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TMI Blog2012 (8) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... written off, being the irrecoverable receivables, without considering their nature and explanation of the appellant. 2. On the facts and circumstances of the case as well as in Law, the Ld. CIT(A) has erred in confirming the action of AO in disallowing a sum of ₹ 2,97,034/- u/s. 361)(va) of the I.T. Act, 1961 being the alleged late payment of the employees' contribution of the Provident Fund. 3. On the facts and circumstances of the case as well as in Law, the Ld. CIT(A) has erred in confirming the action of AO in making an addition of ₹ 2,33,864/- on account of prior period expenses without appreciating the fact and circumstances of the case." 2. Briefly stated the facts of the case are that assessee is engaged in the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave confirmed the amount of ₹ 1,37,982/-. In respect of other two parties, though the notices were served, but there was no response. The AO asked the assessee to file confirmations from these two parties. According to the AO, the assessee failed to comply with the requirements. It was the contention of the assessee that these amounts are unrecoverable and have been certified by the management and as these payments are made exclusively for business purpose, the write off of the same should be allowed. The AO was of the opinion that the assessee could not prove the write off by brining any evidence to show that the alleged advance made by it is part of the business and the advances were made in the ordinary course of the business. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per Annexure 10A to the Audit report, the assessee has debited prior period expenses amounting to ₹ 2,33,864/-. As these expenses pertain to earlier year, the AO sought explanation from the assessee as to why these expenses should not be disallowed. As no explanation/submission came from the side of the assessee, the AO presumed that the assessee does not have any explanation to offer for the same. The AO concluded that the prior period expenses could not be allowed to be set off against the income of the previous year relevant to assessment year under consideration and accordingly disallowed the sum of ₹ 2,33,864/- and added to the returned income. 7. The assessee carried the matter before the Ld. CIT(A). Arguing for the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t these debit balances are either advances given for the purchase of raw materials or advances given to employees who have left the employment of the appellant. The Ld. Counsel relied upon the decision of the Mumbai Tribunal in ITA No. 3971/M/09 in the case of DCIT Circle 3(1) Vs M/s. Edelweiss Capital Ltd., Mumbai and claimed that the balances so written off should be allowed as business loss in terms of Sec. 28 of the Act. 9. Per contra, the Ld. Departmental Representative strongly supported the findings of lower authorities and referred to the judgement of the Ahmedabad Tribunal in the case of ITO Vs Ashok Kumar Lalit Kumar 53 ITD 326 and argued that in that case the matter has been restored back to AO for deciding the question of allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee after giving reasonable opportunity of being heard to the assessee. This ground of the assessee is allowed for statistical purposes. 11. Ground No. 2 relates to disallowance of sum of ₹ 2,97,034/- being alleged late payment of employee's contribution to the Provident fund. The facts giving rise to this dispute has been discussed at para-5 herein above. 12. The Ld. Counsel for the assessee drew our attention to the decision of the Tribunal in ITA No. 6847/Mum/2008 in the case of Pik Pen Pvt. Ltd. Vs ITO, a similar issue had come up before the Bench wherein the Bench has followed the decision of the Hon'ble Supreme Court in the case of CIT Vs Alom Extrusion Ltd. 319 ITR 306. The Ld. DR supported the findings of lower author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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