Jumbo ConsultantsPvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1619/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3798 (ITAT-DELHI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Notional interest
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE MS. DIVA SINGH, JUDICIAL MEMBER ITA N O. 1619 /DEL/201 7 A SSESSMENT YEAR: 20 12 - 1 3 JUMBO CONSULTANTS PVT. LTD. C - 1/2, FLAT NO. 10 MODEL TOWN NEW DELHI VS. ITO WARD 13(4) NEW DEL HI PAN : AAACJ2920R (APPELLANT) (RESPONDENT) O R D E R PER DIVA SINGH , J .M . : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 9.11.2016 OF CIT(A) - 5, DELHI PERTAINING TO 2012 - 13 ASSESSMENT YEAR. ON VARIOUS GROUNDS HOWEVER THE GRIEVANCE OF THE ASSESSEE IS COVERED BY THE GROUND N O. 1 WHICH READS AS UNDER: - 1 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) AND THE CIT(A) ORDER IS BAD ON FACT AND IN THE EYES OF LAW FOR TREATING UNEARNED INTEREST INCOME OF RS. 48,00 0 0/ - ON NOTIONAL BASI S FOR DEEMED INTEREST ON THREE YEAR OLD DOUBTFUL DEBTS WHICH IS NEVER EARNED HENCE DESERVES TO BE QUASHED. 2. BOTH THE PARTIES HAVE HEARD. THE LEARNED AR IN THE COURSE OF HIS ARGUMENTS INVITING ATTENTION TO THE IMPUGNED ORDER SUBMITTED THAT THE ASSESSEE H AD ADVANCED AN AMOUNT OF RS. 40,00,000/ - TO MS. SHALINI MAHESHWARI SOMETIME IN 1989 ON WHICH NOTIONAL INTEREST HAS BEEN CHARGED BY THE REVENUE. IT WAS HIS SUBMISSION THAT NO SUCH ADDITION ON THE VERY SAME AMOUNT HAD BEEN MADE IN THE IMMEDIATELY PRECEDING APPELLANT BY SH. PRAVEEN KUMAR, MANAGER RESPONDENT BY SH. T. VASANTHAN, SR. D.R. DATE OF HEARING 21 - 08 - 201 7 DATE OF PRONOUNCEMENT 050050050 20.10.2017 2 ITA NO . 1619 /DEL/2017 A SSESSMENT YEAR. HE WAS UNABLE TO ADDRESS WHETHER THE ASSESSMENT WAS A SCRUTINY ASSESSMENT OR BY WAY OF A 143(1) ORDER. HOWEVER IN 2015 - 16 ASSESSMENT YEAR, THE PURPOSE FOR WHICH THE AMOUNT WAS GIVEN IT WAS SUBMITTED HAD BEEN ACHIEVED. IT WAS HIS ARGUMENT TH AT THERE ARE NO BORROWED FUNDS WITH THE ASSESSEE AND THE FUNDS WHICH HAVE BEEN ADVANCED ARE FROM ASSESSEES OWN FUNDS AND NO EXPENSES FOR INTEREST HAS BEEN CLAIMED BY THE ASSESSEE. THE PERSON TO WHOM THE LOAN IS ADVANCED IT WAS SUBMITTED IS KNOWN TO THE ASS ESSEE. THE ADDITION MADE BY THE TAX AUTHORITIES IT WAS SUBMITTED WAS CONTRARY TO LAW. 3. THE LEARNED SR. DR ON THE OTHER HAND RELYING UPON THE CONSISTENT ORDERS OF THE AO AND THE CIT(A) SUBMITTED THAT THE ASSESSEE IS IN THE FINANCE BUSINESS AND INTEREST IN COME IS NECESSARILY REQUIRED TO BE RECEIVED . THUS FOR WHAT PURPOSES A LOAN OF RS. 40,00,000/ - WAS ADVANCED TO MRS. SHALINI MAHESHWARI AND WHETHER IT WAS A TRADE ADVANCE OR NOT HAS NEVER BEEN CLARIFIED BY THE ASSESSEE. THE ASSESSEE IT WAS SUBMITTED HAS CLAI MED AT SOME POINT OF TIME THAT THE AMOUNT BECAME IRRECOVERABLE AND SUBSEQUENTLY HAS NOW COME UP WITH AN ARGUMENT THAT IT HAS BEEN SETTLED. THUS IN THE FACE OF THESE CONTRADICTORY ARGUMENTS, THE CLAIM OF THE ASSESSEE IT WAS SUBMITTED THAT HAS CORRECTLY BEEN REJECTED. HOWEVER, WHETHER ANY BORROWED FUNDS HAVE BEEN UTILIZED BY THE ASSESSEE OR NOT AND WHETHER IT HAS CORRECTLY BEEN SETTLED BY WAY OF PAYING BACK , THE ASSESSEE OUR FACTS WHICH WOULD BE KNOWN TO THE ASSESSEE ONLY AS FOR WHAT PURPOSES THE FUNDS WERE A DVANCED ARE NOT AVAILABLE ON RECORD AND EVEN IF ASSESSEE NOW WANTS TO ARGUE THAT IT HAS BEEN SETTLED THEN THE ASSESSEE MUST BE REQUIRED TO DEMONSTRATE THESE FACTS AND THE MATTER FOR THE SAID PURPOSES MAY BE REMANDED TO THE CIT(A). 4. IN THE LIGHT OF THE S UBMISSIONS OF THE PARTIES BEFORE THE BENCH TAKING NOTE OF THE FINDINGS AND REASONS RECORDED BY THE CIT(A) IN PARA 5.4 OF HIS ORDER IT IS DEEMED APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER TO VERIFY WHETHER THE FUNDS ADVANCED TO MRS. SHALINI MAHESHWARI WERE FROM ASSESSEE S OWN FUNDS OR FROM BORROWED FUNDS. APART FROM THAT WHETHER IT WAS A TRADE ADVANCE OR NOT AND WHETHER AS PER THE CLAIM OF THE ASSESSEE IT HAS BEEN SETTLED IN 2015 - 16 ASSESSMENT YEAR ARE ALL FACTS WHICH NEED TO BE ADDRESSED BY WAY OF EVIDENCE S. ACCORDINGLY IN THE ABSENCE OF ANY DISCUSSION 3 ITA NO . 1619 /DEL/2017 THEREON THE IMPUGNED ORDER IS SET ASIDE. ASSESSEE IS GRANTED OPPORTUNITY TO FILE AFRESH EVIDENCES BEFORE THE CIT(A) WHICH SHALL BE TAKEN ON RECORD AFTER OBTAINING A REMAND REPORT OF THE ASSESSING OFFICER. IT IS HOPED THAT THE OPPORTUNITY SO PROVIDED IN GOOD FAITH IS NOT ABUSED BY THE ASSESSEE AND IS UTILIZED BY MAKING FULL AND PROPER COMPLIANCES BEFORE THE CIT(A). IT IS MADE CLEAR THAT IN THE ABSENCE OF THE SAME, THE CIT(A) WOULD BE AT LIBERTY TO PASS AN ORDER IN ACCORDANCE WITH LAW ON THE BASIS OF DAY TO DAY MATERIAL AVAILABLE ON RECORD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF ON 20 TH OCTOBER , 201 7 . SD/ - (DIVA SINGH) JUDICIAL MEMBER N. MISHRA ) SH 4 ITA NO . 1619 /DEL/2017 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR , ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 21.8.2017 PS 2. DRAFT PLACED BEFORE AUTHOR PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.