Smt. Saroj Rander,, Nagpur v. Jt. C.I.T. Range, 4,, Nagpur

ITA 320/NAG/2012 | 2007-2008
Pronouncement Date: 19-11-2014 | Result: Allowed

Appeal Details

RSA Number 32023914 RSA 2012
Assessee PAN AABHR9739Q
Bench Nagpur
Appeal Number ITA 320/NAG/2012
Duration Of Justice 2 year(s) 4 month(s) 3 day(s)
Appellant Smt. Saroj Rander,, Nagpur
Respondent Jt. C.I.T. Range, 4,, Nagpur
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 19-11-2014
Assessment Year 2007-2008
Appeal Filed On 16-07-2012
Judgment Text
1 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 NAGPUR IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH NAGP UR . ! ' BEFORE SHRI D. KARUNAKARA RAO AM AND SHRI VIVEK VARMA JM ITA NO. 319/NAG/2012 (ASSESSMENT YEAR : 2007-08) RAMESH RANDER HUF C/O M/S LOYA BAGRI & CO. CHARTERED ACCOUNTANTS GANDHIBAG NAGPUR -440 002 # # # # ./ PAN :AABHR 9739 Q $% / VS. JT COMMISSIONER OF INCOME TAXRANGE -4 SARAF CHAMBERS NAGPUR -440 001 ( #& / APPELLANT) : ( '(#& / RESPONDENT) #& ) * / APPELLANT BY : SHRI R V LOYA '(#& ) * / RESPONDENT BY : SHRI MAYANK PRIYADARSHI ITA NO. 320/NAG/2012 (ASSESSMENT YEAR: 2007-08) SMT. SAROJ RANDER C/O M/S LOYA BAGRI & CO. CHARTERED ACCOUNTANTS GANDHIBAG NAGPUR # # # # ./ PAN : AAKPR 0537 M $% / VS. ASSTT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -1 ROOM NO. 410 AAYAKAR BHAVAN NAGPUR -440 001 ( #& / APPELLANT) : ( '(#& / RESPONDENT) #& ) * / APPELLANT BY : SHRI R V LOYA '(#& ) * / RESPONDENT BY : SHRI MAYANK PRIYADARSHI ITA NO. 250/NAG/2012 (ASSESSMENT YEAR: 2007-08) ASSTT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -4 ROOM NO. 301 SARAF CHAMBERS NAGPUR $% / VS. SAROJ RANDER SARVODAYA CLOTH MARKET GAMDHIBAGH NAGPUR # # # # ./ PAN :AAKPR 0537 M ( #& / APPELLANT) : ( '(#& / RESPONDENT) #& ) * / APPELLANT-ASSESSEE BY : SHRI R V LOYA '(#& ) * / RESPONDENT-REVENUE BY : SHRI MAYANK PRIYADARSHI % + ) / DATE OF HEARING : 12.09.2014 -./ ) /DATE OF PRONOUNCEMENT : 19.11.2014 0 0 0 0 O R D E R ! . ./ PER VIVEK VARMA JM: THE THREE APPEALS ARE AGAINST THE ORDER OF CIT(A) II NAGPUR DATED 28.03.2012 (RAMESH RANDER (HUF) AND 27.03.201 2 CROSS APPEALS OF SAROJ RANDER AGAINST THE ORDER DATED 27. 03.2012. 2 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 2. IDENTICAL ISSUES HAVE BEEN TAKEN IN THE CASES OF RAMESH RANDER (HUF) AND SAROJ RANDER. 3. SINCE THE IMPUGNED ORDER IN THE CASE OF SAROJ RA NDER IS THE SAME THE APPEAL FILED BY THE DEPARTMENT IS ALSO TA KEN UP AND HEARD ALONG WITH THE APPEALS FIELD BY THE ASSESSES FOR T HE SAKE OF CONVENIENCE AND BREVITY. ITA NO. 319/NAG/2012 : RAMESH RANDER (HUF) : ASSESSEES APPEAL : 4. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN: (1) THAT THE ORDER OF THE JT. COMMISSIONER OF INC OME TAX IS BAD IN LAW AND WRONG ON FACTS AND THE LEARNED CIT (APPE AL) ERRED IN CONFIRMING THE SAME. ON THE FACTS AND CIRCUMSTAN CES OF THE CASE THE ACTION OF THE CIT(A) IS UNJUSTIFIED. (2) THAT THE ASSESSING OFFICER ERRED IN LAW AND ON F ACTS IN NOT ALLOWING EXEMPTION ON AGRICULTURAL INCOME OF RS.1 14 725/- AND THE LEARNED CIT(APPEAL) WAS NOT JUSTIFIED IN UPHOLD ING THE ACTION OF THE ASSESSING OFFICER. ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND EVIDENCE PRODUCED THE ACTION OF THE A UTHORITIES IN DOUBTING THE GENUINENESS OF THE AGRICULTURAL INC OME IS UNJUSTIFIED. (3) THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN DOUBTING AGRICULTURE INCOME OF RS. 1 14 725/- AND MAK ING ADDITION U/ S.68 OF THE INCOME TAX ACT AND THE LEAR NED CIT(APPEAL) WAS UNJUSTIFIED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE AUTHORITIES IS ARBITRARY AND HIGHLY UN JUSTIFIED. (4) THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING DISALLOWANCE OF EXPENDITURE OF INTEREST T O THE TUNE OF RS.67 59 370/AND THE LEARNED CIT(APPEAL) ER RED IN CONFIRMING THE ADDITION. ON THE FACTS AND CIRCUMSTA NCES OF THE CASE THE ACTION OF THE AUTHORITIES IN HOLDING THAT INTEREST WAS LAID OUT FOR NON-BUSINESS PURPOSES IS WITHOUT ANY S OUND BASIS AND HENCE UNJUSTIFIED. (5) THAT THE LEARNED CIT(APPEAL) ERRED IN LAW AND O N FACTS IN HOLDING THAT THE ASSESSEE HAS FAILED TO SUBSTANTIAT E THAT SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE. ON T HE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER AND THE LEARNED CIT(APPEAL) FAILED TO APPRECIATE DOCUMENTARY EVIDEN CES PRODUCED TO SUBSTANTIATE THE CLAIM. (6)THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FA CTS IN HOLDING THAT THE TRANSACTION OF SALE OF AGRICULTURAL LAND I S ADVENTURE IN THE NATURE OF TRADE AND THE LEARNED CIT(A) WAS H IGHLY UNJUSTIFIED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER. ON 3 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE AUTHORITIES IN HOLDING THE AGRICULTURAL LAND AS TRA DING ASSET IS WITHOUT ANY SOUND BASIS AND HENCE CONTRARY TO FA CTS AVAILABLE ON RECORD AND THEREFORE HIGHLY UNJUSTIFIE D. (7) THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN TREATING THE INCOME FROM SALE OF AGRICULTURAL LAND AT RS.3 25 08 795/- AS INCOME FROM ADVENTURE IN THE NA TURE OF TRADE AND DENYING EXEMPTION TO SUCH INCOME. THE LEA RNED CIT(APPEAL) ERRED IN CONFIRMING THE ACTION OF THE AS SESSING OFFICER. THE PRESUMPTION MADE BY THE AUTHORITIES REG ARDING INTENTION OF PURCHASE OF AGRICULTURE LAND AND EARNI NG OF PROFIT IS BASED ON CONJECTURES & SURMISES AND THEREFORE THE A DDITION TO INCOME IS UNLAWFUL AND UNJUSTIFIED. (8) THAT THE ASSESSING OFFICER ERRED IN LAW AND ON F ACTS IN HOLDING THAT THE ASSESSEE IS ENGAGING HIMSELF IN BUYING AND SELLING OF LAND AND THE LEARNED CIT(APPEAL) WAS UNJ USTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER. ON THE FACTS OF THE CASE THE ACTION OF THE AUTHORITIES IS CONTRARY TO FACTS AVAILABLE ON RECORD. (9) THAT THE ASSESSING OFFICER ERRED IN LAW AND ON F ACTS IN HOLDING THAT NO AGRICULTURAL ACTIVITY WAS CARRIED OUT ON TH E IMPUGNED AGRICULTURAL LAND AT VILLAGE LODHI PANJRI. THE LEAR NED AUTHORITIES WERE NOT JUSTIFIED IN DISREGARDING THE EVIDENCE PRO DUCED AND MAKING ADDITION ON THE BASIS OF IRRELEVANT CONSIDER ATION. (10) THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN CHARGING INTEREST U/S.234B AND 234D OF THE INCOME T AX ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE INTEREST CHARGED IS IMPROPER. (11) THAT FOR ANY OTHER GROUND WITH KIND PERMISSION OF HON'BLE MEMBERS AT THE TIME OF HEARING OF APPEAL. 5. THE FACTS ARE THAT THE ASSESSEE IS A HUF. THE A SSESSEE RUNS THE BUSINESS IN THE NAME OF M/S SHRIGOPAL RAMESHKUMAR NAGPUR AND IS ENGAGED IN THE BUSINESS OF WHOLESALE TRADING OF COT TON BALES AND ALSO ACTS AS COMMISSION AGENT. THE ASSESSEE MAINTAINS RE GULAR BOOKS OF ACCOUNT WHICH ARE SUBJECTED TO STATUTORY COMPLIANC ES. BESIDES THE BUSINESS THE ASSESSEE IS ALSO AN AGRICULTURIST AND HAVE BEEN DECLARING AGRICULTURE INCOME IN THE PAST AS WELL. 6. IN THE YEAR UNDER CONSIDERATION THE ASSESSEE SO LD AGRICULTURAL LAND TO MRS. B RADHA AND MRS. B JHASI RANI FOR A TO TAL CONSIDERATION OF RS. 4 22 64 000/-. THE ASSESSEE REDUCED ITS PURC HASE COST OF RS. JJT 4 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 93 80 000/- AND CLAIMED THE BALANCE OF RS. 3 25 08 795/- EXEMPT FROM INCOME TAX. 7. THE AO TREATED THE ENTIRE TRANSACTION AS AN EYE WASH AND H E LD IT BE BUSINESS AS ADVENTURE IN THE NATURE OF TRADE. 8. THE ASSESSEE EXPLAINED TO THE AO THAT THE ASSESS EE ACQUIRED THE PARCEL OF LAND AS AGRICULTURAL LAND AND SOLD THE SA ME AS AGRICULTURAL LAND AND EVEN THE PURCHASER OF THE LAND WERE CONDU CTING AGRICULTURAL ACTIVITIES. AS PER THE SUBMISSIONS MADE BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT COMPLETE DETAILS HAD BEEN PROVIDED WHICH HAS BEEN REPRODUCED IN THE IMPUGNED ORDER AS WELL. 9. THE ASSESSEE ALSO SUBMITTED BEFORE THE CIT(A) T HAT THE AO MADE A FACTUALLY WRONG OBSERVATION THAT THE ASSESSE E WAS NOT DOING ANY AGRICULTURAL ACTIVITY AND ALSO THAT NO DETAILS EXCEPT FOR 7/12 EXTRACT WAS PRODUCED. THE ASSESSEE PLEADED BEFORE T HE CIT(A) THAT THE ASSESSEE HAD BEEN MAINTAINING REGULAR AGRICULTURAL LEDGERS AND BOOKS OF ACCOUNT WHICH HAD BEEN PRODUCED BUT WERE NOT CO NSIDERED. BASED ON THE ABOVE THE ASSESSEE PLEADED BEFORE THE CIT(A ) THAT THE SALE OF AGRICULTURAL LAND WAS NOT IN THE NATURE OF BUSINESS AND THUS CANNOT BE CONSTRUED AS TRANSACTION IN THE NATURE OF TRADE AND ALSO THAT THE INCOME OF RS. 1 14 725/- WAS AGRICULTURAL INCOME AN D WAS NOT JUST ANY OTHER DEPOSIT. 10. THE CIT(A) AFTER TAKING INTO CONSIDERATION TH E SUBMISSIONS OF THE ASSESSEE SUSTAINED THE OBSERVATIONS OF THE AO T HAT THE ASSESSEE DID NOT HAVE ANY INTENTION OF CARRYING OUT ANY AGRI CULTURAL ACTIVITY AS THE LAND WAS IN THE EPICENTER OF MEGA DEVELOPMENT O N WARDHA ROAD. THE CIT(A) ALSO SUSTAINED THE OBSERVATIONS OF THE A O THAT THE AGRICULTURAL ACTIVITY REMAINED UNSUBSTANTIATED BY T HE ASSESSEE. HE 5 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 ALSO SUSTAINED THAT THE ASSESSEE WAS IN FACT TRADIN G IN THE LANDS IN THE VICINITY OF MEGA DEVELOPMENT BEING CARRIED OUT ON W ARDHA ROAD. 11. AGAINST THESE FINDINGS OF THE REVENUE AUTHORITI ES THE ASSESSEE IS NOW IN APPEAL BEFORE THE ITAT. 12. BEFORE US THE AR PLACED A COPY OF APB WHEREIN THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME SINCE ASSESSMENT YEAR 2004-05 WHICH HAS BEEN ACCEPTED BY THE AO IN ASSESSMENT YEARS 200 5-06 & 2006-07 AND ASSESSMENT YEAR 2005-06 WAS SCRUTINY ASSESSMENT . 13. THE ASSESSEE HAS ALSO PLACED BEFORE THE 7/12 EX TRACTS FOR VARIOUS YEARS AND VARIOUS AGRICULTURAL LANDS ON WH ICH THE ASSESSEE HAD PERFORMED AGRICULTURAL INCOME. THE AR THEREFOR E SUBMITTED THAT IN THE LIGHT OF THE DOCUMENTS THE REVENUE AUTHORIT IES HAD ERRED IN NOT ACCEPTING THE CLAIMS OF THE ASSESSEE WITH REGARD TO AGRICULTURAL ACTIVITIES ACTUALLY PERFORMED BY THE ASSESSEE. 