Rajendra D. Ajmere, L/h of Shri Ajmere D. Chunilal, Ahmednagar V. Dy. comm. of Income-tax, Ahmednagar

ITA 1517/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9778 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA MENON
• Assessee Lawyers: S P JOSHI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1517/PN/2011 (ASSESSMENT YEAR: 2007-08) RAJENDRA D AJMERE L/H OF LATE SHRI AJMERE D CHUNILAL KOPARGAON, DIST. AHMEDNAGAR PAN AAGPA 8898 Q .. APPELLANT VS. DY. CIT AHMEDNAGAR CIRCLE, AHMEDNAGAR. RESPONDENT APPELLANT BY : SHRI S.P. JOSHI RESPONDENT BY : SMT. VINITA MENON DATE OF HEARING: 21-11-2012 DATE OF PRONOUNCEMENT: 26-11-2012 ORDER PER G.S. PANNU, A.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I PUNE DAT ED 30-5-2011 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 14-9-20 09 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCO ME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT Y EAR 2007-08. 2. IN THIS APPEAL, THE ONLY ISSUE RELATES TO AN ADD ITION OF RS. 4,97,450/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHORT CHARGING OF INTEREST ON MONEY LENT BY THE ASSESSEE TO THE LENDEES. 3. IN BRIEF, FACTS ARE THAT THE ASSESSEE (SINCE DEC EASED) CARRIED ON THE BUSINESS OF MONEY LENDING AND FILED A RETURN OF INCOME FOR A.Y.2007-08 DECLARING TOTAL INCOME AT RS. 12,24,200 /-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS ENG AGED IN ADVANCING OF LOANS AGAINST PLEDGE OF GOLD/SILVER OR NAMENTS AND JEWELLERY. THE ASSESSING OFFICER ALSO NOTICED THAT GENERALLY THE INTEREST RATE WAS FIXED AT 18% PER ANNUM AND THE LO ANS WERE 2 ITA NO. 1517/PN/2011 RAJENDRA D AJMERE A.Y. 2007-08 REPAYABLE WITHIN A YEARS TIME. IN THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT AN AMOUNT OF RS. 82,70,457/- WAS ADVANCED TO VARIOUS PARTIES DURING THE YEAR. AS PER THE ASSESSING OFFICER THE ASSESSEE OUGHT TO HAVE AC COUNTED FOR INTEREST ON SUCH ADVANCES AT RS. 14,88,682/- CALCUL ATED @ 18% PER ANNUM. INSTEAD, THE INTEREST RECEIVED ACCOUNTED FO R BY THE ASSESSEE WAS ONLY RS. 9,91,232/- AND THEREFORE, THE DIFFERENCE TO THE EXTENT OF RS. 4,97,450/- WAS CONSIDERED AS AN U NDER-STATEMENT OF INTEREST RECEIVED. THE ASSESSING OFFICER HAS TR EATED SUCH DIFFERENCE AS SUPPRESSED INTEREST INCOME WHICH HAS SINCE BEEN UPHELD BY THE CIT(A). AGAINST THE SUSTENANCE OF TH E ADDITION OF RS. 4,97,450/-, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE EXPLANATION RENDERED BY THE AS SESSEE BEFORE THE LOWER AUTHORITIES HAS BEEN COMPLETELY BRUSHED ASIDE . IT WAS SUBMITTED THAT THE AMOUNTS LENT BY THE ASSESSEE ARE IN SMALL AMOUNTS AND THE RATE OF INTEREST IS GENERALLY 18% P .A.. SO HOWEVER, THE LENDEES, WHEN SETTLING THE FINAL ACCOUNT ALWAYS NEGOTIATED SOME DISCOUNT WHEREBY THE ASSESSEE DID NOT EARN 18% RATE OF INTEREST IN ENTIRETY. THE LEARNED COUNSEL POINTED OUT TO THE P APER BOOK WHEREIN IS PLACED AT PAGES 57 TO 64 PARTY-WISE DETAILS OF L OAN RETURNED AND INTEREST RECEIVED THEREON DURING THE MONTH OF APRIL 2006. IT HAS BEEN POINTED OUT THAT IN EACH AND EVERY CASE SMALL AMOU NT OF INTEREST IS ALLOWED AS A DISCOUNT ON INSISTENCE OF THE PARTIES AND IN SUPPORT, REFERENCE HAS ALSO BEEN MADE TO THE COPIES OF RECEI PTS ISSUED WHICH HAVE BEEN PLACED IN THE PAPER BOOK AT PAGES 71 TO 2 25. IT IS POINTED OUT THAT ALL THE RECEIPTS ARE SIGNED BY THE RESPECTIVE LENDEES WHICH CLEARLY SHOW THAT THE ASSESSEE ACCOUNTED FOR THE ACTUAL AMOUNT OF INTEREST RECEIVED FROM EACH OF THE LENDEE S. FURTHERMORE, IT IS SOUGHT TO BE POINTED OUT THAT AT PAGES 18 TO 37 OF THE PAPER 3 ITA NO. 1517/PN/2011 RAJENDRA D AJMERE A.Y. 2007-08 BOOK IS PLACED THE DETAILS OF RS. 82,70,457/- WHICH IS THE AMOUNT LENT TO VARIOUS PARTIES DURING THE YEAR. THE LEARN ED COUNSEL POINTED THAT THE ASSESSING OFFICER HAS APPLIED 18% RATE OF INTEREST ON THE AFORESAID AMOUNT BY ASSUMING THAT THE AMOUNTS HAVE BEEN LENT FOR COMPLETE 12 MONTHS WHEREAS THE AMOUNTS HAVE BEEN LE NT TO VARIOUS PARITIES FOR VARYING PERIODS. IN ANY CASE, IT IS S OUGHT TO BE MADE OUT THAT THERE IS NO MATERIAL OR EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED ANY INTEREST INCOME OVER AND ABOVE THE AMO UNT CREDITED IN THE ACCOUNT BOOKS. 5. ON THE OTHER HAND, LEARNED DR APPEARING FOR THE REVENUE HAS POINTED OUT THAT 18% RATE OF INTEREST WAS NOT DENIE D BY THE ASSESSEE AND THEREFORE, IF THE ASSESSEE HAS RECEIVED INTERES T LOWER THAN THE SAID RATE, IT WAS FOR THE ASSESSEE TO DEMONSTRATE T HE SAME AND HAVING REGARD TO THE ORDERS OF THE LOWER AUTHORITIE S SUCH ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE. THEREFORE, TH E ADDITION MADE BY THE ASSESSING OFFICER WAS SOUGHT TO BE JUSTIFIED . 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT RELATING TO HIS BUSINESS OF MONEY LENDING. IN PARA 2 OF TH E ASSESSMENT ORDER, IT IS AVERRED THAT THE BOOKS OF ACCOUNT AND THE RELEVANT EXPENDITURE VOUCHERS, ETC, WERE PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE INTEREST INCOME CREDITED BY THE AS SESSEE AMOUNTED TO RS. 9,91,232/- WHICH, AS PER THE ASSESS ING OFFICER, WAS UNDER-STATED. THE REASON ADVANCED BY THE ASSESSING OFFICER WAS THAT THE RATE OF INTEREST CHARGED BY THE ASSESSEE W AS 18% AND IF IT WAS APPLIED TO THE AMOUNTS LENT DURING THE YEAR, T HE INTEREST RECEIVED SHOULD HAVE BEEN RS. 14,88,682/-. IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER HAS DIS-REGARDED THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE WITHOUT ANY MATERIAL OR BASIS. IN FACT, 4 ITA NO. 1517/PN/2011 RAJENDRA D AJMERE A.Y. 2007-08 THE MATERIAL PLACED IN THE PAPER BOOK CLEARLY SUPPO RTS THE INTEREST INCOME CREDITED IN THE ACCOUNT BOOKS ON THE BASIS O F VOUCHERS EVIDENCING THE RECEIPT OF PRINCIPAL AMOUNT OF LOAN, INTEREST RECEIVED, DISCOUNT GIVEN, ETC. AND THE VOUCHERS ARE ALSO SIGN ED BY THE LENDEES. THE AMOUNT OF INTEREST SO RECEIVED HAS BE EN DULY ACCOUNTED FOR IN THE ACCOUNT BOOKS. SO HOWEVER, TH E STAND OF THE ASSESSING OFFICER IS BASED ON A MERE PRESUMPTION A ND SURMISES WITHOUT ANY EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS RECEIVED ANY INTEREST INCOME MORE THAN THAT ACCOUNT ED FOR IN THE BOOKS OF ACCOUNT. IN THE FACE OF THE MATERIAL ON R ECORD, IT WAS FOR THE ASSESSING OFFICER TO HAVE CARRIED OUT FURTHER I NVESTIGATIONS, VIZ. VERIFYING TRANSACTIONS WITH THE LENDEES, ETC. SO AS TO SHOW THAT THE ASSESSEE IS IN RECEIPT OF INTEREST INCOME OVER AND ABOVE THE AMOUNT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. NO SUCH EFF ORT HAS BEEN MADE BUT THE EVIDENCE PRODUCED BY THE ASSESSEE HAS BEEN MERELY DISBELIEVED. NOTABLY, THE ASSESSEE FURNISHED THE E XPLANATION TO THE EFFECT THAT DISCOUNT ON THE RATE OF INTEREST WAS GI VEN TO THE LENDEES AT THE TIME OF FINAL SETTLEMENT AND SUCH EXPLANATI ON WAS SUPPORTED BY THE RECEIPTS DULY SIGNED BY THE LENDEES. CONSID ERING THAT THERE IS NO MATERIAL ON RECORD TO DISPROVE THE ASSERTIONS OF THE ASSESSEE, WE FIND THAT THE ADDITION IN QUESTION HAS BEEN MADE ON MERE CONJUNCTURES AND SURMISES AND DESERVES TO BE DELETE D. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 4,97,450/-. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER 2012. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 26 TH NOVEMBER 2012 ANKAM 5 ITA NO. 1517/PN/2011 RAJENDRA D AJMERE A.Y. 2007-08 COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT (A)-I PUNE 4. THE CIT- I PUNE 5. THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T. A.T., PUNE. BY ORDER //TRUE COPY// SR. P.S. I.T.A.T., PUNE