Assistant Commissioner of Income-Tax Central Circle-1(2), Nagpur V. M/s Nandlal Enterprises, Nagpur

ITA 198/NAG/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9578 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 31-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Assessee Lawyers: M MANI
• Keywords: Revision of order
• Section: 263

Judgement Text

ITA NO. 198/NAG/2009 NANDLAL ENTERPRISE S, NAGPUR IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH , NAGPUR BEFORE: SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI D.T. GARASIA , JUDICIAL MEMBER ITA NO. 198 / NAGPUR / 20 09 ASSESSMENT YEAR : 2004 - 05 ACIT CENTRAL CIRCLE - 1(2) NAGPUR VS. M/S. NANDLAL ENTERPRISES NAGPUR (APPELLANT) (RESPONDENT) PAN NO.AADFN 4343C APPELLANT BY: DR. MILIND BHUSARI, CIT(DR) RESPONDENT BY: SHRI M. MANI , ADVOCATE DATE OF HEARING: 09.10.2012 DATE OF PRONOUNCEMENT: 10.10.2012 ORDER PER P.K. BANSAL, ACCOUNTANT MEMBER: - THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 15.6.2009. THE GROUND NOS.1 TO 4 RELATE TO THE DELETION OF THE DISALLOWANCE OF THE INTEREST AMOUNTING TO RS.1,60,260/ - . THE BRIEF FACTS RELATIN G TO THIS ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE MADE CERTAIN ADVANCES TO THE FAMILY MEMBERS OF THE GROUP ON WHICH THE ASSESSEE DID NOT CHARGE ANY INTEREST. THE ASSESSING OFFICER THEREFORE, DISALLOWED A SUM OF RS.1,60,260/ - . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT. AS PLEADED BY THE APPELLANT S AR, THE POSITION WITH REGARD TO THE INTEREST FREE ADVANCES IS NOW WELL S ETTLED. THE ASSESSEE HAS A CAPITAL OF RS.25,00,000/ - . THE TOTAL CAPITAL AVAILABLE WITH THE ASSESSEE IS RS.25,34,894.98 WHICH IS ITS OWN MONEY AND OUT OF WHICH INTEREST FREE ADVANCE OF RS.15,43,937/ - HAS BEEN GIVEN. IN VIEW OF THE JUDICIAL EXPOSITIONS AS MENTIONED ABOVE NO ADDITION ON THIS COUNT CAN BE MADE IN APPELLANT S CASE. ADDITION OF RS.1,60,260/ - IS THEREFORE DELETED. GROUND NO.1 IS ALLOWED. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSI DERED THE SAME. IN OUR OPINION, NO INTERFEREN CE IS CALLED FOR IN THE ORDER OF CIT(A) . THE CIT(A) HAS GIVEN A FINDING OF FACT THAT THE ASSESSEE HAS INTEREST FREE FUNDS WHICH ARE AVAILABLE ITA NO.198/NAG/2009 NANDLAL ENTERPRISES, NAGPUR 2 FOR GIVING THE ADVANCE AND THEREFORE ADVANCES WERE NOT GIVEN OUT OF MONEY BORROWED. NO COGENT MATERIAL OR EVIDEN CE WAS PLACED BEFORE US WHICH MAY COMPEL US TO GIVE THE FINDING AS GIVEN BY THE CIT(A). WE THEREFORE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS GROUND NOS. 1 TO 4. GROUND NO S .5 TO 10 RELATE TO THE DELETION OF THE SUM OF RS.22,93,417/ - ADDED BY THE ASSES SING OFFICER. THE FACTS RELATING TO THIS ADDITION ARE THAT THE CIT IN AN ORDER PASSED U/S 263 OF THE ACT TOOK THE VIEW THAT THE ASSESSING OFFICER FAILED TO EXAMINE THE CREDIT IN THE NAME OF M/S. RAMKRISHNA TRANSPORT COMPANY AMOUNTING TO RS.22,93,417/ - AND ACCORDINGLY HE SET ASIDE THE ASSESSMENT DIRECTING THE ASSESSING OFFICER TO INQUIRE INTO THE CREDIT APPEARING IN THE NAME OF M/S. RAMKRISHNA TRANSPORT COMPANY. THE ASSESSING OFFICER NOTED THAT THE BALANCE SHEET OF THE ASSESSEE SHOWS THIS AMOUNT AS SUNDRY CREDITORS BUT PROFIT & LOSS ACCOUNT DID NOT DISCLOSE ANY TRANSPORT CHARGES. THE ASSESSEE POINTED OUT THAT THE TRANSPORT CHARGES ARE DIRECTLY DEBITED TO THE PURCHASE ACCOUNT. AS SUBMITTED BEFORE THE CIT, THE ASSESSING OFFICER TREATED THE EXPENSES TO BE TH E BOGUS AND AS PER OBSERVATION GIVEN UNDER PARA 4.4 OF HIS ORDER AND HE MADE THE ADDITION OF RS.22,93,417/ - . WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 5.1 I HAVE CAREFULLY EXAMINED THIS ISSUE. AS ARGU ED BY APPELLANT S AR, I AGREE THAT THE AO HAS NOT UNDERSTOOD DIRECTIONS OF THE LEARNED CIT(C), NAGPUR PROPERLY AND CLEARLY VIDE ORDER PASSED U/S 263 OF THE ACT. CASE OF SHRI NANDLAL MALOO IS BEING ASSESSED BY THE SAME ASSESSING AUTHORITY AND A REFERENCE T O THE RECORDS OF SHRI NANDLAL MALOO WOULD HAVE CLARIFIED THE POSITION TO THE ACIT WITH REGARD TO THE CREDIT BALANCE APPEARING IN HIS NAME IN APPELLANT S RECORD AT RS.22,93,417/ - . IT IS ACTUALLY A TRADE CREDIT BALANCE AND APPEARING ON ACCOUNT OF UNPAID TRA NSPORTATION CHARGES TO RAMKRISHNA TRANSPORT CO., WHICH IS OWNED BY SHRI NANDLAL B MALOO. IT IS NOT A CASH CREDIT OR ANY SUCH DEPOSIT AS MISUNDERSTOOD BY THE AO. A CERTIFICATE TO THIS EFFECT HAS BEEN FURNISHED BY SHRI NANDLAL B MALOO. ACTUALLY THE TOTAL TRANSPORT CHARGES IN THE NAME OF RAMKRISHNA TRANSPORT CO. STAND AT RS.1,51,42,000/ - OUT OF WHICH RS.22,93,417/ - REMAINED TO BE PAID AS AT THE CLOSING OF THE ACCOUNTING PERIOD. THE LEARNED CIT (C), NAGPUR HAD DIRECTED THE AO TO VERIFY NATURE OF CREDIT BALA NCE APPEARING IN THE ACCOUNTS OF APPELLANT. SINCE THE POSITION IS CLEAR FROM THE RECORDS OF BOTH THE CONCERNS/ENTITIES, I.E. THE APPELLANT AND RAMKRISHNA TRANSPORT CO., THERE IS NO JUSTIFICATION IN TREATING THE SAID TRADE CREDIT BALANCE AS BOGUS CREDITOR. THE ACIT HAS LOST SIGHT OF THE FACT THAT ACTUALLY TRANSPORT CHARGES PAID BY THE APPELLANT ARE MUCH MORE AS AFORESAID. IN VIEW OF THIS POSITION ADDITION OF RS.22,93,417/ - IS ORDERED TO BE DELETED. GROUND NO.2 IS ALLOWED. ITA NO.198/NAG/2009 NANDLAL ENTERPRISES, NAGPUR 3 3. WE HAVE HEARD THE RIVAL SU BMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES. THE FINDING OF FACT GIVEN BY THE CIT(A) IS THAT THE ASSESSEE INCURRED TRANSPORT CHARGES THROUGH RAMKRISHNA TRANSPORT COMPANY AT RS.1,51,42,000 / - DURING THE YEAR , OUT OF WHICH RS.22,93,417/ - REMAINED OUTSTANDING AT THE END OF THE ACCOUNTING YEAR. THE PROPRIETOR OF THE FIRM HAS DULY CONFIRMED THIS FACT. RECORDS OF THE ASSESSEE AS WELL AS THAT OF RAMKRISHNA TRANSPORT COMPANY ALSO CONFIRMED THIS FACT. NO CONTRARY EVIDEN CE OR MATERIAL WAS FILED BEFORE US WHICH MAY COMPEL US TO TAKE A VIEW DIFFERENT FROM CIT(A). UNDER THESE FACTS AND CIRCUMSTANCES, WE AGREE WITH THE FINDING OF THE CIT(A) DELETING THE ADDITION OF RS.22,93,417/ - . 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAND DISMISSED. PRONOUNCED IN THE OPEN COURT ON 10.10 .20 1 2 SD/ - SD/ - ( D.T. GARASIA ) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS NAGPUR DATED 10 TH OCTOBER , 20 1 2 COPY TO 1 THE ACIT, CENTRAL CIRCLE - 1( 2 ), NAGPUR 2 M/S. NANDLAL ENTERPRISES LTD., 101, JAI BHAVANI, WARDHAMAN NAGAR, NAGPUR 3 THE CIT (A) , NAGPUR 4 THE DR, ITAT, NAGPUR 5 GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL NAGPUR