Margadarsi Chit Fund Private Limited, Hyderabad, Hyderabad V. ACIT,Circle-16(2) Hyd, Hyderabad

ITA 1396/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2648 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Revision of order; Bad and doubtful debts
• Section: 263

Judgement Text

1 ITA.NO.1396/HYD/2016 MARGADARSI CHIT FUND P. LTD., HYDERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1396/HYD/2016 ASSESSMENT YEAR 2010-2011 MARGADARSI CHIT FUND P. LTD., HYDERABAD 500 004. PAN AABCM4751G VS. ACIT, CIRCLE-16(2) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. SIVAKUMAR FOR REVENUE : SHRI K.J. RAO DATE OF HEARING : 19.04.2017 DATE OF PRONOUNCEMENT : 19.04.2017 ORDER PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER PASSED BY CIT(A)-4, HYDERABAD WHEREIN THE CIT(A), IN A CRYPTIC ORDER DISMISSED THE APPEAL FILED BY ASSESSEE BY OBSERVING AS UNDER : 3. WITH REGARD TO THE ABOVE, THE HONBLE ITAT IN IT S ORDER IN ITA.NO.1602/HYD/2014 DATED 05.07.2016 IN THE CASE O F M/S. MAHESHWARI MEGA VENTURES LTD., HELD THAT, WE ARE OF THE OPINION THAT CIT(A) SHOULD NOT HAVE EXERCISED HIS APPELLATE POWERS ON AN ISSUE WHICH WAS SUBJECT MATTER OF CONSIDERATION BY THE CIT U/S.263. SINCE NO DISCRETION WAS ALLOWED TO A.O, WE ARE OF THE OPINION THAT CIT(A) SHOULD NOT HAVE INTERFERED WITH THE ORDER OF THE A.O. THEREFORE RESPECTFULLY FOLLOWING THE HONBLE ITAT DECISION, THE APPEAL IS DISMISSED. 2 ITA.NO.1396/HYD/2016 MARGADARSI CHIT FUND P. LTD., HYDERABAD. 2. IT DESERVES TO BE NOTICED THAT ASSESSEE-COMPANY DEC LARED NIL INCOME FOR THE A.Y. 2010-2011 BUT THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.1.89 CRORES. ON PERUSAL OF AS SESSMENT ORDER, THE PR. CIT, IN EXERCISE OF THE REVISIONARY POWERS VE STED IN HIM UNDER SECTION 263 OF THE ACT, SET ASIDE THE ASSESSMENT WITH A DIRECTION TO MAKE CERTAIN DISALLOWANCE WHILE MAKING AN ASSESSMENT DENOV O. THIS ORDER WAS PASSED ON 24.03.2015. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE APPEL LATE TRIBUNAL CHALLENGING THE DIRECTION OF THE REVISIONAL AUTHORITY. MEANWHILE A.O FOLLOWED THE DIRECTION OF THE REVISIONAL AUTHORITY AND PASSED AN ORDER DATED 31.07.2015 BY DETERMINING THE TOTAL INCOME AT RS .102.37 CRORES. 2.2. AGGRIEVED BY THE ORDER OF THE A.O. AN APPEAL WA S PREFERRED BEFORE THE CIT(A)-4, HYDERABAD. AS THE MATTER STOOD THU S, THE APPEAL BEFORE THE ITAT, AGAINST THE ORDER PASSED BY THE REVISI ONAL AUTHORITY, WAS DISPOSED OF BY THE TRIBUNAL ON 09.09.2015 (ITA.N O.732/HYD/2015) WHEREIN THE TRIBUNAL SET ASIDE THE ORDER OF THE REVISIO NAL AUTHORITY AND IN THIS REGARD OBSERVED AS UNDER : 7. THIS YEAR ALSO ASSESSEE HAD SUBMITTED FULL DETA ILS TO THE AO WHO HAD APPLIED HIS MIND AND HAD COME TO A CONCLUSION T HAT THE BAD DEBTS DEBITED BY THE ASSESSEE WAS AN ALLOWABLE EXPENDITUR E. IN SPITE OF NOTICING THE SAME, HOW LD. PR. CIT COULD INVOKE THE JURISDICTION U/S. 263 IN THIS YEAR IS NOT EXPLAINED BY HIM. ASSESSEE DID IN FACT SUBMIT ALL THE INFORMATION TO AO IN COURSE OF ASSESSMENT PROCEEDIN GS AND THEREFORE, ANY OPINION BY THE CIT CAN ONLY BE CONSIDERED AS CH ANGE OF MIND. FURTHER, ASSESSEE HAD RELIED ON VARIOUS CASE LAW IN CLUDING THE ORDERS OF THE ITAT AND HON'BLE HIGH COURT IN ASSESSEES OWN C ASE IN EARLIER YEARS. THIS SORT OF DELIBERATE AND MISLEADING ORDER BY PR. CIT IS NOT EXPECTED FROM A SENIOR OFFICER LIKE HIM. WE ONLY WISH THAT THE AUTHORITIES OF REVENUE FOLLOW THE ORDERS OF ITAT IN LETTER AND SPI RIT. IN CASE THEY WANT 3 ITA.NO.1396/HYD/2016 MARGADARSI CHIT FUND P. LTD., HYDERABAD. TO DIFFER THEY CAN DIFFER ONLY ON THE REASON THAT T HE ORDER IS EITHER APPEALED AGAINST IN THE HIGH COURT (WHICH, HOWEVER, DOES NOT EMPOWER THEM TO IGNORE THE ORDERS) AND THE ORDER WAS STAYE D BY JURISDICTIONAL HIGH COURT. IN THOSE CIRCUMSTANCES ONLY THE AUTHOR ITIES CAN DIFFER FROM THE ITATS ORDER. THIS DELIBERATE DISOBEDIENCE TO THE ORDERS OF HIGHER JUDICIAL FORUMS CALLS FOR CONTEMPT PROCEEDINGS, BUT WE ARE NOT CONSIDERING THE SAME. HOWEVER WE WISH TO STATE THAT ANY FURTHER NOTICE OF SUCH DISOBEDIENCE WILL CERTAINLY INVITE SERIOUS ACTION I NCLUDING LEVY OF COST. FOR THE TIME BEING WE LEAVE THE MATTER THERE, WITH A DI RECTION THAT THE AUTHORITIES SHOULD FOLLOW THE ORDERS OF ITAT/ HIGH COURT, WHEN THEY WERE BROUGHT TO THE NOTICE IN THE RESPECTIVE PROCEEDINGS . AS ALREADY STATED ORDER OF THE CIT U/S 263 TO THAT EXTENT IS SET ASID E. 3. AS COULD BE NOTICED FROM THE PARA EXTRACTED ABOVE, THE TRIBUNAL, WITH REFERENCE TO DISALLOWANCE OF CLAIM OF BAD DEBTS, MADE STERN OBSERVATIONS AGAINST THE DELIBERATE DISOBEDIENCE TO THE ORDERS OF THE HIGHER JUDICIAL FORUMS. IN SHORT, THE ISSUE ON WHI CH THE REVISIONAL PROCEEDINGS WERE TAKEN-UP NO LONGER SUBSISTS IN THE LIGHT OF DECISION OF THE ITAT. 4. SINCE THIS ISSUE WAS ALREADY DECIDED IN FAVOUR O F ASSESSEE, ORDER PASSED BY THE A.O TO THE EXTENT OF DISALLOWANCE O F BAD DEBTS CAN BE SAID TO BE NOT IN ACCORDANCE WITH LAW AND IT IS THE D UTY OF THE CIT(A) TO CORRECT THE SAID ERROR IN THE PECULIAR FACTS OF THE CA SE. HOWEVER, LD. CIT(A), AS USUAL, CHOSE TO PASS A CRYPTIC ORDER WITHOU T EVEN REFERRING TO THE ORDER PASSED BY THE ITAT. THE CHRONOLOGY OF THE EV ENTS ONLY HIGHLIGHT THE SCANT RESPECT THE DEPARTMENTAL AUTHORITIES HAVE FOR THE QUASI-JUDICIAL FORUM BEING CONSTITUTED TO OVERSEE THE MISTAKES COMMITTED BY THE A.O./ ADMINISTRATIVE COMMISSIONER AS W ELL AS THE LD. CIT(A). SUFFICE TO SAY THAT THE ORDER PASSED BY THE REVI SIONAL AUTHORITY TO THE EXTENT OF DISALLOWANCE OF BAD DEBTS HAVING BEEN SET ASIDE BY THE 4 ITA.NO.1396/HYD/2016 MARGADARSI CHIT FUND P. LTD., HYDERABAD. TRIBUNAL THE A.O. OUGHT NOT TO HAVE MADE ANY DISALLOW ANCE ON THAT ASPECT AND ATLEAST LD. CIT(A) SHOULD HAVE CORRECTED THE ERROR. WE HEREBY SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE A.O. TO PA SS AN APPROPRIATE ORDER IN LINE WITH THE DIRECTION GIVEN BY THE TRIBUNAL IN THE ORDER DATED 09.09.2015. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT O N 19.04.2017. SD/- SD/- (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 19 TH APRIL, 2017 VBP/- COPY TO 1. MARGADARSI CHIT FUND P. LTD., 5-10-195, FATEH MAID AN ROAD, HYDERABAD 500 004. 2. THE INCOME TAX OFFICER, WARD-16(2), HYDERABAD. 3. CIT(A)-4, 2 ND FLOOR, A BLOCK, I.T. TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD 500 004. 4. PR. CIT-4, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE.