P.K.Power Appliances Private Limited, CHENNAI V. ITO Corporate Ward 5(3), CHENNAI

ITA 1582/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5872 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JCIT D R
• Assessee Lawyers: SUSHMA HIRANI
• Keywords: Unexplained cash credit; Retrospective amendment
• Section: 142(1); 201(1); 139

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.1582 /MDS./2017 ( ASSESSMENT YEAR : 2012-13 ) M/S.P.K.POWER APPLIANCES PVT LTD ., 99/10,SNEHA SADAN, NUNGAMBAKKAM HIGH ROAD, NUNGAMBAKKAM, CHENNAI-34. VS. THE INCOME TAX OFFICER, CORPORTE WARD-5(2), CHENNAI. PAN AAACP 3616 N ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS.SUSHMA HIRANI / RESPONDENT BY : MR.B.SAGADEVAN, JCIT, D.R ! ' / DATE OF HEARING : 09.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 09.11.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-3, CHENNA I DATED 30.09.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. ITA NO.1582 /MDS/2017 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS F OR CONSIDERATION. 1. THE ORDER OF LEARNED APPELLANT COMMISSIONER OF I NCOME TAX IS CONTRARY TO LAW, EVIDENCE AND FACTS OF THE CASE AND IS ARBITRAR Y. 2. THE LEARNED APPELLANT COMMISSIONER OF INCOME TAX ERRED IN NOT TAKING INTO ACCOUNT THE SUBMISSIONS MADE AND DOCUMENTARY E VIDENCES PRODUCED BY THE APPELLANT AS TO WHY THE ADDITIONS T O INCOME / DISALLOWANCE OF EXPENSES SHOULD NOT HAVE BEEN MADE TO THE DECLARED INCOME AND THE SAME IS AGAINST THE PRINCIPLES OF NA TURAL JUSTICE. 3. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) -3, CHENNAI IS TO BE SET ASIDE AND PASS ORDERS FOR CANCELLATION OF TH E ADDITIONS TO INCOME / DISALLOWANCES OF EXPENSES MADE IN THE ORDER OF ASSE SSMENT. 2.1 THERE IS A DELAY OF 165 DAYS IN FILING THIS AP PEAL BY THE ASSESSEE. THE LD.A.R DREW MY ATTENTION TO THE REVI SED CONDONATION PETITION FILED ON 08-11-2017 STATING THAT THE DELAY WAS ON ACCOUNT OF SUDDEN ILLNESS OF ASSESSEE COMPANY, MANAGING DIRECT OR MR.P K BALA MURUGESH. DURING THE END OF FEBRUARY, 2017, HE WENT TO UK AND THERE HE DEVELOPED SERIOUS ILLNESS AND GOT ADMITTED IN THE IPSWISCHHOSPITAL, IPSWISCH, U.K BETWEEN 1ST MARCH AND 10THMARCH, 2017.A BRAIN SCAN WAS DONE ON 08.03.2017. AS PER U. K. DOCTORS ADVICE, HE RUSHED BACK TO CHENNAI ON 16.03.2017 AND WAS UNDER TREATMENT FOR UNCONTROLLED BLOOD PRESSURE. HE WAS ADVISED TO TAKE ITA NO.1582 /MDS/2017 3 COMPLETE BED REST AND I COULD NOT ATTEND TO THE ACT IVITIES OF THE COMPANY DURING THE PERIOD. AT THIS JUNCUTURE THAT O N 1ST JUNE,2017, A NOTICE U/S.271(1)(C) OF THE ACT WAS RECEIVED. HIS E RSTWHILE AUDITOR MR.N.SUBRAMANIAM WAS NOT CO-OPERATIVE AND THEREAFTE R, MR.RAJASEKARAN,C.A. WAS ADVISED HIM TO FILE AN APP EAL BEFORE THE TRIBUNAL AS WELL AS AN APPEAL BEFORE THE LD.CIT(A) . ACCORDINGLY, HE SUBMITTED THIS APPEAL BEFORE THIS TRIBUNAL ON 20.06 .2017. THEREFORE, THERE WAS A DELAY OF 165 DAYS IN FILING THE APPEAL AND AND STATED THAT THE SHORT DELAY OF 165 DAYS TO BE CONDONED IN THE I NTEREST OF JUSTICE. ACCORDING TO THE LD. AR, REFUSAL TO CONDONE THE DEL AY WOULD RESULT IN A MERITORIOUS BEING THROWN AT THE VERY THRESHOLD, CAU SE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CASE WOULD BE DECIDED ON MERIT AFTER HEARING THE PARTIES. ON THIS POINT, IT IS PERTINENT TO DRAW THE RATIO LAID DOWN BY THE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQ UISITION V. MST. KATIGI (167 ITR 471). ACCORDING TO LD.A.R, THERE IS GOOD AND SUFFICIENT REASON TO CONDONE THE DELAY AND ADMIT THE APPEAL FO R ADJUDICATION. I HAVE GONE THROUGH THE REASONS ADVANCED BY THE ASSES SEE IN THE REVISED CONDONATION PETITION. IN MY OPINION, THERE EXISTS REASONABLE ITA NO.1582 /MDS/2017 4 CAUSE FOR FILING THE APPEAL BELATEDLY. ACCORDINGLY , I CONDONE THE DELAY OF 165 DAYS IN FILING THIS APPEAL AND ADMIT T HE APPEAL FOR ADJUDICATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF BUYING ENGINES, ALTERNAT ORS, ELECTRICAL CIRCUITS OF VARIOUS CAPACITIES AND OTHER COMPONENTS AND ASSEMBLING THEM AS DIESEL GENERATING SETS AND SELLS THEM TO TH E VARIOUS CLIENTS WHO USE THEM FOR GENERATION OF POWER AS AN ALTERNAT E SOURCE OF ENERGY. IN BUSINESS PARLANCE, THE ASSESSEE IS KNOWN AS ORIGINAL ASSEMBLER OF DG SETS. IT SELL THE DG SETS IN ALL PA RTS OF INDIA AND ALSO EXPORT THEM TO SRI LANKA. THESE DG SETS ARE ASSEMBL ED AT THEIR MANUFACTURING FACILITY SITUATED AT PONDICHERRY AND SOLD TO DIFFERENT PLACES. THE UNIT WAS SET UP IN THE UNION TERRITORY OF PONDICHERRY, A PLACE DECLARED AS INDUSTRIALLY BACKWARD AREA ENJOYI NG THE BENEFITS PROVIDED UNDER SECTION 80 IA OF THE ACT AS ANNOUNCE D IN THE FINANCE ACT, 1993. FOR THE ASSESSMENT YEAR 2012-13, THE AS SESSEE FILED ITS INCOME TAX RETURN ON 27.08.2013 ADMITTING A TOTAL I NCOME OF RS.1,55,670/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT ITA NO.1582 /MDS/2017 5 THROUGH CASS AND NOTICE U/S. 143(2) WAS ISSUED ON 0 4.09.2014. IN RESPONSE TO THE NOTICES ISSUED U/S. 143(2) AS WELL AS 142(1) OF THE ACT, INFORMATION RELATING TO THE RETURN OF INCOME F ILED WAS PROVIDED. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY A DDING CERTAIN ITEMS TO INCOME. 3.1 THE FOLLOWING ITEMS OF EXPENDITURE WERE DISAL LOWED IN COMPUTING THE TAXABLE INCOME FOR THE YEAR FOR THE R EASON THAT NO TAX WAS DEDUCTED AT SOURCE AS REQUIRED UNDER SEC. 40A(I A) READ WITH CHAPTER XVII OF THE ACT AS NO PARTICULARS WITH REGA RD TO DEDUCTION OF TAX AT SOURCE WAS PROVIDED BY THE ASSESSEE COMPANY AT THE TIME OF ASSESSMENT AS THE ASSESSEE FAILED TO FILE THE DETAI LS OF THE SAME A) AUDIT FEE 33,708 B. LEGAL & CONSULTANCY 35,360 C: INTEREST TO OTHER 7,55,420 8,24,488 3.2 AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICE R, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). BEFORE L D.CIT(A), LD AR HAS STATED THAT ASSESSEE COMPANY HAS MADE THE PAYME NT OF AUDIT FEE AMOUNTING TO ` 30,000 AND ` 3,708 BEING SERVICE TAX. HE HAS FURTHER STATED THAT THE SAID AMOUNT IS NOT EXCEEDED ` 30,000/- WHICH IS ITA NO.1582 /MDS/2017 6 BELOW THE AMOUNT LIABLE FOR T.D.S. WITH REGARD TO LEGAL & CONSULTANCY CHARGES, IT WAS SUBMITTED THAT AN AMOUN T OF ` 20,000/- WAS PAID TO BMQR CERTIFICATION PUT. LTD. AND ` 15,360/- WAS PAID TO N ADVOCATE. LD. AR ARGUED THAT THE AMOUNT IS LESS THA N ` 30,000/- FOR WHICH TDS PROVISIONS ARE NOT APPLICABLE. ON APPEAL, LD.CIT(A) OBSERVED THAT ASSESSEE HAS FAILED TO SUBMIT THESE D ETAILS BEFORE THE AO, HENCE, DECLINED TO CONSIDER THE SUBMISSIONS MAD E BY LD.A.R AND DISMISSED THE APPEAL. AGAINST THE ORDER OF LD.CIT( A), NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, LD.A.R SUBMITTED THAT SECOND PROVISO TO THE SECTION 40(A)(IA) OF THE ACT IS APPLICABLE FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION AND THE APPLICATION OF THAT PROVISION IS NOT AT ALL EXAMINED BY THE LOWER AUTHORITIES AND PRAYED THAT T HIS ISSUE TO BE REMITTED TO THE FILE OF LD. ASSESSING OFFICER FOR F RESH CONSIDERATION. 5. ON THE OTHER HAND, LD.D.R FAIRLY CONCEDED THE A BOVE ARGUMENT OF THE LD.A.R. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE PAYMENTS, WHICH ARE BELO W THE AMOUNT ITA NO.1582 /MDS/2017 7 LIABLE FOR T.D.S, CANNOT BE CONSIDERED FOR DISALLOW ANCE U/S.40(A)(IA) OF THE ACT. FURTHER, THE SECOND PROVISO TO SEC.40(A )(IA) OF THE ACT, WHICH WAS INSERTED BY THE FINANCE ACT,2012 WITH EFF ECT FROM 01.04.2013, INTRODUCES A LEGAL FRICTION WHERE AN A SSESSEE FAILS TO DEDUCT TAX IN ACCORDANCE WITH THE PROVISIONS OF CHA PTER XVII-B. WHERE SUCH ASSESSEE IS DEEMED NOT TO BE AN ASSESSEE IN DEFAULT IN TERMS OF THE FIRST PROVISO TO SUB-SECTION (1) OF SE C.201 OF THE ACT, THEN IN SUCH EVEN, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISH ING OF RETURN OF INCOME BY THE RESIDENT BE REFERRED TO IN THE SAID P ROVISO. THE FIRST PROVISO TO SEC.201(1) WAS INSERTED WITH EFFECT FROM 01.07.2012 WHICH READS AS UNDER:- PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RES IDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT- (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTIO N 139 ; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME ; AND ITA NO.1582 /MDS/2017 8 (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED B Y HIM IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO T HIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED : IN MY OPINION, THE SAID PROVISO IS APPLICABLE EVEN FOR THIS ASSESSMENT YEAR AND PROVISO IS A CURATIVE NATURE AS HELD BY T HE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD.(377 ITR 635) WHEREIN HELD THAT:- THE FIRST PROVISO TO SECTION 201(1) OF THE ACT HAS BEEN INSERTED TO BENEFIT THE ASSESSEE. IT ALSO STATES THAT WHERE A P ERSON FAILS TO DEDUCT TAX AT SOURCE ON THE SUM PAID TO A RESIDENT OR ON T HE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SUCH PERSON SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 OF THE ACT. NO DOUBT, THERE IS A MANDATORY REQUIREMENT UNDER SECTION 201 TO DEDUCT T AX AT SOURCE UNDER CERTAIN CONTINGENCIES BUT THE INTENTION OF TH E LEGISLATURE IS NOT TO TREAT THE ASSESSEE AS A PERSON IN DEFAULT SUBJEC T TO THE FULFILMENT OF THE CONDITIONS AS STIPULATED IN THE FIRST PROVISO T O SECTION 201(1). THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A)(IA ) ALSO REQUIRES TO BE VIEWED IN THE SAME MANNER. THIS AGAIN IS A PROVISO INTENDED TO BENEFIT THE ASSESSEE. THE EFFECT OF THE LEGAL FICTION CREAT ED THEREBY IS TO TREAT THE ASSESSEE AS A PERSON NOT IN DEFAULT OF DEDUCTIN G TAX AT SOURCE UNDER CERTAIN CONTINGENCIES. 12. RELEVANT TO THE CASE IN HAND, WHAT IS COMMON TO BOTH THE PROVISOS TO SECTION 40(A)(IA) AND SECTION 201(1) OF THE ACT IS THAT THE AS LONG AS ITA NO.1582 /MDS/2017 9 THE PAYEE/RESIDENT (WHICH IN THIS CASE IS APIL) HAS FILED ITS RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED BY AND IN WH ICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAX ON S UCH INCOME, THE ASSESSEE WOULD NOT BE TREATED AS A PERSON IN DEFAUL T. AS FAR AS THE PRESENT CASE IS CONCERNED, IT IS NOT DISPUTED BY THE REVENUE THAT THE PAYEE HAS F ILED RETURNS AND OFFERED THE SUM RECEIVED TO TAX. 13. TURNING TO THE DECISION OF THE AGRA BENCH OF TH E INCOME-TAX APPELLATE TRIBUNAL IN RAJEEV KUMAR AGARWAL V. ASST. CIT (SUPRA ), THE COURT FINDS THAT IT HAS UNDERTAKEN A THOROUGH ANALY SIS OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND ALSO SO UGHT TO EXPLAIN THE RATIONALE BEHIND ITS INSERTION. IN PARTICULAR, THE COURT WOULD LIKE TO REFER TO PARAGRAPH 9 OF THE SAID ORDER WHICH READS AS UND ER (PAGE 485 OF 34 ITR (TRIB)) : 'ON A CONCEPTUAL NOTE, THE PRIMARY JUSTIFICATION FO R SUCH A DISALLOWANCE IS THAT SUCH A DENIAL OF DEDUCTION IS TO COMPENSATE FOR THE LOSS OF REVENUE BY CORRESPONDING INCOME NOT BEI NG TAKEN INTO ACCOUNT IN COMPUTATION OF TAXABLE INCOME IN THE HAN DS OF THE RECIPIENTS OF THE PAYMENTS. SUCH A POLICY MOTIVATED DEDUCTION RESTRICTIONS SHOULD, THEREFORE, NOT COME INTO PLAY WHEN AN ASSESSEE IS ABLE TO ESTABLISH THAT THERE IS NO ACTUAL LOSS OF R EVENUE. THIS DISALLOWANCE DOES DEINCENTIVISE NOT DEDUCTING TAX A T SOURCE, WHEN SUCH TAX DEDUC TIONS ARE DUE BUT SO FAR AS THE LEGA L FRAMEWORK IS CONCERNED, THIS PRO VISION IS NOT FOR THE PURPOSE O F PENALISING FOR THE TAX DEDUCTION AT SOURCE LAPSES. THERE ARE SEPARATE PENAL PROVISIONS TO THAT EFFECT. DEIN CENTIVISING A LAPSE AND PUNISHING A LAPSE ARE TWO DIFFERENT THINGS AND HAVE DISTINCTLY DIFFERENT, AND SOMETIMES MUTUALLY ITA NO.1582 /MDS/2017 10 EXCLUSIVE, CONNO TATIONS. WHEN WE APPRECIATE THE OB JECT OF SCHEME OF SECTION 40(A)(IA), AS ON THE STATUTE, AND TO EXAMIN E WHETHER OR NOT, ON A 'FAIR, JUST AND EQUITABLE' INTERPRETATION OF LAW AS IS THE GUIDANCE FROM THE HON'BLE DELHI HIGH COURT ON INTERPRETATION OF THIS LEGAL PROVISION, IN OUR HUMBLE UNDERSTANDING, IT COULD NO T BE AN 'INTENDED CONSEQUENCE' TO DISALLOW THE EXPENDITURE, DUE TO NO N-DEDUCTION OF TAX AT SOURCE, EVEN IN A SITUATION IN WHICH CORRESPONDI NG INCOME IS BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT. THE S CHEME OF SECTION 40(A)(IA), AS WE SEE IT, IS AIMED AT ENSURING THAT AN EXPENDITURE SHOULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATION IN WHICH INCOME EMBEDDED IN SUCH EXPENDIT URE HAS REMAINED UNTAXED DUE TO TAX WITHHOLDING LAPSES BY THE ASSESS EE. IT IS NOT, IN OUR CONSIDERED VIEW, A PENALTY FOR TAX WITHHOLDING LAPS E BUT IT IS A SORT OF COMPENSATORY DEDUCTION RESTRICTION FOR AN INCOME GO ING UNTAXED DUE TO TAX WITHHOLDING LAPSE. THE PENALTY FOR TAX WITHH OLDING LAPSE PER SE IS SEPARATELY PROVIDED FOR IN SECTION 271C, AND, SE CTION 40(A)(IA) DOES NOT ADD TO THE SAME. THE PROVISIONS OF SECTION 40(A )(IA), AS THEY EXISTED PRIOR TO INSERTION OF SECOND PROVISO THERET O, WENT MUCH BEYOND THE OBVIOUS INTENTIONS OF THE LAWMAKERS AND CREATED UNDUE HARDSHIPS EVEN IN CASES IN WHICH THE ASSESSEE'S TAX WITHHOLDI NG LAPSES DID NOT RESULT IN ANY LOSS TO THE EXCHEQUER. NOW, THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH AN AMEN DMENT IN LAW, IN VIEW OF THE WELL-SETTLED LEGAL POSITION TO THE EFFE CT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STAT E SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPEC TIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW ITA NO.1582 /MDS/2017 11 OF THESE DISCUSSIONS, AS ALSO FOR THE DETAILED REAS ONS SET OUT EARLIER, WE CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN 'INTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON- DEDUC TION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF REL ATED PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TA X. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECT ION. ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SEC TION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETRO SPECTIVE EFFECT FROM APRIL 1, 2005, BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004 .' 14. THE COURT IS OF THE VIEW THAT THE ABOVE REASONI NG OF THE AGRA BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL AS REGAR DS THE RATIONALE BEHIND THE INSERTION OF THE SECOND PROVISO TO SECTI ON 40(A)(IA) OF THE ACT AND ITS CONCLUSION THAT THE SAID PROVISO IS DEC LARATORY AND CURATIVE AND HAS RETROSPECTIVE EFFECT FROM APRIL 1, 2005, ME RITS ACCEPTANCE. 6.1 HENCE, IN MY OPINION, IT IS APPROPRIATE TO RE MIT THE ISSUE TO THE FILE OF LD. ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF ABOVE DISCUSSION. 7. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE OF INTREST PAID TO OTHER PARTIES AT ` 7,55,420/-. ITA NO.1582 /MDS/2017 12 8. THE BRIEF FACTS OF THE CASE ARE THAT AO HAD CAL LED FOR DETAILS FOR UNSECURED LOANS SHOWN BY THE ASSESSEE AMOUNTING TO RS 4,00,000/-. HOWEVER, ASSESSEE DID NOT FILE REQUIRE DETAILS. FUR THER, MANAGING DIRECTOR OF THE COMPANY WAS ALSO INFORMED TO FILE T HE SAID DETAILS AND ALSO INFORMED IN THE ABSENCE OF SAID DETAILS, UNSEC URED LOANS WOULD HAVE TO BE CONSIDERED AS UNEXPLAINED CASH CREDIT. HOWEVER, THE ASSESSEE FAILED TO USE THIS OPPORTUNITY. IN THE CIR CUMSTANCES AO HAD CONSIDERED SAID UNSECURED LOANS AS UNEXPLAINED CASH CREDITS AND MADE AN ADDITION. AGGRIEVED BY THE ORDER OF LD. AS SESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A ). 8.1 BEFORE LD.CIT(A) ,LD. AR HAS FILED DETAILS OF INTEREST PAID TO CERTAIN PERSONS DURING THE FY 2011-12 RELEVANT TO A Y 2012-13 AND ALSO FILED SCHEDULE TO BALANCE SHEET UNDER THE HEAD LOAN FROM OTHER FINANCE COMPARY/RELATIVES. THE LD.CIT(A) WAS OF THE OPINION THAT THE LD.A.R REITERATED THE DETAILS IN THE BALANCE SHEET ENDING 31.03.2012. ACCORDING TO LD.CIT(A), LD. AR HAD FAILED TO FILE L OAN CONFIRMATION LETTERS, INCOME TAX DETAILS LIKE PAN, BANK STATEMEN TS ETC., TO PROVE CREDIT WORTHINESS / GENIUSES AND IDENTITY OF THE PE RSONS WHO HAD ITA NO.1582 /MDS/2017 13 GIVEN LOANS TO THE ASSESSEE. FURTHER, LD.CIT(A) OBS ERVED THAT THE ASSESSEE HAS NOT FILED THESE DETAILS EITHER BEFORE THE A.O OR BEFORE LD.CIT(A). THEREFORE,, LD.CIT(A) ENDORSED THE VIEW OF LD. ASSESSING OFFICER. AGAINST THE ORDER OF LD.CIT(A), NOW THE ASSESSEE IS IN APPEAL BEFORE US. 9. BEFORE US, THE CONTENTION OF LD.A.R IS THAT TH E IMPUGNED AMOUNT IS NOT BORROWED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND IT WAS BORROWED IN THE EARLIER ASSESSMENT YEARS . TO THAT EFFECT, THE ASSESSEE HAS FILED ITS WRITTEN SUBMISSIONS BEFO RE THE LOWER AUTHORITIES, WHICH ARE NOT AT ALL CONSIDERED BY TH E DEPARTMENT. HENCE, LD.A.R PRAYED THAT IT MAY BE EXAMINED AFRESH . 10. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER O F THE CIT(APPEALS). 11. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN MY OPINION, IF THE ASSESSEE IS ABLE TO DEMONSTRATE BEFORE THE AO THAT THE CREDITS WAS NOT EMANATED IN THE ASS ESSEE YEAR UNDER CONSIDERATION AND IT WAS APPEARED IN BOOKS OF ACCOU NTS OF EARLIER ASSESSMENT YEARS, THEN THERE MAY NOT BE ANY ADDITIO N IN THE ITA NO.1582 /MDS/2017 14 ASSESSMENT YEAR UNDER CONSIDERATION. WITH THIS OBSE RVATION, I REMIT THE ISSUE TO THE FILE OF LD. ASSESSING OFFICER FOR FRESH CONSIDERATION. 12 IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 09 TH NOVEMBER, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 09 TH NOVEMBER, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF