TMI Blog2018 (4) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... Held that:- Order of the Ld. CIT(A) confirming disallowance of depreciation of ₹ 34,65,465/- on leased assets has been set aside and the matter has been restored to the file of the AO for a de novo order. It has been held in K. C. Builders v. ACIT (2004 (1) TMI 7 - SUPREME Court) that where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment and, therefore, in such a case no such penalty can survive and the same is liable to be cancelled. Similar is the position in case the order of the CIT(A) is set aside and the matter is restored to the file of the AO. - ITA No. 6042/Mum/2008 And ITA No. 1898/Mum/2011 - - - Dated:- 28-3-2018 - SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) For The Assessee : Mr. F. V. Irani, AR For The Revenue : Ms. Arju Garodia, DR ORDER PER N.K. PRADHAN, AM The captioned appeals filed by the assessee/appellant are directed against the order of the Commissioner of Income Tax (Appeals)-I, Mumbai and arise out of the assessment completed u/s 143(3) and penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed managerial personal and it was not possible to agree for settlement of huge dues for a paltry sum of ₹ 25 lacs. He considered it to be a concocted story which is not to be believed. He further asked the assessee to explain why no steps had been taken to acquire and sell the assets of ZGFL for realizing the dues. The assessee explained to the AO that ZGFL was a finance company and it was having no major assets. The assessee had filed a case u/s 138 of the Negotiable Instrument Act, which did not enable the assessee to obtain their dues. Even after the promoters of the company were sent to jail, there was no settlement proposal from their end. The assessee could not get possession of its assets given on hire purchase because ZGFL had given it on further lease to another company which was closed. However, the AO was not convinced with the above explanation of the assessee and relying on the decision in Mc Dowell Co. Ltd. v. ITO 154 ITR 148 (SC), disallowed the claim of loss of ₹ 2,21,92,554/-. 2.3 Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) held : 3.6 I have carefully considered the submissions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested in Chennai in connection with some other cases (Indian Bank case) and were in Chennai jail. When the assessee came to know about this, it had taken a PIT Warrant (Prisoner in Transit) against them and their detention in jail was extended by three more months against the case of the appellant. The above mentioned promoters had requested the assessee to withdraw the cases filed against them on the plea stating that they did not have any money to pay the assessee in view of the default by their debtor. The following Banks/Institutions also had exposure in ZGFL: a) Indian Bank b) Times Bank c) Dhanalaxmi Bank d) Bank of Madura e) IREADA f) Transcorp Finance In connection with the Indian Bank Scam, the Income Tax Department had also attached the Bank Accounts of ZGFL. Even after the promoters were jailed, the assessee was not able to recover any dues from ZGFL. On May 24, 2001, ZGFL submitted a written proposal for payment of a total sum of ₹ 25 lacs in instalments for settlement of their dues. Since no recovery could be made till that date from ZGFL, the assessee agreed to accept this payment towards settlement of the dues from ZGFL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Bom.) it has been held that after amendment to section 36(1)(vii), it is neither obligatory nor is there any burden on the assessee to prove that debt written off by him is indeed a bad debt as long as it is bona fide and is based on commercial wisdom or expediency. In the case of CIT v. Star Chemicals (Bombay) Limited (313 ITR 126) (Bom), it has been held that if assessee has written off debt as bad debt, that would satisfy purpose of section 36(1)(vii). We find that the assessee after receiving payment of ₹ 25 lacs, has rightly written off the balance outstanding amount of ₹ 2,21,92,554/- in the books of account in December, 2001 as loss on termination of contract. This view is supported by the ratio laid down in the decisions mentioned hereinbefore. 2.7 In view of the above reasons, we delete the disallowance of ₹ 1,79,80,120/- made by the Ld. CIT(A) and allow the 1st ground of appeal. 3. The 2nd ground of appeal The CIT(A) erred in confirming the disallowance of depreciation of ₹ 34,65,465/- on assets acquired and given on lease, based on the appellate order of earlier years. 3.1 The assessee had claimed a sum of ₹ 34,65,465/- towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt record and decide the issue in accordance with the provisions of law. While framing the assessment, the Assessing Officer may also consider the Special Bench decision of the Mumbai Tribunal, in Indusind Bank Ltd. v/s ACIT, [2012] 135 ITD 161 (SB) (Mum.) if it is found applicable on the facts of the case. We order accordingly. Thus, grounds no.1 and 2, along with additional grounds as above are treated as allowed for statistical purposes. Facts being identical, we set aside the order of the Ld. CIT(A) and direct the AO to follow the above order of the Co-ordinate Bench for the impugned assessment year. Thus the 2nd ground of appeal is allowed for statistical purposes. 3.5 The Ld. counsel of the assessee submits that the assessee would not press the 3rd ground of appeal due to smallness of the amount. Hence, the 3rd ground of appeal is dismissed as not pressed. 4. In the result, the appeal filed by the assessee is partly allowed. ITA No. 1898/Mum/2011 Assessment Year: 2002-03 5. The grounds of appeal raised by the assessee in this appeal are against the order of the Ld. CIT(A) upholding the order of the AO u/s 271(1)(c). 5.1 The AO levied a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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