Raj Kumar Singal, Chandigarh V. ACIT, C-5(1), Chandigarh

ITA 1496/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9907 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHCIT
• Assessee Lawyers: N K SAINI
• Keywords: Salary income; Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC CHANDIGARH !', # BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 1496/CHD/2018 / ASSESSMENT YEAR : 2013-14 SHRI RAJ KUMAR SINGAL, SCO 15, MADHYA MARG, SECTOR 26, CHANDIGARH. VS THE ACIT, CIRCLE 5(1), CHANDIGARH. ./ PAN NO: BJMPS3568P / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI N.K.SAINI # ! ' / REVENUE BY : SHRI MANJIT SINGH, ADDL.CIT $ % ! &/ DATE OF HEARING : 21.05.2019 '()* ! &/ D ATE OF PRONOUNCEMENT : 31.05.2019 $%/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 04.09.2018 OF CIT(A) -2, CHANDIGARH PERTAINING TO 2013-14 ASSESSMENT YEAR ON THE FOLLOW ING GROUNDS : 1. THE LEARNED CIT(A) HAS ERRED IN FACTS AND LAW IN CO NFIRMING THE DISALLOWANCE OF INTEREST UNDER SECTION 36(L)(III) ON AN AMOUNT OF R S. 60,00,934/- AMOUNTING TO RS.3,07,536/- AND SUCH DISALLOWANCE CONFIRMED BY CIT(A) IS LIABLE TO BE DELETED. 2. THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, DELETI ON OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE DISPOSAL OF APPEAL. 3. THE LD. AR INVITING ATTENTION TO THE SUBMISSION S ADVANCED ON BEHALF OF THE ASSESSEE WHICH HAVE BEEN RECORDED IN PAGE 5 OF THE IMPUGNED ORDER SUBMITTED THAT THE AMOUNTS ADVANCED BY THE ASSESSEE TO THE SPECIFIC PARTIES MENTIONED AT SR.NO. 7, 8, 8A, 9, 12, 13 AND 14 WERE FOR BUSINESS PURPOSES. EVEN OTHERWISE IT WAS SUBMITTED, THE ASSESSEE HAD A CAPITAL AVAILABLE TO THE TUNE OF RS. 1,35,00,000/- AND THUS THE ASSESSEE HAS SUFFICIENT FUNDS FOR THE ITA 1496/CHD/2018 A.Y. 2013-14 PAGE 2 OF 4 ADVANCES, THE SAID ACTION, IT WAS SUBMITTED, WAS FU LLY COVERED BY THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS RE LIANCE INDUSTRIES LTD. (2019) 307 CTR 121 (S.C.). RELIANCE WAS PLACED ON THE ORDER OF THE ITAT DATED 28.02.2019 IN ITA 218/CHD/2017 IN THE CASE OF SANTOSH BRIJ VS DCIT, WHEREIN FOLLOWING THE SAID LEGAL POSITION, ID ENTICAL ADDITION HAS BEEN DELETED. ACCORDINGLY, IT WAS HIS SUBMISSION THAT T HE PRAYER OF THE ASSESSEE MAY BE ALLOWED. FURTHER ELABORATING ON THE FACT IT WAS HIS SUBMISSION THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND SU PPLY OF WOOLEN BLANKETS AS NOTED IN PARA 2 OF THE ASSESSMENT ORDER. 4. THE LD. CIT-DR RELIED ON THE ORDERS. IT WAS A LSO HIS SUBMISSION THAT NO FINDING OF FACT ON THE FUNDS AVAILABLE IN THE CA PITAL ACCOUNT IS AVAILABLE IN THE ORDER AND AS FAR AS THE BUSINESS PURPOSES ARE C ONCERNED, THE ASSESSEE HAS NOT BEEN ABLE TO SUPPORT THE CLAIM BY WAY OF AN Y EVIDENCE. THE LD. AR IN REPLY SUBMITTED THAT THE ADVANCES MADE TO GVN CI NVTECH, POWER TECH ENGINEERS AND RAINBOW SUPER POLYMER ETC. WERE FOR B USINESS PURPOSES AS THESE COMPANIES CANNOT BE SAID TO BE THE RELATIVES OF THE ASSESSEE. HOWEVER, IT WAS AGREED THAT THE FACTS WILL NEED TO BE VERIFIED. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE RECORD SHOWS THAT THE A SSESSEE IS SHOWN TO BE ENGAGED IN THE MANUFACTURING AND SUPPLYING OF WOOLE N BLANKETS AND UNIFORMS CLOTHS TO EXPORTERS, PARA MILITARY FORCES AND RAILWAY ETC. IN THE NAME AND STYLE OF M/S NATIONAL WOOLEN AND FINISHERS . THE ASSESSEE DERIVED 'INCOME FROM SALARY', 'INCOME FROM HOUSE PROPERTY' AND 'INCOME FROM BUSINESS AND PROFESSION' DURING THE RELEVANT YEAR. THE AO REQUIRED THE ASSESSEE TO ADDRESS WHY SPECIFIC ADVANCES WERE MADE AS INTEREST FREE ADVANCES TO THE CONCERNED PARTIES CONSIDERING THAT FACT THAT THE ASSESSEE HAD DEBITED RS. 57,50,646/- AS INTEREST IN ITS PROF IT & LOSS ACCOUNT. THE EXPLANATION OFFERED QUA THE FOLLOWING PARTIES WAS D ISCARDED. AS A RESULT THEREOF, THE ASSESSEE THOUGH CARRIED THE ISSUE IN A PPEAL BEFORE THE CIT(A), HOWEVER, WAS UNSUCCESSFUL. THE DETAILS OF THE PARTI ES ARE AS UNDER: 7 GVNCINVTECH 100000 AMOUNT OF RS. 1,00,000/- WAS ADVANCED ON ITA 1496/CHD/2018 A.Y. 2013-14 PAGE 3 OF 4 16.03.2013 FOR BUSINESS PURPOSES 8 POWER TECH ENGINEERS 100000 AMOUNT OF RS. 1,00,000/- WAS ADVANCED ON 25.03.2013 FOR BUSINESS PURPOSES 8A RAINBOW SUPER POLYMER 100000 AMOUNT OF RS. 1,00,000/- WAS ADVANCED ON 11.03.2013 FOR BUSINESS PURPOSES 9 REAL ELEVATORS LTD. 390000 AMOUNT OF RS. 3,90,000/- WAS ADVANCED ON 16.03.2013 FOR BUSINESS PURPOSES 12 BIMAL JAIN 15000 THIS AMOUNT IS PAID IN EARLIER YEARS FOR PURCHASE OF VEHICLE IN ORDINARY COURSE OF BUSINESS. KINDLY REFER TO PARA 5.3 AND PARA 10 OF THE CIT(A) ORDER FOR AY 2010- 11 & 2013-14 DATED 20.09.2016. 13 RAM PARKASH HUF 97500 COPY OF ACCOUNT IS ENCLOSED. AN AMOUNT OF RS. 26500/- WAS RECEIVABLE AS ON 1.4.2012 FROM THE SAID PARTY. ANOTHER AMOUNT OF RS. 1,00,000/- WAS ADVANCED ON 25.04.2012. ON 18.12.2012 AN AMOUNT OF RS. 29000/- WAS RECEIVED BACK/ A SUM OF RS. 97500/- WAS RECEIVABLE AS ON 31.03.2013. 14 ANS AL PROPERTY AND INFRASTRUCTURE LTD. 5198434/- THIS ISSUE WAS RAISED IN AY 2010- 11 AND IN APPEAL NO. 81//2013- 14, THE LEARNED CIT(A) CHANDIGARH HAS ALREADY ACCEPTED THE ASSESSEE'S PLEA THAT THE AMOUNT WAS PAID FOR BUSINESS PURPOSES FOR PURCHASE OF FLAT AT ANSAL SUSHANT CITY PANIPAT. FACTS ARE ALREADY MENTIONED IN PARA 5.2 & 5.3 OF THE CIT(A) ORDER DATED 29.09.2016 FOR AY 2010-11. 5.1 THE RECORD SHOWS THAT THE ASSESSEE ON FACTS QUA THE AVAILABILITY OF FUNDS IS FOUND TO HAVE MADE THE FOLLOWING EXPLANATI ON : IT IS FURTHER SUBMITTED THAT ASSESSEE IS AN INDIVID UAL HAVING ITS CAPITAL OF RS. 1,35,72,249/- AS ON 31.03.2013 AND AMOUNT OF ADVANC ES WHICH ARE MADE DURING THE YEAR IN ANY CASE ARE MUCH LOWER THAN THE ASSESSEE'S OWN CAPITAL, AND FOR THAT REASON THERE WAS NO REASON TO MAKE ANY DISALLOWANCE ON ACC OUNT OF ADVANCES MADE TO VARIOUS PERSONS FOR BUSINESS PURPOSES AND NONE OF THE PERSO NS TO WHOM AMOUNT ARE ADVANCED EXCEPT RAM PARKASH HUF, ARE RELATIVES OF THE ASSESS EE.' 5.2 IT IS BORNE OUT FROM THE RECORD THAT THE CIT(A) NOT CONVINCED WITH THE EXPLANATION CAME TO THE FOLLOWING CONCLUSION : 6.4.4 IN VIEW OF THE ABOVE DISCUSSION, THE AO IS DI RECTED TO CALCULATE THE DISALLOWANCE OF -INTEREST FOR THE ADVANCES GIVEN TO THE PARTIES AT THE SR. NO 7,8,8A,9,12,13 AND 14 AND DELETE THE DISALLOWANCE FOR THE PARTIES AT SR. NO 1 TO 6 ABOVE. THE GROUND OF APPEAL NO. 2 IS PARTLY ALLOWED . 6. A PERUSAL OF THE SAID DECISION SHOWS THAT THE FU NDS AVAILABLE IN ASSESSEE'S CAPITAL ACCOUNT HAVE NOT BEEN ADDRESSED. IT IS ALSO SEEN THAT THE ITA 1496/CHD/2018 A.Y. 2013-14 PAGE 4 OF 4 GENERAL ARGUMENT THAT BECAUSE THE FUNDS HAVE BEEN A DVANCED TO SOME CONCERNS, A NATURAL PRESUMPTION BE DRAWN THAT THESE WERE FOR BUSINESS PURPOSES CANNOT BE ACCEPTED. ACCORDINGLY, CONSIDERI NG THE JUDICIAL PRECEDENT AVAILABLE, THE ISSUE IS REMANDED BACK TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO ARRIVE AT A FINDING OF FACT AND DE CIDE THE ISSUE IN ACCORDANCE WITH LAW. THE ASSESSEE IN ITS OWN INTERESTS CONSIDE RING THE JUDICIAL PRECEDENT AS AVAILABLE IN PR. CIT VS BASTI SUGAR MI LLS 408 ITR 184 (DELHI) IS ALSO ADVISED TO PLACE SUPPORTING EVIDENCES ON RECOR D. THE CIT(A) SHALL PERMIT THE ASSESSEE TO FILE EVIDENCES IN SUPPORT OF ITS CLAIM SO AS TO DEMONSTRATE THAT THE ADVANCES WERE FOR ASSESSEE'S B USINESS PURPOSES. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.05. 2019. SD/- ( !' ) (DIVA SINGH) # / JUDICIAL MEMBER ' ( (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. $ / / CIT 4. $ / ( )/ THE CIT(A) 5. -01 2 , & 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7% / GUARD FILE (+ $ / BY ORDER, 8 # / ASSISTANT REGISTRAR