Subodh Kumar Agrawal(HUF),,, v. DCIT,, Varanasi

ITA 90/ALLD/2014 | 2010-2011
Pronouncement Date: 27-04-2015 | Result: Partly Allowed

Appeal Details

RSA Number 9020714 RSA 2014
Assessee PAN AAQHS7217B
Bench Allahabad
Appeal Number ITA 90/ALLD/2014
Duration Of Justice 1 year(s) 1 month(s) 8 day(s)
Appellant Subodh Kumar Agrawal(HUF),,,
Respondent DCIT,, Varanasi
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2015
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 27-04-2015
Date Of Final Hearing 20-04-2015
Next Hearing Date 20-04-2015
Assessment Year 2010-2011
Appeal Filed On 19-03-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH: ALLAHABAD BEFORE SHRI D. KARUNAKARA. RAO ACCOUNTANT MEMBER AND SHRI C. N. PRASAD JUDICIAL MEMBER I.T.A .NO.-90/ALLD/2014 ASSESSMENT YEAR : 2010-11. SUBODH KUMAR AGRAWAL VS. DCIT HUF NAI BASTI PANDEYPUR RANGE-3 VARANASI. VARANASI. PAN: AAQHS7217B (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. ARVIND SHUKLA ADV. REVENUE BY:-SH. UMESH PATHAK JCIT. DR. DATE OF HEARING: 20/04/2015 DATE OF PRONOUNCEMENT: 27/04/2015 ORDER PER C. N. PRASAD: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) VARANASI DATED 16.01.2014. FOR THE ASSESSM ENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED GROUND NOS. 1 TO 13 ON V ARIOUS ISSUES. 3. GROUND NOS. 1 2 3 AND 13 ARE GENERAL IN NATURE AND THESE GROUNDS NEED NOT BE ADJUDICATED. 4. GROUND NOS. 4 5 10 AND 11 RELATES TO THE ISSUE OF ADDITION MADE U/S 68 OF INCOME TAX ACT IN RESPECT OF UNSECURED LO ANS FROM SMT. I.T.A .NO.-90/ALLD/2014 2 KAILASH KUMARI SHRI SIDDHARTH KAPOOR AND SHRI SUSH IL KUMAR GUPTA INTEREST PAID ON SUCH LOANS AND BROKERAGE EXPENSES INCURRED FOR ARRANGING THOSE LOANS. THE AO WHILE COMPLETING THE ASSESSMENT MADE DISALLOWANCE OF RS.5 62 960/- U/S 68 OF THE ACT STA TING THAT ASSESSEE HAS NOT GIVEN THE PARTICULARS OF THE CREDITORS PAN NOS . AND COMPLETE ADDRESS AND NOT PROVED THE GENUINENESS OF LOAN TRAN SACTIONS. 5. ON APPEAL BY THE ASSESSEE THE LD. CIT(A) SUSTAIN ED THE ADDITION ACCEPTING THE CONTENTION OF THE AO THAT ASSESSEE HA S FAILED TO DISCHARGE THE INITIAL ONUS REGARDING FILING OF PAN COMPLETE ADDRESS GENUINENESS OF LOANS TRANSACTIONS AND PAYING CAPACITY. THE COUN SEL FOR THE ASSESSEE REFERRING TO PAGES 8 TO 13 SUBMITS THAT ASSESSEE OB TAINED LOANS FROM SMT. KAILASH KUMARI SHRI SIDDHATH KAPOOR AND SHRI SUSHI L KUMAR GUPTA BY WAY OF CHEQUES AND THE LOANS WERE REPAID BY CHEQUES AND THE CONFIRMATIONS GIVEN BY SHRI SIDDHARTH KAPOOR AND SH RI SUSHIL KUMAR GUPTA WERE ALSO FURNISHED BEFORE THE LOWER AUTHORIT IES. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LOAN TRANSACTIONS ARE G ENUINE AND THEREFORE THERE IS NO JUSTIFICATION IN TREATING THE SAID LOAN S AS UNEXPLAINED CREDITS. 6. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES IN TREATING THE UNSECURED LOANS AS UNEXPLAINED CRED ITS. I.T.A .NO.-90/ALLD/2014 3 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND ORDERS OF THE LOWER AUTHORITIES. ASSESSE E HAS OBTAINED LOANS FROM SMT. KAILASH KUMARI SHRI SIDDHARTH KAPOOR AND SHRI SUSHIL KUMAR GUPTA BY WAY OF CHEQUES AND ALL THESE TRANSAC TIONS ARE EVIDENT FROM ACCOUNT COPIES OF THE LENDERS. CREDITORS ALSO CONFIRMED HAVING GIVEN THE LOANS TO THE ASSESSEE SH. SUSHIL KUMAR GU PTA FILED RETURN OF INCOME SHOWING GROSS TOTAL INCOME OF RS.16.2 LACS F OR AY 2010-11. IN VIEW OF ALL THESE EVIDENCES WE HOLD THAT THE LOAN TRANSACTIONS ARE GENUINE AND THERE IS NO JUSTIFICATION IN TREATING T HESE LOANS AS UNEXPLAINED CREDITS U/S 68 WE DELETE THE ADDITION MADE U/S 68. THUS WE ALLOW THE GROUND NOS. 4 & 5. 8. IN RESPECT OF GROUND NOS. 10 & 11 WE FIND THAT A O DISALLOWED BROKERAGE EXPENSES OF RS. 65 072/- HOLDING THAT ASS ESSEE IS NOT ENGAGED IN THE BUSINESS OF BROKERAGE SO THESE EXPENSES ARE NOT CONNECTED WITH THE BUSINESS OF THE ASSESSEE. THE LD. CIT (A) SUSTA INED THE DISALLOWANCE AFFIRMING VIEW OF THE AO. THE COUNSEL SUBMITTED THA T ASSESSEE HAD PAID THE BROKERAGE FOR ARRANGING THE LOANS IN MONEY MARK ET. IT WAS THE SUBMISSIONS OF THE ASSESSEE THAT THE AO WAS ALL ALO NG ALLOWING SUCH BROKERAGE IN EARLIER YEARS. IT WAS ALSO SUBMITTED T HAT TDS WAS MADE AND REMITTED TO GOVT. ACCOUNT ON SUCH BROKERAGE PAID. T HUS THE COUNSEL SUBMITTED THAT THERE IS NO JUSTIFICATION IN DISALLO WING SUCH EXPENSES DURING THIS ASSESSMENT YEAR. I.T.A .NO.-90/ALLD/2014 4 9. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE ORD ERS OF THE LOWER AUTHORITIES AND THE RIVAL CONTENTIONS. IT WAS SUBMI TTED THAT TDS WAS DEDUCTED ON THE BROKERAGE EXPENSES INCURRED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE LD. CIT (A) UPHOLD THE DISALLOWA NCE ON THE GROUND THAT TDS WAS NOT REMITTED BY THE ASSESSEE INTO GOVE RNMENT ACCOUNT. ON GOING THROUGH THE ASSESSMENT ORDER WE FIND THAT THE RE IS NO CATEGORICALLY FINDING BY THE AO AS TO WHETHER THE SAID COMMISSION WAS PAID TO WHOM AND THE LOANS WERE ARRANGED BY WHOM. THE ONLY REASO N GIVEN BY AO FOR DISALLOWING EXPENSES IS THE ASSESSEE IS NOT IN THE BUSINESS OF BROKERAGE. IN OUR VIEW THIS IS NOT A REASON FOR DISALLOWING TH E SAID BROKERAGE EXPENSES. IF ASSESSEE PAID THE BROKERAGE EXPENSES F OR ARRANGING LOANS IN MONEY MARKET AND THE LOANS WERE OBTAINED FOR BUSINE SS PURPOSE SUCH EXPENSES ARE TO BE ALLOWED. THIS ASPECT WAS NOT EXA MINED BY LOWER AUTHORITIES. NO PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE AT THE TIME OF ASSESSMENT. IN THESE CIRCUMSTANCES WE RESTORE T HIS ORDER TO THE FILE OF THE AO TO EXAMINE THE ISSUE AFRESH AFTER HEARING TH E ASSESSEE AND ASSESSEE HAS TO PROVIDE DETAILS IN SUPPORT OF ITS C LAIM.. GROUND NOS. 10 & 11 ARE ALLOWED FOR STATISTICAL PURPOSE. 10. GROUND NOS. 6 & 7 ARE RAISED BY THE ASSESSEE AG AINST CONFIRMATION OF DISALLOWANCE OF RS.2 30 000/- UNDER GOLDEN HARVE ST SCHEME. I.T.A .NO.-90/ALLD/2014 5 11. BRIEF FACTS OF THE CASE ARE THAT THE AO WHILE C OMPLETING THE ASSESSMENT NOTICED THAT ASSESSEE HAD DEBITED THE P & L ACCOUNT WITH RS. 2 30 000/- UNDER THE HEAD LOSS ON GOLDEN HARVEST SC HEME. IT WAS THE SUBMISSION OF THE ASSESSEE THAT ASSESSEE PROMOTED G OLDEN HARVEST SCHEME ON BEHALF OF THE PRINCIPAL COMPANY TITAN IND USTRIES LTD. WHO LAUNCHED THE SAID SCHEME. IT WAS THE CONTENTION THA T AS PER THIS SCHEME IF ANY CUSTOMS MAKES EMI PAYMENT FOR 11 MONTHS 12 MONT H EMI WILL BE PAID BY TITAN INDUSTRIES LTD. AND ASSESSEE IS PERMI TTED TO PURCHASE TANISHQ JEWELLERY FOR THE TOTAL AMOUNT OF INSTALLME NTS OF THE 12 MONTHS. IT WAS THE SUBMISSION OF THE ASSESSEE THAT FOR THE MONTH OF JUNE AND JULY ASSESSEE HAS MADE CLAIMS TOWARDS SUCH SCHEME BEFORE THE PRINCIPAL COMPANY WHICH WERE REJECTED BY THE TITAN INDUSTRIES LTD. AND NOT REIMBURSE TO THE ASSESSEE. AN AMOUNT OF RS.2 30 000 /- WAS REDUCED FROM THE COMMISSION PAYABLE TO THE ASSESSEE BY TITAN IND USTRIES LTD AND THIS AMOUNT OF RS.2 30 000/- WAS CLAIMED AS BUSINESS EXP ENDITURE BY THE ASSESSEE. 12. ON APPEAL THE LD. CIT(A) SUSTAIN THE DISALLOWAN CE. COUNSEL FOR THE ASSESSEE SUBMITS THAT TITAN INDUSTRIES LTD BY LETTE R DATED 6.9.2013 CONFIRMS THAT RS.2 30 000/- WAS DEDUCTED FROM MANAG EMENT COMMISSION FOR THE MONTHS OF JUNE AND JULY 2009 IN RESPECT OF GOLDEN HARVEST SCHEME DUE TO TECHNICAL FAULT SUBMITTED BY BHELUPURA STAFF. COUNSEL SUBMITS THAT DUE TO SOME TECHNICAL DEFAULTS TITAN INDUSTRIES LTD I.T.A .NO.-90/ALLD/2014 6 NOT ACCEPTED THE CLAIM OF THE ASSESSEE. THUS THE AS SESSEE HAS CLAIMED THE SAID AMOUNT OF RS.2 30 000/- AS BUSINESS EXPENDITUR E. THE GOLDEN HARVEST SCHEME WAS RUN ON BEHALF OF THE TITAN INDUS TRIES LTD BY THE ASSESSEE. THE ASSESSEE IS ONLY ENTITLED FOR COMMISS ION FROM TITAN INDUSTRIES LTD. THE SAID LOSS WAS RECOVERED FROM TH E ASSESSEE FROM ITS COMMISSION HENCE ASSESSEE HAS CLAIMED SUCH LOSS A S BUSINESS INCOME. 13. THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF L OWER AUTHORITIES IN DISALLOWING THE LOSS ON GOLDEN HARVEST SCHEME. 14. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE OR DERS OF THE LOWER AUTHORITIES. ON A PERUSAL OF THE LETTER ISSUED BY T HE TITAN INDUSTRIES LTD AND ON HEARING THE SUBMISSIONS OF BOTH THE PARTIES WE DO NOT HAVE ANY HESITATION TO DELETE THIS DISALLOWANCE. IT IS NOT I N DISPUTE THAT THE ASSESSEE IS RECEIVING COMMISSION INCOME FROM TITAN INDUSTRIE S LTD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS PROMOTING THE GOLDEN H ARVEST SCHEME ON BEHALF OF THE PRINCIPAL THE TITAN INDUSTRIES LTD. I N SUCH CIRCUMSTANCES THE LOSS ON ACCOUNT OF GOLDEN HARVEST SCHEME WHICH WAS NOT ACCEPTED AND NOT REIMBURSED BY THE PRINCIPAL TITAN INDUSTRIE S LTD. IS A LOAN TO THE ASSESSEE AS IT WAS IN THE COURSE OF THE BUSINESS OF THE ASSESSEE. THUS WE DIRECT THE AO TO DELETE THIS DISALLOWANCE. GROUND N OS. 6 & 7 RAISED BY THE ASSESSEE ARE ALLOWED. I.T.A .NO.