SUNIL & COMPANY, MUMBAI v. DCIT RG 14(2), MUMBAI

ITA 3147/MUM/2009 | 2004-2005
Pronouncement Date: 09-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 314719914 RSA 2009
Bench Mumbai
Appeal Number ITA 3147/MUM/2009
Duration Of Justice 1 year(s) 9 month(s) 27 day(s)
Appellant SUNIL & COMPANY, MUMBAI
Respondent DCIT RG 14(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 09-03-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2004-2005
Appeal Filed On 13-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.K. PANDA (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO. 3147/MUM/2009 ASSESSMENT YEAR- 2004-05 M/S. SUNIL & COMPANY 26/28 MOHAN NIWAS 2 ND FLOOR OLD HANUMAN LANE MUMBAI-400 021 VS. THE DY. CIT RANGE-14(2) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VIMAL PUNAMIYA RESPONDENT BY: SHRI D. SONGATE O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILES BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 18.3.2009 PASSED BY THE LD. CIT(A)-XIV FOR THE ASSE SSMENT YEAR 2004-05. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF TEXTILE PROCESSING AND DEALERSHIP OF TA TA MOTORS AND PASSENGER CARS. THE ASSESSEE FILED ITS RETURN OF I NCOME ON 18.10.2004 DECLARING A TOTAL INCOME OF RS. 20 51 390/-. THE R ETURN WAS PROCESSED U/S. 143(1) AND WAS SELECTED FOR SCRUTINY BY ISSUE OF NOTICE U/S. 143(2). THE ASSESSMENT WAS FINALLY COMPLETED ON 29.12.2006 BY DETERMINING THE TOTAL INCOME AT RS. 40 54 590/-. WHILE DETERMINING THE INCOME THE AO MADE THE DISALLOWANCES/ADDITIONS. 3. AGGRIEVED ASSESSEE PREFERRED AND APPEAL BEFORE T HE LD. CIT(A) AND SUBMITTED AS FOLLOWS: ITA NO. 3147/M/09 2 IT IS CONTENDED THAT THE AO DISALLOWED THE FOLLOWI NG PURCHASES OF RS. 2 12 551/- EFFECTED FROM M/S. DEEP AK ENTERPRISES FOR THE REASON THAT THE INVOICE DATES F ALL IN THE PRECEDING YEAR WHILE THE APPELLANT HAS RECORDED PUR CHASES IN CURRENT YEAR: SR. NO. BILL NO. AMOUNT (RS.) DATE OF ENTRY OF PURCHASE(IN ASSESSEES BOOK) 1 115 59253 4.6.2003 2. 116 41643 10.6.2003 3. 101 111655 4.6.2003 4. TOTAL 212551 THE ASSESSEE SUBMITTED THAT PURCHASES WERE RECORDED UPON RECEIPT OF GOODS IN CURRENT YEAR. THE GOODS W ERE RECEIVED AND CONSUMED DURING THE YEAR UNDER REFEREN CE. THE CORRESPONDING PURCHASES WERE ACCORDINGLY RECORDED I N THE YEAR OF STOCK RECEIPT AND CONSUMPTION. ASSUMING TH E AO WAS RIGHT THAT THE PURCHASES OUGHT TO HAVE BEEN RECORD ED IN THE YEAR TO WHICH THE INVOICES PERTAINED STILL SUCH R ECORDING WOULD HAVE HAD SAME IMPACT ON ASSESSEES TAXABLE IN COME. IN THE PRECEDING YEAR THE ASSESSEE WOULD HAVE DEBI TED PURCHASE WITH CORRESPONDING CREDIT TO STOCK IN TRAN SIT ACCOUNT. SUCH COMPENSATING DEBIT AND CREDIT WOULD HAVE HAD NO IMPACT ON TAXABLE INCOME. SUCH STOCK IN TRANSIT WO ULD HAVE BEEN CLAIMED AS COST ONLY UPON ITS RECEIPT AND CONS UMPTION IN THE CURRENT YEAR. IN VIEW THEREOF THE RECORDING A ND CLAIM OF PURCHASE AS DEDUCTION IN THE CURRENT YEAR (BEING T HE YEAR OF RECEIPT AND CONSUMPTION) COULD NOT HAVE BEEN DISREG ARDED MERELY BECAUSE INVOICES WERE DATED AS OF PRECEDING YEAR. IT WAS FURTHER SUBMITTED THAT THE AO WAS ALSO NOT JUST IFIED IN ALLEGING THE PURCHASES TO BE BOGUS PURCHASES. COPI ES OF INVOICES WERE ALREADY FURNISHED TO THE AO. THE ASS ESSEE HAS SINCE OBTAINED FOLLOWING EVIDENCES TO SUPPORT THAT THE PURCHASES HAVE BEEN EFFECTED FROM A VERIFIABLE SOUR CE WHICH HAVE BEEN CONFIRMED BY THE COUNTER PARTY WHICH IS A SSESSEE TO TAX. THE APPELLANT SUBMITTED ADDITIONAL EVIDENC ES OBTAINED IN SUPPORT OF THE PURCHASES. 4. THE LD. CIT(A) HELD AS FOLLOWS: SINCE IN THE ABOVE SUBMISSIONS THE APPELLANT HAS ALSO FURNISHED A COPY OF CONFIRMATION FROM DEEPAK ENTERP RISES ALONGWITH COPY OF BANK STATEMENT AND MADE A REQUEST FOR ADMIS SION OF ITA NO. 3147/M/09 3 ADDITIONAL EVIDENCE MY LD. PREDCESSOR FOUND IT APP ROPRIATE TO FORWARD THE SAME TO THE AO WITH A REQUEST TO EXAMIN E THE ADDITIONAL EVIDENCE AND SUBMIT HIS COMMENTS ON MERITS ALONGWIT H OBJECTIONS IF ANY. THE AO VIDE HIS LETTER NO. DCIT 14(2/APPEAL/0 8-09 DT. 23.2.2009 SUBMITTED HIS REPORT THE RELEVANT PORTIO N OF WHICH IS REPRODUCED AS UNDER: IN THIS CASE AN ADDITION OF RS. 2 12 551/- WAS MAD E ON ACCOUNT OF PURCHASES FROM M/S. DEEPAK ENTERPRISE S ON ACCOUNT OF PURCHASE OF GREY CLOTH. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE GENUINENESS OF THE PURCHASES. HENCE THE ADDITION WAS MADE. DURING THE COURSE OF APPEAL PROCEEDINGS THE ASSESSEE FILED COPY OF CONFIRMATIO N FROM DEEPAK ENTERPRISES ALONGWITH COPY OF BANK ACCOUNT AS ADDITIONAL EVIDENCE. IN RESPONSE TO THE DIRECTIONS RECEIVED FROM CIT(A) VIDE LETTER DT. 4.4 2008 NOTICE U/S. 133(6) DT. 21.8.2008 WAS ISSUED TO M/S. DEEPAK ENTERPRISES 825 S.P. MUKHERJEE MARG DELHI WHICH WAS DULY SERVED ON THE ASSESSEE AS PER ACKNOWLEDGEMENT ON RECORD. THE PARTY HAS NOT RESPONDED TO THE NOTICE U/S. 133(6). THIS FACT HAS ALREADY BEEN COMMUNICATED TO THE ASSESSEE VIDE THIS OFFICE LETTER DT. 16.10.2008. HOWEVER THE ASSESSE E HAS ALSO NOT REPLIED TO THE ABOVE LETTER. THE ADDITIONAL EVIDENCE PRODUCED MAY NOT BE ADMITTE D AT THE APPEAL STAGE AS 1. THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY DURIN G THE ASSESSMENT PROCEEDINGS WHICH THE ASSESSEE DID NOT A VAIL OF. 2. THE ASSESSEE WAS NOT PREVENTED BY SUFFICIENT CAUSE FOR PRODUCING EVIDENCE BEFORE THE AO. 3. THE AO HAS NOT REFUSED TO ADMIT THE SAID EVIDENCE D URING THE ASSESSMENT PROCEEDINGS. A COPY OF THIS REPORT OF THE AO WAS SUPPLIED TO THE APPELLANT FOR HIS COUNTER COMMENTS AND ARGUMENTS IF ANY. IN REPLY THE APPELLANT FILED A LETTER DT. 13.3.2009 STATING THER EIN THAT LETTER DT. 26.9.2006 NOTIFYING CHANGE OF ADDRESS AND LETTE R DT. 20.10.2008 FROM DEEPAK ENTERPRISES ALONGWITH THEIR CONFIRMATION AND COPY OF BANK STATEMENT ARE BEING ENCLOSED HEREWITH. IT HAS THUS BEEN ARGUED BY THE AR OF THE APPELLANT THAT THE COMMUNICATION CLAIM HAVING BEEN MADE BY TH E AO ITA NO. 3147/M/09 4 VIDE LETTER DT. 16.10.2008 HAS NOT BEEN RECEIVED DU E TO CHANGE IN ADDRESS OF THE APPELLANT AND THUS FURTHER CLAIME D THAT SINCE M/S. DEEPAK ENTERPRISES VIDE THEIR LETTER DT. 20.10.2008 HAD CONFIRMED THE SALES MADE BY THEM TO THE APPELLA NT AND ALSO THE PAYMENT RECEIVED BY CHEQUE FROM THE APPELL ANT WHICH IS FURTHER REFLECTED IN THE BANK STATEMENT OF THE A PPELLANT THE ADDITION MADE MAY BE DELETED. 5. THE LD. CIT(A) FURTHER HELD AS FOLLOWS: ON CAREFULLY CONSIDERING THE FACTS AND ABOVE SUBMI SSIONS OF THE APPELLANT AND GOING THROUGH THE ASSESSMENT ORDE R AS WELL AS THE REMAND REPORT OF THE AO IT IS EVIDENCE THAT THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS COULD N EITHER EXPLAIN THE DISCREPANCY POINTED OUT BY THE AO IN TH E DATES OF PURCHASE ON THE BILL NOS. 115 116 AND 101 WHICH WER E ALL DT. 31.3.2003 WHEREAS THE APPELLANT HAD PUT THE DATE IN PENCIL AS 4.6.2006 IN THESE INVOICE BILLS. IT IS ALSO AN ADMITTED FACT THAT THE APPELLANTS AR COULD NOT SHOW EVEN THE PAY MENTS MADE TO THE SAID PARTY WHO ISSUED THE SALE INVOICES . AS PER THE REPORT OF THE AO NOTICE ISSUED U/S. 133(6) TO DEEPAK ENTERPRISES ON ITS DELHI ADDRESS WHICH WAS DULY SER VED AS PER ACKNOWLEDGEMENT ON RECORD BUT THE PARTY HAS NO T RESPONDED TO THE NOTICE HAS ALSO NOT BEEN EITHER DI SPUTED OR CONTROVERTED BY THE APPELLANT. THE FACT OF HAVING NOT RECEIVED ANY RESPONSE FROM DEEPAK ENTERPRISES WAS ALSO COMMUNICATED BY THE AO TO THE APPELLANT VIDE LETTER DT. 16.10.2008 TO WHICH THE AR OF THE APPELLANT HAS ME RELY STATED THAT DUE TO CHANGE IN ADDRESS OF THE APPELLA NT THE SAME COULD NOT BE RECEIVED. THIS CLAIM OF THE APPE LLANT IS ALSO FOUND TO BE FACTUALLY NOT CORRECT IN VIEW OF THE FA CT THAT EVEN ON THE DATE OF FILING OF APPEAL I.E. AS ON 19.1.20 07 THE ADDRESS OF THE APPELLANT IS THE SAME AS PER THE ADD RESS GIVEN IN THE ASSESSMENT ORDER DT. 29.12.2006 WHEREAS THE APPELLANT HAS CLAIMED THE CHANGE OF ADDRESS INTIMAT ED VIDE LETTER DT. 16.9.2006 FILED IN THE OFFICE OF THE AO ON 28.9.2006. ONCE THE APPELLANT COULD RECEIVE THE ASSESSMENT ORD ER AND ALSO SUBSEQUENTLY FILED THE APPEAL GIVING THE SAME ADDRESS THEREFORE INTIMATION OF CHANGE OF ADDRESS VIDE LET TER DT. 26.9.2006 HAS NO RELEVANCE. THEREFORE THE CLAIM O F THE APPELLANT OF HAVING NOT RECEIVED THE COMMUNICATION FROM THE AO IS NOT CORRECT AND THE SAME IS LIABLE TO BE REJE CTED. IN THE REPORT OF THE AO IT HAS BEEN STATED THAT THE ADDIT IONAL EVIDENCE PRODUCED MAY NOT BE ADMITTED AT THE APPEAL STAGE AS THE APPELLANT WAS GIVEN SUFFICIENT OPPORTUNITY D URING THE ITA NO. 3147/M/09 5 ASSESSMENT PROCEEDINGS APPELLANT WAS NOT PREVENTED BY SUFFICIENT CAUSE FOR PRODUCING EVIDENCE BEFORE THE AO AND THE AO HAS NOT REFUSED TO ADMIT THE SAID EVIDENCE DURIN G THE ASSESSMENT PROCEEDINGS. TO THIS CONTENTION OF THE AO THE APPELLANT HAS NOT MADE ANY COUNTER COMMENTS AND ARGUMENTS. THE APPELLANTS SILENCE ON THIS FINDING IN THE REPORT OF THE AO PROVES THAT THE APPELLANT IS HAVIN G NO SUFFICIENT REASON AND CAUSE FOR CLAIMING AND FURNIS HING THE ADDITIONAL EVIDENCES AT THE APPELLATE STAGE. THERE FORE THE ADDITIONAL EVIDENCES FILED ARE NOT ADMITTED. HENCE THE SAME ARE REJECTED AND TREATED AS HAVING NO RELEVANCE FOR CONSIDERING AND DECIDING THIS GROUND OF APPEAL. HA VING NOT ADMITTED THE ADDITIONAL EVIDENCES I DO NOT HAVE AN Y OTHER REASON BUT CONFIRMING THE ACTION OF THE AO IN MAKI NG DISALLOWANCE OF RS. 2 15 551/- CLAIMED BY THE APPEL LANT AS EXPENDITURE INCURRED FOR PURCHASES WHICH WERE NOT P ROVED BEYOND ANY DOUBT BEFORE THE AO. THEREFORE THE ADD ITION MADE BY THE AO OF RS. 2 15 551/- U/S. 68 OF THE I.T . ACT BY CREATING CASH CREDIT IN THE NAME OF DEEPAK ENTERPRI SES OBTAINING BOGUS BILLS IS UPHELD. THIS GROUND IS THEREFORE DECIDED AGAINST THE APPELLANT. 6. AGGRIEIVED ASSESSEE PREFERRED AN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUND: 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CT(A) HAS ERRED IN CONFIRMING T HE ADDITION OF RS. 2 12 551/- AS BOGUS PURCHASES FROM M/S. DE EPAK ENTERPRISES DELHI 7. WE FIND THAT THE LD. CIT(A) OBSERVED THAT IN THE REPORT OF THE AO IT HAS BEEN STATED THAT ADDITIONAL EVIDENCE PRODUCED M AY NOT BE ADMITTED AT THE APPELLATE STAGE AS THE ASSESSEE HAS BEEN GIVEN SUFFICIENT OPPORTUNITY DURING THE ASSESSMENT PROCEEDINGS. ASSESSEE WAS NO T PREVENTED BY SUFFICIENT CAUSE FOR PRODUCING EVIDENCE BEFORE THE AO AND THE AO HAS NOT REFUSED TO ADMIT THE SAID EVIDENCE DURING THE ASSE SSMENT PROCEEDINGS. TO THIS CONTENTION OF THE AO THE ASSESSEE HAS NOT M ADE ANY COUNTER COMMENTS AND ARGUMENTS. THE ASSESSEES SILENCE ON THIS FINDING IN THE REPORT OF THE AO PROVES THAT THE ASSESSEE IS HAVING NO SUFFICIENT REASON ITA NO. 3147/M/09 6 AND CAUSE FOR CLAIMING AND FURNISHING THE ADDITIONA L EVIDENCES AT THE APPELLATE STAGE. THEREFORE THE ADDITIONAL EVIDENC ES FILED ARE NOT ADMITTED. 8. WITH REGARD TO ADMISSIBILITY OF ADDITIONAL EVIDE NCE WE ARE OF THE OPINION THAT THE SAME CAN BE ADMITTED PLACING RELIA NCE ON THE DECISIONS IN THE CASE OF RAJNISH INDUSTRIES VS. ITO AND PATNA BENCH OF ITAT IN THE CASE OF ABHAY KUMAR SHROFF. IN THE CASE OF ABHAY KU MAR SHROFF 63 ITD 144 WHEREIN IT HAS BEEN HELD AS FOLLOWS: IT WAS THAT THE ASSESSEE AS A MATTER OF RIGHT COUL D NOT FILE OR FILED THEM BEFORE THE TRIBUNAL AS A MATTER OF COURS E. IF THE ASSESSEE PRODUCES SOME DOCUMENTS AT THE APPROPRIATE TIME THEY HAVE TO BE TAKEN INTO CONSIDERATION SUBJECT OF COURSE TO ALL JUST EXCEPTIONS SUCH AS THEIR RELEVANCE ETC. IF NOT DONE AT THE ASSESSMENT STAGE THE ADMISSION OF DOCUMENTS HA S TO BE GOVERNED BY RULE 46A OF THE I.T. RULES 1962 IF PR ODUCED FOR THE FIRST TIME BEFORE THE FIRST APPELLATE AUTHORITY . HAVING MISSED THE BUS AND THE MATTER HAVING TRAVELLED TO T HE TRIBUNAL THE ADMISSION OF DOCUMENTS IS TO BE GOVER NED BYRULE 29 OF THE APPELLATE TRIBUNAL RULES. HENCE I F THE DOCUMENTS SOUGHT TO BE ADMITTED EVEN AT THE SECOND APPELLATE STAGE ARE OF A NATURE AND QUANTITATIVELY SUCH THAT THEY RENDERASSISTANCE TO THE TRIBUNAL IN PASSING ORDERS OR ARE REQUIRED TO BE ADMITTED FOR ANY OTHER SUBSTANTIAL CAUSE IT WOULD RATHER BE THE DUTY OF THE TRIBUNAL TO ADMIT T HEM. THEREFORE IF THE RECEIPT OR ADMISSION OF ADDITIONA L EVIDENCE IS VITAL AND ESSENTIAL FOR THE PURPOSE OF CONSIDERATIO N OF THE SUBJECT MATTER OF APPEAL AND TO ARRIVE AT A FINAL A ND ULTIMATE DECISION THE TRIBUNAL IS AMPLY EMPOWERED TO ADMIT ADDITIONAL EVIDENCE UNDER RULE 29. THEREFORE THE TRIBUNAL HAD TO ADMIT ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE SINCE THAT WAS VITAL AND ESSENTIAL FOR RENDERING JUSTICE AND IN DE CIDING APPEALS. HOWEVER IT WAS NECESSARY TO GIVE THE DEPA RTMENT A REASONABLE OPPORTUNITY OF REBUTTING IT ACCORDING TO THE PRINCIPLE OF NATURE JUSTICE AND FOR THAT PURPOSE TH E MATTER WAS RESTORED TO THE FILE OF THE AO. ITA NO. 3147/M/09 7 FOLLOWING THE RATIO OF THE ABOVE SAID DECISION WE REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PRODUCE BEFORE THE AO ALL THE EVIDENCES AND THEREAFTER THE AO SHALL CONSIDER/RE-EXAMINE THE ISSUE OF ADDITION OF BOGUS PURCHASES FROM M/S. DEEPAK ENTERPRISES IN ACCORDANCE WITH LAW . 9. THE NEXT GROUND RAISED BY THE ASSESSEE READS IS AS FOLLOWS: (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 16 33 869/- OF INTEREST PAID. 10. FOLLOWING THE DECISION IN THE CASE OF ABHISHE K INDUSTRIES LTD. 156 TAXMAN 257 THE LD. CIT(A) HELD AS FOLLOWS: SINCE THE APPELLANT HAVING FAILED TO ESTABLISH THE NEXUS OF BORROWED MONEY USED FOR THE PURPOSES OF ITS BUSINES S TO THE EXTENT OF THE ADVANCES MADE TO ITS SISTER CONCERN THE CLAIM OF DEDUCTION TO THIS EXTENT DISALLOWED BY THE AO IS TH US JUSTIFIED AND UPHELD. THIS GROUND IS ALSO DECIDED AGAINST TH E APPELLANT 11. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTION MADE BEFORE THE LD. CIT(A) WHICH ARE AS FOLLOWS: IN THE ABOVE SUBMISSIONS THE APPELLANT HAS CONTEND ED THAT ADVANCES TO SIL ORIGINALLY WERE BY WAY OF INTEREST BEARING LOANS BUT DUE TO SIGNIFICANT LOSSES INCURRED BY IT SILS CAS E WAS TO BE REFERRED TO BIFR AND THE APPELLANT AGREED FOR WAIVER OF INTE REST. AS A RESULT FROM 1.4.2000 ADVANCES STO SIL WERE TREATED AS INTE REST FREE ADVANCES. THE AO RELYING ON IRRELEVANT CONSIDERATI ONS HAS MADE THE DISALLOWANCE OF INTEREST. THE APPELLANT HAS N OT MADE ANY SPECIFIC BORROWING FOR ADVANCING FUNDS TO SIL WHICH IS REFLECTED IN THE FINANCIAL POSITION AS ON 31.3.2003 AND 31.3.200 4. THE LOANS HAVE PRIMARILY BEEN RAISED FOR TEXTILE AND AUTOMOBI LE BUSINESS DIVISION OF THE APPELLANT. THE AMOUNT ADVANCED TO SIL HAS BEEN SMALLER COMPARED TO INTEREST FREE FUNDS POSSESSED B Y THE ASSESSEE. IT WAS INCORRECT ON THE PART OF AO TO PRESUME THAT THERE WAS DIVERSION OF BORROWED FUNDS FOR ADVANCING TO SIL. THE COURTS AND TRIBUNALS HAVE CONSISTENTLY HELD THAT SO LONG AS ON THE DATE OF ITA NO. 3147/M/09 8 ALLEGED NON BUSINESS APPLICATION THE TAX PAYER HAS OWN FUNDS IN EXCESS OF FUNDS ALLEGEDLY USED FOR NON BUSINESS USE R IT SHOULD BE PRESUMED THAT THE TAX PAYER ALLOCATED HIS OWN INTER EST FREE FUNDS TO THE SEGMENT OF INTEREST FREE FUNDS. THE APPELLANT HAD SUFFICIENT INTEREST FREE FUNDS IN THE FORM OF PARTNERS CAPITA L AS ON 31.3.2003 AND 31.3.2004 WHICH COVERED THE LENDING TO SIL OF R S. 141.52 LAKHS AND 122.46 LAKHS. FURTHER THERE WAS NO EFFECTIVE A DDITIONAL LENDING AND REPAYMENT BY SIL NO DISALLOWANCE WAS ALSO WARR ANTED IN VIEW OF COMMERCIAL EXPEDIENCY OF LENDING TO SIL. RELIAN CE IS PLACED ON THE DEFCISION IN THE CASE OF S.A. BUILDERS LTD. AND VARIOUS OTHER DECISIONS. 12. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS IN THE FORM OF PARTN ERS CAPITAL AS ON 31.3.2003 OF RS. 242.55 LAKHS AND AS ON 31.3.2004 O F RS. 325.74 LAKHS WHICH COVERED THE LENDING TO SIL OF RS. 141.52 LA KHS AND RS. 122.46 LAKHS ON THOSE DATES RESPECTIVELY. IN THESE CIRCU MSTANCES WE DEEM IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE AO TO EXAMI NE THE BALANCE SHEET OF THE ASSESSEE ON THOSE DATES AND DECIDE THE ISSUE AF RESH IN ACCORDANCE WITH LAW. THE AO WHILE DECIDING THE ISSUE SHOULD KE EP IN MIND THE RATIO OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. RELIANCE UTILITIES & POWER LTD. (313 ITR 304) 13. THE LAST GROUND RAISED BY THE ASSESSEE READS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1 56 776/- AS PARTNERS PERSONAL EXPENSES ON MOTOR C AR EXPENSES & DEPRECIATION. 14. THE LD. CIT(A) HELD AS FOLLOWS: HOWEVER ON GOING THROUGH THE ASSESSMENT ORDER I FIND THAT THE AO HAS DISCUSSED THIS ISSUE IN PARA 5 OF HIS OR DER BY STATING THAT OUT OF VEHICLE RUNNING AND MAINTENANC E EXPENSES DEBITED TO THE P&L ACCOUNT AT RS. 4 52 081/- SINCE PERSONAL USE OF MOTOR CARS/VEHICLES BY THE PARTNERS FOR THE PURPOSES OTHER THAN BUSINESS CANNOT BE RULED OUT 1/5 TH OUT OF THESE EXPENSES IS DISALLOWED. SIMILARLY 1/5 TH OF DEPRECIATION ON ITA NO. 3147/M/09 9 MOTOR CARS/VEHICLES CLAIMED AT RS. 3 31 797/- IS AL SO DISALLOWED. SINCE THE APPELLANT HAS NOT CONTESTED THIS FINDING OF THE AO DURING THE APPELLATE PROCEEDINGS EITHER I N WRITING OR ORALLY IT IS PROVED THAT APPELLANT IS HAVING NO GR IEVANCE AGAINST THIS DISALLOWANCE. MOREOVER THE 1/5 TH DISALLOWANCE MADE BY THE AO CAN ALSO NOT BE CONSIDERED AS HIGHL Y EXCESSIVE. THEREFORE THE DISALLOWANCE OUT OF MOTO R CAR EXPENSES AND DEPRECIATION ALLOWANCE U/S. 38(2) OF T HE I.T. ACT 1961 BY THE AO IS UPHELD. THIS GROUND IS ALSO DECI DED AGAINST THE APPELLANT. 15. THE LD. CIT(A) HAS CONFIRMED THE 1/5 TH DISALLOWANCE MADE BY THE AO OUT OF THE VEHICLE RUNNING AND MAINTENANCE EXPEN DITURE DEBITED INTO THE P&L ACCOUNT AND 1/5 TH OF DEPRECIATION ON MOTOR CARS AND VEHICLES. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AS THE DISALLOWANCE MADE ON ACCOUNT OF PERSONAL USE OF MOTOR CARS AND DISALLOWANCE OF 1/5 TH OF DEPRECIATION ON MOTOR CARS SEEMS TO BE REASONAB LE. HENCE WE DISMISS THIS GROUND RAISED BY THE ASSESSEE. 16. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 9 TH DAY OF MARCH 2011 SD/- SD/- (R.K. PANDA) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 9 TH MARCH 2011 RJ ITA NO. 3147/M/09 10 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 3147/M/09 11 DATE INITIALS 1 DRAFT DICTATED ON: 2 . 0 3 .201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 2 .0 3 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______