ACIT, UDAIPUR V. M/s. Lalit Narayan Tak & Party, UDAIPUR

ITA 259/JODH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3027 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 259/JODH/2012 (A.Y. 2005-06) ACIT, CIRCLE, VS M/S. LALIT NARAYAN TAK & PARTY, CIRCLE-2, 3/9, BHOPALPURA, UDAIPUR. UDAIPUR. PAN NO. AAAAL1356M ASSESSEE BY : SHRI P.C. PARWAL. DEPARTMENT BY : SHRI G.R. KOKANI (DR) DATE OF HEARING : 19/03/2013. DATE OF PRONOUNCEMENT : 30/04/2013. PER HARI OM MARATHA, J.M.: THIS APPEAL OF THE REVENUE FOR A.Y. 2005-06 IS DIR ECTED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR, DATED 20/03/2012. 2. BRIEFLY STATED, THE FATS OF THE CASE ARE THAT TH E ASSESSEE, AN ASSOCIATION OF PERSONS (AO), IN SHORT) CARRIED OUT THE BUSINESS OF SALE OF LIQUOR ETC., AFTER OBTAINING LIQUOR-VEND CONTRAC T FROM THE EXCISE DEPARTMENT OF THE STATE OF RAJASTHAN, FOR THE DISTR ICT OF SIROHI AND JALORE. IN THE RETURNED INCOME, FILE DON 13/03/2007 AT RS. 20,18,050/- VARIOUS ADDITIONS WERE MADE, WHICH WERE CHALLENGED BEFORE CIT(A), AND THE MATTER TRAVELLED UPTO ITAT, WHO VIDE ITS OR DER DATED 06/07/2009, RESTORED THE ISSUE REGARDING ADDITION O N ACCOUNT OF DISALLOWANCE OF INTEREST. IN THE FIRST ROUND LD. CI T(A) HAD REDUCED THE DISALLOWANCE MADE ON ACCOUNT OF INTEREST FROM RS. 1 5,29,231/- TO RS. 1,74,018/- VIDE HIS ORDER DATED 06/05/2008. IN THE SECOND ROUND WHILE PASSING THE ORDER ON THE ABOVE SET ASIDE ISSUE LD. CIT(A), HAS RELIGIOUSLY FOLLOWED THE DIRECTIONS OF THE TRIBUNAL THAT HE HAS TO DETAIL CLEARLY AFTER VERIFICATION OF THE BOOKS OF ACCOUNTS AS TO H OW HE WORKED OUT A FIGURE OF RS. 12,93,62,606/- AS AN INTEREST BEARING FUNS, AND TO WORK OUT THE CHARGEABLE INTEREST BY WAY OF A SPEAKING OR DER. AFTER EXAMINATION AND VERIFICATION OF BOOKS OF ACCOUNTS, HE HAS CALCULATED INTEREST ON ADVANCES DURING THE PERIOD FROM 01/04/2 004 TO 31/03/2005. AT PAGES 4 TO 6 OF ORDER, AT RS. 174018 /- AFTER CONSIDERING ALLOWABLE INTEREST UPTO AVAILABLE NON INTEREST BEAR ING FUNDS (1358677.85 1184659.37). HE ALSO CALLED FOR A REM AND REPORT FROM THE A.O. ON THE ISSUE AFTER VERIFYING THE CLAIM OF THE ASSESSEE, INTEREST CALCULATION AND AMOUNT OF ADVANCE GIVEN, AND TO DET ERMINE IF ANY INTEREST BEARING FUNDS WERE GIVEN TO OTHER AOPS. TH E A.O. SENT HIS REPORT DATED 20/10/2011 20/02/2012. THE OPERATING PART OF THIS REMAND REPORT IS AS UNDER :- AFTER VERIFICATION OF CAPITAL ACCOUNT AND CASH BOOK OF THE ASSESSEE AOP, IT IS FOUND THAT THE SURPLUS FUND OF RS. 10,72,04,284/- WERE AVAILABLE TO ASSESSEE AOP FOR G IVING THE ADVANCES FOR WHICH NO INTEREST IS LIABLE, INSTEAD O F RS. 12,93,62,606/- WHICH SHOWN IN THE APPELLATE ORDER. ON EXAMINATION OF INTEREST CALCULATION SHEET WHICH IS PRODUCED BEFORE YOUR GOOD SELF, IT IS CLEAR THAT INTEREST AM OUNT FOR INTEREST BEARING FUND IS RS. 4,62,133/- WHEREAS ASS ESSEE HAS CLAIMED IN HIS REPLY RS. 1,74,018/-. 3. AFTER CONSIDERING THE ABOVE AND THE REJOINDER TO REMAND REPORT FILED ON BEHALF OF THE ASSESSEE, LD. CIT(A) HAS GIV EN HIS FINDING AS UNDER:- I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLANT AS WELL AS SUBMISSIONS MADE. IT IS SEEN THAT AS PER A.O. TOTA L INTEREST FREE LOAN OF RS. 17,99,69,292/- WAS GIVEN FOR VARYING PE RIOD TO DIFFERENT AOPS/MEMBERS ON WHICH INTEREST CHARGEABL E WAS RS. 15,29,00,230/-. THIS AMOUNT WAS ADDED TREATING IT TO BE DISALLOWABLE HOLDING THAT INTEREST BEARING FUND WAS PASSED BY THE AOPS MEMBERS WITHOUT CHARGING INTEREST. THE APPELLANT HAS STATED THAT IT HAD INTEREST FREE FUND AVAILABLE ON ACCOUNT OF MEMBERS CAPITAL AND DISTILLERY OUTSTA NDING TOTALING TO RS. 10,72,04,284/- AS SUBMITTED DURING APPEAL AND VERIFIED BY THE A.O. IN THE REMAND PROCEEDINGS REP RODUCED SUPRA. SO CREDIT FOR SAME IS TO BE GIVEN AS NO INT EREST AMOUNT WAS PAID ON THE ABOVE AMOUNT. AS PER THE CHART GIV EN BY THE APPELLANT OF THE CUMULATIVE NET LOANS UPTO 21 ST MARCH 2005, THE LOAN WAS BELOW THE INTEREST FREE AMOUNT AVAILABLE W ITH THE APPELLANT OF RS. 10,72,04,284/- AND ON THE BALANCE AMOUNT ONLY THE INTEREST IS DISALLOWABLE. IN THE REMAND REPORT AFTER EXAMINATION OF THE WORKI NG OF INTEREST AFTER GIVING CREDIT FOR INTEREST FREE FUND S AVAILABLE, THE A.O. HAS MENTIONED THAT INTEREST LIABLE TO BE DISAL LOWANCE IS RS. 4,62,133/- INSTEAD OF RS. 1,74,018/- CLAIMED EARLIE R AND ALLOWED BY THE LD. CIT(A). IN VIEW OF THE WORKING GIVEN BY THE APPELLANT AND T HE COMMENTS OF A.O., INTEREST OF RS. 4,62,133/- IS HELD TO BE D ISALLOWABLE INSTEAD OF DISALLOWANCE MADE BY THE A.O. OF RS. 15, 29,231/- ON THIS ACCOUNT. THE ADDITION OF THE BALANCE AMOUNT I S DELETED. 4. THE ASSESSEE IS SATISFIED BUT THE REVENUE IS STI LL AGGRIEVED AND AHS FILED THIS APPEAL. WE HAVE HEARD RIVAL SUBMISSIONS. AS WE HAVE DISCUSSED ABOVE, THE LD. CIT(A) HAS FOLLOWED THE DI RECTIONS OF ITAT GIVEN IN ITS ORDER DATED 06/07/2009 IN THEIR LETTER AS WELL IN THEIR SPIRIT. THE LD. D.R. COULD NOT POINT OUT ANY FALLAC Y IN THE FINDING OF LD. CIT(A), WHO HAS CARRIED OUT THE DIRECTIONS OF THE T RIBUNAL IN THE SECOND ROUND BY PASSING A SPEAKING ORDER AND DETAILING ALL THE FACTS AND FIGURES OF ADVANCES GIVEN ETC. IT WOULD BE HELPFUL TO UNDERSTAND OUR ABOVE OBSERVATIONS IN CASE WE INCORPORATE PARA 1 AN D 1.1 OF THE ORDER OF LD. CIT(A), AS UNDER :- HAVING HEARD THE LD. DEPARTMENTAL REPRESENTATIVE E X PARTE QUA THE ASSESSEE, IT APPEARS TO US THAT THE L D. CIT(A) ACTED UNREASONABLY IN RECORDING A FINDING THAT THE NON INTEREST BEARING FUNDS OF RS. 12,93,62,606/- WAS AV AILABLE WITH THE APPELLANT UPTO 28.3.2005. THIS HAS BEEN S O DONE WITHOUT HIMSELF VERIFYING THE FACTS CLAIMED BEFORE HIM WITH REFERENCE TO BOOKS OF ACCOUNT OF THE ASSESSEE OR EVEN GIVING OPPORTUNITY TO THE A.O. TO VERIFY THE CALCUL ATION OF CHARGEABLE INTEREST OF RS. 1,34,018/- THAT RESULTED IN RELIEF OF RS. 13,55,213/-. WE, THEREFORE, SET ASIDE HIS D ECISION AND RESTORE THE MATTER TO HIM SO THAT A SPEAKING OR DER MAY BE PASSED BY HIM SHOWING AS TO HOW INTEREST BEA RING FUNDS ON RS. 12,93,62,606/- HAS BEEN WORKED OUT AND NARRATE CONSTITUENTS THEROF. THESE FACTS NEED TO B E STATED CLEARLY IN THE ORDER AFTER VERIFICATION OF BOOKS OF ACCOUNT. HE SHALL ALSO WORK OUT THE DETAILS OF CHARGEABLE IN TEREST AND BASIS OF GIVING RELIEF, IF ANY, AFTER PROVIDING REASONABLE AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE BEFORE PASSING SPEAKING ORDER IN ACCORDANCE WITH L AW. IN ABOVE RESPECT, THE ASSESSEE HAS SUBMITTED AS UND ER: THAT THE LD. ACIT MADE ARBITRARY ADDITION OF RS. 1,52,9231/- ON ACCOUNT OF INTEREST AGAINST INTEREST FREE LOANS TO THE AOPS OF THE NEXT F.Y. IN THIS RESPECT , WE WOULD LIKE TO STATE HERE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE AOP WAS A LIQUOR CONTRA CTOR WHCH WAS AWARDED TO HIM FOR ONE YEAR ONLY AND THE AMOUNT GIVEN TO THE AOPS OF NEXT F.Y. WAS FOR SECUR ITY MONEY, EARNEST MNEY DEPOSIT WITH TENDER APPLICATION FOR OBTAINING THE NEXT CONTRACT FOR THE NEXT F.YS. ON B EHALF OF THE MEMBERS OF THE ASSESSEE AOP. THE SAID AMOUNT W AS GIVEN AT THE END OF THE RELEVANT F.Y. 2004-05 [MOST LY IN THE MONTH OF MARCH 2005]. FURTHER, IT IS PERTINENT TO STATE HERE THAT MOST OF THE MEMBERS ARE COMMON BETWEEN TH E EXISTING AOP & THE NEW AOPS AND FOR OBTAINING NEW CONTRACT AND ALSO FOR THE BUSINESS INTEREST OF EXIS TING MEMBERS. IT WAS ESSENTIAL TO GIVE SUCH AMOUNT AS A DVANCE TO THE NEW AOPS. 5. THEREFORE, WE DONT FIND ANY NECESSITY IN INTERF ERING WITH THE ABOVE FINDING OF LD. CIT(A) AND DISMISS THE APPEAL. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH APRIL 2013. VL COPY TO ALL CONCERNED.