Ashok Kumar Jain V. Commissioner of Income Tax, Dehradun

ITA/43/2009

AI Insights

The case revolves around the appellant, Ashok Kumar Jain, who contested the denial of deductions for bad debts claimed in his income tax returns. Initially, the Assessing Officer rejected these deductions, leading to an appeal to the Commissioner of Income Tax (Appeals), who favored the appellant. However, the Income Tax Appellate Tribunal, upon the department's appeal, remanded the case to the Assessing Officer for a detailed examination due to the absence of sufficient material to support the deductions claimed. The High Court's decision focused on the procedural aspect of whether the Tribunal could remand the case, ultimately upholding the Tribunal's decision and dismissing the appellant's appeal.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 672621 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 30-03-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ARVIND VASHISTH
• Assessee Lawyers: S K SRIVASTAVA; CHETAN JOSHI
• Keywords: Assessing Officer; Bad debts; Income Tax; Income tax appellate tribunal; Remand
• Section: 36(1)(vii); 254(4)

Judgement Text

"IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 43 of 2009 Ashok Kumar Jain …..…….. Appellant Versus Commissioner of Income Tax, Dehradun ....……… Respondent Coram:- Hon’ble J.S. Khehar, C.J. Hon’ble Sudhanshu Dhulia, J. Present: Mr. S.K. Srivastava, Advocate with Mr. Chetan Joshi Advocate for the appellant. Mr. Arvind Vashisth, Advocate for the respondent. Date of Decision: 30.03.2010 J.S. Khehar, C.J. (Oral) Certain incriminating documents, cash, KVPs and FDRs in the name of the appellant and his children were found during the course of a search conducted on 30.11.1999. On the determination rendered by the Assessing Officer, the appellant/assessee sought certain deductions. Some of these deductions were on account of bad debts, which the assessee claimed ought to have been written off. The Assessing Officer did not accept the deductions sought by the appellant in the final order passed on 27.11.2001. Dissatisfied with the order passed by the Assessing Officer, the appellant/assessee preferred an appeal before the Commissioner of Income Tax (Appeals), so as to assail the order dated 27.11.2001. The Commissioner of Income Tax (Appeals), after examining the facts relevant to the claim of the appellant/assessee, arrived at the conclusion that the Assessing Officer was wrong in brushing aside the detailed reply furnished by the appellant/assessee on 15.11.2001. The Commissioner of Income Tax (Appeals) also took into consideration the provisions of Section 36(1)(vii) of the Income Tax Act, 1961 and the amendments made thereto with effect from the 2 assessment year 1989-90. According to the view expressed by the Commissioner of Income Tax (Appeals), to record a finding that the bad debt was deducted from the profit and loss account, it was sufficient for the assessee to establish, that the bad debt had been written off as irrecoverable. It was also concluded by the said appellate authority, that the detailed reply submitted by the appellant/assessee dated 15.11.2001 was sufficient to arrive at the aforesaid conclusion. 2. Dissatisfied with the order passed by the Commissioner of Income Tax (Appeals) dated 31.01.2005, wherein the claim raised by the appellant/assess for deductions on the basis of certain written off debts as irrecoverable had been allowed, the department preferred an appeal before the Income Tax Appellate Tribunal. The assessee also raised certain other pleas by filing cross objections before the Income Tax Appellate Tribunal. Neither the other issues raised by the department, nor the issues canvassed at the hands of the appellant/assessee, besides deductions demanded on the basis of written off bad debts, is subject matter of consideration in the present appeal. 3. In so far as the issue of bad debts, which the appellant /assessee claimed as deductions, on account of the fact that they were irrecoverable is concerned, the Income Tax Appellate Tribunal in its order dated 27.05.2009 inter alia observed as under:- “No document in support of above requirement was available on record or shown to us. We appreciate that assessee is suffering handicap in the sense that his books are lying seized with the revenue and A.O. neither examined them in accordance with law nor gave relevant reasons in the assessment order before making disallowance u/s 36(1)(vii). The report sent by him to the learned Commissioner did not improve the situation. Be that as it may, for allowing of claim, statutory requirement noted above has to be satisfied. On peculiar facts of the case, we deem it fit and proper to set aside impugned order and restore the matter to the file of the Assessing Officer to record a fresh finding as to the satisfaction of statutory conditions. A fresh order be passed after allowing reasonable opportunity of being heard to the assessee and after examining seized record.” 3 4. It is the aforesaid determination rendered by the Income Tax Appellate Tribunal, which is subject matter of challenge at the hands of the appellant/assessee before this Court. The solitary contention advanced by the learned counsel for the appellant/assessee is based on Section 254(4) of the Income Tax Act, 1961. Sub-section (4) being a sole basis for assailing the order rendered by the Income Tax Appellate Tribunal, sub-section (4) of Section 254 only is being extracted hereunder:- “(4) Save as provided in the National Tax Tribunal Act, 2005, orders passed by the Appellate Tribunal on appeal shall be final.” Based on sub-section (4) of Section 254 of the Income Tax Act, 1961, it is the submission of the learned counsel for the appellant/assessee, that it was not open to the Income Tax Appellate Tribunal to remand the matter for re-determination of the controversy to the Assessing Officer. In this behalf, it is the vehement contention of the learned counsel for the appellant/assessee, that the Income Tax Appellate Tribunal is required to pass orders which are final in nature, and as such, it was not open to Income Tax Appellate Tribunal to remand the matter for re- determination at the hands of the Assessing Officer. We have perused sub-section (4) of Section 254 of the Income Tax Act, 1961 with the assistance of the learned counsel for the appellant, but we find nothing therein, on the basis of which, it can be inferred that the Income Tax Appellate Tribunal could not have remanded the matter for re- determination at the hands of the Assessing Officer. We are satisfied that the Income Tax Appellate Tribunal having been satisfied, that there was no sufficient material, documentary or otherwise, to support the conclusion recorded by the Assessing Officer, as also on the basis of the further report sought by the Commissioner of Income Tax (Appeals), relevant part whereof has been extracted in paragraph 13 of the order passed by the Income Tax Appellate Tribunal, there was no other alternative with the Income Tax Appellate Tribunal but to remand the matter for adjudication to the Assessing Officer with the clear direction that the issue should be re-determined keeping in mind the satisfaction of 4 the statutory conditions. This is exactly what has been done by the Income Tax Appellate Tribunal. 5. In view of the above, we are satisfied that no substantial question of law arises for consideration in the instant appeal filed under Section 260-A of Income Tax Act, 1961. The instant appeal is accordingly hereby dismissed. (Sudhanshu Dhulia, J.) (J.S. Khehar, C.J.) 30.03.2010 P.Singh 5 "