THE ITO, Ward 3(1), Indore V. M/s. T.Logiks, Indore

ITA 304/IND/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4036 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Keywords: Unexplained cash credit; Business income; Additional evidence; TDS
• Section: 144; 143(3); 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.304/IND/2017 ASSESSMENT YEAR: 2012-13 ITO-3(1) INDORE / VS. M/S. T. LOGIKS, AG-273, SCHEME-74, VIJAY NAGAR, INDORE ( REVENUE ) ( RE SPONDENT ) PAN: AAFCT9876B REVENUE BY SHRI K.G. GOYAL, SR. DR RESPONDENT BY NONE DATE OF HEARING: 17.01.2019 DATE OF PRONOUNCEMENT: 06. 02.2019 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL BY REVENUE PERTAINING TO A.Y. 2012-13 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INC OME TAX(APPEALS)-I INDORE, (IN SHORT CIT(A)), DATED 31. 01.2017 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON M/S. T. LOGIKS ITANO.304/IND/2017 2 30.03.2015 BY ITO, 3(1) INDORE. THE REVENUE HAS RAISE D FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.44,70,967/- MADE BY THE AO ON ACCOUNT OF SUNDRY CREDITORS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD NOT FURNISHED ANY EXPLANATION OR PRODUCED BOOKS FOR VER IFICATION BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS OR REMAND PROCEEDINGS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A) HAS ERRED IN LAW BY DELETING THE ADDI TION OF RS.26,54,750/- MADE BY THE AO ON ACCOUNT OTHER LIAB ILITIES AND PROVISIONS WITHOUT APPRECIATING THE FACT THAT THE A SSESSEE HAD NOT FURNISHED ANY EXPLANATION OR PRODUCED BOOKS OF ACCOUNT FOR VERIFICATION BEFORE THE AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS OR REMAND PROCEEDINGS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A) HAS ERRED IN LAW BY RESTRICTING THE A DDITION OF RS.26,69,795/- TO 11,24,565/- MADE BY THE AO ON ACC OUNT OF INTEREST ON LOAN AND ADVANCES. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A) HAS ERRED IN LAW BY DELETING THE ADDI TION OF RS.97,05,439/- MADE BY THE AO ON ACCOUNT UNEXPLAINE D CREDITS IN CAPITAL ACCOUNT WITHOUT TAKING ANY DOCUMENTARY E VIDENCES ON RECORD REGARDING THE SOURCE OF SUCH HUGE CAPITAL . 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A) HAS ERRED IN LAW BY DELETING THE ADDI TION ON ACCOUNT OF UNEXPLAINED CREDITS IN CAPITAL ACCOUNT W ITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD NOT FUR NISHED ANY EXPLANATION OR PRODUCED BOOKS OF ACCOUNT FOR VERIFI CATION BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR REMAND PROCEEDINGS REGARDING THE SOURCE OF SUCH HUGE INTRO DUCTION OF CAPITAL. 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A} HAS ERRED IN LAW BY DELETING THE ADDI TION OF RS.5,OO,OOO/- MADE BY THE AO ON ACCOUNT OF GENERATO R CHARGES WITHOUT APPRECIATING THE FACT THAT THE ASSE SSEE HAD NOT FURNISHED ANY EXPLANATION OR PRODUCED BOOKS OF ACCO UNT FOR M/S. T. LOGIKS ITANO.304/IND/2017 3 VERIFICATION BEFORE THE AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS OR REMAND PROCEEDINGS. 2. NO ONE APPEARED ON BEHEST OF ASSESSEE EVEN THOUGH T HE NOTICE OF HEARING WAS DULY SERVED UPON IT. IT WAS THER EFORE, DECIDED TO HEAR THIS APPEAL WITH THE ASSISTANCE OF THE LD. DEPARTMENTAL REPRESENTATIVE AND AVAILABLE RECORDS. 3. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE THAT ASSESSEE IS A PARTNERSHIP FIRM. INCOME OF RS.28,82,060 /- WAS DECLARED IN E-RETURN OF INCOME FILED ON 31.03.201 4. CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. NOTICES U/S 143(2) OF THE ACT WAS DULY SERVED UPON THE ASSESSEE. HOWEVER, THE ASSESSEE DID NOT ATTEND THE HEARING AND T HIS FAILURE TO ATTEND THE HEARING WAS THEREAFTER FOLLOWED BY NOTICES U/S 271(1)(B) OF THE ACT AND U/S 144 OF THE ACT. PARTIAL REPLY WAS SUBMITTED BY THE FIRM BUT FOR THE REMAINING DETAILS NON-APPEARED ON 26.02.2015 WHICH LEF T NO OPTION BEFORE THE ASSESSING OFFICER EXCEPT TO FRAM E EX- PARTE ASSESSMENT ORDER U/S 144 OF THE ACT, THEREBY MAK ING VARIOUS ADDITIONS TOTALING TO RS.2,46,24,636/- AND ASSESSING THE INCOME AT RS.2,75,06,696/-. M/S. T. LOGIKS ITANO.304/IND/2017 4 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A) AND PARTLY SUCCEEDED. 5. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AG AINST THE DELETION OF ADDITION BY LD. CIT(A) 6. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDER OF ASSESSING OFFICER. 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE (D R) AND PERUSED THE RECORD PLACED BEFORE US INCLUDING THE REMAND REPORT DATED 22.04.2016 PREPARED BY LD. AO WHIC H WAS ONE OF THE BASIS WITH LD. CIT(A) FOR ADJUDICATING THE ISSUES RAISED BY THE ASSESSEE AGAINST THE ADDITIONS MADE BY LD. ASSESSING OFFICER. 8. AGAINST VARIOUS ADDITIONS DELETED BY LD. CIT(A), T HE ISSUES RAISED BY THE REVENUE IN GROUND NO.1 FOR ADDIT ION OF RS. 44,70,967/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS, GROUND NO.2 FOR ADDITION OF RS.26,54,750/ - FOR UNEXPLAINED LIABILITY AND PROVISIONS, GROUND NO.3 FOR ADDITION OF RS.11,24,565/- ON ACCOUNT OF INTEREST ON LOAN AND ADVANCES, GROUND NO.4 & GROUND NO.5 FOR ADDITION O F RS.97,05,439/- ON ACCOUNT OF UNEXPLAINED CREDITS IN CAPITAL ACCOUNT, GROUND NO.6 FOR ADDITION OF RS.5,00,0 00/- ON ACCOUNT OF GENERATOR CHARGES. M/S. T. LOGIKS ITANO.304/IND/2017 5 9. ONE OF THE UNDISPUTED FACT IS THAT THE ASSESSEE MADE NO COMPLIANCE BEFORE THE ASSESSING OFFICER. ALL ADDITIONAL EVIDENCES IN SUPPORT OF ITS CONTENTION WERE FILED B EFORE THE LD. CIT(A) FOR THE FIRST TIME WHICH WERE REFERRED B Y THE LD. CIT(A) TO THE ASSESSING OFFICER CALLING FOR A REMAND RE PORT. 10. ON 24.02.2016 REMAND REPORT WAS PREPARED AND SUBMITTED TO LD. CIT(A). REFERENCE TO THIS REMAND RE PORT HAS BEEN MADE IN THE APPELLATE ORDER OF LD. CIT(A) WHIL E FRAMING THE APPEAL ORDER ON 31.01.2017. THE LD. CIT(A) HAS DELETED THE ADDITION MENTIONED IN THE GROUNDS RAISED BY THE REVENUE OBSERVING AS FOLLOWS:( FOR SAKE OF CONVE NIENCE WE HAVE MENTIONED THE RESPECTIVE GROUNDS RAISED BY TH E REVENUE) GROUND NO.1: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.44,70,967/- MADE BY THE AO ON ACCOUNT OF SUNDRY CREDITORS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD NOT FURNISHED ANY EXPLANATION OR PRODUCED BOOKS FOR VER IFICATION BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS OR REMAND PROCEEDINGS. FINDING OF LD. CIT(A) 11. GROUND NO. 3(C):- THIS GROUND OF THE APPELLANT IS DIRECTED AGAINST THE ADDITION OF RS.4470967/ - BEING SUNDRY CREDITORS TREATED AS BOGUS. THE DETAILED FAC TS OF THE CASE AS PER THE' ASSESSMENT ORDER ARE REPRODUCED AT PARA NO.2 ABOVE AND THE DETAILED M/S. T. LOGIKS ITANO.304/IND/2017 6 SUBMISSIONS OF THE APPELLANT ON THE ISSUE ARE REPRODUCED AT PARA NO. 3 ABOVE, THE REMAND' REPORT OF THE AO IS REPRODUCED AT PARA NO.4 AND THE COMMENTS OF THE APPELLANT ARE REPRODUCED AT PARA NO.5 ABOVE. 11.1 FROM THE ASSESSMENT ORDER IT IS SEEN THAT ADDITION HAS BEEN MADE AS NO DETAILS WERE SUBMITTED BY THE APPELLANT, DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAS FILED THE DETAILS. TH E AMOUNT OF RS.4470967/CONSISTS OF THE FOLLOWING SIX CREDITORS:- M/S K. K. & CO. RS.8000/ - SNEHAL ENTERPRISES RS.3144/ - SHAHEED SMRITI FUELS RS.1L2545/ - ADVANCE RENT RS.1491627/ - RANBAXY LABORATORIES LTD. RS.600000 / - RANBAXY ADVANCE RS.1242743/ - IN HIS REMAND REPORT DATED 22/04/2016, IN RESPECT O F K. K. & CO. NO ADVERSE FINDING HAS BEEN RECORDED BY THE AO, HENCE THE AMOUNT IS CONSIDERED TO BE EXPLAINED OTHERWISE ALSO IT IS ONLY A CARRIED FORWA RD BALANCE FROM EARLIER YEARS. IN RESPECT OF M/ S SNEHAL ENTERPRISES AO HAS OBSERVED THAT IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT, THE ABOVE CONCERN HAS INFORMED THAT THERE WAS NO TRANSACTION DURING THE YEAR UNDER CONSIDERATION AND HENCE CREDIT NOT SATISFACTORILY EXPLAINED. ON PERUSAL OF THE LEDGER ACCOUNT PLACED ON RECORD, IT IS SEEN THAT THE APPEL LANT HAS NO TRANSACTION WITH M/S SNEHAL ENTERPRISES DURING THE YEAR UNDER CONSIDERATION THERE WAS OPENING BALANCE OF RS. 97644/- AND THERE ARE TWO JOURNAL ENTRIES OF RS.23,000/- AND RS.71500/-, WHIC H AS PER NARRATION ARE DEBITS TO M/S PHARMASIA ON ACCOUNT OF PAYMENTS MADE BY M/S PHARMASIA ON BEHALF OF THE APPELLANT TO M/S SNEHLA ENTERPRISES COPY OF ACCOUNT OF M/ S PHARMASIA HAS ALSO BEEN FILED WHEREIN THE SAID ENTRIES ARE DULY REFLECTED. IN VIE W OF THE ABOVE NO ADVERSE INFERENCE IS JUSTIFIED ON ACCO UNT OF REPLY OF M/ S SNEHAL ENTERPRISES AS THERE WAS NO M/S. T. LOGIKS ITANO.304/IND/2017 7 TRANSACTION WITH THE APPELLANT DURING THE YEAR. IN RESPECT OF SHAHEED SMRITI FUELS COPY OF ACCOUNT HAS BEEN FILED AND HAS BEEN EXPLAINED THAT THE AMOUNT WAS DUE ON ACCOUNT OF DIESEL PURCHASED BY THE APPELLANT FROM THE SAID PARTY. M/ S SHAHEED SMRITI FUELS IS A PROPRIETARY CONCERN OF MS. SHRUTI JAIN A ND IS DULY ASSESSED TO TAX COPY OF ACCOUNT HAS BEEN FI LED CONFIRMING THE BALANCE. COPY OF ADVANCE RENT HAS BEEN FILED WHICH SHOWS THAT THE AMOUNT WAS A CARRIED FORWARD OPENING BALANCE BEING ADVANCE RENT RECEIVED FROM M/ S RANBAXY LABORATORIES LTD. M/ S RANBAXY LABORATORIES LTD. (ADVANCE DEPOSIT) OF RS.600000/- IS ALSO A CARRIED FORWARD BALANCE. AS REGARDS, RANBAXY ADVANCE ACCOUNT OF RS.1242743/- THE APPELLANT FLIED A COPY OF LEASE AGREEMENT WITH THE SAID COMPANY WHEREBY AN AMOUNT OF RS.5000000/ - WAS GIVEN AS INTEREST FREE SECURITY DEPOSIT FOR CAR RYING OUT MODIFICATION IN THE BUILDING LEASED OUT TO RANB AXY LTD. IN 2009-10. COPY OF LEDGER ACCOUNT FROM F. Y. 2009-10 TO F. Y. 2011-12 WAS FILED SHOWING THE ADJUSTMENT OF RENT AGAINST THE DEPOSIT. IN VIEW OF THE ABOVE EXPLANATION NO ADVERSE INFERENCE IS CALLED FO R IN THE LIGHT OF THE COMMENTS OF THE AO IN THE REMAND REPORT THAT THE NOTICE ISSUED TO RANBAXY LTD. REMAINED UNCOMPLIED. IN VIEW OF THE ABOVE DISCUSSIO N THE ADDITION OF RS. 4470967 [: IS DIRECTED TO BE DELETED. THIS GROUND OF THE APPELLANT IS THEREFORE ALLOWED. RS.4470967/ - DELETED GROUND NO.2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A) HAS ERRED IN LAW BY DELETING THE ADDI TION OF RS.26,54,750/- MADE BY THE AO ON ACCOUNT OTHER LIAB ILITIES AND PROVISIONS WITHOUT APPRECIATING THE FACT THAT THE A SSESSEE HAD NOT FURNISHED ANY EXPLANATION OR PRODUCED BOOKS OF ACCOUNT FOR VERIFICATION BEFORE THE AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS OR REMAND PROCEEDINGS. M/S. T. LOGIKS ITANO.304/IND/2017 8 FINDING OF LD. CIT(A) 12. GROUND NO. 3(D):- THIS GROUND OF THE APPELLANT IS DIRECTED AGAINST THE ADDITION OF RS.2654 750/ - BEING OTHER LIABILITIES &, PROVISIONS NAMELY SERVICE TAX AND TDS HELD TO BE NOT ALLOWABLE. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE REPRODUCED AT PARA 2 ABOVE AND THE DETAILED SUBMISSIONS OF THE APPELLANT ON THE ISSUE ARE REPRODUCED AT PARA NO. 3 ABOVE. THE REMAND REPORT OF THE AO IS REPRODUCED AT PARA NO.4 AND THE COMMENTS OF THE APPELLANT ARE REPRODUCED AT PARA NO.5 ABOVE. 12.1 THE ABOVE AMOUNT OF RS.2654750/- CONSISTS OF FOLLOWING FOUR ITEMS:- 1. SERVICE TAX PAYABLE RS.688035/- 2. TAX DEDUCTED AT SOURCES (2011-12) RS.23309/- 3. UCO BANK (A/D) RS.849567/- 4. SERVICE TAX PAYABLEF. Y. 2011-12 RS.1093839/ - AS REGARDS SERVICE TAX THE APPELLANT HAS EXPLAINED THAT THE SERVICE TAX OF RS.1093839/ - PERTAIN.S TO THE SERVICE TAX PAYABLE ON RENT OF IMMOVABLE PROPERTY A ND HAS FILED COPY OF RENT ACCOUNT. ON PERUSAL OF THE S AME IT IS SEEN THAT THE APPELLANT HAS SHOWN ANNUAL RENT FOR THE F. Y. 2011-12 OF RS.11713632/- AGAINST WHICH SERVICE TAX OF RS.1093839/- HAS BEEN TAKEN AS DEDUCTION AND THE NET RENTAL INCOME. OF RS.1061.9793/- IS SHOWN IN THE P & L ACCOUNT. FROM THE COPY OF LEASE DEED WHICH HAS BEEN FILED BY THE APPELLANT IT IS SEEN THAT THE REVISED RENT OF THE PROPERTY WAS RS. 884983/WITH EFFECT FROM JANUARY 2010. AS PER THE RENT ACCOUNT THE MONTHLY RENT RECEIVED IS RS. 976136/-. THE MONTHLY RENT RECEIVED IS 10.30% MORE THAN THE RENT TO BE RECEIVED AS PER THE RENT AGREEMENT AND THE AMOUNT OVER AND ABOVE THE RENT IS THE COMPONENT OF SERVICE TAX WHICH HAS BEEN DEDUCTED BY THE APPELLANT. SERVICE TAX DOES NOT PARTAKE THE CHARACTER OF INCOME IN THE HANDS OF THE M/S. T. LOGIKS ITANO.304/IND/2017 9 LANDLORD AND LANDLORD IS ONLY THE COLLECTION AGENT AND HENCE AS SERVICE TAX IS NOT INCOME IN THE HANDS OF LANDLORD THE OUTSTANDING SERVICE TAX DOES NOT CONSTITUTE INCOME OF THE APPELLANT AND HENCE NO ADVERSE INFERENCE CAN BE DRAWN ON ACCOUNT OF THE SAME. AS REGARDS, UCO BANK O/D 1CCOUNT THE AMOUNT OF RS.849567/- IS THE O/D T ACCOUNT BALANCE AND THE INTEREST COMPONENT HAS ALREADY BEEN PAID BEFORE THE DUE DATE AND HENCE NO DIVERSE INFERENCE IS CALLED FOR ON THIS ACCOUNT. E TDS OF RS.23309/ - HA S BEEN PAID AND PROOF IN THIS REGARD HAS BEEN ED. IN VIEW OF THE ABOVE DISCUSSION THE ADDITION TO BE DELETED. THIS GROUND OF THE APPEAL IS THEREFORE ALLOWED. RS.2654750/ - DELETED GROUND NO.3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A) HAS ERRED IN LAW BY RESTRICTING THE A DDITION OF RS.26,69,795/- TO 11,24,565/- MADE BY THE AO ON ACC OUNT OF INTEREST ON LOAN AND ADVANCES. FINDING OF LD. CIT(A) 13. GROUND NO. 3(E):- THIS GROUND OF THE APPELLANT IS DIRECTED AGAINST THE ADDITION OF RS. 2669795/- BEIN G INTEREST ON LOANS & ADVANCES DISALLOWED IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE SAID PAYMENT. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE REPRODUCED AT PARA NO.2 ABOVE AND THE DETAILED SUBMISSIONS OF THE APPELLANT ON THE ISSUE ARE REPRODUCED AT PARA NO. 3 ABOVE. THE REMAND REPORT OF THE AO IS REPRODUCED AT PARA NO.4 AND THE COMMENTS OF THE APPELLANT ARE REPRODUCED AT PARA NO.5 ABOVE. 13.1 FROM THE ASSESSMENT ORDER IT IS SEEN THAT THE ADDITION IS MADE AS NO DETAILS OF LOANS AND ADVANCE AND INTEREST PAID THEREON WERE GIVEN AT THE TIME OF ASSESSMENT. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAS SUBMITTED COPY OF M/S. T. LOGIKS ITANO.304/IND/2017 10 INTEREST ACCOUNT ACCORDING TO WHICH THE TOTAL INTER EST PAID IS RS.3045880/- CONSISTING OF INTEREST PAID TO UCO BANK O/D ACCOUNT, PHARMACOS, SHRI BABU LAL JAIN & PARTNERS. AGAINST THIS TOTAL INTEREST RECEIV ED FROM AFD PHARMASIA IS SHOWN AT RS.5210169/- AND THE NET INTEREST OF RS.2164289/- IS CREDITED TO THE P & L ACCOUNT AND IN THE COMPUTATION OF INCOME FILED AF TER MAKING ADJUSTMENT, THE SAID AMOUNT IS SHOWN AS INCOME FROM OTHER SOURCES. ANOTHER ACCOUNT OF INTER EST TO TATA CAPITAL LTD. HAS BEEN FILED ACCORDING TO WHICH THE TOTAL INTEREST PAID IS RS.7691447/- WHICH IS DEBITED TO THE P & L ACCOUNT. IN THE COMPUTATION OF INCOME THE APPELLANT HAS ADDED BACK THE INTEREST OF RS. 2669795/-, OUT OF THE TOTAL INTEREST OF RS.7691 447 /- PAID TO TATA CAPITAL LTD., TO THE NET PROFIT AS PER P&L ACCOUNT AND HAS CLAIMED IT AS A DEDUCTION UNDER THE HEAD INCOME FROM PROPERTY AND HAS EXPLAINED THAT THE AMOUNT OF LOAN RELATABLE TO THE SAID INTER EST WAS ATTRIBUTABLE TO THE CONSTRUCTION OF THE RENTED PROPERTY AND HENCE WAS DEDUCTIBLE AGAINST THE RENT RECEIVED. AS REGARDS THE BALANCE OF RS.5021652/- IT HAS BEEN EXPLAINED THAT THE SAME IS RELATABLE TO SISTER CONCERNS PHARMASIA:RS.368633/- AFD PHARMASIA RS.3948068/- AND VITAMAX HEALTHCARE RS. 704951/ - AND IS DISALLOWED IN THE COMPUTATION OF THE INCOME FROM HOUSE PROPERTY. HOWEVER AS NOTED ABOVE THE AMOUNT OF RS.7691447/- IS DEBITED TO THE P&L ACCOUNT AND THE SAME HAS NOT BEEN ADJUSTED IN THE COMPUTATION OF BUSINESS INCOME THEREFORE THE AMOUNT REMAINING AFTER THE ADJUSTMENT OF INTEREST RELATABLE TO INCOME FROM HOUSE PROPERTY OF RS. 2669795/- I.E. RS.5021652/- IS CLAIMED AS A DEDUCTION IN THE COMPUTATION OF BUSINESS INCOME. TH E AMOUNT OF RS.5021652/ - HAS BEEN WORKED OUT BY ADOPTING THE INTEREST RATE OF 7 % ON THE BALANCES WITH THE SISTER CONCERNS. FROM THE INTEREST ACCOUNT IT I S SEEN THAT RS. 5210169/- HAS BEEN SHOWN AS CREDIT OF INTEREST FROM AFD PHARMASIA HOWEVER NO INTEREST FRO M PHARMASIA AND VITAMAX HEALTHCARE IS SHOWN. THE M/S. T. LOGIKS ITANO.304/IND/2017 11 APPELLANT HAS ALSO NOT SHOWN 'THAT THE ADVANCES TO THESE SISTER CONCERNS WERE FOR THE PURPOSES OF BUSINESS AND ADMITTEDLY THE LOAN FROM TATA CAPITAL LTD. WAS UTILIZED IN GIVING THE INTEREST FREE ADVAN CE TO THESE CONCERNS. THE DISALLOWANCE OF INTEREST TO THE ABOVE EXTENT I.E. RS.368633/ - AND RS. 704951/ - IS THEREFORE CONFIRMED IN APPEAL. IT IS FURTHER SEEN THAT THE INTEREST OF RS. 50981/- PAID TO SHRI BABULAL JAIN HAS BEEN PAID/CREDITED WITHOUT TDS AND HENCE THE SAME IS NOT ALLOWABLE AS A DEDUCTION IN VIEW OF THE PROVISIONS OF SECTION 40 (A)(IA) .THE ADDITION OF RS. 2669795/- 1S THEREFORE REDUCED TO RS.1073584/-+ RS.50981/- = 1124565/-. THE APPELLANT GETS RELIEF OF RS. 1545230/-. THIS GROUND OF THE APPELLANT IS THEREFORE PARTLY ALLOWED . RS.1545230/- DELETED GROUND NO.4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.97,05,439/- MADE BY THE AO ON ACCOUNT UNEXPLAINE D CREDITS IN CAPITAL ACCOUNT WITHOUT TAKING ANY DOCUM ENTARY EVIDENCES ON RECORD REGARDING THE SOURCE OF SUCH HU GE CAPITAL. FINDING OF LD. CIT(A) 14. GROUND NO. 3(E):- THIS GROUND OF THE APPELLANT IS DIRECTED AGAINST THE ADDITION OF RS. 9705439/- BEIN G CREDITS IN CAPITAL ACCOUNT OF THE PARTNERS NOT SATISFACTORILY EXPLAINED. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE REPRODUCED AT PARA NO. 2 ABOVE AND THE DETAILED SUBMISSIONS OF THE APPELLANT ON THE ISSUE ARE REPRODUCED AT PARA NO. 3 ABOVE. THE REMAND REPORT 9F THE AO IS REPRODUCED AT PARA NO.4 AND THE COMMENTS OF THE APPELLANT ATE REPRODUCED AT PARA NO.5 ABOVE. 14.1 FROM THE ASSESSMENT ORDER IT IS SEEN THAT THE ADDITION IS MADE AS N DETAILS OF ADDITION TO PARTNE RS ACCOUNT WAS FILED. DURING THE COURSE OF APPELLATE M/S. T. LOGIKS ITANO.304/IND/2017 12 PROCEEDING THE APPELLANT HAS SUBMITTED THE DETAILS OF THE CREDITS SR. NAME OF PARTNER CREDIT DURING REMARK NO. THE YEAR 01. MR. SHAILENDRA JAIN 19,26,548 RS.8,50,000/- WAS CREDITED AS ADDITIONAL CAPITAL. FURTHER RS.10,76,548/ - WAS CREDITED AS INTEREST ON CAPITAL DURING THE YEAR. 02. MS. NAYANA JAIN 20,65,682 RS.15,50,000/ - W AS CREDITED AS ADDITIONAL CAPITAL. FURTHER RS.5,15,682/-1 WAS CREDITED AS INTEREST ON CAPITAL DURING; I THE YEAR. I 03. MS. SAASHA JAIN 45,38,805 RS.40,00,000 /- W AS CREDITED ASL ADDITIONAL CAPITAL. FURTHER RS.5,38,805/-1 I WAS CREDITED AS INTEREST ON CAPITAL DURING THE YEAR. 04. MR. TANMAY JAIN 11,74,404 RS.9,35,000/- WAS CREDITED AS ADDITIONAL CAPITAL. FURTHER RS.2,39,404/- WAS CREDITED AS INTEREST ON CAPITAL DURING THE I YEAR. I FROM THE ABOVE EXPLANATION IT IS SEEN THAT FRESH CAPITAL WHICH HAS COME ILL. DURING THE YEAR IS:- 1. SHRI SHAILENDRA JAIN RS. 850000/- 2. MS. NAINAJAIN RS.155000/- 3. MS. ASHA JAIN RS.400000/- & 4. SHRI TANMAY JAIN RS.935000/- THUS, TOTAL CREDITS TO CAPITAL ACCOUNT ARE TO THE T UNE OF RS.7335000/- AND THE BALANCE AMOUNT IS INTEREST CREDITED TO THE CAPITAL ACCOUNT. APPELLANT HAS FILE D, COPIES OF ACCOUNTS OF THE PARTNERS DULY CONFIRMING THE TRANSACTION ALONGWITH THEIR BANK ACCOUNT. THE PARTNERS ARE ASSESSED TO TAX SEPARATELY AND THE CRE DIT IN THE CAPITAL ACCOUNT IS THROUGH BANKING CHANNELS AND HENCE NO ADVERSE INFERENCE IS WARRANTED IN THE HANDS OF THE FIRM. THE ADDITION' IS THEREFORE DIREC TED TO BE DELETED. THIS GROUND OF THE APPELLANT IS THEREFO RE ALLOWED. RS.9705439/-DELETED M/S. T. LOGIKS ITANO.304/IND/2017 13 GROUND NO.5 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. LD.CIT(A} HAS ERRED IN LAW BY DELETING THE ADDI TION OF RS.5,OO,OOO/- MADE BY THE AO ON ACCOUNT OF GENERATO R CHARGES WITHOUT APPRECIATING THE FACT THAT THE ASSE SSEE HAD NOT FURNISHED ANY EXPLANATION OR PRODUCED BOOKS OF ACCO UNT FOR VERIFICATION BEFORE THE AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS OR REMAND PROCEEDINGS. FINDING OF LD. CIT(A) 15. GROUND NO. 3(G):- THIS GROUND OF THE APPELLANT IS DIRECTED AGAINST THE ADDITION OF RS.500000 / - BEIN G GENERATOR INCOME. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE REPRODUCED AT PARA NO.2 ABOVE AND THE DETAILED SUBMISSIONS OF THE APPELLANT ON THE ISSUE ARE REPRODUCED AT PARA NO.3 ABOVE. THE REMAND REPORT OF THE AO IS REPRODUCED AT PARA NO.4 AND THE COMMENTS OF THE APPELLANT ARE REPRODUCED AT PARA NO.5 ABOVE. 15.1 FROM THE ASSESSMENT ORDER IT IS SEEN THAT THE ADDITION IS MADE ON ADHOC BASIS AS NO DETAILS WERE SUBMITTED OF GENERATOR INCOME AND EXPENSES. DURING APPELLATE PROCEEDINGS THE APPELLANT HAS FILED THE DETAILS AND COPY OF LEDGER ACCOUNT, GENERATOR CHARG ES AND DIESEL OIL ETC. AND HAS EXPLAINED THAT THE GENERATOR WAS INSTALLED IN THE WAREHOUSE BUILDING RENTED TO RANBAXY LTD. FOR WHICH SEPARATE CHARGES WERE RECEIVED AND AGAINST WHICH EXPENDITURE OF DIESEL OI L WAS INCURRED. THE APPELLANT HAS PRODUCED THE DETAIL S OF THE EXPENSES THE BILLS ETC. IN VIEW OF THE ABOVE THE ADDITION IS DIRECTED TO BE DELETED. THIS GROUND OF THE APPELLANT IS THEREFORE ALLOWED. RS.500000/- DELETED 11. BEFORE ADJUDICATING THE ISSUES WE ARE ALSO LIKE TO REPRODUCE THE ABSTRACT OF THE REMAND REPORT DATED M/S. T. LOGIKS ITANO.304/IND/2017 14 22.04.2016 WHICH WAS HEAVILY RELIED BY LD. CIT(A) F OR DELETING THE ADDITIONS: 2. AT THE OUTSET IT IS TO BE MENTIONED HERE THAT S HRI SHAILENDRA JAIN, ONE OF THE PARTNERS OF THE FIRM, I S THE KEY PERSON OF THE GROUP. THE GROUP CONSIST PROPRIET OR SHIP CONCERNS, FIRMS AND COMPANIES. ALL THE ENTITIES ARE INTERCONNECTED AND FUNDS ARE TRANSFERRING FROM ONE CONCERN TO OTHER AT THE WILL AND WISH OF SHRI SHAIL ENDRA JAIN. THE MANAGEMENT IS NOT AT ALL BOTHERED ABOUT A NY LAW OR RULE AS FAR AS THE FINANCIAL TRANSACTIONS OF THE GROUP ARE CONCERNED. 3. DURING THE COURSE OF REMAND REPORT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO EXPLAIN ITS CASE. IN REPLY THE ASSESSEE HAS FURNISHED ITS REPLY. AFTER RECEIVING T HE REPLY INFORMATION WERE CALLED FOR FROM VARIOUS PARTIES. C ERTAIN DISCREPANCIES WERE NOTICED IN THE REPLIES RECEIVED WHICH WERE INFORMED TO THE ASSESSEE VIDE LETTER DATED 04.04.2016 AS UNDER: 'A) M/S SNEHAL ENTERPRISES - IN THE NAME OF THIS PA RTY YOU HAVE SHOWN SUNDRY CREDITORS OF RS. 3144/-. HOWEVER, THE PARTY HAS REPLIED VIDE LETTER DATED 15.03.2016 THAT NO TRANSA CTION WAS MADE WITH YOU. B) M/S KANCHAN MARBLES & GRCMITES - IN THE NAME OF THIS.PARTY YOU HAVE SHOWN ADVANCE 'OF RS.1,15,0741-. HOWEVER, THE PARTY HAS REPLIED VIDE LETTER DATED 03.03.2016 THAT NO TR ANSACTION WAS MADE WITH YOU. C) M/S SNEHA TRADERS - IN THE NAME OF THIS PARTY YO U HAVE SHOWN ADVANCE OF RS. 18,1831-. HOWEVER, THE PARTY H AS REPLIED VIDE LETTER DATED 27.02.2016 THAT NO TRANSACTION WA S MADE WITH YOU. D) TECHNOCRATS SECURITY SYSTEMS PVT. LTD. - IN THE NAME OF THIS PARTY YOU HAVE SHOWN ADVANCE OF RS. 25,000/-. HOWE VER, THE PARTY HAS REPLIED VIDE LETTER DATED 26.02.2016 THAT NO TRANSACTION WAS MADE WITH YOU. E) THE NOTICES ISSUED IN THE CASES OF SUN PHARMACEU TICAL INDUSTRIES LTD. (ERSTWHILE RANBOXI LABORATORIES LTD .), SHRI LAXMICHAND SHARMA, M/S TIRUPATI PESTCON, M/S PHARMA SIA ETC. REMAINED UNCOMPLIED WITH. 1.1. PLEASE EXPLAIN THE ABOVE DISCREPANCIES WITH D OCUMENTARY EVIDENCES. 2. FROM THE REPLY RECEIVED FROM M/S AFD PHARMASIA, TO WHOM YOU HAVE SHOWN LOAN OF RS. 5,64,00,983/-, IT IS SEE N THAT YOU M/S. T. LOGIKS ITANO.304/IND/2017 15 HAVE NOT GIVEN ANY LOAN TO THEM. LEDGER ACCOUNT SHO WS THAT INSTEAD OF LOAN IT WAS PAYMENT TO TATA CAPITAL, INT EREST TO TATA CAPITAL ETC. PAID BY YOU. IN THE CASE OF VITAM AX H EALTHCARE PVT. LTD. YOU HAVE SHOWN ADVANCE OF RS. 1,00,70,742 /-. LEDGER ACCOUNT SHOWS THAT INSTEAD OF LOAN, IT WAS P AYMENT OF SALARY, SERVICE TAX, TAXI CHARGES, SECURITY AND LAB OUR SERVICES OF VITAMAX HEALTHCARE P. LTD. ETC. PAID BY YOU. INC IDENTALLY, BOTH THE ABOVE ARE YOUR FAMILY CONCERNS. PLEASE JUS TIFY HOW THE ABOVE PAYMENTS CAN BE TREATED AS LOAN AND ALSO EXPL AIN THE BUSINESS EXIGENCY OF SUCH PAYMENTS. 3. VIDE ORDER SHEET ENTRY DATED 10.02.2016 IT WAS A SKED TO EXPLAIN THE SOURCE OF CREDITS APPEARING IN THE CAPI TAL ACCOUNT, THE SOURCE OF LOAN OF RS. 3 LAKH RECEIVED FROM SMT SHRUTI JAIN AND JUSTIFY THE INTEREST ACCOUNT GIVING BIFURCATION OF FUND USED FOR BUSINESS AND CONSTRUCTION OF WAREHOUSE. THE CAS E WAS FIXED FOR HEARING ON 22.02.2016. ON 22.02.2016 A WRITTEN SUBMISSION WAS FILED AT DAK GIVING ONLY LIST OF ADD RESS OF THE PARTIES OF LOANS AND ADVANCES AND COPY OF LEASE AGR EEMENT & SUPPLEMENTARY LEASE AGREEMENT WITH RANBAXI. THOUGH SPECIFICALLY ASKED, YOU HAVE NOT FURNISHED THE FULL AND COMPLETE REPLY TO THE ORDER SHEET ENTRY DATE 10.02.2016.' 4. IN COMPLIANCE TO THE ABOVE LETTER, THE ASSESSEE SOUGHT ADJOURNMENT. THE HEARING WAS ADJOURNED TO 21.04.201 6 ON ASSESSEE'S REQUEST. ON 21.04.2016 THE ASSESSEE FILE D A WRITTEN REPLY AT OAK. A PERUSAL OF THE REPLY SHOWS THAT THE REPLY OF THE ASSESSEE WAS NOT TO THE POINT. AS HAS BEEN MENTIONED ABOVE, THE GROUP CONCERNS HAD ENTERED INTO FINANCIAL TRANSACTIONS AS PER THEIR WILL AND WISH. IN REPLY TO QUERY REGARDING M/S KANCHAN MARBL ES & GRANITES IT WAS STATED THAT M/S PHARMASIA HAD PAID RS. 1,15,074 1- ON BEHALF OF THE FIRM THROUGH ACCOUNT PAYEE CHEQUE. REGARDING TE CHNOCRAT SECURITY SERVICES IT WAS STATED THAT THE PAYMENT WA S MADE BY M/S PHARMASIA ON BEHALF OF THE FIRM. 4.1. REGARDING M/ S AFD PHARMASIA IT WAS STATED THAT AN AMOUNT OF RS. 5,44,25,794/- WAS EARLIER YEARS BALANCE AND RS. 11,20,0001- WAS OF DURING THE YEAR. OUT OF THE ABOVE, AN AMOUNT OF RS. 7,00,000/- WAS RETURNED BACK TO THE FIRM. THESE ADVANCES WERE STAT ED TO BE TO CATER THEIR BUSINESS NEED AND TO AVOID THE DEFAULT AND RE PUTATION OF THE FIRM AND THEIR ASSOCIATES. IT WAS FURTHER STATED THAT IN REPAYMENT OF SUCH ADVANCE, M/S AFO PHARMASIA PAID THE AMOUNT OF RS. 6,54,980/- TO M/S TATA CAPITAL LTD. ON BEHALF OF THE FIRM ON A CCOUNT OF REPAYMENT OF TERM LOAN OF M/S TATA CAPITAL LTD. BY THE FIRM. IT WAS ALSO STATED THAT AN INTEREST OF RS. 52, I 0, 169/- WAS ALSO CHARGED BY THE FIRM. M/S. T. LOGIKS ITANO.304/IND/2017 16 12. FROM PERUSAL OF THE ABOVE REMAND REPORT, WE FIN D THAT THE ASSESSEE REPLIED PARTLY TO THE QUESTIONS RAISED IN THE QUESTIONNAIRE IN LETTER DATED 04.04.2016. BUT FOR O THER ISSUES, FOR INSTANCE NATURE OF LOAN TO M/S AFD PHAR MASIA AMOUNTING TO RS.5,64,00,983/-, THE ASSESSEE DID NOT GIVE EXPLANATION. SIMILARLY REGARDING CREDITS APPEARING FOR THE PARTNERS IN THE CAPITAL ACCOUNT NO PROPER EXPLANATI ON WAS GIVEN, SOURCE OF DEPOSITS IN THE SAME BANK ACCOUNT OF THE PARTNERS HAVE ALSO NOT BEEN EXPLAINED. CONCLUDING R EMARKS OF THE ASSESSING OFFICER IN THIS REMAND REPORT DATE D 22.04.2016 ARE THAT THE ASSESSEE HAS NOT GIVEN ANY PROPER EXPLANATION TO THE POINTS ON WHICH ADDITIONS WERE M ADE IN THE ASSESSMENT ORDER. 13. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALS O ASSESSEE DID NOT APPEAR ON THE DATE OF HEARINGS. PE NALTY NOTICE FOR NOT ATTENDING THE HEARING WAS ISSUE U/S 271(1)(B) OF THE ACT ON 20.02.2015 AND SUBSEQUENTLY EX-PARTE ORDER HAS BEEN FRAMED. 14. EVEN, IN THE APPEAL BEFORE US THOUGH THE ASSESS EE HAS BEEN SERVED THE NOTICE OF HEARING IT HAS OPTED NOT TO APPEAR BEFORE US ON THE DATE OF HEARING FIXED ON 14.05.201 8, 24.10.2018 & 17.01.2019. THIS ACTION OF ASSESSEE OF CONSISTENTLY NOT APPEARING ON THE DATE OF HEARING F IXED BY VARIOUS AUTHORITIES CERTAINLY CREATES DOUBTS AND SU SPICION IN OUR MIND. THE ISSUES RAISED BY THE REVENUE IN VA RIOUS GROUNDS OF APPEAL PURELY RELATES TO THE FACTS OF TH E CASE AND IT NEEDS COMPLETE EXAMINATION OF THE FINANCIAL STAT EMENT OF THE CURRENT YEAR AS WELL AS PRECEDING YEAR FOR THE VERIFICATION OF OPENING BALANCE, GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE CASH CREDITORS AND M/S. T. LOGIKS ITANO.304/IND/2017 17 UNSECURED LOANS TO BE ESTABLISHED WITH DOCUMENTARY EVIDENCES. 15. WE, THEREFORE, IN THESE GIVEN FACTS AND CIRCUMS TANCES OF THE CASE, ARE OF THE CONSIDERED VIEW THAT ALL THE I SSUES RAISED BY THE REVENUE IN GROUND NO.1 TO GROUND NO.6 NEEDS TO BE SET ASIDE TO THE FILE OF LD. ASSESSING OFFICE R FOR AFRESH IN DEPTH EXAMINATION WHO SHALL PROVIDE PROPER OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO ATTEND THE DATE OF HEARING FIXED BY LD. AO WITHO UT TAKING ANY ADJOURNMENT UNLESS OTHERWISE REQUIRED ELSE THE ASSESSING OFFICER WILL BE AT HIS/HER DISCRETION TO DECIDE THE CASE OF THE ASSESSEE AS PER THE PROVISIONS OF LAW. 16. IN THE RESULT, ALL THE GROUNDS RAISED IN APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 06 .02.2 019. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 06/02/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR