ACIT, New Delhi V. Sh. Ashok Kumar Jain, New Delhi

ITA 2842/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65987 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: P D MITTAL
• Keywords: Deemed to accrue or arise in india; Additional evidence; Onus to prove

Judgement Text

ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2842/DEL/2011 A.Y. : 2007-08 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 35(1), ROOM NO. D-4, VIKAS BHAVAN, NEW DELHI 110 002 VS. SH. ASHOK KUMAR JAIN, PROP. M/S SHRIPATI COMPUTERS, H/13, 1 ST FLOOR, VIJAY CHOWK, KRISHNA NAGAR, DELHI-110051 (PAN/GIR NO. : ACXPJ 4657K) AND C.O. NO. 103/DEL/2012 (IN ITA NO. 2842/ DEL/2011) A.Y. 2007-08 ASHOK KUMAR JAIN, VS. ACIT, CIRCLE 35(1), PROP. SHREEPATI COMPUTERS, D-BLOCK, VIKAS BHAVAN, H-13, 1 ST FLOOR, VIJAY CHOWK, NEW DELHI 110 002 KRISHNA NAGAR, DELHI 110 051 (PAN/GIR NO. : ACXPJ 4657K) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. P.D. MITTAL, FCA DEPARTMENT BY : SH. BHIM SINGH, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS)-XXVII, NEW DELHI DATED 12.1.2011 AND PERTA IN TO ASSESSMENT YEAR 2007-08. ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 2 REVENUE REVENUE REVENUE REVENUES S S S APPEAL APPEAL APPEAL APPEAL 2. THE GROUNDS OF APPEAL RAISED IN THE REVENUES AP PEAL READ AS UNDER:- I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED BOTH FACTS AND LAW DELETING AN ADDITION O F RS. 12,19,2901- MADE BY THE AO U/S. 68 OF THE IT. ACT, 1 961 ON ACCOUNT OF UNSECURED LOAN IN RESPECT OF WHICH ASSES SEE COULD NOT ESTABLISHED THE CREDITWORTHINESS OR GENUI NENESS IN IGNORING THE FACTS THAT THE AO HAS SPECIFICALLY ASKED TO PRODUCED THE BANK STATEMENT AND INCOME TAX RETURN OF THE LENDER SO THAT GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE DEPOSITORS COULD BE ASCERTA INED, HOWEVER, ASSESSEE HAS FAILED TO DISCHARGE HIS PRIMA RY ONUS TO SUBMIT THIS DOCUMENT AND PROVING THE CREDITWORTHI NESS. II) THE CIT (A) HAS IGNORED THE PROVISION LAID D OWN UNDER SECTION 68 OF THE IT ACT WHILE DELETING THE ADDITIO N. III) THE CIT(A) HAS DELETED THE ADDITIONS ON THE BA SIS OF FRESH DOCUMENTS FILED DURING APPELLATE PROCEEDINGS AND WIT HOUT CALLING THE REMAND REPORT FROM THE A.O., WHICH IS VIO LATION OF THE PROVISION LAID DOWN UNDER RULE 46A OF THE IT AC T. IV) THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS AP PEAL. 3. IN THIS CASE THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF TRADING OF COMPUTER PARTS. DURING THE COURSE OF ASSESSMENT, ASSESSING OFFICER NOTED THAT ASSESSEE HAS RECEIVED UNSECURED LOANS / DEPOSITS DURING ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 3 THE ASSESSMENT YEAR. ASSESSEE WAS ASKED TO ESTA BLISH THE IDENTITY OF THE CREDITORS, GENUINENESS OF TRANSACTION AND C REDITWORTHINESS OF THE CREDITORS. ASSESSEE SUBMITTED CONFIRMATIONS FRO M THESE PARTIES ALONGWITH COPY OF RETURN OF INCOME AND COPY OF THEI R BANK STATEMENTS. BUT ASSESSING OFFICER NOTED THAT IN RESPECT OF N EMI CHAND MAHNOT, NO COPY OF HIS RETURN OF INCOME FOR A.Y. 2007-08 WAS FILED AND IN RESPECT OF LOAN FROM SHOBHA DAGA, THE COPY OF HER BAN K STATEMENT FROM WHICH THE AMOUNT HAS BEEN ADVANCED TO THE ASSESS EE WAS NOT FILED. IN LIGHT OF THE ABOVE, THE ASSESSING OFFIC ER OBSERVED THAT ASSESSEE HAS NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF SH. NEMI CHAND MAHNOT (LOAN AMOU NT OF ` 9 LACS) AND SMT. SHOBHA DAGA (LOAN AMOUNT OF ` 3,19,230/-) FR OM WHOM HE HAS TAKEN THE LOAN DURING THE FINANCIAL YEAR 2006-0 7. ACCORDINGLY, THE ASSESSING OFFICER CONCLUDED THAT THE AMOUNT INVOLVE D WERE TREATED AS DEEMED INCOME OF THE ASSESSEE U/S. 68 OF THE I.T. AC T. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A), ASSE SSEE INTER- ALIA SUBMITTED THE ADDITIONAL EVIDENCES. THESE E VIDENCES WERE FORWARDED TO THE LD ASSESSING OFFICER FOR HIS CO MMENTS. THE ASSESSING OFFICER OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCES. HOWEVER, ASSESSING OFFICER DID N OT FILE ANY REPORT FOR VERIFICATION OF THE FACTS MENTIONED IN THE ADDITIONA L EVIDENCES. BUT THE LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT TH E DOCUMENTS FILED BY THE ASSESSEE ARE RELEVANT TO THE GROUND OF APPEAL AND GO TO THE ROOT OF THE MATTER. CONSIDERING THE ADDITIONAL EVIDENCES AND THE SUBMISSIONS OF THE ASSESSEE, LD. COMMISSIONER OF INC OME TAX (A) HELD THAT ASSESSEE HAS CLEARLY AND CATEGORICALLY ESTABL ISHED THAT ASSESSEE HAS DISCHARGED ITS BURDEN OF PROOF AS REQUIRED U/S. 68 OF THE I.T. ACT. ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 4 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 6. IT HAS BEEN INTER-ALIA ARGUED BY THE LD. DEPAR TMENTAL REPRESENTATIVE THAT LD. COMMISSIONER OF INCOME TAX ( A) HAS DELETED THE ADDITION ON THE BASIS OF THE FRESH DOCUMENTS F ILED DURING APPELLATE PROCEEDINGS, WITHOUT CALLING THE REMAND R EPORT FROM THE ASSESSING OFFICER, WHICH IS VIOLATION OF PROVISION LAID DOWN UNDER RULE 46A. 6.1 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT LD. COMMISSIONER OF INCOME TAX (A) HAS APPRECIATED THE A DDITIONAL EVIDENCES IN THE CORRECT PERSPECTIVE AND ACCORDINGL Y, RIGHTLY DELETED THE ADDITION. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ACCEPTED THE ADDITIONAL EVIDENCES ON THE IMPUGNED IS SUE OF UNSECURED LOANS AND HAS DELETED THE ADDITION IN THIS REGARD. THOUGH, LD. COMMISSIONER OF INCOME TAX (A) HAS SENT THE DOCUMENT S AND SUBMISSIONS TO THE ASSESSING OFFICER, BUT THE ASSES SING OFFICER HAS NOT COMMENTED ON THE VERACITY OF THE SUBMISSIONS / DOCUME NTS SUBMITTED, BUT HAS ONLY OBJECTED THE ADMISSION OF THE ADDITIONA L EVIDENCES. IN OUR CONSIDERED OPINION, INTEREST OF JUSTICE WILL BE SERVED, IF THE MATTER IS REMITTED TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH, IN LIGHT OF ALL THE MATERIALS AND EVIDENCES AS SUBMITTED BY THE ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 5 ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. NEED LESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BE ING HEARD. ASSESSEES CROSS OBJECTION ASSESSEES CROSS OBJECTION ASSESSEES CROSS OBJECTION ASSESSEES CROSS OBJECTION 8. THE GROUNDS OF APPEAL RAISED IN THE CROSS OBJECT ION READ AS UNDER:- 1. THAT AT THE LD. A.O. AS WELL AS LD. CIT (APPEAL) HAS EARED TO DISALLOW RS. 358210/- BEING THE ENTIRE AMOUNT OF INTEREST CLAIMED AS DEDUCTIONS, WITHOUT TAKING INTO CONSIDERA TION & WITHOUT APPRECIATING THE FACT AS BELOW: A) THE INTEREST HAS BEEN PAID ON THE BORROWINGS MADE FOR BUSINESS PURPOSES & THERE IS A DIRECT NEXUS BETWEEN THE BORROWINGS MADE & BORROWINGS UTILIZED FOR BUSINESS PURPOSES. B) THAT THE TRADE ADVANCES AS APPEARING IN THE BALA NCE SHEET ARE PURELY TRADE ADVANCES INCURRED DURING THE COURSE OF BUSINESS & HAS ULTIMATELY BEEN SETTLED AS BUSINE SS PURCHASES / EXPENDITURE. C) THAT THE WITHDRAWALS MADE BY THE ASSESSEE ARE WIT HIN THE LIMIT OF THE CAPITAL INVESTED & NOT BEYOND THE C APITAL INVESTED AT ANY POINT OF TIME. D) THAT THE INTEREST FREE ADVANCES MADE TO M/S. BHAV YA INTERNATIONAL WAS IN THE NATURE OF BUSINESS ACCOMMOD ATION ADVANCES & THE ASSESSEE HAS UTILIZED MORE FUNDS BORR OWED FROM BHAVYA INTERNATIONAL THEN THE ADVANCES MADE. THI S ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 6 FACT IS EVIDENT FROM THE FACT THAT IN CASE THE INTER EST IS CALCULATED THE NET AMOUNT WOULD BE INTEREST PAYABLE & NOT INTEREST RECEIVABLE. TO BE IN BRIEF IN THIS CASE IN TEREST PAYABLE COMES TO RS. 185037.48 WHILE INTEREST RECEI VABLE COMES TO RS. 86888.02. 2. THAT AT THE LD. A.O. AS WELL AS LD. CIT (APPEAL) IS ALSO WRONG .WHILE DISALLOWING RS. 236819/- ACCOUNTED FOR UNDER THE HEAD COMMISSION IN VIEW OF THE PROVISIONS OF SEC TION 40 (A) (IA) OF THE INCOME TAX ACT,1961, WITHOUT CONSIDE RING & APPRECIATING THE FOLLOWING FACTS. A) THAT THE EXPENSES IS IN THE NATURE OF TRADE DISC OUNT THOUGH ACCOUNTED FOR UNDER THE HEAD COMMISSION. B) THAT THE EXPO HAS BEEN INCURRED BY WAY OF DEBITI NG THE EXPO ACCOUNT & CORRESPONDINGLY CREDITING THE ACCOUN T OF THE CUSTOMER TO WHOM SALES HAVE BEEN MADE. THERE IS NO CASE WHERE THE AMOUNT HAS BEEN PAID OR CREDITED TO A NY PARTY OTHER THAN THE CUSTOMER. C) THAT THE TRANSACTION OF COMMISSION AS DEFINED U/S 194 H OF THE IT ACT, REQUIRE RENDING OF CERTAIN SERVICES & IN LIEU THEREOF THE AMOUNT IS PAID. IN THE PRESENT CASE THER E IS NO RENDERING OF SERVICES TO WHOM THE AMOUNTS HAVE BEEN P AID. 3. THAT THE ENTIRE ASSESSMENT ORDER IS WRONG, ARBIT RARY, UNJUST AGAINST THE FACT AS WELL AS AGAINST THE LAW. 4. THAT THE APPELLANT CRAVES, LEAVE, TO AMEND ANYO NE OR MORE OF THE GROUND OF APPEAL AS STATED ABOVE & AS & WHEN THE NEED FOR DOING SO ARISE. ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 7 9. WE HAVE HEARD BOTH THE COUNSEL ON THE ISSUES RA ISED IN THE CROSS OBJECTION AND PERUSED THE RECORDS. AS REGARDS GRO UND (1), LD. COUNSEL OF THE ASSESSEE HAS INTER-ALIA CONTENDED TH AT ACTUALLY IF THE COMPUTATIONS ARE MADE PROPERLY, INSTEAD OF INTEREST P AYABLE, THERE WILL BE INTEREST RECEIVABLE BY THE ASSESSEE. HENCE, IT WAS PLEADED THAT GROUND NO. 1 MAY BE DECIDED IN FAVOUR OF THE ASSESSE E. 10. AS REGARDS GROUND NO. 2 ISSUE OF DISALLOWANCE O F ` 236819/-, IN LIGHT OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT, LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE AMOUNT INVOLVED D OES NOT FALL UNDER THE HEADING OF COMMISSION AND HENCE, SECTION 40 A(IA) IS NOT ATTRACTED. HE FURTHER SUBMITTED THAT ASSESSEE HAS E RRONEOUSLY SHOWN THE AMOUNT PAID AS COMMISSION PAID, BUT ACTUALLY IT W AS NO SO. 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS A ND HEARD BOTH THE PARTIES ON THIS ISSUE. WE FIND THAT IN THE REV ENUES APPEAL ABOVE, WE HAVE ALREADY REMITTED THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER. HENCE, IN OUR OPINION, INTEREST OF JUSTICE WILL BE SERVED, IF THE ISSUES RAISED IN THE CROSS OBJECTION ARE REMITTED TO THE FI LE OF THE ASSESSING OFFICER TO EXAMINE THE VERACITY AND FACTUAL CORRECTN ESS OF THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD. WE HOLD AND DIRECT ACCORDINGLY. ITA NO. 2842/DEL/2011 & CO NO. 103/DEL/2012 8 12. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2012. SD/- SD/- [U.B.S. BEDI] [U.B.S. BEDI] [U.B.S. BEDI] [U.B.S. BEDI] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 30/11/2012 SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES