Kiran Agritech Pvt.Ltd, Aurangabad V. Assistant Commissioner of Income-tax, Circle - 1, Aurangabad

ITA 1109/PUN/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6981 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 20-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Opportunity of being heard

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1109/PUN/2018 / ASSESSMENT YEAR : 2014-15 KIRAN AGRITECH PVT. LTD., 4/17/29, NEAR WATER TANK, OLD MONDHA, AURANGABAD. PAN : AAECK4065A . /APPELLANT VS. ACIT, CIRCLE-1, AURANGABAD. . / RESPONDENT / APPELLANT BY : SHRI M. K. KULKARNI / RESPONDENT BY : SHRI M. K. VERMA / DATE OF HEARING : 11.02.2019 / DATE OF PRONOUNCEMENT: 01.03.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, AURANGABAD DATED 03.04.2018 FOR THE ASSESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ASSESSMENT MADE BY THE A.O. MAKING ADDITION OF RS.8,86,050/- INVOKING THE PROVISIONS OF S.36(1)(III) OF THE ACT. THE ADDITION IS NOT SUSTAINABLE IN LAW. THE SAME BE DELETED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS UNDER BOUNDEN DUTY TO CONSIDER THE STATUTORY PRESUMPTION THAT ONCE ON THE BASIS OF FINAL ACCOUNTS DUTY AUDITED THE ASSESSEE SHOWN AVAILABILITY OF INTEREST-FREE FUNDS THEN STATUTORY IT HAS TO BE PRESUMED THAT THE INTEREST-FREE ADVANCES WERE MADE OUT OF INTEREST-FREE FUNDS ANY. IN VIEW OF THIS STATUTORY PRESUMPTION THE ADDITION MADE OF RS.8,86,050/- IS NOT SUSTAINABLE. IT BE DELETED. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DECISION OF THE HONBLE DELHI HIGH COURT (SUPRA) RELIED UPON BY THE LD. CIT(A) WAS DECIDED ON THE FACTS OF THAT CASE ONLY. IT CANNOT BE RELIED AS A PRECEDENT APPLICABLE TO THE FACTS OF THIS CASE. THE CONFIRMED ADDITION BY LD. CIT(A) IS UNSUSTAINABLE. THE SAME BE DELETED. 4) THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. ITA NO.1109/PUN/2018 - 2 - 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF GINNING, PRESSING OF COTTON AND OIL MILL. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.64,81,899/-. AT THE END OF THE ASSESSMENT, THE ASSESSING OFFICER DISALLOWED A SUM OF RS.8,86,050/- INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT ON ACCOUNT OF INTEREST BEARING FUND FOR NON-BUSINESS PURPOSES AS ADVANCE GIVEN BY THE ASSESSEE TO M/S RADHEKIRAN PULSES PVT. LTD. AMOUNTING TO RS.98,45,000/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED WITH THIS ACTION OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) SUSTAINED THE SAID ADDITION AS MADE BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE ME WITH THE ABOVE EXTRACTED GROUNDS OF APPEAL. 5. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE OF MAKING ADDITION OF RS.8,86,050/- INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT ON ACCOUNT OF AD-HOC BASIS IGNORING THE FACT OF AVAILABILITY OF SUFFICIENT INTEREST-FREE FUNDS. IN THIS REGARD, LD. COUNSEL BROUGHT MY ATTENTION TO THE AVAILABILITY OF INTEREST-FREE FUNDS AND INTEREST- BEARING FUNDS TABULATED IN PARA 6.6 OF THE ASSESSMENT ORDER (TABLE). THE LD. COUNSEL SUBMITTED THAT BOTH THE ASSESSING OFFICER AND THE CIT(A) IGNORED THE FACT OF NON-INTEREST-BEARING FUNDS AND SECURED LOANS TO THE TUNE OF RS.2.17 CRORES OUT OF TOTAL UNSECURED LOANS OF RS.2.86 CRORES. CONSEQUENT TO IGNORING OF THIS FACT, THE CIT(A) GAVE A WRONG FINDING THEREBY HELD THE INAPPLICABILITY OF THE BINDING JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD., 313 ITR 340. ITA NO.1109/PUN/2018 - 3 - FOR THIS PURPOSE, LD. COUNSEL SUBMITTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. 6. ON CONSIDERING THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE AND AFTER HEARING THE LD. DR FOR THE REVENUE, I AM OF THE OPINION, FOR THIS LIMITED PURPOSE, THE MATTER SHOULD BE REMANDED TO THE FILE OF THE CIT(A) FOR CONSIDERING THE AVAILABILITY OF THE INTEREST-FREE FUNDS OF RS.2.17 CRORES WHILE ADJUDICATING THE ISSUE IN THE REMAND PROCEEDINGS. THE CIT(A) SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 01 ST DAY OF MARCH, 2019. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 01 ST MARCH, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, AURANGABAD; 4. THE CCIT, NASHIK; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE