Kamlesh Bherulal Shah, Vadodara V. The Dy. Commissioner of Income Tax, Circle-1(2), Vadodara

ITA 122/AHD/2023

AI Insights

The case involves Kamlesh Bherulal Shah, the proprietor of M/s. J K Metal Corporation, who appealed against the order of the CIT(A) concerning the assessment year 2014-15. The primary issues in the appeal were the additions made to the capital account, disallowance of interest expenses, and disallowance of expenses made through credit cards, totaling Rs. 13,99,215. The Tribunal found that the additional evidence provided by the assessee regarding the capital addition needed further verification and thus remanded this issue back to the Assessing Officer. The Tribunal also found that the disallowances related to interest expenses and credit card expenses were not justified based on the evidence provided during the assessment proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299917 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 11-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 01-03-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . N o . 1 2 2/ A h d /2 0 2 3 ( A s se ss m e nt Y e a r : 20 14- 15 ) K a m le s h B he r u la l S ha h , Pr op . M/s . J K Me t al C o rp or at io n, 50 2/1 -A , G I D C E s t ate M ak ar pu r a, V a d o da r a-39 00 1 0 V s.D C I T C ir cl e - 1( 2) , V a d o da r a [ P A N N o. AB N P J 8 3 1 5 R ] (Appellant) .. (Respondent) Appellant by : Shri B. T. Thakkar, A.R. Respondent by : Shri B. P. Makwana, Sr. D.R. D a t e of H ea r i ng 12.07.2023 D a t e of P r o no u n ce me nt 19.07.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi on 06.01.2023 for A.Y. 2014-15. 2. The grounds of appeal raised by the assessee are as under: “1. The grounds of appeal mentioned hereunder are without prejudice to each other. 2. The assessment order under appeal is bad in law and deserves to be quashed. 3. The Learned Assessing Officer erred in fact and in Law in making an addition of Rs. 13,99,215/- on account following: Sr. No. Particulars against which Appeal preferred Amount (Rs.) Ground of Appeal 1. Addition to capital 6,00,000 The said disallowance of expenses is bad in ITA No. 122/Ahd/2023 Kamlesh Bherulal Shah vs. DCIT Asst.Year–2014-15 - 2 - law and deserves to be quashed. 2. Disallowance of Interest Expenses 2,28,514 The said disallowance of expenses is bad in law and deserves to be quashed. 3. Disallowance of Expenses made through credit card 5,70,701 The said disallowance of expenses is bad in law and deserves to be quashed. 6. Initiation of Penalty u/sec.271(1)(C) N/A The said initiation of Penalty is bad in law and deserves to be quashed. TOTAL 13,99,215 4) Honorable National Faceless Appeal Centre, Delhi grievously erred in law and on facts in relating the addition and disallowances of Rs. 13,99,215/-. 5) Looking to the opportunity for representing the defense your appellant preferred an appeal before Honorable bench of Income Tax Appellate Tribunal. 6) The learned A.O. and the Hon’ble National Faceless Appeal Centre, Delhi grievously erred in law and on facts in under taking/confirming reassessment proceedings and making the assessment u/s 143(3). 7) The Appellant craves, leave to add alter amend or withdraw any one or more grounds of appeal.” 3. The assessee is a proprietor of M/s. J. K. Metal Corporation and engaged in the business of trading of metal. The assessee filed return of income on 13.11.2014 declaring taxable income at Rs. 32,93,620/-. After issuing statutory notices the assessee filed details before the Assessing Officer. The Assessing Officer observed that the assessee has made addition to his capital account by sum of Rs. 6,00,000/- other than profit of Rs. 33,96,651/-. The Assessing Officer after taking cognizance of the reply made an addition of Rs. 6,00,000/- as unexplained addition to capital under Section 68 of the Act. The Assessing Officer also made ITA No. 122/Ahd/2023 Kamlesh Bherulal Shah vs. DCIT Asst.Year–2014-15 - 3 - disallowance out of interest expenses amounting to Rs. 3,48,000/- and addition of Rs. 5,70,701/- towards unexplained expenses through credit card. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. The Ld. A.R. submitted that in respect of addition to capital. The assessee has given the confirmation of the said parties alongwith Pan Card, Aadhar Card and copy of bank statement which clearly shows that the amount was received from Mr. Kuparam Jagjit Patel as business advance. The assessee has prima facie discharge its onus and the additional evidence related to confirmation was not available before the Assessing Officer and at this juncture it is available with the assessee. As regards Ground No. 2 in respect of disallowance out of interest expenses, the Ld. A.R. submitted that the Assessing Officer presumed that it was a secured loan but in fact from the balance sheet and the details it cannot be revealed that same are unsecured loan and was related to borrowing for property which is allowable up to Rs. 8,00,000/-. As related to Ground No. 3 the expenses in respect of credit card the assessee has given all the details as per the contentions of the Ld. A.R. only the evidences in support of the explanation was not available before the Assessing Officer and therefore, the same should be allowed as the assessee has actually incorrect the expenses related to credit card. ITA No. 122/Ahd/2023 Kamlesh Bherulal Shah vs. DCIT Asst.Year–2014-15 - 4 - 6. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. As relates to Ground No. 1 relating to unexplained addition to capital amounting to Rs. 6,00,000/- the assessee is submitting the confirmation and the copy of bank statement which is an additional evidence before the Tribunal and the said evidences were not available either before the Assessing Officer or before the CIT(A). It will be appropriate to remand back this issue to the file of the Assessing Officer for verifying the documents and accordingly adjudicated the issue. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. Thus, Ground No. 1 is partly allowed for statistical purpose. As relates to Ground No. 2 relating to disallowance out of interest expenses. The payments were made out of interest free unsecured loans and it was for the business purpose. The records from the balance sheet as well as the details of return of income reveal this fact. Thus, the Assessing Officer as well as CIT(A) has not taken proper cognizance of the evidences filed by the assessee during the assessment proceedings. Hence, this addition does not sustain. Ground No. 2 is allowed. As regards Ground No. 3 expenses through credit card amounting to Rs. 5,70,701/- the assessee has submitted that these payments were made from the accounts of M/s. Jagetia Metals proprietor Smt. Tarika Shah by his creditors and payments were made out of his saving account. The expenses were incurred for the other parties. It appears that the assessee has incurred this expenses for the business ITA No. 122/Ahd/2023 Kamlesh Bherulal Shah vs. DCIT Asst.Year–2014-15 - 5 - purposes as the trail of the said expense in detail was explained by the assessee during the assessment proceedings. Hence, Ground No. 3 is allowed. 8. In result, appeal of the assessee is partly allowed for statistical purpose. This Order pronounced in Open Court on 19/07/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 19/07/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 13.07.2023 2. Date on which the type draft is placed before the Dictating Member 14.07.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 14.07.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .07.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 19.07.2023 7. Date on which the file goes to the Bench Clerk 19.07.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................