Shri Ashok Manilal Thakkar, Ahmedabad V. The ACIT.,Circle-3, Ahmedabad

ITA 1906/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5864 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 1990-1991
• Appeal Filed On: 03-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. SHRI ASHOK MANILAL THAKKAR, 2256, MAHURAT POLE, MANEK CHOWK, AHMEDABAD. VS. THE ASSTT. CIT, CIRCLE- 3, AHMEDABAD. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI DHIREN SHAH, AR REVENUE BY:- SHRI P. R. GHOSH, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING F OLLOWING GROUND:- (1) THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACT S IN DISMISSING THE APPEAL. HE OUGHT TO HAVE ALLOWED THE APPEAL FULLY IN ACCORDANCE WITH THE GROUNDS OF APPEAL RAIS ED BY THE APPELLANT BEFORE HIM. 1. ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST RS .42,950/- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ADDITION OF RS.42,950/- ON ACCOUNT OF DISALLOWANCE OF INTEREST WHILE MAKING AN OBSERVATION THAT OUT OF A TOTAL DE BTORS OF RS.17,81,500/- IN THE SCHEDULED LIST, RS.12.21.100/ - ARE TRADE DEBTORS. BUT IT IS VERY CONVENIENTLY NOT REFERRING TO THE BALANCE AMOUNT OF RS.5,60,500/-. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT CONSIDERING THE FACT THAT THE TOTAL AMOUNT ON WHICH INTEREST HA S NOT BEEN ITA NO.1906/AHD/2010 ASST. YEAR :1990-91 2 PAID BY THE APPELLANT COMES TO RS.8,36,012/- AS AGA INST NON- INTEREST PAID DEBTORS AMOUNTING TO RS.5,60,500/-. 2. THE ONLY ISSUE INVOLVED IN THE APPEAL IS THAT LD . CIT(A) HAS CONFIRMED AN ADDITION OF RS.42,950/- BEING DISALLOW ANCE OF INTEREST. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF INTEREST M ADE BY THE AO VIDE HIS ORDER DATED 11.12.2008 U/S 143 R.W.S. 254 PASSE D ON A TOTAL INCOME OF RS.1,51,870/-. THE MATTER TRAVELED TO THE TRIBUNAL WHICH REDUCED THE INCOME TO RS.1,08,920/- VIDE THEIR ORDER DATED 25.7 .2007. REGARDING THE DISALLOWANCE OF INTEREST OF RS.42,950/- THE TRIBUNA L HAD RESTORED THE MATTER TO THE FILE OF AO FOR TAKING FRESH DECISION IN ACCORDANCE WITH LAW. IN CASE IT IS VERIFIED THAT THE DEBTORS OF RS.5,60, 500/- FROM WHOM NO INTEREST HAS BEEN CHARGED ARE TRADE DEBTORS THEN NO DISALLOWANCE ON ACCOUNT OF INTEREST PAID ON BORROWED MONEY IS JUSTI FIED. IN ORDER TO GIVE EFFECT TO THE DIRECTIONS THE AO ISSUED NOTICE U/S 1 43(2). HE ISSUED SEVERAL NOTICES TO THE ASSESSEE AS MENTIONED BY THE AO IN P ARA 3 OF HIS ORDER. FINALLY IT WAS SUBMITTED VIDE ASSESSEES LETTER DAT ED 10.12.2008 THAT ASSESSEE IS NOT CHARGING INTEREST ON RS.5,60,500/- AGAINST SAID AMOUNT BECAUSE ASSESSEE HAD INTEREST-FREE CREDITORS TO THE EXTENT OF RS.6,40,036/- AS SARAFI CREDITORS AND PROPRIETARY CAPITAL OF RS.1 ,95,096. THE LD. AO DID NOT AGREE WITH THE ASSESSEE ON THE GROUND THAT ASSE SSEE HAS NOT PROVED THAT DEBTORS OF RS.5,60,500/- ARE TRADE DEBTORS OR NOT. HE ACCORDINGLY MADE THE DISALLOWANCE OF RS.42,950/-. 3. THE LD. CIT(A) ALSO CONFIRMED THE DISALLOWANCE O N THE SAME GROUND THAT ASSESSEE FAILED TO PROVE THAT DEBTORS A RE TRADE DEBTORS. THE LD. CIT(A) OBSERVED AS UNDER :- 2.5 AFTER DUE CONSIDERATION, I THINK THE AO IS COR RECT WHEN HE SAY THAT THE APPELLANT HAS NOT CLARIFIED THE POSITION PARTIC ULARLY IN CONTEXT OF THE 3 DIRECTIONS OF THE ITAT. AS CAN BE SEEN FROM THE EXP LANATION FURNISHED, IT IS BEING STATED THAT OUT OF A TOTAL DEBTORS OF RS.1 7,81,500/- IN THE SCHEDULED LIST RS.12,21,000/- ARE TRADE DEBTORS. B UT IT IS VERY CONVENIENTLY NOT REFERRING TO THE BALANCE AMOUNT OF RS.5,60,500/-, WHICH IS THE ISSUE IN CONTEXT. A REFERENCE TO THE BALANCE SHEET SHOWS THAT THE APPELLANT HAS A TOTAL OF SUNDRY DEBTORS OF RS.11,43 ,142/- CLUBBED UNDER SCHEDULE G OF THE BALANCE SHEET WHEREIN THESE DEBTO RS NAMED BY THE APPELLANT DO NOT FEATURE, INSTEAD THEY FEATURE UNDE R THE HEAD LOANS, ADVANCES AND DEPOSITORS. THEREFORE, IT WAS FOR THE APPELLANT TO GET THE ISSUE VERIFIED, ASSERTION OF WHICH HAD BEEN MADE IN THE PROCEEDINGS BEFORE THE ITAT. AS THE MATTER STANDS TODAY, THAT S TATEMENT REMAINS UNVERIFIED AND THEREFORE IT CAN BE ASSUMED THAT THE AMOUNTS IN QUESTION WERE NOT TRADE DEBTORS. 2.6 IN VIEW OF THE ABOVE FINDING, SINCE THE EARLIER FIRST APPELLANT AUTHORITY HAS ALREADY HELD AGAINST THE ASSESSEE, I THINK, IN VIEW OF THE JUDICIAL PRUDENCE, THE MATTER CANNOT BE AGAIN READJ UDICATED AND REOPENED BY REFERENCE TO THE SAME SET OF FACTS ABOU T THE AVAILABILITY OF INTEREST FREE LOANS AND ITS ADVANCES TO THESE PARTI ES. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CARE FULLY PERUSED THE MATERIAL ON RECORD. IN MY CONSIDERED VIEW NO INTERF ERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). THE CLAIM OF THE LD. AR WA S SAME THAT IT HAD INTEREST FREE CAPITAL AND INTEREST FREE SARAFI CRED ITORS TOTALING TO RS.8,36,012/- WHICH WOULD COVER NON-INTEREST BEARIN G DEBTORS OF RS.5,60,500/-. HOWEVER, THE MAIN ISSUE WHETHER THE DEBTORS ARE TRADE DEBTORS HAS NOT BEEN ADDRESSED BY THE LD. AR. THUS AS PER ORDER OF THE TRIBUNAL THE ISSUE COULD BE DECIDED IN FAVOUR OF AS SESSEE ONLY WHEN IT PROVES THAT SUM OF RS.5,60,500/- REPRESENTED TRADE DEBTORS. ONCE HE FAILED TO PROVE SO THE AO WAS JUSTIFIED IN MAKING T HE ADDITION AND LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION. TH US THE GROUND RAISED IN THE APPEAL IS REJECTED. 4 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 6/7/2010 SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD, DATED : 6/7/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD