Prithvi Raj Saneja, Abohar V. Dy. Commissioner of Income-tax, Bathinda

ITA 245/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8808 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 25-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SH TARSEM LAL
• Assessee Lawyers: SH PADAM BAHL
• Keywords: Business income; Business expenditure; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER [ I.T.A NOS. 244 & 245 (ASR)/2015 ASSESSMENT YEARS: 2003-04 & 2005-06 SH. PRITHVI RAJ SANEJA PROP. SARDARI LAL MUNSHI RAM SANEJA, SURYA MOTOR COMPLEX, HANUMANGARH ROAD, ABOHAR. 152 116 PAN:AAAHP7218M VS. ASST. CIT, CIRCLE-II, BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SH. PADAM BAHL (CA. ) RESPONDENT BY: SH. SH. TARSEM LAL (DR.) DATE OF HEARING: 16.02. 2016 DATE OF PRONO UNCEMENT: 15.03.2016 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY ASSESSEE AGAINST TH E ORDER OF LEARNED CIT(A), DATED 17.03. 2015 & 25.03.2015 RESP ECTIVELY. 2. THE GROUNDS OF APPEAL TAKEN BY ASSESSEE IN TWO APPEALS ARE REPRODUCED BELOW. IN ITA NO.244(ASR)/2015 (I) THAT THE ORDER PASSED BY THE LD. CIT (A) IS ILLEGAL , UNWARRANTED & NOT JUSTIFIED. (II) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) ERRED IN UPHOLDING THE ORDER OF ASSESSING O FFICER REFUSING TO ALLOW SET-OFF OF BROUGHT FORWARD LOSS O F RS.333964/- RELATING TO ASSESSMENT YEAR 1995- 96 AN D 1996-97 ON ACCOUNT OF DISCONTINUANCE OF BUSINESS IN SPITE OF THE FACT:- ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 2 A) THAT CARRYING ON FINANCIAL TRANSACTION AMOUNTS TO CARRYING ON MONEY LENDING BUSINESS AS IN THE PAST. B) THAT SALES TAX REGISTRATION OF THE APPELLANT WAS INTACT TILL FINANCIAL YEAR 2005-06. C) THAT SECURITIES WITH TRADE DEPARTMENT WERE INTACT AT RS.6325/- D) THAT BANK ACCOUNTS WERE OPERATIONAL BESIDES RECOVERIES FROM THE DEBTORS TO THE EXTENT OF RS.661653/- AND MAKING OF PAYMENTS TO THE CREDITORS TO THE EXTENT OF RS. 1874407/-. (III) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT (A) ERRED IN UPHOLDING THE ORDER OF ASSESSIN G OFFICER TREATING DIVIDEND INCOME AS INCOME FROM OTHER SOURC ES INSPITE OF THE FACT:- A) THAT SHARE INVESTMENT ACCOUNT HAS SEPARATELY BEEN MAINTAINED. B) THAT DIVIDEND INCOME HAS BEEN TREATED AS BUSINESS INCOME FOR THE PURPOSE OF SET OFF PAST BUSINESS LOSSES AS THE RELE VANT SHARES WERE HELD AS STOCK-IN-TRADE & NOT AS INVESTMENT. (IV) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (A) ERRED IN UPHOLDING THE ORDER ASSESSING OFFICER DISA LLOWING NET INTEREST PAID AT RS.52465/-(ACTUALLY RS. 16296/-) ET CONFIRM ING THE ADDITION OF BANK INTEREST AT RS.36168/- IGNORING THE FACT: A) THAT THE DEPARTMENT HAS ACCEPTED THE NETTING OF IN TEREST IN THE PAST. B) THAT DEPOSITS WITH BANKS AS ON 31.03.2002 ARE AT R S.847057/- & RS. 1121289/- AS ON 31.03.2003 AS AGAINST INTEREST BEARING FUNDS AT RS.612945/- AS ON 31.03.2002 & RS.707366/- AS ON 31 .03.2003. C) THAT INTEREST PAID CLAIMED AS SET-OFF AGAINST INTE REST RECEIPTS ARE OLD CREDITORS. (V) THAT ON THE FACTS T CIRCUMSTANCES OF THE CASE, TH E LD.CIT (A) ERRED IN RESTRICTING THE DISALLOWANCE AT RS.40000/- OUT OF AGRI.INCOME AT RS.1015000/- IGNORING THE FACT: A. THAT NO DISALLOWANCE WAS MADE BY THE ASSESSING OFFI CER WHILE MAKING ASSESSMENT OF THE APPELLANT FOR ASSESSMENT YEAR 2004-05 WHILE ACCEPTING AGRICULTURA L INCOME AT RS. 1099572/-. B. THAT AGRICULTURAL INCOME OF THE APPELLANT WAS ACCEP TED AT RS. 1344876/- IN ASSESSMENT YEAR 2002-03. C. THAT PROCEEDS OF AGRI./HORTICULTURE/FORESTRY PRODUC E ARE AT RS.226612/- FOR NEHRI AGRI.LAND AT 13.5 ACRES OU T OF WHICH 6 ACRES IS COVERED BY ORCHARD. TOTAL HOLDING IS 37.5 ACRES T THEKA OF 24 ACRES ORCHARD IS 12, 50,000/-. ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 3 (VI) THAT WITHOUT PREJUDICE TO GROUND NO. 3 & 4, THE ADDITION/DISALLOWANCES MADE ARE EXCESSIVE & UNREASONABLE. (VII) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN CONFIRMING THE CHARGING OF INTEREST U/S 234-A FIT 2 34-B. (VIII) THAT THE HUMBLE APPELLANT PRAYS FOR PERMISSION TO A DD OR AMEND ANY GROUND OF APPEAL BEFORE THE DISPOSAL OF APPEAL. IN ITA NO.245(ASR)2015 (I) THAT THE ORDER PASSED BY THE LD. CIT (A) IS IL LEGAL, UNWARRANTED & NOT JUSTIFIED. (II) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RESCIND DEDUCTION OF INTEREST RS.22706/- FROM INTEREST RECEIPT OF RS.101764/- FRO M BANK DEPOSITS THEREBY ERRED IN ENHANCING THE ASSESSMENT WITHOUT G IVING A NOTICE OF ENHANCEMENT. (III) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER W.R.T. PARTIAL DISALLOWANCE OF RS.22706/- OUT OF INTEREST PAID AT RS.102180/- AGAINST INTEREST RECEIPT AT RS.101764/- IGNORING TH E FACTS:- (A) THAT CARRYING ON FINANCIAL TRANSACTION AMOUN TS TO CARRYING ON MONEY LENDING BUSINESS AS IN THE PAST . B) THAT INTEREST WAS NOT CLAIMED AS DEDUCTION AS I NCOME UNDER THE HEAD INTEREST WAS TAKEN AT NIL. C) THAT INTEREST BEARING FUNDS ARE AT RS.968137/- AS O N 31/03/2005 AS AGAINST BANK DEPOSITS AT RS.4537895.6 9 WHICH WERE RS.3097527/- AS ON 31/03/2004 A RS.1121289/- AS ON 31/03/2003 AGAINST OLD INTEREST BEARING FUNDS AT RS.686614/- AS ON 31/03/2004 A RS.707366/- AS ON 31/03/2003. D) THAT INTEREST FREE FUNDS AVAILABLE TO THE APPELLANT AS ON 31/03/2005 ARE AT RS. 14400297/- AS AGAINST DEBIT BALANCES AT RS.7701739/- (IV) THAT ON THE FACTS A IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN CONFIRMING THE ARBITRARY DISALLOWA NCE OF RS.40000/- OUT OF AGRICULTURAL INCOME OF RS.17,70,000/- AND TR EATING IT AS INCOME FROM OTHER SOURCES. ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 4 (V) THAT WITHOUT PREJUDICE TO GROUNDS NO. 2, 3 A 4 ADDITION/DISALLOWANCES MADE ARE EXCESSIVE A UNREASO NABLE. (IV) THAT ON THE FACTS A CIRCUMSTANCES OF THE CA SE, THE LD.CIT (A) ERRED IN CONFIRMING THE CHARGING OF INTEREST U/S 23 4-A A 234-B. 3. THESE APPEALS WERE HEARD TOGETHER THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEIN G PASSED. 4. ITA NO. 244(ASR)/2015 IS DELAYED BY ONE DAY AND LEARNED AR EXPLAINED THAT DELAY HAD OCCURRED BECAUSE OF POST AL DEPARTMENT AND HE PRAYED FOR THE CONDONATION OF DELAY AND IT WAS COND ONED. 5. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT ASSESSEE IS EARNING INCOME FROM AGRICULTURAL A ND DIVIDEND AND HE FILED HIS RETURN OF INCOME AFTER CLAIMING BANK CHAR GES, INTEREST, AND MISCELLANEOUS CHARGES, AGAINST AGRICULTURAL INCOME AND DIVIDEND INCOME AND ALSO CLAIMED SET OFF OF BROUGHT FORWARD LOSSES FOR ASST. YEAR 1994-95 TO 1996-97 IN THE COMPUTATION OF INCOME FOR ASST. Y EAR 2003-04. 6. IN ASST. YEAR 2005-06 AGAIN SIMILARLY THE ASSESS EE FILED RETURN OF INCOME SHOWING THE INCOME FROM AGRICULTURE AND DIVI DEND. THE ASSESSING OFFICER IN ASST. YEAR 2003-04 HELD THAT A SSESSEE HAD DISCONTINUED HIS BUSINESS AS A COMMISSION AGENT AND THEREFORE, THE BROUGHT FORWARD LOSSES SET OFF AGAINST THE INCOME W AS NOT ALLOWABLE. THE ASSESSING OFFICER FURTHER HELD THAT LOSS FOR ASST. YEAR 1994-95 WAS EVEN OTHERWISE NOT LIABLE TO BE SET OFF AS PERIOD OF EIG HT YEARS HAD PASSED. THE ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 5 ASSESSING OFFICER HELD THAT SINCE AGRICULTURAL INCO ME WAS A TAX FREE INCOME AND THEREFORE, NO SET OFF OF ANY LOSS OR OTH ER EXPENSES OR LOSS WAS PERMITTED. AS REGARDS DIVIDEND INCOME, THE ASSE SSING OFFICER HELD THAT SINCE IT WAS INCOME FROM OTHER SOURCES AND T HEREFORE, NO BUSINESS LOSS CARRIED FORWARD FROM PRECEDING YEARS WAS ELIGI BLE FOR SET OFF. IN VIEW OF THE ABOVE, THE CLAIM OF SET OFF OF BUSINESS LOSS AMOUNTING TO RS.3,64,999/- WAS DISALLOWED. 7. THE ASSESSING OFFICER ALSO DISALLOWED THE CLAIM OF INTEREST EXPENSES OF RS.52,464.95 AGAINST THE AGRICULTURE AND DIVIDEN D INCOME BY HOLDING THAT THE EXPENSES OF INTEREST WAS NOT INCURRED FOR PURPOSES OF EARNING DIVIDEND. THEREFORE, ASSESSEE WAS SHOW CAUSED TO EX PLAIN HIS ENTITLEMENT FOR CLAIM OF INTEREST AS BUSINESS EXPENDITURE. THE ASSESSEE SUBMITTED THAT IN FACT INTEREST CLAIM OF INTEREST WAS RS.16,2 95.94 INSTEAD OF 52465/95 WHICH WAS INCURRED DURING THE COURSE OF RU NNING OF THE CONCERN. THE ASSESSING OFFICER FROM THE EXAMINATIO N OF BALANCE SHEET OF ASSESSEE HELD THAT THERE WAS NO NEXUS BETWEEN THE I NTEREST PAID AND DIVIDEND INCOME THEREFORE, THE CLAIM OF INTEREST AG AINST DIVIDEND INCOME WAS NOT ALLOWED. THE ASSESSING OFFICER FURTHER OBSE RVED THAT ASSESSEE HAD EARNED INTEREST INCOME FROM VARIOUS SAVING BANK ACCOUNTS AMOUNTING TO RS.36,168.51. WHICH THE ASSESSEE HAD N OT DECLARED IN THE RETURN OF INCOME. IN VIEW OF THE ABOVE, THE ASSESSI NG OFFICER MADE THE ADDITION TO THE EXTENT OF INTEREST FROM BANKS AND A LSO MADE ADDITION ON ACCOUNT OF INTEREST FROM M/S SURYA MOTORS. THE ASSE SSING OFFICER FURTHER ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 6 OBSERVED THAT ASSESSEE HAD CLAIMED AGRICULTURE INCO ME TO THE TUNE OF RS.10,15,000/-. FROM THE EXAMINATION OF VARIOUS REC EIPTS OF AGRICULTURE PRODUCE AND EXPENSES, THE ASSESSING OFFICER DISALLO WED AN AMOUNT OF 3 LACS OUT OF AGRICULTURAL INCOME AND TREATED THIS AS INCOME FROM OTHER SOURCES. 8. IN ASST. YEAR 2005-06, THE ASSESSING OFFICER OBS ERVED THAT ASSESSEE HAD CLAIMED TO HAVE PAID INTEREST @ 18% TO ADID SANEJA A RELATIVE AND OTHER FRIENDS TO THE EXTENT OF RS.1021 80/-WHICH THE ASSESSEE HAD SET OFF AGAINST INTEREST EARNED FROM SAVING BAN KS WHICH WAS APPROXIMATELY 4% TO 5 %. THE ASSESSING OFFICER HELD THAT A PERSON CANNOT BE EXPECTED TO BORROW FUNDS @ 18% AND PLACE THE SAME IN BANKS TO EARN JUST 4%. THEREFORE, HE RESTRICTED THE CLAIM OF 18% TO 4% AND MADE THE DISALLOWANCE OF RS.79,057/- OUT OF THE CLA IM OF INTEREST. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE HA D DECLARED AGRICULTURE INCOME TO THE TUNE OF RS.17,70,000/- AND HE DISALLOWED THE AMOUNT OF RS.40,000/- OUT OF THE AGRICULTURE INCOME AND TREAT ED THE SAME AS INCOME FROM OTHER SOURCES. 9. AGGRIEVED WITH THE ORDER THE ASSESSEE FILED APPE ALS BEFORE LEARNED CIT(A), HOWEVER, LEARNED CIT(A) PARTLY ALLOWED THE APPEALS OF THE ASSESSEE AND RESTRICTED THE DISALLOWANCE OUT OF AGRICULTURE INCOME TO RS.40,000/- ONLY AGAINST DISALLOWANCE OF RS.3 LACS IN ASST. YEA R 2003-04. HE FURTHER ALLOWED RELIEF TO THE ASSESSEE ON ACCOUNT OF INTERE ST FROM M/S SURYA ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 7 MOTORS WHICH AS PER HIS OPINION WAS ALREADY CREDITE D IN THE BANK ACCOUNT AND THEREFORE, IT WAS NOT REQUIRED TO BE AD DED AGAIN, HOWEVER HE CONFIRMED THE ADDITION ON ACCOUNT OF INTEREST PAID AMOUNTING TO RS.52,465/- AND ALSO CONFIRMED THE ADDITION OF RS. 36,168/- BEING INTEREST ON SAVING BANK ACCOUNTS WHICH WAS NOT DECL ARED IN THE RETURN OF INCOME. 10. AS REGARDS APPEAL FOR ASST. YEAR 2005-06, THE L EARNED CIT(A) RESCINDED THE DEDUCTION ALLOWED BY ASSESSING OFFICE R TO THE EXTENT OF RS.22,706/- AND DIRECTED THE ASSESSING OFFICER TO C HARGE INCOME FROM OTHER SOURCES AT RS.1,01,764/-. HE ALSO UPHELD THE DISALLOWANCE MADE BY ASSESSING OFFICER OUT OF AGRICULTURE INCOME TO T HE TUNE OF RS.40,000/-. 11. AGGRIEVED WITH THE ORDER OF LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 12. ARGUING THE FIRST APPEAL FOR ASST. YEAR 2003-04 , THE LEARNED AR SUBMITTED THAT ASSESSEE HAD NOT DISCONTINUED HIS BU SINESS AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAPER BOOK PAG E 33 WHERE A COPY OF NOTICE ISSUED BY EXCISE AND TAXATION OFFICER-CUM-DE SIGNATED OFFICER DATED 18.04.2007 WAS PLACED AND THEREFORE, IT WAS A RGUED THAT THE ASSESSEE HAD NOT CLOSED BUSINESS COMPLETELY, THEREF ORE, ASSESSEE WAS ELIGIBLE FOR SET OFF OF LOSSES. RELIANCE IN THIS RE SPECT WAS PLACED ON THE ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 8 CASE LAW DECIDED BY ITAT, DELHI BENCHES IN THE CASE OF ITO VS. MOKUL FINANCE PVT. LTD., 110 TTJ 445(DEL). 13. AS REGARDS THE CONFIRMATION OF ADDITION OF BANK INTEREST, THE LEARNED AR SUBMITTED THAT ASSESSEE HAD BEEN DECLARI NG THE INCOME FROM DIVIDEND AS BUSINESS INCOME AND INTEREST WAS PAID O N THE AMOUNTS WHICH WAS UTILIZED FOR THE PURCHASE OF SHARES IN EA RLIER YEARS, THEREFORE, THE EXPENSES WAS ALLOWABLE EXPENSES. 14. AS REGARDS THE LEARNED CIT(A)S ACTION REGARDIN G UPHOLDING ASSESSING OFFICERS ACTION FOR AGRICULTURE INCOME T O THE EXTENT OF RS.40,000, THE LEARNED AR SUBMITTED THAT THE ACTION OF LEARNED CIT(A) IS NOT JUSTIFIED, KEEPING IN VIEW THE FACT THAT IN EAR LIER YEAR THAT IN ASST. YEAR 2002-03 THE AGRICULTURE INCOME WAS ASSESSED AN D ASSESSING OFFICER HAD ACCEPTED INCOME OF RS.13.44 LACS. 15. ARGUING THE APPEAL IN ASST. YEAR 2005-06, THE L EARNED AR SUBMITTED THAT LEARNED CIT(A) HAS INCREASED THE ADD ITION WITHOUT GIVING ANY NOTICE TO THE ASSESSEE WHICH IS CONTRARY TO THE LAW. 16. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT ASSESSEE BEFORE LEARNED CIT(A) AND BEFORE THE TRIBUNAL ALSO WAS NOT ABLE TO DEMONSTRATE THE CONTINUATION OF BUSINESS ACTIVITIES EXCEPT THE NOTICE FROM EXCISE AND TAXATION OFFICER, WHICH CANNOT BE TREATED AS PROOF OF CONTINUATION OF BUSINESS, THEREFORE, ASSESSEE WAS RIGHTLY DENIED SE T OFF OF LOSSES. RELIANCE ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 9 IN THIS RESPECT WAS PLACED ON THE ORDER OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PRECISION GALVANISING WORKS 53 DTR 0023 . 17. AS REGARDS DISALLOWANCE OF INTEREST, THE LEARNE D DR SUBMITTED THAT SINCE NO EXPENSES WAS INCURRED FOR EARNING OF DIVID END, THEREFORE, THE DISALLOWANCE OF INTEREST WAS RIGHTLY MADE. THE LEAR NED DR SUBMITTED THAT LEARNED CIT(A) HAS RIGHTLY MADE THE DISALLOWANCE. 18. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. FIRST WE TAKE UP THE APP EAL FOR ASST. YEAR 2003-04. AS REGARDS THE CLAIM OF ASSESSEE REGARDING CONTINUATION OF HIS EARLIER BUSINESS WE FIND THAT ASSESSEE WAS NOT ABLE TO DEMONSTRATE THE CONTINUING OF HIS BUSINESS EXCEPT THE NOTICE BY EXC ISE AND TAXATION OFFICER. THE ASSESSEE DID NOT HAVE ANY TURN OVER AN D NEITHER THERE IS AN INCOME IN THE YEAR UNDER CONSIDERATION AND NEITHER THERE ARE ANY EXPENSES OF LABOUR OR SALARIES OR ELECTRICITY BILLS ETC. THE CASE LAW RELIED UPON BY THE LEARNED AR IS OF NO HELP TO THE ASSESSE E AS IN THAT CASE, THE HONBLE ITAT HAD HELD THAT THE BUSINESS CANNOT BE S AID TO DISCONTINUED UNLESS THE BUSINESS IS ABANDONED AND OR CLOSED, WHE REAS IN THE PRESENT CASE, THE FACTS AND CIRCUMSTANCES SUGGESTS THAT BUS INESS WAS ALREADY CLOSED AS THE ASSESSEE DID NOT BRING TO OUR NOTICE ANYTHING TO ESTABLISH THAT BUSINESS WAS BEING CONTINUED EXCEPT A NOTICE O F ETO. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE CIT VS. PRECISION GALVANISING ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 10 WORKS 53 DTR 0023 HAS HELD UNDER SIMILAR CIRCUMSTANCES VIDE PARA 10 & 11 HAS AS UNDER: 10. IT IS CLEAR THAT THE CIT(A) AS WELL AS THE TRI BUNAL ERRED IN HOLDING THAT THE ASSESSEE WAS STILL CARRYING ON BUS INESS. IT HAS NOT BEEN DISPUTED THAT THE ELECTRICITY SUPPLY OF THE AS SESSEE HAD BEEN CUT OFF AND THE BUSINESS HAD STOPPED. THE EXPENSES CLAIMED ALSO DO NOT SHOW ANY CLAIM TOMORROW WAGES OR ELECTRICITY CH ARGES. IRRESPECTIVE OF MEANING OF THE TERM BUSINESS ENTIR ETY OF FACTS AND CIRCUMSTANCES ARE REQUIRED TO BE SEEN. NO DOUBT, IF BUSINESS IS BEING RUN ITS VOLUME MAY NOT BE CONCLUSIVE. HOWEVER , WHERE NUMEROUS CIRCUMSTANCES INDICATE CLOSURE, INSIGNIFIC ANT TURNOVER CAN BE TAKEN INTO ACCOUNT TO DETERMINE WHETHER SUCH ENT RY IS ONLY BEING USED AS DEVICE. THE CIT(A) IN THE CIRCUMSTANCES WAS REQUIRED TO GO INTO THE QUESTION WHETHER PLEA OF THE ASSESSEE THAT IT WAS CARRYING ON BUSINESS WAS MERELY A DEVICE TO AVOID TAX BY CLA IMING CARRY FORWARD LOSSES AND BUSINESS EXPENSES WHICH COULD BE ALLOWED ONLY IF THE BUSINESS WAS STILL CONTINUING WHICH HAS NOT BEEN DONE. IN THE CIRCUMSTANCES OF THE CASE, THE FINDING OF THE CIT(A ) AS AFFIRMED BY THE TRIBUNAL CANNOT BE SUSTAINED. 11. ACCORDINGLY, WE ANSWER THE QUESTION IN FAVOUR O F THE REVENUE, SET ASIDE THE IMPUGNED ORDERS OF THE CIT(A) AND THE TRIBUNAL AND REMIT THE MATTER BACK TO THE CIT(A) TO THE CIT(A) F OR FRESH DECISION IN ACCORDANCE WITH LAW. WE FIND THAT IN THE PRESENT CASE THERE IS NO EVIDE NCE OF CONTINUATION OF SAME BUSINESS, THEREFORE, THE ACTION OF LEARNED CIT (A) IN NOT ALLOWING SET OFF OF LOSSES IS CONFIRMED. IN VIEW OF THE ABOVE, G ROUND NO.2 IS DISMISSED. 19. AS REGARDS GROUND NO.3, WE FIND THAT IT IS AN U NDISPUTED FACT THAT ASSESSEE HAD DECLARED ITS INCOME FROM DIVIDEND AS B USINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES, DESPITE THE F ACT THAT ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF SALE/PURCHASE OF SHA RES. MOREOVER, THE ASSESSEE HAS BEEN HOLDING THE SHARES SINCE LONG. TH E LEARNED CIT(A) HAS MADE A FINDING OF FACT IN THIS RESPECT AND ASSESSEE HAS NOT ABLE TO ESTABLISH THAT THE EXPENDITURE OF INTEREST WAS INCU RRED FOR MAKING ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 11 INVESTMENT IN SHARES WHICH WERE PURCHASED IN EARLIE R YEARS. THE FACT THAT THESE SHARES WERE PURCHASED IN EARLIER YEARS A ND WAS CONTINUED TO BE HELD BY ASSESSEE ITSELF PROVES THAT THE ASSESSEE HAD PURCHASED THESE SHARES AS INVESTMENT AND NOT WERE HELD AS STOCK IN TRADE, THEREFORE, THE ACTION OF LEARNED CIT(A) IN THIS RESPECT IS ALSO CO NFIRMED, THEREFORE, GROUND NO.3 IS DISMISSED. 20. NOW COMING TO GROUND NO.4, WE FIND THAT THE AS SESSEE HAD CLAIMED INTEREST OF RS.52,465/- IN ITS P& L ACCOUNT WHICH WAS REVISED TO RS.16,296/- AND WHICH WAS CLAIMED AS BUSINESS EXPEN DITURE AGAINST INCOME OF AGRICULTURAL AND DIVIDEND. THE AGRICULTUR AL INCOME BEING EXEMPT AND DIVIDEND INCOME BEING INCOME FROM OTHER SOURCES IN THE CASE OF ASSESSEE, THEREFORE, THE ASSESSEE WRONGLY CLAIME D THESE EXPENSES AGAINST THESE INCOMES AND IN FACT THE ASSESSEE HAD NOT DECLARED INCOME FROM SAVING BANKS IN HIS RETURN OF INCOME WHICH WAS TAXED BY ASSESSING OFFICER AS INCOME FROM OTHER SOURCES. SINCE WE HAVE ALREADY HELD THAT DURING THE YEAR NO BUSINESS ACTIVITY WAS CARRIED OU T, THEREFORE, INTEREST EXPENSES WAS NOT ALLOWABLE AND THEREFORE, LEARNED C IT(A) HAS RIGHTLY CONFIRMED THE ACTION AND WE ALSO DO NOT FIND ANY IN FIRMITY IN THE ORDER OF LEARNED CIT(A). THEREFORE, GROUND NO.4 IS DISMISSED . 21. NOW COMING TO GROUND NO.5, WE FIND THAT IN RESP ECT OF LOCAL SALE OF CROPS THE ASSESSEE WAS NOT HAVING ANY PROOF AND WAS NOT HAVING ANY EVIDENCE, THEREFORE, OUT DISALLOWANCE OF AGRICULTUR AL CLAIM OF ASSESSEE A ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 12 SMALL AMOUNT OF RS.40,000/- HAS BEEN CONFIRMED BY L EARNED CIT(A). IN VIEW OF THE MAGNITUDE OF THE ADDITION AND IN VIEW O F THE FACT THAT NO SUCH EVIDENCE WAS AVAILABLE WITH THE ASSESSEE REGARDING LOCAL SALE OF CROPS, WE CONFIRM THE ACTION OF LEARNED CIT(A) AND THEREFORE, GROUND NO.5 IS ALSO DISMISSED. 22. GROUND NO.1 IS GENERAL AND DO NOT REQUIRE ANY A DJUDICATION. 23. GROUND NO. 6, 7 AND 8 DO NOT REQUIRE ANY ADJUDI CATION. 24. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSES SEE FOR ASST. YEAR 2003-04 IS DISMISSED. 25. NOW COMING TO APPEAL FOR ASST. YEAR 2005-06 WE FIND THAT LEARNED CIT(A) WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESS EE HAS INCREASED THE DISALLOWANCE FROM RS.79,057/- TO RS.10,1,764/- WHIC H IS AGAINST LAW AS LEARNED CIT(A) IS NOT EMPOWERED TO INCREASE THE TAX LIABILITY OF ASSESSEE UNLESS HE HAS PROVIDED SUFFICIENT OPPORTUNITY OF BE ING HEARD. WE FIND THAT LEARNED CIT(A) HAS NOT PROVIDED ANY OPPORTUNIT Y IN THIS CASE, THEREFORE, GROUND NO.2 IS ALLOWED. 26. AS REGARDS GROUND NO.3 REGARDING PARTIAL DISALL OWANCE OF RS.22,706/- WE FIND THAT ASSESSEE HAD NOT BEEN CARR YING ANY BUSINESS IN THE YEAR UNDER REFERENCE AND MOREOVER THE ASSESSING OFFICER HAS MADE A CLEAR FINDING OF FACT THAT ASSESSEE HAD MADE PAYMEN T OF INTEREST @ 18% WHILE EARNING INTEREST INCOME FROM SAVING BANK @ 4% , THEREFORE, HE HAS ITA NOS244 & 245 (ASR)/2015 ASST. YEARS: 2003-04 & 2 005-06 13 RIGHTLY RESTRICTED THE DISALLOWANCE TO 4%. THE ACTI ON OF THE LEARNED CIT(A) INCREASING THE DISALLOWANCE HAS ALREADY BEEN REVERS ED. IN VIEW OF THE ABOVE GROUND NO.3 IS ALSO DISMISSED. 27. AS REGARDS GROUND NO.4 REGARDING UPHOLDING OF A DDITION ON ACCOUNT OF AGRICULTURE INCOME TO RS.40,000/- WE HAV E ALREADY DECIDED THE ISSUE IN ASST. YEAR 2003-04 WHEREBY THE ACTION OF THE LEARNED CIT(A) HAS BEEN CONFIRMED, THEREFORE, IN THIS YEAR ALSO TH E SAME IS CONFIRMED. IN VIEW OF THE ABOVE, GROUND NO.4 IS ALSO DISMISSED. 28. GROUND NO.5 AND 6 DO NOT REQUIRE ANY ADJUDICATI ON. IN VIEW OF THE ABOVE APPEAL FOR ASST. YEAR 2005-06 IN ITA 245 IS P ARTLY ALLOWED. 29. IN NUTSHELL APPEAL IN ITA 244 IS DISMISSED WHER EAS APPEAL IN ITA 245 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2016 SD/- SD/ - (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED: 15.03.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.