The DCIT, Circle-1(1), Baroda V. C.H. Jewellers Pvt.Ltd., Baroda

ITA 1449/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0222 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU S JHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1449/AHD/2010 ASSESSMENT YEAR:2007-08 DATE OF HEARING:30.7.10 DRAFTED:2.8.10 DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), BARODA V/S . M/S. C.H. JEWELLERS PVT. LTD., 18-19, PAANORAMA COMPLEX, R.C. DUTT ROIAD, ALKAPUARI, BARODA, PAN NO.AABCC8472G (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SUDHANSHU S JHA, DR RESPONDENT BY:- WRITTEN SUBMISSION O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-I, BARODA IN APPEAL NO.CAB-I/1 24/09-10 DATED 21-01-2010. THE ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-1(1), BAR ODA U/S.143(3) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 19-11-2009 FOR ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETED THE DISALLOWANCE OF INTEREST FOR DIVERTING THE SAME IN GIVING INTEREST FREE ADVANCE. FOR THIS, REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND NO.1 :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(APPEALS) ERRED DIN DELETING THE ADDITION OF RS. 13,90,623/- BEING INTEREST EXPENSES, ON THE UNEXPLAINED UNSECURED LOAN OF RS.2 ,02,37,808/- CLAIMED TO HAVE BEEN RECEIVED FROM ONE SHRI MANUBHAI M PATEL D URING THE YEAR RELEVANT TO ASSESSMENT YEAR 2004-05, WITHOUT APPRECIATING TH E FACT THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS, IDENTITY AND C REDITWORTHINESS OF THE CREDITOR AS REQUIRED U/S.68 OF THE ACT. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE-COMPANY MAINLY DEALS IN DIAMOND JEWELLERY AND IN ITA NO.538/AHD/2008 FOR ASSESSMENT YEAR 2004-05 ORDER DATED 08-08-2008 IN ASSESSEES OWN CA SE, WHEREIN THE TRIBUNAL HAS DELETED THE ADDITION MADE U/S.68 AMOUNTING TO RS.2, 02,37,808/- AND INTEREST AMOUNTING TO RS.2,36,755/- AS ASSESSEES INCOME FRO M UNDISCLOSED SOURCES AND THE ITA NO.1449/AHD/2010 A.Y. 2007-08 DCI CIR1(1),BRD V. M/S. C.H. JEWELLERS P. LTD. PAGE 2 ABOVE VIEW IS ALSO UPHELD IN THE ORDER OF ASSESSEE S OWN CASE IN ITA NO.1110/AHD/2009 DATED 26-06-2009 FOR ASSESSMENT YEAR 2005-06. SINC E THE PRESENT APPEAL FOR ASSESSMENT YEAR 2007-08 ALSO REL ATED TO THE INTEREST OF RS.13,90,623/- ON THE SAID UNSECURED DEPOSITS AMOUN TING TO RS.2,02,37,308/- RECEIVED FROM SHRI MANUBHAI M PATEL, THERE IS NO JU STIFICATION FOR DISALLOWANCE OF INTEREST. THE VERY BASIS OF THE ADDITION ITSELF HAS BEEN KNOCKED OUT IN ASSESSEES OWN CASES (SUPRA) AND HELD THAT LOAN WAS GENUINE AN D IDENTIFY AND CREDITWORTHINESS OF THE LOAN GIVEN AS WELL AS GENUINENESS OF THE TRA NSACTION HAS BEEN ESTABLISHED. THE RELEVANT FINDING OF CIT(A) IS ALSO BASED ON THE TRIBUNALS DECISION CITED (SUPRA) AND THE RELEVANT FINDINGS READS AS UNDER:- 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. AR AND THE FACTS OF THE CASE. I FIND THAT INDEED THE ITAT HAS, IN ASSESSEES APPEAL FOR AY 2004-2005, VIDE ORDER DT. 08.08.2008 IN ITA NO.538/AHD/2008, DELETE D THE ADDITION U/S.68 AND HELD THAT THE LOAN WAS GENUINE SINCE THE IDENTITY A ND CREDITWORTHINESS OF THE LOAN GIVER, AS WELL AS THE GENUINENESS OF THE TRANS ACTION HAD BEEN ESTABLISHED. SINCE THE UNSECURED LOAN HAS BEEN HELD BY THE ITAT TO BE A GENUINE LOAN, THE DISALLOWANCE OF INTEREST ON THE G ROUND THAT THE LOAN WAS NOT GENUINE IS THUS CLEARLY UNSUSTAINABLE. ACCORDINGLY, THE DISALLOWANCE OF INTEREST AMOUNTING TO RS.13,90,623/- IS DIRECTED TO BE DELETED. 4. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE IN ASSESSEES OWN CASE FOR EARLIER YEARS AN D THE DISALLOWANCE OF INTEREST IS OUT OF THE GENUINE CASH CREDITS, WE ALLOW THE CLAIM OF THE ASSESSEE AND THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE ARE REVERSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06/08/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 06/08/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 4. THE C IT CONCERNS. 2. THE REVENUE. 5. THE D R, ITAT, AHMEDABAD 3. THE CIT(APPEALS)-I, BARODA 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD