K.Anand, Vellore V. DCIT, Vellore

ITA 1201/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8393 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 12-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: B R SUDHEENDRA
• Keywords: Earning of tax free income
• Section: 143(3); 142(1); 14A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 12 01 /MDS/201 6 / ASSESSMENT YEAR :20 0 9 - 1 0 SHRI K. ANAND, NO. 89, SANTHAPET, GUDIYATTAM, VELLORE 632 602. [PAN:A A C P A3797N ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE 1 , VELLORE. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI B.R. SUDHEENDRA, C.A. / RESPONDENT BY : SHRI S UPRIYO PAL, JCIT / DATE OF HEARING : 1 2 . 0 7 .201 6 / DAT E OF P RONOUNCEMENT : 23 . 0 9 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1 3 , CHENNAI , DATED 07 . 0 1 .20 1 6 RELEVANT TO THE AS SESSMENT YEAR 20 0 9 - 1 0 . THE MAIN ISSUED RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE UNDER SECTION 14A R.W. RULE 8D. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MONEY LENDING AND FILED HIS RETURN OF INCOME ADMITTING I.T.A. NO . 12 01 /M/ 16 2 TOTAL INCOME AT .21,20,109/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 23.08 .2010. FURTHER, NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE CALLING FOR BOOKS OF ACCOUNT, SUPPORTIVE DOCUMENTS AND EVIDENCES FOR EXPENSES CLAIMED. IN RESPONSE THERETO, THE ASSESSEE PRODUCED ALL THE PARTICULARS AND DETAILS AS CALLED FO R. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE PARTICULARS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT BY DETERMINING THE INCOME OF THE ASSESSEE AT .24,71,920/ - AFTER MAKING DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BY IGNORING THE CASE LAW OF HON BLE DELHI HIGH COURT RELIED UPON BY THE AR OF THE ASSESSEE IN THE CASE OF CHEMINVE ST LTD. IN I.T.A. NO. 749 OF 2014 DATED 02.09.2015, BY RELYING ON THE CIRCULAR NO. 5/2014 DATED 11.02.2014, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. TH E LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY RELIED ON THE DECISION IN THE CASE OF CHEMINVEST LTD. (SUPRA) AND PLEADED THAT THE DISALLOWANCE MADE BY I.T.A. NO . 12 01 /M/ 16 3 THE ASSESSING OFFICER BE DELETED. PER CONTRA , THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5 . WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS TAKEN LOAN FROM VARIOUS PERSONS INCLUDING BANKS AND HAS CLAIMED EXPEN SES TOWARDS INTEREST ON SUCH LOANS. I N ASSET SIDE OF THE BALANCE SHEET, IT WAS SHOWN THAT THE NON BUSINESS ASSETS NOT YIELDED ANY TAXABLE INCOME. FURTHER , THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R UNDER CONSIDERATION. 6 . THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS VERY CRYPTIC. IN THIS CASE , THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MONEY LENDING AND EARNED INTEREST INCOME OF .14,14,548/ - AND PAID INTEREST AMOUNT OF .12,19,006/ - . IT MAY BE A FACT THAT THAT ASSESSEE HAS TAKEN LOAN FROM VARIOUS PERSONS INCLUDING BANKS AND ALSO CLAIMED EXPENSES TOWARDS INTEREST ON SUCH LOANS. THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING AS TO WHETHER THE ASSESSEE HAS MADE INVESTMENTS OUT OF BORROW ED FUNDS OR NOT . BEFORE US, THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS NOT USED ANY BORROWED FUNDS FOR MAKING INVESTMENTS IN EARLIER YEAR . BEFORE THE LD. CIT(A), THE ASSESSEE HAS ADMITTED SHORT TERM CAPITAL GAIN ON SALE OF VACANT LAND WHICH EXISTED A S ON 31.03.2008 FOR .20,37,000/ - DURING THIS ASSESSMENT I.T.A. NO . 12 01 /M/ 16 4 YEAR. THE AMOUNT OF SHORT TERM CAPITAL GAIN ADMITTED BY THE ASSESSEE WAS FOR .20,92,620/ - AND HAS ALSO PAID THE TAXES ON SUCH SHORT TERM CAPITAL GAINS . FURTHER, THE ASSESSEE HAS SUBMITTED THAT THE I TEMS OF RANIPET LAND FOR .25,971/ - , PLOTS FOR .5,34,000/ - AND GOLD BULLION FOR .5,95,000/ - ARE ASSETS WHICH HAS YIELDED TAXABLE INCOME. MOREOVER, WITH REGARD TO THE AGRICULTURAL LANDS, THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE MADE TOTAL INVESTMENTS AS ON 31.03.2009 AT .22,00,337/ - , WHICH IS LOWER THAN THE CAPITAL OF THE ASSESSEE. WITHOUT OBTAINING ANY REMAND REPORT, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE FACTS, WE SET ASIDE THE ORDER OF THE LD. CIT( A) AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE DETAILS AS SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW BY PASSING A SPEAKING ORDER AFTER ALLOWING OPPORTUNITY OF HEA RING TO THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 23 RD SEPTEMBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 23 . 0 9 .201 6 VM/ - I.T.A. NO . 12 01 /M/ 16 5 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.