Sh. Ram Murti Prop., Aligarh V. A.C.I.T.-1, Aligarh

ITA 122/AGR/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5978 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.122/AGRA/ 2013 ASSESSMENT YEAR: 2008-09 RAM MURTI, VS. ASSTT.COMMISSIONER OF INCOME TAX -1, PROP. M/S UMA EXPORTS, ALIGARH. D-53, INDUSTRIAL ESTATE, ALIGARH. (PAN AAYPM 9991 Q). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI AMIT SHUKLA , JR. D.R. DATE OF HEARING : 01.07.2014 DATE OF PRONOUNCEMENT : 04.07.2014 ORDER PER PRAMOD KUMAR, ACCOUNTANT MEMBER: BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 26.12.2012 PASSED BY THE LD. CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, F OR THE ASSESSMENT YEAR 2008- 09. 2. IN GROUND NO.1 & 2 THE ASSESSEE HAS RAISED THE F OLLOWING GRIEVANCES: 1(I) BECAUSE THE LD. CIT(A) HAS WRONGLY AND ILLEGAL LY CONFIRMED THE ADDITION OF RS.1,25,000/- MADE BY THE ASSESSING OFF ICER ON INTEREST FREE LOAN TO M/S UMA OVERSEAS BY DISALLOWING THE SA ME OUT OF INTEREST PAYMENT. ITA NO.122/AGRA/2013 A.Y. 2008-09 2 (II) BECAUSE CONSIDERING THE FACTS OF THE CASE THE ADDITION OF RS.1,25,000/- AS CONFIRMED BY LD. CIT(A) IS LEGALLY WRONG AND DESERVES TO BE DELETED. 2(I) BECAUSE THE LD. CIT(A) HAS ERRED BOTH IN LAW A ND ON FACTS IN MAKING AN ENHANCEMENT OF RS.78,000/- U/S. 36(1)(III ) OF THE I.T. ACT ON INTEREST FREE LOAN/ADVANCE GIVEN TO SMT. MAMTA AGAR WAL. THE ENHANCEMENT MADE IS UNJUSTIFIED IGNORING THE APPELL ANTS SUBMISSION. (II) BECAUSE CONSIDERING THE FACTS OF THE CASE THE ENHANCEMENT OF RS.78,000/- MADE BY LD. CIT(A) IS LEGALLY WRONG AND DESERVES TO BE DELETED. 3. LD. REPRESENTATIVES FAIRLY ACCEPTS THAT THE ISSU E IS NOW COVERED BY THE ORDER DATED 30.06.2014 OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 IN ITA NOS.120 & 121/AGRA/2013 WHEREIN WE HAVE INTER ALIA OBSERVED S FOLLOWS :- 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CA SE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE FIND THAT IT IS AN UNDISPUTED POSITION THAT I NTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE ARE FAR IN EXCESS OF THE INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE. IN THE DOCUMENTS FILED BEFOR E US, IT IS SHOWN THAT THE ASSESSEE HAD A CAPITAL OF RS 176 LAKHS AND BUSINESS PROFIT OF RS 82.45 LAKHS, AND BOTH THESE AMOUNTS PUT TOGETHER ARE FAR IN EXCESS OF THE INTEREST FREE INVESTMENTS MADE BY THE ASSESS EE. WITH THESE UNDISPUTED FACTS IN MIND, LET US TAKE A LOOK AT THE LEGAL POSITION LAID DOWN BY HONBLE BOMBAY HIGH COURT, IN THE CASE OF C IT VS RELIANCE UTILITIES & POWER LTD (313 ITR 340), AS STATED THUS , THE PRINCIPLE THEREFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABL E BOTH INTEREST-FREE AND OVERDRAFT AND/OR LOANS TAKEN, THEN A PRESUMPTIO N WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST-FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST-FREE FU NDS WERE SUFFICIENT TO MEET THE INVESTMENTS. ON THE BASIS OF THIS PRINCI PLE, AS HAS BEEN CONSISTENTLY HELD BY COORDINATE BENCHES OF THIS TRI BUNAL, AS LONG AS INTEREST FREE FUNDS AVAILABLE TO AN ASSESSEE ARE IN EXCESS OF THE NON BUSINESS INVESTMENTS OR INTEREST FREE ADVANCES, PRE SUMPTION HAS TO BE ITA NO.122/AGRA/2013 A.Y. 2008-09 3 THAT INVESTMENTS OR INTEREST FREE ADVANCES ARE OUT OF INTEREST FREE ADVANCES, AND, ACCORDINGLY, DISALLOWANCE IN RESPECT OF INTEREST PAID ON BORROWINGS CANNOT BE MADE ON THE GROUND THAT THE BORROWED MONIES HAVE NOT BEEN USED FOR BUSINESS PURPOSES. IN THIS VIEW OF THE MATTER, AND HAVING REGARD TO THE FACTS AND FIGURES CITED BEFORE US WHICH ARE NOT DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. THE IMPUGN ED INTEREST DISALLOWANCES ARE, ACCORDINGLY, DELETED. 4. LEARNED D.R., HOWEVER, RELIED UPON THE STAND OF THE AUTHORITIES BELOW. 5. HAVING HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL ON RECORD, WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US IN ASSESSEES OWN CASE VIDE ORDER DATED 30.06.2014 IN ITA NOS.120 & 121/AGRA/2013. RESPECTFULLY FOLLOWING THE SAME, WE DELETE THE DISALLOWANCE. GROUND NOS.1 & 2 ARE THUS ALLOWED. 6. IN GROUND NO.3 THE ASSESSEE HAS RAISED THE FOLLO WING GRIEVANCE :- 3(I) BECAUSE THE LD. CIT(A) HAS WRONGLY, ILLEGALLY AND ARBITRARILY CONFIRMED AN ADDITION OF RS.1,00,000/- OUT OF ADDIT ION OF RS.2,00,000/- MADE BY THE ASSESSING OFFICER ON ADHO C BASIS AS UNDER:- OUT OF EXPENSES AS MENTIONED IN THE ASSESSMENT ORDER BEING NOT FULLY VERIFIABLE RS.50 ,000/- OUT OF PURCHASES FOR GOODS, THE PAYMENT BEING MADE IN CASH LESS THAN RS.20,000/- RS.1,50,000/- -------------- TOTAL ADDITION RS.2,00,000/- -------------- (II) BECAUSE THE ADDITION CONFIRMED BY LD. CIT(A) O UT OF EXPENSES IS WRONG AND ILLEGAL ON THE GROUND THAT THE SAME HA S BEEN MADE BY THE ASSESSING OFFICER WITHOUT SPECIFICALLY POINTING OUT ANY EXPENSE OF DISALLOWABLE OR OF PERSONAL NATURE. ITA NO.122/AGRA/2013 A.Y. 2008-09 4 7. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONC ERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED RS.2,00,000/- IN RESPECT OF CAS H PAYMENTS MADE, BY OBSERVING AS UNDER :- C) ADDITION ON ACCOUNT OF CASH PAYMENTS MADE:- I) THE ASSESSEE HAS MADE PAYMENTS IN CASH FOR EXPEN SES SHOWN ARE LESS THAN RS.20,000/- FOR EACH ENTRY LIKE CONVE YANCE EXPENSES OF RS.45,290/- & GENERATOR REPAIR EXP. OF RS.16,425/-, REPAIRS AND MAINT. OF RS.14,206/-, OFFICE EXPENSES OF RS.67,731 /-, SALES PROMOTION EXPENSES OF RS.59,116/-, STAFF SALARY OF RS.34,730/ -, CONSUMABLE STORES OF RS.43,978/- CONSISTING OF PURCHASE OF DHOTI, FIL E AND TUBES AND CHEMICALS ETC. AND FURTHER THE ASSESSEE HAS SHOWN PAYMENT OF WAGES OF RS.5,08,320/- DURING THE YEAR, WHICH WAS RS.1/72 LACS LAST YEAR AND THE SAME HAVE BEEN MADE IN CASH AND THE ASSESSEE HA S GOT SELF MADE VOUCHERS AND DID NOT SUBMIT THE PAN ETC. OF THE LAB OUR. THEREFORE, THE SAME IS NOT FULLY VERIFIABLE, AS LABOUR MIGRATE S AND THE AUTHENTICITY IS DOUBTFUL. THIS EXPENSE SEEMS TO BE QUITE EXCESSIVE AS COMPARED TO THE LAST YEAR. AS THE ASSESSEE HAS MADE CASH PAYMENTS AND HAS MANY SELF MADE VOUCHERS AND ALL THE SAME ARE NOT VERIFIABLE O R EXPENSES SEEMS TO BE EXCESSIVE. THEREFORE, IN VIEW OF THE SAME ON ESTIMATE BASIS AN ADDITION OF RS.50,000/- IS BEING MADE IN THE HAND O F THE ASSESSEE ON ESTIMATE BASIS. II) FURTHER, THE ASSESSEE HAS ALSO SHOWN PAYMENTS F OR PURCHASES FOR GOODS MADE FOR LESS THAN RS.20,000/- FOR EACH T RANSACTION IN CASH IN THE CASES OF MANY PARTIES AS PER LEDGER ACCOUNTS AND REGULAR PAYMENTS IN CASH HAVE BEEN MADE ON MANY DAYS IN A W EEK REGULARLY, LIKE IN THE CASE OF M/S AMAR TRADING CO., ALIGARH & TO SOME OTHER PARTIES OF ALIGARH. AS THE PAYMENTS MADE IN CASH A RE NOT FULLY VERIFIABLE AND THERE BEING FALL IN THE G.P. OF THE ASSESSEE IN THIS YEAR, THE PURCHASES MADE IN CASH CAN NOT BE VERIFIED AND THE ASSESSEE HAS THE REASON TO VARIATE ITS G.P. %. THEREFORE, AN ES TIMATE BASIS, THE AMOUNT OF RS.1.50 LACS IS BEING DISALLOWED AND ADDE D BACK TO THE INCOME OF THE ASSESSEE TO PLUG ANY LEAKAGE IN PURCH ASES MADE FOR GOODS IN CASH. THE TOTAL DISALLOWANCE UNDER THIS HEAD COMES TO RS. 2 LACS. ITA NO.122/AGRA/2013 A.Y. 2008-09 5 8. AGGRIEVED BY THE DISALLOWANCE SO MADE, THE ASSES SEE CARRIED THE MATER BEFORE THE LD. CIT(A). THE LD. CIT(A) UPHELD THE D ISALLOWANCE IN PRINCIPLE BUT RESTRICTED THE QUANTUM OF DISALLOWANCE TO RS.1,00,0 00/-. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO COGENT MATE RIAL TO JUSTIFY OR WARRANT THE IMPUGNED DISALLOWANCE. MERE FACT THAT THE PAYMENTS ARE MADE IN CASH AND THAT SOME OF THE VOUCHERS ARE SELF-MADE DO NOT NEGATE TH E GENUINENESS, BONAFIDE AND FACTUM OF THE EXPENDITURE SO INCURRED. IN THIS VIE W OF THE MATTER AND BEARING IN MIND THE ENTIRETY OF THE CASE, WE DEEM IT FIT AND P ROPER TO DELETE THE IMPUGNED DISALLOWANCE. GROUND NO.3 IS THUS ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER PRONOUNCED IN THE OPEN COURT ON 04.07.201 4) SD/- SD/- (BHAVNESH SAINI) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOU NTANT MEMBER DATE: 4 TH JULY, 2014 PBN/* ITA NO.122/AGRA/2013 A.Y. 2008-09 6 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY