ACIT Vs Sheetal Jewellery House LLP (ITAT Mumbai)
Bad Debts Allowed on Write-off 26AS Mismatch Cannot Trigger Addition – ITAT Dismisses Revenue Appeal
Revenue challenged deletion of multiple additions by CIT(A) including bad debts (₹3.61 Cr), 26AS mismatch (₹12.03 lakh) & commission (₹2.98 lakh).
On Bad Debts (Sec 36(1)(vii)):
- Assessee wrote off debt relating to earlier years & had filed NCLT claim
- ITAT held: post-1989 amendment, mere write-off is sufficient; no need to prove irrecoverability (relying on TRF Ltd)
- Deduction rightly allowed
On 26AS mismatch:
- Difference due to GST, credit notes, timing issues & incorrect entries
- Assessee provided reconciliation & no defects in books
- ITAT held: addition cannot be made merely on 26AS mismatch
On Commission:
- Payment supported by bank entries, TDS, confirmation & ITR of recipient
- Identity, genuineness & business purpose established
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Instant appeal of the revenue was preferred against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “Ld. CIT(A)”] order passed u/s. 250 of the Income Tax Act, 1961 [hereinafter referred to as “Act”] order passed for the Assessment Year 2021-22 date of order 25.09.2025. The impugned order emanated from the order of the Assessment Unit Income Tax Department [hereinafter referred to as “Ld. AO”], order passed u/s. 143(3) r.w.s. 144B of the Act date of order 26.12.2022.
