M/s Jindal Buildtech Pvt. Ltd., Gurgaon V. DCIT Circle, Parwanoo

ITA 248/CHANDI/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4405 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 17-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154; 201; 80IC; 80IC; 43; 13; 22; 20

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ,च डीगढ़ I N T H E I N C O M E T A X A P P E L L A T E T R I B U N A L D I V I S I O N B E N C H , “ B ” , C H A N D I G A R H B E F O R E M S . A N N A P U R N A G U P T A , A C C O U N T A N T M E M B E R & S H R I S U D H A N S HU SR I V A S T A V A , J U D I C I A L M E M B E R आयकरअपीलसं./ ITA No.248/C H D / 2 0 2 0 नधा रणवष / Assessment Year :2 0 1 6 - 1 7 M/s Jindal BuildtechPvt Ltd., # 706, Sec-15, Part II, Gurgaon बनाम The DCIT / ACIT, Circle, Parwanoo (H.P.) थायीलेखासं./PAN NO: AABCJ 5779R अपीलाथ /Appellant यथ /Respondent Hearing though video Conferencing नधा रतीक ओरसे/Assessee by : Sh. Ashok Goyal, CA राज वक ओरसे/ Revenue by : Smt. PrinykaDhar, Sr. DR स ु नवाईक तार$ख/Date of Hearing : 15.03-.2022 उदघोषणाक तार$ख/Date of Pronouncement : 19. 04-.2022 आदेश/Order P er A N N A PU R N A G U PTA , A M : T h e p r e s e n t a p p e a l h a s b e e n f i l e d b y t h e a s s e s s e e ag a i n s t t h e o r d e r o f t h e C o m m i s s i o n e r o f I n c o m e T a x ( A p p e a l s ) , S h i m l a ( i n s h o r t r e f e r r e d t o a s ‘ C I T ( A ) ’ d a t e d 3 0 . 0 1 . 2 0 2 0 r e l a t i n g to A . Y . 2 0 1 6 - 1 7 , p a s s e d u / s 2 5 0 ( 6 ) o f t h e I n c o m e T a x A c t , 1 9 6 1 ( h e r e in a f t e r r e f e r r e d t o a s “ A c t ” ) . ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 2 1. A t th e o ut s et i t s e l f i t w as s t a te d t ha t G rou n d N o. 2 w a s not b ei n g pr es s e d b e for e u s. G ro u nd N o. 2 of t h e a pp e a l re a d s as un de r : - 1. T hat t h e L d. CIT A p pe a l , Sh im l a w a s f ur t he r not j us t i f i ed t o a r bi tr a ri l y i n n ot dec i d i n g t h e is s u e of di s al l o wa n c e of 80 IC c l a im on i nt e r e s t i nc om e of R s . 9, 7 8, 970 . 0 0, wh e n t h e s am e was no t c la im e d. 12 . T he s a i d gr o u nd N o. 2 i s , t he re fo r e, di s m is s e d a s n ot p re s s ed. 2 . G r o u n d N o . 1 o f t h e a p p e a l r e a d s a s u n d e r : - 2. T hat or d e r pas s e d u/ s 25 0( 6) o f t h e I n co m e T ax A ct , 19 61 by t h e L d . Co m m i s s io ne r of Inc om e T ax (A p pe al s ), Sh i m la i s aga i ns t l aw a n d fa ct s o n th e f il e i n as m uc h as he w as not j u st i f ie d i n co n f i r m ing t he i s s ue o f no t i c e u/ s 1 43 (2 ) o f t he I . T . Ac t , whi c h i s agai ns t CB D T gu id e l i nes . 3. The a r g u me n t o f th e Ld. Co un s e l f o r th e as s e s s e e vi s -à -vi s t he a bo v e gr o un d w as th at t h e c as e o f t h e as s e ss ee h ad be en sel e ct e d fo r s c ru t i n y i n v io la t io n o f t h e C BD T g u i de li ne s a ppl i ca bl e a n d, t he re fo r e, th e a s s es s men t ord er p a s s e d a s a co ns eq u e nc e w a s b ad i n la w a nd ne e d e d t o be qu as he d. I n s up p or t o f t hi s pr o p o s i t io n, re li a nc e w a s pl a ce d on t h e de c is i o n o f th e C o o rdi na t e Be n c h o f t h e IT A T in th e c as e of Mr s . P ay a l K u ma ri , J ag ad h ar i Vs. as s ess e e I T A N o. 23 /C h d / 201 1 or d er d at ed 24 - 02 - 2 01 1. ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 3 4. T he L d. C o uns e l fo r t h e a s s es s e e t ook u s fi r s t to t he as s e s s me n t o r de r po i n t i n g o ut f ro m p ar a 1 o f t h e or de r t ha t t he c as e w a s s el e ct e d fo r Co mp u ls o r y S cr u ti ny . H e, th er ea ft e r , t oo k u s t o t he no ti c e i ss u ed t o th e a s s es s e e u/ s 143 ( 2) of th e A ct dat e d 2 0. 9. 20 1 7 a nd dr e w o ur a t t e nt i o n t o t he fa c t t ha t t he no t i c e w as is s ue d unde r Co mp ul s o ry M a nu a l S e le ct i on on t he b a s i s o f t h e pa r a me t er a t pa r a 1 (i ) o f t he Ma n ua l c o mp ul so r y G ui de l i ne s o f t h e CBD T i s s ue d b y In s tr u ct i on N o . 5/ 20 17 d a te d 7. 7 . 2 01 7. T he re l e va n t co n t e n ts o f t h e n ot i c e is s ued u /s 1 43( 2 ) o f th e A c t a re re pr od uc e d a s unde r: - ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 4 5. H e , t he re a ft e r, dr ew o u r a tt e n t i o n t o t h e g ui de l in e s o f t h e C BD T r e fe rr ed to in th e n ot i c e u /s 1 43( 2 ) pl a c e d a t pap er bo o k pa ge N o . 4 as un de r : - 6. Re fe rri n g t o t h e abo v e , he s t a te d th a t as pe r C BD T gui de li ne s for M an u a l S ec t io n o f ca s es , it co ul d h a v e be e n s e le c t ed for s c rut i n y on th e c ri t e ri a t h at t h er e w a s r ec ur ri ng a ddi ti on in t he pa s t, t he q ua nt u m e xc ee di ng Rs . 10 la c s a nd t he i s s ue h a d e it he r b e c ome f in al in fa vo ur o f t he R ev en u e or t h e a pp e a l w as pe nd i n g in t hi s re g a rd. 7. H e, t he r e a f te r p oi n te d ou t t h a t t he ass e s s ee ha d ra i s ed a n ob je ct i o n du r i n g t he a s s es s m en t p roc e e d i ng s i t s e l f t o t h e s e le c t i on o f th e c a s e po i n t i n g o u t t ha t th e re w as no re c ur ri n g a dd i t io n , a s und er :- ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 5 9. H e s ta t ed th at t h e A ss e s s i ng o f fi c e r, i n r es p o nse , su mm a r il y di s mis s e d hi s c on t e nt io n in h i s not i ce u/ s 1 4 2( 1 ) of t he A c t da t e d 5. 1 2. 20 18 by s i m p l y s t at i n g th a t t he a s s e ss me nt pr oc e e d i ngs u /s 1 43 ( 3) o f t he A ct w a s s t at u t o r y pr oc e e d i n gs a nd ha d t o be c o m pl e t ed by pa s s i ng o r d er u/ s 1 43( 3 ) o f t h e A c t as un de r : - “ P le as e r e fe r t o th e as s e ss m e nt p ro ce e di ngs f or 20 16 - 17 . In t hi s c onn e c ti on i n r e s pon se t o yo ur l e tt e r dat e d 27 . 09. 2 01 8, y ou a r e he r eb y i nf or m ed t ha t as s e s sm e nt pr o ce ed in gs u/ s 14 3(3 ) i s s t at u t or y p r oc ee di ng u nde r ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 6 In c o m e T a x A c t , 1 9 61 a n d t h us th e s am e i s t o be c om pl et e d b y p as s i ng u/ s 14 3 ( 3). ” 10 . T he L d . c ou n se l fo r th e as s e s s e e th e r e a ft er t o ok u s t o t he o rde r o f t he L d . CIT (A ) p oi n t i ng o ut t he re fro m t ha t he h a d di s mi s s ed t h is c on t e n t i o n o f t he a s s ess e e by s t a t i n g th a t i n t he as s e s s me nt y e a r 20 13 - 14 , th e as s e s s ee ha d b e e n d en i e d d e du c t i on u /s 80I C on th e i n t e r e s t i nc o me o f Rs . 10 , 5 7, 218 /- a n d s i nc e t hi s w a s of a re c u r r i ng n a t u re a nd s i nc e t he as s e s s ee ha d no t fi l e d a p pe a l a ga i n s t t he s a m e , t he c a s e h a d be e n r i gh tl y s el e ct e d fo r s c ru ti ny . O ur a t t e n t i o n w as dra w n t o p a r a 5. 2 o f th e CI T (A ) o r de r a s u nde r : - “ 5. 2 G r ou n d No . 2: T he ap p e ll an t i n t h i s gr o u nd o f ap pe al ha s c h al l e n g e d th e s e l ec t io n of t he c as e f or m an u al s c r ut i n y. I h av e c a re f ul ly c ons i de r e d th e f ac t s o f t he c as e, t he s ubm i s s i on of t he a p pe ll an t and t he ac ti on of th e A . O . T he on ly i s s ue h er e is r e gar di ng m an ua l se l e c t i o n o f t hi s c as e i n s cr ut i ny . T he a p pe l l an t ha s ar gu e d t h at t he r e w as no add it i on o f Rs . 10 la cs h as be e n m ade i n ea r li e r as s e ss m en t y e ar s an d t ha t t he r ef or e t h e i s s ue of n ot i c e u / s 1 4 3(2 ) o f t he Ac t w as not as per t he CB D T gui de li ne s v id e I ns t r uc t i on N o. 5/ 20 17 ap pl i c a bl e f or ma n ua l s el e ct i o n of c as e s f or s c r ut in y . T he a ppe l la n t has al s o p la ce d r e l ia nc e o n v ar i o us ju d i c i a l p r ono u nc e m e n ts . I hav e pe r us e d t he s u bm is s i on o f t he ap pe l la nt v i s - a- vi s th e f ac ts of t he c as e o n r e c o r d and t he CB D T In s tr u ct i o n No . 5 / 2 0 17 go v e r n i ng t h e g u i de l i n es f or m a nu al ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 7 s e le c ti on of c as es fo r s cr u ti ny d ur i n g t he F Y 201 6- 17 . In t hi s r e ga r d, t he CB D T Inst r uc t i o n No. 5/ 2 0 1 7 a ls o c ov e r s t he c as e s whe r e an ad di t i o n o f r e cu rr i ng n a t ur e, app ar e nt ly ex c e e di n g Rs . 10 l ak hs , i n as s e ssm e nt has be co m e f i na l as no f ur t he r app e a l wa s/ ha s be e n f i l e d. In t he c as e of a p p el l an t f or the A Y 2 013 - 1 4, de d u ct i on u / s 80 IC t o t he ex t e n t of i nt er e s t i nc om e of R s . 10, 57 , 2 1 8/ - was di s al lo we d i n as s e s sm ent or d er da te d 22 . 0 2. 20 1 6 , s i nc e , t he i nt er e s t In c o m e w as n ot di r e ct l y de r i v ed by th e as s e s s ee f r om it s e li g i b l e m a n uf ac tu ri ng a ct i v i t i es. A p par e n t l y, t he a dd i ti on o n ac co un t of d is a l l o wa nc e of de du c t i o n u /s 80 I C on i nc om e a r is i ng f r om i nt er e s t w as of r e c ur r in g n at ur e w hi c h h as a tt ai ne d f in al it y , s in ce , t he a s s es s e e had n ot c h al le ng e d t he s ai d ad di t i o n . T he r e fo r e, t he s u bm is s i on of t he as s e s s ee i n t hi s r e gar d is fa c t ual l y in c or r e c t . F ur t h er , not i ce u/ s 14 3(2 ) h as bee n i s su ed a s pe r t he pr o v i s i o n of t hi s A ct . T he r e fo re , no i nf ir m i t y i s f ou n d i n t he i s s ue o f n o t ic e u / s 143 (2 ) i s s ue d i n th i s c as e . H e nc e, t hi s g r oun d o f a p pe al i s di s m is s e d. ” 11 . T he Ld . c o uns e l fo r t he a s s e s s ee , t he r e a ft e r, dre w ou r a t t e nt io n t o t he fa ct t h a t t he d is a l lo w a nc e o f d e du c t io n u/ s 80IC of t he A ct on i nt er es t in c o m e i n a s s es s me n t ye a r 20 13 - 14, re fe r r ed t o by t h e Ld. CI T(A ) , w a s a n e rro r an d w as re c ti fi e d on a n ap p li ca t i on fi l ed b y t h e a s s es s e e u/ s 154 o f t he A c t v i d e o rd e r p as s e d u /s 154 d at e d 1 5 . 6 . 2 0 20 . O ur a tt e nt io n w a s dra w n to t h e s a i d or d er p la c e d a t pa p e r boo k p ag es 17 & 1 8. The Ld . c ou ns el fo r th e a s s es se e , t he re fo r e, c ont e nd e d, th a t th e ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 8 ba s i s fo r t h e L d. CI T (A ) t o h ol d t h a t t h e re w a s a re c u rr i n g di s a l l ow a n c e be i ng ma de in t h e ca s e of th e a s s es s e e re l at i ng t o di s al l ow a n c e o f de d uc t i o n u /s 80 I C o f t h e A c t o n i nt e r e s t i nc o me ex ce ed i n g Rs . 1 0 la c s, w as in fa c t n on - e xi s t e n t s in c e t he s ai d ba si s w a s de l et e d b y w ay of re c ti fi c at i o n or de r pa s s ed u /s 15 4 o f t he A c t th e A c t, a s t he a s s es s e e ha d n e v e r c l a i m ed s uc h de du c t i o n a n d, t her e f o re , t he s el e c t io n o f t he a s s es s e e’ s c as e fo r s c ru t i n y i n t h e i mp ug ne d or de r w a s i n v i o l a t i o n o f t he C BD T G ui d e l i n e s in t hi s re ga rd a n d t he a s s es s men t or de r p a s s ed a s a c ons e qu e n c e ne e de d to b e q u as he d. 12 . T he Ld. D R, pe r c on t r a, p o i n te d o u t t ha t t h e a ss e s se e ’s c as e w as s e le c te d f or s cr ut in y fo r cl a i m o f de du ct i on o f i n te r e s t in co me u/ s 8 0IC o f t he A ct w h i c h ha d no t be en d el e t e d a nd, in f ac t , r e m ai ne d a s s u ch e ve n w he n t he C IT ( A ) pa s s ed t he o r d e r i n t h e c a s e of a s s e sse e for t h e i mpu gne d y e a r. S h e po i n t ed ou t t h a t t he fi n d i n gs o f t h e L d. CIT (A ) i n t hi s r e ga rd w e re fa c t u a l l y c o rr ec t as on t he d a t e of s e l e c t io n o f t he a s s es s e e c as e fo r sc ru ti ny a s al s o t he pa s s i ng of th e or de r by t h e Ld . CI T(A ) , t he d is a l l o w a nc e o f d e d u ct i on u / s 80I C o f th e A ct on th e i nt er es t in co me w a s v er y muc h a li ve an d no ap pe al ha d bee n fi l e d by t he a s s es s e e a ga i n s t t h e sa m e. S he poi nt ed o ut t ha t it w as on ly s u bs eq u e nt ly , a ft er t h e ord e r w as pa s s ed b y th e Ld. CIT (A ) i n t he i mp u g ne d ca s e , w he n t h e a s s es s e e h ad m o ve d r e c t i fi c a t io n ap pl ic a tion u / s 154 o f t he A c t fo r t h e a ss e s s me nt ye ar 2 0 1 3- 1 4 an d t he or d er p a s s ed th e re i n. I n t h is ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 9 re g a r d, our a t t e nt i on w as dr aw n t o th e ch ro n o lo gy of t he o rde r as un der :- 1) 22 . 2 . 20 16 A s se ss m ent or de r pa ss e d fo r a ss e s s me nt y e ar 201 3 - 14 m a ki n g d is a l l o w a n c e o f de du c t i on u / s 8 0I C on in te res t i n c o m e. 2) 26. 1 2. 20 18 A ss e ss me n t o r de r pa s s ed fo r t he i mp u gne d a s s es s men t ye a r, i. e A. Y 20 16 -1 7 3) 30 . 1 . 20 20 CI T( A ) ord er fo r t he i m pu gn e d a s s ess men t ye a r A . Y 20 16- 1 7 p a s s ed a n d , 4) 15. 6 . 2 02 0 ord er u / s 15 4 o f t h e A c t pa s s ed for A . Y 201 3 -1 4 de l et i n g t he d is a l lo w a nc e o f de duc t i on ma de u /s 80 IC o f t he A ct . 12 . 1 S he , th e r e f or e , co nt e n d ed t hat t h e L d. CIT (A ) ha s ri g ht fu ll y hel d t ha t t he s el e ct i on o f th e a s s es s e e s ca s e w a s in ac co r d a nc e w i t h th e gu i d e l i n es i n t h i s r eg a r d. 13 . We h av e h ea rd t h e ri v a l c o n t e nt i o n s a nd ha ve a ls o c ar e fu ll y c ons i de re d t h e d o cu me n t s r e f er re d t o b e for e us . We a r e n ot i n a gr e e m e nt w i t h t h e co nt e n t i o n o f t he Ld . Cou n s el for t h e as s e ss ee t ha t t he a s s es s e e ’s ca s e i n t h e i mp u g ne d a s s e s s me n t y e a r w a s s el e ct e d f o r s c rut i n y i n v i ol a t i on o f t he C BD T gui de l i n es i n t h is re g a r d an d t h e re a s o ns fo r t he s am e ar e e v i de nt fr o m t h e a rg u m e n ts m a de by bo th th e pa r t i es be fo re u s a n d t he u nd is p u t e d fa c ts o f th e c as e . ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 10 14 . It i s n o t de ni e d t h a t a s o n t h e d a t e w he n t h e as s e s s ee ’s c as e fo r t h e i mpu gne d a ss e s s me nt ye ar i. e . A . Y 201 6-1 7 w a s s el e ct e d for s c r u ti ny , t he as s e s s me nt o rd er f or t he a s s es s m e nt y e a r 20 1 3 -14 h a d be en pa s se d m a ki n g d i s al l ow a n ce o f de du ct i on c l a i me d b y t h e a s ses se e u /s 8 0I C o f t he A c t o n i nt e r e st i nc o me w hi c h ex ce ed ed Rs . 10 l a cs . Th er e i s no di s pu t e v is - a -v i s th is fa c t . I t i s a l s o n ot d en i e d t h a t n o a pp ea l ha d be e n fi l ed b y th e a s s es se e a g a i n s t t he s a i d ord e r . T he CBD T gui d e l in es , as po i n t e d o ut b y t h e L d. co u ns e l f or t he a s s es s e e h i ms el f be fo re u s , c at e g or i c a l l y s ta t es t ha t c as e s for M a n ua l S e l e c t io n ha ve t o be ta ke n on t he b as i s w he n ce rt a in d is a l l o w a n c es m ad e i n t h e pas t ha v e re m a in e d un c on te s t ed b y t he a s s ess e e. N o w , as on t he d a t e o f s el e c t i on o f t h e a s s es s e e’ s ca s e fo r scr u t i n y fo r t he i m p ug n ed y e a r, pos i t io n b ei ng s o t ha t a d is a l l o w a n c e e xc ee d i n g Rs . 10 la c s h ad be e n ma de i n th e a s s es s e es c as e w h ic h h a d r e ma i n e d unc on t e s t e d, We d o n ot fi n d a n y mi s t a k e i n t h e or d e r o f t h e Ld . CI T( A ) h o l di n g th a t th e s el e c t i on o f t h e a s s es s e e ’s c a s e fo r s c ru t i n y w a s a s pe r CBD T gui de l i n es . T ha t su bs eq ue nt ly , di s a l l ow a nc e ha d be e n fo un d t o ha v e be e n do ne e r ro neo us l y a n d w as re c ti fi e d u /s 1 54 o f t he A ct , do es n ot c han ge th e pos i ti o n , s in ce a s on da t e o f s e le c ti on o f t he c a s e o f t he a s s es s e e for ma n ua l s c rut i ny, th e a s s es s e es c a s e ful fi l le d th e c o n d i t i ons as s p ec i fie d in t he C BD T gu i d e l i n es a nd t he r e w as n o w ay by w hi c h t he A s s e ssi ng o f fi ce r c o ul d ha v e k now n t h a t t h e d is a l lo w a nc e ha d bee n ma de e rr on e o us l y, w hi c h he c ou l d ha ve b e e n ma de aw a re o f a nd c o ul d h av e co me t o hi s k n ow l e dg e ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 11 on l y b y w a y o f a n or de r pa s s ed, a n d w hi c h , i s a fac t o n re co rd, w as a ffe c te d s ubs e que n t l y o nl y a ft e r th e ord er p a s s e d in a pp e a l by t he CI T(A ) . It i s t he fa c t s i t ua ti on a s on th e da t e o f s e l ec t i on o f th e c as e f or s c rut i n y w hi c h i s t o b e co ns i d er ed a n d s e e n w he t h e r t h ey fu l fi l l th e c ri te ri a m en ti on e d t her ei n fo r s e l e c t io n o f ca s es fo r s c ru ti ny . It is i mpo s s ib l e for t he A s s es s in g o ffi c e r to f ors e e o n the da t e o f s el e ct i o n o f c as e for s c ru t i ny t hat t he fu l f i l l me nt o f co nd i t i o ns w a s e rr on e o us . A s t ri c t i nt e rp re t a t i on t o th e a ffe c t t h a t di s al l ow an c e w hi c h co ul d ne ve r ha v e b e e n ma de b y th e D ep ar t m en t c ou l d no t ha ve be e n t he c ri t e r i a fo r s e le c ti on o f c a s e, in o u r vi e w , ca n n ot b e a p p l i e d to a d m i n is t ra t i v e m at t e rs r el a ti ng t o th e s e l e c t i o n of c a s e f or s c ru ti n y. T he CBD T gu i d e l i n es in t h i s re g a r d a r e o nl y t o f ac i li t a t e s el e c t i o n o f c a s es fo r s c rut i n y fo r e f fe c t i ve an d w or t h w h i l e a ss e s s me n t s to be co n du c t ed a n d t o e ns u re t h a t th er e is no ad hoc is m r es or t e d t o i n th e s a m e re s ul t i n g i n w as t a ge o f r es o u rc es of th e de pa r t m e nt i n i nc ons e quen t i al as s e s s me n t s . . T he se g u i de l i ne s a r e me re ly ad mi ni s t r at i v e i n na t ure a nd h av e t o b e c ons i de re d as it i s w i th ou t re ad i n g b et w ee n t he l i nes or g oi n g de epe r i nt o it . Eve n o t h e r w i s e w e fi n d th a t th e i s su e fo r w hi c h t he c a s e w as s e le c te d for s cr u ti n y a s s es s me n t, i . e di s a ll ow a nc e o f de d u ct i on u/ s 80 IC on i n te re s t i nc o me , w as not pr es s e d b y t he Ld . C ou n se l fo r t h e a s s es s e e be fo r e us , a s n ot e d in e ar l i e r p ar t o f o ur or d er a bov e , t hu s vi rt u a l l y c on c e d i n g t ha t i t w as not e l i g i b l e t o th e s a i d d e d uc t i on a s pe r l a w . Co n s id e r i n g t h e s a me , i f th e a s s e ss me nt or d e r i s q uas h ed fo r t h e r ea s on ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 12 t ha t t he c as e w as n ot s e l e c t e d for s c r ut in y as p e r C BD T gu i d e l i ne s , as c an vas s e d b y t h e L d. C o u ns e l fo r th e a ss e ss e e, i t w oul d t an t a mo u nt t o qu as h i n g a n ot h e rw i s e dul y co n duc t e d as s e s s me n t p roc ee di ngs di s a l l ow i ng an u n di sp ut ed l y i n el i g i bl e cl a i m o f d e duc t i on o f t he a s s es s e e, on a me r e a d m in is t ra t i v e as p ec t , w hi ch a spec t di d not e v e n e xi s t a s not e d by u s ab ove . Tha t w oul d re s ul t i n not h i n g s h or t o f t ra ve s t y o f j us t i c e 15 . In vi ew o f t h e ab o ve , w e di s mis s t hi s c ont e n t i on o f as s e s s ee t ha t t he a s s e s se e s ca s e w a s s e l ec t e d f or s c ru t i ny i n vi ol a t i o n of t h e CBD T G ui de li ne s an d w e up hol d t h e o r de r o f t he CI T (A ) i n t hi s re g ar d. 16 . . G rou nd N o. 1 of t h e ap p e a l is d is m is s e d. 17 . G rou nd N o. 3 o f th e a ppe al re ad s as un d er :- 3. T hat t h e L d. C IT A ppe al , S hi m l a was f u r th er n ot j ust i f ie d t o ar b i t r ar i l y u p h o l d t h e ad di t i o n on acc ou nt o f i nt e r es t of Rs . 4, 00 , 8 00. 00 , r e gar d in g ad v a nc es t o A d hu n ik En er c o n, w he n t h e r e w er e s uf f ic i en t i nt e r es t f r ee f un d s. 15 . T he gr i e va nc e o f t he a s s e sse e i n t hi s g rou n d r el a te s t o di s a l l ow a nc e o f i nt er es t re l a ti n g t o a d va n c e ma de by t he as s e s s ee to on e M /s A dh un i k E n e r c on, i nt er e s t co mpo nen t b ei ng R s . 4, 00, 800 an d t he a dv a n c e t o t he s a i d pa r t y a m o un t i n g to Rs . 33, 40 , 000/ -. T he A s s ess i ng o f fi c e r d is a l l o w e d th e s a me f ol lo w i ng th e p ro p os i tion l a i d d ow n by t h e H on' bl e J u ri s d i c t i o na l H i g h C ou r t i n t he c as e o f A bh i sh ek In d us t r i e s v ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 13 28 6 I TR 1 (P & H ) and CI T V s . A ve ry Cy c l e In d us t r i es Lt d. 298 IT R 239 t ha t i n t e r es t fr e e a d va n c es fo r n o n- b us i nes s pu rp ose s ma d e ou t o f m ix ed fu n ds i nc lu di ng i nt er es t b e a r i n g fu nds w a rra n t di s al l ow a n ce o f i n t e re s t re l at i n g to t he i nt er es t fre e ad v a n ce s s o ma de . T he A s s e ssi ng o f fi ce r a pp l i ed a r at e o f 1 2 % o n t he i m pu g n ed a dva n c e s a nd ma d e di s a l l ow a n c e o f in t e re s t o f Rs . 4, 00, 8 0 0/ - u/ s 3 6(1 )( i i i ) o f t h e A c t . 16 . N ow , t he s ol i t a r y c on t e nt i o n o f t h e L d. co u ns e l fo r t h e a s s es s e e be fo r e u s w a s t ha t t he a ss e s s e e ha d s u ff i c i e n t i nt er es t fr e e o w n fu nd s fo r t he pu r p os e o f m a k in g t he i m p u gn e d a dv an c e s an d t he p re s u mp ti on , t he re fo re , w as t ha t t he s a i d in te re s t f re e fu nds w er e us e d fo r ma ki n g t h e a dv a n c es c a l l i n g f or no d is a l lo w a n c e o f in t e r e s t. O ur a tt e nt io n w as dr aw n t o t h e de ci s i on o f t he H o n ' b l e A p ex C o u rt in t he c a s e o f C I T V s . R e l i a n c e U t i l i t i e s & P o w e r L t d . ’ 3 1 3 I T R 3 4 0 ( S C ) layi n g d o w n a n d s e tt l in g th e a for es a i d pr op os i ti on . H e f urt he r p oint e d out t h a t t h is c on t e n t i o n ha d b e e n r ai s e d b e f o re t h e Ld . CIT (A ) als o a t pa r a 5. 4. 3 o f t he o rd er b ut ha d be e n s u m ma r i l y di s mi s s ed by t h e Ld . CIT (A ) s t a ti ng t ha t th e as s e s s ee ha d fa il e d t o e s t ab li s h t he ne x us b et w ee n t h e i nt e re s t fr e e fu n ds an d t h e i nt e r es t fr ee a d va n c e s ma d e . 17 . T he L d. D R, h ow ev er , s u ppo r te d t h e or de r o f th e L d. CIT ( A ). 18 . We ha ve h ea r d t h e c on t e n t i o ns o f bot h t he pa r tie s . ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 14 19 . T he i s s ue to b e a dj ud i c a t e d r el a t e s to di sa l l o wan c e o f i nt e re s t u /s 36 ( 1) ( i i i ) o f t he A c t o n a c co u n t o f i n t e r e s t fr e e non b u s in es s a d va n c es m a de . A s po in te d o ut by t h e L d. Co u n s el fo r t he a s ses se e, t he H on’ bl e a pe x c o urt , i n t h e c as e o f CI T V s . R e l i a n c e U t i l i t ie s & P o w e r L t d (s up ra ), h as s et t l ed t h e p ro pos i t io n i n t h i s r eg a r d t ha t w her e s uf fi ci e nt ow n i nt e re s t fre e fu n ds a re av a i l ab le , the pr e s u m pt i o n i s t h a t t he s a i d fun ds ha v e b ee n us e d fo r t h e pu r pos e o f mak i n g in te r e s t f re e no n bus i ne s s ad va nc es c al l i n g fo r no di s al l ow a n c e of i n t e re s t u /s 36 ( 1) ( i i) o f t h e A c t . H a vi n g sa i d s o , w e fi n d t h a t t he a ss e ss e e h ad pl e ad e d t ha t s u ff ic i en t o w n fun d s w e re a va il a b l e f or t he p ur pos e o f m a ki n g i n t e r es t fr e e n on b us i n e s s a dv an c e t o M / s Adhu ni k E ne rc on, i n t he pr es e nt c a s e, a m o un t i n g t o R s. 33, 40 , 00 0/ -, but th e sa m e ha s n o t be e n d e a l t w i t h b y th e L d . CI T (A ) i n a c c o r da nc e w i th th e s et t l e d pr o pos i t i o n o f l aw a s s ta t ed ab ov e . We , t her e f or e , co n s i de r i t fi t t o re s t o re t he is s ue b a c k t o t h e fi le o f t h e A s s e s s in g o ffi c e r t o ve r i fy t h e fa c t o f a va i la bi l it y of ow n fu n ds w i t h t he a s s es s e e an d t he r e a f te r a dj ud i c a t e t he is s u e a fre s h i n a c c or d an c e w i t h l aw . 19 . 1 . G rou nd N o. 3 o f th e a ppe al i s a l l o w e d f or s t ati s ti c al p ur po s e s . 20 . G rou nd N o. 4 re a ds as un der :- 4. T hat t h e L d. C IT A ppe al , S hi m l a was f u r th er n ot j ust i f ie d t o a r bi tr a ri l y u ph o l d t h e a dd i t i o n on a dhoc bas i s o n t ot al e x p e n di t ur e o f Rs . 45 , 75, 10 , 8 3 0. 00 @ 0. 5 % whe n ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 15 bo oks of ac c o u nt s we re ac ce pt e d a nd n o de t a i l s wer e as k e d f o r i n E -A s s e s s m en t P r oc ee di ng. 21 . T he gr i e v a n c e o f t h e as s e s s ee i n t h e ab o ve gr ound i s v i s -a -v is th e a dh oc d is a l lo w a nc e o f 0. 5 % o f t h e t ot al e xp e n d i t u re i nc u r r e d b y t he a s s es s e e of R s . 45 , 75, 10, 8 30 / -. The L d. co uns e l fo r th e a s s es s e e po i n t e d o ut fr o m p a ra g ra ph 7 o f th e a s s es s me n t or d er t h a t t h e s a id a dh o c di s a l l ow a nc e w a s m a d e fo r t h e re as o n t ha t t h e a ss e ss e e di d n ot p ro du c e i ts bo ok s o f ac co u nt a nd b il l a n d vo u ch e r s t o a ut h en t i c a t e t h e c l a i m o f va r i o us ex p en s es . T he s a m e w a s u ph e ld b y th e L d. CIT ( A ) a ls o for t h e s a me re as on . 22 . T he L d. c oun s el f or t he a s s es s e e c ont e n d e d b e f or e u s t ha t i t w as ne v e r a s k ed t o p r o d u ce i t s boo k s o f a c c ou n t d u r i n g t h e e n t ir e a s s es s me n t pr o c e e d i n gs a nd as s e s s e e b ei n g a pri v a t e li mi t ed c omp an y , i ts b oo k s o f a cc ou n ts w er e s t a t ut or i l y au di t e d a s re qui re d by l aw as pe r th e Co m p a n i es A ct a nd w as e ve n s ubj e ct ed t o t a x au d i t un d er t h e Inc o m e T ax A ct a l s o a n d n ot h i n g ad ve r s e ha d be e n p o i nt ed out b y e i t he r o f t h e a ud i t ors w it h r eg a r d t o t he e x p en s es c la i me d b y i t . H e con te nd e d t ha t e ve n i n t h e pa s t , n o e x pe nd i t ure ha d e ve r be e n d i s al l ow e d in t he c a s e o f t he as s e s s ee . 23 . T h e Ld. D R re fe rre d t o th e or de r o f t he A ss e ss i ng o ffi c er a nd p oi n t e d ou t t ha t d e s pi t e s e ve r a l op po r t un it i es , t he a s s es s ee di d not fur n i s h th e ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 16 ne c es s a ry i n f o r m at i on, bo o ks o f ac co u nt or b il l s and vou ch e rs t o a ut he n t i c at e t he c l a i m. 24 . We h a v e h e a rd b o t h th e p a rt i es . We ha ve n ot e d tha t ou t o f t he t ot a l e xp e ns e s o f Rs . 45, 7 5, 10, 83 0/ - a s c la i me d by t he ass e s s ee , 0. 5 % o f t h e s a me ha v e b ee n di s al l ow e d for no n- p ro d uc ti on o f bo oks an d vou c h e rs. U ndi s p u te dl y, t hi s d is a l lo w a nc e i s t ot al l y a dh oc a nd w i t h o ut an y ba s is a ls o . Ev en for t h e s ak e o f a rg u me nt s , i f i t i s a cc ep te d th at t he a s s es s e e di d n ot pr o d uc e a n y b oo k s and vo u c h e rs , t he di s a ll ow a n ce o f ex pe ns es ou ght t o ha v e be e n o n a ra ti o n a l b as i s con s id er i n g t he s u rro un di ng fa c t s a nd c ir cu ms t a n c e s o f t he ca s e o f t h e a s s es s e e a nd co n s i de r i n g it s pa s t hi s t o ry a ls o . A s po in te d out by t h e L d. Co u ns e l for t h e a s s ess e e , i ts bo oks a re s ub j e ct e d t o s t a t u t or y a u d i t un d e r Co m p a nie s A c t a nd t ax a ud i t un der t h e I n c o me T a x A c t. Th e A s s es s in g o ffi cer o u g ht t o ha ve a t l ea s t c on si de re d t h e r ep or t o f t he a ud i t ors w hi c h wa s b as e d o n t h e b o oks o f ac c o unt o f t h e a ss e s s e e o nl y be fo r e re s or t i ng t o th is a d h oc di s a l l ow a nc e . F u rt he r, t h e r e ou gh t t o ha v e be en a pr op e r ba s i s fo r a do pt i n g t h e r at e o f 0. 5% for di s a l l ow a nc e O ut o f t h e e nt i re e xp e ns e s . T he a s s es s e e c ont e nde d th a t h e w as ne ve r as k ed t o pr o d u c e t he bo oks o f a cc ou n t a n d ha vi n g not ed t h a t t he R e ve nu e A u th ori t ie s hav e ma de a n a bs ol ut el y a d ho c b a s i s, w e c on s id er i t fi t t o re s t or e th is i s sue b ac k t o th e A O t o g iv e o p p or t un it y t o t he a s s e ss e e to s u bs t an t iat e it s c la i m o f ITA No. 248-Chd-2020 M/s Jindal BuildtechPvt.Ltd., Gurgaon 17 e xp e ns e s a n d t he re a ft e r a dj ud ic a te t h e i ss u e in ac cor da nc e w i t h l a w . G rou nd N o. 4 o f th e a ppe al i s a l l o w e d f or s t at i s ti c al p ur po s e s . 25 . G rou nd N o. 5 o f th e a ppe al re ad s as un d er :- 5. T hat t he a ppe l l an t c r av es l ea ve t o a dd d el et e or m odi f y an y gr o u nd of a pp e al be f or e t he s am e i s hea r d or di s po se d of f . 26 . T hi s g ro un d is ge n e ra l i n na tu r e a nd d oes n o t ne e d an y s p ec i fi c a dj ud i c a t io n, an d a c c o rd i n g l y t he s a m e i s di s mi s s ed. 27 . In t h e r e s ul t , t h e a pp e a l o f t he a ss e s s e e i s part l y al l o w ed fo r s t at i s t i c a l pu r p os e s . . O rde r p ro no un c e d o n 19. 0 4. 2 02 2 . S d/ - S d/ - (SUDHANSHU SRIVASTAVA) (ANNAPURNA GUPTA) Judicial Member Accountatn Member Dated : 19. 04 .2022 “आर.के.” आदेशक त+ल,पअ-े,षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु .त/ CIT 4. आयकरआय ु .त (अपील)/ The CIT(A) 5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar