Busy Bee Engineering Pvt. Ltd.,, Ahmedabad v. The Income tax Officer,Ward-1(2),, Ahmedabad

ITA 852/AHD/2012 | 1998-1999
Pronouncement Date: 18-10-2016 | Result: Allowed

Appeal Details

RSA Number 85220514 RSA 2012
Assessee PAN AABCB2108C
Bench Ahmedabad
Appeal Number ITA 852/AHD/2012
Duration Of Justice 4 year(s) 6 month(s)
Appellant Busy Bee Engineering Pvt. Ltd.,, Ahmedabad
Respondent The Income tax Officer,Ward-1(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 18-10-2016
Date Of Final Hearing 06-10-2016
Next Hearing Date 06-10-2016
Assessment Year 1998-1999
Appeal Filed On 17-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD JUDICIAL MEMBER) ITA. NO: 852/AHD/2012 (ASSESSMENT YEAR: 1998-99) BUSY BEE ENGINEERS PVT. LTD. C/O. MAHESH S. KAMDAR A/601 SILICON VALLEY CO. OP. HOUS. SOCY. LTD. BESIDES SILICON VALLEY SHOPPING CENTRE BELOW FLY OVER SHIVRANJNI CROSS ROAD SATELLITE ROAD AHMEDABAD V/S INCOME TAX OFFICER WARD- 1 (2) AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCB2108C APPELLANT BY : SHRI J.P. SHAH WITH ANIL N. SHAH A.R. RESPONDENT BY : SHRI PRASOON KABRA SR. D.R. ( )/ ORDER DATE OF HEARING : 06 -10-201 6 DATE OF PRONOUNCEMENT : 18 -10-2016 ITA NO. 852/ AHD/2012 . A.Y. 1998-99 2 PER N.K. BILLAIYA ACCOUNTANT MEMBER 1. WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-6 AHMEDABAD DATED 08.02.2012 PER TAINING TO A.Y. 1998- 99. 2. THE GRIEVANCE OF THE ASSESSEE IS THREE FOLD. (I) THE ASSESSEE IS AGGRIEVED BY THE ADDITION OF RS. 3 69 500/- AS UNEXPLAINED CASH CREDITS AND THE ASSESSEE IS FURTHE R AGGRIEVED BY THE ADDITION OF RS. 66 510/- AS INTEREST EXPENDITURE ON THE AFOREMENTIONED CASH CREDITS. (II) (II) THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE OF INTEREST OF RS. 34 92 619/-. (III) (III) THE ASSESSEE IS AGGRIEVED BY THE ADDITION OF RS. 61 29 000/- AS UNEXPLAINED CASH CREDITS WHICH WAS RECEIVED BY THE ASSESSEE- COMPANY FROM THE MEMBERS OF CO-OP. SOCIETIES. 3. THIS IS THE SECOND ROUND OF LITIGATION. THE FIRST R OUND OF LITIGATION EMANATED FROM THE ASSESSMENT ORDER DATED 28.03.2001 MADE U/S . 143(3) OF THE ACT WHEREIN THE ASSESSMENT WAS COMPLETED BY MAKING FOLL OWING ADDITIONS TO THE RETURNED LOSS OF RS. 4 15 862/-. (I) UNEXPLAINED CASH CREDITS RS. 1 2 4 29 697/- (II) INTEREST EXP. ON UNEXPLAINED CASH CREDIT RS . 22 37 344/- (III) INTEREST EXPENSES RS. 13 21 7 85/- (IV) UNEXPLAINED CASH CREDIT RS. 2 61 08 186/- ITA NO. 852/ AHD/2012 . A.Y. 1998-99 3 4. THE LITIGATION TRAVELLED UP TO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 23.12.2009 IN ITA NOS. 730 & 841/AHD/2005 HAD GIVEN PART RELIEF TO THE ASSESSEE. 5. INSOFAR AS THE ADDITION OF RS. 2 61 08 186/- IS CON CERNED THE LD. CIT(A) HAD CONFIRMED THE ADDITION OF RS. 1 49 71 718/- AND THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE FILES OF THE A.O. FOR DECIDING AFR ESH AS PER THE DIRECTIONS. THE RELEVANT FINDING OF THE TRIBUNAL READS AS UNDER :- 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ASSESSEE HAS MADE OUT A PRIMA FACIE CASE THAT MONEY ACTUALLY DOES NOT BELONG TO HIM BUT BELONG TO MEMBE RS BUT THIS DOES NOT REALLY DISCHARGE THE ONUS CAST UPON HIM TO EXPLAIN DEPOSIT S/LOANS IN REJECT OF WHICH ASSESSES HAD ONLY SUBMITTED PARTIAL DETAILS BEFORE THE ASSESSING OFFICER AND BEFORE THE CIT(A) AND OTHER DETAILS ARE NOW SUBMITT ED BEFORE US ON WHICH A PRAYER HAS BEEN MADE FOR ADMITTING ADDITIONAL EVIDE NCES. WE IN THE INTEREST OF JUSTICE ADMIT THE DETAILS AND REQUIRE THE ASSESSING OFFICER TO VERIFY THEM. THE ADDITIONAL' DETAILS FURNISHED BY THE ASSESSEE ARE C ONFIRMATION FROM RESPECTIVE MEMBERS COPY OF ACCOUNT DETAILS OF PAN EVIDENCE FROM SOCIETY SUCH AS ALLOTMENT LETTER CERTIFICATE NOC FOR LOAN POSSES SION LETTER SHARE CERTIFICATE NAME OF THE MEMBER IN THE LIST OF GOVT. AUDIT REPOR T RESOLUTION FOR ADMISSION OF THE MEMBER SHARE CONTRIBUTION IN THE CASE OF TRAN SFER APPLICATION OF TRANSFER/UNIT COPY OF THE BILL PROOF OF DEATH CO PY OF WILL DATE ENTERED IN THE TRANSFER REGISTER OF THE SOCIETY MUNICIPAL TAX BILL ELECTRICITY BILL ETC. THE ASSESSEE WILL SUBMIT COPIES OF THE PAPER BOOKS TO THE ASSESS ING OFFICER ALONG WITH THIS FULL CHART CONTAINING 24 COLUMNS AND INFORMATION ABOUT A LL THE 77 MEMBERS/DEPOSITORS. THE ASSESSING OFFICER WILL EXAM INE THEM IF NECESSARY CARRY OUT FURTHER ENQUIRY INCLUDING SUMMONING ORIGINAL PE RSON DEPOSITING THE MONEY WITH THE SOCIETY WHETHER SUCH DEPOSITS ARE DECLARE D IN THE IT RETURNS WHETHER ITA NO. 852/ AHD/2012 . A.Y. 1998-99 4 TRANSFER OF MONEY TO THE SOCIETY/ASSESSEE IS THROUG H BANKING CHANNELS. IF IDENTITY OF THE DEPOSITOR IS ESTABLISHED AND HE OWNS THE MON EY PAID TO THE ASSESSEE THEN NO FURTHER QUESTIONING IS REQUIRED TO BE DONE AND SUCH UNSECURED LOAN/DEPOSIT SHOULD BE TREATED AS EXPLAINED. THIS VIEW WE ARE T AKING ON THE BASIS OF VARIOUS JUDGMENTS OF THE COURTS AS UNDER:- 1. CIT VS. DIVINE LEASING AND FINANCE LTD. (2008) 2 99 ITR 268 (DEL); 2. A ONE HOUSING COMPANY LTD. VS. ITO (2008) 299 IT R (AT) 327 (DEL); 3. CIT VS. ELECTROPOLYCHEM LTD. (2007) 294 ITR 661 (MAD) 4. CIT VS. ILLAC INVESTMENTS (P) LTD. (2006) 287 IT R 135 (DEL) 5. UMA POLYMERS (P) LTD. VS. DCIT (2006) 284 ITR 00 1 (AT) JODHPUR 6. SHREE BARKHA SYNTHETICS LTD. VS. ACIT (2006) 283 ITR 377 (RAJ.) 7. CIT VS. DOWN TOWN HOSPITAL (P) LTD. (2004) 267 I TR 439 (GAUHATI) 8. CIT VS. SOPHIA FINANCE LTD. (2004) 205 ITR 98 (D EL). 11. THE ASSESSING OFFICER WILL ALSO CALCULATE PRO-R ATE DISALLOWANCE OF INTEREST IN THOSE CASES WHERE DEPOSITS ARE NOT OWNED UP BY ANY DEPOSITOR OR DEPOSITOR IS NOT FOUND IN EXISTENCE. HE WILL NOT DISALLOW CLAIM OF I NTEREST IN RESPECT OF THOSE DEPOSITS/UNSECURED LOAN WHICH ARE TREATED AS EXPLAI NED ON THE BASIS OF ADMISSION BY THE DEPOSITORS AND EXISTENCE OF DEPOSITORS. 12. IN RESPECT OF SOURCE OF MONEY NOT FOUND EXPLAIN ED IN THE HANDS OF THE DEPOSITOR THEN DEPARTMENT IS FREE TO TAKE ACTION IN HIS HANDS. 13. THUS WE SET ASIDE THE TWO APPEALS AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AS PER OUR DI RECTION ABOVE AND AS PER LAW. 14. IN THE RESULT THE APPEAL OF ASSESSEE AND THAT OF REVENUE BOTH ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL THE A.O. COMPLETED THE ASSESSMENT AND COMPUTED THE ASSESSED INCOME AS FOLL OWS:- INCOME AS PER STATEMENT OF INCOME RS. -4 15 862 ADD: UNEXPLAINED CASH CREDITS AS DISCUSSED IN PARA NO 5 RS. 3 69 500 ITA NO. 852/ AHD/2012 . A.Y. 1998-99 5 2 INTEREST EXPENDITURE ON UNEXPLAINED CASH CREDITS AS DISCUSSED IN PARA NO 6 RS. 66 510 3. INTEREST EXPENSES AS DISCUSSED IN PARA NO 7 RS. 34 92 619 4. UNEXPLAINED CASH CREDITS AS DISCUSSED IN PARA NO 8 RS. 61 29.000 TOTAL INCOME RS. 96 41 767 7. IT IS THE SAY OF THE LD. COUNSEL THAT WHILE COMPLET ING THE ASSESSMENT THE A.O. HAD MADE TWO ADDITIONS WHICH WERE NOT THERE IN THE FIRST ASSESSMENT ORDER. THEREFORE THE ASSESSMENT ORDER TO THIS EXTE NT IS NOT AS PER THE DIRECTIONS OF THE TRIBUNAL AND THESE TWO ADDITIONS DESERVE TO BE DELETED. PER CONTRA THE LD. D.R. STATED THAT SINCE THE DIRE CTIONS OF THE TRIBUNAL WERE TO DECIDE THE ISSUES AFRESH. THEREFORE THE A.O. WA S FREE TO MAKE OTHER ADDITIONS ALSO. 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE SUB MISSIONS MADE BY THE REPRESENTATIVES OF BOTH SIDES QUA THE FIRST GRIEVAN CE MENTIONED ELSEWHERE. WE HAVE MENTIONED HEREINABOVE THE ADDITIONS MADE I N THE FIRST ASSESSMENT ORDER WHICH LITIGATION TRAVELLED UP TO T HE TRIBUNAL. WE HAVE ALSO MENTIONED THE SPECIFIC FINDINGS OF THE TRIBUNA L QUA THE ISSUE EMANATED FROM THE FIRST ASSESSMENT ORDER. A PERUSAL OF THE D IRECTIONS OF TRIBUNAL (SUPRA) CLEARLY SHOWS THAT THE TRIBUNAL HAD SET ASI DE THE ISSUE RELATING TO THE ADDITION OF RS. 2 61 08 186/- OUT OF WHICH THE LD. CIT(A) HAD CONFIRMED THE ADDITION OF RS. 1 49 71 718/-. THE A.O. HAS GON E BEYOND THE DIRECTIONS OF THE TRIBUNAL AND HAS MADE FRESH ADDITIONS. ITA NO. 852/ AHD/2012 . A.Y. 1998-99 6 2.4 BINDING NATURE OF ORDERS OF TRIBUNAL: (1) THE FIRST APPELLATE AUTHORITY OR THE ASSESSING OFFICER IS BOUND BY THE ORDERS OF THE TRIBUNAL. EVEN WHERE THE ASSESSEE OR THE DEP ARTMENT HAS PURSUED THE MATTER IN REFERENCE PROCEEDINGS IT DOES NOT ACT AS A KIND OF STAY OF OPERATION OF THE ORDER OF THE TRIBUNAL. (2) THE ASSESSING OFFICER CANNOT IGNORE THE DECIS ION TAKEN BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND TAKE A CONTRARY VIEW - I TO VS. SIEMENS INDIA LTD. & ANR. 156 ITR 11 (BOM.) 28 STC 483 SREE RAJENDRA MI LLS LTD. VS. CIT: 109 ITR 229 (CAL). RUSSELL PROPERTIES PVT. LTD. VS. A. CHOW DHURY. ADD/. CIT. WEST BENGAL & OTHERS. (3) UNION OF INDIA & ORS. VS. KAMLAKASHI FINANAEE CORPORATION LTD. AIR (1992) 711 (SC). IT CANNOT BE TOO VEHEMENTLY EMPHASIZED THAT IT IS O F UTMOST IMPORTANCE THAT IN DISPOSING OF THE QUASI-JUDICIAL ISSUES BEFORE THEM REVENUE OFFICERS ARE BOUND BY THE DECISION OF THE APPELLATE AUTHORITIES. THE ORDE R OF THE APPELLATE COLLECTOR IS BINDING ON THE ASSISTANT COLLECTORS WORKING WITHIN HIS JURISDICTION AND THE ORDER OF THE TRIBUNAL IS BINDING UPON THE ASSISTANT COLLE CTORS AND THE APPELLATE COLLECTORS WHO FUNCTION UNDER THE JURISDICTION OF T HE TRIBUNAL. THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES. THE MERE FACT THAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT 'A CCEPTABLE' TO THE DEPARTMENT - IN ITSELF AN OBJECTIONABLE PHRASE - AND IS THE SUBJECT MATTER OF AN APPEAL CAN FURNISH NO GROUND FOR NOT FOLLOWING IT UNLESS ITS OPERATION HAS BEEN SUSPENDED BY A COMPETENT COURT. IF THIS HEALTHY RULE IS NOT FOLLOW ED THE RESULT WILL ONLY BE UNDUE HARASSMENT TO ASSESSEE AND CHAOS IN ADMINISTRATION OF TAX LAWS. WHEN AN ORDER IS PASSED BY A HIGHER AUTHORITY THE LOWER AUTHORITY IS BOUND THEREBY KEEPING IN VIEW THE PRINCIPLES OF JUDICIAL DISCIPLINE. THIS ASPECT OF THE MATTER HAS BEEN HIGHLIGHTED BY THIS COURT IN BHOPAL SUGAR INDUSTRIES VS. INCOME TAX OFFICER. BHOPAL [AIR 1961 SC 182] IN THE FOLLOW ING TERMS (PAGE 622): ITA NO. 852/ AHD/2012 . A.Y. 1998-99 7 (A) 'IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIR ECTIONS GIVEN TO IT BY A SUPERIOR TRIBUNAL IN THE EXERCISE OF ITS APPELLATE POWERS THE RESULT WILL BE CHAOS IN THE ADMINISTRATION OF JUSTICE AND WE HAVE INDEED FOUND IT VERY DIFFICULT TO APPRECIATE THE PROCESS OF REASONING BY WHICH THE LEARNED JUDICIAL COMMISSIONER WHILE ROUNDLY CONDEMNING THE RESPONDEN T FOR REFUSING TO CARRY OUT THE DIRECTIONS OF THE SUPERIOR TRIBUNAL YET HE LD THAT NO MANIFEST INJUSTICE RESULTED FROM SUCH REFUSAL. (B) IT MUST BE REMEMBERED THAT THE ORDER OF THE TRIBUNA L DATED APRIL 22 1954 WAS NOT UNDER CHALLENGE BEFORE THE JUDICIAL COMMISS IONER. THAT ORDER HAD BECOME FINAL AND BINDING ON THE PARTIES AND THE RE SPONDENT COULD NOT QUESTION IT IN ANY WAY. AS A MATTER OF FACT THE COM MISSIONER OF INCOME-TAX HAD MADE AN APPLICATION FOR A REFERENCE WHICH APPL ICATION WAS SUBSEQUENTLY WITHDRAWN. THE JUDICIAL COMMISSIONER WAS NOT SITTIN G IN APPEAL OVER THE TRIBUNAL AND WE DO NOT THINK THAT IN THE CIRCUMSTA NCES OF THIS CASE IT WAS OPEN TO HIM TO SAY THAT THE ORDER OF THE TRIBUNAL W AS WRONG AND THEREFORE THERE WAS NO INJUSTICE IN DISREGARDING THAT ORDER. AS WE HAVE SAID EARLIER SUCH A VIEW IS DESTRUCTIVE OF ONE OF THE BASIC PRINCIPLE S OF THE ADMINISTRATION OF JUSTICE.' 9. CONSIDERING THE FACTS IN TOTALITY AS STOOD AT THE TIME OF ORIGINAL ASSESSMENT STAGE QUA THE DIRECTIONS OF THE TRIBUNAL QUA THE AF OREMENTIONED JUDICIAL ANALYSIS IN OUR CONSIDERED OPINION AND UNDERSTANDI NG OF THE LAW THE PRESENT ASSESSMENT ORDER IS IN COMPLETE DISREGARD T O THE ORDERS OF THE APPELLATE AUTHORITIES. THIS WOULD LEAVE NO CHOICE B UT TO QUASH SUCH ASSESSMENT ORDER. THEREFORE TO THIS EXTENT THE AS SESSMENT ORDER IS QUASHED. 10. ADDITIONS OF RS. 3 69 500/- AND 66 510/- ARE DIRECT ED TO BE DELETED. THE FIRST GRIEVANCE MENTIONED HEREINABOVE IS ALLOWED. ITA NO. 852/ AHD/2012 . A.Y. 1998-99 8 11. THE SECOND GRIEVANCE RELATES TO THE ADDITION OF RS. 34 92 619/-. WHILE SCRUTINIZING THE RETURN OF INCOME THE A.O. NOTICED THAT THE ASSESSEE HAS DEBITED INTEREST EXPENSES OF RS. 35 59 129/-. IN T HE FIRST ASSESSMENT ORDER THE A.O. HAS DISALLOWED THE ENTIRE SUM OF RS. 35 59 129/- AS THE ASSESSEE FAILED TO ESTABLISH THAT THE INTEREST FREE ADVANCES WERE FOR BUSINESS PURPOSE. IN THE PRESENT ASSESSMENT ORDER THE A.O. DISALLOWED RS. 34 92 619/- REDUCING THE ORIGINAL DISALLOWANCE OF R S. 35 59 129/- BY RS. 66 510/- AS THIS AMOUNT HAS BEEN SEPARATELY DISALLO WED BY THE A.O. 12. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 13. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY SUBMITTED THAT THE ALLEGED INTEREST FREE ADVANCES WERE MADE OUT OF INT EREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. THEREFORE THERE IS NO REASON WHY INTEREST SHOULD BE DISALLOWED. THE LD. COUNSEL DREW OUR ATTE NTION TO THE BALANCE SHEET OF THE ASSESSEE AND POINTED OUT THAT THE INTE REST FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE RS. 7.29 CRORES WHEREAS THE ALLEGED INTEREST FREE ADVANCES WERE TO THE TUNE OF RS. 6.96 CRORES. THE L D. COUNSEL FURTHER STATED THAT ADVANCES TO SAMARTHKRUPA CO-OP. HOUSING SOCIET Y WAS IN FACT NOTHING BUT ADVANCES FOR PURCHASE OF FLATS FOR FACILITATING THE EXECUTION OF SCHEME FOR WHICH THE COMPANY ALSO ENTERED INTO DEVELOPMENT AGREEMENT WITH THE SOCIETY. THE LD. COUNSEL FURTHER STATED THAT SIMILA R IS THE NATURE OF INTEREST FREE ADVANCES OF RS. 3 75 33 041/- IN THE NAME OF S ILICON VALLEY CO-OP. HOUSING SOCIETY AND SWASTIK CO-OP. HOUSING SOCIETY. THE LD. COUNSEL CONCLUDED BY STATING THAT NOT ONLY THE ADVANCES WER E MADE OUT OF FREE ITA NO. 852/ AHD/2012 . A.Y. 1998-99 9 AVAILABLE FUND WITH THE ASSESSEE-COMPANY BUT ALSO T HE ADVANCES WERE MADE PURELY FOR BUSINESS PURPOSE. THEREFORE NO DIS ALLOWANCE OF INTEREST NEEDS TO BE MADE. PER CONTRA THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 14. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW AND WITH THE ASSISTANCE OF THE LD. COUNSEL; WE HAVE GONE THR OUGH THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE LIGH T RULE 18(6) OF THE APPELLATE TRIBUNAL RULES. WE FIND FORCE IN THE CONT ENTION OF THE LD. COUNSEL. AS MENTIONED ELSEWHERE THE INTEREST FREE FUNDS AVA ILABLE WITH THE ASSESSEE ARE IN EXCESS OF THE INTEREST FREE ADVANCE S MADE BY IT. THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY IN TH E CASE OF RELIANCE UTILITIES AND POWER 313 ITR 340 SQUARELY APPLY ON T HE FACTS OF THE CASE WHEREIN THE HONBLE HIGH COURT HAS HELD THAT WHERE THERE IS A MIXTURE OF OWN FUNDS AND LOAN FUNDS THEN THE PRESUMPTION IS T HAT THE INTEREST FREE ADVANCES HAVE BEEN MADE OUT OF OWN FUNDS. THIS DECI SION OF THE HONBLE BOMBAY HIGH COURT WAS SUBSEQUENTLY FOLLOWED BY THE HONBLE COURT IN THE CASE OF HDFC LTD. 366 ITR 505. WE FURTHER FIND FORC E IN THE CONTENTION OF THE LD. COUNSEL THAT ALL THE ALLEGED ADVANCES WERE FOR BUSINESS PURPOSES AND THE SAME WAS EXPLAINED TO THE A.O. DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS ITSELF. THE RELEVANT SUBMISSION MADE BE FORE THE A.O. READ AS UNDER:- 6. REFERENCE TO BALANCE SHEET SHOWS THAT THE INTE REST FREE ADVANCES OF RS. 3 15 41 406/- ALLEGED TO HAVE MADE BY THE ASSESSEE COMPANY TO SAMARTHAKRUPA CO. OP. HOUSING SOCY. LTD. IS IN FACT NOTHING BUT T HE SUNDRY DEBTORS AND INCLUDE THE AMOUNT FOR PURCHASE OF FLATS FOR FACILITATING T HE EXECUTION OF SCHEME FOR WHICH ITA NO. 852/ AHD/2012 . A.Y. 1998-99 10 THE COMPANY ALSO ENTERED IN TO DEVELOPMENT AGREEMEN T WITH THE SOCIETY AS STATED HEREINABOVE. NOT ONLY THIS AGAINST THE SAID AMOUNT OF RS. 3 15 41 406 THE COMPANY ALSO CREDIT BALANCE OF RS.3 47 65 500 RECEI VED FROM THE MEMBERS OF THE SAID SOCIETY ON WHICH THE COMPANY HAS NOT PAID ANY INTEREST. THE GROUPING GIVING THE DETAILS OF THE SAID CREDIT IS SUBMITTED HEREWIT H. IT IS CLEAR FROM THE ORDER ITSELF THAT THE AMOUNT OF THE LOAN ADVANCES AND THE CONT RIBUTION RECEIVED AGAINST BOOKING OF UNITS FROM THE MEMBERS OF SAID SOCIETY O N WHICH SOCIETY NEED NOT AND DID NOT PAID ANY INTEREST. CONSIDERING THIS ASPECT IN FACT COMPANY DID NOT ADVANCED ANY NON BEARING NON BUSINESS PURPOSE INTER EST FREE ADVANCES OF RS. 3 15 41 406 TO SAMARTHKRUPA CO.OP. HOUSING SOCIETY BUT AS AGAINST THAT- IT HAD A NET CREDIT AMOUNT OF RS.32 24 094 (RS.3 47 65 500 C REDIT LESS: RS . 3 15 41 406 ). HENCE NO INTEREST IS REQUIRES TO BE DISALLOWED ON THIS ADVANCE OF RS.3 15 41 406. 7. WITH REGARD TO ALLEGED INTEREST FREE ADVANCES O F RS.3 75 33 041 WE REQUEST TO KINDLY REFER PAGE NO. S-14 & S-15 OF PAPER BOOK -4 PART-I WHEREIN THE DETAILS OF ADVANCES TO 7 PARTIES IS GIVEN AMOUNTING TO RS.2 25 24 633 & ADVANCES TO 6 PARTIES AMOUNTING TO RS. 18 24 754 RESPECTIVELY. DETAILS SHOWS THAT THE COMPANY HAD TO RECEIVE RS. 63 70 000 FROM SILICON VALLEY CO . OP. HOUSING SOCIETY LTD. AGAINST WHICH IT HAD A CREDIT BALANCE OF RS. 3 39 2 8 187 FROM THE MEMBERS OF THE SAID SOCIETY. BOTH THE ADVANCES AS WELL AS CREDIT B ALANCE PERTAIN TO THE SAME PARTY AND IT'S MEMBERS FOR THE DEVELOPMENT OF THE S CHEME UNDERTAKEN BY THE COMPANY AND THEREFORE NO INTEREST IS DISALLOWABLE O N RS.63 70 000 STATED AS ABOVE. 8. REFERENCE TO THE DETAILS GIVEN ON PAGE S-14 ALS O SHOWS THAT THE PURPOSE FOR WHICH THE AMOUNT WAS ADVANCED. THE AMOUNT INCLUDE R S. 1 34 90 633 PAID FOR SWASTIK CO-OP. HOUSING SOCIETY LTD. PLOT NO. 85. AS THE COMPANY CAN NOT DIRECTLY PURCHASE THE PLOT IN' IT'S NAME WITH A VI EW TO DEVELOP A SCHEME THE COMPANY PURCHASED THE SAID PLOT IN THE NAME OF RELA TED PERSONS TO THE DIRECTOR AND PAID ADVANCE FOR THE SAME. THIS IS CLEAR FROM T HE COPY OF DOCUMENT/ INDEX-II SUBMITTED HEREWITH. WITH REGARD TO ADVANCE TO OTHER PARTIES APPEARING ON PG. NO. ITA NO. 852/ AHD/2012 . A.Y. 1998-99 11 S-14 ALSO THE SAME IS RELATED TO THE VARIOUS SCHEM ES DEVELOPED BY THE ASSESSEE COMPANY. CONSIDERING THE NATURE OF BUSINESS OF THE COMPANY AND THE AMOUNTS BEING GIVEN OUT OF BUSINESS CONSIDERATIONS NO INTE REST IS CHARGEABLE. PROM THIS FACTS IT IS CLEAR THAT THE ADVANCE IS PURELY FOR THE BUSINESS PURPOSES AND NO INTEREST FREE ADVANCE FOR NON BUSINESS PURPOSES IS GIVEN AND THEREFORE ON THIS AMOUNT ALSO NO INTEREST IS REQUIRED TO BE DISALLOWE D AND WE REQUEST FOR THE SAME. 15. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF T HE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT AND ALSO CONSIDERING THE FACT THAT THE ADVANCES WERE MADE FOR BUSINESS PURPOSES. WE SET ASIDE THE F INDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION O F RS. 34 92 619/-. THE SECOND GRIEVANCE OF THE ASSESSEE MENTIONED HEREINAB OVE IS ALLOWED. 16. THE THIRD GRIEVANCE RELATES TO THE ADDITION OF RS. 61 29 000/-. AS MENTIONED ELSEWHERE THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILES OF THE A.O. WITH SPECIFIC DIRECTIONS. THE RELEVANT FINDINGS OF THE A .O. READ AS UNDER:- AS PER THE DIRECTION OF HONBLE ITAT CONFIRMATION WAS CALLED FOR BY CALLING INFORMATION U/S 133(6). THIS OFFICE HAS NOT RECEIVE D ANY CONFIRMATION IN RESPECT OF THE FOLLOWING PERSONS ARID'' THE ASSESSEE HAS ALSO BEEN NOT ABLE TO SUBMIT FRESH CONFIRMATIONS IN COMPLIANCE TO THE ORDER OF THE HON 'BLE ITAT ON ITS OWN. THEREFORE THESE AMOUNT WHICH HAVE NOT BEEN CONFIRME D AS PER THE ITAT DIRECTION IS TAKEN AS UNEXPLAINED CASH CREDIT SR.NO PARTY NAME SR. NO IN SILICON VALLEY MEMBER LIST AMOUNT REMARKS 1 ASHOK K PATEL 7 400000 NOT FOUND/NOT SERVED 2 GIRISH N CHAWALA 24 200000 NOT FOUND/NOT SERVED 3 INDIRABEN MANUBHAI 33 230000 NOT FOUND/NOT SERVED ITA NO. 852/ AHD/2012 . A.Y. 1998-99 12 4 JAYESH B PATEL 34 400000 NOT FOUND/NOT SERVED 5 JAYESH R PATEL 35 270000 NOT FOUND/NOT SERVED 6 JAYARAM PATEL 36 20000 NOT FOUND/NOT SERVED 7 JAYANT D PATEL 40 430000 NOT FOUND/NOT SERVED 8 KIRITBHAI CTRIVEDI 42 300000 NOT FOUND/NOT SERVED 9 KAUSHIK C DAVE 43 50000 NO CONFIRMATION RECEIVED 10 LALBHAI TRIVEDI 44 50000 NO CONFIRMATION RECEIVED 11 LALDHAR UDAIRAJ 45 501000 NOT FOUND/NOT SERVED 12 M.S.PATEL 47 30000 NO CONFIRMATION RECEIVED 13 MANHAR SADRANI 48 150000 NO CONFIRMATION RECEIVED 14 N.B.JANI 50 20000 NO CONFIRMATION RECEIVED 15 NITABEN N SHAH 52 511000 NOT FOUND/NOT SERVED 16 PRITI.PUROHIT 56 125000 NO CONFIRMATION RECEIVED 17 RAMAN G KHER 59 151000 NOT FOUND/NOT SERVED 18 RAMESHBHAI P PATEL 61 101000 NO CONFIRMATION RECEIVED 19 SANDHYABEN N JAISWAL 64 850000 NOT FOUND/NOT SERVED 20 SHOE VALLEY 69 850000 NOT FOUND/NOT SERVED 21 VAKIL JAYANTITAL G(HUF) 75 490000 NO CONFIRMATION RECEIVED TOTAL 6129000 AS THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION OR DETAILS OF RECEIPT OF RS 61 29 000/- FROM SILICON VALLEY MEMBERS DURING THE YEAR UNDER CONSIDERATION. THE RECEIPT OF RS. 61 29 000/- IS TREATED AS UNEXPL AINED CASH CREDITS U/S 68 OF THE I.T. ACT AND SAME IS ADDED TO THE TOTAL INCOME OF T HE ASSESSEE. ITA NO. 852/ AHD/2012 . A.Y. 1998-99 13 17. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT(A) THE ASSESSEE FAILED TO CONVINCE HIM. 18. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT ALL THE TRANSACTIONS WERE MADE BY ACCOUNT PAYEE CHEQUES. TH E CREDITORS WERE THE ALLOTTEES OF THE FLAT WHEREVER THE PAN DETAILS WERE AVAILABLE; THE SAME WAS MADE AVAILABLE TO THE A.O. THE LD. COUNSEL FURTHER POINTED OUT THAT IN ADDITION TO THE ABOVE DETAILS MUNICIPAL TAX BILL FR OM THE AHMEDABAD MUNICIPAL CORPORATION WHEREIN THE NAME OF THE RESP ECTIVE MEMBER APPEARS AND THE DETAILS OF THE FLAT/SHOP ON WHICH M UNICIPAL TAX IS ASSESSED BY THE AMC WERE ALSO PROVIDED TO THE A.O. ALONG WI TH ELECTRICITY BILLS COPY OF SALE DEED AND CONFIRMATIONS OF THE PAYMENTS MADE BY THE MEMBERS WITH BOOKING DETAILS. IT IS THE SAY OF THE LD. COUN SEL THAT THE ASSESSEE HAD PROVED THE IDENTITIES BEYOND ALL DOUBTS. THEREFORE THERE IS NO ROOM FOR MAKING THE ADDITIONS AS UNEXPLAINED CASH CREDIT. PE R CONTRA THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTH ORITIES. 19. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW QUA THE DIRECTIONS OF THE TRIBUNAL IN THE FIR ST ROUND OF LITIGATION QUA THE ISSUE UNDER CONSIDERATION. IN OUR UNDERSTANDING IF THE TRANSACTION IS DONE BY ACCOUNT PAYEE CHEQUE THEN THE IDENTITY OF T HE PAYER GOES INTO OBLIVION BECAUSE THE MONEY HAS FLOWN FROM ONE IDENT IFIED BANK ACCOUNT TO ANOTHER IDENTIFIED BANK ACCOUNT. WE ALSO FIND THAT WHEREVER IT WAS POSSIBLE PAN DETAILS WERE MADE AVAILABLE TO THE A.O. NO EFFO RT TO VERIFY FROM THE ALLOTTEES OF THE FLATS BY MAKING ANY PHYSICAL VERIF ICATION THEREOF. IN OUR ITA NO. 852/ AHD/2012 . A.Y. 1998-99 14 CONSIDERED OPINION THE ASSESSEE HAS SUCCESSFULLY E STABLISHED THE IDENTITIES. THE TRANSACTION IS DONE BY ACCOUNT PAYEE CHEQUE. FU RTHER THE IDENTITIES OF THE ALLOTTEES ARE SUPPORTED BY MUNICIPAL TAX BILLS OF AMC AND ELECTRICITY BILLS. CONSIDERING THESE FACTS IN TOTALITY WE DO N OT FIND ANY REASON FOR MAKING THE IMPUGNED ADDITION. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE AD DITION OF RS. 61 29 000/-. THE THIRD GRIEVANCE OF THE ASSESSEE MENTIONED HEREI NABOVE IS ALLOWED. 20. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 18 - 10- 2 016. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHME DABAD