Shri Ramesh Chand Rai, Jhansi V. The DCIT Central-1, Bhopal

ITA 155/Ind/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8342 (ITAT-INDORE)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Difference of opinion; Change of opinion
• Section: 147; 143(3); 153A

Judgement Text

ITA Nos.155 & 156/Ind/2021 A.Ys. 2009-10 & 2012-13 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER (Conducted through Virtual Court) ITA Nos.155 & 156/Ind/2021 Assessment Years: 2009-10 & 2012-13 Shri Ramesh Chand Rai, vs. DCIT, Central-1, Q-8, Ras Bahar Colony, Bhopal. Jhansi – 284 003 (U.P.) [PAN – ADOPR 9447 D] (Appellant) (Respondent) Appellant by : Nisha Lahoti & Vijay Bansal, ARs Respondent by : Shri Harshit Bari, Sr. D.R. Date of hearing : 15.06.2022 Date of pronouncement : 12.07.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : These two appeals are filed by the assessee against two different orders, both dated 28.05.2021, passed by the CIT(A)-3, Bhopal for the Assessment Years 2009-10 & 2012-13. 2. The ground of appeal are as under: ITA No.155/Ind/2021 – Assessment Year 2009-10 “1. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the order passed by Ld. AO which is contrary to the material on record, provisions of the Act, unjust and bad in law. 2. On the facts and circumstances of the case and applicable law, Ld. AO erred in passing the impugned order u/s 147 r.w.s. 143(3) which is merely a change of opinion. ITA Nos.155 & 156/Ind/2021 A.Ys. 2009-10 & 2012-13 Page 2 of 5 3. On the facts and circumstances of the case and applicable law, Ld. AO erred in making the addition of Rs.55,19,413 by holding it as unexplained expenses incurred in cash and out of the books. 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in not considering the fact that expense of Iklod site of Rs.55,19,413 have been duly accounted and reported in the books of accounts of Jai Baba Construction, partnership firm of the assessee. 5. On the facts and circumstances or the case and applicable law, Ld. AO erred in not providing for rebuttal of the letter submitted by Ld. AO of Jai Baba Construction. 6. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in not considering the written submissions and documentary evidences already on record in proper perspective more particularly when the nature of business of assessee is that of being liquor contractor. ITA No.156/Ind/2021 – Assessment Year 2012-13 “1. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the order passed by Ld. AO which is contrary to the material on record, provisions of the Act, unjust and bad in law. 2. On the facts and circumstances of the case and applicable law, Ld. AO erred in passing the impugned order u/s 147 r.w.s. 143(3) which is merely a change of opinion. 3. On the facts and circumstances of the case and applicable law, Ld. AO erred in sustaining the assessment order passed u/s 147 r.w.s. 143(3) more particularly when the impugned year is covered under the provisions of section 153A. 4. On the facts and circumstances of the case and applicable law, Ld. AO erred in disallowing the interest expense of Rs.29,92,480/-. 5. On the facts and circumstances or the case and applicable law, Ld. CIT(A) erred in sustaining the disallowance of interest of Rs.29,92,480/- more particularly when the assessment for the impugned year has been completed u/s.153A. 6. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the disallowance of interest of Rs.29,92,480/- on the premise that the said disallowance was not made while passing the order u/s. 153A rws 143(3) dated 10.08.2018. 7. On the facts and circumstances of the case and applicable law, Ld. AO erred in initiating the proceedings u/s 147 merely on the basis of audit objection received from the Revenue Audit Party. ITA Nos.155 & 156/Ind/2021 A.Ys. 2009-10 & 2012-13 Page 3 of 5 8. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the disallowance of interest of Rs.29,92,480/- in absence of reference to any incriminating material relating to impugned disallowance. 9. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the disallowance of interest of Rs.29,92,480/- when the impugned year is an unabated year within the meaning of section 153A. 10. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in not considering the fact that the amount of interest of Rs.29,92,480/- was paid by the assessee on the loan availed from his partnership firm in the form of excess withdrawal out of capital account. 11. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in not considering the written submissions and documentary already on record in proper perspective.” 3. First we take up the appeal for Assessment Year 2012-13. The assessee is an individual and engaged in the business of liquor and earning income from house property. Regular return of income was filed on 30.09.2012 declaring total income of Rs.65,08,305/-. The case of the assessee was selected for scrutiny and order under Section 143(3) of the Act was passed on 10.05.2015 determining total income at Rs.71,08,305/-. During the course of search at the premises of the assessee various incriminating materials were found and seized and the search assessment was completed by passing order under Section 153A read with Section 143(3) of the Act dated 10.08.2018 determining total income at Rs.8,40,96,300/-. The Assessing Officer observed that an addition relating to disallowance of expenses was not made by passing order under Section 153A read with Section 143(3) and thus made addition of Rs.29,92,480/- vide order dated 26.11.2019. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the disallowance of interest expenses of Rs.29,92,450/- is not justifiable because the assessee has paid interest to the firm M/s Ramesh Chandra Rai in which assessee is partner and in the Balance Sheet of the partnership firma as well as Profit & Loss account the amount was reflected as income of interest and paid tax on such income. The interest received from the firm ITA Nos.155 & 156/Ind/2021 A.Ys. 2009-10 & 2012-13 Page 4 of 5 by the assessee has already been taxed. Therefore, the said amount cannot be doubly taxed as per law. 6. The Ld. DR relied upon the assessment order and the order of the CIT(A). 7. The Ld. AR submitted that assessment under Section 147 read with Section 143(3) of the Act was not on account of any incriminating material found during the search and seizure operation. Ld. AR further submitted that the expenses incurred were fully demonstrated by the assessee before the Assessing Officer and before the CIT(A) and the same are business expenditure. 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Balance Sheet has reflected that the assessee has debited Rs.29,92,480/- under the head “interest (Ramesh Chand Rai, Partner) as unsecured loan of Rs.7 lakhs in respect of Shri Gaurav Rai which was outstanding. Though the CIT(A) has observed that no interest was paid to Shri Gaurav Rai yet the CIT(A) cannot overlook the receipt of the amount from partner of the firm i.e. Ramesh Chandra Rai and thus the assessee partnership firm has paid the interest of Rs.29,92,480/-. In fact, the assessee has offered the same to tax and thus when the Revenue has accepted the tax component, the expenses cannot be overlooked and the same should be taken into account. Therefore, the Assessing Officer as well as the CIT(A) was not right in making the said addition. Hence, ITA No.156/Ind/2021 for Assessment Year 2012-13 filed by the assessee is allowed. 9. In ITA No.155/Ind/2021 for Assessment Year 2009-10, as regards ground no.3, the order under Section 147 was passed in consonance with the audit objection and there was no new material provided by the Assessing Officer while making the addition. In fact, the addition of Rs.55,19,413/- was duly reflected in the Balance Sheet produced before the Assessing Officer and thus the same cannot be ignored by the Assessing Officer. Hence, ground no.3 is allowed. 10. Rest of the grounds are general in nature. Hence, ITA No.155/Ind/2021 for Assessment Year 2009-10 is allowed. ITA Nos.155 & 156/Ind/2021 A.Ys. 2009-10 & 2012-13 Page 5 of 5 11. In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on this 12 th day of July, 2022. Sd/- Sd/- (BHAGIRATH MAL BIYANI) (SUCHITRA KAMBLE) Accountant Member Judicial Member Indore, the 12 th day of July, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore