Rakesh Singhal , Chennai V. The ACIT, Non Corporate Circle -6(1), Chennai

ITA 2276/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5661 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 18-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JCIT D R
• Assessee Lawyers: S SRIDHAR
• Section: 142(1)

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.2276 /MDS./2017 ( ASSESSMENT YEAR : 2013-14 ) SHRI RAKESH SINGHAL , NO.16/23E,KAMBAREESWAR AGRAHARAM, VITHAL MARKET, PARK TOWN,CHENNAI 600 003. VS. THE ACIT, NON-CORPORATE CIRCLE 6(1), CHENNAI. PAN AYSPS 6615 B ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.S.SRIDHAR,ADVOCATE / RESPONDENT BY : MR.B.SAGADEVAN, JCIT, D.R ! ' / DATE OF HEARING : 29.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 08.12.2017 / 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)-5, CHENNA I DATED 27.07.2017 PERTAINING TO ASSESSMENT YEAR 2013-14. ITA NO. 2276/MDS/2017 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS F OR ADJUDICATION. 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) 5, CHENNAI DATED 27.07.2017 IN L.T.A.NO.72/CIT(A)-5/2016-17 FO R THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS , AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN CONFIRMING THE ASSESS MENT OF RS.7,68,000I- BEING THE INTEREST PAYMENT TO M/S RTG EXCHANGE P LT D. IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNI NG PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG NOTICED THE FREQUENCY OF TRANSACTIONS BETWEEN THE APPELLANT AND THE SAID COMPANY, THE DISALLOWANCE OF SUCH SUM ON WRONG PRESUMPTION OF FA CTS AND FOR WANT OF FURTHER EVIDENCE ESPECIALLY OVERLOOKING THE REPL Y LETTER DATED 14.3.2016 WAS WRONG, ERRONEOUS, UNJUSTIFIED, INCORR ECT AND NOT SUSTAINABLE IN LAW. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE CONCLUSIONS REACHED FROM PARA 5 OF THE IMPUGNED ORDER WERE WHOLLY UNJUSTIFIE D AND OUGHT TO HAVE APPRECIATED THAT THE FAILURE TO CROSS EXAMINE THE C OMPANY WOULD VITIATE THE SAID FINDINGS OF THE FIRST APPELLATE AUTHORITY IN SUSTAINING THE ADDITION. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED OR DER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTI CE WOULD BE NULLITY IN LAW. 6. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GR OUNDS/ARGUMENTS AT THE TIME OF HEARING. ITA NO. 2276/MDS/2017 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS TRADER IN STEEL BUSINESS IN THE NAME AND STYLE OF N/S. REAL M ETAL & ALLOYS. IN RESPONSE TO NOTICES ISSUED U/ 143(2) & 142(1) BY L D. ASSESSING OFFICER, THE ASSESSEE FLIED DETAILS DOCUMENTS ON TH E BASIS OF WHICH RETURN OF INCOME WAS FILED ALONG WITH OTHER INFORMA TION / DOCUMENTS AS CALLED FOR U/S 142(1) DURING THE COURSE OF ASSES SMENT PROCEEDINGS. AFTER VERIFICATION OF THE SAME AND TAK ING INTO THE RECORD AVAILABLE DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSMENT IS FINALIZED BY THE LD. ASSESSING OFFICE R IN THE FOLLOWING MANNER. 3.1 THE ASSESSEE HAS SHOWN CREDIT BALANCE OF RS.70 ,91,200/- IN THE NAME OF M/S.RTG EXCHANGE PVT LTD. HOWEVER, IN T HAT PARTY BOOK IT HAD SHOWN DEBIT BALANCE OF RS.60,52,379/- ONLY I N THE NAME OF THE ASSESSEE. ON SCRUTINY, IT IS FOUND THAT ENTRY FOR T HE INTEREST AMOUNTING TO RS.7,68,000/- HAS NOT BEEN CONFIRMED BY THE SAID COMPANY. HENCE, THE ASSESSEE WAS REQUESTED VIDE ORDER SHEET ENTRY DATED 17/03/2016 TO SHOW CAUSE WHY THIS AMOUNT OF RS,7,68 ,000/- SHOULD NOT BE DISALLOWED. IN THIS REGARD THE AR OF THE ASS ESSEE HAS STATED ITA NO. 2276/MDS/2017 4 THAT THE LETTER DATED 14/03/2016 MAY BE TREATED AS REPLY TO THIS. THE CONTENTS OF THE SAID LETTER IS REPRODUCED BELOW:- THESE EXPLANATION IS IN CONTINUATION TO EARLIER EX PLANATION OF RTG EXCHANGE LTD., I WOULD LIKE TO MENTION THAT INITIAL LOAN WAS TAKEN MONTH OF JUNE 2008 AND THE SAME WAS SQUARED OFF IN F,Y.20 11-12. INTEREST WERE PROVIDED FROM F.Y.2008-09 TO F.Y.2011-12 AND L OAN WAS PAID OFF WITH INTEREST ON 20TH JUNE 2011. A FRESH LOAN WAS T AKEN ON 2GTH MARCH, 2012 WHICH WAS CARRIED FORWARDED IN F. V.2012-13. S O, IT IS CLEARLY EVIDENT THAT I PROVIDE INTEREST EVERY YEAR AND CLOS E THE LOAN AFTER FEW YEARS WITH INTEREST. I AM ENCLOSING LEDGE COPIES FR OM F.Y.2008-09 TO F.Y.2011-12 AND BANK STATEMENTS SHOWING ACCEPTANCE AND REPAYMENT TRANSACTION 3.2 FROM THE ABOVE LETTER, LD. ASSESSING OFFICER F OUND THAT EARLIER LOAN WAS TAKEN IN THE YEAR 2008 AND THE SAME WAS SQ UARED OFF IN F.Y.2011-12. HE HAS NOT GIVEN ANY EXPLANATION REGAR DING THE QUERY RAISED IN THE SHOW CAUSE PERTAINING TO THE ALLOWABI LITY OF INTEREST PERTAINING TO THE A.Y.2013-THEREFORE, A SUM OF RS.7 ,68,000/- IS HEREBY ADDED TO THE INCOME RETURNED IN THIS REGARD. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIE D THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) CONFIRMED THE ADDITION ON THE REASON THAT M/S.RTG EXCHANGE PVT LTD., IS NOT CONFI RMED THE RECEIPT OF SUCH AMOUNT. ITA NO. 2276/MDS/2017 5 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, THE ASSESSEE FOL LOWED THE MERCANTILE SYSTEM OF ACCOUNTING AND THE ASSESSEE PROVIDED INTE REST ON OUTSTANDING BALANCE AND ALSO DEDUCTED TDS FROM THE SAID AMOUNT, WHICH WAS DISCLOSED TO THE DEPARTMENT. MORE SO, M/ S.RTG EXCHANGE PVT LTD., PAID THE INTEREST RECEIPT ON CAS H BASIS. AS SUCH, THE LD. ASSESSING OFFICER CANNOT BE FOUND FAULT W ITH THE ASSESSEE FOR NOT DISCLOSING THE SAID RECEIPT BY M/S.RTG EXCHANGE PVT LTD. IN MY OPINION, THE CLAIM OF ASSESSEE IS TO BE ALLOWED AS BUSINESS DEDUCTION AND THE SAME IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 08 TH DECEMBER, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 08 TH DECEMBER, 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