Shree Sanand Textile Indus.Ltd., Ahmedabad V. The ACIT.,(OSD),Circle-8, Ahmedabad

ITA 1156/AHD/2010

• Counselvise Citation: 115620514 RSA 2010
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 1156/AHD/2010 ASSESSMENT YEAR :1995-96 SHREE SANAND TEXTILE INDUS. LTD. 10A, SATTAR TALUKA SOCIETY, NR. C.U.SHAH COLLEGE, ASHRAM ROAD, AHMEDABAD V/S . ASS. COMM. OF INCOME TAX (OSD) CIR 8, AHMEDABAD PAN NO. AAMCS8681G (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI ANIL R. SHAH, A.R. /BY RESPONDENT SHRI NIMESH YADAV, SR. D.R /DATE OF HEARING 29.05.2012 /DATE OF PRONOUNCEMENT 01.06.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS ASSESSEES APPEAL ARISES OUT OF ORDER OF C IT(A)-XIV, AHMEDABAD, ORDER DATED 16.02.2010 FOR ASSESSMENT YE AR 1995-96. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 1156/AHD/2010 A.Y.1995-96 PAGE 2 '1 THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN HOLDING THAT SEC. 36(1)(III) OF THE ACT, APPLIES AND THEREB Y CONFIRMING THE ADDITION OF RS.21,70,651/- MADE BY THE ASSESSING OF FICER. 2. YOU APPELLANT SUBMITS THAT ON FACTS OF THE CASE AND PROVISIONS OF LAW SEC. 36(1)(III) DOES NOT APPLY AND THAT LOAN TO SISTER CONCERN EVEN OUT OF BORROWED FUNDS IS NOT LIABLE TO BE DISA LLOWED AND FURTHER THAT THE CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE WIT HOUT PROVING THE NEXUS OF INTEREST FREE LOAN AVAILABLE AND INTERES T FREE LOANS GIVEN. 3. WITHOUT PREJUDICE, IT IS SUBMITTED BY YOUR APPE LLANT THAT THE CIT(A) HAS ERRED IN CONFIRMING THE AMOUNT OF DISALL OWANCE OF RS.21,70,651/- DISREGARDING THAT INTEREST IF AT ALL LIABLE TO BE DISALLOWED IS INTEREST ON NET CURRENT YEARS ADVANCES GIVEN CAL CULATED ON PRODUCT BASIS ONLY. 2. ALL THESE GROUNDS OF APPEAL ARE AGAINST CONFIRMI NG THE ADDITION OF RS. 21,70,651/- MADE BY THE ASSESSING OFFICER U/S. 36(1)(III) OF THE I.T.ACT. 3. THE BRIEF FACT OF THE CASE IS THAT IN THIS CASE WAS REMITTED BACK BY THE ITAT D BENCH, VIDE ITS ORDER NO. ITA NO. 3231/AHD /2003 DATED 11.07.2007 AS UNDER:- THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(A), IN OUR OPINION, IS NOT RIGHT IN DELETING THE ADDITION BY A SSUMING THAT, THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDING S, HAD NOT SOUGHT ANY EXPLANATION FROM THE ASSESSEE BEFORE MAKING ADD ITION IN THAT SITUATION, HE SHOULD HAVE RESTORED THE MATTER FOR N ECESSARY VERIFICATION INSTEAD OF DELETING THE ADDITION. WHEN AN EXPENDIT URE IS CLAIMED IT IS FOR THE ASSESSEE TO PROVE THE CLAIM WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AS WELL AS THAT OF ASSESSING OFFICE AND REMI T THE MATTER BACK TO ITA NO. 1156/AHD/2010 A.Y.1995-96 PAGE 3 THE FILE OF ASSESSING OFFICER TO REPROCESS THE CLAI M BY AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AND IN ACCORDANCE WITH LAW. ACCORDINGLY THE A.O. ISSUED NOTICE U/S 143(2) ON 19 .06.2008, THE ASSESSEE DIN NOT TURN UP AND FURNISH ANY EVIDENCE IN SUPPORT OF HIS CLAIM. HE AGAIN DISALLOWED THE INTEREST OF RS.21,70,651/-. 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE WAS IN SECOND APPEAL BEFORE LD. CIT(A)-XIV, AHMEDABAD, WHO HAS CO NFIRMED THE ADDITION BY OBSERVING THE FOLLOWING:- AS PER MY QUESTIONNAIRE, THE SHOW CAUSE WAS VERY S PECIFIC. THE APPELLANT DOES NOT HAVE ANY SATISFACTORY EXPLANATIO N FOR ANY OF ITS QUESTION, EXCEPT THAT ALL THE BOOKS OF ACCOUNT WERE SEIZED. IT IS IMPORTANT TO NOTE THAT THE APPELLANT SUBMITTED A CO PY OF LEDGER ACCOUNT IN ITS BOOKS OF ACCOUNT DURING THE APPELLATE PROCEE DINGS TO CLAIM THE OPENING BALANCE AS WELL AS ADVANCE OF LOAN DURING T HE YEAR. BUT, WHEN FURTHER DETAILS TO VERIFY THE GENUINENITY OF SUCH C LAIMS WERE ASKED THAT TOO BASED ON APPELLANTS OWN FINANCIAL ACCOUNTS NOT ES SHOWING DISCREPANCIES, THE APPELLANT HAS SHOWN ITS INABILIT Y TO PRODUCE OR SUBMIT THE SAME. FURTHER, TO APPRECIATE THE RATIO OF HON BLE SUPREME COURT JUDGEMENT IN THE CASE OF S.A. BUILDER LTD. VS. CIT, 288 ITR 1 AS HEAVILY RELIED UPON BY APPELLANT, THE APPELLANT FAILED TO S UBMIT THE DETAILS/EXPLANATION IN RESPECT OF PURPOSE AND FINAL UTILIZATION OF ADVANCE SO GRANTED TO ITS SISTER CONCERN M/S. WWFIPL. IT I S IMPORTANT TO NOTE THAT THE BOOKS OF ACCOUNT WERE SEIZED BY THE CENTRA L EXCISE AND CUSTOMS DEPTT. OF THE APPELLANT AND NOT OF ITS SIST ER CONCERN. IT IS, THEREFORE, THE APPELLANT HAS NO EXPLANATION OR CRED IBLE EVIDENCE TO SUBSTANTIATE ITS CLAIM OF INTEREST. IN THE ABSENCE OF SUCH DETAILS AND EXPLANATION, THE DISALLOWANCES OF INTEREST IN THE O RIGINAL ASST. ORDER AS WELL AS IN THE PRESENT ASST. ORDER AFTER THE DIRECT ION OF THE HONBLE ITAT ITA NO. 1156/AHD/2010 A.Y.1995-96 PAGE 4 ARE FULLY JUSTIFIED. THE GROUNDS OF APPEAL OF APPE LLANT ARE, THEREFORE, REJECTED. 5. NOW THE ASSESSEE BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED A PAPER BOOK AND CONTENDED THAT ON PAGE N OS. 19 AND 49 OF THIS PAPER BOOK, WHICH WAS IN THE FORM OF QUESTIONNAIRE ISSUED BY THE LD. CIT(A)- XIV, AHMEDABAD, DATED 08.01.2010, SHOWS THAT THE SH ARE CAPITAL WAS AT RS. 34.05 LACS AND RESERVE AND SURPLUS OF RS. 82,82,489 /-, THE TOTAL OF THE BOTH AMOUNT IS RS. 1.17 CRORE. THE ASSESSEE HAS GIVEN I NTEREST FREE LOAN TO SISTER CONCERN AT RS. 1.20 CRORE WHICH IS MORE LESS MATCHI NG WITH INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE. THE MATTER IS OLD. B OOKS ACCOUNT HAS BEEN SEIZED BY THE CENTRAL EXCISE DEPARTMENT. THE COMPA NY HAS CLOSED DOWN ITS BUSINESS. THERE IS NO PERSON TO COMPLETE THE LEGAL FORMALITIES. 6. ANOTHER SIDE, THE LD. D.R., VEHEMENTLY ARGUED TH AT THE ASSESSEE HAS NOT CO-OPERATED WITH THE A.O. AS WELL AS LD. CIT(A). T HEREFORE, HE ARGUED FOR CONFIRMATION OF THE ADDITION. 7. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND PAPER BOOK SUBMITTED BY THE APPELLANT. IT APPEARS FROM THE BA LANCE SHEET FOR THE YEAR ENDING ON MARCH 1995 THAT RS. 1.17 CRORE INTEREST F REE FUND WAS AVAILABLE WITH THE ASSESSEE, WHICH WAS RS. 1.32 CRORE IN PREC EDING YEAR. DURING THE YEAR, UNSECURED LOAN HAS COME DOWN FROM RS. 69.86 L AC TO RS. 53.21 LAC. THERE IS NO DIRECT NEXUS BETWEEN INTEREST BEARING B ORROWED FUND WITH INTEREST FREE ADVANCES IN THE ASSESSMENT ORDER. WE HAVE CO NSCIOUS VIEW THAT THE ASSESSEE HAS SUFFICIENT INTEREST FREE FUND TO ADVAN CE INTEREST FREE TO SISTER CONCERN. ACCORDINGLY, THE ADDITION IS NOT JUSTIFIE D AND THE SAME IS DELETED. ITA NO. 1156/AHD/2010 A.Y.1995-96 PAGE 5 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ON ALL THE THREE GROUNDS OF APPEAL. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (SHRI G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 30.05.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 31.05.2012 4) DATE OF CORRECTION 31.05.2012 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 01.06.2012 7) ORDER UPLOADED ON 01.06.2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 01.06.2012