Assistant Commissioner of Income-tax, Circle - 6, Pune V. Shree Sadguru Enterprises, Pune

ITA 2125/PUN/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9479 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAHADEVAN A M KRISHANAN
• Assessee Lawyers: SWANAND BARVE
• Keywords: TDS
• Section: 40(a)(ia); 201; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO. 2125 /PUN/201 7 / ASSESSMENT YEAR : 201 3 - 14 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE ....... / APPELLANT / V/S. SHREE SADGURU ENTERPRISES, 526, GANESH PETH, DAL ALI, KASTURE CHOWK, PUNE - 411002 PAN : AAFFS5900C / RESPONDENT ASSESSEE BY : SHRI SWANAND BARVE REVENUE BY : SHRI MAHADEVAN A.M. KRISHANAN / DATE OF HEARING : 29 - 07 - 2021 / DATE OF PRONOUNCEMENT : 30 - 07 - 202 1 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 10 - 03 - 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 4, PUNE [CIT(A)] FOR ASSESSMENT YEAR 201 3 - 14. 2. GROUND NO. 1 RAISED BY THE REVENUE CHALLENGING THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO .2125/PUN/2017, A.Y. 2013 - 14 3. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO NOTICED THAT THE ASSESSEE DEBITED AN AMOUNT OF RS.2,36,61,522/ - OUT OF WHICH RS.1,63,23,346/ - PAID INTEREST TO RELIANCE CAPITAL. ACCORDING TO THE AO, NO TDS WAS DEDUCTED ON SUCH INTEREST PAYMEN T. THE AO ASKED THE ASSESSEE TO EXPLAIN WHY SUCH INTEREST PAID TO RELIANCE CAPITAL SHOULD NOT BE DISALLOWED FOR NON DEDUCTION OF TDS. IT WAS EXPLAINED BY THE ASSESSEE THAT THE RELIANCE CAPITAL IS A BANKING COMPANY AND NO TDS IS DEDUCTIBLE. ACCORDING TO THE AO ON AN EXAMINATION FROM THE OFFICIAL WEBSITE OF RELIANCE CAPITAL IS A NON BANKING FINANCE COMPANY AND PLACING RELIANCE OF THE CHANDIGARH BENCH ES OF THE ITAT IN THE CASE OF SH. UMESH TREHAN VS. THE INCOME TAX OFFICER IN ITA NO. 1022/CHD/2012 THE AO AD DED THE ABOVE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. THE CIT(A) DELETED THE SAID ADDITION BY PLACING RELIANCE IN THE CASE OF RAJIV KUMAR AGARWAL OF AGRA BENCH OF ITAT BY HOLDING THE SECOND PROVISO TO SECTION 40(A)(IA) W.E.F. 01 - 04 - 2013 READ WITH FIRST PROVISO TO SECTION 201 OF THE ACT THAT NO DISALLOWANCE FOR NON DEDUCTION OF TDS IS PERMISSIBLE IF THE RESIDENT PAYEE HAS FURNISHED ITS RETURN OF INCOME BY TAKING INTO ACCOUNT SUCH SUM IN THE RETURN OF INCOME AND PAID DUE TAXES ON SUCH INCOME. BEFOR E US, THE LD. DR , SHRI MAHADEVAN A.M. KRISHANAN VEHEMENTLY ARGUED THAT NO EVIDENCES WHATSOEVER FILED BEFORE THE AO REGARDING EVIDENCES CLAIMING THE PAYEE FILED RETURN OF INCOME SHOWING THE INTEREST PAID BY THE ASSESSEE AS INCOME COMPUTING SUCH INCOME IN TH E RETURN OF INCOME SHOWING A CERTIFICATE THAT TAXES HAVE BEEN PAID TO THAT EFFECT. WE NOTE THAT NO EVIDENCES FILED BEFORE THE AO AS RIGHTLY POINTED OUT BY THE LD. DR SHOWING THE RELIANCE CAPITAL THE PAYEE TAKING INTO ACCOUNT THE INTEREST PAID BY THE ASSES SEE HAS ITS INCOME AND A CERTIFICATE FILED TO THAT EFFECT. THE CIT(A) ALSO DID NOT DISCUSS ABOUT SUCH EVIDENCES IN THE IMPUGNED 3 ITA NO .2125/PUN/2017, A.Y. 2013 - 14 ORDER IN ITS DECISION FROM PARA NOS. 5.3 TO 5.3.2. WITHOUT HAVING SUCH EVIDENCES ON RECORD THE CIT(A) PROCEEDED TO HOLD THE SE COND PROVISO TO SECTION 40(A)(IA) READ WITH FIRST PROVISO TO SECTION 201 IS APPLICABLE. IN OUR CONSIDERED OPINION, HAVING NO EVIDENCES ON RECORD THE APPLICABILITY OF THE RATIO LAID DOWN ANY DECISION IS NOT JUSTIFIED. ADMITTEDLY, THERE WAS NO EVIDENCES EV EN BEFORE THIS TRIBUNAL SHOWING THAT RESIDENT PAYEE THE RELIANCE CAPITAL FURNISHED RETURN OF INCOME TAKING INTO THE INTEREST AS ITS INCOME BY COMPUTING IN THE RETURN OF INCOME AND NO CERTIFICATE AS REQUIRED UNDER LAW WAS FILED TO THAT EFFECT. THEREFORE, C ONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT PROPER TO REMAND THE ISSUE TO THE FILE OF CIT(A) FOR ITS FRESH ADJUDICATION AS INDICATED ABOVE. THUS, GROUND NO. 1 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 4. GROUND NO. 2 RAISED BY THE REVENUE AGAINST THE DELETION OF ADDITION MADE U/S. 36(1)(III) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE PURCHASED UNIT 1 AND UNIT 2 ON THE UP PER GROUND FLOOR FOR A TOTAL CONSIDERATION OF RS.2,45,00,000/ - AND RS.3,90,00,000/ - , RESPECTIVELY. THE AO ASKED TO FURNISH DETAILS OF SOURCES OF PAYMENTS MADE TOWARDS PURCHASE OF THE ABOVE SAID TWO PROPERTIES. ACCORDING TO THE AO, THE ASSESSEE UTILIZED T HE FUNDS BORROWED FROM RELIANCE CAPITAL AND BANK OF INDIA. ON FURTHER EXAMINATION OF THE AO FOUND THAT THE ABOVE SAID SHOPS IN UNIT 1 AND UNIT 2 WERE BEING USED FOR GODOWN, THEREBY HE HELD THE INTEREST PAID TO BANK OF INDIA OF RS.43,22,908/ - WAS DISALLOWE D U/S. 36(1)(III) OF THE ACT BY HOLDING THAT THE ASSESSEE AVAILED INTEREST BEARING FUNDS FOR INVESTING IN PURCHASING THE ABOVE SAID SHOPS WHICH ARE NOT USED FOR ITS BUSINESS PURPOSE. THE CIT(A) DELETED THE SAID ADDITION. THE LD. DR 4 ITA NO .2125/PUN/2017, A.Y. 2013 - 14 SUBMITS THAT NO EVIDEN CES W ERE SUBMITTED SHOWING THE SAID PROPERTIES WERE USED FOR BUSINESS PURPOSE AND THE CIT(A) HELD TERM LOAN FROM THE BANK OF INDIA WAS SANCTIONED MUCH BEFORE THE INVESTMENT IN SHOPS AND THE LOAN SANCTIONED BY THE BANK OF INDIA WAS PURCHASED OF MACHINERY ON LY. THE LD. AR SUBMITS THAT ALL THE DETAILS REGARDING THE EVIDENCES FILED BEFORE THE CIT(A) AND ADMITTED NO SUCH EVIDENCES FOR FILED BEFORE THE AO. WE NOTE THAT THE FACT IS NOT DISPUTED THAT NO EVIDENCES WERE FILED BEFORE THE AO AND ALL THE EVIDENCES STA TED TO HAVE BEEN CONCERNING THE SAID DISALLOWANCES WERE FILED BEFORE THE CIT(A). ON EXAMINATION OF THE IMPUGNED ORDER WE NOTE THAT NO OPPORTUNITY WAS GIVEN BY THE CIT(A) FOR AO AS REQUIRED UNDER RULE 46A. THE EVIDENCES FILED BEFORE US FROM THE PAGE NOS. 49 TO 51 WERE ADMITTEDLY NOT BEFORE THE AO , T HEREFORE, THE CIT(A) DID NOT FOLLOW THE PROCEDURE AS LAID DOWN IN RULE 46A WHENEVER THE NEW EVIDENCES WHICH WERE NOT BEFORE THE AO COMES TO ITS KNOWLEDGE. THEREFORE, WE DEEM IT PROPER TO REMAND THE ISSUE TO TH E FILE OF CIT(A) FOR ITS FRESH ADJUDICATION AND TO DECIDE THE ISSUE BY FOLLOWING THE DUE PROCEDURE ESTABLISHED UNDER LAW. THUS, GROUND NO. 2 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 6. GROUND NO. 3 RAISED BY THE REVENUE IS RELATING TO DELETION OF ADDITION MADE U/S. 68 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO ASKED THE ASSESSEE TO FURNISH THE D ETAILS OF UNSECURED LOANS THAT ARE CONFIRMATION, RETURN OF INCOME, BALANCE SHEET AND BANK STATEMENT. ACCORDING TO THE AO NO DETAILS WERE SUBMITTED BY THE ASSESSEE AND NO SATISFACTORY EXPLANATION WAS OFFERED IN RESPECT OF UNSECURED LOANS TAKEN DURING THE Y EAR UNDER CONSIDERATION, THEREBY THE AO BY PLACING ON MANY 5 ITA NO .2125/PUN/2017, A.Y. 2013 - 14 DECISIONS ADDED AN AMOUNT OF RS.1,11,50,000/ - TO THE INCOME OF THE ASSESSEE. WE NOTE THAT AS IT APPEARS FROM PARA NO. 7.3.1 OF THE IMPUGNED ORDER THAT THE ASSESSEE FURNISHED THE DETAILS LIKE NAMES , PANS, ADDRESS, CONFIRMATION LETTERS FROM THE LENDERS AND THE CIT(A) HELD THE AO WITHOUT MAKING ANY ENQUIRY BY ISSUING A NOTICE U/S. 131 OF THE ACT MADE THE ADDITION AND ON SUCH FAILURE OF THE AO THE CIT(A) DELETED THE SAID ADDITION. THE LD. AR ADMITS NO DETAILS WERE FILED BEFORE THE AO BUT THE EVIDENCES LIKE NAMES, PANS, ADDRESS, CONFIRMATION LETTERS WERE ALL FILED BEFORE THE CIT(A). AS RIGHTLY POINTED OUT BY THE LD. DR THAT THE ONUS ON THE ASSESSEE TO PROVE CREDITWORTHINESS AND GENUINENESS OF TRANSACTI ON AS REQUIRED U/S. 68 OF THE ACT, THE ASSESSEE CLAIMS TO HAVE GIVEN ONLY NAMES, PANS AND ADDRESS AND CONFIRMATION LETTERS BEFORE THE CIT(A) BUT NO OPPORTUNITY WAS GIVEN TO THE AO AS REQUIRED UNDER LAW. WE NOTE THAT THE ASSESSEE FILED CONFIRMATION LETTERS FROM PAGE NO. 42 TO 49 OF THE PAPER BOOK WHEREIN CONFIRMATION LETTERS OF LENDERS FILED WHICH CONTAINS THE NAMES, PANS AND AMOUNT OF LOAN. IN THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FURNISH RETURN OF INCOME, BALANCE SHEET AND BANK STATEME NT BUT NO SUCH DETAILS RELEVANT TO THE ADDITION TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION FILED BEFORE THE AO NOR BEFORE THE CIT(A), EVEN BEFORE US. MERE GIVING NAMES AND ADDRESS ES OF THE LENDERS ARE NOT SUFFICIENT TO PROVE ALL THE INGREDIENTS OF SECTION 68 OF THE ACT, IN OUR OPINION APART FROM IDENTITY OTHER INGREDIENTS LIKE CREDITWORTHINESS AND GENUINENESS OF TRANSACTION REQUIRED TO BE PROVED IN SUPPORT OF CLAIM U/S. 68 OF THE ACT. THE CIT(A) OBSERVED THAT THE AO FAILED TO EXAMINE THE SAID LENDERS U/S. 131 OF THE ACT BUT HOWEVER IN OUR OPINION THE CIT(A) ALSO FAILED TO EXERCISE SAID JURISDICTION BY REMANDING THE MATTER TO THE FILE OF AO. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT PROPER TO REMAND THE ISSUE T O THE FILE OF CIT(A) FOR ITS FRESH ADJUDICATION. 6 ITA NO .2125/PUN/2017, A.Y. 2013 - 14 THE ASSESSEE IS LIBERTY TO FILE EVIDENCES, IF ANY, IN SUPPORT OF ITS CLAM. THUS, G ROUND NO. 3 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2021 . SD/ - SD/ - ( INTURI RAMA RAO ) ( S.S. VISWANETHRA RAVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 30 TH JULY, 202 1 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 4 , PUNE 4. THE PR. CIT - 3 , PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE