DCIT, Firozabad v. M/s Hind Glass Industries, Firozabad

ITA 168/AGR/2009 | 2005-2006
Pronouncement Date: 17-09-2010 | Result: Dismissed

Appeal Details

RSA Number 16820314 RSA 2009
Assessee PAN AACFH9813L
Bench Agra
Appeal Number ITA 168/AGR/2009
Duration Of Justice 1 year(s) 4 month(s) 18 day(s)
Appellant DCIT, Firozabad
Respondent M/s Hind Glass Industries, Firozabad
Appeal Type Income Tax Appeal
Pronouncement Date 17-09-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 17-09-2010
Date Of Final Hearing 15-09-2010
Next Hearing Date 15-09-2010
Assessment Year 2005-2006
Appeal Filed On 29-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH : AGRA BEFORE SHRI R.K. GUPTA J. M. AND SHRI P.K. BANSAL A.M. PAN NO. AACFH9813L I.T.A.NO . 168/AGR/2009 A. Y. 2005-06 DY. CIT M/S.HIND GLASS INDUSTRIES CIRCLE 5 VS. RAJA KA TAL FIROZABAD FIROZABAD APPELLANT RESPONDENT APPELLANT BY : NONE (APPLICATION REJECTED) RESPONDENT BY : SHRI PRAKASH NARAIN ADV. O R D E R PER R.K.GUPTA J.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A)- II AGRA RELATING TO ASSESSMENT YEAR 2005-06. 2. THE DEPARTMENT IS OBJECTING THE DELETING THE ADDIT ION OF RS. 50 LAKHS MADE BY THE ASSESSING OFFICER UNDER SECTIO N 68 AND ALSO DELETING THE DISALLOWANCE OF INTEREST ON THE AMOUNT OF RS. 50 LAKHS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM WA S CARRYING ON MANUFACTURING AND SALE OF GLASS WARE. THE RETURN DE CLARING NIL INCOME WAS FILED ON 27.10.05. THE ASSESSING OFFICER MADE A N ADDITION OF RS. 50 LAKHS BY REJECTING THE LOAN TAKEN FROM M/S. ADVERT HOLDING PRIVATE - 2 - 2 LIMITED F-12 GREEN PARK EXTENSION NEW DELHI. THE ASSESSING OFFICER ALSO DISALLOWED THE INTEREST OF THE AMOUNT OF RS. 5 0 LAKHS PAID BY THE ASSESSEE. DETAILED WRITTEN SUBMISSIONS WERE FILED B EFORE THE LD. CIT(A). THE ASSESSEE COMPANY TOOK LOAN FROM M/S. ADVERT HOL DING PVT. LIMITED WHO IS REGISTERED WITH THE REGISTRAR OF COMPANIES A ND ALSO WITH R.B.I. AND ASSESSED TO TAX UNDER PAN NO. ADCA5948H AT NEW DELHI. THE SOURCE OF LOAN GIVEN BY THE ASSESSEE COMPANY WAS ON ACCOUNT OF REPAYMENT OF LOAN GRANTED EARLIER TO OTHER PERSONS BY THE COMPANY. ALL THE TRANSACTIONS ARE ROUTED THROUGH PROPER BANKING CHANNEL. THE DETAILS FILED BEFORE THE CIT(A) WERE SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS. REMAND REPORT DATED 4.6.208 WAS SENT BY T HE ASSESSING OFFICER JUSTIFYING THE ADDITION MADE UNDER SECTION 68. THE DETAILED SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE AND THE REMAND REPORT SOUGHT FROM THE ASSESSING OFFICER HAD BEEN INCORPORATED BY THE LD. CIT(A) IN HIS ORDER AT PAGE 2 TO 7 OF HIS ORDER. AFTER CONSIDERIN G THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD THE LD. CIT(A) FOU ND THAT ONUS LAY UPON THE ASSESSEE HAS BEEN DULY DISCHARGED. IT WAS FURT HER NOTED BY THE LD. CIT(A) THAT THE ASSESSING OFFICER ON 30.12.2007 ON BEHALF OF THE CREDITOR COMPANY IN COMPLIANCE OF NOTICE UNDER SECTION 131 F OR VERIFYING THE LOAN AND WAS DULY EXAMINED ON OATH NO ADVERSE INFERENCE CAN BE TAKEN BY THE ASSESSING OFFICER IF SHRI UMESH CHANDRA DIRECTOR COULD NOT ATTEND DUE TO ILLNESS AS IN HIS PLACE SHRI VIVEK BANSAL FCA WAS DULY APPEARED AND - 3 - 3 EXAMINED BY THE ASSESSING OFFICER. THEREFORE THERE WAS NO REASON TO MAKE ANY ADDITION UNDER SECTION 68 AND DISALLOWING THE INTEREST ON THAT AMOUNT. ACCORDINGLY THE GROUND OF THE ASSESSEE WAS ALLOWED. 4. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TR IBUNAL. NONE APPEARED ON BEHALF OF THE DEPARTMENT . HOWEVER AN ADJOURNMENT APPLICATION DATED 15.9.2010 IS PLACED ON RECORD BY WHICH IT IS STATED THAT DUE TO SHORTAGE OF DEPARTMENTAL OFFICIALS THE ADDL . CIT IS NOT ABLE TO APPEAR. SIMILAR APPLICATIONS ARE RECEIVED BY THE TR IBUNAL IN THIS WEEK AS WELL AS IN THE WEEK OF LAST MONTH WHEN BENCH SITS. THE DEPARTMENT IS NOT SERIOUS TO DISPOSE OF THE MATTERS LISTED BEFORE THE TRIBUNAL. IT IS ALSO A MATTER OF FACT THAT IN LAST SIX MONTHS THE BENCH S ITS ONLY FOR ONE WEEK IN EACH MONTH AND THE FACT WAS INFORMED TO THE DEPARTM ENT. THE VARIOUS LITIGANTS/ASSESSEES COME FROM VARIOUS DISTRICTS OF UTTAR PRADESH AND MADHYA PRADESH. THE APPROACH OF THE DEPARTMENT IS NOT CORRECT TO SEEK EVERY TIME ADJOURNMENTS. IN THESE CIRCUMSTANCES TH E APPLICATION OF THE DEPARTMENT WAS REJECTED AND THE APPEAL WAS TAKEN F OR HEARING ON MERIT. THE APPEAL IS DISPOSED OF ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. AUTHORIZED REPRESENTATIVE. 5. THE LD. AUTHORIZED REPRESENTATIVE HAS PLACED RELIAN CE ON THE ORDER OF CIT(A). 6. AFTER CONSIDERING THE ORDER OF ASSESSING OFFICER AN D LD. CIT(A) WE FOUND NO REASON TO INTERFERE IN THE FIND ING OF THE LD. CIT(A). - 4 - 4 THE LD. CIT(A) HAS ASCERTAINED THE FACTUAL POSITION AND FOUND THAT THE CREDITOR M/S. ADVERT HOLDING PRIVATE LIMITED IS ASS ESSED TO TAX ON REGULAR BASIS. THE SOURCE OF SOURCE HAS ALSO BEEN EXPLAINED BY THE CREDITOR. NO ADVERSE MATERIAL WAS FOUND BY THE ASSESSING OFFICER . STATEMENT OF FCA OF THE CREDITOR WAS RECORDED AS DIRECTOR OF THE COM PANY WAS NOT ABLE TO APPEAR DUE TO HIS ILLNESS. THE LD. CIT(A) HAS RELIE D UPON VARIOUS CASE LAWS MENTIONED IN HIS ORDER. THE FINDING OF THE LD. CIT(A) HAS BEEN RECORDED AT PARA 3.4 AT PAGES 8 TO 10 WHICH ARE AS UNDER :- 3.4 I HAVE CONSIDERED THE FACTS OF THE CASE THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE THE R EMAND REPORT AND THE REJOINDER. THE SUM AND SUBSTANCE OF THE ARGUMENTS AND THE SUBMISSIONS OF THE AR IS THAT THE IDENTITY AND C NESS OR CAPACITY OF THE CREDITOR COMPANY ADVE RT HOLDING PRIVATE LIMITED A NON BANKING FINANCIAL CO MPANY AND GENUINENESS OF THE TRANSACTION HAVE BEEN DULY P ROVED AS PER CONFIRMATION LETTER DATED 1.4.05 CONFIRMING THE LOAN ACCOUNT BY ADVERT HOLDING PVT. LTD BEARING PERMANE NT ACCOUNT NUMBER OF THE CREDITOR COMPANY COPIES OF ACKNOWLEDGEMENT OF I. T. RETURNS FOR 2005-06 AND 20 06-07 ASSESSMENT YEARS BALANCE SHEET OF THE CREDITOR COM PANY FOR THE YEARS ENDING 31.3.03 31.3.04 31.3.05 BANK AC COUNT OF CREDITOR COMPANY SHOWING THAT THERE WAS NO CASH DEP OSITED - 5 - 5 PRIOR TO LOAN COPY OF CERTIFICATE OF INCORPORATION AS PRIVATE LIMITED COMPANY BEARING NO. 55-57935 CERTIFICATE O F REGISTRATION BEARING REGISTRATION NO. B-14 03068 F OR CARRYING ON BUSINESS OF NON BANKING FINANCIAL COMPA NY ISSUED BY RESERVE BANK OF INDIA PERSONAL PRESENCE AND EXAMINATION OF SHRI VIVEK KUMAR BANSAL FCA AS AUTHORIZED REPRESENTATIVE OF THE CREDITOR COMPANY A DVERT HOLDING P.LTD. NEW DELHI FOR VERIFICATION OF LOAN ALONGWITH ACCOUNT BOOKS AND SOURCE OF LOAN ADVANCED TO THE AS SESSEE WHICH WAS THE REPAYMENT OF LOAN GRANTED EARLIER TO DIFFERENT CORPORATES AND PERSONS COPIES OF ACCOUNT OF SUCH P ARTIES IN THE BOOKS OF THE CREDITORS COMPANY. IT HAS BEEN EMP HASIZED THAT WHEN ALL THE EVIDENCE DETAILS DOCUMENTS AND MATERIAL INCLUDING ACCOUNT BOOKS OF THE CREDITOR COMPANY NEC ESSARY FOR PROVING THE LOAN HAD BEEN PRODUCED BY THE ASSES SEE AND THE CREDITOR COMPANY AND SHRI VIVEK KUMAR F. C. A. WAS ALSO PERSONALLY PRESENT BEFORE THE ASSESSING OFFICE R ON 30.12.2007 ON BEHALF OF THE CREDITOR COMPANY IN COM PLIANCE OF NOTICE UNDER SECTION 131 FOR VERIFYING THE LOAN AND WAS DULY EXAMINED ON OATH NO ADVERSE INFERENCE CAN BE TAKEN BY THE ASSESSING OFFICER IF SHRI UMESH CHAND DIRECTOR COULD NOT ATTEND DUE TO ILLNESS AS IN HIS PLACE SHRI VIV EK BANSAL F. - 6 - 6 C. A.DULY APPEARED AND WAS EXAMINED BY THE ASSESSIN G OFFICER. HENCE THE AUTHORIZED REPRESENTATIVE SUBMI TTED THAT THERE REMAINS NOTHING TO BE EXPLAINED AND EXAM INED FURTHER UNDER SECTION 68 OF THE ACT AND THE ADDITIO N MADE ON THE GROUND OF PROVING THE SOURCE OF SOURCE IS UNJUS TIFIED AND AGAINST THE LAW DECLARED IN THE FOLLOWING CASES :- (1) CIT VS. JAUHARIMAL GOEL (2005) 147 TAXMAN 48 (ALLD. ) WHERE THE HON'BLE ALLAHBAD HIGH COURT HAS REFERRED MORE THAN 20 JUDGMENT OF HIGH COURT AND SUPREME COURT. (2) NEMICHAND KOTHARI VS. CIT (2003) 264 ITR 254. (3) SAROGI CREDIT CORPN. VS. CIT 103 ITR 34.(AS ALSO REFERRED BY HON'BLE ALLAHBAD HIGH COURT IN HIS OF JAUHARIMAL GOEL AS ABOVE.). (4) CIT VS. ROHINI BUILDERS 256 ITR 360 (AGAINST WHICH THE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE PETIT ION FILED BY THE REVENUE (2002) 254 ITR (ST) 275 3.5 REGARDING THE CASES RELIED ON BY THE ASSESSING OFFI CER THE AR SUBMITTED THAT THE CASE OF RAM LAL AGARWAL V S. CIT REPORTED IN 280 ITR 547 ( ALLD) IS NOT APPLICAB LE AS THE PERSONS MAKING THE GIFT IN THAT CASE WERE FOUND TO BE PERSONS OF NO MEANS WHEREAS ON THE OTHER HAND IN - 7 - 7 ASSESSEES CASE THE LOAN IS FROM PRIVATE LIMITED CO MPANY DOING BUSINESS OF FINANCE AND REGISTERED UNDER COMP ANIES ACT AND RESERVE BANK OF INDIA HAVING SUBSTANTIAL AM OUNT OF CAPITAL AND HAD FULLY CAPACITY OF ADVANCING LOAN AS THE LOAN WERE ADVANCED FROM THE RETURN OF LOAN FROM OTH ER CORPORATES AND OTHER PERSONS THROUGH BANKING CHANNE LS AS PER ACCOUNTS SUBMITTED. 3.6 REGARDING OTHER CASES CITED BY THE ASSESSING OFFICE R IT HAS BEEN POINTED OUT THAT THESE CASES LAY DOWN THE GENERAL PRINCIPLES OF EXPLAINING THE NATURE AND SOU RCE OF CREDIT UNDER SECTION 68 AND THERE IS NOTHING TO SU PPORT THE ASSESSING OFFICER SO AS TO ADD THE AMOUNT OF LOAN R S. 50 00 000/- AND INTEREST THEREON OF RS. 1 87 50/-. 3.7 ACCORDINGLY FOLLOWING THE DECISION OF HON'BLE HIGH COURT IN THE CASE OF DY. CIT VS. ROHINI BUILDERS ( 2002) 182 CTR (373) (GUJ) WHERE ALSO THE SLP FILED BY THE DEPARTMENT AGAINST THE HIGH COURT ORDER HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT AS REPORTED IN 254 ITR (ST) 275 SC THE ADDITION OF RS. 50 00 000 /- AND INTEREST THEREON OF RS. 1 87 500/- MADE UNDER SECTI ON 68 BY THE ASSESSING OFFICER BOTH THE MERIT AND IN LAW IS FOUND TO BE NOT SUSTAINABLE AND IS ACCORDINGLY DIRE CTED TO - 8 - 8 BE DELETED. THESE GROUNDS OF APPEAL ARE THEREFORE ALLOWED. 7. THE ABOVE FINDING OF THE LD. CIT(A) REMAINED UNCONT ROVERTED AS NOTHING HAS BEEN BROUGHT ON RECORD TO ESTABLISH OTHERWISE. THEREFORE IN VIEW OF THE REASONING GIVEN BY THE LD. CIT(A) W E CONFIRM HIS ORDER. 8. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS DIS MISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER 2010. SD/- SD/- ( P.K. BANSAL ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AGRA DATED : 17 TH SEPTEMBER 2010. CPU* COPY FORWARDED TO :- THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) CONCERNED. THE D.R ITAT AGRA. GUARD FILE BY ORDER AR I.T.A.T. AGRA.