultural land. As such the income of the assessee is exempted from the tax on the sale of the agricultural land. However the onus is on the assessee to prove that the land is agricultural in nature within the meaning of the provisions of section 2(14) of the Act. However we find that the necessary details are not arising from the order of the authorities below. Accordingly, we restore the impugned issue to the file of the AO for fresh adjudication as per the provisions of law. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see claimed that the debtor belongs to F.Y. 1999-00 to 2008-09. For this purpose the assesseesubmitted name wise and year wise detail along with audited balance sheet each year and ledger account except for the F.Y. 1999-2000 2000-2001. 3.1 Accordingly the AO held that the assessee failed to prove that the bad debt pertaining to A.Y. 1999-2000 and 2000-2001for ₹ 6,75,359/- has been offered to tax in earlier year. Thus the AO disallowed the same and added to the total income of the assessee. Aggrieved assessee preferred an appeal before the learned CIT (A). 4. The assessee before the learned CIT (A) submitted that bad debt claimed by him pertaining to F.Y 1999-2000 2000-2001 are genuine and bona-fide as the same has been shown in the audited account. The assessee has also filled corroborative evidences such as name and year wise detail of bad debts, list of debtor of respective year from audited accounts containing name of such debtor. Further the same has been accepted by the AO while framing the assessment under section 143(3) of the Act, for the A.Y. 2006-07 and 2007-08. The assessee also submitted that similar deduction for the A.Y. 2011-12 has been allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f low tax effect without deciding the issue on merits hence the same can have no effect oh the present appellate proceedings. 4.2.3 The Ld. AR has also made alternative arguments that the bad debts written off may be allowed as business loss. In this regard, it is to be stated that for claiming business loss, the appellant has to firstly prove that the transactions in question were pertaining to the trading transactions carried out in ordinary course of business and secondly, he has to also establish that such debts have actually become bad and also are not recoverable. Thirdly, he has to also establish efforts made to recover such debts. Mere writing off entries in books of A/c is not sufficient for claiming business loss. Undisputedly, above conditions are not satisfied as no documentary evidences have been furnished except a list of persons with amount written off. 4.2.4 Thus, in view of the above factual legal position, I hold that AO has rightly disallowed part of the bad debts amounting to ₹ 6,75,359/-. Hence, disallowance made is confirmed and Ground no.2 is dismissed. Being Aggrieved by the order of the learned CIT (A) the assessee is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at these bad debts were offered to tax in the respective assessment years, but the circumstantial evidences in the form of audited financial statements cannot be neglected wherein the assessee has classified such bad debts as the debtors. In this connection we draw support and guidance from the judgment of the Hon ble Supreme Court in the case of SumatiDayal vs. CIT reported in 214 ITR 801 wherein it was held as under: It is, no doubt, true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee. But in view of section 68, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is prima facie evidence against the assessee, viz., the receipt of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue has accepted the same. Further the learned CIT (A) had allowed the claim of Bad debt for A.Y. 2011-12 with regard to debt pertaining to similar period. In view of the above and after considering the circumstantial evidences, we hold that such bad debts were offered to tax. Accordingly the assessee is entitled for the deduction under section 36 of the Act. Hence the ground of appeal of the assessee is allowed. In the result the appeal of the assessee is allowed. Coming to the ITA No. 1910/Ahd/2018 for A.Y. 2013-14. 8. First issue raised by the assessee is that the learned CIT (A) erred in confirming the disallowances of bad debt amounting to ₹ 6,59,939/- despite the fact that claim of bad debt for the A.Y. 2013-14 has been allowed in similar fact and circumstances. 9. The identical issue has already been decided by us in favour of assessee in ITA No. 1909/Ahd/2018 vide paragraph no.7 of this order. Respectfully following the same this ground of appeal of the assessee is also allowed. 10. The additional ground of appeal raised by the assessee vide letter dated 06/02/2020 is that the learned CIT (A) erred in confirming the order of the AO by holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the lockdown in the country, the orders though substantially prepared but could not be pronounced for the unavoidable reasons within the maximum period of 90 days. In such circumstances we find that the Hon ble Mumbai Tribunal in the case of JSW Limited VsDeputy Commissioner of Income Tax in ITA No. 6103/MUM/2018 vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under: 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)] , Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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