Akshat Polymers, Mehsana V. The Income Tax Officer, Patan Ward-4, Mehsana

ITA 2420/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4996 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Proportionate interest
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AKSHAT POLYMERS SR. NO. 840, OPP. HYNOUP INDUSTRIES , THOL ROAD, KADI, DISTRICT MEHSANA - 380712 PAN: AAOFA7349C (APPELLANT) VS THE IT O , WARD - 4 , MEHSANA (RESPONDENT) REVENUE BY : S H RI KAMLESH MAKWANA , SR. D . R. ASSESSEE BY: SHRI PRITESH SHAH, A.R. DATE OF HEARING : 05 - 12 - 2 018 DATE OF PRONOUNCEMENT : 31 - 01 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 , ARI SES FROM ORDER OF THE CIT(A) , GANDHINAGAR, AHMEDABAD DATED 12 - 03 - 2 014 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2420 / A HD/20 14 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 2 4 20 /AHD/20 14 A.Y. 2009 - 10 PAGE NO AKSHAT P OLYMERS VS. IT O 2 2. THERE WAS A DELAY OF 96 DAYS IN FILING THIS APP EAL BY THE ASSESSEE. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THAT THE DELAY WAS OCCURRED BECAUSE OF ILL HEALTH OF THE MANAGING PARTNER. IT IS EXPLAINED BECAUSE OF HIS TREATMENT THERE WAS DELAY IN HANDING OVER OF THE ORDER OF THE LD. CIT(A) TO THE AUTHORIZED REPRESENTATIVE AS A RESULT THE IMPUGNED APPEAL WAS FILED LATE BY 96 DAYS. AFTER CONSIDERING THE FACTS REPORTED IN THE AFFIDAVIT IT APPEARED THAT THERE WAS A BONA FIDE REASON FOR FLING THE INSTANT APPEAL LATE BY 96 DAYS, THEREFORE, WE CONDONED T HE DELAY IN FILING THIS APPEAL 3 . THE ASSESSEE HAS FILED RETURN OF INCOM E DECLARING TOTAL LOSS AT RS. 67,1 1 ,9 53/ - . THE CASE WAS SELECTED UNDER SCRUTINY U/S. 143(3) O F THE ACT ON 25 TH SEP, 2010. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS S TATED THAT IN RESPECT TO FOLLOWING DEPOSITORS (I) SHRI RAKESHBHAI GOVINBHAI PATEL - UNSECURED LOAN OF RS. 50,000/ - (II) SHRI SHAILESHBHAI NARANBHAI PATEL - UNSECURED LOAN OF RS. 99,000/ - (III) SHRI KANJIBHAI MULJIBHAI DESAI - UNSECURED LOAN OF RS. 3,00,000/ - (IV) SHRI DHARMASIBHAI IALLUBHAI DESAI - INTRODUCTION OF CAPITAL AS PARTNER OF RS. 515,50,000/ - T HE ASSESSEE HAS NOT FILED DETAILS AS PER PROVISIONS OF SECTION 68 OF THE ACT THEREFORE ASSESSEE FAILED TO PROVE THE CREDIT WORTHINESS OF THE DEPOSITORS. CO NSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED THE IMPUGNED UNSECURED LOAN U/S. 68 OF THE ACT AND ADDED THE AMOUNT OF RS. 19,99,000/ - TO THE TOTAL INCOME OF THE ASSSESSEE. GROUND 2 : DISALLOWANCE OF INTEREST I.T.A NO. 2 4 20 /AHD/20 14 A.Y. 2009 - 10 PAGE NO AKSHAT P OLYMERS VS. IT O 3 4. DURING THE COURSE OF ASSESSMENT T HE ASS ESSING OFFICER NOTICED ASSESSEE HAD ADVANCE D LOAN OF RS. 10 LACS TO SHRI RAJESH P SHUKLA. RS. 20,600/ TO ABHADAY CORPORATION, RS. 66,000/ - TO SHRI IQBAL A. MALIK AND RS. 66000/ - TO PRAHLAD H. PATEL B UT NO INTEREST HAS BEEN CHARGED ON THESE ADVANCES . ON THE OTHER HAND THE ASSESSEE HAS DEBITED INTEREST EXPENSES OF RS. 33 , 04 , 223/ - IN THE P & L A/C. THEREFORE, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN WHY PROPORTIONATE INTEREST SHOULD NOT TO BE DISALLOWED FOR NOT CHARGING INT EREST ON THE AFORESAID ADVANCES . THE ASSESSEE RESPONDED THAT INTEREST FREE ADVANCES WERE GIVEN OUT OF INTEREST FREE BO R R OW ING , THEREFORE , THERE WAS NO QUESTION OF DISALLOWANCE OF INTEREST EXPENSES. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLAN ATION OF THE ASSESSEE ON THE GROUND THAT ASSESSEE HAS NOT PROVED WITH THE DOCUMENTARY EVIDENCES THAT IM PUGNED ADVANCES WERE GIVEN OUT OF INTEREST - FREE BOR ROW INGS. CONSEQUENTLY THE ASSESSING OFFICER HAS WORKED OUT INTEREST @ 15% ON THE IMPUGNED ADVANCE S TO THE AMOUNT OF RS. 1 ,7 2 , 890/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE HOLDING THAT THE INTEREST EXPENSES UP TO THAT EXTENT HAS NOT BEEN INCURRED FOR THE PURPOSE OF BUSINESS . 5 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). T HE L D. CIT(A) H A S DISMISSED THE APPEAL OF THE ASSESSEE . 6 . WITH THE ASSISTANCE OF THE REPRESENTATIVE S OF THE ASSESSEE AND THE REVENUE, WE HAVE GONE THROUGH THE MATERIAL ON RECORD AND EXAMINED THE ISSUE OF ADDITION OF RS. 19,99,000/ - IN RESPECT OF UNSECURED LO AN MADE U/S. 68 OF THE ACT AND DISALLOWANCE OF INTEREST AMOUNTING TO RS. 11,72,890/ - IN RESPECT OF INTEREST FREE ADVANCES. DURING T HE COURSE OF COURSE APPELLATE I.T.A NO. 2 4 20 /AHD/20 14 A.Y. 2009 - 10 PAGE NO AKSHAT P OLYMERS VS. IT O 4 PROCEEDINGS BEFORE US THE LD. COUNSEL HAS SUBMITTED VARIOUS DOCUMENTS T O SUBSTANTIATE THE GEN UINENESS OF THE IMPUGNED UNSECURED LOAN AND EXPLAINED THAT COMPLETE DOCUMENTS COULD NOT BE MADE AVAILABLE BE F ORE THE ASSESSING OFFICER BECAUSE OF PREVAILING DISPUTE AMONG THE PARTNERS O N THE ISSUE T H AT TH E IMPUGNED ADDITIONS U/S. 68 OF THE ACT SHOULD BE BO RNE B Y THE TWO PARTNERS WHO HAD BROUGHT THE IMPUGNED AMOUNT AS ADDITIONAL CONTRIBUTION TO THEIR CAPITAL A/C. THEREFORE , IT IS PLEADED BEFORE US THAT THE LD. CIT(A) HAS PASSED THE ORDER WITHOUT CONSIDERING THE DETAILS AND SUBMISSION MA DE B Y THE ASSESSEE. WE HAVE PERUSED THE MATERIAL ON RECORD AND NOTICED THAT NEITHER THE ASSESSEE HAS ATTENDED BE FORE T H E LD. CIT(A) NOR FURNISHED ANY SUBMISSION BEFOR E THE LD. CIT(A) DURI NG THE COURSE O F APPELLATE PROCEEDINGS. IN THE LIGHT OF T HE ABOVE FACTS AND CIRCUMSTA NCES, WE ARE OF THE VIEW IT WILL BE APPROPRIATE TO RESTORE THIS CASE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION AFTER EXAMINATION OF T HE SUBMISSION OF THE ASSESSEE. ACCORDINGLY IN THE INTEREST OF JUSTICE AS DIRECTED ABOVE, WE SET ASIDE BOTH THE ISSUE TO THE FILE OF THE LD. CIT(A) FOR DE - NOVO ADJUDICATION AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 31 - 01 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 31 /01/2019 I.T.A NO. 2 4 20 /AHD/20 14 A.Y. 2009 - 10 PAGE NO AKSHAT P OLYMERS VS. IT O 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CI T 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,