M/s. Agrawal Money Finance,, Indore v. The ACIT,, Indore

ITA 46/IND/2010 | 2006-2007
Pronouncement Date: 18-02-2010 | Result: Allowed

Appeal Details

RSA Number 4622714 RSA 2010
Assessee PAN AAMFA1274C
Bench Indore
Appeal Number ITA 46/IND/2010
Duration Of Justice 24 day(s)
Appellant M/s. Agrawal Money Finance,, Indore
Respondent The ACIT,, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 18-02-2010
Assessment Year 2006-2007
Appeal Filed On 25-01-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER ITA NO.46/IND/2010 ASSESSMENT YEAR 2006-07 M/S. AGRAWAL MONEY FINANCE (PAN AAMFA 1274 C) C/O ARORA BANTHIA & TULSIYAN CAS 6 TH FLOOR SILVER ARC PLAZA 20/1 NEW PALASIA INDORE .APPELLANT VS ACIT-5(1) INDORE .RESPONDENT APPELLANT BY : SHRI AJAY TULSIYAN CA RESPONDENT BY : SMT. APARNA KARAN SR. DR O R D E R THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER O F THE LEARNED FIRST APPELLATE AUTHORITY DATED 27.11.2009 ON THE GROUND THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING AN ADDITION OF RS.10 233/- MADE BY THE ASSESSING OFFICER U/S 69C O F THE ACT BEING INTEREST PAID ON UNSECURED LOAN WHICH ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS WRONG AND UNCALLED FOR AND THE SAME REQ UIRES TO BE DELETED. 2. DURING THE HEARING OF THE APPEAL I HAVE HEARD S HRI AJAY TULSIYAN LD. COUNSEL FOR THE ASSESSEE AND SMT. APARNA KARAN LD. SR. DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE EXPENSES WERE PROPERLY DEBITED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE ADVA NCED THE ARGUMENT WHICH IS IDENTICAL AS RAISED BEFORE THE LD. CIT(A) BY FURTHER SUBMITTING 2 THAT ON IDENTICAL ISSUE/FACTS THE TRIBUNAL IN THE CASE OF SANJANA COLD STORAGE VS. ACIT (ITA NO.188/IND/2009) (ASSESSMENT YEAR 2005-06) VIDE ORDER DATED 5.5.2009 REMANDED THE SAME TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION. THIS FACTUAL MATRIX WAS NOT CON TROVERTED BY THE LD. SR. DR. HOWEVER THE LD. SR. DR DEFENDED THE IMPUGNED O RDER. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. R EPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON TH E FILE. BRIEF FACTS ARE THAT THE ASSESSEE DECLARED LOSS OF RS.5 14 126/- IN ITS RETURN FILED ON 30.10.2006. THE ASSESSEE FURNISHED BOOKS OF ACCOUNT S AND THE SAME WERE TEST-CHECKED DURING ASSESSMENT PROCEEDINGS. THE ASS ESSEE ALSO FURNISHED WRITTEN SUBMISSION BEFORE THE LD. ASSESSING OFFICER . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 14 2(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE STAND OF THE ASSESSEE IS THAT THE NECESSARY REQUIREMENTS WERE DULY COMPLIED WITH. THE ASSESSMEN T WAS COMPLETED U/S 143(3) VIDE ORDER DATED 24.12.2008 DETERMINING THE LOSS AT RS.4 03 893/- WHEREIN A LUMP SUM DISALLOWANCE OF PE TTY EXPENSES WAS MADE AND RS.10 233/- WAS ADDED AS INTEREST ON UNSEC URED LOANS FROM HINDUSTAN CONTINENTAL LTD. U/S 69C OF THE ACT. ON A PPEAL THE STAND OF THE LD. ASSESSING OFFICER WAS AFFIRMED BY THE LD. C IT(A) WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL. AS ARGUED BY THE LD . COUNSEL FOR THE ASSESSEE AND NOT CONTROVERTED BY THE REVENUE THAT T HE FACTS IN THE CASE 3 OF SANJANA COLD STORAGE (SUPRA) ARE QUITE IDENTICAL THEREFORE FOR READY REFERENCE THE AFORESAID ORDER IS REPRODUCED HEREUN DER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II INDORE DATED 20 TH JANUARY 2009 FOR ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUND : - THAT THE LD.CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 17 589/- MADE BY THE ASSESSING OFFICER U/S 69C AS A LLEGED UNEXPLAINED EXPENDITURE. THAT ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE THE SAID AMOUNT WAS PROP ERLY EXPENDED DULY RECORDED IN BOOKS BEING INTEREST PA ID TO A LOAN CREDITORS AND PROPERLY EXPLAINED. IT IS PRAYED THAT THE ADDITION NOW REQUIRES TO BE DELETED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSE E HAS BEEN ENGAGED IN RUNNING A COLD STORAGE PLANT. THE A SSESSEE CHALLENGED THE DISALLOWANCE ON ACCOUNT OF INTEREST OF RS. 17 589/-CLAIMED TO BE PAID ON LOAN TO M/S.HINDUSTAN CONTINENTAL LIMITED ( HCL). THE AO NOTED SEVERAL FA CTS WITH REGARD TO EXISTENCE OF M/S. HCL AND WHEREVER THAT P ARTY WAS CLAIMED TO EXIST THE AO ISSUED SUMMONS AS WELL AS TRIED TO TRACE THE PARTY AT DIFFERENT PLACES BUT THE SAID P ARTY WAS NOT AVAILABLE AT THE GIVEN ADDRESS. THE AO ACCORDINGLY HELD THAT THE SAID PARTY WAS NON-EXISTENT AND WAS ONLY PAPER COMPANY. THE ASSESSEE WAS ALSO DIRECTED TO PRODUCE THE SAID PARTY BEFORE THE AO FOR EXAMINATION BUT THE ASSESSEE FAI LED TO PRODUCE THE SAID PARTY BEFORE THE AO. THE AO ACCOR DINGLY HELD THAT THE TRANSACTION OF PAYMENT OF INTEREST IS DOUBTFUL BECAUSE THE ASSESSEE FAILED TO PROVE THE IDENTITY CREDITWORTHINESS GENUINENESS OF THE TRANSACTION IN THE MATTER. THE INTEREST PAYMENT TO THE AFORESAID PARTY WAS ADDED BACK TO THE INCOME OF THE ASSESSEE U/S 69C OF THE INCOME-TAX ACT 1961 BEING UNEXPLAINED EXPENDITURE . THE LD.CIT(A) CONFIRMED THE ADDITION. 3. THE LEARNED COUNSEL FOR THE ASSESSEE WITHOUT COMMENTING UPON THE FINDINGS OF THE AUTHORITIES BEL OW WITH REGARD TO NON-EXISTENCE OF M/S. HCL SUBMITTED THAT THE AFORESAID PARTY WAS RECENTLY ASSESSED TO TAX BY THE INCOME TAX DEPARTMENT AT INDORE. HE HAS HOWEVER RESTRICT ED HIS ARGUMENT TO THE ISSUE THAT SECTION 69C OF THE INCOM E-TAX ACT 1961 IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE EL ABORATING SECTION 69C OF THE INCOME-TAX ACT 1961 SUBMITTED THAT FOR APPLYING THE PROVISIONS OF SECTION 69C OF THE INCOM E-TAX ACT 1961 THE AO COULD EXAMINE THE SOURCE OF THE EXPEND ITURE AND THE ASSESSEE WAS UNDER OBLIGATION TO EXPLAIN TH AT DURING THE FINANCIAL YEAR THE ASSESSEE HAS INCURRED ANY EXPENDITURE AND HAS OFFERED EXPLANATION ABOUT THE S OURCE OF THE EXPENDITURE. HE HAS SUBMITTED THAT THE ASSESSEE HAS SPECIFICALLY STATED AND PROVED BEFORE THE AUTHORITI ES BELOW 4 THAT THERE WAS AN OPENING CREDIT BALANCE IN THE CAS E OF M/S. HCL IN THE SUM OF RS. 2 16 336/- AND NO LOAN WAS TA KEN DURING THE ASSESSMENT YEAR IN QUESTION. IT WAS SUB MITTED THAT THE INTEREST EARLIER CREDITED IN THE ACCOUNT OF THE SAID PARTY WAS PAID IN THE ASSESSMENT YEAR UNDER APPEAL. HOWE VER RS. 17 589/- IN QUESTION WAS CREDITED IN THE ACCOUNT OF THE AFORESAID PARTY ON MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE THE ASSESSEE IS ABLE TO EXPLAIN SOURCE O F THE EXPENDITURE AND FURTHER SUBMITTED THAT THE AFORESAI D TRANSACTION WAS CONFIRMED BY M/S. HCL AND EVEN FACT S ARE NOT IN DISPUTE. THEREFORE THERE WERE NO REASONS IN MAKING ANY ADDITION U/S 69C OF THE ACT. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE EXP LANATION OF THE ASSESSEE WAS NOT SATISFACTORY AND AS SUCH THE A O WAS JUSTIFIED IN MAKING THE ADDITION. THE LEARNED COUNS EL FOR THE ASSESSEE IN REJOINDER SUBMITTED THAT THE SPECIFIC S UBMISSION WAS MADE BEFORE THE LD.CIT(A) IN REGARD TO THE APPL ICABILITY OF PROVISIONS OF SECTION 69C OF THE INCOME-TAX ACT 1961 ON WHICH THE LD.CIT(A) HAS NOT GIVEN ANY FINDING. HE H AS REFERRED TO P. B. 78 WHICH IS WRITTEN SUBMISSION F ILED BEFORE THE CIT(A) IN SUPPORT OF THE ABOVE CONTENTION. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIO N U/S 69C COULD BE MADE BY TAKING UNEXPLAINED EXPENDITURE TO BE DEEMED INCOME OF THE ASSESSEE. HE HAS SUBMITTED THA T SINCE THE ASSESSEE ON MERCANTILE SYSTEM CREDITED THE AFOR ESAID INTEREST IN THE ACCOUNT OF THE PARTY I.E. M/S. HCL LIMITED THEREFORE SOURCE IS EXPLAINED AND AS SUCH THE SAME CANNOT BE DEEMED INCOME OF THE ASSESSEE IN RESPECT 0F FINA NCIAL YEAR UNDER APPEAL. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIA L ON RECORD AND AM OF THE OPINION THAT THE MATTER REQ UIRES RECONSIDERATION AT THE LEVEL OF THE CIT(A). THE FAC TS AS NOTED ABOVE ARE NOT IN DISPUTE. THERE WAS A CREDIT BALANC E IN THE ACCOUNT OF M/S. HCL LIMITED IN A SUM OF RS. 2 16 33 6/-. COPY OF THE ACCOUNT IS FILED AT P.B. 44. CONFIRMATI ON OF M/S. HCL LIMITED IS FILED AT P.B. 43. THE ASSESSEE ON ME RCANTILE SYSTEM OF ACCOUNTING CREDITED INTEREST OF RS. 17 58 9/- IN THE ACCOUNT OF THE AFORESAID PARTY. SECTION 69C OF THE INCOME-TAX ACT 1961 READS AS UNDER :- 69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURR ED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF OR THE EXPLANATION IF ANY OFFERED BY HIM IS NOT IN THE OPINION OF THE [ASSESSING] OFFICER SATISFACTORY THE AMOUNT COVER ED BY SUCH EXPENDITURE OR PART THEREOF AS THE CASE MAY BE MA Y BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FI NANCIAL YEAR :] [ PROVIDED THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT SUCH UNEXPLAINED EXPEN DITURE 5 WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SH ALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME.] 5. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF T HE PROVISIONS CONTAINED U/S 69C OF THE INCOME-TAX ACT 1961 IT IS CLEAR THAT THE ASSESSEE IS UNDER OBLIGATION TO E XPLAIN THE SOURCE OF SUCH EXPENDITURE U/S 69C OF THE INCOME-TA X ACT 1961 OTHERWISE THE SAME WOULD BE DEEMED TO BE THE INCOME OF THE ASSESSEE IN THE FINANCIAL YEAR RELEVANT TO T HE MATTER IN ISSUE. MAY BE M/S. HCL WAS SAID TO BE NON-EXISTENT AT THE GIVEN ADDRESS BUT ADDITION COULD BE MADE ONLY IN ACCORDANCE WITH LAW. THE AO APPLIED THE PROVISIONS OF SECTION 69-C OF THE INCOME-TAX ACT 1961 FOR THE P URPOSE OF MAKING THE ADDITION IN THE MATTER. HOWEVER AS NOTE D ABOVE THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE SOURCE OF INTEREST PAYMENT MADE TO M/S. HCL LIMITED. THE AO CANNOT GO BEYOND THE SOURCE OF THE PAYMENT OF INTEREST WHILE INVOKING THE PROVISIONS OF SECTION 69C OF THE INCOME-TAX ACT 1961 IN THE MATTER. SPECIFIC PLEA WAS TAKEN BEFORE THE LD.C IT(A) ( P.B. 78) HOWEVER THE LD.CIT(A) CHOSE NOT TO GIVE ANY FINDING ON THE LEGAL ISSUE. CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE I AM OF THE VIEW THAT SI NCE THE LD.CIT(A) FAILED TO GIVE ANY FINDING ON THE LEGAL I SSUE THEREFORE IT WOULD BE REASONABLE AND APPROPRIATE T O RESTORE THIS ISSUE TO THE FILE OF THE LD.CIT(A) WITH A DIRE CTION TO RE- DECIDE THIS ISSUE IN THE LIGHT OF THE PROVISIONS CO NTAINED U/S 69COF THE INCOME-TAX ACT 1961. I ACCORDINGLY SET -ASIDE THE IMPUGNED ORDER AND RESTORE THIS ISSUE TO THE FILE O F THE LD.CIT(A) WITH THE DIRECTION TO DECIDE THIS ISSUE I N THE LIGHT OF PROVISIONS OF SECTION 69C OF THE INCOME-TAX ACT 19 61 BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THE LD.CIT(A) SHALL RESTRICT HIS FINDING IN THE LIGHT OF APPLICABILITY OF PROVISIONS OF SECTION 69C OF TH E INCOME- TAX ACT 1961 BECAUSE THE FACTS HAVE NOT BEEN DISP UTED BEFORE ME AT THIS STAGE. IN CASE THE LD.CIT(A) CO ME TO THE FINDING THAT THE PROVISIONS OF SECTION 69C ARE NOT APPLICABLE IN THE MATTER HE SHALL DELETE THE ENTIRE ADDITION ON THE ISSUE. WITH THE ABOVE OBSERVATION THE ISSUE IS REMANDED T O THE FILE OF THE LD.CIT(A) AS DIRECTED ABOVE. 6. AS A RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED ON 5 TH MAY 2009. 4. IN THE PRESENT APPEAL ALSO THE ASSESSEE FIRM PA ID INTEREST OF RS.10 233/- TO M/S. HINDUSTAN CONTINENTAL LTD. (HCL ) AND IN THE AFORESAID CASE ALSO THE FACTS AND THE ISSUE IS IDE NTICAL THEREFORE 6 KEEPING IN VIEW THE PARITY AND ALSO IN THE INTEREST OF JUSTICE ON IDENTICAL LINES (AS NARRATED IN THE AFORESAID ORDER) THIS AP PEAL IS REMANDED BACK TO THE FILE OF THE LD. CIT(A) TO ADJUDICATE THE ISS UE. NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY OF BEING HEARD BE PROVIDE D TO THE ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE IF ANY TO SUBSTANTIATE ITS CLAIM THEREFORE THIS APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 18.2.2010. (JOGINDER SINGH) JUDICIAL MEMBER FEBRUARY 18 2010 {VYAS} COPY TO APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE