Madras Chellam Saraswathi Thangaraj, CHENNAI V. ACIT, CHENNAI

ITA 1340/CHNY/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5295 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 13-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: T BANUSEKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY , JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1340/CHNY/2016 / ASSESSMENT YEAR : 2012-13 MADRAS CHELLAM SARASWATHI THA N GARAJ, 4-A, FLAT NO. D, I FLOOR, VIDYUT VILAS RAJEEV STREET, OMR ROAD, KOTTIVAKKAM, CHENNAI 600 041. [PAN: ADGPT 6310B] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -15(1), CHENNAI. ) / APPELLANT) ) / RESPONDENT) () / APPELLANT BY : SHRI. T. BANUSEKAR, CA ,-() / RESPONDENT BY : SHRI. GURU BHASHYAM , JCIT ) /DATE OF HEARING : 23.01.2018 ) /DATE OF PRONOUNCEMENT : 20.04.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI IN ITA NO. 259/ CIT(A)-15/14-15 DATED 12.02.2016 FOR ASSESSMENT YEAR 2012-13. :-2-: ITA NO. 1340/CHNY/2016 2. MADRAS CHELLAM SARASWATHI THANGARAJ , THE ASSESSEE , IS RUNNING A SMALL SCALE INDUSTRY MANUFACTURING LT PANEL BOARDS AND GE NERAL FABRICATION . THE ASSESSEE FILED A RETURN DECLARING A TAXABLE INCOME OF RS.15,59,410/-. WHILE COMPLETING THE ASSESSMENT FOR AY 2012-13, THE AO MADE THE FOLLOWING ADDITIONS / DISALLOWANCES : 1. UNSECURED LOAN FROM SAI ENTERPRISES RS 43,10,0 00/- AS NON-GENUINE. 2. UNSECURED LOAN FOR WANT OF CONFIRMATION. I) Y.BALAKRISLMAN REDDY RS. 10,00,000 II) KILPAUK FINANCE RS. 7,00,000 III) EURO PROCESS FINANCE RS. 3,50,000 3. FOLLOWING SUNDRY CREDITORS WERE DISALLOWED FOR W ANT OF CONFIRMATION: RS. A) BANDARI METALS & ALLOYS 3,39,094 B) ELMAG INSULATIONS 3,39,880 C) UMA INDUSTRIES 4,41,997 D) SUSHI I ELECTRICALS 4,17,980 E) TA TRADERS 7,88,369 TOTAL 23,27,320 4. RS.3,70,000/-, LABOUR CHARGESCLAIMED,WAS DISALLO WED FOR WANT OF EVIDENCES&(5). RS.17,33,685/-, INTEREST DISALLOWED, ON THE UNSECU RED LOAN CONSIDERED AS NOT GENUINE. AGGRIEVED BY THE ABOVE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL. AGAINST TH E ORDER OF THE CIT(A), THE ASSESSEE FILED THIS APPEAL . 3. THE AR SUBMITTED THAT IN THE WRITTEN SUBMISSION FILED BEFORE THE CIT(A), RECONCILIATION OF THE BALANCES WERE PROVIDED AND EX PLAINED THAT M/S. SAI :-3-: ITA NO. 1340/CHNY/2016 ENTERPRISES SOURCED FUNDS AND IN TURN LENT TO ASSES SEE. ASSESSEE ACCOUNTS ALL THE RECEIPTS AND REPAYMENTS IN THE NAME OF M/S. SAI ENTERPRISES. FROM LEDGER OF SAI ENTERPRISES, IT IS SEEN THAT THEY HAVE ONLY ACCOUNTED REPAYMENTS MADE BY ASSESSEE TO SAI (RECEIPTS FROM SAI), AND CONSEQU ENT REPAYMENT MADE BY SAI TO PRINCIPAL LENDER. LIST OF CHEQUES RECEIVED T HROUGH SAI WITH CHEQUE NUMBERS / PARTY NAME / DATE OF CREDIT IN BANK FURNI SHED BEFORE CIT(A). DETAILS OF REPAYMENTS ALSO FURNISHED BEFORE CIT(A). ON THE ADDITION OF UNSECURED LOAN FROM Y. BALAKRISHNAN REDDY OF RS.10,00,000/-, THE AR SUBMITTED THAT CONFIRMATION RECEIVED BY ASSESSEE MUCH LATER ONLY. THE LOAN HAS BEEN CONFIRMED TO BE GENUINE BY THE PARTY AND IT OUGHT N OT TO HAVE BEEN SUMMARILY REJECTED BY THECIT(A) ON THEGROUND AS TO WHY CONFIRMATION WAS SUBMITTED BY ASSESSEENOW IF IT WAS RECEIVED EARLI ER. ON THE ADDITION OF UNSECURED LOAN FROM KILPAUK FINANCE AT RS. 7,00,000 /- , THE AR SUBMITTED THAT DUE TO STRAINED RELATIONSHIP, THE CONFI RMATION COULD NOT BE OBTAINED AND FILED. INVITING OUR ATTENTION TO THE PAPER BOOK , THE AR SUBMITTED THAT THE RECEIPTS AND PAYMENTS WERE ONLY THROUGH ACCOUNT PAYEE CROSSED CHEQUES AND LEDGER ACCOUNT IN ASSESSEE'S BOOKS IS ALSO FURNISHED . ON THE ADDITION OF UNSECURED LOAN FROM EUROPROCESS FINANCE AT RS.3,50,000/-, THE AR INVITING OUR ATTENTION TO THE PAPER BOOK AND THE LEDGER COPY , SUBMITTED THAT THE ENTIRE AMOUNT RELATES TO OPENING BAL ANCE. IN RESPECT OF THE ADDITION OF SUNDRY CREDITORS, THE AR INVITING OUR ATTENTION TO THE PAPER BOOK AND THE LEDGER COPY , SUBMITTED THAT THE LEDGER CON FIRMATIONS FROM THE :-4-: ITA NO. 1340/CHNY/2016 CREDITORS WERE FURNISHED TO THE CIT(A) . THEY ARE E XPENSE CREDITORS. WHEN THE EXPENSES HAVE BEEN ALLOWED, THE AR PLEADED THAT ADD ITION OF BALANCES OF SUCH CREDITORS CANNOT BE MADE. ON THE DISALLOWANCE OF LA BOUR CHARGES, THE AR SUBMITTED THAT THE BILLSCOULD NOT BEPRODUCED BEFORE CIT(A) EVEN THOUGH IN THE LETTER IT HAS BEEN STATED THAT BILLS ARE PRODUC ED FOR VERIFICATION. INVITING OUR ATTENTION TO THE PAPER BOOK , THE AR SUBMITTED THAT THE IMPUGNED BILLS ARE NOW AVAILABLE FOR VERIFICATION. ON THE INTEREST DIS ALLOWANCE OF RS.17,33,685/-, THE AR SUBMITTED THATOUT OF RS.23,22,571/- INTEREST PAID, THE AO DISALLOWED RS.17,33,685/- INTEREST PAID TO OTHERS THAN BANK & SECURED LOAN . THE CIT(A) HELD THAT SINCE THE UNSECURED LOANS ARE TREA TED AS UNPROVED, INTEREST CANNOT BE ALLOWED. INVITING OUR ATTENTION TO THE PA PER BOOK , THE AR SUBMITTED THAT SINCE THE LOANS ARE CONFIRMED BY CR EDITORS, THE INTEREST ON SUCH LOANS ARE ALLOWABLE AND HENCE PLEADED THAT T HE ASSESSEES PLEA MAY BE ALLOWED. PER CONTRA, THE DR SUPPORTED THE ORDERS OF THE AO/ CIT(A) SUBMITTING THAT THE ASSESSEE FAILED TO FURNISH RELE VANT MATERIAL BEFORE THEM AND HENCE THE CONCLUSION DRAWN BY THEM CAN NOT BE F AULTED. IN VIEW OF THAT THE DR PLEADED TO SUSTAIN THE ORDER OF THE CIT(A). 4. WE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH RELEVANT MATERIAL. SINCE THE ISSUES INVOLVED ARE TO BE DECIDED BASED O N THE FINDING OF FACTS AND ASSOCIATED CIRCUMSTANCES AND THE RELEVANT MATERIAL WERE NOT FURNISHED OR DULY APPRECIATED , AS THE CASE MAY BE, DUE TO ONE OR THE OTHER CONDITIONS, THOUGH SOME OF THEM ARE PLACED BEFORE US NOW, WE AR E OF THE VIEW THAT IN :-5-: ITA NO. 1340/CHNY/2016 THE INTERESTS OF JUSTICE THESE ISSUES SHOULD GO BAC K TO THE AO FOR A FRESH EXAMINATION AND APPROPRIATE DECISION.ACCORDINGLY, REMIT THEM TO THE AO. THE ASSESSEE SHALL FURNISH ALL THE FACTS AND CIRCUM STANCES ASSOCIATED WITH THESE TRANSACTIONS, PLACE ALL THE MATERIALS ON WHIC H IT RELIES IN SUPPORT OF ITS CONTENTIONS BEFORE THE AO WITHIN 45 DAYS FROM THE R ECEIPT OF THIS ORDER AND THEN COMPLY TO THE AOS REQUIREMENTS AS PER LAW. TH E A O IS FREE TO CONDUCT APPROPRIATE ENQUIRY AS DEEMED FIT , BUT HE SHALL F URNISH ADEQUATE OPPORTUNITY TO THE ASSESSEE ON THE MATERIAL ETC TO BE USED AGA INST IT AND DECIDE THE ABOVE ISSUES IN ACCORDANCE WITH LAW . IN THE RES ULT, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 20 TH DAY OF APRIL, 2018 AT CHENNAI. SD/- . ' ) (DUVVURU RL REDDY) $% /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) % /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 20 TH APRIL, 2018 JPV ),4565 /COPY TO: 1. (/ APPELLANT 2. ,-( /RESPONDENT 3. 7 ) (/CIT(A) 4. 7 /CIT 5. 5, /DR 6. : /GF