The DCIT(OSD)-Range-1,, Ahmedabad v. Dharnendra Overseas Ltd.,, Ahmedabad

ITA 1031/AHD/2007 | 2003-2004
Pronouncement Date: 29-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 103120514 RSA 2007
Assessee PAN AAACD4127G
Bench Ahmedabad
Appeal Number ITA 1031/AHD/2007
Duration Of Justice 4 year(s) 22 day(s)
Appellant The DCIT(OSD)-Range-1,, Ahmedabad
Respondent Dharnendra Overseas Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 29-03-2011
Date Of Final Hearing 29-03-2011
Next Hearing Date 29-03-2011
Assessment Year 2003-2004
Appeal Filed On 08-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI D.K.TYAGI HONBLE JUDICIAL MEMBER AND SHRI D. C. AGRAWAL HONBLE ACCOUNTANT MEMBER ITA NO.1031/AHD/2007 ASSESSMENT YEAR:2003-04 DATE OF HEARING:291311 DRAFTED:30.3.11 DCIT (OSD) RANGE-1 3 RD FLOOR JITENDRA CHAMBERS NR. NEW RBI LANE ASHRAM ROAD AHMEDABAD 380 014 V/S . DHARNENDRA OVERSEAS LTD. 2 ND FLOOR CHAKRAVARTY COMPLEX NR. VIJAY CHAR RASTA NAVRANGPURA AHMEDABAD PAN NO.AAACD4127G (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SHELLEY JINDAL CIT-DR RESPONDENT BY:- WRITTEN SUBMISSION O R D E R PER D.K.TYAGI JUDICIAL MEMBER:- THIS IS REVENUES APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME-TAX(APPEALS)-V AHMEDABAD IN APPEAL NO. CIT( A)-V/DCIT (OSD)-1/148/2006-07 DATED 27-12-2006 FOR THE ASSESS MENT YEAR 2003- 04. 2. THE REVENUE INITIALLY HAS TAKEN FOLLOWING FIVE G ROUNDS:- 1) THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.3 27 09 106/- MADE ON ACCOUNT OF PAYMENT OF OUTS TANDING SECURED LOAN. 2) THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7 59 97 311/- MADE ON ACCOUNT OF UNEXPLAINED CAS H CREDIT. ITA NO.1031/AHD/2007 A.Y. 2003-04 DCIT (OSD) RNG-1 ABD V. DHARNENDRA OVERSEAS LTD. PA GE 2 3) THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF 1 87 07 106/- MADE ON ACCOUNT OF ADMINISTRATIVE EXP ENSES. 4) THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.6 95 462/- MADE UNDER THE HEAD MISCELLANEOUS EX PENSES WRITTEN OFF. SUBSEQUENTLY IN RESPECT OF GROUND NO.1 & 2 FOLLOWIN G ADDITIONAL GROUNDS WERE TAKEN:- ADDITIONAL GROUNDS OF APPEAL (1) ADDITION OF RS.3 27 09 106/- ON ACCOUNT OF OUTS TANDING UNSECURED LOANS THE ASSESSEE CLARIFIED BEFORE THE CIT(A) THAT: SIR WE HAVE MADE A PAYMENT OF RS.1 40 00 000/- FR OM DHARMENDRA INDUSTRIES LTD. THIS WAS PAID AGAINST TH E OUTSTANDING IN THE BOOKS OF BANK ACCOUNT RS.3 27 09 106/-. SO THE AMOUNT REMAINS RS.1 87 09 106/-. WE HAVE TREATE D THIS IN OUR BOOKS AS SUNDRY BALANCE WRITTEN OFF. SO THE TR EATMENT GIVEN IN OUR BOOKS CREDITED TO DHARMENDRA INDUSTRIE S LTD. AND DEBITED TO THE BANK AND THE BALANCE DEBITED TO BANK AND BALANCE RS.1 87 09 106/- IS WRITTEN OFF AS A SUNDRY BALANCE. SO THE CREDIT FROM DHARMENDRA INDUSTRIES LTD. RS.1 40 00 000/- AND SUNDRY BALANCE WRITTEN OFF OF RS.1 87 09 106/- WHICH IS TALLY IN THE TOTAL OF THE SAID BOTH AMOUNT OF RS.3 27 09 106/- (2) ADDITION OF RS.7 59 97 311/- ON ACCOUNT OF ADDI TION TO OUTSTANDING UNSECURED LOANS THE ASSESSEE CLARIFIE D BEFORE THE CIT(A) THAT; FOR THE MARCH 2003 AND IN THE BALANCE SHEET & SCH EDULE D UNDER THE HEAD OF UNSECURED LOAN THE AMOUNT IS REF LECTED I.E. RS.450672861 AGAINST PREVIOUS YEAR RS.384675550 AND THE CLARIFICATION IS AS UNDER; PREVIOUS YEAR UNSECURED LOAN WAS RS.384675550 AND L OSS FROM PARTNERSHIP FIRM OF THE CURRENT YEAR RS.619973 11. TOTAL COMES TO RS.446672861 OF DHAMENDRA MARKETING CO. TH E UNSECURED LOAN FROM DHARMENDRA INDUSTRIES LTD. WHIC H IS RS.14000000 I.E. CREDIT OF THE CURRENT YEAR WHICH I S USED FOR THE SETTLEMENT OF DUES OF THE BANK WHICH WE HAVE ALREAD Y MENTIONED IN OUR EARLIER LETTER DTD. 21 ST NOVEMBER 2006 AND THE TOTAL REFLECTED IN THE BALANCE SHEET FOR THE CU RRENT YEAR ITA NO.1031/AHD/2007 A.Y. 2003-04 DCIT (OSD) RNG-1 ABD V. DHARNENDRA OVERSEAS LTD. PA GE 3 UNDER THE HEAD OF UNSECURED LOAN WHICH IS RS.460672 861 WHICH IS UNSECURED LOAN AS ON 31 ST MARCH 2003 3. AT THE TIME OF HEARING NONE-APPEARED ON BEHALF O F ASSESSEE HOWEVER WE FIND A LETTER OF ASSESSEE ON RECORD STA TING THAT WRITTEN ARGUMENT ENCLOSED WITH THIS LETTER MAY KINDLY BE TA KEN INTO CONSIDERATION WHILE DECIDING THIS APPEAL. SO WE HAVE PROCEEDED TO DECIDE THE APPEAL AFTER TAKING INTO CONSIDERATION THE WRITTEN SUBMISS IONS OF ASSESSEE AND AFTER HEARING LD. CIT-DR. 4. GROUND NO.1 RELATES TO ADDITION OF RS.3 27 09 10 6/- ON ACCOUNT OF OUTSTANDING SECURED LOAN. THE ASSESSING OFFICER NOT ICED FROM THE BALANCE-SHEET OF THE ASSESSEE THAT OUTSTANDING SECU RED LOAN WAS REDUCED TO RS.1 08 35 156/- FROM THE EARLIER FIGURE OF RS.4 35 44 262/-. ACCORDING TO HIM SOURCES OF PAYMENTS WERE NOT KNOW N AND HE MADE THIS ADDITION. BEFORE LD. CIT(A) ASSESSEES SUBMISS ION WAS AS UNDER:- IN THE ABOVE PARA THE LD. ASSESSING OFFICER HAS M ENTIONED THAT LAST YEAR OUTSTANDING SECURED LOAN WAS AT RS.4 35 4 4 262/- AND AT THIS YEAR IT IS RS.1 08 35 156/-. SIR WE HAVE MADE A PAYMENT OF RS.1 40 00 000/- FROM DHARMENDRA INDUSTRIES LTD. TH IS WAS PAID AGAINST THE OUTSTANDING IN THE BOOKS OF BANK ACCOUN T RS.3 27 09 106/- AND THIS WAS TREATED AS FULL AND F INAL PAYMENT AGAINST THEIR LEDGER AMOUNT RS.3 27 09 106/-. SO T HE AMOUNT REMAINS RS.1 87 09 106/-. WE HAVE TREATED THIS IN O UR BOOKS AS SUNDRY BALANCE WRITTEN OFF. SO THE TREATMENT GIVEN IN OUR BOOKS CREDITED TO DHARMENDRA INDUSTRIES LTD. AND DEBITED TO THE BANK AND THE BALANCE DEBITED TO BANK AND BALANCE RS.1 87 09 106/- IS WRITTEN OFF AS A SUNDRY BALANCE. SO THE CREDIT FRO M DHARMENDRA INDUSTRIES LTD. RS.1 40 00 000/- AND SUNDRY BALANCE WRITTEN OFF OF RS.1 87 09 106/- WHICH IS TALLY IN THE TOTAL OF THE SAID BOTH AMOUNT OF RS.3 27 09 106/-. LD. CIT(A) DELETED THIS DISALLOWANCE BY OBSERVING A S UNDER:- I FIND THAT THIS ADDITION APPEARS TO HAVE BEEN MAD E WITHOUT VERIFYING VARIOUS SCHEDULES OF THE BALANCE SHEET. I T IS APPARENT THAT ITA NO.1031/AHD/2007 A.Y. 2003-04 DCIT (OSD) RNG-1 ABD V. DHARNENDRA OVERSEAS LTD. PA GE 4 THE REDUCTION IN UNSECURED LOANS WAS ON ACCOUNT OF SETTLEMENT OF BANK DUES AND THE AMOUNT WAIVED HAS ALREADY BEEN WR ITTEN BACK IN THE PROFIT AND LOSS ACCOUNT AS INCOME. THE AMOUN T OF BANK DUES WAS PAID BY SISTER CONCERNS AND REDUCTION IN UNSECU RED LOANS IS FULLY EXPLAINED. HAD THE ASSESSING OFFICER ANALYSED THE SCHEDULES TO THE BALANCE SHEET THIS SITUATION WOULD HAVE BEC OME CLEAR. THE DISALLOWANCE IS THEREFORE DELETED. SINCE THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESS EE BY PLACING RELIANCE ON THE ADDITIONAL EVIDENCE PRODUCED BEFORE HIM BY A SSESSEE AND WHICH WAS NOT CONFRONTED TO THE ASSESSING OFFICER THE MA TTER IS RESTORED BACK TO THE FILE OF AO FOR THE LIMITED PURPOSES OF VERIF YING THE CONTENTION OF THE ASSESSEE BEFORE LD. CIT(A) BY WAY OF ADDITIONAL EVI DENCE. IF IT IS FOUND CORRECT NO ADDITION IS TO BE MADE. THIS GROUND OF R EVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5. SECOND GROUND RELATES TO ADDITION OF RS.7 59 97 311/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THIS ADDITION HAS BEEN MADE BY ASSESSING OFFICER ON THE BASIS OF INCREASE IN BALANCE AS COMP ARED TO LAST YEAR. BEFORE LD. CIT(A). THE SUBMISSION ON BEHALF OF ASSE SSEE WAS AS UNDER:- FOR THE MARCH 2003 AND IN THE BALANCE SHEET & SCH EDULE D UNDER THE HEAD OF UNSECURED LOAN THE AMOUNT IS REF LECTED I.E. RS.460672861 AGAINST PREVIOUS YEAR RS.384675550 AND THE CLARIFICATION IS AS UNDER:- PREVIOUS YEAR UNSECURED LOAN WAS RS.384675550 AND LOSS FROM PARTNERSHIP FIRM OF THE CURRENT YEAR RS.619973 11. TOTAL COMES TO RS.446672861 OF DHARMENDRA MARKETING CO. T HE UNSECURED LOAN FROM DHARMENDRA INDUSTRIES LTD WHICH IS RS.14000000 I.E. CREDIT OF THE CURRENT YEAR WHICH I S USED FOR THE SETTLEMENT OF DUES OF THE BANK WHICH WE HAVE AL READY MENTIONED IN OUR EARLIER LETTER DTD. 21 ST NOVEMBER 2006 AND THE TOTAL REFLECTED IN THE BALANCE SHEET FOR THE CU RRENT YEAR UNDER THE HEAD OF UNSECURED LOAN WHICH IS RS.460672 861 WHICH IS UNSECURED LOAN AS ON 31 ST MARCH 2003 ITA NO.1031/AHD/2007 A.Y. 2003-04 DCIT (OSD) RNG-1 ABD V. DHARNENDRA OVERSEAS LTD. PA GE 5 THIS SUBMISSION OF THE ASSESSEE WAS ACCEPTED BY LD. CIT(A) AND DISALLOWANCE WAS DELETED BY HIM BY OBSERVING AS UND ER:- AGAIN THE SITUATION IS FULLY EXPLAINED IF SCHEDUL E D TO THE BALANCE SHEET IS PROPERLY EXAMINED. HERE IT MAY BE POINTED OUT THAT LOSS FROM PARTNERSHIP HAS SEPARATELY BEEN DISA LLOWED BY THE ASSESSING OFFICER. THEREFORE ADDITION TO THAT EXTE NT WAS UNNECESSARY ON THE FACE OF IT. HOWEVER AS EXPLAINE D BY THE ASSESSEE THE DIFFERENCE STANDS FULLY EXPLAINED AND THIS ADDITION IS ACCORDINGLY DELETED. SINCE THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESS EE BY PLACING RELIANCE ON THE ADDITIONAL EVIDENCE PRODUCED BEFORE HIM BY A SSESSEE AND WHICH WAS NOT CONFRONTED TO THE ASSESSING OFFICER THE MA TTER IS RESTORED BACK TO THE FILE OF AO FOR THE LIMITED PURPOSES OF VERIF YING THE CONTENTION OF THE ASSESSEE BEFORE LD. CIT(A) BY WAY OF ADDITIONAL EVI DENCE. IF IT IS FOUND CORRECT NO ADDITION IS TO BE MADE. THIS GROUND OF R EVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 6. THE THIRD GROUND RELATES TO DISALLOWANCE OF RS.1 87 07 106/- MADE ON ACCOUNT OF ADMINISTRATIVE EXPENSES. THE ASSESSIN G OFFICER NOTICED THAT THIS AMOUNT WAS CLAIMED AS ADMINISTRATIVE EXPE NSES WHICH WAS TOO HIGH. AO ACCORDINGLY DISALLOWED THIS EXPENSE. BEFOR E LD. CIT(A) IT WAS ARGUED THAT NO SUCH CLAIM OF ADMINISTRATIVE EXPENSE WAS MADE BEFORE AO AS A MATTER OF FACT THIS AMOUNT WAS WRITTEN BAC K AS INCOME ON ACCOUNT OF WAIVER OF BANK LIABILITIES. LD. CIT(A) V ERIFIED THIS FACT FROM SCHEDULE N TO THE PROFIT AND LOSS ACCOUNT AND FOUND THAT THI S AMOUNT HAS BEEN WRITTEN BACK AS INCOME AND THERE IS NO CLA IM OF ADMINISTRATIVE EXPENSE. CONSIDERING THIS ADDITION TO BE FRIVOLOUS HE DELETED THIS ADDITION. ITA NO.1031/AHD/2007 A.Y. 2003-04 DCIT (OSD) RNG-1 ABD V. DHARNENDRA OVERSEAS LTD. PA GE 6 7. BEFORE US THIS FINDING OF LD. CIT(A) REMAINED UN CONTROVERED ON BEHALF OF REVENUE. THEREFORE THE ORDER PASSED BY L D. CIT(A) ON THIS ISSUE IS HEREBY UPHELD. THIS GROUND OF REVENUES AP PEAL IS DISMISSED. 8. FOURTH GROUND RELATES TO DISALLOWANCE OF RS.6 95 462/- UNDER THE HEAD MISCELLANEOUS EXPENSES WRITTEN OFF. THE ASSE SSING OFFICER HAS MENTIONED IN HIS ASSESSMENT ORDER THAT IT WAS NOT C LEAR AS TO WHAT TYPE OF EXPENSE WAS INCLUDED IN THIS EXPENSE AND HOW THE Y WERE ADMISSIBLE. HE THEREFORE DISALLOWED THE EXPENSES AND ADDED THIS AMOUNT TO THE INCOME OF THE ASSESSEE. BEFORE LD. CIT(A) THE ASSES SEES EXPLANATION WAS THAT THIS EXPENDITURE WERE WRITTEN OFF EVERY YE AR IN EQUAL PROPORTION. LD. CIT(A) ACCEPTED THIS EXPLANATION OF THE ASSESSE E AS HE FOUND THAT SIMILAR CLAIM WAS ALSO CLAIMED IN EARLIER YEAR AND THESE EXPENSES WERE RIGHTLY CLAIMED ON PRO RATA BASIS AND HENCE WERE AL LOWABLE. THE ASSESSING OFFICER HAS MADE THIS ADDITION BY PASSING AN EX PARTE ORDER WITHOUT LOOKING INTO THE RECORD OF EARLIER YEAR. WE FURTHER FIND THAT AT THE TIME OF HEARING BEFORE US THIS FINDING OF LD. CIT(A ) WAS NOT CONTROVERTED BY LD. CIT-DR. THEREFORE WE FIND NO INFIRMITY IN T HE ORDER PASSED BY LD. CIT(A) DELETING THIS ADDITION AND WE UPHOLD THE SAM E. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 9. IN THE RESULT REVENUES APPEAL IS PARTLY ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 29/03/2011 SD/- SD/- (D.C.AGRAWAL) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 29/03/2011 ITA NO.1031/AHD/2007 A.Y. 2003-04 DCIT (OSD) RNG-1 ABD V. DHARNENDRA OVERSEAS LTD. PA GE 7 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-V AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD