Shri Ketan Babubhai Patel, Ahmedabad V. The Income tax Officer,Ward-9(2), Ahmedabad

ITA 1302/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6822 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-04-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS CHHAVI ANUPAM
• Assessee Lawyers: S N DEVATIA
• Keywords: Depreciation

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MUKUL KR. SHRAWAT, JM AND D.C.AGRAWAL , AM ITA NO. ASST. YEAR 1. 1302/AHD/2008 2004-05 2. 1303/AJD/2008 2004-05 3. 1304AHD/2008 2004-05 1.SHRI KETAN BABUBHAI PATEL, 4, MAHAVIRKRUPA, BHUYANGDEV CHAR RASTA, GHATLODIA, AHMEDABAD. VS. INCOME-TAX OFFICER, WARD 9(2), AHMEDABAD. 2. SHRI LALITHBHAI BABUBHAI PATEL, 4 MAHAVIRKRUPA, BHUYANGDEV CHAR RASTA, GHATLODIA, AHMEDABAD. INCOME-TAX OFFICER, WARD 9(2), AHMEDABAD. 3. SHRI BABUBHAI JAMNADAS PATEL, JAMNADAS HOUSE, OPP. ISRO FLATS, AMBLI BOPAL ROAD, JODHPUR, AHMEDABAD. INCOME-TAX OFFICER, WARD 9(2), AHMEDABAD APPELLANT RESPONDENT APPELLANT BY :- SHRI S. N. DEVATIA, AR RESPONDENT BY:- MRS. CHHAVI ANUPAM, CIT, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THESE ARE THE THREE APPEALS FILED BY THE ASSESSEES OF THE SAME GROUP INVOLVING COMMON ISSUES AND HENCE THEY ARE TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. ITA NO.1302/AHD/2008 ASST. YEAR 2004-05 2. IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS :- ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 2 (1) THE LD. CIT(A)-XV, AHMEDABAD ERRED IN LAW AND ON FA CTS IN CONFIRMING AND ENHANCING THE INTEREST EXPENSES OF R S.1,35,000/- INSTEAD OF RS.1,01,400/- DISALLOWED BY THE LD. AO, BECAUSE THE APPELLANT ONLY CHARGED INTEREST AT THE RATE OF 9% W HILST PAID BY HIM IN MOST CASES @ 18% AND ALSO ERRED IN DISALLOWI NG RS.90,000/- AND RS.42,940 (RS.36,000/- + RS.6,940/- ) ON THE GROUND THAT THE SAME WAS WITH RESPECT TO INTEREST F REE LOANS ADVANCED AND WAS INCURRED FOR PERSONAL PURPOSES RES PECTIVELY. (2) THE LD. CIT(A) ERRED IN DISALLOWING 1/5 TH OF THE DEPRECIATION ON MOTOR CAR OF RS.57,494/- AND VEHICLE LOAN INTEREST OF RS.23,919/- BOTH AMOUNTING OF RS.16,282/- AND CONSI DERED IT TO BE ATTRIBUTABLE TO THE PERSONAL USE OF THE APPELLAN T WITHOUT SUBSTANTIATING ANY COGENT REASONS WHICH REQUIRES TO BE DELETED TO PROTECT LAW AND JUSTICE. (3) THE LD. CIT(A) ERRED IN CONFIRMING THE CHARGING OF INTEREST U/S 234B, C & D OF THE I.T. ACT. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS AN IN DIVIDUAL ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION AND DEVELOPME NT. HE IS PARTNER IN TWO FIRMS NAMELY M/S SANKALP BUILDERS AND M/S RAJ C ORPORATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND T HAT ASSESSEE HAS CLAIMED INTEREST EXPENDITURE OF RS.3,74,537/- AGAIN ST INCOME SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES WHICH CO MPRISES OF INTEREST AND BROKERAGE INCOME. THE AO NOTED THAT ASSESSEE HA S BORROWED INTEREST BEARING FUNDS FROM VARIOUS PARTIES @ 18% PER ANNUM BUT HAS ADVANCED A SUM OF RS. 15 LACS TO SHRI PRITESH B. CHUDASMA A PA RTNER IN SISTER CONCERN BY CHARGING INTEREST @ 9% PER ANNUM. THUS THE AO BE LIEVED THAT ASSESSEE HAS UTILIZED INTEREST BEARING FUNDS FOR NO N-BUSINESS PURPOSES BY ADVANCING THE SAME AT 9%. ON ASKING TO EXPLAIN THE ASSESSEE ADMITTED THAT HE HAS BORROWED THE FUNDS FROM YAS CORPORATION @ 18% BUT THE FUNDS HAVE BEEN GIVEN TO SHRI PRITESH B. CHUDASMA F OR A SHORT PERIOD WHICH WAS REPAID ON 29 TH DECEMBER, 2005 THOUGH TAKEN IN THE MONTH OF MARCH, 2003. BUT THESE PERSONS ARE NOT COVERED U/S 40A(2)(B). THE AO ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 3 WAS, HOWEVER, NOT SATISFIED WITH THE EXPLANATION AN D DISALLOWED INTEREST AT RS.1,01,400/- BEING THE AMOUNT OF INTEREST CHARG ED LESS FROM SHRI PRITESH B. CHUDASMA. SIMILARLY, THE AO FOUND THAT A SSESSEE HAS PAID MONEY TO SHRI WAGHJIBHAI T. DESAI OF RS. 5 LACS AT 9% BUT HAD BORROWED FUNDS AT 18%. HE CALCULATED EQUIVALENT INTEREST WHI CH IS WORKED OUT AT RS.90,000/- AND DISALLOWED THE SAME. 4. WHEN THE MATTER CAME UP BEFORE LD. CIT(A) HE CON SIDERED THAT DISALLOWANCE OF INTEREST BY THE AO IS INADEQUATE. H E SHOULD HAVE IN FACT DISALLOWED 9% ON RS.14,95,000/- WHICH COMES TO RS.1 ,35,000/-. HE ACCORDINGLY MADE THE ENHANCEMENT IN THE DISALLOWANC E. LD. CIT(A) ALSO HELD THAT ASSESSEE FAILED TO PROVE ANY COMMERCIAL C ONNECTION IN ADVANCING THE MONEY TO SHRI PRITESH B. CHUDASMA AT LOWER RATE OF INTEREST. REGARDING DISALLOWANCE OF INTEREST IN RES PECT OF ADVANCE TO SHRI WAGHJIBHAI T. DESAI, LD. CIT(A) ALSO AFFIRMED THE O RDER OF AO BY HOLDING THAT FUNDS BORROWED AT HIGHER RATEAT 18% HA VE BEEN ADVANCED FREE OF INTEREST AND ALSO FOR NON-BUSINESS CONSIDER ATION. LD. CIT(A) ALSO HELD THAT THERE IS A CLEAR NEXUS BETWEEN THE INTERE ST BEARING FUNDS BORROWED BY THE ASSESSEE WITH THE FUNDS ADVANCED AT LOWER RATE OF INTEREST. 5. AGAINST THIS, THE LD. AR SUBMITTED THAT UNDER TH E FACTS HE IS UNABLE TO DISPUTE THAT INTEREST BEARING FUNDS BORROWED AT HIGHER RATE OF INTEREST WERE ADVANCED AT LOWER RATE OF INTEREST AS MENTIONE D BY THE AO BUT HE SUBMITTED THAT ASSESSEE HAD FURTHER BORROWED A FUND OF RS.7 LACS FROM YASH CORPORATION ON 8.4.2003 AND THEREAFTER REPAID RS.3,00,000/- AND RS.2,28,000/- ON 13.6.2003 AND 4.3.2004 RESPECTIVEL Y. HE ALSO REPAID A SUM OF RS.2,42,000/- ON 16.3.2004. THESE REPAYMENTS SHOULD BE TREATED AS PAYMENTS AGAINST OPENING BALANCE AMOUNTING TO RS .11,51,424/-. THUS ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 4 THE ASSESSEE HAD LESSER BORROWED FUNDS FROM M/S YAS H CORPORATION IN ASST. YEAR 2003-04 THEREBY LESSER AMOUNT SHOULD BE DEEMED TO HAVE BEEN ADVANCED TO SHRI PRITESH B. CHUDASMA AND THEREBY LE SSER AMOUNT OF INTEREST SHOULD BE DISALLOWED. 6. ON THE OTHER HAND, LD. DR SUBMITTED THAT AT NO P OINT OF TIME ASSESSEES BORROWED FUNDS HAVE REDUCED FROM RS.14,9 5,000/- GIVEN TO SHRI PRITESH B. CHUDASMA. THEREFORE, QUESTION OF HOLDING THAT LESSER FUNDS ARE ADVANCED OUT OF BORROWED FUNDS SHOULD NOT BE ACCEPT ED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE REASONS ARE THAT IN FY 200 3-04 HARDLY AT ANY POINT OF TIME ASSESSEE HAS SHOWN THAT BORROWED FUND S EITHER FROM YAS CORPORATION OR FROM OTHERS ARE REDUCED FROM RS.14,9 5,000/- BEING ADVANCE OUTSTANDING AGAINST SHRI PRITESH B. CHUDASM A. THERE IS NO DISPUTE ON THE FACTS THAT THERE WAS A NEXUS BETWEEN THE FUNDS BORROWED @ 18% AND ADVANCED AT LESSER RATE OF 9%. FURTHER THER E IS ALSO NO DISPUTE THAT NO BUSINESS PURPOSE WAS SERVED IN ADVANCING TH E FUNDS TO WAGHJIBHAI T. DESAI WITHOUT INTEREST. 8. SIMILARLY, NEXUS BETWEEN THE FUNDS BORROWED AT 1 8% AND ADVANCED TO WAGHJIBHAI T. DESAI AT 9% IS ALSO NOT DISPUTED A ND IS ALSO NOT DISPUTED THAT THERE WAS NO BUSINESS PURPOSE IN ADVANCING THE FUNDS TO THAT PARTY. WE ALSO NOTICE THAT ASSESSEE IN FACT BORROWED FUNDS FROM YASH CORPORATION, DHANLAXMI K. MISTRY, VIJAYBHAI K. MIST RY AND ALKABEN H. MISTRY. AFTER CONSIDERING THE RATE OF INTEREST PAID BY THE ASSESSEE AND RECEIVED BY HIM, THE LD. CIT(A) HAD CONFIRMED THE D ISALLOWANCE AT RS.90,000/-. ACCORDINGLY, WE UPHOLD THE DISALLOWANC E OF RS.90,000/-. THERE ARE OTHER ADVANCES AT LOWER RATE OF INTEREST ON WHICH AO HAD ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 5 DISALLOWED INTEREST AT RS.42,940/- COMPRISING OF RS .36,000/- AND RS.6,940/- BEING THE BORROWED FUNDS UTILIZED FOR P ERSONAL PURPOSES. FURTHER ON A SUM OF RS.2 LACS THE AO DISALLOWED INT EREST @ 18% WORKED OUT AT RS.36,000/- AND SIMILARLY AO WORKED OUT INTE REST OF RS.6,940/- ON INTEREST BEARING FUNDS USED FOR PERSONAL PURPOSES. 9. LD. CIT(A) HAD CONFIRMED BOTH THE ADDITIONS AND AFTER HEARING THE PARTIES WE ARE OF THE VIEW THAT ASSESSEE WAS UNABLE TO ESTABLISH ANY BUSINESS CONNECTION WITH THE EXPENDITURE INCURRED O UT OF INTEREST BEARING BORROWED FUNDS WITH ANY BUSINESS PURPOSE. ACCORDING LY, GROUND NO.1 IN ASSESSEES APPEAL IS DISMISSED. 10. GROUND NO. 2 RELATES TO DISALLOWANCE OUT OF DEP RECIATION ON MOTOR CAR AND VEHICLE LOAN INTEREST. AFTER HEARING BOTH T HE PARTIES, WE CONFIRM THE DISALLOWANCE AS IT WAS NOT ESTABLISHED THAT VEH ICLE WAS WHOLLY AND EXCLUSIVELY USED FOR BUSINESS PURPOSES. THIS GROUND OF ASSESSEE IS ALSO REJECTED. AS A RESULT, THE APPEAL FILED BY THE ASSE SSEE IS DISMISSED. ITA NO.1303/AHD/2008 ASST. YEAR 2004-05 11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN TH IS APPEAL:- (1) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIONS MA DE BY THE AO DISALLOWING THEREIN THE INTEREST EXPENSES OF RS. 1,27,260/- ON THE GROUND THAT THE INTEREST CHARGED BY THE APPE LLANT WAS @ 9% WHILST INTEREST PAID WAS IN MOST CASES @ 18% AND ALSO DISALLOWED RS.45,180/- ON THE GROUND THAT IT WAS IN CURRED FOR PERSONAL PURPOSES. ALL THESE ADDITIONS BY DISALLOWA NCES ARE ILLEGAL AND AGAINST LAW AND THEREFORE, THE ENTIRE D EDUCTION AS CLAIMED BY THE APPELLANT MAY KINDLY BE ALLOWED AND THAT OF ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE MAY KINDL Y BE DELETED IN TOTO TO PROTECT LAW AND JUSTICE. (2) THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE ADDI TIONS MADE BY THE AO BY THEREBY DISALLOWING 1/5 TH OF THE DEPRECIATION ON ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 6 MOTOR CAR OF RS.92,114/-, VEHICLE LOAN INTEREST OF RS.33,547/- AND VEHICLE REPAIR OF RS.25,813/- ALL AMOUNTING TO RS.30,295/- TREATING IT AS FOR THE PERSONAL USE OF THE APPELLAN T. THESE ADDITIONS BEING MADE ON ACCOUNT OF DISALLOWANCE ARE ILLEGAL AND THE SAME MAY KINDLY BE DELETED AND THE CLAIM MADE B Y THE APPELLANT MAY KINDLY BE ALLOWED IN FULL. (3) THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE ADDI TIONS MADE BY THE AO DISALLOWING 1/4 TH OF THE EXPENSES CLAIMED IN RESPECT OF TELEPHONE EXPENSES OF RS.30,459/- AND MOBILE EXP ENSES OF RS.37,857/- ALL AMOUNTING TO RS.9304/- TREATING IT AS FOR PERSONAL USE. THIS ACTION OF THE LD. CIT(A) IS ILLE GAL AND THE SAME MAY KINDLY BE DELETED IN FULL AND THE CLAIM MA DE BY THE APPELLANT MAY KINDLY BE ALLOWED IN FULL TO PROTECT LAW AND JUSTICE. (4) THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO IN RESPECT OF CHARGING OF INTEREST CHARGED U/S 234B, C & D OF THE ACT. THIS BEING ILLEGAL THE SAME MAY KINDLY BE DELE TED TO PROTECT LAW AND JUSTICE. 12. THE FIRST ISSUE RELATES TO DISALLOWANCE OF INTE REST OUT OF PAYMENT OF INTEREST ON BORROWED FUNDS WHICH WERE FOUND TO HAVE BEEN ADVANCED AT LOWER RATE OF INTEREST FOR NON-BUSINESS PURPOSES. T HE FACTS IN THIS CASE ARE SIMILAR TO THE FACTS IN THE CASE OF SHRI KETAN BABU BHAI PATEL IN ITA NO.1302/AHD/2008 WHICH HAS BEEN DISPOSED OF AS ABOV E. THE AO HAD FOUND THAT ASSESSEE HAD BORROWED FUNDS @ 18% BUT HE HAD ADVANCED TO SHRI PRITESH B. CHUDASMA @ 9%. DIFFERENCE OF INTERE ST WAS CALCULATED AT RS.1,27,260/-. THIS WAS AN INTEREST PAID ON ADVANCE S GIVEN TO SHRI PRITESH B. CHUDASMA AT 9% AND BORROWED FUNDS TAKEN AT 18%. THERE WAS NO DISPUTE THAT THERE WAS A NEXUS BETWEEN THE FUNDS BO RROWED AT 18% AND FUNDS ADVANCE TO SHRI PRITESH B. CHUDASMA AT 9%. TH ERE WAS ALSO NO DISPUTE THAT THERE WAS NO BUSINESS PURPOSE IN ADVAN CING THE FUNDS TO HIM AT LOWER RATE OF INTEREST. FOR THE REASONS STATED B Y US IN THE CASE OF SHRI KETAN BABUBHAI PATEL, WE CONFIRM THE DISALLOWANCE. THIS GROUND OF ASSESSEE IS REJECTED. ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 7 13. THE SECOND AND THIRD GROUND ARE REGARDING DISAL LOWANCES OUT OF DEPRECIATION AND TELEPHONE EXPENSES WHICH WERE HELD NOT TO HAVE BEEN INCURRED ENTIRELY FOR BUSINESS PURPOSES. 14. THE LD. AR COULD NOT PROVE THAT ENTIRE EXPENDIT URE WAS INCURRED FOR BUSINESS PURPOSES. ACCORDINGLY, THE DISALLOWANCES B EING REASONABLE AND ATTRIBUTABLE TO NON-BUSINESS PURPOSES ARE CONFIRMED . 15. THE OTHER GROUND RELATES TO CHARGING OF INTERES T, WHICH WOULD BE ON THE ASSESSED INCOME AND DOES NOT REQUIRE ANY SPECIF IC ADJUDICATION. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ITA NO.1304/AHD/2008 ASST. YEAR 2004-05 16. IN THIS APPEAL ASSESSEE HAS RAISED FOLLOWING GR OUNDS :- (1) THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES OF RS.4,77,927/- OUT OF THE TOTAL EXPENSES OF RS.5,71,448/- CLAIMED BY THE APPELLANT ON THE GROUN D THAT THE SAME WAS NOT BORROWED FOR THE PURPOSE OF BUSINESS A ND NOT THEREFORE, ALLOWABLE UNDER SECTION 36(1)(III) OF TH E IT ACT. THE SAME MAY THEREFORE BE ALLOWED AS DEDUCTION. (2) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DISALLO WING A SUM OF RS.59,467/- BEING 1/4 TH OF DEPRECIATION ON MOTOR CAR OF RS.1,89,204/- AND ALSO VEHICLE LOAN INTEREST OF RS. 43,116/- ALONG WITH VEHICLE REPAIR EXPENSES OF RS.5,550/- ON THE G ROUND THAT THE APPELLANT FAILED TO SUBMIT CONCRETE EVIDENCE TO PROVE THAT THE VEHICLES WERE USED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, INSPITE OF THE FACT THAT ALL THE REQUISITE INFORMAT ION HAVE BEEN FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. THUS THE SAME MAY BE ALLOWED AS DEDUCTION. (3) THE LD. CIT(A) CONFIRMED THAT ADDITION OF RS.52,000 /- MADE BY THE AO ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES AND PERSONAL EXPENSES ON ADHOC BASIS. THE SAME MAY BE DELETED. ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 8 (4) THE LD. CIT(A) ERRED IN CONFIRMING THE PROVISIONS O F SECTIONS INVOKED BY THE AO IN RESPECT OF CHARGING OF INTERES T UNDER SECTION 234B, 234C AND 234D OF THE IT ACT AND ALSO FURTHER ERRED IN CONFIRMING THE INITIATION OF PENALTY PROCE EDINGS UNDER SECTION 274 R.W.S. 271(1)(C) OF THE IT ACT. THE SAM E MAY KINDLY BE CANCELLED. 17. GROUND NO.1 RELATES TO DISALLOWANCE OF INTEREST EXPENSES BEING THE INTEREST PAID ON BORROWED FUNDS BUT UTILIZED FOR NO N-BUSINESS PURPOSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAS BORROWED FUNDS FROM M/S RISHIL DEVELOPERS AND P AID INTEREST OF RS.2,50,741/-. BUT WHEN CONFRONTED IT WAS ADMITTED THAT ACTUAL CLAIM OF INTEREST BY THE PARTY IS RS.21,160/- AND ACCORDINGL Y AO DISALLOWED A SUM OF RS.2,29,581/-. FURTHER IT WAS FOUND BY THE AO T HAT ASSESSEE HAD A CREDIT BALANCE OF RS.41,44,280/- WHICH WAS THE FUN D BORROWED FROM VARIOUS PARTIES AND INTEREST OF RS.5,71,448/- WAS P AID THEREON. IT WAS, HOWEVER, ADMITTED BEFORE THE AO THAT ONLY A SUM OF RS.93,521/- BEING THE INTEREST WAS PAID IN RESPECT OF FUNDS TAKEN FRO M JADIBEN MAFATLAL & ILABEN PATNI WHICH WAS UTILIZED FOR PERSONAL PURPOS ES AND THE SAME HAS BEEN ACTUALLY OFFERED FOR TAX BY THE ASSESSEE. IT W AS CLAIMED THAT REMAINING AMOUNT OF RS.4,77,927/- REPRESENTED INTER EST PAID ON LOANS BORROWED FOR BUSINESS PURPOSES. IT WAS SUBMITTED TH AT ASSESSEE IS A MEMBER OF AOP AND CARRIES ON THE BUSINESS OF PURCHA SE AND SALE OF LAND AND HAS 25% SHARES. THE ASSESSEE HAD CONTRIBUTED A SUM OF RS.41,44,280/- TOWARDS THE CAPITAL OF THE AOP. OTHE R MEMBERS OF THE AOP HAD ALSO CONTRIBUTED TO THE AOP FOR CARRYING OU T THE BUSINESS. THE ASSESSEE HAD MADE CONTRIBUTION TO THE AOP OUT OF BO RROWED FUNDS AND HAS PAID INTEREST OF RS.4,77,927/- ON SUCH BORROWED FUNDS. THE AO WAS, HOWEVER, NOT SATISFIED AND HE DISALLOWED ENTIRE PAY MENT OF INTEREST OF RS.5,71,448/-. ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 9 18. WHEN THE MATTER CAME UP BEFORE THE LD. CIT(A), SHE OBSERVED THAT ASSESSEE IS NOT ABLE TO PROVE THAT BORROWED FUNDS W ERE UTILIZED FOR BUSINESS PURPOSES. THE ASSESSEE FAILED TO FURNISH A NY REPLY TO THE QUERIES RAISED BY HER VIDE LETTER DATED 23.10.2007. SHE ALS O NOTED THAT THE ASSESSEES INVESTMENT IN THE LAND IS RS.1.52 LACS. THEREFORE, IT CANNOT BE SAID THAT ENTIRE SUM OF RS.41,44,280/- COULD BE UTI LIZED FOR BUSINESS PURPOSES. 19. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ISSUE HAS NOT BE EN PROPERLY EXAMINED. THE CLAIM OF THE ASSESSEE THAT HE HAS CONTRIBUTED B ORROWED FUNDS INTO THE AOP NEEDED TO BE CONSIDERED. THE COPY OF ACCOUNTS F ROM THE BOOKS OF AOP WAS REQUIRED TO BE CALLED AND EXAMINED SO AS TO KNOW WHO HAS CONTRIBUTED HOW MUCH AND WHETHER ASSESSEE HAD ACTUA LLY CONTRIBUTED TO THE EXTENT CLAIMED. IF GENUINNESS OF THE BUSINESS O F AOP IS NOT DOUBTED THEN CONTRIBUTION MADE BY THE ASSESSEE TO THE AOP C ANNOT BE DOUBTED AND ALSO BUSINESS PURPOSE CANNOT BE DOUBTED. IF THE FUN DS ARE UTILIZED OR ADVANCED ELSEWHERE AND IF THERE IS NO BUSINESS PURP OSE THEN CORRESPONDING INTEREST PAID ON BORROWED FUNDS REQUI RES TO BE DISALLOWED. ACCORDINGLY, WE RESTORE THE MATTER TO THE FILE OF A O FOR NECESSARY VERIFICATION. 20. GROUND NO.2 RELATES TO DISALLOWANCE OUT OF VEHI CLE EXPENSES AND DEPRECIATION. AFTER HEARING BOTH THE PARTIES AND PE RUSING THE ORDERS OF AUTHORITIES BELOW, WE ARE OF THE VIEW THAT ASSESSEE WAS NOT ABLE TO SHOW WHETHER ENTIRE CLAIM WAS FOR BUSINESS PURPOSES. THE DISALLOWANCE MADE FOR NON-BUSINESS PURPOSES IS CONSIDERED REASONABLE AND HENCE CONFIRMED. ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 10 21. GROUND NO.3 RELATES TO ADDITION OF RS.52,000/- FOR LOW HOUSEHOLD WITHDRAWALS. THE AO NOTED THAT THE FAMILY OF ASSESS EE CONSISTED OF 13 MEMBERS AND AGGREGATE WITHDRAWAL IS OF RS.3,08,000/ - AND THAT OF ASSESSEE IS ONLY RS.1,05,000/-. THE AO CONSIDERED M ONTHLY EXPENSES OF RS.30,000/- AND THEREBY WORKED OUT THE ADDITIONAL E XPENSES AT RS.52,000/-. THE LD. CIT(A) CONFIRMED THE ADDITION FOR THE SAME REASONS. 22. WE HAVE HEARD THE PARTIES AND IN OUR CONSIDERED VIEW ESTIMATE MADE BY THE AO IS REASONABLE PARTICULARLY WHEN ASSE SSEE WAS NOT ABLE TO SUBSTANTIATE HOW SUCH A LARGE FAMILY IS MAINTAINED WITH SUCH A MEAGER EXPENDITURE OF RS.3,28,000/-. WE CONSIDERED THAT WI THDRAWAL MADE BY THE ASSESSEE IS LOW AND THERE IS NO SATISFACTORY EXPLAN ATION HOW ASSESSEE COULD CARRY ON WITH SUCH LOW WITHDRAWAL. ACCORDINGL Y, WE CONFIRM THE ADDITION. AS A RESULT, THIS GROUND OF ASSESSEE IS R EJECTED. 23. THE LAST GROUND RELATES TO INTEREST UNDER SECTI ON 234B, 234C & 234D. IN OUR CONSIDERED VIEW INTEREST UNDER THESE S ECTIONS IS LEVIABLE ON THE BASIS OF ASSESSED INCOME AND, THEREFORE, NO INT ERFERENCE AT THIS STAGE IS CALLED FOR. THEREFORE, WE REJECT THIS GROUND OF ASS ESSEE. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED BUT FOR STATISTICAL PURPOSES. 24. IN THE RESULT, ITA NOS. 1302/AHD/2008 AND 1303/ AHD/2008 ARE DISMISSED AND ITA NO.1304/AHD/2008 IS PARTLY ALLOWE D BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 21/4/11. SD/- SD/- (MUKUL KR. SHRAWAT) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 21/4/11. ITA NOS.1302 TO 1304/AHD/2008 ASST. YEAR 2004-05 11 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 6/4/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 13/4/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S . 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..