Craft Int Decor Private Limited Vs DCIT (ITAT Bangalore)
ITAT Bangalore: Mere Write-off of Bad Debt is Sufficient After TRF Ltd.; AO Must Verify Only Section 36(2) Conditions
The Bangalore ITAT in Craft Int Decor Pvt. Ltd. v. DCIT (ITA Nos. 139 & 140/Bang/2026, order dated 15.07.2026) held that after 1 April 1989, an assessee is not required to establish that a debt has actually become irrecoverable. Once the bad debt is written off in the books of account, the only remaining requirement is compliance with the conditions prescribed under Section 36(2). Since the lower authorities had rejected the claim solely for want of confirmations and without examining whether the debt had been taken into account as income in earlier years, the Tribunal restored the issue to the Assessing Officer for fresh verification in the light of the Supreme Court’s decision in TRF Ltd. v. CIT, (2010) 190 Taxman 391 (SC).
The Tribunal also dealt with the assessee’s contention that interest on TDS and interest on VAT had already been disallowed by the assessee in the computation of income. It observed that if these amounts had indeed been added back while computing taxable income, a further disallowance by the Assessing Officer would amount to double disallowance, and accordingly restored the matter to the Assessing Officer for verification with directions to delete the addition if the claim was found to be correct.
Regarding the donation expenditure, the Tribunal noted that the assessee had failed to furnish supporting documents such as donation receipts and certificates for claiming deduction under Section 80G. However, in the interest of justice, it granted another opportunity to produce the necessary evidence before the Assessing Officer and restored the issue for fresh adjudication.
The Tribunal also condoned a 408-day delay in filing the appeal, accepting the director’s medical condition as sufficient cause but imposing a cost of ₹5,000 payable to the Prime Minister’s National Relief Fund, noting that the assessee had not satisfactorily explained why its other director could not have filed the appeal.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. The assessee has filed the present appeal against the separate impugned orders dated 03.12.2024 and 26.12.2025 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], which in turn arose from the assessment order passed under section 143(3) and penalty order passed under section 270A of the Act, respectively, for the assessment year 2017-18
ITA No. 140/Bang/2026
Quantum Appeal — A.Y. 2017-18
2. This appeal by the assessee is delayed by 408 days. Along with the appeal, the Director of the assessee company has filed an affidavit seeking condonation of delay, stating as follows: –
1. That I am the Director of the appellant in the above matter and am fully conversant with the facts of the case. I am competent to swear to this affidavit.
2. That there has been a delay of 408 days in filing the appeal before the Hon’ble Tribunal. The delay is neither intentional nor deliberate but solely due to circumstances beyond my control.
3. That I am key person responsible for handling tax and compliance matters in our organization. I am aged about 70 years and had undergone Coronary Artery Bypass Grafting (CABG) surgery in the year 2012. Since then, I have been under continuous medical supervision and medication.
4. That in December 2024,1 was advised strict bed rest by my doctor due to severe low back pain. My medical condition further restricted my mobility and ability to attend to official and statutory matters.
5. That owning to the above medical conditions, the appeal could not be filed within the prescribed time. The delay is attributable solely to these unavoidable health circumstances.
6. That the delay is bona fide and not intentional. I humbly submit that if the delay is not condoned. I shall suffer irreparable loss and injury, whereas no prejudice will be caused to the Revenue.
7. That I respectfully pray that this Hon’ble Tribunal may kindly condone the delay in filing the appeal and admit the same for hearing on merits.
3. During the hearing, the learned Authorised Representative (“learned AR”) submitted that as the Director was under continuous medical supervision and medication and was advised bed rest, the assessee could not file the present appeal within the prescribed limitation period. From the perusal of the financials of the assessee, we find that the assessee company had other directors, and therefore, it is difficult to appreciate that, due to the non-availability of one of the directors due to medical conditions, there was no one else who was authorised to take necessary steps for filing the present appeal within the prescribed limitation period. Be that as it may, we are of the considered view that in the interest of justice, the substantial justice deserves to be preferred when pitted against the technical considerations. Therefore, we are of the considered view that the reasons stated by the assessee constitute sufficient cause for not filing the present appeal within the prescribed limitation period. However, as the assessee has not come forth with complete facts regarding the non-availability of the other director, we deem it appropriate to impose a cost of Rs. 5000/-, which shall be paid by the assessee within 30 days from the date of receipt of this order to the Prime Minister’s National Relief Fund. Thus, with the above condition, the delay in filing the present appeal is condoned, and we proceed to decide the appeal on the merits.
