Shri Girishbhai M.Patel, Ahmedabad V. The Dy.CIT.,Mehsana Circle, Mehsana

ITA 2727/AHD/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5323 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 06-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PPM
• Assessee Lawyers: SAKAR SHARMA SHRI J P JHANGID
• Keywords: Search and seizure; Source of fund; Deemed dividend
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.A. NO. 2727/AHD/2010 (ASSESSMENT YEAR: 2005-06) GIRISHBHAI M PATEL, 4, REGENT PARK, VANZA CO- OPERATIVE SOCIETY PART II, NEAR JUDGES BUNGALOW, BODAKDEV, AHMEDABAD V/S DY CIT, MEHSANA CIRCLE, MEHSANA (APPELLANT) (RESPONDENT) PAN: ABYPP8093M APPELLANT BY : SHRI SAKAR SHARMA RESPONDENT BY : SHRI J.P. JHANGID, SR. D.R. ( )/ ORDER DATE OF HEARING : 06-01-201 4 DATE OF PRONOUNCEMENT : 07-02-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), GANDHINAGAR DATED 30.06.2010. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SAL ARY BUSINESS AND OTHER SOURCES. HE FILED HIS ORIGINAL RETURN OF INCOME ON 01.02.2006 DECLARING TOTAL INCOME AT RS. 8,20,448/-. THE RETURN WAS PROCESSED UNDER SECTION 143(3) OF ITA NO 2727/AHD/2010 . A.Y. 2005-06 2 THE ACT. NOTICE UNDER SECTION 148 OF THE ACT WAS IS SUED ON 14.07.2008 AND THEREAFTER ASSESSMENT WAS FRAMED UNDER SECTION 148 READ WITH SECTION 143 (3) VIDE ORDER DATED 30.10.2009 AND THE TOTAL INCOM E WAS DETERMINED AT RS. 32,47,960/-. AGGRIEVED BY THE ORDER OF A.O., ASSES SEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 30.06.2010 P ARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN DS:- 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRM ING ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS. 21,71,160/- BY INVOKING PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRM ING ACTION OF ASSESSING OFFICER IN DENYING DEDUCTION OF INTEREST PAID ON BORROWINGS USED FOR R EPAYMENT OF HOUSING LOAN TAKEN IN EARLIER YEAR FROM THE BANK AMOUNTING TO RS. 1,13,176/- WHILE COM PUTING INCOME FROM HOUSE PROPERTY. 1 ST GROUND IS WITH RESPECT TO INVOKING PROVISION OF SE CTION 2(22)(E) OF THE ACT. 4. A.O. NOTICED THAT ASSESSEE WAS A DIRECTOR OF B. PATEL INFRASTRUCTURE PVT. LTD. AND WAS HOLDING MORE THAN 10% OF ITS VOTING POWER. HE ALSO NOTICED THAT B. PATEL INFRASTRUCTURE PVT. LTD. WAS HAVING ACCUMULAT ED RESERVES, HAD GRANTED LOAN OF RS. 21,71,160/- TO THE ASSESSEE. A.O. WAS O F THE VIEW THAT AS PER THE PROVISIONS OF SECTION 2 (22)(E) OF THE ACT, ANY PAY MENT BY A PVT. LTD. COMPANY TO A PERSON HOLDING NOT LESS THAN 10% OF TH E VOTING POWER WOULD BE CHARGEABLE TO TAX AS DEEMED DIVIDEND. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE AMOUNT GRANTED BY THE COMPANY T O THE ASSESSEE NOT BE CONSIDERED AS DEEMED DIVIDEND. ASSESSEE INTERALIA S UBMITTED THAT THE AMOUNT WAS PAID BY B. PATEL INFRASTRUCTURE PVT. LTD . FOR BUSINESS CONSIDERATION. IT WAS FURTHER SUBMITTED THAT HE HAD GIVEN GUARANTEE TO JAMMU AND KASHMIR BANK LTD. FOR THE FACILITIES GRANTED TO B. PATEL INFRASTRUCTURE PVT. LTD. AND APART FROM PERSONAL GUARANTEE, THE BUNGLOW AND THE LAND WAS ALSO BEEN USED FOR THE PURPOSE OF EXTENDING CREDIT FACIL ITY TO THE COMPANY AND THE FUNDS RECEIVED FROM THE COMPANY WERE RETURNED BY HI M ON THE REPAYMENT OF LOAN AND RELEASE OF ALL HIS ASSETS WHICH WERE GIVEN AS SECURITY. HE THEREFORE SUBMITTED THAT THE AMOUNT GIVEN TO HIM CANNOT BE CO NSIDERED TO BE IN THE ITA NO 2727/AHD/2010 . A.Y. 2005-06 3 NATURE OF LOAN AND ADVANCE WITHIN THE MEANING OF SE CTION 2(22)(E) OF THE ACT. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEP TABLE TO THE A.O. AND HE ACCORDINGLY CONSIDERED THE AMOUNT OF RS. 21,71,1 60/- GIVEN BY B. PATEL INFRASTRUCTURE PVT. LTD. TO THE ASSESSEE AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O. , ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) CONFIRMED THE ACTION O F A.O. BY HOLDING AS UNDER:- 3.3 THE MATTER HAS BEEN CONSIDERED BUT I AM AFRAID I DO NOT AGREE WITH THE AUTHORISED REPRESENTATIVE. SECTION 2(22)(E) IS A DEEMED SECTION AND THEREFORE NEEDS TO BE INTERPRETED STRICTLY. THE LAW DOES NOT GIVE POWER FOR THE ASSESSING AUTHORITY TO PROBE THE CAUSES FOR OBTAINING ADVANCES AND BEING JUDGMENTAL ABOUT THE NEED OF THE ADVANCES. WHILE TH E COMPANY OBTAINED LOAN FROM JAMMU & KASHMIR BANK AND THE APPELLANT STANDING GUARANTEE FOR THAT LOAN IS ONE TRANSACTION, THE COMPANY GIVING ADVANCES TO THE ASSESSEE IS A TOTALLY DIFFERENT TRA NSACTION. THERE IS NOTHING ON RECORD THAT THIS ADVA NCE WAS GIVEN EITHER IN LIEU OF ASSESSEE STANDING GUARA NTEE OR FOR UTILIZATION IN THE EVENT OF ANY RECALL OF LOAN. THEREFORE, THE AMOUNT ADVANCED BY THE COMPANY TO THE ASSESSEE HAD THE CHARACTER OF ADVANCE ONLY. EVEN IF IT WAS TO BE ASSUMED THAT IT IS A -BU SINESS TRANSACTION, THE CHARACTER WOULD NOT CHANGE TILL ANY SUCH EVENTUALITY OR EVENT WERE TO OCCUR; AND IF THESE WERE NOT TO OCCUR, THE COMPANY HAD COMPLETE LIEN ON THE MONIES ADVANCED TO THE ASSESSEE. THEREF ORE, SEEN WHICHEVER WAY THE CHARACTER OF MONEY CONTINUED TO BE ADVANCED TO THE ASSESSEE. SINCE ALL OTHER CONDITIONS WERE MADE, THE APPLICATION OF SECTION 2(22)(E) AND THE CONSEQUENT ADDITION OF RS. 21,71,160/- WAS WELL JUSTIFIED AND THEREFORE THE SAME IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, THE LD. A.R. REITERATED THE SUBMISSIO NS MADE BEFORE A.O. AND CIT(A). HE FURTHER SUBMITTED THAT ON THE REQUEST OF THE BOARD OF DIRECTORS OF B. PATEL INFRASTRUCTURE PVT. LTD. ASSESSEE HAD GIV EN PERSONAL GUARANTEE AS WELL AS HIS BUNGALOW TOGETHER WITH THE LAND TO THE BANK AS SECURITY FOR THE PURPOSE OF EXTENDING CREDIT FACILITIES TO THE COMPA NY AND FOR WHICH THE ASSESSEE WAS NOT PAID ANY GUARANTEE COMMISSION. THE AMOUNT RECEIVED FROM B. PATEL INFRASTRUCTURE PVT. LTD. WAS RETURNED TO THE COMPANY AFTER IT HAD REPAID THE LOAN TO THE BANK. HE THEREFORE SUBMITTE D THAT THE FUNDS WERE RECEIVED UNDER THE BUSINESS COMPULSION AND CANNOT B E CONSIDERED AS LOANS AND ADVANCE WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT. HE FURTHER PLACED RELIANCE ON THE DECISIONS IN THE CASE OF CIT VS. RAJKUMAR 318 ITR 462 (DEL.), CIT VS. CREATIVE DYING AND PRINTING PVT . LTD. 318 ITR 476 (DEL.), ACIT VS. HARSHAD V DOSHI 130 ITD 137 (CHENNAI) AND PRADIP KUMAR ITA NO 2727/AHD/2010 . A.Y. 2005-06 4 MALOHATRA VS. CIT 338 ITR 538 (CALCUTTA). IN VIEW O F THE AFORESAID DECISIONS HE SUBMITTED THAT THE ADDITION MADE BY THE A.O. BE DELETED. THE LD. D.R. ON THE OTHER HAND LD. D.R. RELIED ON THE ORDER OF A.O. AND CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT B. PATEL INFRASTRUCTURE PVT. LTD. IS A COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED AND A LSO HAS ACCUMULATED PROFITS. ASSESSEE IS A SHAREHOLDER OF B. PATEL INFRASTRUCTUR E PVT. LTD. OWNING MORE THAN 10% OF ITS EQUITY. ASSESSEE HAS STATED TO HAVE GIVEN GUARANTEE TO THE BANKERS OF B. PATEL INFRASTRUCTURE PVT. LTD. FOR GR ANTING VARIOUS CREDIT FACILITIES TO B. PATEL INFRASTRUCTURE PVT. LTD.. DURING THE YE AR UNDER REVIEW, ASSESSEE IS STATED TO HAVE RECEIVED LOAN OF RS 21,71,160/-. THE LEDGER ACCOUNT OF B. PATEL INFRASTRUCTURE PVT. LTD. REVEALS THAT IT HAS VARIOU S TRANSACTIONS OF RECEIPT AND PAYMENT OF MONEY. THE DISPUTE IN THE PRESENT CASE I S WHETHER THE TRANSACTIONS OF RECEIPT AND ITS REPAYMENT CAN BE CO NSIDERED TO BE IN THE ORDINARY COURSE OF BUSINESS AND THEREFORE WHETHER T HE AMOUNT OF LOAN RECEIVED BY THE ASSESSEE IS TO BE CONSIDERED AS DEE MED DIVIDEND AS PER THE PROVISIONS OF S. 2(22}(E)? 8. THE DEFINITION OF 'DEEMED DIVIDEND' AS DEFINED I N S. 2(22)(E) CREATES A FICTION PROVIDING CERTAIN CIRCUMSTANCES UNDER WHICH CERTAIN KINDS OF PAYMENTS MADE TO PERSONS SPECIFIED THEREIN IS TO BE TREATED AS DE EMED DIVIDEND INCOME. THE PROVISION CREATES A FICTION AND ON SATISFACTION OF THE FOLLOWING CONDITIONS, THE AMOUNT IS TREATED AS DEEMED DIVIDEND. I. THE PAYER COMPANY MUST BE A CLOSELY HELD COMPANY . II. IT APPLIES TO ANY SUM PAID BY WAY OF LOAN OR A DVANCE DURING THE YEAR TO THE FOLLOWING PERSONS : (A) A SHAREHOLDER HOLDING AT LEAST 10 PER CENT OF VOTIN G POWER IN THE PAYER COMPANY. (B) A COMPANY IN WHICH SUCH SHAREHOLDER HAS AT LEAST 20 PER CENT OF THE VOTING POWER. (C) A CONCERN (OTHER THAN COMPANY) IN WHICH SUCH SHAREH OLDER HAS AT LEAST 20 PER CENT INTEREST: III.THE PAYER COMPANY HAS ACCUMULATED PROFITS ON TH E DATE OF ANY SUCH PAYMENT AND THE PAYMENT IS OUT OF ACCUMULATED PROFITS. IV. THE PAYMENT OF LOAN OR ADVANCE IS NOT IN COURSE OF ORDINARY BUSINESS ACTIVITIES. ITA NO 2727/AHD/2010 . A.Y. 2005-06 5 9. IN THE PRESENT CASE, THE ASSESSEE SATISIFIES CON DITIONS NO (I) TO (III). HOWEVER WITH RESPECT TO CONDITION NO (IV), IT IS STATED THA T THE LOAN WAS IN GRANTED IN LIEU OF THE GUARANTEE GIVEN BY THE ASSESSEE TO THE BANKE RS OF B. PATEL INFRASTRUCTURE PVT. LTD. FOR ADVANCING OF VARIOUS C REDIT FACILITIES TO IT AND THEREFOR THE LOAN RECEIVED BY THE ASSESSEE IS DURIN G THE NORMAL COURSE OF BUSINESS AND NOT A GRATUITOUS LOAN AND THEREFORE IT CANNOT BE CONSIDERED TO BE DEEMED DIVIDEND AND IN SUPPORT OF WHICH RELIANCE HAS BEEN PLACED ON THE DECISION OF PRADIP KUMAR MALHOTRA (SUPRA) AND OTHER DECISIONS. HOWEVER WE FIND THAT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUP RA) THE FACT WAS THAT THE ASSESSEE HAD PERMITTED HIS PROPERTY TO BE MORTGAGED TO BANK FOR ENABLING THE COMPANY TO TAKE THE BENEFIT OF LOAN. LATER ON I NSPITE OF THE REQUEST OF THE ASSESSEE, THE COMPANY WAS UNABLE TO RELEASE THE PRO PERTY FROM THE MORTGAGE. IN SUCH A SITUATION IT WAS HELD THAT THE ADVANCE GIVEN WAS NOT A GRATUITOUS ADVANCE TO THE SHAREHOLDER BUT WAS GIVEN TO PROTECT THE INTEREST OF THE COMPANY AND THEREFORE THE ADVANCE WAS HELD NOT TO BE IN THE NATURE OF DEEMED DIVIDEND. IN THE PRESENT CASE IT IS NOT THE CASE THAT THE ASSESSEE HAD REQUESTED FOR RELEASE OF HIS PROPERTIES WHICH W AS KEPT AS SECURITY WITH THE BANK AND THE SAME WAS NOT RELEASED WHEN REQUEST ED BY ASSESSEE AND THEREFORE THE FACTS OF PRADIP MALHOTRA (SUPRA) ARE NOT IDENTICAL AND THEREFORE THE RATIO OF THE DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 10. IN THE CASE OF CIT VS. RAJKUMAR (SUPRA) THE AD VANCE GIVEN BY THE ASSESSEE WAS IN THE NATURE OF TRADE ADVANCE WHICH IS NOT THE CASE IN THE PRESENT APPEAL AND THEREFORE THE RATIO OF AFORESAID DECISIO N IS ALSO NOT APPLICABLE TO THE PRESENT CASE. SIMILARLY IN THE CASE OF CIT VS. CREATIVE DYEING (SUPRA), THE ADVANCE GIVEN TO THE ASSESSEE WAS TO BE ADJUSTED AG AINST THE DUES FOR JOB WORK DONE BY ASSESSEE AND WAS THEREFORE CONSIDERED TO BE A BUSINESS TRANSACTION. THUS THE CASE LAWS RELIED BY ASSESSEE ARE DISTINGUISHABLE AND CANNOT BE APPLIED TO THE FACTS OF THE CASE OF ASSES SEE. IN THE CASE OF P. SARADA VS CIT (1998) 229 ITR 444 (SC) IN PARA 5 HAS HELD AS UNDER:- 'THE LEGAL FICTION CAME INTO PLAY AS SOON AS THE MO NIES WERE PAID BY THE COMPANY TO THE APPELLANT. THE ASSESSEE MUST BE DEEMED TO HAVE RECEIVED DIVIDENDS ON THE DATES ON WHICH SHE WITHDREW THE AFORESAID ITA NO 2727/AHD/2010 . A.Y. 2005-06 6 AMOUNTS OF MONEY FROM THE COMPANY. THE LOAN OR ADVA NCE TAKEN FROM THE COMPANY MAY HAVE BEEN ULTIMATELY REPAID OR ADJUSTED BUT THAT WILL NOT ALT ER THE FACT THAT THE ASSESSEE, IN THE EYE OF LAW, H AD RECEIVED DIVIDEND FROM THE COMPANY DURING THE RELEV ANT ACCOUNTING PERIOD. 11. IN THE CASE OF TARULATA SHYAM & ORS VS CIT (197 1) 82 ITR 485 (CAL), THE H'BLE H.C. HAS HELD THAT 'LOAN OBTAINED BY ASSESSEE FROM COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED IS CHARGEAB LE AS DEEMED DIVIDEND TO THE EXTENT OF ACCUMULATED PROFITS NOTWITHSTANDING I TS REPAYMENT BEFORE THE END OF THE ACCOUNTING YEAR.' 12. CONSIDERING THE FACTS OF THE PRESENT CASE IN TH E LIGHT OF THE DECISIONS CITED ABOVE, WE ARE OF THE VIEW THAT THE AMOUNT RECEIVED BY THE ASSESSEE WILL HAVE TO BE CONSIDERED AS DEEMED DIVIDEND AND THEREFORE W E FIND NO INFIRMITY IN THE ORDER OF A.O. AND CIT(A). THUS THIS GROUND OF ASSES SEE IS DISMISSED. 13. IN THE RESULT, THIS GROUND OF THE ASSESSEE IS D ISMISSED. 2 ND GROUND IS WITH RESPECT TO DENIAL OF DEDUCTION OF I NTEREST PAID ON BORROWING USE FOR REPAYMENT OF HOUSING LOAN. 14. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PERUSING THE DETAILS FILED BY THE ASSESSEE. A.O. NOTICED THAT ASSESSEE HAD CLAIME D DEDUCTION OF INTEREST ON THE FUNDS BORROWED AND UTILIZED FOR CONSTRUCTION /REPAYMENT OF HOUSING LOAN. A.O. NOTICED THAT THE FUNDS WERE BORROWED FO R THE PURPOSE OF BUSINESS AND NOT FOR THE PURPOSE OF CONSTRUCTION/REPAYMENT O F HOUSING LOAN. HE ACCORDINGLY DENIED THE CLAIM OF INTEREST OF RS. 1,1 3,176/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE C IT(A). CIT(A) CONFIRMED THE ADDITION MADE BY THE A.O. BY HOLDING AS UNDER:- 4.2 THE MATTER HAS BEEN CONSIDERED BUT IT IS DIFFIC ULT TO AGREE WITH THE AUTHORISED REPRESENTATIVE. TO START WITH, THERE CANNOT BE AN ESTOPPEL IN THE INCO ME-TAX PROCEEDINGS PARTICULARLY WHEN IT HAS NOT BEE N SHOWN THAT THERE HAS BEEN A SPECIFIC ACCEPTANCE OF THE ASSESSEE'S STAND IN ANY SCRUTINY ASSESSMENT COMPLETED BY THE ASSESSING AUTHORITIES. THE THEORY OF THE ASSESSEE REGARDING THE SO CALLED REPLACEMENT OF BANK FUND BY PRIVATE FUNDING REMAINS UNPROVED- W HEREAS THE REPLACEMENT OF THE MONEY BORROWED FROM THE BANK IS A DIFFERENT TRANSACTION AND THE PA YMENTS HAVE BEEN MADE FROM THE FUNDS AVAILABLE WITH THE ASSESSEE, AT NO STAGE IT HAS BEEN PROVED T HAT THE FUNDS RECEIVED FROM PRIVATE PARTIES LED TO THIS REPLACEMENT. THE APPELLANT HAS A NUMBER OF SOURCES OF INCOME WHICH INCLUDES INCOME FROM INTEREST, ITA NO 2727/AHD/2010 . A.Y. 2005-06 7 SALARY FROM PARTNERSHIP FIRM ETC. THEREFORE, UNLESS IT IS SPECIFICALLY SHOWN THAT THE FUNDS FROM THE B ANK GOT REPLACED BY THE PRIVATE FUNDS, INFERENCE COULD AS WELL BE DRAWN THAT THE PRIVATE FUNDS WENT INTO T HE OTHER OPERATIONS RUN BY THE ASSESSEE. IN FACT, IF T HE ASSESSEE'S ARGUMENT IS ACCEPTED, THIS CLAIM OF INTEREST U/S.24 WILL TURN OUT TO BE A CLAIM FOR PER PETUITY. THEREFORE, CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER'S CONTENTION I S UPHELD AND THE DISALLOWANCE OF RS. 1,13,176/- IS CONFIRMED 15. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 16. BEFORE US, THE LD. A.R. SUBMITTED THAT ASSESSEE HAD ORIGINALLY TAKEN HOUSING BUILDING LOAN FROM VISNAGAR NAGRIK BANK IN F.Y. 199 9-2000. THE SAID LOAN WAS REPAID IN F.Y. 02-03 BY RAISING FUNDS FROM OUTS IDE PARTIES. HE FURTHER SUBMITTED THAT THE DEDUCTION WAS CLAIMED IN THE EAR LIER YEARS AND THE SAME HAS ALSO BEEN ALLOWED BY THE DEPARTMENT. HE FURTHER SUBMITTED THAT THERE IS NOTHING ON RECORD TO INDICATE THAT THE FUNDS BORROW ED WERE APPLIED FOR BUSINESS PURPOSES AND WAS NOT USED FOR MAKING REPAY MENT OF LOAN. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. AND CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE HAS NOT PROVED THE SUBSTITU TION OF BANK LOAN FROM PRIVATE PARTIES. HE THUS SUPPORTED THE ORDER OF A.O . AND CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, THE LD. A.R. HAS SUBMITTED THAT THE ASSE SSEE HAD ORIGINALLY TAKEN HOUSING BUILDING LOAN IN F.Y. 1999-2000 FROM VISNAG AR NAGRIK BANK AND THE SAID LOAN WAS REPAID IN F.Y. 02-03 BY TAKING LOAN F ROM OUTSIDE PARTIES. THE SAID SUBSTITUTION OF LOAN WAS UNDERTAKEN BY HIM FOR THE REASON THAT BY SUBSTITUTING THE LOAN, HE HAS REDUCED HIS INTEREST BURDEN. IT WAS FURTHER SUBMITTED BEFORE US THAT IN EARLIER YEARS THE INTER EST HAS BEEN ALLOWED AND THE DISPUTE IS ONLY WITH RESPECT TO THE YEAR UNDER APPE AL. BEFORE US, THERE ARE NO DETAILS OF THE PARTIES FROM WHOM THE ASSESSEE HAD B ORROWED FUNDS AND THE INTEREST PAID TO HIM. FURTHER THERE IS NO CERTIFIC ATE OF BANK CERTIFYING THE REPAYMENT OF LOAN AND CLOSURE OF THE BANK LOAN ACCO UNT OF ASSESSEE. BEFORE US, THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE TO SUPPORT THAT THE INTEREST PAYMENT WAS ALLOWED WHILE MAKING ASSESSMENTS IN PAS T AND IN SUBSEQUENT YEARS. BEFORE US, THE LD. D.R. HAS SUBMITTED THAT A SSESSEE HAS NOT PROVED THE ITA NO 2727/AHD/2010 . A.Y. 2005-06 8 SUBSTITUTION OF LOAN. CONSIDERING THE TOTALITY OF T HE FACTS, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE SUBMISSIONS MAD E BY ASSESSEE NEEDS TO BE RE-EXAMINED AT THE END OF A.O. WE THEREFORE REMIT T HE ISSUE BACK TO THE FILE OF A.O. AND DIRECT HIM TO EXAMINE THE CONTENTIONS MADE BY ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH AS PER LAW. THE ASSESSEE SHALL BE FREE TO SUBMIT THE NECESSARY EVIDENCE IN SUPPORT OF HIS CON TENTIONS. THE ASSESSEE SHALL ALSO PROMPTLY SUBMIT THE DETAILS CALLED FOR B Y THE A.O. TO DECIDE THE ISSUE. NEEDLESS TO STATE THAT A.O. SHALL GRANT ADEQ UATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THIS GROUND OF ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 07 - 02 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD