Late Deepak Agarwal, Kanpur V. Income Tax Officer-4(4), Kanpur

ITA 248/LKW/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4873 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest
• Section: 143(3); 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.248/LKW/2014 ASSESSMENT YEAR 2007-08 INCOME TAX OFFICER 4(4) KANPUR- 208 001 VS LATE DEEPAK AGARWAL, SON & L/H SHISHIR AGARWAL, 59/36, BIRHANA ROAD, KANPUR 208 001 PAN ACFPA 8002 R (RESPONDENT) (APPELLANT) SHRI RAKESH GARG, ADVOCATE APPELLANT BY SHRI AMIT NIGAM, DR RESPONDENT BY 0 5 / 1 1 /2015 DATE OF HEARING 04/01/2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT (A)-II, KANPUR DATED 13.01.2014 FOR THE AY 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 01. BECAUSE ON A PROPER CONSIDERATION OF FACT S AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED ON FACT AND IN LAW IN UPHOLDING THE ADDITION OF RS.1,50,708 /-ON ACCOUNT OF INTEREST CHARGEABLE FROM AGMOTEX FABRICS LTD., WHICH ADDITION IS CONTRARY TO FACTS, BAD IN LAW AND BE DELETED. 02. BECAUSE THE CIT (A) HAS FAILED TO CONSIDE R THE SUBMISSIONS MADE BEFORE HIM AND HAS ARBITRARILY PASSED AN ORDER SUMMARILY REJECTING THE SUBMISSIONS AND THE PAPER B OOK FILED ON 05.03.2013. 2 03. BECAUSE THE CIT(A) HAS FAILED TO APPRECIAT E THAT THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT IS WITHOUT JURISDICTION, BARRED BY LIMITATION, IN AS MUCH AS, THE NOTICE U/S 143(2) HAS BEEN ISSUED BEYOND THE PERIOD OF 12 MONTHS. 04. BECAUSE THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER CHARG ING INTEREST U/S 234B OF THE ACT. 3. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NOTIONA L INTEREST AT THE AT THE RATE OF 10.41% ON THE MINIMUM BALANCE OF LOANS AND ADVANCES GIVEN BY THE ASSESSEE TO M/S AGMOTEX FABRICS LTD. OF RS.1,99,51,589/- AS HAS BEEN NOTED BY THE ASSESSING OFFICER ON PAGE 3 OF THE ASSESSMENT ORDER. THEREAFT ER, HE SUBMITTED THAT THE BANK RECONCILIATION STATEMENT OF THE ASSESSEE AS ON 31.0 3.2007 IS AVAILABLE ON PAGES 18 TO 20 OF THE PAPER BOOK AND FROM THE SAME, IT CAN B E SEEN THAT VARIOUS CHEQUES ISSUED BY THE ASSESSEE TO THIS COMPANY I.E. M/S AGM OTEX FABRICS LTD. REMAINED UNENCASHED AS ON 31.03.2007 AND THESE CHEQUES WERE ACTUALLY ENCASHED BY THAT COMPANY IN SEPTEMBER, 2007. HE FURTHER SUBMITTED TH AT AS AGAINST OVER DRAFT BALANCE OF THE BANK AS PER BOOKS OF THE ASSESSEE AS ON 31.03.2007 OF RS.272.57 LAKH, AS PER THE BANK STATEMENT, THERE WAS DEPOSIT IN THE BANK ACCOUNT AS ON 31.03.2007 OF RS.50.62 LAKH MAINLY FOR THIS REASON THAT VARIOUS CHEQUES ISSUED BY THE ASSESSEE TO THIS COMPANY I.E. M/S AGMOTEX FABRI CS LTD. OF RS.323.19 LAKH WERE NOT ENCASHED BY THAT COMPANY UP TO 31.03.2007. HE S UBMITTED THAT UNDER THESE FACTS, SUCH UNENCASHED CHEQUES ISSUED BY THE ASSESS EE TO THIS COMPANY HAS RESULTED INTO INCREASE IN DEBIT BALANCE OF THAT COM PANY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THEREFORE, THE SAME SHOULD BE REDU CED BY THE AMOUNT OF THESE UNENCASHED CHEQUES AND IF THIS IS DONE, IT WILL COM E OUT THAT THERE IS NO UNDER CHARGING OF INTEREST BY THE ASSESSEE FROM THIS COMP ANY AND THEREFORE, NO ADDITION IS CALLED FOR. 3 4. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF AU THORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT IT IS NOTED BY THE ASSESSING OFFICER ON PAGES 2 AND 3 OF THE ASSESSMEN T ORDER THAT IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT I NTEREST HAS BEEN CHARGED BY THE ASSESSEE ON THE ADVANCES TO M/S AGMOTEX FABRICS LTD . AT THE RATE OF 10% AND THE SAME HAS BEEN SHOWN AT RS.9,26,252/- AND TOTAL INTE REST PAYMENT BY THE ASSESSEE DURING THIS YEAR IS RS.10,42,774/-. IT WAS ALSO SUB MITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE RATE OF INTEREST CHARGED FROM THIS COMPANY AND RATE OF INTEREST PAID BY THE ASSESSEE ON ITS BORROWINGS ARE MORE OR LESS SAME. BUT, THE ASSESSING OFFICER HAS PROCEEDED ON THIS BASIS THAT THERE IS MINIMUM DEBIT BALANCE OF RS.1,99,51,589/-IN THE ACCOUNT OF THIS COMPANY I N THE BOOKS OF THE ASSESSEE ON 14.03.2007 AND THEREFORE, AT LEAST ON THIS BALANCE, INTEREST SHOULD BE CHARGED AT THE RATE OF 10.41% FOR THE FULL YEAR AND IN THIS MA NNER HE WORKED OUT THE INTEREST CHARGEABLE FROM THIS COMPANY AT RS.20,76,960/- AND AFTER REDUCING THE INTEREST CHARGED BY THE ASSESSEE FROM THIS COMPANY RS.9,26,2 52/-, ADDITION WAS MADE BY THE ASSESSING OFFICER OF THE BALANCE AMOUNT OF RS.1 1,50,708/-. NOW, IF THE CHEQUES ISSUED BY THE ASSESSEE TO THIS COMPANY, WHICH WERE NOT ENCASHED UP TO 31.03.2007 ARE REDUCED FROM THE DEBIT BALANCE OF TH IS COMPANY AS ON 14.03.2007 OF RS.1,99,51,589/- THEN THE ACTUAL AMOUNT UTILIZED BY THAT COMPANY DURING THE PRESENT YEAR WILL GO DOWN CONSIDERABLY BECAUSE THE AMOUNT OF UNENCASHED CHEQUES AS ON 31.03.2007 ISSUED TO THIS COMPANY WAS TO THE TUNE OF RS.323.19 LAKHS AS AGAINST TOTAL CLOSING DEBIT BALANCE OF RS. 397.85 LAKHS OUTSTANDING IN THE NAME OF THAT COMPANY AS ON 31.03.2007. 6. CONSIDERING THESE FACTS, WE ARE OF THE CONSIDERE D OPINION THAT THE ADDITION MADE BY THE ASSESSING OFFICER OF NOTIONAL INTEREST RECEIVABLE AS PER HIM FROM THIS COMPANY ON THE BASIS OF DEBIT BOOK BALANCE WITHOUT CONSIDERING THE AMOUNT OF UNENCASHED CHEQUES IS NOT JUSTIFIED. WE, THEREFORE, DELETE THE SAME BECAUSE AFTER 4 EXCLUDING THE AMOUNT OF UNENCASHED CHEQUES, THE AMO UNT OF INTEREST CHARGED BY THE ASSESSEE FROM THIS COMPANY OF RS.9,26,252/- IS PROPER AND REASONABLE IN THE FACTS OF THE PRESENT CASE IN OUR CONSIDERED OPINION . HENCE, THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NOTIONA L INTEREST INCOME IS DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K . GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 04/01/2016 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR