DEVI SAHAY SAXENA vs. ASTT COMMISSIONER OF I T JAIPUR

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ITA/58/2011HC RajasthanRJHC02058228201116 December 2011Author: ARUN MISHRA,NARENDRA KUMAR JAIN3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the reasons assigned by the Tribunal for not allowing the bad debt on the ground that it is not a part of payment relating to commission income are legal and justified. The Court found that the question involved relates to a question of fact and that no substantial question of law is involved in the appeal. Therefore, the appeal was dismissed. The operative direction was the dismissal of the appeal, upholding the ITAT's decision to disallow the bad debt claim. No issue was expressly left undecided.

What were the facts?

The assessee, Devi Sahay Saxena, filed an appeal before the Rajasthan High Court challenging an order dated December 9, 2010, passed by the Income Tax Appellate Tribunal (ITAT), Jaipur Bench. The ITAT had partly allowed an appeal filed by the Revenue. The dispute concerns a claim of Rs. 2,00,000/- made by the assessee as bad debt. This claim was initially disallowed by the Assessing Officer (AO) and added to the assessee's income. The Appellate Authority (CIT(A)) had set aside the AO's disallowance. However, the ITAT reversed the CIT(A)'s decision, restoring the AO's order and thus disallowing the bad debt claim. The AO's reasoning was the assessee's inability to explain the income against which the bad debt was claimed and the lack of satisfactory evidence.

What were the issues?

1. Whether the Tribunal was justified in disallowing the claim of Rs. 2,00,000/- as bad debt, on the ground that it was not a part of payment relating to commission income, thereby restoring the order of the Assessing Officer? (Question of mixed law and fact, relating to Section 36(1)(vii) of the Income Tax Act, 1961). Assessee's contention: The assessee argued that the bad debt claim should be allowed. (Specific arguments not recorded in the judgment). Revenue's contention: The Revenue argued that the bad debt claim should be disallowed. (Specific arguments not recorded in the judgment). The Tribunal's reasoning for disallowance was that the sums paid could not be considered as having been paid for earning commission income, and therefore, the bad debt could not be allowed as it was not part of payment relating to commission income.

Which sections of the Income-tax Act were involved?

Section 260A,Section 36(1)(vii)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
(1) DB INCOME TAX APPEAL 58/2011 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

D.B. INCOME TAX APPEAL NO.58/2011 DATE: 16.12.2011 HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRA HON'BLE MR. JUSTICE NARENDRA KUMAR JAIN-I Mr. Devendra Kumar, for the appellant. **** BY THE COURT:(PER HON'BLE JAIN, J.) Heard learned counsel for the appellant.

2.

Assessee/appellant has preferred this appeal under Section 260A of Income Tax Act, 1961 challenging the order dated 09.12.2010 passed by the Income Tax Appellate Tribunal, Jaipur Bench-'B', Jaipur in ITA No.283/JP/2010, whereby appeal filed by the Revenue was partly allowed.

3.

The dispute in the present appeal relates to claim of Rs.2,00,000/- as bad debt, which was disallowed by the Assessing Officer and the same was added in the income of the assessee. The said addition was set aside by the Appellate Authority, however, the Income Tax Appellate Tribunal set aside the order of the Appellate Authority in this behalf and (2) DB INCOME TAX APPEAL 58/2011

restored the order of the Assessing Offcer. Hence, this appeal has been preferred.

4.

The Assessing Officer, in its assessment order, in para 6 has observed that assessee is unable to satisfy as to what was his income against which this amount has been claimed as bad debt and since he has not given any satisfactory explanation, nor has produced any oral or documentary evidence, therefore, the same is disallowed.

5.

The learned Appellate Authority allowed the said claim holding that Assessing Officer was not justified in disallowing the aforesaid claim of Rs.2 lacs. The learned Tribunal considered the matter in detail and in para 3.4 of its judgment, came to a conclusion that bad debt in the present case cannot be considered to be allowed because it is not a part of payment relating to commission income. Para 3.4 of the order of the learned Tribunal is reproduced as under:- “We have heard both the parties. The assessee is engaged in the business of commission. It is not the case of the assessee to procure land on his behalf. Moreover, there is no material on record to suggest that the persons to whom advances were made, were not willing to return the advance. The assessee has claimed the bad debt of Rs.2.00 lacs against the commission income. The sums so paid cannot be considered to have been paid for earning commission. Hence, bad debt cannot be considered to be allowed because it is not a part of payment relating to commission income. Hence, the ld. CIT(A) was not justified in deleting the addition of Rs.2.00 lacs.”

(3) DB INCOME TAX APPEAL 58/2011

6.

We have considered the submissions of the learned counsel for the appellant in the light of reasons assigned by the Assessing Officer, Appellate Authority and the Income Tax Appellate Tribunal and we are of the view that the reasons assigned by the Tribunal for not allowing bad debt on the ground that it is not a part of payment relating to commission income, are absolutely legal and justified. The said question relates to a question of fact and in our view, no substantial question of law is involved in this appeal so as to entertain it.

7.

Hence, the appeal is dismissed. (NARENDRA KUMAR JAIN-I),J. (ARUN MISHRA),CJ. /KKC/

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