SOFTOUCH HYGINE PRODUCTS (MKT.) PVT. LTD. V. DY. COMMISSIONER OF INCOME-TAXCO.CIR 7(6) OR HIS SUCCESSOR

TAXAP/1386/2007

AI Insights

The case involves SofTouch Hygiene Products (Mkt.) Pvt. Ltd., the appellant, challenging the order of the ITAT, Ahmedabad, which partly allowed their appeal regarding disallowances made by the Assessing Officer (AO) on various expenses claimed by the appellant for the Assessment Year 1997-98. The main contention was the Tribunal's lack of a reasoned order in confirming the disallowances of foreign travel, medical, marketing, sales promotion, and traveling expenses. The High Court found that the Tribunal did not provide adequate reasoning for its decision and merely upheld the CIT(A)'s findings without independent analysis.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 691863 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 05-12-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: NITIN MEHTA
• Assessee Lawyers: S N DIVATIA
• Keywords: Assessment Order; Disallowance; Foreign Travel Expenses; Income Tax; Marketing Commercial Expenses; Medical expenses; Sales promotion expenses; Traveling Expenses
• Section: 143(2)

Judgement Text

"O/TAXAP/1386/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1386 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ SOFTOUCH HYGINE PRODUCTS (MKT.) PVT. LTD.....Appellant(s) Versus DY. COMMISSIONER OF INCOME-TAXCO.CIR 7(6) OR HIS SUCCESSOR....Opponent(s) ================================================================ Appearance: MR SN DIVATIA, ADVOCATE for the Appellant(s) No. 1 MR NITIN K MEHTA, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 05/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. This is an appeal by the appellant- assessee, seeking to challenge the order of the ITAT, Ahmedabad Bench-B, Ahmedabad (for short, Page 1 of 6 O/TAXAP/1386/2007 JUDGMENT ‘the Tribunal’), Dated : 16.03.2007, rendered in ITA No. 594/Ahd/2003 for the A.Y. 1997-98, whereby, the Tribunal partly allowed the same. 2. The brief facts giving rise to the present appeal are that the appellant-assessee filed its return of income for the year under consideration on 28.11.1997, declaring its total income at Rs.55,060/-. Pursuant thereto, the case of the assessee was examined by the concerned Revenue and a notice u/s. 143(2) of the Income Tax Act, 1961, (‘the Act’, for short)came to be issued to the assessee. Later on, the concerned AO passed the Assessment Order, making certain additions / disallowances. The assessee, hence, approached the learned CIT(A) by way of an appeal against the same and the CIT(A) allowed the appeal of the assessee in part. However, since, the assessee as well as the Revenue both were not satisfied with the order of the CIT(A), the carried the matter before the Tribunal filing separate appeals, wherein, the Tribunal passed the impugned order. Hence, the present appeal. 3. At the time of admitting this appeal, this Court framed the following question of law; “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal, was right in Page 2 of 6 O/TAXAP/1386/2007 JUDGMENT law in confirming without passing a speaking and reasoned order as well as ignoring the material / evidence on record the disallowance of (i) foreign travel expenses of Rs.3,20,515/-, (ii) Medical expenses of Rs.1,70,000/-, (iii) marketing commercial expenses of Rs.3,10,027/-, (iv) sales promotion expenses of Rs.1,35,123/- and (v) traveling expenses of Rs.77,506/-?” 4. Mr. Divatia, learned Advocate for the assessee, submitted that the Tribunal committed a grave error in passing the impugned order, inasmuch as it failed to appreciate the material on record in its proper perspective. He, further, invited our attention to the orders of the CIT(A) as well as the Tribunal. He submitted that, since, while confirming the order of the CIT(A), the Tribunal has given no reasons, the order of the Tribunal be quashed and set aside and the present appeal be allowed. 5. On the other hand, Mr. Mehta, learned Advocate, supported the orders passed by the CIT(A) as well as the Tribunal and submitted that there being concurrent findings, present appeal be dismissed. 6. We heard learned Counsels for the parties and perused the material on record as well as the orders passed by the learned CIT(A) and the Tribunal. While confirming the Page 3 of 6 O/TAXAP/1386/2007 JUDGMENT disallowance of Rs.3,20,515/-, the Tribunal has observed as under in Para-9; “Having heard both the parties and perusing the record, we find that the Assessing Officer disallowed the claim of Rs.3,20,515/- towards foreign traveling expenses on the ground that the assessee has not filed any supporting evidence i.e., pass port, reason for travelling. The CIT(A) has confirmed the same as in the remand report the Assessing Officer has explained that out of total travelling expenses of Rs.3,20,515, the assessee could not explain any of the expenses with supporting evidence. Before us, the learned AR of the assessee produced correspondence with foreign parties but could not produce any details of expenses incurred in foreign tours along with supporting evidence. Therefore, we do not find any reason to interfere with the order of the CIT(A) in confirming the disallowance.” 7. In the same manner, the Tribunal has confirmed the findings of the CIT(A) with regard to medical expenses, marketing and commercial expenses etc.. The Tribunal, being a Court of appeal, was required to record reasons by arriving at concrete findings from the material on record, while confirming the findings recorded by the CIT(A). In the case on hand, the Tribunal has not given any findings of its own, but, it merely relied on the findings of the CIT(A) and without assigning any reason as to why it was Page 4 of 6 O/TAXAP/1386/2007 JUDGMENT concurring with the findings of the CIT(A), confirmed the same. 8. Mr. Mehta, learned Advocate for the Revenue, is not in a position to controvert the aforesaid aspect. 9. Under the circumstances, we are inclined to accept the submission made by Mr. Divatia that the Tribunal has passed a non-speaking order. We are, therefore, of the opinion that, as the Tribunal has assigned no reasons for confirming the order of the CIT(A), if, the matter is remanded to the Tribunal for its consideration afresh, on merits, and in accordance with law, same would met the ends of justice. 10. In the result, present appeal is PARTLY ALLOWED. The order of the Tribunal, Dated : 16.03.2007, is quashed and set aside and the matter is remanded to the Tribunal for its consideration afresh, on merits, and in accordance with law. Since, the matter pertains to A.Y. 1997-98, the Tribunal will, after providing an opportunity of hearing to the parties, decide the matter at the earliest. It is needless to say that we have not entered into the merits of the matter. No order as to costs. Page 5 of 6 O/TAXAP/1386/2007 JUDGMENT (K.S.JHAVERI, J.) (K.J.THAKER, J) UMESH Page 6 of 6 "