Pr. Commissioner Of Income Tax,, Ajmer v. M/S Mahaveer Auto Agencies,, Jln Hospital Road, Bajrangarh Chouraha, Ajmer

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 225 / 2016 Pr. Commissioner of Income Tax,, Ajmer ----Appellant Versus M/s Mahaveer Auto Agencies,, JLN Hospital Road, Bajrangarh Chouraha, Ajmer ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 20/04/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasreversed the view taken by the CIT (A) and has partly allowed theappeal of the assessee. 2.Counsel for the Department has taken us to the order of the Tribunal and framed the following substantial questions of law: “1. Whether the Tribunal was legally justified inreversing the findings of the CIT(A) and deleting theaddition made on account of closing stock u/s. 69when there was difference in stock as per bankstatements vis-a-vis the return filed? 2. Whether the Tribunal was legally justified indeleting the addition made on account of closingstock as per the bank statement specifically whenafter the set aside, the Assessing Officer ascertainedthe position of stock as on 31.03.2006 as per thebank statement dated 14.02.2006 and consideredthe statement of the partner? 3. Whether the Tribunal was legally justified inreversing the findings of the CIT(A) and deleting theaddition made on account of interest specifically when after the set aside, the Assessing Officer calledfor details and evidences in respect of amount givento sister concern and to prove the businessexpediency which the assessee failed to produce? 4. Whether the Tribunal was legally justified inreversing the findings of the CIT (A) and deleting theaddition made on account of bad debts specificallywhen after the set aside, the Assessing Officer calledfor details and evidences in respect of amount takeninto consideration in the profit and loss account onaccount of sale made in earlier years and written offwhich the assessee failed to produce?” 3.We have gone through the order of the Tribunal. The Tribunal while considering ground No.1 has specifically observedthat previous year, the view was taken which is contrary to theview taken by the AO. In our considered opinion, the Tribunalrightly relied upon the decision of the Supreme Court inRadhaswami Satsangh & ors. wherein it has been held as under: “Held, reversing the decision of the High Court, onthe facts, (i) that property given to the Satguruwas intended for the common purpose of furtheringthe purpose of the institution. The central councilhad authority to manage the properties of theinstitution and, on revocation of the trust, theproperty was not to go back to the Satguru, and, atthe most, in the place of the trust, the centralcouncil would exercise authority. The Tribunal wasjustified in holding that the properties were subjectto a legal liability of being used for the religious orcharitable purposes of the Satsang. (ii) That, in the absence of any material changejustifying the Department to take a different viewfrom that taken in earlier proceeings, the questionof the exemption of the assessee appellant shouldnot have been reopened. Strictly speaking, res judicata does not apply toincome-tax proceedings. Though, each assessmentyear being a unit, what was decided in one yearmight not apply in the following year; where afundamental aspect permeating through thedifferent assessment years has been found as afact one way or the other and parties have allowedthat position to be sustained by not challenging theorder, it would not be at all appropriate to all the position to be changed in a subsequent year.” 4.Even on the ground of bad debts of earlier years, the Tribunal has specifically observed as under: Strictly speaking, res judicata does not apply toincome-tax proceedings. Though, each assessmentyear being a unit, what was decided in one yearmight not apply in the following year; where afundamental aspect permeating through thedifferent assessment years has been found as afact one way or the other and parties have allowedthat position to be sustained by not challenging theorder, it would not be at all appropriate to all the position to be changed in a subsequent year.” 4.Even on the ground of bad debts of earlier years, the Tribunal has specifically observed as under: “9.3 We have heard the rival contentions andperused the material available on record. As persection 36(1)(vii) of the Act, the amount of bad debtor part thereof which is written off as irrecoverablein the accounts of the assessee for the previous yearis required to be deducted while computing theincome of the assessee. Section 36(2) provides asunder:- “Section 36(2): In making any deduction for a baddebt or part thereof, the following provisions shallapply- (i) No such deduction shall be allowed unless suchdebt or part thereof has been taken into account incomputing the income of the assessee of theprevious year in which the amount of such debt orpart thereof is written off or of an earlier previousyear, or represents money lent in the ordinarycourse of the business of banking or money-lendingwhich is carried on by the assessee; (ii) If the amount ultimately recovered on any suchdebt or part of debt is less than the differencebetween the debt or part and the amount sodeducted, the deficiency shall be deductible in theprevious year in which the ultimate recovery ismade; (iii) Any such debt or part of debt may be deductedif it has already been written off as irrecoverable inthe accounts of an earlier previous year (being aprevious year relevant to the assessment yearcommencing on the 1[st] day of April, 1988, or anyearlier assessment year), but the Assessing Officerhad not allowed it to be deducted on the ground thatit had not been established to have become a baddebt in that year; (iv) Where any such debt or part of debt is writtenoff as irrecoverable in the accounts of the previousyear (being a previous year relevant to the earlierassessment year) and the Assessing Officer issatisfied that falling beyond a period of four previousyears immediately preceding the previous year inwhich such debt or part is written off, the provisionsof sub-section (6) of section 155 shall apply; (v) Where such debt or part of debt relates toadvances made by an assessee to which clause (viia)of sub-section (1) applies, no such deduction shallbe allowed unless the assessee has debited theamount of such debt or part of debt in that previous year to the provision for bad and doubtful debtsaccount made under that clause. We have noticed that in all the previous years theassessment order has been passed under section143(3) of the IT Act and the said debts werementioned. On perusal of the record, it transpiredthat it is not the case of the AO that the debtors, (asmentioned at pages 61 to 106 of the paper book)were not taken into account in computing theincome of the assessee for the previous year.” 5.In view of the above, we are of the considered opinion that no substantial question of law arises in this appeal. The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. /bm gandhi 158