14. THE DR ON THE OTHER HAND SUPPORTED THE ORDERS O F THE REVENUE AUTHORITIES. 15. WE HAVE HEARD THE ARGUMENTS AND PERUSED THE ORD ERS OF THE REVENUE AUTHORITIES AND HAVE ALSO PERUSED THE DOCUM ENTS PLACED BEFORE US. NO DOUBT THE ASSESSEE HAD BEEN SAYING T HAT THE DOCUMENTS WERE PRODUCED BEFORE THE REVENUE AUTHORITIES. FROM THE MERE GOING THROUGH THE DOCUMENTS IT IS SEEN THAT THE ASSESSEE HAS BEEN PERFORMING AGRICULTURAL ACTIVITY FOR THE PAST AT L EAST THREE YEARS BUT THE DETAILS AND DOCUMENTS HAVE BEEN IGNORED BY THE REVENUE AUTHORITIES AND HAVE GIVEN RIVAL FINDINGS. SINCE TH E ASSESSEE HAS PRODUCED THE DOCUMENTS EVEN BEFORE US WE CAN ONLY OBSERVE THAT THOUGH THERE IS ENOUGH EVIDENCE TO PROVE THE AGRICU LTURAL ACTIVITY BUT THE REVENUE AUTHORITIES MUST ALSO BE SATISFIED. 6 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 16. IN THESE CIRCUMSTANCES WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE OF AGRICULTURAL ACTIVITY AND TREA TMENT OF INCOME ON THE SALE OF AGRICULTURAL LAND TO THE FILE OF THE AO WHO SHALL ADJUDICATE THE ISSUES AFRESH IN THE LIGHT OF THE DOCUMENTS PLA CED BEFORE US. 17. GROUNDS NO. 2 3 6 7 8 & 9 ARE TREATED AS AL LOWED FOR STATISTICAL PURPOSES. 18. GROUNDS NO. 4 & 5 PERTAIN TO DISALLOWANCE OF IN TEREST EXPENSE OF RS. 67 59 370/-. 19. IN THE ASSESSMENT PROCEEDINGS THE AO NOTICED T HAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 2 62 38 330/- AS INTER EST IN HIS PROFIT & LOSS ACCOUNT. ON THIS THE AO CALLED FOR EXPLANATIO N AND FOUND THAT THE ASSESSEE HAD PAID INTEREST OF RS. 2 62 38 330/- ON LOANS ON THE ONE HAND AND HAD ADVANCED INTEREST FREE LOANS TO HI S RELATIVES. 20. THE AO THEREFORE OBSERVED THAT SINCE THE FUND S ADVANCED BY THE ASSESSEE TO HIS RELATIVES WERE NOT FOR BUSINESS PURPOSES HE DISALLOWED INTEREST EXPENSE OF RS. 10 00 000/- AND RS. 57 59 370/- AGGREGATING TO RS. 67 39 370/-. 21. THE ASSESSEE APPROACHED THE CIT(A) AND SUBMITTE D BEFORE HIM THAT THE AO HAD ERRED IN DISALLOWING THE INTEREST A T RS. 67.59 LACS. THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PAID I NTEREST 2.62 CRORES AND RECEIVED RS. 2.59 CRORES HE THEREFORE SUBMITTED THAT IF AT ALL INTEREST IS TO BE DISALLOWED IT CANNOT EXCEED RS. 3.00 LACS AND ODD. THE ASSESSEE ALSO SUBMITTED BEFORE THE CIT(A) THAT THE AO THOUGH HAD REJECTED THE ARGUMENT OF THE ASSESSEE BUT DID NOT REJECT THE GENUINENESS OF THE MOVEMENT OF FUNDS AND RECEIPT AN D EXPENSE OF INTEREST AND HAD ALSO ACCEPTED THAT THE ASSESSEES TURNOVER WAS RS. 7 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 72.12 CRORES. BASED ON THIS THE REJECTION OF ARGUM ENTS WAS NOT DESIRED. 22. THE CIT(A) AFTER CONSIDERING THE DETAILED SUBM ISSIONS OF THE ASSESSEE OBSERVE I HAVE CONSIDERED THE ISSUE OF PROPORTIONATE DISALLOWANCE. THE A.O. HAS GIVEN A CATEGORICAL FINDING THAT WHILE THE ASSESSEE IS INCURRING INTEREST BURDEN OF RS.2 62 38 330I HUGE INTEREST FREE ADVANCES WERE GIVEN TO FAMILY MEMBERS AND RELATED PARTIES. THE MANDATORY CONDITION FOR ALLOWANCE OF INTEREST ULS.36(1)(III) IS THAT THE BORROWED FUNDS SHOULD BE USED FOR BUSINESS PURPOSE. IT IS NOT THE CONTENTION OF THE ASSESSEE THAT THE FUNDS ADVANCED TO FAMILY MEMBERS AND RELATED PARTIES WERE FOR BUSINESS PURPOSE. THE ASSESSEE HAS ONLY CONTENDED THAT HE HAD OWN SUFFICIENT FUNDS TO MAKE INTEREST FREE ADVANCES. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE THAT WHEN THE HUGE ADVANCES WERE MADE TO THE RELATED PARTIES THE ASSESSEE HAD SUFFICIENT FUNDS/ NON INTEREST BEARING FUNDS. EXCEPT FOR THE GENERAL EXPLANATION THAT IT HAS SUFFICIENT CAPITAL AND INTEREST FREE FUNDS THE ASSESSEE HAD NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT HE HAD SUFFICIENT BANK AND CASH BALANCE AVAILABLE ON THE DATES WHEN THE INTEREST FREE LOANS WERE GIVEN. IT WOULD BE PERTINENT TO MENTION THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF SANGHVI SWISS REFILLS (P) LTD. VS. ITO [ 20031 85 ITD 59 (MUM.) ON THIS ISSUE. IT IS WELL-SETTLED THAT UNDER SECTION 36(1)( III ) INTEREST PAYABLE ON THE AMOUNT BORROWED BY WHATEVER NAME IT IS CALLED IS ALLOWABLE AS DEDUCTION ONLY IF IT IS USED FOR THE PURPOSE OF THE BUSINESS. IT IS ALSO WELL-SETTLE D THAT THE INITIAL ONUS IS ON THE PERSON WHO CLAIMS THE DEDUCTION. THUS IT WAS FOR THE ASSESSEE TO PROVE T HAT THE AMOUNT OF RS. 60 LAKHS WAS UTILIZED FOR THE PURPOSE OF BUSINESS. THE ASSESSEE HAD NOT FURNISHED ANY EVIDEN CE TO SHOW THAT ON THE DATE WHEN THE AMOUNT OF RS. 60 LAKHS WAS DIVERTED TO ITS SISTER CONCERN THE ASSES SEE HAD OWN FUNDS/NON-INTEREST-BEARING FUNDS THE ASSESS EE COULD NOT MAKE A GENERAL CLAIM THAT IT HAD SUFFICIE NT NON- INTEREST-BEARING FUND/OWN FUND WHICH WAS MORE THAN THE INTEREST-FREE LOAN GIVEN BY IT. IN FACT IT WAS FOR THE ASSESSEE TO PROVE PRECISELY BY REFERRING TO THE BAN K AND CASH BALANCE AVAILABLE ON THE DATE WHEN INTEREST-FR EE LOAN WAS GIVEN AND AT BEST THE BENEFIT OF DOUBT W OULD BE GIVEN TO THE ASSESSEE WHEN IN THE COMMON POOL 8 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 ACCOUNT THERE WAS SUFFICIENT BALANCE WHICH COULD COVER THE INTEREST FREE LOAN THIS EXERCISE WAS NOT DONE BY THE ASSESSEE AT ANY STAGE AND THERE WAS NO EVIDENCE TO PROVE THAT THE ASSESSEE HAD SUFFICIENT NON- INTEREST-BEARING FUNDS SO AS TO ADVANCE RS. 60 LAKH S TO ITS GROUP CONCERNS. IN FACT THE VERY FACT THAT ON THE DATE WHEN RS. 60 IAKHS WERE RECEIVED THE SOME WAS TRANSFERRED TO THE GROUP CONCERNS INDICATED THAT TH E AMOUNT WAS NOT UTILIZED FOR THE PURPOSE OF BUSINESS . 23. AGAINST THIS ORDER OF THE CIT(A) THE ASSESSEE IS NOW BEFORE THE ITAT. 24. BEFORE US THE AR REITERATED THE ARGUMENTS MADE BEFORE THE REVENUE AUTHORITIES AND HAVE ALSO PLACED DETAILED D OCUMENTS IN THE FORM OF AUDITED BALANCE SHEET AND TRIAL BALANCE TO SHOW THAT THE ASSESSEE HAD A CAPITAL BALANCE OF RS. 6 34 22 643/- AND SUNDRY DEBTORS WERE TO THE EXTENT OF RS. 20 07 15 381/- AN D SUNDRY CREDITORS WERE TO THE EXTENT OF RS. 7 79 81 475/-. THE AR ALS O POINTED OUT THAT OUT OF THE INTEREST DEBITED AND CONSIDERED BY THE R EVENUE AUTHORITIES WERE RS. 2 62 38 330/-. THE AR POINTED OUT THAT THI S INTEREST IS BROKE UP INTO RS. 2 40 75 333/- PAID TO BANK AND RS. 21 6 2 997/- PERTAINED TO EXPORT INTEREST THEREFORE THE EFFECTIVE INTERE ST COULD ONLY BE RS. 2 40 75 333/- WHICH COULD BE CONSIDERED AGAINST TH E ASSESSEE FOR DISALLOWANCE. 25. THE AR THEREFORE SUBMITTED THAT ON FACTS AND AFTER TAKING INTO CONSIDERATION THE QUANTUM OF OWN FUNDS WITH THE ASS ESSEE NO DISALLOWANCE IS CALLED FOR. 26. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTH ORITIES. 27. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED TH E MATERIAL PLACED BEFORE US. ON GOING THROUGH THE ORDERS OF TH E REVENUE AUTHORITIES WE FIND SUCH DETAILS HAVE NOT BEEN CON SIDERED BY EITHER OF 9 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 THE REVENUE AUTHORITIES. THESE DETAILS HAVE IMPORTA NT BEARING ON THE INFERENCE OF THE ISSUE. 28. SINCE THE ISSUE HAS NOT BEEN SEEN COMPLETELY BY THE REVENUE AUTHORITIES AND ADDITION AS SUCH CANNOT BE MADE OR SUSTAINED ON HALF BAKED FACTS WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE BE DECIDED AFRESH. 29. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A ) ON THIS ISSUE AND DIRECT THE AO TO DECIDE THE IMPUGNED ISSUE AFRESH AFTER GIVING REASONABLE AND ADEQUATE OPPORTUNITY TO THE ASSESSEE . 30. GROUNDS NO. 4 & 5 ARE THEREFORE ALLOWED FOR ST ATISTICAL PURPOSES. 31. GROUND NO. 10 PERTAINS TO CHARGE OF INTEREST U/ S 234B. THE CHARGE OF INTEREST BECOMES CONSEQUENTIAL HENCE THE GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES BECAUSE THE CHA RGE OF INTEREST SHALL BE RE-EXAMINED BY THE AO. ITA NO. 320/NAG/2012 : SAROJ RANDER : ASSESSEES APPEAL : 32. GROUND NO. 1 IS GENERAL. 33. GROUNDS NO. 2 TO 7 PERTAINS TO TREATMENT OF SAL E OF AGRICULTURAL LAND AND AGRICULTURAL INCOME. 34. THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO IN THE CASE OF RAMESH RANDER (HUF) WHERE THE FACTS ARE IDENTICAL. 35. TO HAVE A CONSISTENT FINDING WE RESTORE THE IS SUES TO THE FILE OF THE AO FOR FRESH ADJUDICATION ON THE ISSUE. 36. GROUNDS NO. 2 TO 7 ARE ALLOWED FOR STATISTICAL PURPOSES. 10 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 37. GROUND NO. 8 IS CHARGE OF INTEREST U/SS 234B & 234D OF THE INCOME-TAX ACT. THE CHARGE OF INTEREST BECOMES CONS EQUENTIAL HENCE THE GROUND IS TREATED AS ALLOWED FOR STATISTICAL PU RPOSES BECAUSE THE CHARGE OF INTEREST SHALL BE RE-EXAMINED BY THE AO. ITA NO. 250/NAG/2012 : SAROJ RANDER : REVENUES APPEAL : 38. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AOS ACTION OF REJECTING THE BOO KS OF ACCOUNT AND ESTIMATION OF GROSS PROFIT IS NOT JUSTIFIED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN ALLOWING A LOW GROSS PROFIT AS CLAIMED BY THE AS SESSEE EVEN THOUGH THE ASSESSEE FAILED TO PRODUCE DOCUMENTARY EVIDENCE S IN SUPPORT OF SUCH A WIDE FLUCTUATION IN PURCHASE AND SALE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 9 39 872/- STATING T HAT THE COMMERCIAL VIABILITY OF BUSINESS IS NOT POSSIBLE DUE TO SOME T ECHNICAL REASONS. 4. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF HEARING. 39. GROUND NO. 1 & 2 ARE INTERCONNECTED I.E. WITH REGARD TO REJECTION OF BOOKS AND ESTIMATION OF GROSS PROFIT. 40. IN THE PROCEEDINGS BEFORE THE CIT(A) THE ASSES SEE MADE VERY DETAILED SUBMISSIONS AS HAS BEEN REPRODUCED IN THE IMPUGNED ORDER. AFTER CONSIDERING THESE SUBMISSIONS THE CIT(A) OBS ERVED I HAVE GIVEN DUE CONSIDERATION TO THE SUBMISSION OF THE APPELLANT. IT IS A FACT THAT THE AO COULD NOT FIND A NY IRREGULARITIES IN THE BOOKS OF THE ACCOUNT OF THE A PPELLANT. THE ONLY CONTENTION OF THE AO WAS THAT THE ASSESSEE IS S OWING VERY LOW GROSS PROFIT. THE ASSESSEE IN HER SUBMISSION AB OVE HAS EXPLAINED THE VAGARIES OF YARN TRADE. I FIND FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE AO WAS NOT JUSTIF IED IN ASKING FOR THE EVIDENCE OF FLUCTUATION ON DAILY BAS IS SINCE THERE IS NO AUTHORIZED DOCUMENTS AVAILABLE IN THE MARKET IN THIS REGARD. FURTHER THE AO WAS NOT JUSTIFIED IN TING T HE BOOKS JUST BECAUSE THE ASSESSEE WAS UNABLE TO PROVIDE BILLWISE FLUCTUATION OF PROFIT/LOSS. THE BOOKS OF THE ASSESSEE ARE DULY AUDITED. THE AG HAD BROUGHT ANY MATERIAL ON RECORD WHICH WOULD PO INT TOWARDS ANY DEFECT IN THE BOOKS WARRANTING REJECTIO N OF 11 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 BOOKS. THE DELHI HIGH COURT IN CIT VS. JAS JACK ELE GANCE EXPORTS (2010) 324 ITR 95 (DELHI) HAS HELD THAT GRO SS PROFIT LOWER THAN IN EARLIER YEARS ALONE WOULD NOT BE ENOU GH FOR REJECTION OF BOOKS PARTICULARLY WHEN THE AG HAD NO T BEING ABLE TO FIND ANY DEFECTS IN THE BOOKS. HENCE I HOL D THAT THE REJECTION OF BOOKS BY THE AG AND ESTIMATION OF GROSS PROFIT IS NOT JUSTIFIED. HENCE THE APPEAL OF THE AS SESSEE IS ALLOWED. 41. THE DEPARTMENT NOT IN AGREEMENT HAS FILED THE A PPEAL AGAINST THIS ORDER OF THE CIT(A). 42. BEFORE US THE DR SUBMITTED THAT THE RELEVANT D ETAILS WERE NOT FILED BY THE ASSESSEE AND THEREFORE THE ORDER OF T HE AO WAS CORRECT AND SUSTAINED. 43. ON THE OTHER HAND THE AR SUBMITTED THAT COMPLE TE DETAILS WERE FILED AND WHICH HAVE BEEN REPRODUCED BY THE CIT(A) FOR CONVENIENCE. THE AR THEREFORE SUBMITTED THAT THE ORDER OF THE CI T(A) DID NOT SUFFER FROM ANY INFIRMITY. 44. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED TH E ORDERS OF THE REVENUE AUTHORITIES. THE CIT(A) HAS MADE A CATE GORICAL FINDING THAT AO COULD NOT FIND ANY IRREGULARITY IN THE BOOK S OF ACCOUNT WHICH COULD TRIGGER REJECTION OF BOOKS. HE THEREFORE RE VERSED THE ORDER OF THE AO ON THE ISSUE OF REJECTION OF BOOKS AND HELD THAT THE BOOKS DID NOT LEAD TO ABSURD RESULTS. 45. THIS NOT BEING THE CASE THEN THE BOOKS RESULTS ARE CERTIFIED TO BE CORRECT. 46. IN THAT CASE THE BOOKS RESULTS AS DECLARED BY THE ASSESSEE HAVE TO BE ACCEPTED. 47. WE THEREFORE REJECT GROUNDS NO. 1 & 2 AS RAIS ED BY THE DEPARTMENT. 12 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 48. GROUND NO. 3 PERTAINS TO ADDITION OF RS. 9 39 8 72/-. 49. GROUND NO. 3 PERTAINS TO ADDITION OF RS. 9 39 8 72/-. 50. IT WAS FOUND BY THE AO THAT THERE WAS NO BUSINE SS BY THE ASSESSEE AND THEREFORE THE AO ADDED IT BACK TO EXP ENSES NOT ALLOWABLE. 51. BUT BEFORE THE AO AND THEN BEFORE THE CIT(A) T HE ASSESSEE GAVE DETAILED REASONING AS TO WHY THERE WAS HARDLY ANY BUSINESS DURING THE YEAR UNDER CONSIDERATION. THE CIT(A) AFTER CON SIDERING THE REASONS & REPRODUCING THEM IN THE IMPUGNED ORDER O BSERVE I HAVE GIVEN DUE CONSIDERATION TO THE SUBMISSION O F THE APPELLANT. THE AO HAS HELD THAT SINCE THERE WERE NO RECEIPTS DURING THE YEAR THE BUSINESS OF THE ASSESSEE HAS C EASED TO EXIST OR DISCONTINUED. HOWEVER IT IS SEEN FROM THE SUBMISSION OF THE ASSESSEE THAT DUE TO TECHNICAL REASONS AND N ON-VIABILITY OF BUSINESS IN THE YEAR NO ACTIVITY OF PURCHASE AN D SALE WAS UNDERTAKEN. IT IS INFORMED THAT THE SITE OF MARBLE EXCAVATION WAS FILLED WITH WATER AND THE SAME HAD RESULTED INT O CUTTING OF MARBLES DIFFICULT. AS A CONSEQUENCE THE SALE COULD NOT BE MADE IN THE YEAR UNDER CONSIDERATION. HOWEVER THE ASSESSEE HAS POINTED OUT THAT THERE SUBSTANTIAL STOCK AVAILABLE FOR SALE WITH THE ASSES SEE. THUS I FIND FORCE IN THE CONTENTION OF THE ASSESSE E THAT THE MINING BUSINESS OF THE ASSESSEE WAS NOT CLOSED BUT WAS NOT CONTINUED ON ACCOUNT OF COMMERCIAL EXPEDIENCY. THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE BUSINESS OF MARBL E WAS DISCONTINUED / CEASED TO EXIST AND DISALLOWING THE LOSS. THE AO IS DIRECTED TO ALLOW THE BUSINESS LOSS OF RS 9 39 87 2/-. THE APPEAL OF THE ASSESSEE IS ALLOWED. 52. THE CIT(A) THEREFORE DELETED THE ADDITION. 53. AGAINST THIS ORDER THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 54. BEFORE US THE DR PLACED RELIANCE ON THE DECISI ON OF THE AO WHILE THE AR RELIED ON THE DECISION OF THE CIT(A) AND POINTED OUT THAT THE DETAILED SUBMISSIONS HAVE BEEN EXTRACTED IN THE IMPUGNED ORDER. 13 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 55. WE HAVE CONSIDERED THE ARGUMENTS AND THE ORDERS OF THE REVENUE AUTHORITIES. THE FACT THAT THE EXCAVATION S ITE OF MARBLE WAS FILLED BY WATER HAS NOT BEEN DISPUTED BY THE AO. TH E AO HAS ALSO NOT DISPUTED THE FACT THAT THERE WAS BUSINESS OF TRADIN G IN MARBLE BY THE ASSESSEE. THE ONLY REASON THAT IN THE YEAR UNDER CO NSIDERATION THERE WAS NO BUSINESS AND THAT TOO BECAUSE OF UNAVOIDABLE CIRCUMSTANCES WOULD NOT RESULT IN THE CLOSURE OF BUSINESS. THERE IS A DIFFERENCE BETWEEN LULL IN THE BUSINESS AND CLOSURE OF BUSINES S. AT BEST IT COULD BE SAID THAT THERE WAS A LULL IN THE BUSINESS DURIN G THE IMPUGNED YEAR. 56. IN THIS WAY WE CANNOT SUSTAIN THE ORDER OF THE AO THAT SINCE THERE WAS NO BUSINESS THEREFORE HE WENT ON TO MAK E A DISALLOWANCE. WE MUST ALSO OBSERVED THAT THE ASSESSEE WAS HAVING SUBSTANTIAL CLOSING STOCK WHICH PROVES THAT THE ASSESSEE HAD P UT THE BUSINESS ON A HOLD BECAUSE OF REASONS BEYOND HIS CONTROL. 57. WE THEREFORE SUSTAIN THE ORDER OF THE CIT(A) CONSEQUENTIALLY REJECT THE GROUND AS RAISED BY THE DEPARTMENT. 58. AS A RESULT GROUND NO. 3 AS RAISED BY THE DEPA RTMENT IS REJECTED. 59. IN THE RESULT THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. TO SUM UP: ASSESSEES APPEAL IN ITA NO. 319/NAG/2012 IS ALLOWE D FOR STATISTICAL PURPOSES ASSESSEES APPEAL IN ITA NO. 320/NAG/2012 IS ALLOWED FOR STATISTICAL PURPOSES REVENUES APPEAL IN ITA NO. 250/NAG/2012 STANDS DIS MISSED 14 RAMESH RANDER HUF ITA NO. 319/NAG/2012 SAROJ RANDER ITA NO. 320/NAG/2012 ITA NO. 250/NAG/2012 ORDER PRONOUNCED IN THE OPEN COURT ON 19/11/2014 SD/- SD/- ( . ) ( ! ) ( D. KARUNAKARA RAO ) ( VIVEK VARMA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER NAGPUR; (MUMBAI) 1% DATED 19/11/2014 . % . ./ * CHAVAN SR. PS 0 0 0 0 ) )) ) ' ' ' ' 2 / 2 / 2 / 2 / / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '(#& / THE RESPONDENT. 3. 3 ( ) -II NAGPUR / THE CIT(APPEALS)-II NAGPUR 4. 3 II NAGPUR/ CIT II NAGPUR 5. 6 7 ' % NAGPUR / DR ITAT NAGPUR 6. 7 ! 8 + / GUARD FILE. 0 % 0 % 0 % 0 % / BY ORDER / / TRUE COPY / / SENIOR PRIVATE SECRETARY ITAT MUMBAI CAMP: NAGPUR