Smt. Mohini Singh, Chandigarh V. DCIT, Chandigarh

ITA 1086/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2342 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-04-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 26-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NOS. 1085 TO 1091/CHD/2012 A.Y. 2003-04 TO 2009-10 SMT. MOHINI SINGH, V DCIT, CC-I, HOUSE NO. 152, SECTOR 9-B, CHANDIGARH. CHANDIGARH. PAN: ABZPS-6055R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K.MUKHI RESPONDENT : SHRI AMARVEER SINGH DATE OF HEARING : 09.04.2013 DATE OF PRONOUNCEMENT : 10.04.2013 ORDER PER BENCH THIS IS A BUNCH OF SEVEN APPEALS PERTAINING TO ASSESSMENT YEARS 2003-04 TO 2009-10, FILED AGAINST SEPARATE EVEN DATED ORDERS DATED 26.09.2012. IN ALL THESE APPEALS, ALMOST IDENTICAL ISSUES ARE INVOLVED, THER EFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, THESE ARE BEIN G DECIDED BY A COMMON ORDER. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH U/S 132(1) OF THE INCOME-TAX ACT,1961 ( 'THE ACT' F OR SHORT) WAS CONDUCTED IN THE CASE OF M/S HOT MILLIONS GROUP OF CASES ON 17.09.2008. SMT.MOHINI SINGH, THE PRESENT ASSESSEE, WAS ALSO COVERED IN THIS SEARCH. CONSEQU ENT UPON THIS SEARCH, NOTICES DATED 12.08.2009 WERE ISS UED FOR 2 THE ASSESSMENT YEARS COVERED U/S 153A. IN RESPONSE , THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME FILED BY HER ON 28.11.2003 U/S 139(1) OF THE ACT FOR ASSESSMENT YEAR 2003-04 AND LIKEWISE FOR OTHER YEARS, MAY BE TREATE D AS RETURN OF INCOME FILED IN RESPONSE TO NOTICE(S) ISS UED U/S 153A OF THE ACT. FOR ASSESSMENT YEAR 2002-03, SHE HAS DECLARED INCOME OF RS.1,33,475/- UNDER THE HEAD IN COME FROM BUSINESS AND PROFESSION AND ALSO FROM OTHER SOURCES. SHE IS PARTNER IN THE FIRM M/S HOT MILLI ONS AND THE COMPUTATION OF INCOME FILED ALONG WITH RETURN O F INCOME REVEALED THAT SHE HAS RECEIVED INTEREST ON PARTNER S CAPITAL OF RS.1,76,098/- AND HAS PAID INTEREST ON UNSECURED LOANS TAKEN FOR BUSINESS OF RS.1,64,781/-. THUS, SHE HAS DISCLOSED NET INCOME OF RS.11,317/- UNDER THIS HEAD . THE ASSESSEE RECEIVED LOANS FROM 13 PERSONS STATED TO B E CLOSE FRIENDS AND RELATIVES OF THIS GROUP. THE ASSESSEE FILED A SHEET OF CALCULATION OF INTEREST PAID AND RECEIVED IN DETAIL, SHOWING NEXUS BETWEEN INTEREST RECEIVED AND INTERES T PAID. A COPY OF ACCOUNTS OF SMT.MOHINI SINGH IN THE BOOKS OF ACCOUNT OF THE FIRM M/S HOT MILLIONS FOR THE RELEVA NT ASSESSMENT YEARS, TO PROVE THE NEXUS OF AMOUNT OF L OAN TAKEN AND INVESTED WAS ALSO FILED. THE ASSESSEE AL SO APPENDED A CHART SHOWING THE AMOUNT RECEIVED FROM T HE PARTIES, THE DATE OF RECEIPT OF THE LOAN AND THE DA TE OF INVESTMENT OF THE SAME IN THE FIRM M/S HOT MILLIONS FOR THE PERIOD FROM 01.04.2003 TO 31.03.2009, IN WHICH THE ASSESSEE IS A PARTNER. AS PER AO, THE ASSESSEE DID NOT FILE DETAILS REGARDING LOANS WHICH WERE BROUGHT FORWARD AS ON 3 01.04.2003. THEREFORE, THE AO CONCLUDED THAT THE A SSESSEE HAS NOT PROVED A NEXUS IN RESPECT OF LOANS TAKEN PR IOR TO 01.04.2003. FROM THE CHART SUBMITTED BY THE ASSESS EE, THE AO NOTICED THAT THERE IS A CONSIDERABLE DELAY IN IN VESTMENT, IN SOME OF THE CASES AND IN SOME OF THE CASES, ONLY A PART AMOUNT HAS BEEN INVESTED IN THE FIRM. THEREFORE, TH E AO CONCLUDED THAT THE ASSESSEE HAS NOT BEEN ABLE TO SH OW NEXUS IN RESPECT OF THOSE AMOUNTS IN WHICH THERE IS A CONSIDERABLE DELAY IN RECEIPT OF THE AMOUNT FROM TH E PARTIES AND INVESTMENT IN M/S HOT MILLIONS. AFTER PREPARIN G AND INCORPORATING A CHART ALONGWITH HIS REMARKS IN HIS ORDER AT PAGE 4, THE AO HAS TREATED SOME OF THE AMOUNT TO BE NOT ALLOWABLE BECAUSE THE REQUISITE NEXUS DOES NOT STAN D ESTABLISHED. ACCORDINGLY, THE AO HAS TREATED TOTAL AMOUNT OF INTEREST PAID TO THE FOLLOWING PARTIES, TOTALING TO RS.1,64,781/-, IN ASSESSMENT YEAR 2003-04 AS DISALL OWED AND THE SAME HAS BEEN ADDED BACK TO ASSESSEE'S INCO ME OF THE YEAR: S.NO. NAME LOAN AMOUNT INTEREST AS ON 31.03.2003 ------- ----------------- ------------- ----- ----------------- 1. BANDNA SINGH 139,757.20 16,770.86 2. DEEPIKA SINGH 173,106.00 17,477.00 3. AMAR BATRA 25,000.00 3,000.00 4. JAGBIR SINGH 25,000.00 3,000.00 5. LAJ KAUR 50,000.00 7,500.00 6. GURDIT SINGH 25,000.00 3,750.00 7. NEELAM BATRA 2,500.00 300.00 8. R.S.BATRA 37,500.00 4,500.00 9. S.JAMIAT SINGH 206,893.00 37,473. 14 10. VARSHA MAN SINGH 117,400.00 1 7,610.00 11. JAGBIR SINGH SANDHU 125,000.00 22, 500.00 12. NAVREET SANDHU 125,000.00 22,500. 00 13. PRAVEEN VASISHT 60,000.00 8,400.00 ----------------- 164,781.00 ---------------- 4 3. SIMILARLY, IN OTHER ASSESSMENT YEARS, THE AO HA S DONE THE EXERCISE AND HAS ARRIVED AT DIFFERENT AMOUNTS O F DISALLOWABLE INTERESTS, WHICH HAVE BEEN ADDED BACK TO THE RESPECTIVE INCOMES OF THOSE ASSESSMENT YEARS. AGAI NST THIS, THE ASSESSEE WENT IN APPEAL AND LD. CIT(APPEA LS), AFTER OBSERVING THAT THE ASSESSEE DID NOT FURNISH ANY DOCUMENTARY EVIDENCE IN RESPECT OF HER CLAIM AND AF TER REFERRING TO THE CHART, ACCEPTING DETAILS OF LOANS, HE HAS AFFIRMED THE FINDING OF LD. AO IN ALL THE ASSESSMEN T YEARS. 4. NOW THE ASSESSEE IS IN FURTHER APPEAL AND HAS TA KEN ALMOST STEREO TYPED GROUNDS EXCEPT FOR THE AMOUNT O F ADDITION, WHICH ARE DIFFERENT IN DIFFERENT ASSESSME NT YEARS. WE EXTRACT THE GROUND TAKEN IN ASSESSMENT YEAR 2003 -04, WHICH WILL GIVE A PICTURE OF THE NATURE OF GROUND T AKEN IN ALL THE YEARS UNDER CONSIDERATION. THE GROUND FOR A.Y. 2003-04 READS AS UNDER : INTEREST SHOULD BE DISALLOWED ONLY FOR THOSE PORTION OF LOAN TAKEN BY THE ASSESSEE, WHERE NEXUS HAS NOT BEEN PROVED FOR THE INVESTMENT OF THE SAME LOAN IN HOT MILLIONS & THEREFORE ADDITION OF RS.164,781/- AS PER PARA 5.3 OF ASSESSMENT ORDER IS NOT CORRECT AT ALL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY PERUSED THE ENTIRE RECORD. IT WAS ARGUED BY LD. AR THAT THE ASSESSEE HAD BORROWED FUNDS DURING THE RELEVANT PER IOD FROM HIS FRIENDS AND RELATIVES IN HER INDIVIDUAL CA PACITY AND HAD INVESTED THEM IN THE FIRM M/S HOT MILLIONS AS HER CAPITAL CONTRIBUTION. IT WAS CONTENDED THAT SHE WA S GETTING 5 INTEREST FROM THE FIRM BUT AT THE SAME TIME SHE WAS ALSO GIVING INTEREST TO UNSECURED LOANEES, THUS, AFTER C LAIMING OFF-SET OF INTEREST RECEIVED AND INTEREST PAID, SHE HAS DISCLOSED NET-OF INTEREST PAID AND RECEIVED IN HER RETURN OF INCOME FILED FOR THE RELEVANT ASSESSMENT YEARS. HE ALSO RELIED ON THE CHART WHICH WAS ADMITTEDLY GIVEN TO A O DURING ASSESSMENT PROCEEDINGS. ACCORDING TO LD. AR , IN MAJORITY OF CASES, NEXUS HAS BEEN PROVED BUT IN FEW CASES NEXUS HAS NOT BEEN PROVED IN A PARTICULAR ASSESSMEN T YEAR BUT AS A CONSEQUENCE, IT WOULD STAND PROVED IN THE NEXT ASSESSMENT YEAR. 6. ON THE OTHER HAND, LD. CIT-DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND HAS REITERATED THE REA SONS GIVEN THEREIN FOR MAKING THE DISALLOWANCE IN QUESTI ON. 7. AFTER CONSIDERING RIVAL STANDS IN THE LIGHT OF T HE OBTAINING FACTS AND EVIDENCE AVAILABLE ON RECORD, W E ARE OF THE CONSIDERED OPINION THAT DUE TO SHILLY-SHALLY CO OPERATION OF THE ASSESSEE, EXACT FACTUAL MATRIX REGARDING THE LOANS TAKEN AND LOANS GIVEN BY THE ASSESSEE COULD NOT BE PROPERLY DELINEATED BY THE AO. THEREFORE, IN THE INTEREST OF JUSTICE, WE DEEM IT FIT TO RESTORE THE COMMON ISSUE TO THE F ILE OF THE AO WITH A DIRECTION THAT HE SHALL CONSIDER THE ISSU E IN ITS CORRECT PERSPECTIVE DE NOVO. HE SHALL DULY CONSIDE R CONTENTION OF THE ASSESSEE REGARDING LOANS TAKEN AN D INVESTMENTS MADE AFTER HEARING THE ASSESSEE'S EXPLA NATION IN RESPECT OF THE TIME LAG BETWEEN THE WITHDRAWALS AND INVESTMENTS, UNLESS THE AMOUNTS WITHDRAWN ARE FOUND TO 6 HAVE BEEN INVESTED SOMEWHERE ELSE AND COMPUTE THE E XACT ALLOWABLE AMOUNTS OF INTEREST. THEREFORE, WE RESTO RE ALL THE ABOVE CAPTIONED APPEALS TO THE FILE OF THE AO WITH AFOREMENTIONED DIRECTION AND ALLOW THEM FOR STATIST ICAL PURPOSES. BEFORE PARTING, WE WOULD LIKE TO MENTION THAT THE AO HAS TO AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER LAW. 8. IN THE RESULT, ALL THE APPEALS ARE ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL,2013. SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH APRIL,2013. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH