2015 (10) TMI 2122 - HC - Income Tax

Disallowance of deduction of the write off of inventories - Whether the Tribunal was justified in law in not passing the reasoned order in respect of claim of the appellant on the facts and circumstances of the case? - Held that - Since the appeal filed by the assessee for the assessment year 2002-03 on which reliance was placed was partly allowed by giving certain benefits to the assessee, the order passed by the Tribunal dismissing the appeal and the Miscellaneous petition filed by the assessee, relying upon the order made for the assessment year 2002-03 is not sustainable. Hence, the Tribunal is directed to reconsider the matter afresh for the assessment year 2004-05, in the light of the order made in 2009 (2) TMI 248 - ITAT, BANGALORE in accordance with law. Accordingly, without answering the substantial questions of law, this appeal is allowed and remanded to the Tribunal for considering the matter afresh, in accordance with law.

Summary

Issues:
1. Disallowance of inventories written off and various expenditures by the Assessing Officer.
2. Appeal before the Commissioner of Income Tax (Appeals) and subsequent appeal before the Tribunal.
3. Dismissal of the appeal and the Miscellaneous petition filed by the assessee.
4. Substantial questions of law admitted for consideration.
5. Justification of the Tribunal's actions in not allowing deductions and passing reasoned orders.

Analysis:
1. The assessee, a public limited company, filed an appeal under Section 260-A of the Income Tax Act, 1961, challenging the orders of the Income Tax Appellate Tribunal for the assessment year 2004-05. The Assessing Officer disallowed a significant sum towards inventories written off and various expenditures claimed by the assessee due to the absence of business activities during the previous assessment year. The First Appellate Authority partially allowed the appeal by permitting certain expenditure claims.

2. The assessee's subsequent appeal before the Tribunal, which dismissed the appeal without delving into the merits of the case but relying on a previous order for a different assessment year, led to the filing of a Miscellaneous petition for rectification. However, the Misc. Petition was also dismissed based on a similar approach without considering the specifics of the case. This series of events prompted the assessee to file the present appeal before the High Court.

3. The High Court admitted the appeal based on substantial questions of law related to the disallowance of inventories written off and the lack of reasoned orders by the Tribunal. The Court observed that since the appeal for the assessment year 2002-03, which was relied upon by the Tribunal, resulted in certain benefits for the assessee, the dismissal of the current appeal and the Miscellaneous petition based on that order was not sustainable.

4. Consequently, the High Court directed the Tribunal to reconsider the matter afresh for the assessment year 2004-05 in light of the order for the assessment year 2002-03. The Court allowed the appeal and remanded the case to the Tribunal for a fresh consideration, emphasizing the need for a proper assessment in accordance with the law without directly addressing the substantial questions of law raised by the assessee.

This detailed analysis highlights the progression of the case, the issues raised, the Tribunal's actions, and the High Court's directive for a fresh consideration of the matter.