M/s Indian Rice Mills Stores, Kolkata V. ITO, WD-35(2), KOLKATA, Kolkata

ITA 1053/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4680 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 19-05-2014
• Court: TRIBUNAL
• Department Lawyers: DEBASISH BANERJEE
• Assessee Lawyers: K M ROY
• Keywords: Unexplained cash credit; Additional evidence
• Section: 43B; 68

Judgement Text

1 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.1053/KOL/2014 ASSESSMENT YEAR : 2009-10 M/S. INDIAN RICE MILLS STORES -VERSUS- I.T.O., WA RD-35(2), KOLKATA KOLKATA (PAN:AAAFI 7039 K) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI K.M.ROY, CA FOR THE RESPONDENT: SHRI DEBASISH BANERJEE, JCIT, S R.DR DATE OF HEARING : 30.05.2016. DATE OF PRONOUNCEMENT : 01.06.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 07.03.2014 OF CIT(A) XX, KOLKATA, RELATING TO AY 2009-10. 2. GROUND NO.1 RAISED BY THE ASSESEE READS AS FOLL OWS :- L.THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER (APPEALS) ERRED IN MAKING ADDITION RS 3142138/- RECEIVED ADVANCE FROM CUSTOMER AS UNEXPLAINED CASH CREDIT U/S 68 OF INCOME TAX ACT,1961. 3. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENG AGED IN THE BUSINESS OF TRADING INCLUDING EXPORTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD SHOWN TO HAVE RECEIVED AN ADVANCE OF RS.31,42,138/- FROM THE FOLLOWING TWO CUSTOMERS :- (A)A.G.S.SEN TRADING LTD. : RS.22,39,728/- (B)AL-BURHANI INTERNATIONAL : RS. 9,02,410/- RS.31,42,138/- THE AO REQUESTED THE ASSESSEE TO EXPLAIN SUCH CLAIM BY FURNISHING :- 2 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 (I) CONFIRMATIONS OF ADVANCE FROM CUSTOMERS WITH THEIR PARTY LEDGER, I.T.RETURN, PROFIT & LOSS AND BALANCE SHEET. (II) PRESENT ADDRESS, TELEPHONE NUMBER, FAX NUMBER AND P AN OF THE SAID CUSTOMERS. (III) DETAILS OF TRANSACTIONS WITH SUPPORTING DOCUMENTS W HEN SUCH CREDIT BALANCES STARTED AND SUBSEQUENTLY ADJUSTED. 4. AO HAS SET OUT IN PARAGRAPH 3.2 OF HIS ORDER , THE OPPORTUNITIES GIVEN TO THE ASSESSEE TO EXPLAIN THE RECEIPT OF ADVANCES FROM TH E CUSTOMERS. THERE WERE AS MANY AS 8 OPPORTUNITIES AFFORDED TO THE ASSESSEE BY THE AO IN THIS REGARD. THE AO AFTER REFERRING TO THE OPPORTUNITIES AFFORDED TO THE ASSE SSEE, OBSERVED THAT THE ASSESSEE FAILED TO COMPLY WITH THE DIRECTIONS OF THE AO AND ACCORDINGLY A SUM OF RS.31,42,138/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 5. BEFORE CIT(A)THE ASSESSEE EXPLAINED THAT IT C OULD NOT COMPLY WITH THE DIRECTIONS OF THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS A ND REQUESTED FOR AN OPPORTUNITY TO PRODUCE EVIDENCES THAT WAS CALLED FOR BY THE AO. TH E CIT() ALLOWED OPPORTUNITIES TO THE ASSESSEE TO PRODUCE SUCH EVIDENCE AND CALLED UP ON THE AO TO EXAMINE THE EVIDENCE AND FILE A REMAND REPORT. IN THE REMAND P ROCEEDINGS, THE AO CALLED FOR CERTAIN DETAILS WHICH ARE LISTED IN PARAGRAPH 3 OF THE CIT(A)S ORDER IN SUB-PARAGRAPH 4.4. AO IN THE REMAND REPORT FURTHER SUBMITTED THAT THE ASSESSEE HAD FILED ONLY THE COPY OF ITS OWN BANK STATEMENT IN SUPPORT OF ITS CL AIM BUT DID NOT FILE ANY EVIDENCE IN RESPECT OF IDENTITY OF THE CREDITOR, CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTION. THE CIT(A) AFTER CONSIDERING THE REMAND REPORT OF T HE AO CAME TO THE CONCLUSION THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION, IDENTITY AND CREDITWORTHINESS OF THE PERSONS WHO HAVE CLAIMED TO HAVE PAID ADVANCE TO THE ASSESSEE ETC., AND THEREBY CONFIRMED THE ORDER OF A O. 6. AGGRIEVED BY THE ORDER OF AO THE ASSESSEE HAS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 3 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 7. AT THE TIME OF HEARING THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAD MADE SUPPLIES TO THE AFORESAID TWO PERSONS FROM WHOM ADVANCE WAS RECEIVED IN THE SUBSEQUENT FINANCIAL YEARS AND THAT THE ADVANCE WAS ADJUSTED AGAINST THE SUPPLIES MADE SUBSEQUENTLY. IT WAS SUBMITTED BY HIM THAT THE ONE OF THE AFORESAID PARTIES IS RESIDENT OF BANGLADESH AND THE OTHER RESIDENT OF DU BAI. IT WAS HIS SUBMISSION THAT IT WAS NOT POSSIBLE FOR THE ASSESEE TO COMPLY WITH THE REQUEST OF THE AO TO FILE EVIDENCE REGARDING CREDITWORTHINESS OF THE PARTIES. HE HOWEV ER SUBMITTED THAT THE EVIDENCE WITH REGARD TO THE PERMISSION OF REMITTANCE OF THE AFORESAID SUMS FROM BANGLADESH AND DUBAI AND THAT OF THE SUPPLIES OF GOODS BY THE ASSESSEE IN THE SUBSEQUENT FINANCIAL YEAR, COULD BE PRODUCED TO EXPLAIN THE ID ENTITY, GENUINENESS AND CAPACITY OF THE CREDITOR. HE PRAYED FOR SETTING ASIDE THE ORDER OF CIT(A) AND PRAYED FOR AN ORDER OF REMAND TO THE AO BY AFFORDING ONE MORE OPPORTUNI TY FOR THE ASSESSEE TO ESTABLISH THE CREDITWORTHINESS IN QUESTION. 8. THE LD. DR WHILE POINTING OUT THAT THE ASSESS EE ALREADY HAD ENOUGH OPPORTUNITY, FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT EVEN PL ACED DOCUMENTS IN SUPPORT OF ITS CLAIM BEFORE THE TRIBUNAL SO THAT ANOTHER OPPORTUNI TY CAN BE AFFORDED TO THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS RIGHTLY CONTENDED BY THE LD. DR THERE WAS COMPLETE FAILURE ON THE PART OF THE ASSES SEE TO FURNISH ANY EVIDENCE EITHER BEFORE AO OR BEFORE CIT(A) AND EVEN BEFORE THE TRIB UNAL. THE REQUEST FOR A REMAND IS MADE WITHOUT ANY BASIS OR EVIDENCE BEING SHOWN TO T HE TRIBUNAL TO JUSTIFY THE ORDER OF REMAND. WE HAVE ALREADY SEEN THAT THE AO AFFORDED A S MANY AS 8 OPPORTUNITIES IN THE COURSE OF ASSESSMENT PROCEEDINGS. IN THESE CIRCUMS TANCES WE ARE OF THE VIEW THAT THE REQUEST MADE ON BEHALF OF THE ASSESEE CANNOT BE ACC EPTED. ON THE EVIDENCE ON RECORD, WE ARE OF THE VIEW THAT THE CONCLUSIONS OF THE CIT( A) ARE JUST AND PROPER AND CALLS FOR NO INTERFERENCE. ACCORDINGLY GROUND NO.1 RAISED BY THE ASSESSEE IS DISMISSED. 10. GROUND NO.2 RAISED BY THE ASSESSEE READS AS FOLLOWS :- 4 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 2. THE CIT(APPEALS) ERRED IN MAKING ADDITION OF RS 100000/- RECEIVED AS UNSECURED LOAN AS UN EXPLAINED CASH CREDIT U/S68 OF THE INCOM E TAX ACT 1961. 11. THE ASSESSEE DURING THE PREVIOUS YEAR RECEIV ED UNSECURED LOANS TOTALLING RS.10,00,000/- FROM THE FOLLOWING THREE PARTIES :- (A) S.D.DUGAR : RS. 75,000/- (B) HAKIMUDDIN BEMAT : RS.8,00,000/- (C) M.K.DUGAR & SONS HUF : RS.1,25,000/- RS.10,00,000/- THE AO REQUESTED THE ASSESSEE TO EXPLAIN SUCH CLAIM BY FURNISHING (I)CONFIRMATIONS OF SUCH LOANS. (II)THE FOLLOWING EVIDENCES IN SUPPORT OF GENUINENE SS OF LOAN AND CREDITWORTHINESS OF LOAN CREDITORS :- (A) BANK STATEMENT OF LOAN CREDITORS (B) CASH FLOW STATEMENT OF LOAN CREDITORS (C) PAN, COPY OF I.T. ACKNOWLEDGEMENT, P/L ACCOUNT AND BALANCE SHEET OF LOAN CREDITORS, FOR THE RELEVANT PERIOD. 12. IN THE ORDER OF ASSESSMENT, THE AO IN PARAGRAPH 4. 2 HAS SET OUT THE OPPORTUNITIES AFFORDED TO THE ASSESSEE TO EXPLAIN T HE AFORESAID UNSECURED LOANS AND THE FAILURE OF THE ASSESSEE TO COMPLY WITH THE REQUEST OF THE AO. THE AO HAD AFFORDED ABOUT 8 OPPORTUNITIES TO THE ASSESSEE IN THIS REGAR D. THE AO ACCORDINGLY TREATED RS.10,00,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 13. BEFORE CIT(A) THE ASSESSEE FILED THE FOLLOWI NG DETAILS :- I) OWN BANK ACCOUNT IN SUPPORT OF CLAIM. II) LOAN CONFIRMATIONS, ACKNOWLEDGEMENT OF ITR, BAN K STATEMENT AND P&L A/C OF LOAN CREDITORS: S.D. DUGAR RS 75,000/- M.K. DUGAR & SONS HUF RS.1,25,000/- III) IT WAS SUBMITTED BY THE ASSESSEE THAT THE LOAN CREDITOR, MR HAKIMUDDIN BEHMAT WAS NOT COOPERATIVE IN PROVIDING FURTHER DOCUMENTS DUE TO FAMILY DISPUTE. 5 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 14. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO ON THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE HIM. THE AO IN HIS REMAND REPO RT TO THE CIT(A) HAD REPORTED THAT ON ENQUIRY FROM THE LOAN CREDITORS IT WAS OBSERVED THA T: I) MR HAKIMUDDIN BEHMAT, THE LOAN CREDITOR WHO WAS CLAIMED TO HAVE ADVANCED THE ASSESSEE A SUM OF RS 8,00,000 DID NOT REPLY TO THE LETTER ISSUED BY THE AO. II) THE FOLLOWING PARTIES CONFIRMED THE CLAIM OF TH E ASSESSEE: S.D. DUGAR RS 75,000/- M.K. DUGAR & SONS HUF RS.1,25,000/- THE AO HOWEVER REPORTED THAT THE CLAIM OF THE ASSES SEE EXPLAINING THE CREDITS CANNOT BE ACCEPTED FOR THE FOLLOWING REASONS: I) MR HAKIMUDDIN BEHMAT THE LOAN CREDITOR WHO WAS C LAIMED TO HAVE ADVANCED ASSESSEE THE SUM OF RS 800000 DID NOT REPLY TO THE LETTER IS SUED BY THE OFFICE. THE ONUS WAS ON THE ASSESSEE TO FURNISH THE EVIDENCES OF CREDITWORT HINESS OF THE LOAN CREDITOR MR H. BEHMAT AND GENUINENESS OF SUCH TRANSACTIONS BUT, TH E ASSESSEE HAS FAILED TO DO SO. II) S D DUGAR AND M K DUGAR & SONS HUF CONFIRMED TH E CLAIM OF THE ASSESSEE BUT THEY DID NOT FURNISH CASH FLOW STATEMENT. THE ASSESSEE W AS ALSO UNABLE TO FURNISH THE CASH FLOW STATEMENT OF SUCH LOAN CREDITORS. THERE WAS CA SH DEPOSIT OF RS 45000 IN THE BANK ACCOUNT OF M/S M K DUGAR & SONS HUF JUST BEFORE ISS UE OF CHEQUE OF RS 1,25,000/- BY THE SAID PARTY. SIMILARLY, THERE WAS CASH DEPOSIT O F RS 61500 IN THE BANK ACCOUNT OF SD DUGAR JUST BEFORE ISSUE OF CHEQUE OF RS 75000/- BY THE SAID PARTY. THE AO ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE AO SHOULD BE SUSTAINED. 15. ON A CONSIDERATION OF THE REMAND REPORT OF THE AO, THE CIT(A) WAS OF THE VIEW THAT THE GENUINENESS OF LOAN TRANSACTIONS AND CREDI TWORTHINESS OF LOAN CREDITORS WAS NOT BEEN PROVED BY THE ASSESSEE AND THEREFORE THE E XPLANATIONS OFFERED BY THE ASSESSEE COULD NOT BE ACCEPTED AS SATISFACTORY. THE CIT(A) THEREFORE HELD THAT THE SUM OF RS 1000000 CREDITED IN THE ACCOUNT OF THE ASSESS EE WAS RIGHTLY ADDED TO THE TOTAL INCOME OF THE ASSESSEE FIRM FOR THE AY 09-10 AS UNE XPLAINED CREDIT U/S 68 OF THE ACT. 16. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT MR.HAKIMUDDIN BEHMAT, ONE OF THE LOAN CREDITORS, WHO HAD GIVEN A SUM OF RS.8,00,000/- HAD NOT RESPONDED TO THE SUMMONS ISSUED BY THE AO OWING TO STRAINED PERSONAL RELATIONSHIP. IT WAS SUBMITTED BY HIM THAT THE AFORESAID PARTY WA S NOW WILLING TO EXTEND NECESSARY 6 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 COOPERATION. HE THEREFORE PRAYED THAT ONE MORE OPPO RTUNITY MAY BE AFFORDED TO THE ASSESSEE TO SATISFACTORILY EXPLAIN THE UNSECURED LO ANS RECEIVED FROM MR.HAKIMUDDIN BEHMAT. AS FAR AS THE OTHER TWO UNSECURED LOAN CRED ITORS ARE CONCERNED S.D.DUGAR AND M.K.DUGAR & SONS, HUF THE LD. COUNSEL SUBMITTED THAT THE AO WAS ALWAYS AT LIBERTY TO EXAMINE THE AFORESAID PARTIES BUT DID NO T DO SO. IT WAS SUBMITTED BY HIM THAT THE CASH DEPOSIT OF RS.45,000/- IN THE BANK ACCOUNT OF M.K.DUGAR & SONS HUF BEFORE ISSUING OF CHEQUES TO THE ASSESSEE AND THE DEPOSIT OF RS.61,500/- IN THE BANK ACCOUNT OF S.D.DUGAR BEFORE ISSUING OF CHEQUES TO THE ASSES SEE COULD BE PROPERLY EXPLAINED ONLY BY THE AFORESAID TWO PARTIES AND NOT BY THE AS SESSEE. HE PRAYED THAT THE ORDER OF CIT(A) MAY BE SET ASIDE AND THE ISSUE MAY BE REMAND ED TO THE AO WITH THE DIRECTION TO THE AO TO EXAMINE OF THE THREE CREDITORS. THE LD . DR SUBMITTED THAT THE ASSESSEE HAD ENOUGH OPPORTUNITY AND THE REQUEST MADE BEFORE THE TRIBUNAL SHOULD NOT BE ACCEPTED. 17. WE HAVE GIVEN A CAREFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS. AS FAR AS THE LOAN RECEIVED FROM SHRI HAKIMUDDIN BEHMAT IS CONCER NED THE POSITION REMAINS THE SAME THAT EVEN TODAY CONFIRMATION OF HAVING GIVEN T HE LOAN HAS NOT BEEN FILED. IT IS THEREFORE NOT POSSIBLE TO REMAND THE ISSUE ON THE P RESUMPTION THAT MR.HAKIMUDDIN BEHMAT WOULD FILE THE CONFIRMATION TO ENABLE TO THE AO TO MAKE PROPER INVESTIGATION. THE REQUEST MADE BY THE LD. COUNSEL FOR THE ASSESSE E IN THIS REGARD IS THEREFORE REJECTED. 18. AS FAR AS THE CASH DEPOSITS IN THE BANK ACCO UNT OF S.D.DUGAR AND M.K.DUGAR & SONS HUF IS CONCERNED, WE ARE OF THE VIEW THAT THE AO OUGHT TO HAVE SUMMONED AND EXAMINED THOSE TWO PERSONS WITH REGARD TO THE CASH DEPOSITS IN THEIR BANK ACCOUNT PRIOR TO ISSUE OF CHEQUES TO THE ASSESSEE. WE THERE FORE ACCEPT THE PRAYER FOR REMANDING THE ISSUE TO THE AO IN SO FAR AS THE TWO CREDITORS ARE CONCERNED. THE AO WILL EXAMINE THOSE TWO AFORESAID PARTIES AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THUS GROUND NO.2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED., 7 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 19. GROUND NO.3 RAISED BY THE ASSESSEE READS AS FOLLOWS :- 3. THE CIT (APPEALS) ERRED IN DISALLOWING EXPENDITU RE TOWARDS INTEREST ON CASH CREDIT LOAN OF SBI AMOUNTING TO RS 886927/-. 20. THE AO NOTICED THAT THE ASSESSEE WHILE COMP UTING THE TOTAL INCOME HAD CLAIMED DEDUCTION OF RS.8,86,927/- WHICH WAS AN EXPENDITURE ON ACCOUNT OF INTEREST ON CASH CREDIT LOAN WITH STATE BANK OF INDIA. THE AO EXAMIN ED THE ALLOWABILITY OF CLAIM OF THE ASSESSEE FOR DEDUCTION OF THE AFORESAID SUM IN THE LIGHT OF THE PROVISION OF SECTION 43B (E) OF THE ACT. AS PER THE AFORESAID PROVISION ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR ADVANCES FROM A SCHEDULED B ANK SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE TOTAL INCOME ONLY WHEN S UCH INTEREST IS ACTUALLY PAID. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD NOT PRODUC ED ANY EVIDENCE WITH REGARD TO THE PAYMENT OF INTEREST BUT NOTICED THAT THERE WAS A SE TTLEMENT BETWEEN THE ASSESSEE AND THE BANK DURING THE PREVIOUS YEAR 2010-11 AND THE A SSESSEE OBTAINED BENEFIT OF RS.3,48,806/- BY WAY OF SUCH SETTLEMENT WITH THE BA NK AND THE SAME WAS OFFERED TO TAX AS INCOME IN THAT YEAR. THE AO ALSO REFERRED TO EXP LANATION 3C AND 3D TO SECTION 43B OF THE ACT WHICH PROVIDES THAT EVEN IF INTEREST PAYABLE ON LOANS OR ADVANCES FROM A SCHEDULED BANK IS CONVERTED INTO A LOAN OR ADVAN CE THAT WILL NOT BE THE ACTUAL PAYMENT OF INTEREST. THE AO ACCORDINGLY ADDED A SUM OF RS.8,86,927/- TO THE TOTAL INCOME OF THE ASSESSEE. 21. ON APPEAL BY THE ASSESSEE CIT(A) CONFIRMED T HE ORDER OF AO. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE RAISED GROUND NO.3 BEF ORE THE TRIBUNAL. 22. AT THE TIME OF HEARING IT WAS POINTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE THAT THE FOLLOWING IS THE DETAILS OF THE BANK TRANSACTIO NS IN THE CASH CREDIT ACCOUNT OF THE ASSESSEE.:- DETAILS OF BANK TRANSACTIONS OF S.B.I. MARTINIER BR ANCH, KOLKATA A/C NO.00000011187485784 O.D.BALANCE ON 01.04.2008 RS.8,786,087.21 LESS : DEPOSITS RS.2,600,000.00 8 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 RS.6,186,087.21 ADD : O.D. INTT. 886,927.00 BANK CHARGES & OTHER CHARGES 16,500.00 O.D.BALANCE ON 31.03.2009 RS.7,089,564.21 23. THE LD.COUNSEL FOR THE ASSESSE POINTED OUT T HAT A SUM OF RS.26,00,000/- HAS BEEN PAID BY THE ASSESSEE TOWARDS OUTSTANDING BALANCE DU E AND PAYABLE TO THE BANK AND THE SAME COVERED THE OD INTEREST DEBITED IN THE PROFIT AND LOSS ACCOUNT. ACCORDING TO HIM THEREFORE PAYMENT OF RS.26,00,000/-OUGHT TO BE CONS TRUED AS PAYMENT OF INTEREST WHICH WAS CLAIMED AS DEDUCTION BY THE ASSESSEE AND NO DISALLOWANCE CAN BE MADE U/S 43B OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE TH US SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO CANNOT BE SUSTAINED. THE LD. DR PLA CED RELIANCE ON THE ORDER OF AO. 24. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION T O THE RIVAL SUBMISSIONS. FROM THE DETAILS GIVEN TO US IT APPEARS THAT THE ASSESSEE HA D DEPOSITED A SUM OF RS.26,00,000/- IN HIS BANK ACCOUNT IN WHICH THE CREDIT FACILITY IN QUESTION WAS AVAILED BY THE ASSESSEE. THERE ARE TWO QUESTIONS THAT NEED TO BE ANSWERED BE FORE ACCEPTING THE CLAIM OF THE ASSESSEE NAMELY WHAT IS THE OUTSTANDING AMOUNT OF I NTEREST AND WHETHER THE SUM OF RS.26,00,000/- PAID WOULD COVER THE INTEREST OF RS. 8,86,927/- WHICH WAS CLAIMED AS DEDUCTION BY THE ASSESSEE IN COMPUTING ITS TOTAL I NCOME. THE SECOND ASPECT THAT NEEDS TO BE SEEN IS AS WHETHER THIS DEPOSIT OF RS.26,00, 000/- WAS PRIOR TO THE ACCRUAL OF INTEREST ON THE LOAN AMOUNT IN QUESTION IN WHICH C ASE THE BENEFIT OF PAYMENT OF RS.26,00,000/- CANNOT BE ATTRIBUTED TO THE REPAYMEN T OF INTEREST OF RS.8,86,927/-. WE ARE OF THE VIEW THAT THESE TWO ISSUES HAVE TO BE RE -EXAMINED BY THE AO AND FOR THIS PURPOSE THE ORDER OF CIT(A) ON THIS ISSUE IS SET AS IDE AND THE AO IS DIRECTED TO EXAMINE THESE IN ACCORDANCE WITH LAW AFTER AFFORDI NG THE ASSESSEE OPPORTUNITY OF HAVING HEARD. 9 ITA NO.1053/KOL/2014-M/S. INDIAN RICE MILLS STORES- A.Y.2009-10 25. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE COURT ON 01.06.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01.06.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. INDIAN RICE MILLS STORES, 71A, N.S.ROAD, GUP TA (MANSION), KOLKATA-700001. 2.I.T.O., WARD-35(2), KOLKATA. 3. CIT(A)-XX, KOLKATA 4. CIT-XII, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES