Gujarat High Court
Vipul Fashions (P) Ltd. vs Assistant Commissioner Of Income Tax on 15 March, 2005
Equivalent citations: (2006)202CTR(GUJ)299, [2006]284ITR332(GUJ)
ORDER D.A. Mehta, J.
1. Heard Mr. T.P. Hemani, the learned advocate for the appellant. Admit.
2. The following common substantial question of law arises from the impugned order of Tribunal dt. 10th Sept., 2003 :
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in reversing the order of CIT(A) without assigning any reasons and without controverting findings recorded in the order of the CIT(A) ?
3. In light of the view that the Court proposes to. take, the appeals are taken up for final hearing and disposal.
4. The assessment year is 1995-96 and the relevant accounting period is the year ended on 31st March, 1995. The assessee filed return of income showing income at Rs. 30,02,420 on 30th Nov., 1995. The AO, for the reasons stated in his order dt. 30th March, 1998, disallowed a sum of Rs. 20,67,776 treating the same as excessive rebate and discount allowed to various parties, including one sister-concern of the appellant, namely, M/s Vipul Exports.
5. The assessee carried the matter in appeal before CIT(A), who held that, considering the overall facts and circumstances of the case, the disallowance be restricted to 2 per cent of the total sales of Rs. 1.87 crores, and rounding off the same to a figure of Rs. 3,75,000, confirmed the disallowance to the said extent while granting reduction qua the balance amount. The reasons which weighed with the CIT(A) for passing the said order are narrated in paragraph No. 4.2 of the appellate order.
6. Both the assessee and the Revenue preferred cross-appeals before the Tribunal : Revenue being aggrieved by the relief of Rs. 16,91,776 granted to the assessee; and assessee being aggrieved by the disallowance of Rs. 3,75,000 sustained by the CIT(A). Both the appeals were heard together by the Tribunal and have been disposed of by a common order.
7. As can be seen from the impugned order of the Tribunal, paragraph Nos. 3 to 3.3 is narration of the facts; paragraph No. 3.4 records the contentions on behalf of the assessee, while paragraph No. 3.5 records the submissions made by the Departmental Representative; and paragraph No. 3.6 records the submissions made in rejoinder by the counsel of the assessee. Though the finding of the Tribunal appears to run into four paragraphs, namely, paragraph Nos. 3.7 to 3.10, as can be seen from the impugned order, the Tribunal has reproduced various findings recorded by the AO in paragraph Nos. 3.7, 3.8 and 3.9, while in paragraph No. 3.10, it is stated thus :
Keeping in view the totality of the facts and circumstances of the case and after examining the basis on which AO allowed discount at the rate of 10 per cent and further allowed discount at the rate of 1 per cent i.e., Rs. 50,812 on the sales of Rs. 50,81,263, we are of the view that AO has taken fair and reasonable view. Looking to the amount of discount and rebates allowed to other parties, we are of the view that it will meet the ends of justice if the disallowance made by the AO is restored. We accordingly hold that disallowance of Rs. 20,67,776 made by the AO was fair and reasonable. We accordingly restore the same.
8. Thus, it is apparent that the Tribunal has singularly failed to record any reasons as to why Tribunal is not agreeing with the order of CIT(A). The Tribunal, it appears, has lost sight of the fact that primarily it is called upon to decide as to whether the order made by the first appellate authority is correct or not. The assessment order has already merged in the order of the CIT(A) and has no independent existence. In case the Tribunal was inclined to reverse the order of CIT(A), it was necessary for the Tribunal to record, howsoever briefly, the reasons for the same. The impugned order of the Tribunal nowhere reflects as to why the basis on which the CIT(A) accepted the explanation of the assessee was not correct. In the view that the Court is inclined to take, it is not necessary to enter into discussion on merits of the issue involved nor the veracity or the weightage to be assigned to the evidence available on record.
9. In a similar matter in case of Nirman Textile Mills (P) Ltd. v. Asstt. CIT, Tax Appeal No. 69 of 2004, decided on 10th Jan., 2005, this Court has stated thus :
In 1959 the apex Court had observed that if the Tribunal arrives at its own conclusion of fact after due consideration of evidence before it, the Court will not interfere, but for this purpose it was necessary that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the points for determination before it, and what was the evidence pro and contra in regard to each of the issues and what were the findings reached on the evidence on record before it. [Omar Salay Mohamed Sait v. CIT ]. This position has been reiterated once again in 2002 by this Court after referring to the aforesaid judgment in the two decisions rendered in cases of Mercury Metals (P) Ltd. v. Asstt. CIT and Ramesh Chandra M. Luthra v. Asstt. CIT . The Tribunal has passed the order on 29th Aug., 2003 and yet seems to be blissfully unaware of the legal position.
10. In light of the aforesaid legal position and the fact situation, the impugned order of the Tribunal in relation to disallowance of Rs. 20,67,776 is quashed and set aside and both the appeals are restored to the file of the Tribunal for the purpose of adjudication afresh.
11. Accordingly, both the appeals are allowed to the aforesaid extent. The question is answered in light of what is stated hereinbefore. The appeals stand disposed of accordingly. There shall be no order as to costs.