-90/ALLD/2014 7 15. GROUND NO. 8 & 9 ARE RAISED AGAINST CONFIRMING THE ADDITION OF RS.2 96 175/- TOWARDS STOCK LOSS. THE AO WHILE COMP LETING ASSESSMENT NOTICED THAT ASSESSEE DEBITED RS.2 96 175/- TO ITS P & L ACCOUNT AS STOCK LOSS. ASSESSEE WAS REQUIRED TO PROVE THE SAID EXPEN DITURE ASSESSEE HAS NOT PRODUCE ANY EVIDENCE OR FURNISHED ANY DETAILS I N RESPECT OF ITS CLAIM AND THEREFORE AO DISALLOWED THE SAID STOCK LOSS. S AID DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A) OBSERVING THAT THE SHOR TAGE OF STOCK LOSS CLAIMED BY THE ASSESSEE IS NOT GENUINE AND THE CORR ESPONDENCE CLAIM OF THE ASSESSEE U/S 37 DOES NOT APPEAR TO BE GENUINE. 16. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRI NCIPALS WILL TAKE BACK UNSOLD ITEMS LIKE JEWELLERY AFTER WEIGHING THA T ITEMS. HE SUBMITTED THAT THE FRACTIONAL DIFFERENCES OVER A PERIOD OF TI ME WHICH ESULTED IN DEBIT CANNOT BE CHALLENGED AND ASSESSEE WAS OBLIGED TO ACCEPT THE DEBIT IN THE INTEREST OF BUSINESS. HE SUBMITTED THAT OUT FLOW OF INCOME IS UNDISPUTED AS THE MONEY IS DEDUCTED DIRECTLY BY PRI NCIPALS OUT OF PAYMENT TO THE ASSESSEE. THEREFORE THERE IS NO JUS TIFICATION/REASON FOR NOT ALLOWING THE STOCK LOSS. 17. THE LD. DR VEHEMENTLY SUPPORTS THE ORDERS OF LO WER AUTHORITIES. ON HEARING BOTH THE PARTIES AND IN THE INTEREST OF JUSTICE WE ARE INCLINED I.T.A .NO.-90/ALLD/2014 8 TO SUSTAIN THE ADDITION TO THE EXTENT OF 50% OF THE ADDITION/DISALLOWANCE MADE BY THE AO. THUS THIS GROUND OF APPEAL IS PARTL Y ALLOWED. 18. GROUND NO. 12 IS RAISED BY THE ASSESSEE CHALLEN GING THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE ACTION OF THE AO IN NO T ALLOWING THE CLAIM U/S 80C OF THE ACT. THE AO WHILE COMPLETING THE ASS ESSMENT DENIED DEDUCTION CLAIMED U/S 80C FOR THE REASON THAT NO EV IDENCE IN SUPPORT OF DEDUCTION WAS FURNISHED BY THE ASSESSEE. ON APPEAL THE LD. CIT(A) SUSTAINED THE DISALLOWANCE OBSERVING THAT THE PAYME NT OF PREMIUM TO LIC BY SH. SUBODH KUMAR AGRAWAL WAS IN THE INDIVIDU AL CAPACITY. THE LD. CIT(A) ALSO OBSERVED THAT THE SOURCE OF PAYMENT FOR LIC ON BEHALF OF SH. SUBODH KUMAR AGARWAL WAS ALSO NOT FURNISHED INS PITE OF SEEKING FOR SUCH INFORMATION FROM ASSESSEE. ON A QUERY FROM BENCH THE COUNSEL SUBMITS THAT THE PAYMENT WAS MADE BY HUF AND SHRI S UBODH KUMAR AGRAWAL HAS NOT MADE ANY CLAIM IN INDIVIDUAL CAPACI TY. THE LD. DR HAS NO SERIOUS OBJECTION IN REMITTING THE MATTER BACK T O THE FILE OF THE AO FOR VERIFICATION AS TO WHETHER THE LIC PREMIUM WAS MADE BY SHRI SUBODH KUMAR AGRAWAL (HUF) OR SHRI SUBODH KUMAR AGRAWAL IN HIS INDIVIDUAL CAPACITY AND WHETHER ANY CLAIM WAS MADE BY SHRI SUB ODH KUMAR AGRAWAL IN HIS INDIVIDUAL RETURN. IF PAYMENT TO LIC IS MADE BY HUF THE CLAIM OF THE ASSESSEE IS TO BE ALLOWED AND NO DISAL LOWANCE IS WARRANTED. THEREFORE WE REMIT THIS ISSUE BACK TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE AFTER PROVIDIN G ADEQUATE I.T.A .NO.-90/ALLD/2014 9 OPPORTUNITY TO THE ASSESSEE. THE GROUND NO. 12 IS A LLOWED FOR STATISTICAL PURPOSES. 19. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2015. SD/- SD/- ( D. KARUNAKARA RAO ) (C. N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27/04/2015 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR