M/s Eliza Power Industries, Una V. ITO, Una

ITA 1121/CHANDI/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6596 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 04-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Unexplained cash credit
• Section: 80IC; 68; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1121/CHD/2017 / ASSESSMENT YEAR : 2012-13 M/S ELIZA POWER INDUSTRIES, JITPUR, GAGRET DISTT.UNA H.P. VS. THE ITO, UNA, H.P. ./PAN NO: AACFE1643D / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, CA ' ! / REVENUE BY : SMT. CHANDRAKANTA, SR. DR # $ % /DATE OF HEARING : 27.02.2019 &'() % / DATE OF PRONOUNCEMENT : 27.02.2019 / ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 23.3.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS), PALAMPUR [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) THROUGH HIS ORDER DATED 03.04.2017 HA S ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVI SIONS OF S. 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN HE HAD ERRED IN NOT ALLOWIUNG DEDUCTION U/S 80IC ON INTEREST INCOME OF RS. 1,36,856/- EVEN WHEN SUCH IN COME IS DERIVED FROM THE FIXED DEPOSITS HELD AS SECURITY WI TH VARIOUS GOVERNMENT AUTHORITY PERTAINING TO BUSINESS ACTIVIT Y. 3. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN HE HAD ERRED IN MAKING ADDITION OF RS. 15,7 5,000/- TO ITA NO. 843-CHD-2018- SH. G.P.SINGH, HUF, LUDHIANA 2 THE APPELLANT'S INCOME ON ACCOUNT OF ALLEGED UNEXPL AINED CASH CREDIT WHICH WERE AMOUNTS OF CAPITAL INTRODUCE D BY PARTNERS OF THE APPELLANT FIRM. 4. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF NOT ALLOWING DEDUCTION U/S 80IC ON ADDITION O F RS. 15,75,000/- (AGITATED THROUGH GROUND 3 ABOVE) MADE U/S 68 ON ACCOUNT OF CAPITAL INTRODUCED BY PARTNERS. 5. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN HE HAD ERRED IN MAKING ADDITION OF RS. 8,11 ,241/- TO THE APPELLANT'S INCOME ON ACCOUNT OF ALLEGED UNEXPL AINED CASH CREDIT FROM SH. PARAMJIT SINGH. 6. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF NOT ALLOWING DEDUCTION U/S 801C ON ADDITION OF R S. 8,11,241/- (AGITATED THROUGH GROUND 5 ABOVE) MADE U /S 68 ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT FROM SH. PARAMJIT SINGH. 7. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY C1T(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF ESTIMATING THE INTEREST INCOME OF RS. 20,000/- F ROM DEPOSIT OF RS. 2,00,000/- GIVEN TO SALES TAX AUTHORITIES EVEN WHEN NO SUCH INCOME WAS RECEIVED DURING THE YEAR. HE HAS ALSO ER RED IN NOT ALLOWING DEDUCTION U/S 80IC ON THE SAID ENHANCED IN COME. 8. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 3. GROUND NO.1 : GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUI RE ANY SPECIFIC ADJUDICATION. 4. GROUND NO. 2 : VIDE GROUND NO.2, THE ASSESSEE HAS AGITATED THE ACTION OF THE LOWER AUTHORITIES IN DENYING DEDUCTIO N U/S 80IC OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON INTER EST INCOME OF RS. 1,36,856/-. ITA NO. 843-CHD-2018- SH. G.P.SINGH, HUF, LUDHIANA 3 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE INADVERTENTLY MENTIONED IN THE RETURN OF I NCOME THE SAID RECEIPT AS INTEREST FROM FDRS WHEREAS, THE SAME WAS RECEIVED AS INTEREST FROM PARTNERS OF THE ASSESSEE FIRM. HE HAS FURTHER SUBM ITTED THAT THE ASSESSEE DURING THE YEAR ALSO PAID SOME INTEREST TO THE OTHE R PARTNERS ON THEIR CAPITAL. HE, THEREFORE, HAS SUBMITTED THAT IN THE COMPUTATION OF INCOME, THE ASSESSEE MAY BE ALLOWED NETTING OF THE INTEREST PAID WITH INTEREST RECEIVED FROM PARTNERS. HOWEVER, THE LD. COUNSEL F AIRLY AGREED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80I C OF THE ACT ON THE AFORESAID AMOUNT. 6. THE LD. DR HAS ALSO AGREED THAT THE MATTER MAY B E EXAMINED AFRESH BY THE LD. CIT(A) IN THIS RESPECT. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS HELD THAT IF THERE IS A RECEIPT OF INTEREST FROM THE PARTNERS AS WELL AS PA YMENT OF INTEREST TO THE SAME PARTNERS, THE ASSESSEE IS ENTITLED TO NETTING OF THE SAME. THEREFORE, THE MATTER IS REMANDED TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THIS FACT AND ALLOW THE RELIEF TO THE ASSESSEE ACCORDING LY. HOWEVER, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IC OF T HE ACT ON THE AFORESAID INTEREST INCOME. 8. GROUND NOS. 3 & 4 : VIDE GROUND NO.3 AND 4 THE ASSESSEE HAS AGITATED THE ADDITION OF RS. 15.75 LACS MADE INTO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND FURTHER THE ACTION OF THE LOWER AUTHORITIES IN DENYING DEDUCTIO N U/S 80IC OF THE ACT ON THE SAID AMOUNT. ITA NO. 843-CHD-2018- SH. G.P.SINGH, HUF, LUDHIANA 4 9. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE SAID AMOUNT OF RS. 15.75 LACS WERE IN FACT CAPITAL INTRODUCED BY SHRI RAJ KUMAR INTO THE FIRM. HE HAS FURTHER RELIED UPON THE VARIOUS D OCUMENTS TO SUBMIT THAT IN FACT THE SAID AMOUNT WAS TRANSFERRED FROM HIS PR OPRIETORSHIP CONCERN M/S MBH TRADERS. HE HAS ALSO SUBMITTED THAT EVEN CE RTAIN AMOUNT WAS CREDITED TO THE ACCOUNT OF M/S MBH TRADERS FROM OTH ER PROPRIETORSHIP CONCERN OF THE ASSESSEE. HE, THEREFORE, HAS SUBMI TTED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF DEPOSITS. 10. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT TH OUGH THE ASSESSEE HAS TRIED TO SHOW THAT THE AMOUNT HAS BEEN CREDITED FROM PROPRIETORSHIP CONCERN, HOWEVER, THE CREDITWORTHINESS OF THE PROPR IETORSHIP CONCERN HAS NOT BEEN PROVED. 11. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE MATTER NEEDS EXAMINATION AND VERI FICATION AT THE HANDS OF THE ASSESSING OFFICER. THE ASSESSEE WILL DEMONSTRAT E BEFORE THE ASSESSING OFFICER THE SOURCE AND CREDITWORTHINESS OF THE CRED ITOR INCLUDING THE SOURCE OF THE DEPOSITS IN THE PROPRIETORSHIP CONCERN. THE ASSESSING OFFICER WILL EXAMINE THE SAME AND DECIDE THE ISSUE AFRESH IN ACC ORDANCE WITH LAW. SINCE IT IS A CASE OF CAPITAL INTRODUCTION, I DO NO T THINK THAT THE ASSESSEE IS ENTITLED TO ANY DEDUCTION U/S 80IC OF THE ACT ON TH IS ACCOUNT. THEREFORE, THE ISSUE RAISED VIDE GROUND NO.3 IS RESTORED TO T HE FILE OF THE ASSESSING OFFICER, WHEREAS, THE ISSUE RAISED VIDE GROUND NO.4 IS DECIDED AGAINST THE ASSESSEE. ITA NO. 843-CHD-2018- SH. G.P.SINGH, HUF, LUDHIANA 5 12. GROUND NO.5. VIDE THIS GROUND, THE ASSESSEE HAS AGITATED THE ADDITION OF RS. 8.11 LACS MADE INTO THE INCOME OF T HE ASSESSEE BY LOWER AUTHORITIES AS UNEXPLAINED CASH CREDIT U/S 68 OF TH E ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THIS AMOUNT HAS BEEN ADDED UNDER THE HEAD UNEXPLAINED LOANS. HE HAS FURTHER SUBMITTED T HAT IN FACT THE CREDITOR SH. PARAMJIT SINGH WAS THE PARTNER OF THE OF THE FI RM, HOWEVER, HE RETIRED FROM THE PARTNERSHIP OF THE FIRM DURING THE YEAR UN DER CONSIDERATION. AS PER THE DISSOLUTION DEED, HIS CAPITAL WAS TREATED L OAN TO THE FIRM. THAT THERE WAS OTHERWISE NO INTRODUCTION OF ANY CASH OR CAPITAL DURING THE YEAR. THAT THE AMOUNT OF CAPITAL WAS INTRODUCED BY PARMAJ IT SINGH AS CAPITAL OF THE PARTNER DURING THE EARLIER YEARS. 13. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED T HAT THESE PLEAS HAVE NOT BEEN TAKEN INTO ACCOUNT BY THE LOWER AUTHORITIE S. THAT THE MATTER NEEDS EXAMINATION AT THE END OF THE CIT(A). 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW, THAT SINCE THESE ASPECTS HAS NOT BEEN EXAMINED BY THE ASSESSIN G OFFICER AND I HAVE ALSO RESTORED THE OTHER ISSUES TO THE FILE OF THE A SSESSING OFFICER, HENCE, THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE ASSE SSING OFFICER TO EXAMINE THE ABOVE CONTENTIONS OF THE ASSESSEE AND DECIDE T HE ISSUE IN ACCORDANCE WITH LAW. 15. GROUND NO. 6: SO FAR AS THE GROUND NO.6 IS CORNERED, THE ASSESSE E HAS CLAIMED DEDUCTION U/S 80IC OF THE ACT ON THE AFORESAID AMOUNT OF RS. 8.11 LACS AS UNEXPLAINED LOANS FROM SH. PARAMJIT S INGH. THE LD. COUNSEL HAS BEEN FAIR ENOUGH TO ADMIT THAT THIS AMOUNT DOE S NOT QUALIFY FOR ITA NO. 843-CHD-2018- SH. G.P.SINGH, HUF, LUDHIANA 6 DEDUCTION U/S 80IC OF THE ACT. GROUND NO. 6 OF TH E APPEAL IS, THEREFORE, DISMISSED. 16. GROUND NO.7 : THIS GROUND IS NOT PRESSED BY THE LD. COUNSEL FO R THE ASSESSEE, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 17. GROUND NO.8 : THIS GROUND IS GENERAL IS NATURE AND DOES NOT REQU IRE ANY SPECIFIC ADJUDICATION. IN VIEW OF THE FINDINGS GIVEN ABOVE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMM EDIATELY ON COMPLETION OF HEARING. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 27.02.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR