Badshah Allabax Bagwan,, Kolhapur v. DCIT, (Central) Cir.,, Kolhapur

ITA 607/PUN/2010 | 2003-2004
Pronouncement Date: 23-09-2011 | Result: Allowed

Appeal Details

RSA Number 60724514 RSA 2010
Assessee PAN ABFPB9592G
Bench Pune
Appeal Number ITA 607/PUN/2010
Duration Of Justice 1 year(s) 5 month(s) 2 day(s)
Appellant Badshah Allabax Bagwan,, Kolhapur
Respondent DCIT, (Central) Cir.,, Kolhapur
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 23-09-2011
Assessment Year 2003-2004
Appeal Filed On 21-04-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER I.T.A. NOS.605 TO 608/PN/2010 ASSESSMENT YEARS: 2000-2001 2002-03 2003-04 & 200 6-07 BADSHAH ALLABAX BAWAN .... APPELLANT 499 BAGWAN HOUSE PARVATI CO.OP.HSG. SCTY. YADRAV SHIROL KOLHAPUR. PA NO.ABFPB 9592 G VS. DY. CIT CENTRAL CIRCLE .... RESPONDENT KOLHAPUR. APPELLANT BY: SHRI M.K.KULKARNI RESPONDENT BY: SHRI HARESHWAS SHARMA DATE OF HEARING: 12- 9-2011 DATE OF PRONOUNCEMENT: 23 -9-2011 ORDER PER SHAILENDRA KUMAR YADAV JM ALL THESE APPEALS PERTAIN TO SAME ASSESSEE AND ARE DIRECTED AGAINST A COMMON ORDER DATED 25.3.2010 OF THE CIT(C ENTRAL) PUNE UNDER SECTION 263 OF THE I.T.ACT 1961 FOR THE ASSE SSMENT YEARS 2000-2001 2002-03 2003-04 AND 2006-07 RESPECTIVE LY. AS A COMMON ISSUED IS INVOLVED IN ALL THESE APPEALS THE Y WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2 2. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE L IKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT AN AMOUNT OF RS.39 70 000 WAS SEEN TO BE THE PART OF OPENING BALANCE OF THE LOANS GIVEN BY THE ASSESSEE AS ON 1.4.1999. THE AO NOTICED THAT THESE LOANS ARE SUBSEQUENTLY RE CEIVED BACK BY THE ASSESSEE. THE AO CONSIDERED THE AMOUNTS WHICH WERE RECEIVED BACK AS INCOME OF THE ASSESSEE FOR THE YEARS IN WHI CH THE LOANS WERE RECEIVED BACK. 3. ACCORDING TO THE CIT THE AO DID NOT CONSIDER TH E FACT THAT THE ASSESSEE MUST HAVE RECEIVED ON THESE LOANS. IN THE ASSESSMENT ORDER IT IS OBSERVED THAT THE ASSESSEE WAS CHARGIN G INTEREST @ 2% P M ON THE LOANS ADVANCED BY HIM. SO THE AO SHOUL D HAVE INCLUDED THIS INTEREST COMPONENT AS PART OF THE INC OME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE YEA R WISE BREAK-UP OF THE AMOUNTS RECEIVED BACK BY THE ASSESSEE AND TH E INTEREST CHARGEABLE ON THE SAME @ 2% P.M. IS AS FOLLOWS: SR. NO. A.Y. AMOUNT RECEIVED BACK IN. @ 2% P.M. PERIOD FOR WHICH INT. CHARGE A B C D E 1. 2000 - 2001 26 70 000 6 40 000 1.4.99 TO 31.3.2000 2. 2002 - 03 1 00 000 48 000 1.4.00 TO 31.3.2002 3. 2003 - 04 6 00 000 4 32 00 1.4.99 TO 31.3.2002 4. 2006 - 07 40 000 88 000 1.4.99 TO 31.3.2006 THIS AMOUNT OF INTEREST SHOWN AT SR.NO.C OF THE C OLUMN SHOULD HAVE BEEN PRIMA FACIE ADDED BACK BY THE AO AS THE PART OF INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATIONS. 3 4. ACCORDING TO THE CIT AS THIS ACTION OF THE AO O F NON-INCLUSION OF THE ACCRUED INTEREST FOR THE RELEVANT YEARS THE ASSESSMENT ORDERS WERE PERCEIVED TO BE ERRONEOUS IN SO FAR AS PREJUDI CIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY NOTICE UNDER SECTION 263 WAS ISSUED AND SERVED ON THE ASSESSEE FOR THE YEARS UND ER CONSIDERATION. AFTER CONSIDERING THE SUBMISSIONS M ADE BY THE ASSESSEE THE CIT OBSERVED THAT THE ISSUE OF CHARGI NG INTEREST ON THE AMOUNT RECEIVED OUT OF OPENING BALANCE AS ON 1.4.19 99 HAS NEVER BEEN CONSIDERED IN THE ASSESSMENT ORDER THEREFORE AND IS NOT PART OF GROUND OF APPEAL. SUBSEQUENTLY THE CIT OBSERVE D THAT THE AO HAS INCLUDED THE AMOUNTS RECEIVED BACK AS PART OF T HE INCOME OF THE ASSESSEE FOR THE RELEVANT YEAR. HOWEVER IT WA S CORRECT THAT SUCH INCOME WHICH HAD NOT BEEN RECEIVED IN ONE- GO BUT HAS BEEN SPREAD OVER THE ENTIRE YEAR. THEREFORE THERE APPE ARS TO BE SOME FORCE IN THE CONTENTION OF THE ASSESSEE THAT THE AM OUNT RECEIVED BACK DURING THE YEAR HAS BEEN REDEPLOYED BY THE ASS ESSEE AND INTEREST ON THE SAME HAS ALREADY BEEN CALCULATED AN D INCLUDED IN THE INCOME OF THE ASSESSEE. THE CIT FURTHER OBSERV ED THAT IT IS CLEAR FROM THE ASSESSMENT ORDER THAT INTEREST ON SUCH AMO UNT HAS NOT BEEN PROPERLY CALCULATED AND INCORPORATED BY THE AO AS PART OF THE INCOME FOR THE YEAR. IT WAS OBSERVED THAT IN 2000- 2001 KHATUBAI BAGWAN & NAYAN TEXTILE HAVE REPAID LOANS OF RS.250 LAKHS AND RS.3.2 LAKHS RESPECTIVELY DURING THE YEAR OUT OF OP ENING BALANCE BUT NO INTEREST HAVE BEEN CHARGED OR COMPUTED WHILE WOR KING OUT INTEREST RECEIVED/ACCRUED DURING THE YEAR. IN CASE OF MR ABHAY KUMAR GPALKAR INTEREST @ 12% WAS NOT CALCULATED ON ENTIRE AMOUNT OF RS.1 00 000 FOR THE ENTIRE YEAR AS IT APP EARS THAT PARTY HAS REPAID LOAN DURING THE YEAR AND AGAIN TAKEN LOA N OF SAME AMOUNT FOR FURTHER PERIOD. ACCORDING TO CIT THE AO HAS NOT EXAMINED OR CHARGED INTEREST ON AMOUNT WHICH IS REC EIVED BACK WHICH ASSESSEE MUST HAVE ADVANCED TO OTHER PARTY FO R PART PERIOD. TO THIS EXTENT THE ASSESSMENT ORDER APPEARS TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE . ACCORDINGLY ASSESSMENT ORDERS FOR THE FOUR YEARS WERE SET ASIDE ON THE LIMITED 4 ISSUE AND RESTORED BACK TO THE FILE OF THE AO WITH THE FOLLOWING DIRECTIONS: I) CHECK THE ASSESSEES CLAIM THAT THE AMOUNTS REC EIVED BACK DURING THE RESPECTIVE YEAR HAVE BEEN REDEPLOYE D BY THE ASSESSEE; II) CHECK THE ASSESSEES CLAIM THAT INTEREST HAS BE EN CALCULATED ON CUT MITI BASIS ON REDUCING BALANCE AN D SUCH INTEREST HAS BEEN BROUGHT TO TAX; III) AO TO EXAMINE LOAN REPAID DURING THE YEAR BY A PARTY AND ITS REDEPLOYMENT AS LOAN TO OTHER PARTY AND CHARGIN G OF INTEREST ON SUCH LOAN. IF AFTER THIS VERIFICATION THE AO FINDS THAT THE I NTEREST CHARGED DOES NOT INCLUDE THE INTEREST ON THE AMOUNT S RECEIVED BACK DURING THE RESPECTIVE YEAR OR ASSESS EE HAS NOT CHARGED INTEREST ON FRESH LOAN GIVEN OUT OF REP AID LOAN THE INCOME OF THE ASSESSEE SHOULD BE MODIFIED ACCORDINGLY. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. BEFORE US LEARNED AUTHORISED REPRESENTATIVE REITERATED THE SU BMISSIONS MADE BEFORE THE CIT AND FURTHER SUBMITTED THAT THE ACTIO N TAKEN BY THE CIT IS WITHOUT JURISDICTION AND ILLEGAL SINCE THE E NTIRE ASSESSMENT ORDER IS SUBJECT MATTER OF APPEAL CHALLENGED AS BAD IN LAW. THE ACTION OF THE CIT IS SIMPLY BASED ON PRESUMPTION TH AT ASSESSEE MUST HAVE RECEIVED INTEREST IGNORING THE FACT THAT ASSESSMENTS WERE A RESULT OF SEARCH AND SEIZURE ACTION U/S.132(1) OF THE I.T.ACT. HE SUBMITTED THAT PERUSAL OF ASSESSMENT ORDER WOULD RE VEAL THAT THE AO HAD ESTIMATED THE INTEREST RECEIVED AND ADDED TO TOTAL INCOME. IN VIEW OF THIS HE URGES US THAT THE CIT WAS NOT J USTIFIED IN HOLDING THAT THE ASSESSMENT ORDERS ARE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ON THE OTHER HAND LEA RNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE CIT. 6. AFTER GOING THROUGH THE RIVAL CONTENTIONS WE FI ND THAT THE AO HAS ALREADY MADE ADDITION ON ACCOUNT OF INTEREST FO R THE VARIOUS YEARS UNDER CONSIDERATION WHICH ARE AS UNDER: 5 2000-2001 : RS.9 75 160 2002-03 : RS.8 88 594 2003-04 : RS.8 19 232 2006-07 : RS.20 51 816 SINCE ADDITIONS HAVE ALREADY BEEN MADE ON ACCOUNT O F INTEREST NO FURTHER ADDITION IS JUSTIFIED ON PRESUMPTIONS. THE AO HAS CHARGED INTEREST ON REDUCING BALANCE CUT MITI BASIS AS EVID ENT FROM ANNEXURE-A TO ASSESSMENT ORDER WHICH SHOWS THAT FU NDS RECEIVED BACK OUT OF THE OPENING BALANCE AND CHARGED INTERES T ON SUCH LOANS HAS ALREADY BEEN ESTIMATED IN THE ASSESSMENT ORDER. THE INTEREST HAS BEEN WORKED OUT NOT ONLY ON THE AMOUNT RECEIVED BACK BUT ALSO OUTSTANDING BALANCE ON DAY TO DAY BASIS. MOREOVER THE CIT HAS NOT MADE OUT ANY CASE FOR MAKING THE ORDER ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE CIT HIMSELF HAS OBSERVED THAT IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT INTEREST ON SUCH AMOUNTS HAVE NOT BEEN CLEARLY CALC ULATED AND INCORPORATED BY THE AO AS PART OF INCOME FOR THE YE AR UNDER CONSIDERATION. FOR THE ASSESSMENT YEAR 2000-2001 KHATUBAI BAGWAN & NAYAN TEXTILE HAVE REPAID LOANS OF RS.250 LAKHS AND RS.3.2 LAKHS RESPECTIVELY DURING THE YEAR OUT OF OP ENING BALANCE BUT NO INTEREST HAVE BEEN CHARGED OR COMPUTED WHILE WOR KING OUT INTEREST RECEIVED/ACCRUED DURING THE YEAR. SIMILAR LY IN CASE OF MR ABHAY KUMAR GPALKAR INTEREST @ 12% WAS NOT CALCULA TED ON ENTIRE AMOUNT OF RS.1 00 000 FOR THE ENTIRE YEAR AS IT APP EARS THAT PARTY HAS REPAID LOAN DURING THE YEAR AND AGAIN TAKEN LOA N OF SAME AMOUNT FOR FURTHER PERIOD AND THE AO HAS NOT EXAMIN ED OR CHARGED INTEREST ON AMOUNT WHICH IS RECEIVED BACK WHICH ASS ESSEE MUST HAVE ADVANCED TO OTHER PARTY FOR PART PERIOD. THES E FINDINGS OF THE CIT ARE ON THE BASIS OF PRESUMPTIONS SURMISES AND CONJECTURES WHICH CANNOT BE A SOUND BASIS IN INVOKING THE PROVI SIONS OF SECTION 263. THE CIT HAS NOT MADE OUT A CLEAR CUT CASE OF INVOKING THE 6 REVISION ORDER UNDER SECTION 263 FOR ALL THE FOUR A SSESSMENT YEARS. THEREFORE THE SAME ARE QUASHED. 7. IN THE RESULT APPEALS FOR ALL THE FOURS ARE ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER 2011. SD/- SD/- ( G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 23 RD SEPTEMBER 2011 PARIDA COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) PUNE 4. THE CIT PUNE 5. THE D.R ITAT PUNE BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL 7