DCIT 8(3), MUMBAI V. YUVAK FINE FAB LTD, MUMBAI

ITA 3108/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3605 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PAL SINGH
• Keywords: Unexplained cash credit; Depreciation; Additional evidence
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND . , SHRI D.KARUNAKAR RAO, ACCOUNTANT MEMBER . / ITA NO.3108/MUM/2012 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2008-09 THE ASSTT. COMMISSIONER OF INCOME TAX 8(3), ROOM NO.217, AAYKAR BHAVAN, M.K.MARG, MUMBAI - 400 020. ! ! ! ! / VS. YUVAK FINE FAB LIMITED, 160-161/B, SANJAY BUILDING NO.5, MITTAL ESTATE, ANDHERI (EAST), MUMBAI 400 059 # ./ $% ./ PAN/GIR NO. : AAACV 2450N ( #& / APPELLANT ) .. ( '(#& / RESPONDENT ) #& ) / APPELLANT BY: SHRI AJAY PAL SINGH '(#& * ) / RESPONDENT BY : SHRI HARIDAS BHAT ! * + / DATE OF HEARING : 27/05/2013 ,-' * + / DATE OF PRONOUNCEMENT : 27/05/2013 . / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS D IRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-18 MUMBAI DATED 27/02/2012 FOR ASSESSMENT YEAR 2008- 08. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF UNPROVED SHARE AP PLICATION MONEY OF RS.26,00,000/- TREATED BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT U/S.68 OF THE INCOME TAX ACT, 1961 WITHOUT A PPRECIATING THE FACT . / ITA NO.3108/MUM/2012 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2008-09 2 THAT DETAILS FURNISHED BY THE ASSESSEE RELATED TO A LLOTMENT OF SHARES ON 10.10.2009, WHICH WERE NOT RELEVANT TO AYR.2008-09. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN ALLOWING DEPRECIATION OF RS.6,73,616/- WIT HOUT APPRECIATING THE FACT THAT ASSETS ON WHICH THE SAID DEPRECIATION WAS CLAIMED, WERE MERELY CAPITAL WORK IN PROGRESS AN WERE NOT PUT TO USE D URING THE RELEVANT ASSESSMENT YEAR. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTERE ST OF RS.2,00,52,763/- U/S.36(1)(III) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO FURNISH ANY DETAILS TO SHOW THAT THE INTEREST- BEARING BORROWED FUNDS WERE UTILIZED FOR BUSINESS PURPOSES. 2. THE ASSESSMENT ORDER IN THE PRESENT CASE IS DATE D 15/12/2010 PASSED UNDER SECTION 144(1) OF THE INCOME TAX ACT, 1961 (T HE ACT). IN ABSENCE OF COMPLIANCE TO THE NOTICES ISSUED BY THE A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS AN EX-PARTE ORDER UNDER THE PROVISIONS OF SECTION 144(1) HAS BEEN FRAMED, IN WHICH SEVERAL ADDITIONS WERE MADE, OUT OF WHICH THE REVENUE IS AGGRIEVED BY DELETION OF AFOREMENTIONED THREE ADDIT IONS WHICH ARE STATED IN THE GROUNDS OF APPEAL. 3. IT MAY BE MENTIONED HERE THAT THE AFOREMENTIONED ADDITIONS WERE AGITATED IN THE APPEAL FILED BY THE ASSESSEE BEFOR E LD. CIT(A) BY WAY OF FILING ADDITIONAL EVIDENCES BEFORE LD. CIT(A). THOSE ADDI TIONAL EVIDENCES WERE FORWARDED TO THE AO FOR OBTAINING REMAND REPORT. T HE AO HAD SUBMITTED REMAND REPORT DATED 17/2/2012, COPY OF WHICH WAS PL ACED ON RECORD. THE COMMENTS OF THE AO WITH REGARD TO EACH OF THE ADDIT ION, THE DELETION OF WHICH IS CONTESTED IN THE PRESENT APPEAL ARE AS UNDER: (I) WITH REGARD TO ADDITION OF RS.26,00,000/- (GRO UND NO.1): DURING THE ASSESSMENT PROCEEDINGS, AS SEEN FROM THE PARA 4 OF THE ASSESSMENT ORDER THERE WAS INCREASE IN SHARE APPLICATION MONEY TO THE TUNE OF RS.26,00,000/-. AN ADDITION WAS MADE U/S 68 FOR WAN T OF ANY EVIDENCES. EVEN DURING THE APPELLATE PROCEEDINGS, THE DOCUMENT FURN ISHED BY THE ASSESSEE IS ABOUT ALLOTMENT OF SHARES WHICH IS DTD. 10.10.2009. THIS DOCUMENT NEEDLESS TO SAY IS IRRELEVANT AS FAR AS ON GOING PROCEEDINGS FO R A.Y.2008-09 IS CONSIDERED FOR . / ITA NO.3108/MUM/2012 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2008-09 3 THE ISSUE UNDER CONSIDERATION OF SHARE APPLICATION MONEY. THEREFORE, NO RELIEF IS WARRANTED ON THIS ACCOUNT TO THE ASSESSEE. (II) WITH REGARD TO ADDITION OF RS.6,73,616/-(GROUN D NO.2): AS DISCUSSED IN PARA 5 OF THE ASSESSMENT ORDER, FAI LURE ON THE PART OF THE ASSESSEE TO PRODUCE PROOF IN RESPECT OF ADDITION TO FIXED ASSETS HAS RESULTED INTO DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.6,73,6 16/-. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE HAS PRODUCED DOCUMENTS. TH ESE DOCUMENTS HAVE BEEN CAREFULLY PERUSED. THIS EXERCISE REVEALED THAT IN RESPECT OF FACTORY BUILDING & SOMET RAPIER WEAVING MACHINE ADDITIONS HAVE BEEN MA DE OF RS.11,93,664/- & RS.56,33,928/- RESPECTIVELY. (III) WITH REGARD TO ADDITION OF RS.2,00,52,763/-(G ROUND NO.3): DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM OF INTEREST PAYMENTS BY DOCU MENTARY EVIDENCES WHICH HAS RESULTED INTO DISALLOWANCE OF INTEREST CLAIM OF RS. 2,00,52,763/-. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS PROVIDED TH E DETAILS ALONGWITH THE EVIDENCES. THE DETAILS FURNISHED BY THE ASSESSEE RE VEALS THAT DURING THE YEAR, THE ASSESSEE AVAILED LOAN FACILITY FROM VARIOUS BAN KS & FINANCIAL INSTITUTIONS ON WHICH IT HAS PAID INTEREST. AT THIS JUNCTURE, IT NE EDS TO BE MENTIONED THAT PRODUCTION OF THESE EVIDENCES DOES NOT TANTAMOUNT T O OFFERING OF SATISFACTORY EXPLANATION ON THIS ACCOUNT AS THE ASSESSING OFFICE R HAS DISALLOWED THE ASSESSEES CLAIM IN THE ASSESSMENT. ORDER ON THIS A CCOUNT ON TWO ACCOUNTS VIZ. (A) NON PRODUCTION OF EVIDENCES AND (B) USEAGE OF I NTEREST BEARING BORROWED FUNDS FOR THE PURPOSE OTHER THAN BUSINESS. EVEN DURING TH E APPELLATE PROCEEDINGS NO EVIDENCE REGARDING THE USEAGE OF BORROWED FUNDS FOR THE PURPOSE OF BUSINESS HAS BEEN PRODUCED. THEREFORE, NO RELIEF IS MERITED ON T HIS ACCOUNT. 4. LD. CIT(A) HAS DELETED THE AFOREMENTIONED THREE ADDITIONS WITH THE FOLLOWING OBSERVATIONS: 1.6. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. COUNSEL AND THE REMAND REPORT OF THE A.O. AND THE REPLY FILED BY THE LD. C OUNSEL TO THE REMAND REPORT OF THE A.O. AND THE VARIOUS GROUNDS OF APPEAL ARE DECI DED AS FOLLOWS: .. (II) ADDITION U/S 68 ON ACCOUNT OF SHARE APPLICATIO N MONEY OF R. 26,00,000/- I HAVE CONSIDERED THE REPLY OF THE ASSESSEE TO THE REMAND REPORT OF THE A.O. AND IN THIS REPLY, THE ASSESSEC HAS CLEARLY SHOWN THAT THE AMOUNT IN QUESTION IS SHARE APPLICATION MONEY AND THE ALLOTMENT WAS MADE ON 10. 10.2009 - WHICH CAN BE NO GROUND FOR MAKING DISALLOWANCE/ADDITION BECAUSE THE APPELLANT HAS EXPLAINED THE SOURCE BY GIVING ALL THE DETAILS LIKE NAME AND ADDRESS AND PAN NUMBER. THUS THIS GROUND OF APPEAL IS ALLOWED. . / ITA NO.3108/MUM/2012 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2008-09 4 (III) DISALLOWANCE OF DEPRECIATION RS. 6,73,616/- I HAVE CONSIDERED SUBMISSIONS OF THE LD. COUNSEL AN D IT IS SEEN THAT THE APPELLANT HAS GIVEN FULL DETAILS OF THE ASSETS AND THE USER FOR BUSINESS PURPOSES AND THEREFORE, THE SAME DESERVES TO BE ACCEPTED AND THIS GROUND OF APPEAL IS ALLOWED. (IV)DISALLOWANCE OF INTEREST U/S 36(1)(III) OF RS. 2,00,52.763/- I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. COUNSE L IN REPLY TO THE REMAND REPORT AND HERE THE APPELLANT HAS VERY CLEARLY SHOW N THAT ALL THE LOANS WERE PREEXISTING LOANS NO INTEREST FREE LOANS WERE GIVEN BY THE ASSESSEE THERE WAS NO DIVERSION OF INTEREST BEARING FUNDS FOR NON-BUSI NESS PURPOSE BY THE ASSESSEE AND THE FUNDS HAVE BEEN USED WHOLLY AND EXCLUSIVELY FOR RUNNING THE BUSINESS OF THE ASSESSEE AND ARE THEREFORE ALLOWABLE U/S 36(1)( III) OF I.T. ACT. HENCE, IN VIEW OF THE ABOVE I DIRECT THE A.O. TO DE LETE THIS ADDITION AND THIS ROUND OF APPEAL IS ALLOWED. 5. ON THESE FACTS, AT THE OUTSET IT WAS SUBMITTED B Y LD. D.R THAT DESPITE THE SPECIFIC AGITATION BY A.O, LD. CIT(A) BY WAY OF A N ON-SPEAKING ORDER HAS DELETED THE ADDITION. LD. D.R SUBMITTED THAT IN THE INT EREST OF JUSTICE THE MATTER MAY BE RESTORED BACK TO THE FILE OF A.O WITH A DIRECTIO N TO RE-ADJUDICATE ALL THE AFOREMENTIONED THREE ISSUES DENOVO. 6. ON THE OTHER HAND, LD. A.R SUBMITTED THAT LD. CI T(A) HAS RIGHTLY DELETED THE ADDITION ON THE BASIS OF EXPLANATION AND EVIDEN CE SUBMITTED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS AND REMAND REPORT HAS ALSO BEEN OBTAINED FROM THE A.O. 7. WE HAVE HEARD BOTH PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. THERE IS A FORCE IN THE CONTENTION OF LD. D.R THAT THE ORDER PASSED BY LD. CIT(A) WHILE DELETING THESE ADDITION IS A NO N-SPEAKING AND CRYPTIC ORDER. LD. CIT(A) HAS NOT EVEN MENTIONED ABOUT THE EVIDEN CES WHICH WERE STATED TO BE FILED BY THE ASSESSEE. WE HAVE ALSO CAREFULLY G ONE THROUGH THE REMAND REPORT AND THE RELEVANT PORTION OF WHICH HAS ALREA DY BEEN REPRODUCED ABOVE. THE AO HAS ALSO NOT CARRIED OUT ANY ENQUIRY WITH R EGARD TO THE EVIDENCES SUBMITTED BY THE ASSESSEE TO SUPPORT HIS CASE. KE EPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT IT WI LL SERVE THE INTEREST OF JUSTICE IF ALL THESE THREE ISSUES ARE RESTORED BACK TO THE FILE OF A.O FOR RE- . / ITA NO.3108/MUM/2012 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2008-09 5 ADJUDICATION AS PER LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORDINGLY. IN VIEW OF ABOVE DISCUSSIONS ALL THE THREE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE CONSID ERED TO BE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 27/05/201 3 . * ,-' / 0!1 27/05/2013 - * 2 3 SD/- SD/- ( . / D.KARUNAKAR RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 0! DATED 27/05/2013 . . . . * ** * '+45 '+45 '+45 '+45 65'+ 65'+ 65'+ 65'+ / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '(#& / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 582 '+! , , / DR, ITAT, MUMBAI 6. 2 9 / GUARD FILE. .! .! .! .! / BY ORDER, (5+ '+ //TRUE COPY// : :: : / ; ; ; ; $ $ $ $ (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ! . ./ VM , SR. PS