M/s. Ajitbhai Bholabhai, Ahmedabad V. The ACIT.,Circle-3, Ahmedabad

ITA 1046/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1406 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P D SHAH
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 1046 /AHD/201 3 / ASSESSMENT YEAR : 2008 - 09 AJITBHAI BHOLABHAI, C/O. MEHTA LODHA & CO., CHARTERED ACCOUNTANTS , 105, SAKAR - I, ASHRAM ROAD, AHMEDABAD - 380009 PAN : AABFA 7292 F VS ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 3, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI P.D. SHAH, AR REVENUE BY : SHRI PARVEEN KUMAR, SR DR / DATE OF HEARING : 0 6/ 0 6 /201 6 / DATE OF PRONOUNCEMENT: 09 / 06 /201 6 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME - TAX (APPEALS) - 6, AHMEDABAD DATED 05 . 02 .201 3 FOR ASSESSMENT YEAR 2008 - 09. 2. FOLLOWING GROUNDS ARE RAISED: - 1 . THAT THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE ADDITION MADE BY THE LEARNED AO U/S 68 OF THE ACT OF RS.3,00,000/ - AND THEREFORE THE LEARNED ASSESSING OFFICER BE DIRECTED TO DELETE THE ADDITION OF RS.3,00,000/ - MADE U/S 68 OF THE ACT. 2 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS BY NOT DIRECTING THE LD. AO TO MAKE NO DISALLOWANCE U/S 14A OF THE ACT AND THEREFORE THE LEARNED ASSESSING OFFICER BE DIRECTED TO NOT TO MAKE ANY DISALLOWANCE U/S 14A OF THE A CT. 3. BRIEF FACTS ARE THE ASSESSEE CLAIMS TO HAVE ADVANCED A LOAN OF RS.3,00,000/ - THROUGH CHEQUE IN THE PRECEDING ASSESSMENT YEAR TO ONE M/S. SANDEEP TEXTILES, WHICH WAS REPAID IN THIS YEAR IN CASH. THE ASSESSING SMC - ITA NO.1046/AHD/ 2013 SHRI AJITBHAI BHOLABHAI VS. ACIT AY : 2008 - 09 2 OFFICER PROPOSED TO TREAT THIS REPA YMENT AMOUNT AS CASH CREDIT IN THIS YEAR. THE ASSESSEE EXPLAINED THAT BEING AN ADVANCE OF EARLIER YEAR THIS REPAYMENT DOES NOT FALL WITHIN THE PURVIEW OF SECTION 68. THE LD. ASSESSING OFFICER ASKED THE A SSESSEE TO PRODUCE THE CREDITOR AND GIVE THE NEW AD DRESS. THE ASSESSEE EXPRESSED HIS DIFFICULTY BY EXPLAINING THAT AFTER HAVING RECEIVED BACK THE AMOUNT IT IS NOT POSSIBLE FOR HIM TO PRODUCE THE PARTY AS ITS NEW ADDRESS WAS NOT KNOWN TO HIM. THE LD. ASSESSING OFFICER MADE THE ADDITION U/S 68 OF THE ACT W HICH WAS CONFIRMED BY THE LD. CIT(A) IN APPEAL. 4. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT SECTION 68 CANNOT BE APPLIED FOR THE RECEIPT OF THE AMOUNT DURING THE YEAR OF THE ADVANCES GIVEN IN THE EARLIER YEAR. IN THIS REGARD, RELIANCE IS PLACED ON THE DECISIONS OF ITAT IN THE CASE OF SURAJKANWARI KASRAT VS. ACIT IN ITA NO. 1708 & 2108/AHD/2010 AND RACMANN SPRINGS PRIVATE LIMITED VS. DCIT, REPORTED IN 55 ITD 159 (DELHI). 5 . APROPOS SECOND GROUND PERTAINING TO CALCULATION OF DISALLOWANCE U/S 14A OF T HE ACT, THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE LD. CIT(A) ERRED IN SET TING ASIDE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY ANY ARITHMETICAL ERROR. IT IS CONTENDED THAT AFTER THE CIT(A)S ORDER VARIOUS JUDGMENTS ON THE ISSUE OF SECTION 14A TO THE EFFECT THAT THE DISALLOWANCE U/S 14A CANNOT EXCEED THE EXEMPT INCOME. RELIANCE IS PLACED ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CORRTECH ENERGY PVT LTD , 372 ITR 97 (GUJ ) AND THE DECISIONS OF ITAT, AHMEDABAD BENCH IN THE CASE OF SHREE LAXMI BIDI TRADING CO. VS. DCIT , JIVRAJ TEA LIMITED VS. DCIT IN IT A NO.866/AHD/2012 AND MADHUSUDAN INDUSTRIES LIMITED VS. ITO IN ITA NO.1715/AHD/2011. LD. COUNSEL FOR THE ASSESSEE EARNESTLY PLEADS THAT THE ASSESSEES GROUND ABOUT SECTION 14A SHOULD BE CONSIDERED IN VIEW OF THE JURISDICTIONAL HIGH COURT AND SMC - ITA NO.1046/AHD/ 2013 SHRI AJITBHAI BHOLABHAI VS. ACIT AY : 2008 - 09 3 AHMEDABAD TRI BUNAL JUDGMENTS. THEREFORE, THE VERIFICATION BY THE ASSESSING OFFICER SHOULD NOT BE RESTRICTED TO ARITHMETICAL ERROR BUT TO DECIDE THE SAME AFRESH IN THE INTEREST OF SUBSTANTIAL JUSTICE. 5. LD. DEPARTMENTAL REPRESENTATIVE IS HEARD. 6. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE THE ASSESSEES PLEA THAT THE CASH CREDIT IN QUESTION IS NOT ANY NEW CASH CREDIT BUT THE REPAYMENT OF AMOUNT WHICH WAS ADVANCED TO M/S. SANDEEP TEXTILES IN PRECEDING YEAR , THE SAME CANNOT BE ADDED U/S 68 OF THE ACT IN VIEW OF THE JUDGMENT OF THE TRIBUNAL IN THE CASES OF SURAJKANWARI KASRAT AND RACMANN SPRINGS PRIVATE LIMITED (SUPRA). HOWEVER, ON QUERY, THE LD. COUNSEL FOR THE ASSESSEE WAS NOT IN A POSITION TO READILY DEMONSTRATE THAT THE ADVANCE TO M/S. SANDEEP TEXTILES WAS GIVEN BY CHEQUE. IN VIEW OF ABOVE FACTUAL CIRCUMSTANCES, INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE IN QUESTION IS SET ASIDE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER GIVING SUFFIC IENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 7. APROPOS GROUND NO.2, I AM INCLINED TO SET ASIDE TH IS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AFRESH IN VIEW OF THE AFOREMENTIONED JUDGMENTS IN THE CASE OF CORRTECH ENERGY PVT LTD, SHREE LAXMI BIDI TRADING CO, JIVRAJ TEA LIMITED AND MADHUSUDAN INDUSTRIES LTD. (SUPRA), AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 9 T H JUNE , 201 6 AT AHMEDABAD. SD/ - R.P. TOLANI ( JUDICIAL MEMBER ) AHMEDABAD; DATED 0 9 / 0 6 /201 6 *BIJU T. SMC - ITA NO.1046/AHD/ 2013 SHRI AJITBHAI BHOLABHAI VS. ACIT AY : 2008 - 09 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD