M/s. Nitin Spinners Ltd., BHILWARA V. Dy. CIT, BHILWARA

ITA 233/JODH/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1967 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Keywords: Business income; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.233/JODH/2016 ASSESSMENT YEAR: 2012-13 M/S NITIN SPINNERS LTD. VS. DY CIT, 16-17 K.M. STONE, CHITTOR ROAD, BHILWARA CIRCLE HAMIRGARH, BHILWARA BHILWARA PAN NO. AAACN7529A (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI. S.K. MEENA DATE OF HEARING : 01/05/2017 DATE OF PRONOUNCEMENT : 03/05/2017 ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAIL ING THE CORRECTNESS OF THE ORDER DT. 18/05/2016 OF LD. CIT(A), AJMER, PERTA INING TO 2012-13, ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN SUSTAINING THE ARBITRARY DISALLOWANCE OUT OF SALES COMMISSION TO THE EXTENT OF RS. 6,50,000/- OUT OF TOTAL DISALLOWANCE OF RS. 13,00,000/- BY THE LD. AO FROM THE TOTAL SALES COMMISSION OF RS. 5,42,99,912/ -. THE ADDITION SUSTAINED MAY KINDLY BE DELETED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, SUSTAINING ARBITRARY DISALLOWANCE OUT OF SALES COMMISSION TO THE EXTENT OF RS. 6,50,000/- DESPITE THE FACT BROUGHT TO THE NOTICE OF LD. CIT(A) THAT SIMIL AR DISALLOWANCE SUSTAINED IN THE IMMEDIATELY PREVIOUS ASSESSMENT YEAR I.E. A.Y. 2011 -12 DELETED BY HONBLE ITAT JODHPUR BENCH IS AN OPEN AND DELIBERATE CONTEMPT OF HONBLE ITAT. APPROPRIATE DIRECTION MAY KINDLY BE ISSUED FOR INITIATION OF CO NTEMPT PROCEEDING AGAINST SHRI ANIL KUMAR, CIT(A), AJMER IN THE MATTER. 2 2. AT THE TIME OF HEARING AN ADJOURNMENT APPLICATION WAS PLACED ON BEHALF OF THE ASSESSEE SEEKING TIME STATING THAT THE ARGUING COUNS EL IS NOT ABLE TO BE PRESENT TODAY. NO ONE WAS PRESENT IN SUPPORT OF THE APPLICATION. ACCO RDINGLY, AFTER PASSING IT OVER TWICE CONSIDERING THE FACT THAT THE PRESENT APPEAL COULD BE DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORDS IT WAS CONSIDERED APPRO PRIATE TO REJECT THE ADJOURNMENT APPLICATION. 3. LD. SENIOR DEPARTMENTAL REPRESENTATIVE WAS HEARD. 4. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE ASSESS EE AS IN THE EARLIER YEARS WAS STATED TO BE ENGAGED IN THE MANUFACTURING AND SALE OF COTTON YARN & KNITTED FABRIC FROM BHILWARA AND EXPORT OF KNITTED FABRIC. THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDING FOR THE REASONS SET OUT AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER PROCEED TO MAKE A LUMP SUM DISALLOWANCE OF RS. 13,00,000/- FROM THE SALE AND COMMISSION EXPENSES CLAIMED. THE ISSUE TRAVELLED IN AP PEAL BEFORE THE LD. CIT(A) WHEREIN THE ARGUMENT OF THE ASSESSEE ARE FOUND REPRODUCED IN PARA 4.2 AT PAGE 2 & 3 OF THE IMPUGNED ORDER. APART FROM VARIOUS OTHER SUBMI SSIONS IT WAS STATED THAT THE COMMISSION IS REDUCED FROM 1.35% IN PREVIOUS YEAR TO 1.26% IN THE YEAR UNDER CONSIDERATION AND THERE IS NO INCREASE IN ABSOLUTE TERMS OF PERCENTAGE OF SALE, AND THE COMMISSION PAID IN THE YEAR UNDER CONSIDERATION WHICH WA S RS. 543.00 LACS AS AGAINST 556.00 LACS IN THE IMMEDIATE PRECEDING A.Y. AND THAT THERE WERE NO BAD DEBTS. APART FROM THAT VARIOUS OTHER SUBMISSIONS WERE ADVANCED CONS IDERING WHICH THE LD. CIT(A) GRANTED PART RELIEF HOLDING AS UNDER: 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, GROU NDS OF APPEAL AND WRITTEN SUBMISSION CAREFULLY. IN VIEW OF THE FACTS DISCUSSED BY THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT SOME DISALLOWANCE OUT OF THE SALES COMMISSION EXPENSES WAS REQUIRED TO BE MADE B Y THE ASSESSING OFFICER. HOWEVER, THE DISALLOWANCE MADE BY THE AO APPEARS TO BE ON HIGHER SIDE. I AM OF THE CONSIDERED VIEW THAT IT WOULD BE FAIR AND REASONABLE TO RESTRICT THE DISALLOWANCE OUT OF SALES COMMISSION EXPENSES TO RS . 6,50,000/-. ACCORDINGLY, THE DISALLOWANCE OUT OF ABOVE EXPENSES IS RESTRICTED TO RS. 6,50,000/- AND THE APPELLANT GETS RELIEF OF RS. 6,50,000/-. (EMPHASIS PROVIDED) 5. LD. SENIOR DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ASSESSMENT ORDER AND THE REASONS SET OUT THEREIN IN SUPPORT OF THE LUMP SUM DISALLOWANCE OF RS.13,00,000/- AND SUBMITTED THAT NO FURTHER RELIEF ON FACTS WAS WARRANT ED. 3 6. WE HAVE HEARD SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERING THE FINDINGS AS HIGHLIGHTED IN THE EARLIER PA RT OF THIS ORDER WE FIND THAT THE LD. CIT(A) HAS NOT SPECIFICALLY ADDRESSED WHICH FACTS R ECORDED IN THE ASSESSMENT ORDER WARRANTED FURTHER DISALLOWANCE TO BE SUSTAINED. SIMIL ARLY HE ALSO FAILED TO ADDRESS WHY SUSTAINING OF DISALLOWANCE TO THE EXTENT OF RS. 6,50,0 00/- IS CONSIDERED TO BE JUST AND FAIR. MERELY DESCRIBING THE DECISION TO BE JUST AND FAIR DOES NOT MAKE IT SO, IT IS THE SPECIFIC REASONING BROUGHT OUT IN THE ORDER WHICH CAN LE AD TO THE CONCLUSION THAT A DECISION IS JUST AND ALSO FAIR. IN THE ABSENCE OF ANY RELEVANT DISCUSSION THEREIN THE DECISION IS OPEN TO THE CHALLENGE OF BEING ARBITRARY AND WHIMSICAL. HOLDING THAT THE FINDINGS REPRODUCED HEREIN ABOVE IN PARA 4.3 OF THE IMPU GNED ORDER AS ARBITRARY AND NON SPEAKING AS NO REASONS OR JUSTIFICATION FOR PART REL IEF HAS BEEN SET OUT THEREIN AND CONSEQUENTLY THE REQUIREMENTS OF SUB SECTION (6) OF SEC TION 250 OF THE INCOME TAX ACT CANNOT BE SAID TO HAVE BEEN MET. THE SAID STATUTORY PR OVISIONS LAYS DOWN THE PROCEDURE WHICH THE LD. CIT(A) IS REQUIRED TO FOLLOW WHILE DECIDING THE APPEAL AND MANDATES THAT THE SAID AUTHORITY SHALL SET OUT THE REA SONS FOR THE DECISION. THE SAID REQUIREMENT CANNOT BE SAID TO HAVE BEEN MET. THE LD. CIT (A) WAS REQUIRED TO GIVE HIS INDEPENDENT FINDINGS SUPPORTED BY REASONS FOR THE CONCLU SION DRAWN. ACCORDINGLY THE IMPUGNED ORDER IS SETASIDE AND THE ISSUE IS RESTORED B ACK TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION TO PASS A SPEAKING ORDER IN ACCORDA NCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED ON 03/05/2017 IN THE OPEN C OURT. SD/- SD/- (B.C. MEENA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED : 03/05/2017 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR