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2017 (1) TMI 386 - ITAT MUMBAI

2017 (1) TMI 386 - ITAT MUMBAI - TMI - Disallowance of bad debts - the balance of the parties in assessee’s books were not tallying with the books of the respective parties - Held that:- As observed by the learned CIT(A), the AO had disallowed the assessee’s claim for write off of bad debts of the four parties only to the extent that there were differences / discrepancies in the account balance of these parties vis-à-vis the books of accounts of the assessee, and to the extent these differences .....

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4 - Dated:- 4-1-2017 - SHRI JASON P BOAZ, AM AND SHRI RAM LAL NEGI, JM For The Assessee : None For The Revenue : Shri Rajat Mittal ORDER PER JASON P BOAZ (A.M): This appeal by the assessee is directed against the order of the CIT(A)-40, Mumbai dated 30/06/2014 for A.Y. 2007-08. 2. The facts of the case, briefly, are as under:- 2.1. The assessee, a company engaged in the business of post production of films, editing, graphics, scanning, recording etc., and shooting equipment rentals, filed its re .....

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.2007-08, the assessee preferred an appeal before the CIT(A) - 40, Mumbai, who disposed off the appeal vide the impugned order dated 30/06/2014, allowing the assessee partial relief. 3. Aggrieved by the order of the CIT(A) - 40, Mumbai dated 30/06/2014, the assessee preferred this appeal raising the following grounds:- 1. The CIT(A) erred in upholding the disallowance of Bad Debts to the extent of ₹ 14,65,624/- in respect of four parties which is arbitrary since the Learned Assessing Offic .....

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s in the assessee's case is not genuine for the reason that the opening balances of the respective parties were not tallying with the books of the respective parties. 3. The CIT(A) has erred in confirming the disallowance on the fact that the assessee has continued doing the business with all these four parties even after writing off the debt. 4. The hearings in this case were filed on a number of occasions. On all the dates hearing were held, none was present for the assessee, nor was any a .....

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therefore, proceed to dispose off this appeal ex-parte, with the assistance of the learned DR for Revenue and the material on record. 5. In grounds 1 to 3 (supra) raised by the assessee, all challenge the finding of the learned CIT(A) in the impugned order in upholding the disallowance of bad debts amounting to ₹ 14,65,624/- in respect of four parties since the balance of the parties in assessee s books were not tallying with the books of the respective parties, ignoring all the details f .....

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opted by the assessee vis-à-vis the system adopted by the four parties. The learned CIT(A) noting that the assessee was not able to explain away these discrepancies / differences upheld the disallowance made by the AO. The learned DR submitted that since the assessee had failed to bring on record any evidence to explain away the discrepancies / differences or controvert the findings of the learned CIT(A), the impugned order of the learned CIT(A) is to be upheld. 7. We have heard the learn .....

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/ accounts of these four parties vis-à-vis the books of accounts of the assessee is also admittedly not denied by the assessee. In our view, the learned CIT(A) after judiciously considering the facts of the case on this issue in detail has held as under at paras 15 to 17 thereof. 15. I have considered the facts of the case and feel that arguments made by the appellant are totally misplaced. In the present case, the AO is not questioning the 'writing off of the bad debts' by the a .....

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ial amount has been brought to tax by the AO, and rightly so. The AO has stated in the assessment order that while the assessee has claimed an amount of ₹ 16.86.863/- as bad debts written off in the name of M/s. B4U Television Network India Ltd., the said party was showing a balance of ₹ 10,76,546/- only, in its books of accounts. Thus, the appellant has claimed an excess amount of ₹ 6,10,317/- as bad debt written off, as compared to the balance appearing in the books of this p .....

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mounting to ₹ 42,424/-, in respect of this party. Similarly, in the case of M/s. UTV Production, the appellant had claimed bad debts written off amounting to ₹ 1,40,000/-, whereas the corresponding balance appearing in the books of the said party was only ₹ 21,741/-, which shows that the appellant had claimed excess bad debts written off amounting to ₹ 1,18,259/-, in respect of this party. The total amount of excess bad debts written off claimed by' the appellant as c .....

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th all these parties, even after writing off of the balances. It is not clear as to how and why the assessee wrote off these amounts as irrecoverable, when it was still doing business with these parties, and in most of the cases, the appellant was even receiving payments subsequent to writing off. Accordingly, writing off of such amounts on the one hand and continuing business transaction with such parties on the other hands does not inspire confidence about the genuineness of such writing off, .....

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pening Balance 10,31,465 Add: Billed for the year 3,41,997 13,73,462 Less: Bad Debts w/o 7,79,643 Less: Received during the year 2,52,192 Less: Discount 91,627 Closing Balance 2,50,000 26/07/2007 Cheque received 1,00,000 Amount billed during the year 1,61,617 From the above, it is clear that the amount of ₹ 7.79.463/- has been written off without any reason or basis and the transactions are happening on regular basis between the two parties. Therefore, the very satisfaction that these amou .....

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89, once a balance has been written off in the books, it should be allowed and assessee is not required to prove that actually it had become bad. However, situation is slightly different in the present case, as there is discrepancy in the figure written off, and the AO has only taxed such discrepancy. The claim of the assessee that he was actually showing more balance than the other party, does not explain the situation. In fact, amount written off by the assessee is liable to be taxed u/s.41 (1 .....

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