TMI Blog2010 (2) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... e has made a legal claim that no amount is payable by it to the party, the fact remains that in the Balance Sheet it appears as liability and the other party has filed a case for recovery of the amount - In the instant case there is neither write off of the amount by the assessee nor the other party has given up its claim. We, therefore, are of the opinion that the amount of Rs.13,31,981 cannot be added u/s. 41(1) of the Act - Appeal of the assessee is partly allowed - ITA No. 1109/Mum/2007, ITA No. 1293/Mum/2007 - - - Dated:- 4-2-2010 - D.K. Agarwal, R.K. Panda, JJ. K.M. Kapadia for the Appellant Rajneesh Arvind for the Respondent ORDER R.K. Panda: These are cross appeals, the first one filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties from whom it has made purchases or to whom sales were made and did not give names and addresses of the parties to whom commission had been paid and since neither books of account were produced nor any documents like bank statement were furnished, the Assessing Officer made disallowance of Rs.40 lakhs out of manufacturing and administrative expenses on estimate basis. While doing so he relied on a couple of decisions. 5. Before the CIT(A) it was submitted that some of the records were missing since 14.1.2004, a suit was filed by Vijaya Bank, some of the books were taken by the tax consultant Shri Sandeepkumar Kabra for production before the sales tax authorities and the remaining books were seized by CBI during the search carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee did not produce the relevant books of account and other documents as demanded by the Assessing Officer during the course of assessment proceedings on the ground that they were seized by the CBI. To a pointed query by the Bench as to the prevailing position as on today regarding the books of account, the learned counsel for the assessee submitted that there is no change in the position and the assessee is not in a position to produce the books of account before the Assessing Officer even now. It is the settled posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the disallowance of Rs.24,84,226 by the Assessing Officer. 9. After hearing both the sides, we find the Assessing Officer disallowed the sum of Rs.24,84,226 claimed by the assessee on account of bad debts on the ground that the assessee has made contradictory statements in respect of its claim of bad debts. According to the Assessing Officer the assessee first stated that it was not written off in the books of account and subsequently it was stated that since it was old it was written off. Therefore, the Assessing Officer was under the impression that which statement is correct is not verifiable in absence of records. According to the Assessing Officer the assessee has failed to furnish any evidence in support of its claim that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a sufficient compliance for claiming deduction u/s. 36(1)(vii) of the Act. The assessee need not prove that the debt has become bad or that steps have been taken to recover the debts. Since in the instant case admittedly the assessee has written off the debt as bad in its Profit and Loss A/c., therefore, following the decisions of the Hon'ble High Court cited above, we are of the considered opinion that the assessee is entitled to claim the deduction of bad debts. We accordingly set aside the order of the CIT(A) and direct the Assessing Officer to allow the claim of bad debt made by the assessee. This ground of the assessee is accordingly allowed. 13. In grounds of appeal No. 4, the assessee has challenged the order of the CIT(A) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.13,31,981, the assessee has made a statutory legal claim that it had nothing to pay to the aforesaid party. He, therefore, upheld the action of the Assessing Officer in treating the sum of Rs.13,31,981 as income u/s. 41(1) of the Act. However, he deleted the balance sum of Rs.2,42,598. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 16. We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the Assessing Officer added an amount of Rs.15,74,580 on account of unverifiable trade creditors on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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