Prakash Chand Bokaria, CHENNAI V. ITO Non Corporate Ward 5(4), CHENNAI

ITA 2342/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5123 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-01-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 25-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: KETAN K JAIN
• Keywords: Business income; Principle of natural justice

Judgement Text

, (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL D (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.2342/CHNY/2017 / ASSESSMENT YEAR : 2013-2014. PRAKASH CHAND BOKARIA, NO.25, VEPERY HIGH ROAD, PERIAMET, CHENNAI 600 003. [PAN AAGPP 5641L] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 5(4), CHENNAI. ( !' / APPELLANT) ( #$ !' /RESPONDENT) / APPELLANT BY : SHRI. KETAN K. JAIN, C.A. /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 25-06-2018 !' /DATE OF PRONOUNCEMENT : 26-06-2018 % / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS D IRECTED AGAINST AN ORDER DATED 24.07.2017 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-5, CHENNAI, IT HAS RAISED THE FOLLOWING G ROUNDS:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E AND IS OPPOSED TO THE PRINCIPLE OF EQUITY, NATURAL JUSTICE AND F AIR PLAY. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO ITA NO. 2342 /CHNY/2017 :- 2 -: APPRECIATE THE ORDER OF THE ASSESSING OFFICER, AS B AD IN LAW. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO ACCEPT THE CONTENTION OF THE APPELLANT THAT THE BOOKS OF A CCOUNTS, DOCUMENTS, BANK STATEMENT ETC. WERE FURNISHED BY TI LE APPELLANT AND WERE EXAMINED BY THE LEARNED ASSESSIN G OFFICER DURING THE ASSESSMENT PROCEEDINGS. 4. TILE COMMISSIONER OF INCOME TAX (APPEALS) HAS NEVER CALLED FOR THE BOOKS OF ACCOUNTS ELM IN G THE APPEAL PROCE EDINGS. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED BY U PHOLDING THE ADDITION MADE BY THE LEARNED INCOME TAX OFFICER WITHOUT CONSIDERING THE FACT THAT THE APPELLANT IS REGULAR IN FILING THE RETURN OF INCOME TAX WITH INCOME BEING REPORTED UND ER THE HEAD 'PROFIT & GAIN FROM BUSINESS AND PROFESSION'. 6.THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAIL ED TO NOTE THAT THE APPELLANT HAS SUBMITTED THE RETURN OF EARL IER YEARS TO ESTABLISH THE FACT THAT THE INTENTION OF THE APPELL ANT WAS ALWAYS TO DO MONEY LENDING BUSINESS AND EARN INTEREST THER EON. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO ACCEPT THE CONTENTION THAT THE APPELLANT HAS USED CERTAIN PORTION OF LOAN FUNDS TO ADVANCE TO THE CUSTOMERS AND EARN I MEREST INCOME AND DID NOT CONSIDER THE DETAILS OF SOURCE AND APPLICAT ION OF FUNDS OVER A PERIOD OF TIME SUBMITTED BY THE APPELLANT. 8. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ACTION OF THE LEARNED INCOME TAX OFFICER, THUS REJECTED TH E APPEAL. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND S 1, 2 AND 8 COULD BE TREATED AS GENERAL. ACCORDINGLY, THE SE GROUNDS DO NOT NEED ANY ADJUDICATION. ITA NO. 2342 /CHNY/2017 :- 3 -: 3. AS PER THE LD. AUTHORISED REPRESENTATIVE, GROUNDS 3 & 4 ASSAILED TREATMENT OF ASSESSEES INCOME FROM MONEY LENDING BUSINESS UNDER THE HEAD INCOME FROM OTHER SOURCES. AS PE R THE LD. AUTHORISED REPRESENTATIVE, GROUNDS 5 & 6 RELATED TO TREATMENT OF INTEREST INCOME FROM MONEY LENDING BUSINESS UNDER THE HEAD INCOME F ROM OTHER SOURCES. AGAIN AS PER THE LD. AUTHORISED REPRESEN TATIVE, GROUND NO.7, RELATED TO DISALLOWANCE OF INTEREST OF LOANS RAISED BY THE ASSESSEE FOR THE PURPOSE OF LENDING IN ITS MONEY L ENDING BUSINESS. AS PER THE LD. AUTHORISED REPRESENTATIVE, THE LD. ASS ESSING OFFICER HAD FOR NO REASON SHIFTED THE INCOME FROM BUSINESS TO INCOME FROM OTHER SOURCES. 4. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT ASSESSEE COULD NOT PRODUCE ANY BOOKS OF ACCOUNTS IN SUPPORT OF ITS CONTENTION THAT IT WAS DOING A MONEY LENDING BUSINE SS. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, LD. ASSESSING OFFICER WAS JUSTIFIED IN TREATING THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ASSESSEE ADMITTEDL Y, DECLARED IN ITS RETURN OF INCOME THAT IT WAS DOING A BUSINESS OF M ONEY LENDING. LD. ITA NO. 2342 /CHNY/2017 :- 4 -: ASSESSING OFFICER HIMSELF HAS NOTED AT PAGE 1 OF TH E ASSESSMENT ORDER THAT ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNTS AND THESE WERE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. RELEVANT PARA AS IT APPEARS IN THE ASSESSMENT ORDER IS REPRODUCED HEREUNDER:- IN RESPONSE TO THE NOTICE, THE ASSESSEES REPRESENTATIVE SHRI. KETAN K. JAIN, A.C.A. & SHRI. SUNIL SETHIA, C.A., OF M/S. SUNIL SETHIA & ASSOCIATES, APPEARED AND FILED THE POWER OF ATTORNEY. SUBSEQUENTLY NOTICE U/S.142(1) DT. 20.05.2015 AND LETTER WERE ISSUED CALLING FOR DETAILS. THE BOOKS OF ACCOUNTS, DOCUMENTS, BANK STATEMENT ETC., FURNISHED BY THE ASSESSEE WERE EXAMINED AND THE ASSESSMENT IS COMPLETED AS UNDER:- HOWEVER, LD. ASSESSING OFFICER REFUSED TO CONSIDER THE CLAIM OF THE ASSESSEE THAT INTEREST RECEIPT OF H23,43,545/-, I NTEREST PAYMENT OF H19,53,516/- AND INTEREST PAYABLE H9,95,050/- WERE OF ITS BUSINESS OF MONEY LENDING. LD. ASSESSING OFFICER IN PARA 3 OF ITS ORDER SAYS THAT ASSESSEE HAD NOT FURNISHED ANY BOOKS OF ACCOUNTS NO R FURNISHED ANY DOCUMENTARY EVIDENCE FOR ANY SOURCE OF INCOME. LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE VIEW TAKEN BY TH E LD. ASSESSING OFFICER DESPITE ASSESSEE POINTING OUT THAT IT WAS CARRYING ON MONEY LENDING BUSINESS SINCE A DECADE AND WAS FILING FOR M ITR-4 WHICH WAS DESIGNATED FOR ASSESSEES HAVING BUSINESS INCOME. AS PER THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE HAD N OT FURNISHED ITA NO. 2342 /CHNY/2017 :- 5 -: BOOKS OF ACCOUNTS RELATING TO ITS MONEY LENDING BUS INESS BEFORE LD. ASSESSING OFFICER. HOWEVER, AS ALREADY MENTIONED B Y ME, LD. ASSESSING OFFICER ON THE FACING SHEET OF THE ASSESS MENT ORDER HAS STATED THAT BOOKS OF ACCOUNTS WERE FURNISHED BY TH E ASSESSEE AND THESE WERE EXAMINED. HOWEVER, IN THE VERY NEXT PAR A, LD. ASSESSING OFFICER INTER-ALIA STATES AS UNDER:- THE AR OF THE ASSESSEE HAS NOT FURNISHED ANY BOOK S OF ACCOUNTS AND HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCES FOR ANY SOURCE OF HIS INCOME. OBSERVATIONS OF THE LD. ASSESSING OFFICER AS CONTAI NED IN PARA 2 AND AS CONTAINED IN PARA 3 ARE CONTRADICTORY TO EACH OTHE R. ONE OF THE CONTENTION OF THE ASSESSEE IS THAT BANK LOAN RAISED BY IT FROM CITY BANK WAS FOR THE PURPOSE OF MONEY LENDING BUSINESS AND S UCH AMOUNT WAS ADVANCED IN THE COURSE OF SUCH BUSINESS. IN THE FA CTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT QUESTION WHETHER ASSESSEE HAD CARRIED ON A MONEY LENDING BUSINESS R EQUIRES A FRESH LOOK BY THE LD. ASSESSING OFFICER. ASSESSEE HAS TO PRODUCE ITS LOAN DOCUMENTATION TO PROVE THAT BANK LOAN RAISED WAS FO R THE PURPOSE OF ITS MONEY LENDING BUSINESS. I THEREFORE SET ASIDE THE ORDERS OF THE ITA NO. 2342 /CHNY/2017 :- 6 -: LOWER AUTHORITIES AND REMIT THE CASE BACK TO THE FI LE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION DENOVO. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED ON TUESDAY, THE 26TH DAY OF JUNE , 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 26TH JUNE, 2018. KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /1 / GF