Kalpeshkumar B. Verma, Anand V. The Pr. CIT(Central), Surat

ITA 1244/AHD/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3262 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Source of fund
• Section: 143(3); 153A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 1244 & 1245/AHD/2018 (ASSESSMENT YEAR: 2009-10 & 2010-11) KALPESHKUMAR B. VERMA, TRIVENI 106, SWAMINARAYAN SOCIETY, NEAR SARDARGUNJ, ANAND- 388001 V/S THE PR. COMMISSIONER OF INCOME TAX (CENTRAL), SURAT (APPELLANT) (RESPONDENT) PAN: ABCPV 5892N APPELLANT BY : SHRI MUKUND BAKSHI, AR RESPONDENT BY : SHRI O.P. SHARMA, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 29 -11-201 8 DATE OF PRONOUNCEMENT : 18 -02-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. PR. CIT U/S. 263. THE ASSESSEE HAS TAKEN FOLLOWING GROU NDS OF APPEAL: ITA NO. 1244 & 1245/AHD/2018 . A.YS. 2009- 10 & 2010-11 2 1- THE LD. PR. CIT (CENTRAL), SURAT HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE LD. A.O. U/S. 153A R .W.S. 143(3) DATED 29.02.2016 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SO AS TO JUSTIFY THE INVOCATION OF POWERS U/S. 263 AND DIRECTING TO REVI SE THE ASSESSMENT ORDER TO VERIFY AND CONSIDER THE ALLOWANCE OR OTHERWISE OF T HE CLAIM OF INTEREST EXPENSES AMOUNTING TO RS. 57,37,042 AGAINST INTEREST INCOME OF RS. 42,11,011/-THE ORDER OF THE PR. CIT BEING ERRONEOUS IN LAW AND IN FACTS IS PRAYED TO BE CANCELLED / REVOKED. 2. THE LD. PR. CIT HAS FURTHER ERRED IN LAW AND I N FACTS IN COMPLETELY DISREGARDING THE SUBMISSION OF THE APPELLANT THAT THE IMPUGNED A SSESSMENT ORDER SOUGHT TO BE REVISED U/S. 263 IS PASSED U/S. 153A R.W.S. 143( 3) HAVING A SCOPE OF ASSESSMENT OF UNDISCLOSED INCOME ON THE BASIS OF IN CRIMINATING DOCUMENTS / MATERIAL. IN ABSENCE OF ANY MATERIAL / DOCUMENT IN RELATION TO THE CLAIM OF EXPENSES DIRECTED TO BE RE-VERIFIED, NO INCRIMINATI NG MATERIAL OR DOCUMENT IS FOUND AND AS SUCH, SUCH VERIFICATION BEING BEYOND T HE SCOPE OF IMPUGNED ASSESSMENT, THE ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS AND CONSEQUENTLY, NO PREJUDICE CAN BE SAID TO HAVE BEEN CAUSED. 3. THE LD. PR. CIT (CENTRAL), SURAT HAS FURTHER E RRED IN LAW AND IN FACTS IN DIRECTING THE CONDUCT OF ENQUIRY AND VERIFICATION WHICH ARE B EYOND THE SCOPE OF POWERS VESTED U/S 153A R.W.S. 143(3) AND CONSEQUENTLY U/S. 263 OF THE I.T. ACT, 1961. 4. YOUR APPELLANT CRAVES LIBERTY TO ADD, ALTER, A MEND, SUBSTITUTE OR WITHDRAW ANY OF THE GROUND OF APPEAL HEREINABOVE CONTAINED. 2. ON VERIFICATION OF THE CASE RECORDS OF THE ASSESSEE FOR A.Y.2009-10, IT IS NOTICED THAT THE ASSESSEE HAS SHOWN TO HAVE RECEIVE D RS.42,11,011/- AS INTEREST INCOME IN THE YEAR UNDER CONSIDERATION. HE HAS ALSO CLAIMED .INTEREST EXPENDITURE OF RS.57,37,042/- RESULTING INTO DECLAR ATION OF LOSS OF RS. 15,26,031/-UNDER THE HEAD 'INCOME FROM OTHER SORUCE S'. FURTHER, PERUSAL OF RECORDS REVEAL THAT THE BORROWED FUNDS HAVE BEEN UT ILIZED FOR MAKING INVESTMENT IN SHARES/SECURITIES. THUS, THE INTEREST PAYMENT/EXPENDITURE HAS NOT BEEN UTILIZED WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF EARNING INTEREST INCOME. ON PERUSAL OF HIS REPLY DATED 23.12.2015 .S UBMITTED ON 29.12.2015 DURING COURSE OF ASSESSMENT PROCEEDINGS, IT IS NOTI CED THAT THE ASSESSEE HAS ... SUBMITTED THE LEDGERS OF INTEREST RECEIVED AND INTE REST PAYMENT, BUT NOT ITA NO. 1244 & 1245/AHD/2018 . A.YS. 2009- 10 & 2010-11 3 FURNISHED THE PROOF ESTABLISHING THE NEXUS BETWEEN SOURCE OF FUNDS AND ITS UTILIZATION. HIS SUBMISSION MADE DURING ASSESSMENT PROCEEDINGS BY SIMPLY : FILING COPY OF LEDGER ACCOUNTS HAS BEEN ACCEPTED .B Y THE A.O. WITHOUT CONDUCTING VERIFICATION OF NEXUS AND WITHOUT VERIFY ING THEIR ADMISSIBILITY UNDER THE I.T. ACT. ACCORDINGLY, THE SAID INTEREST EXPEND ITURE HAS BEEN ALLOWED ERRONEOUSLY AND IS PREJUDICIAL TO THE INTEREST OF R EVENUE. 3. THUS, IMPUGNED ASSESSMENT FOR A.Y. 2009-10 PASSED O N 29.02.2016 BY THE ASSESSING OFFICER I.E. DCIT, CENTRAL CIRCLE-3, BARO DA U/S. 153A R.W.S. 143(3) OF THE ACT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF REVENUE WITHIN MEANING OF SECTION 263 OF THE INCOME TAX ACT. 4. NOW ASSESSEE HAS COME BEFORE US WITH THE GRIEVANCE FOR ORDER PASSED BY THE LD. PR. CIT IS WRONG AND ALREADY HAD ADEQUATE ENQUIRY H AVE BEEN MADE BY THE ASSESSING OFFICER. 5. IN THIS CASE, ASSESSEE HAS SHOWN HAS TO HAVE RECEIV ED RS. 42,11,011/- AS INTEREST INCOME IN THE YEAR UNDER CONSIDERATION, AND HAS ALS O CLAIMED INTEREST EXPENDITURE OF RS. 57,37,042/- RESULTING INTO DECLA RATION OF LOSS OF RS. 15,26,031/- UNDER THE HEAD INCOME FROM OTHER SOURC ES. 6. WE CAN SEE IN THIS CASE, DURING SEARCH NO INCRIMIN ATING MATERIAL WAS FOUND AND LD. A.O. MADE ADEQUATE ENQUIRY IN THIS CASE. 7. IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED AN ORD ER IN THE MATTER OF CIT VS. AMIT CORPORATION (2012) 81 CCH 0069 (GUJ.) HIGH COU RT WHEREIN IT IS HELD THAT DURING THE COURSE OF FRAMING OF ASSESSMENT, ASSESSI NG OFFICER HAD ACCESS TO ALL RECORDS ITA NO. 1244 & 1245/AHD/2018 . A.YS. 2009- 10 & 2010-11 4 OF ASSESSEE, AFTER PURSUING SUCH RECORD ASSESSING O FFICER FRAMED ASSESSMENT, SUCH ASSESSMENT COULD NOT HAVE BEEN RE-OPENED IN EXERCISE OF REVISI ON POWER U/S 263 FOR MAKING FURTHER INQUIRIES. 8. IN THIS CASE, ASSESSEE CANNOT BE BRANDED AS ERRONEO US AS THERE HAS BEEN INQUIRY WITH REGARD TO CLAIMS MADE AND MERE INADEQUACY CANN OT GROUND FOR TAKING ACTION U/S. 263 OF THE INCOME TAX ACT. 9. LD. A.R. ALSO CITED A CASE OF PR. CIT VS. SAUMYA CO NSTRUCTION PVT.LTD. 81 TAXMANN.COM 292 (GUJ.) WHEREIN HAS BEEN HELD THAT A SSESSMENT U/S. 153A, RELATION TO MATERIAL DISCLOSED DURING SEARCH OR REQ UISITION; IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH, NO ADDITION CAN BE MADE ON BAS IS OF MATERIAL COLLECTED AFTER SEARCH. 10. IN VIEW OF THE ABOVE, WE ALLOW BOTH THE APPEAL OF T HE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON 18 - 02- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 18/02/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD