Shri Govind Agrawal, Indore V. The ITO Ward-4(4), Indore

ITA 130/IND/2013

• Counselvise Citation: 13022714 RSA 2013
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABCPA4489L I.T.A.NO. 130 /IND/201 3 A.Y. : 2008-09 SHRI GOVIND A G RAWAL, M/S.PANCHESHWAR TRADERS, 97, AGRASEN NAGAR, INDORE. VS. ITO, WARD 4(2), INDORE APPELLANT RESPONDENT APPELLANT BY : SHRI PRANAY GOYAL, C. A. RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 01 . 0 7 .201 3 DATE OF PRONOUNCEMENT : 25 . 0 9 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A), DATED 17.1.2013 FOR THE ASSES SMENT YEAR 2008-09, WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE :- -: 2: - 2 1) THAT, ON FACTS AND CIRCUMSTANCES OF THE CASE ADDITION UPHELD BY LD. CIT(A) RS. 2,95,249/- ON ACCOUNT OF DEPOSITS OUT OF UNDISCLOSED SOURCE IS BAD IN LAW AND ON FACTS. 2) THAT, ON FACTS AND CIRCUMSTANCES OF THE CASE ADDITION UPHELD BY LD. CIT(A) OF RS. 87,496/- BY DISALLOWING THE INTEREST PAID BY THE ASSESSEE TO THE BANK IS BAD IN LAW AND ON FACTS. 2. THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FIRST ISSUE RELATES TO ADDITION OF RS . 2,95,249/- ON ACCOUNT OF FUND DEPOSITED OUT OF UNDISCLOSED SOU RCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON PERU SAL OF BALANCE SHEET IN RESPECT OF PROPRIETORY BUSINESS TH E ASSESSING OFFICER OBSERVED THAT BANK BALANCE WITH UNION BANK OF INDIA WAS AT RS. 7,30,485/- IN SCHEDULE I OF BALANCE SHEE T AND AS PER BANK ACCOUNT THE BALANCE WAS AT RS. 1,345/-. TH US, THERE WAS A DIFFERENCE OF RS. 7,29,140/-. THE ASSESSING O FFICER OBSERVED THAT ASSESSEE WAS HAVING PERSONAL BALANCE TO THE -: 3: - 3 TUNE OF RS. 4,33,891/- AND AFTER REDUCING FROM RS. 7,29,140/- THE AMOUNT OF RS. 2,95,249/- REMAINS IN ASSESSEES PERSONAL ACCOUNT THE SAME WAS TREATED AS INCOME FROM UNDISCL OSED SOURCES. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONF IRMED THE ADDITION. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. W E HAVE ALSO VERIFIED THE WITHDRAWALS MADE BY ASSESSEE OUT OF BA NK ACCOUNT OF M/S. PANCHESHWAR TRADERS, A PROPRIETORSHIP FIRM OF ASSESSEE. WE HAVE ALSO VERIFIED THE CASH DEPOSITED BY ASSESSEE IN HIS SAVING BANK ACCOUNT FOR MAKING TRANSACTIONS OF TRADING IN SHARES. FROM THE RECORD WE FOUND THAT TO EXPLAIN THE SOURCE OF CASH DEPOSIT, THE ASSESSEE HAS FILED CASH FLOW S TATEMENT FROM 1.4.2007 TO 31.3.2008, STATEMENT OF AFFAIRS AS ON 31.3.2008, PASS BOOK OF THE BANK ACCOUNT IN THE BOO KS OF THE ASSESSEE. WE FOUND THAT THE ASSESSEE HAS MADE WITHD RAWALS FROM PROPRIETORY CONCERN AT RS. 19,52,000/- ON DIFF ERENT DATES AND DEPOSITED THE SAME IN THE PERSONAL ACCOUNT ON D IFFERENT DATES AT RS. 12.80 LAKHS. THUS, OUT OF WITHDRAWAL B Y THE ASSESSEE THERE REMAIN BALANCE OF RS. 6,72,000/- ( R S. -: 4: - 4 19,52,000 (-) RS. 6,72,000/-) AND NOT RS. 5,75,000/ -, WHICH WAS WRONGLY CONSIDERED BY THE ASSESSING OFFICER. CA SH DEPOSIT OF RS. 50,000/-, RS. 55,000/-, RS. 22,000/- FROM 17 .1.2008 TO 18.1.2008 AND 24.1.2008 RESPECTIVELY IN SAVING BANK ACCOUNT BY THE ASSESSEE WAS ALSO WRONGLY CONSIDERED BY ASSE SSING OFFICER AS DEPOSIT MADE WITH THE FIRM. THUS, OUT OF AMOUNT OF RS. 7,30,485/- AMOUNT OF RS. 6,72,000/- WAS PERSONA L. AN AMOUNT OF RS. 55,033/- WAS RECEIVED BY THE ASSESSEE ON MATURITY OF FIXED DEPOSIT AND THERE WAS OPENING CAS H BALANCE OF RS. 3,452/- WITH M/S. PANCHESHWAR TRADERS, PROPR IETORY CONCERN OF THE ASSESSEE, SHRI GOVIND AGARWAL. THUS, ENTIRE DEPOSIT IN THE ACCOUNT IS OUT OF DISCLOSED SOURCES, WHICH IS CLEAR FROM RECONCILIATION STATEMENT SO FILED BY ASS ESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE ADDITION OF RS. 2,95,249/-. 4. AN ADDITION OF RS. 87,496/- WAS MADE BY THE ASSESSING OFFICER ON THE PLEA THAT THE ASSESSEE HAS DIVERTED INTEREST BEARING FUNDS FOR HIS PERSONAL PURPOSES. T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PA ID INTEREST ON BORROWING OF RS. 4,35,240/-. AS PER THE ASSESSIN G OFFICER, -: 5: - 5 THE ASSESSEE ON ONE SIDE IS PAYING INTEREST ON LOAN S AND ON OTHER SIDE, THE ASSESSEE IS ENJOYING RS. 7,29,140/- FOR PERSONAL USE FOR SOME PURPOSES. THE DISALLOWANCE OF INTEREST WAS CONFIRMED BY THE LD.CIT(A). THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D MATERIAL PLACED BEFORE US. THERE IS NO DISPUTE TO THE WELL S ETTLED LEGAL PROPOSITION THAT INTEREST EXPENDITURE IS ALLOWABLE TO THE ASSESSEE ONLY TO THE EXTENT INTEREST BEARING FUNDS HAVE BEEN UTILIZED FOR THE PURPOSE OF BUSINESS. IN CASE OF DI VERSION OF INTEREST BEARING FUNDS FOR PERSONAL PURPOSES, THE I NTEREST EXPENDITURE CLAIMED ON SUCH BORROWINGS IS NOT PERMI SSIBLE. IN THE INSTANT CASE, WE FOUND THAT THE ASSESSEE WAS HA VING HIS OWN CAPITAL OF RS. 8,59,806.79, WHICH WAS EMPLOYED IN THE FIRM AS WORKING CAPITAL. NOTHING WAS PLACED BEFORE US TO SHOW THAT WITHDRAWALS FOR PERSONAL USE WAS OUT OF INTERE ST FREE FUNDS AVAILABLE WITH ASSESSEE. ACCORDINGLY, WE DO N OT FIND ANY INFIRMITY IN THE ORDERS OF LOWER AUTHORITIES DISALL OWING INTEREST EXPENSES OF RS. 87,496/-. -: 6: - 6 6. IN THE RESULT, GROUND NO. 2 TAKEN BY ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 25 TH SEPTEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH SEPTEMBER, 2013. CPU* 24259