Shri Hiteshbhai Ramanbhai Patel, Baroda V. The Dy.CIT, Circle-3, Baroda

ITA 1382/AHD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9698 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N M DARJI
• Keywords: Depreciation; Additional evidence; Reasonable cause
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.1382 & 1383/AHD/2014 ( / ASSESSMENT YEAR: 2009-10) HITESHBHAI RAMANBHAI PATEL DEHMI PAMOL ROAD, AT & POST: PAMOL TAL: BORSAD, DIST. ANAND PIN: 388 560 / VS. THE DCIT, CIRCLE-3 BARODA ./ ./ PAN/GIR NO. : AJHPP 8514 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI N. M. DARJI, A.R. / RESPONDENT BY : SHRI PRASOON KABRA, SR. DR / DATE OF HEARING 23/12/2016 / DATE OF PRONOUNCEMENT 23/12/2016 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), BARODA, DATED 26/06/2014 FOR THE ASSESSMENT YEAR (AY) 2009-10 AND ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: (I) THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS, IN CONFIRMING THE ADDITION OF RS.85,96,210/- MADE BY THE AO U/S. 41(1) OF THE ACT IN RESPECT OF THE OUTSTANDING CREDITORS OF EARLIER YEARS HOLDING AS BOGUS CREDITORS WITHOUT CONSIDERING THE ADDITIONAL EVIDENCE FILED UNDER RULE 46A. (II) THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS, IN RESTRICTING THE DISALLOWANCE OF INTEREST CHARGEABLE BANK RATE ON EXACT LOAN AMOUNT ITA NO. 1382 & 1383/AHD/14 HITESHBHAI RAMANBHAI PATEL VS. DCIT ASST.YEAR 2009-10 - 2 - ADVANCED TO RAVI TOBACCO AS PER SEGREGATED LOAN ACCOUNT FOR F.Y. ENDING ON 31/03/2009 FILED DURING APPELLATE PROCEEDINGS WHICH HAS RESULTED IN TO CONFIRMATION OF DISALLOWANCE OF INTEREST EXPENSES TO THE EXTENT OF RS.3,44,729/- AS PER APPEAL EFFECT ORDER DTD.26/06/2014 PASSED BY THE AO. (III) THE LD.CIT(A) IS NOT JUSTIFIED IN PARTLY CONFIRMING DISALLOWANCES OF INTEREST EXPENSES AS PER DETAILS PRODUCED BEFORE HIM EXACT LOAN ADVANCED TO RAVI TOBACCO AT THE END OF FINANCIAL YEAR 31/03/2009 RS.36,42,914/- DOES NOT EXCEED CAPITAL & RESERVE RS.58,91,963/- AND RAVI TOBACCO HAS UTILIZED THE SAME FOR BUSINESS PURPOSE. 2. ASSESSEE HAS FILED CERTAIN DOCUMENTS UNDER RULE 46(A) AND REQUESTED THAT SAME MAY BE CONSIDERED AS ADDITIONAL EVIDENCE. AFTER HEARING BOTH THE PARTIES WE ADMIT THESE ADDITIONAL EVIDENCE AS PER A.R. SAME WERE NOT CONSIDERED BY THE AUTHORITIES BELOW. 3. THE FACTS OF THE CASE ARE ASSESSEES PROPRIETIES OF HITESH TOBACCO COMPANY ENGAGED IN THE TRADING OF TOBACCO IS BEING ASSESSED IN THE STATUS OF INDIVIDUAL BEARING PAN NO.AJHPP8514E AND PROPRIETOR IS RUNNING BUSINESS IN HIS PERSONAL CAPACITY UNDER THE GUIDANCE OF SHRI ALPESH R. PATEL, PROPRIETOR OF RAVI TOBACCO IN DAY TO DAY ACTIVITY AND IN HIS FINANCIAL ARRANGEMENT. 4. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FILED ON 30/09/2009 DECLARING TOTAL INCOME AT RS.19,38,420/-. THE LD. A.O. PASSED THE ORDER U/S.144 READ WITH SECTION 143(3) OF THE ACT DT.27/12/2011 ASSESSING TOTAL INCOME AT RS.1,40,58,340/-. WHILE FINALIZING THE ASSESSMENT THE LD.AO HAS MADE ADDITIONS/DISALLOWANCES AS UNDER: ITA NO. 1382 & 1383/AHD/14 HITESHBHAI RAMANBHAI PATEL VS. DCIT ASST.YEAR 2009-10 - 3 - (I) BOGUS CREDITORS U/S. 41(1) : RS. 85,86,210/- (II) DISALLOWANCE OUT OF INTEREST EXPENSES : RS. 34,22,742/- (III) DISALLOWANCE OUT OF PETROL/DIESEL EXP. : RS. 4,180/- (IV) DISALLOWANCE OUT OF DEPRECIATION ON CAR : RS. 6,788/- TOTAL : RS. 1,20,19,920/- THE LD.CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AO RS.85,86,210/- U/S.41(1) OF THE ACT HOLDING BOGUS CREDITORS. 5. AS REGARD DISALLOWANCE OF INTEREST EXPENSES THE CIT(A) HAS DIRECTED THE A.O. TO RESTRICT THE DISALLOWANCE OF THE INTEREST CHARGEABLE @ BANK RATE ON EXACT AMOUNT OF LOAN ADVANCED TO RAVI TOBACCO, PROPRIETOR ALPESH R. PATEL AS PER SEGREGATED LOAN ACCOUNT FOR ACCOUNTING PERIOD ENDING ON 31/03/2009 FILED DURING THE COURSE OF APPELLANT. 6. AS PER THE A.R. ASSESSEE WERE LEAVING IN ADVANCE CIRCUMSTANCES AS CBI AND OTHER LINE FORCING AUTHORITIES FORGING TO HIM FOR THE REASON BEST KNOWN TO THEM. THEREFORE, ASSESSEE COULD NOT PRODUCE THE ALL RELEVANT DOCUMENTS IN SUPPORT OF HIS CONTENTION AND THOSE CIRCUMSTANCES WERE BEYOND HIS CONTROL WHICH PREVENTED BY REASONABLE CAUSE IS THE STATUTORY NOTICES ISSUED BY THE A.O. THE ASSESSEE HAD PROVIDED THE AUTHENTIC EVIDENCE AS REGARDS THE NECESSITY OF LOAN, SANCTIONED OF THE LOAN AND CBI INQUIRY ETC. LD.AR HAS FILED THREE COMPILATION INCLUDES CONFIRMATION OF ACCOUNT RECEIVED BY THE ASSESSEE AND SOME CASE LAW THREE COMPILATION/PAPER BOOKS (I) COMPILATION CONSISTING A COPY OF THE REPRESENTATION TO THE A.O., (II) COPY OF THE ANNEXURE A B IN RESPECT OF THE DETAILS SUNDRY CREDITORS FILED BEFORE THE CIT(A), (III) AFFIDAVIT OF HITESH R. PATEL REGARDING SUNDRY CREDITOR AND ACCOUNTS OF HITESH TOBACCO & RAVI TOBACCO FOR THE F.Y. ENDING ON 31.03.2007, 31.03.2008 & ITA NO. 1382 & 1383/AHD/14 HITESHBHAI RAMANBHAI PATEL VS. DCIT ASST.YEAR 2009-10 - 4 - 31.03.2009. (IV) COPY OF AFFIDAVIT OF MANISH J. PATEL (V) COPY OF REPRESENTATION AS PER LETTER DTD. 05.09.2013 FILED BEFORE THE LD.CIT(A) (VI) COPY OF THE REPRESENTATION AS PER LETTER DTD.05.09.2013 FILED BEFORE THE ACIT, CIRCLE-3, BARODA AS REGARDS REMAND REPORT PROCEEDINGS. (VII) COPY OF THE REMAND REPORT OF THE AO (VIII) COPY OF THE REPRESENTATION AS PER LETTER DTD.28.02.2014 FILED BEFORE THE CIT(A) IN APPEAL AGAINST PENALTY ORDER. (IX) COPY OF THE LETTER OF ICICI BANK INTIMATING M/S. RAVI TOBACCO WAS APPOINTED AS M & C. HITESH TOBACCO GOT LOAN THROUGH HIM WHICH HAVE BEEN REPAID. 7. IN COMPILATION (II) WITH REGARD TO ADDITIONAL EVIDENCE UNDER SECTION 46(A) AND IN COMPLIANCE NO. (III) LD. A.R. HAS STATED SEVERAL JUDGMENTS. 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDERS PASSED BY THE AUTHORITIES BELOW ITS EFFECT THAT ASSESSEE COULD NOT PURSUE HIS CASE AS HE WAS BEHIND THE BARS FOR A CASE U/S. 120(B), 420, 465, 468, 478 OF THE INDIAN CRIMINAL CODE AND WAS GRANTED BAIL BY THE HONBLE COURT ON 12/10/2012. 9. SHRI ALPESH PATEL AND THE ASSESSEE HAVING BUSINESS CONNECTION, THEY WERE DEPENDENT ON EACH OTHER FOR THE FINANCIAL NECESSITIES. AS PER NECESSITY THE AMOUNT WERE ADVANCED BY THE ASSESSEE TO SHRI ALPESH PATEL SAME WERE REPAID BY SHRI ALPESH PATEL PROP. OF RAVI TOBACCO UTILIZED BY HIM FOR BUSINESS PURPOSE. ITA NO. 1382 & 1383/AHD/14 HITESHBHAI RAMANBHAI PATEL VS. DCIT ASST.YEAR 2009-10 - 5 - 10. SINCE ASSESSEE WAS PREVENTED TO PURSUE THESE CASES BEFORE THE AUTHORITIES AS BELOW ON ACCOUNT OF ADVERSE CIRCUMSTANCES WHICH WERE BEYOND THE CONTROL, THEREFORE, WE REMAND THIS MATTER BACK TO THE FILE OF THE A.O. TO DECIDE A MATTE FRESH AND CONSIDER ALL THE DOCUMENTS WHICH HAVE BEEN FILED BEFORE US. 11. ORDER OF THE CIT(A) IS SET ASIDE AND APPEAL OF THE ASSESSEE ALLOWED FOR STATISTICAL PURPOSE. 12. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 1368/AHD/2014 FOR ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- (I) THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS, IN CONFIRMING THE PENALTY U/S.271(1)(C) OF THE ACT, IMPOSED BY THE ASSESSING OFFICER ON ADDITION OF SUNDRY CREDITORS RS.85,86,210/- U/S.41(1)OF THE ACT WHICH HAS BEEN CONFIRMED BY HIM IN HIS APPELLATE ORDER NO. CAB-I/278/12-13 DTD.27/12/2014 AND (II) IN CONFIRMING THE PENALTY U/S.271(1)(C) OF THE ACT ON REDUCED AMOUNT OF DISALLOWANCE OF INTEREST OUT OF TOTAL DISALLOWANCE INTEREST EXPENSES RS.34,22,742/- MADE BY THE A.O. AS HELD BY HIM IN HIS APPELLATE ORDER NO. CAB-I/278/12-13 DTD.27/12/2014. 13. THIS APPEAL IS AGAINST THE CONSEQUENTIAL TO THE ORDER OF ITA NO.1382 AND SAME HAS BEEN SET ASIDE BY THE ITAT, AHMEDABAD. THEREFORE, THIS ORDER IS ALSO SET ASIDE. ITA NO. 1382 & 1383/AHD/14 HITESHBHAI RAMANBHAI PATEL VS. DCIT ASST.YEAR 2009-10 - 6 - 14. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 23/12/2016 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/12/2016 PRITI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A), BARODA. 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY