The Income Tax Officer, Bathinda V. M/s Euro Infrastructure & Power Limited, Bathinda

ITA 319/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0533 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained investment; Commercial expediency
• Section: 143(3); 260A; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER [ I.T.A NO.319 (ASR)/2016 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-1(1), BATHINDA. VS. M/S EURO INFRASTRUCTURE & POWER LIMITED, 3400-B ST. NO.6/1, POWER HOUSE ROAD, BATHINDA. PAN:ABCE7889F (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S.S. KANWAL (DR) RESPONDENT BY: SH. P.N.ARORA (ADV.) DATE OF HEARING: 13.07. 2016 DATE OF PRONO UNCEMENT: 19.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LEARNED CIT(A), BATHINDA, DATED 28.03.2016 FOR ASST. YEAR: 2012-13. 2. THE REVENUE IS AGGRIEVED WITH THE ACTION OF LEAR NED CIT(A), BY WHICH HE HAD DELETED THE ADDITIONS MADE BY ASSESSIN G OFFICER ON ACCOUNT OF DIFFERENCE IN VALUE IN STOCK STATEMENTS SUBMITTE D TO BANK AND AS SUBMITTED ALONG WITH INCOME TAX RETURNS. THE REVENU E IS FURTHER AGGRIEVED WITH THE ACTION OF LEARNED CIT(A) BY WHIC H HE HAD DELETED THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF NO TIONAL INTEREST ON INTEREST FREE LOANS GIVEN BY ASSESSEE OUT OF INTERE ST BEARING BORROWED FUNDS. ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 2 3. AT THE OUTSET, LEARNED AR SUBMITTED THAT THE ISS UE OF DIFFERENCE IN STOCK STATEMENT HAS ALREADY BEEN DECIDED IN FAVOUR OF ASSESSEE IN ITS OWN CASE BY THE CONSOLIDATED ORDER OF HONBLE TRIBU NAL VIDE ORDER DATED 26.03.2015 AND IN THIS RESPECT FILED A COPY OF THE SAID JUDGMENT. THE LEARNED AR INVITED OUR ATTENTION TO ITA NO.571(ASR) /2013 FOR ASST. YEAR:2010-11 AND SUBMITTED THAT THE APPEAL OF THE R EVENUE FOR ASST. YEAR:2010-11 WAS DISMISSED UNDER THE SIMILAR FACTS AND CIRCUMSTANCES. SIMILARLY, REGARDING NON CHARGING OF INTEREST, THE LEARNED AR SUBMITTED THAT THIS ISSUE WAS ALSO DECIDED AGAINST THE REVENU E BY THE SAME JUDGMENT. 4. THE LEARNED DR ACCEDED THAT THE ISSUES WERE COVE RED IN FAVOUR OF ASSESSEE. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ISSUE IN TH E PRESENT APPEAL AROSE DUE TO DIFFERENCE IN VALUE OF STOCK GIVEN TO BANK F OR OBTAINING CASH CREDIT LIMITS AND AS PER BOOKS OF ACCOUNT OF THE ASSESSEE. THE ISSUE HAS BEEN DECIDED BY THE HONBLE TRIBUNAL IN THE CASE OF ASSE SSEE ITSELF ALONG WITH BUNCH OF APPEALS WHEREIN THE TRIBUNAL HAD TAKEN THE LEAD CASE OF M/S ISHAR INFRASTRUCTURE DEVELOPMENT (P) LTD., BATHINDA . THE RELEVANT FINDINGS OF THE TRIBUNAL ORDER AS CONTAINED IN PARA 18 ONWARDS ARE REPRODUCED BELOW. 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. THE LD. DR WHILE STARTED THE ARGUMENTS INITIA LLY TOOK UP THE MATTER IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPER (P) LTD. FOR THE ASSESSMENT YEAR 2009-10 BEING A LEAD CASE AND ARGUE D THAT ALL OTHER ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 3 MATTERS ARE IDENTICAL AND THEREFORE, THE DECISION I N THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPER (P) LTD. FOR THE ASSESSMEN T YEAR 2009-10 IS TO BE FOLLOWED IN OTHER APPEALS IDENTICALLY. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE WHILE ARGUING THE MATTER ARGUED FROM ALL THE APPEALS SEPARATELY AND ACCORDINGLY THE LD. DR SUBMITTED THAT COUNTER WRITTEN SUBMISSION DEALING WITH EACH AND EVERY APPEAL, WHICH HAS BEEN REPRODUCED HEREINABOVE. ACCORDINGLY, WE DEAL WITH MATTER AS UN DER: 19. THE LD. DR AT PAGE 2 TO 6 OF HIS WRITTEN SUBMIS SIONS DATED 02.02.2015 REPRODUCED HEREINABOVE, AS STATED THAT T HE ORDER OF THE LD. CIT(A) IS PERVERSE BECAUSE THE FINDINGS GIVEN BY T HE LD. CIT(A) THAT THE BANK AUTHORIOTIES ARE NOT CONCERNED WITH THE AVAILA BILITY OF ADEQUATE STOCK AS THEIR INTERESTS ARE COVERED BY THE COLLAT ERAL SECURITY PROVIDED BY THE ASSESSEE. IF IT IS SO WHY HYPOTHECATION OF THE STOCK IS MADE BY THE BANK WHEREAS THE DRAWING POWER IS DETERMINED ON THE BASIS OF THE STOCK AND NOT ON THE BASIS OF COLLATERAL SECURITIES. THE LD. CIT(A) IGNORED THE STATEMENT OF SENIOR BRANCH MANAGER OF THE SAME VERY BRANCH AND THE LD. CIT(A) HAS NOT DOUBTED THE CORRECTNESS OF THE STAT EMENT OF SENIOR BRANCH MANAGER, WHICH CANNOT BE TRASHED WITHOUT GIVING ANY COGENT REASONS. HOWEVER, THE LD. DR RELIED UPON THE STATEMENT OF S H.TEJINDER SHARDA AND DP REGISTER WHICH WAS IGNORED BY THE LD. CIT(A). T HE LD. COUNSEL FOR THE ASSESSEE HAS ALREADY GIVEN HIS SUBMISSIONS TO THE SAID ARGUMENTS MADE BY THE LD. DR WHICH HAS BEEN CONSIDERED BY US AND WHICH HAS BEEN REPRODUCED HEREINABOVE. 20. OUR FINDINGS ARE BASED ON THE SAID ARGUMENTS M ADE BY THE LD. DR AND THE LD. COUNSEL FOR THE ASSESSEE WITH REGARD TO THE SAID COLLATERAL SECURITIES AND DP REGISTER AND THE STATEMENT OF SEN IOR BRANCH MANAGER SH.TEJINDER SHARDA AND THE STOCK STATEMENT FILED BY THE ASSESSEE FOR THE A.Y. 2009-10 ON 02.02.2015 AVAILABLE AT PB 12 & 13 WHICH ARE UNSIGNED . THE LD. COUNSEL FOR THE ASSESSEE HAS POINTED OUT CERTAIN DEFICIENCIES IN THE DP REGISTER ON WHICH THE LD. DR HAS PLACED HEAV Y RELIANCE BUT HAS NOT BEEN REBUTTED BY THE LD. DR IN HIS COUNTER ARGUMEN TS OR COUNTER WRITTEN SUBMISSIONS. THE SAID DEFICIENCIES EVEN THOUGH REP RODUCED HEREINABOVE BY THE LD. COUNSEL FOR THE ASSESSEE IN HIS WRITTEN SUBMISSIONS I.E. VITAL INFORMATION RELATING TO PHYSICAL VERIFICATION OF TH E STOCK HAS NOT BEEN RECORDED AND THERE IS NO COLUMN IN THE REGISTER F OR KEEPING THE RECORD THAT ON WHICH DATE STOCK STATEMENT HAS BEEN RECEIVED. TH E COLUMN FOR ACCOUNTANT INITIALS IS BLANK AND COLUMN FOR INSPECT ION IS MOSTLY BLANK EXCEPT INITIALS IN SOME OF THE COLUMNS AND DATE OF 19.01.2010 AGAINST THE STOCK STATEMENT OF 31.08.2009, 30.09.2009 AND 31.1 0.2009 WHICH SHOWS THE REALITY OF PHYSICAL VERIFICATION OF STOCK AS ON DIFFERENT DATES OF THREE MONTHS. THE LD. COUNSEL FURTHER ARGUED THAT COLUMN FOR FULL SIGNATURE OF INCUMBENT INCHARGE IS ALSO BLANK EXCEPT STARTING FR OM ENTRIES FOR THE MONTH OF MARCH 2009 TO DEC., 2009 BUT NO NAME OF THE PERS ON WHO DID THE INITIALS CAN BE MADE OUT. 21. AS REGARDS THE STATEMENT OF SENIOR BRANCH MANAG ER, SH. TEJINDER SHARDA, IT WAS ONLY A GUESS WORK THAT HIS PREDECESS OR MUST HAVE GONE THROUGH THE MODUS OPERANDI OF MAINTAINING THE RECO RDS BY THE BANK AS HE ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 4 WAS NOT IN THE BRANCH OF THE BANK DURING THE RELEVA NT PERIOD. IN FACT, BANK DOES NOT HAVE ANY RECORD OF ANY PHYSICAL VERIFICATI ON OF THE STOCK AS ON 31.03.2009 AND THE DRAWING POWER REGISTER CANNOT BE RELIED UPON. THAT THE ASSESSEE HAD IN FACT MORE STOCK AS COMPARED TO THE STOCK DECLARED IN THE AUDITED PROFIT & LOSS ACCOUNT AND BOOKS OF ACCO UNT. IN FACT, A PROCEDURE HAS BEEN STATED BY SH.TEJINDER SHARDA OF MAINTAININ G THE DRAWING POWER REGISTER AND IN FACT, NOTHING HAS BEEN BROUGHT ON R ECORD TO JUSTIFY THAT THE PHYSICAL VERIFICATION HAS BEEN DONE. IN FACT, THE P RESENT INCHARGE OF THE BANK, WHO ALLEGEDLY AS MENTIONED BY THE AO AS VERI FIED THE STOCK PHYSICALLY WAS NEVER CROSS-EXAMINED AND NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO OR EVEN BY THE LD. DR, MR. TARSEM LAL THAT THE STOCK WHICH IN ALL THE CASES MENTIONED HEREINABOVE, WHICH IS LYING AT DIFFERENT SITES, NOT AT ONE PLACE IN ONE CITY BUT AT DIFFERE NT CITIES IN DIFFERENT STATES. NOT EVEN A SINGLE DOCUMENTARY EVIDENCE WAS PLACED O N RECORD TO ESTABLISH THAT ANY BANK OFFICER HAS EVER VISITED DIFFERENT SI TES AND DIFFERENT CITIES IN DIFFERENT STATES AND THAT TOO ON ANY DATE AND THERE ARE NO DETAILS AVAILABLE WITH THE BANK AUTHORITIES WITH REGARD TO THE MATERI AL, SPECIFICATIONS AND WEIGHMENT AND/OR NUMBERS OF MATERIAL AVAILABLE. HA D IT BEEN VERIFIED PHYSICALLY, THE SAME SHOULD HAVE BEEN THERE. THE L D. DR TOTALLY RELIED UPON THE DP REGISTER, A COPY OF WHICH IS PART OF TH E ASSESSMENT ORDER BUT THE SAME IS NOT BACKED BY ANY DOCUMENTARY EVIDENCE WHICH CAN PROVE THAT THE PHYSICAL VERIFICATION HAS BEEN DONE BY ANY OF THE BANK AUTHORITIES AT ANY POINT OF TIME DURING THE IMPUGNED YEAR IN A NY OF THE CASE MENTIONED HEREINABOVE. 22. MUCH RELIANCE HAS BEEN PLACED ON THE STATEMENT OF BANK MANAGER, SH. TEJINDER SHARDA IN THE CASE OF MUNISH KUMAR BA NSAL CONTRACTOR BUT THE AO HAS FAILED TO PROVE THAT ANY PHYSICAL VERIFI CATION HAS BEEN MADE OF THE STOCK. HOWEVER, A STATEMENT RECORDED OF THE BRA NCH MANAGER IN THE CASE OF SH. MUNISH KUMAR BANSAL CONTRACTOR, WHO HAS BEEN ASSESSED BY THE AO, THE SAME CANNOT AFFECT THE ASSESSMENT OF TH E PRESENT APPEAL AND CANNOT BE BLINDLY APPLIED IN THE PRESENT APPEAL AUT OMATICALLY. HOWEVER, THE MATTER IN THE CASE OF SH. MUNISH KUMAR BANAL CO NTRACTOR, TRAVELLED UPTO THE ITAT, AMRITSAR BENCH AND THE ITAT, AMRITSA R BENCH IN ITS DECISION IN ITA NO.391(ASR)/2012 DATED 12.09.2013 D ELETED THE ADDITION THOUGH THE FACTS IN THAT CASE WERE DIFFERENT.. 23. THE LD. DR HAS TRIED TO REBUT THE CONTENTION OF THE ASSESSEE THAT THE ACTUAL PHYSICAL VERIFICATION OF THE STOCK HAS BEEN DONE BY THE BANK AUTHORITIES BY RELYING ON DP REGISTER WHICH SHOWS T HAT THE PHYSICAL VERIFICATION OF THE STOCK STATEMENT DATED 31.03.200 9 WAS MADE ON 03.04.2009 (PAGE 45). IT WAS EXPLAINED BY THE LD. C OUNSEL FOR THE ASSESSEE THAT IT WAS IMPOSSIBLE FOR THE BANK AUTHORTIES TO P HYSICALLY VERIFY THE STOCK AS PER STOCK STATEMENT DATED 31.03.2009, AS THE STO CK WAS LYING AT DIFFERENT SITES IN MADHYA PRADESH. THIS ARGUMENT OF THE LD. DR CANNOT BE ACCEPTED AT ALL IN VIEW OF THE ABOVE FACTS. HENCE, IT STANDS PROVED THAT THE BANK MANAGER ONLY NARRATED THE PROCEDURE AND NOTHI NG HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE STOCK HAS BEEN PHYSICAL LY VERIFIED AT ANY POINT OF TIME AND NO DOCUMENTARY EVIDENCE HAS BEEN PLACED ON RECORD BY THE REVENUE. ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 5 23.1 AS REGARDS THE COUNTER COMMENTS/SUBMISSIONS BY THE LD. DR, OUR FINDINGS ARE : I) THAT THE STOCK STATEMENTS FOR THE ASSESSMENT YEA R 2009-10 AS CLAIMED BY THE ASSESSEE ARE NOT INFLATED BUT DE FLATED. HE HAS COMPARED THE VALUE OF THE STOCK AS PER STOCK ST ATEMENT WITH THE SANCTIONED LIMIT INSTEAD OF STOCK AS PER B ALANCE SHEET AS ON 31.03.2009. HENCE, THE COUNTER COMMENT IS FACTUALLY WRONG. II) THE LD. DR STATED THAT DURING THE AY 2010-11, T HE ASSESSEE HAS NOT CLAIMED THAT HE FILED INFLATED STOCK STATEM ENT. BUT ON PAGE 6 OF THE ORDER OF THE AO, THE AO HAS REPRODUCE D IN PARA 2.4 IN WRITTEN SUBMISSION OF THE ASSESSEE AND IT HA S BEEN CLAIMED BY THE ASSESSEE THAT THE INFLATED STOCK ST ATEMENTS WERE SUBMITTED TO THE DEPARTMENT FOR GETTING LOANS. HENCE, THE COUNTER COMMENT OF THE LD. DR IS FACTUALLY WRON G. I) ON PAGE 4 OF THE COUNTER COMMENTS, THE LD. DR HAS D ISCUSSED REGARDING CROSS EXAMINATION OF SH. KAMLESH GUPTA BU T THIS CROSS EXAMINATION WAS MADE BY THE ASSESSEE DURING T HE A.Y. 2010-11. MOREOVER, THE LD. CIT(A) HAS GIVEN DE TAILED FINDING REGARDING NON-PHYSICAL VERIFICATION OF THE STOCK AT PARA 12(III) OF THE APPELLATE ORDER FOR AY 2009-10 II) THE LD. DR HAS DISCUSSED ON PAGE 5 OF THE WRITTEN SUBMISSION REGARDING STATEMENT OF THE BANK MANAGER REGARDING INDEPENDENT VERIFICATION OF THE STOCK DAT ED 4.2.2010. BUT THE AO HAS NEVER TAKEN ANY COGNIZANCE OF THIS INDEPENDENT STOCK AUDIT REPORT IN THE ASSESSMENT O RDER. MOREOVER, THIS INDEPENDENT VERFICIATION RELATES TO STOCK STATEMENT DATED 31.01.2010 ALLEGEDLY MADE ON 4.2.20 10 BUT NOT TO THE STOCK STATEMENT DATED 20.03.2010 ON THE BASIS OF WHICH ADDITION HAS BEEN MADE . HENCE, NO RELIANCE CAN BE PLACED ON THE INDEPENDENT STOCK VERIFICATION. III) ON PAGE 6 OF THE COUNTER COMMENTS, THE LD. DR HAS S TATED THAT THE VALUE OF THE STOCK HAS BEEN MENTIONED AT STOCK STATEMENT DATED 31.03.2009 AT RS.12,62,06092/- BUT THE ASSESSEE NEVER STATED THAT THE STOCK STATEMENT WAS INFLATED AND IT HAS ONLY STATED BY THE ASSESSEE THAT IT IS U NSIGNED. BUT IN THIS REGARD, THE ASSESSEE HAS ALL ALONG STA TED THAT THE STOCK AS PER STOCK STATEMENT HAS BEEN INFLATED TO A VAIL CC LIMIT FROM THE BANK. THE PHYSICAL VERIFICATION OF THE STOCK HAS NEVER BEEN PROVED BY THE DEPARTMENT. HENCE, THI S COUNTER COMMENT OF THE LD. DR IS ALSO FACTUALLY WRO NG. IV) THE LD. DR HAS AGAIN RELIED ON THE DP REGISTER FOR THE AY 2009-10 AND ACCORDING TO HIM THE BRANCH MANAGER SIG NED THE D.P.REGISTER IN TOKEN OF HAVING PHYSICALLY VERI FIED THE STOCK AND THE SAME IS FURTHER COUNTER SIGNED BY TH E CHIEF MANAGER AT THAT TIME. BUT THE ASSESSEE IN HIS COU NTER COMMENTS HAS BROUGHT OUT THE VITAL DEFECTS IN THE DP ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 6 REGISTER, WHICH HAS BEEN DISCUSSED (SUPRA). HENCE, THIS DP REGISTER HAS NO AUTHENTIC VALUE AND THE COMMENTS OF THE LD. DR ARE LIABLE TO BE REJECTED. V) THE LD. DR HAS ALSO STATED THAT THE ASSESSEE HAS TR IED TO RELY ON THE DECISION OF THIS BENCH IN THE CASE OF M UNISH KUMAR BANSAL AND ACCORDING TO HIM, THE FACTS OF THI S CASE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT ASSE SSEE. BUT THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE BENCH THAT IN THE ABOVE SAID CASE, THE ADDITION HAS BEEN DELETED AND NO FURTHER RELIANCE HAS BEEN PLACED. MOREOVER, REGARDI NG DIFFERENCE OF RS.1,73,16,531/- POINTED OUT BY THE LD. DR, THIS ISSUE IS COVERED BY THE FINDING THAT THE ASSESSEE HAS FILED INFLATED STOCK STATEMENT. VI) ACCORDING TO THE LD. DR, THE ASSESSEE HAS STATED TH AT THE AUDITED ACCOUNTS FILED WITH THE BANK ARE THE SAME A S WITH THE INCOME TAX DEPARTMENT AND BECAUSE OF THIS FACT, IT WAS IN THE KNOWLEDGE OF THE BANK THAT THE ACTUAL STOCK AS ON 13.03.2009 AND 20.03.2010 WAS MUCH LESS THAN THE ST OCK AS PER STOCK STATEMENT BUT NO ACTION WAS TAKEN AS P ER STOCK STATEMENT SUBMITTED TO THE BANK. AS PER LD. DR, THE COMMENTS OF THE ASSESSEE HAS NO RELEVANCE. BUT THIS FACT IS IMPORTANT BECAUSE THE BANK HAS NOT TAKEN NOTE OF DIFFERENCE IN STOCK. VII) THE LD. DR HAS GIVEN COMMENTS ON HYPOTHECATION OF S TOCK, WHICH HAS ALREADY BEEN DISCUSSED IN THIS ORDER SUPR A. VIII) THE LD. DR HAS FURTHER STATED THAT THE ASSESSEE MAD E BLANKET CLAIM THAT IT HAS SHOWN INFLATED STOCK FOR THE AY 2010-11. THIS IS IN CONTRADICTION TO THE COUNTER CO MMENTS OF THE LD. DR ON PAGE 4 THAT NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN AY 2010-11. XI THE SAME FACTS HAVE BEEN DISCUSSED IN RESPECT O F OTHER CASES WHICH ARE BEFORE US AND THE FINDINGS ALREADY RECORDED ABOVE SHALL APPLY ACCORDINGLY TO ALL OTHER CASES MENTIONED HEREINABOVE, MUTATIS MUTANDIS. 24. IT IS A FACT ON RECORD THAT THE CREDIT FACILITY HAS BEEN EXTENDED BY THE BANK TO THE ASSESSEE AGAINST THE HYPOTHECATION OF STOCK AND NOT AGAINST PLEDGE OF STOCK, IN WHICH THE CONTROL AND P OSSESSION OF THE STOCK REMAINED WITH THE ASSESSEE. 25. THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN T HE BOOKS OF ACCOUNT OR PURCHASE/SALES OR HAS NOT BROUGHT ON RECORD TO P ROVE THAT EXTRA PURCHASES HAVE BEEN MADE BY THE ASSESSEE AT ANY POI NT OF TIME. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED IS NOT UNDER DISPUTE AND NO DEFECT BY THE AUDITOR HAS BEEN POINTED OUT. IT IS T HE REAL INCOME WHICH CAN BE TAXED, WHEREAS IN THE PRESENT CASES ALL THE ADDI TIONS ARE MADE ON CONJECTURES AND SURMISES. ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 7 26. TIME AND AGAIN BEFORE BOTH THE AUTHORITIES BELO W, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE EXPLANATION THA T THE STATEMENT HAS BEEN SUBMITTED BEFORE THE BANK AUTHORITIES ONLY ON ESTIMATED BASIS TO AVAIL OF THE BANK LOAN AND THERE IS NO OTHER PURPOS E. THIS CONTENTION OF THE ASSESSEE HAS NOT BEEN REBUTTED AT ANY POINT OF TIME BY THE AO OR BY THE LD. DR. IT IS A FACT THAT THE AO AS NOT POINTED O UT ANY DEFECTS IN THE BOOKS OF ACCOUNT AND IN FACT, THE AO HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. AS ARGUED BY THE LD. DR THAT CA SH CREDIT LIMIT IS CALCULATED ON THE BASIS OF DP REGISTER, WHICH IN TU RN IS MAINTAINED ON PHYSICAL VERIFICATION OF THE STOCK AND NO DOCUMENTA RY EVIDENCE HAS BEEN BROUGHT ON RECORD THAT THE STOCK MENTIONED IN THE . DP REGISTER BY THIRD PARTY I.E. BANK AUTHORITIES, HAS BEEN MAINTAINED ON PHYSICAL VERIFICATION OF THE STOCK, MAINTAINED BY THE ASSESSEE AT DIFFERENT CITIES IN DIFFERENT STATES. 27. THE AO HAS MUCH RELIED ON THE DECISION IN THE C ASE OF DEVGAN RICE & GENERAL MILLS (SUPRA). THE ISSUE BEFORE THE HONB LE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF DEVGAN RICE & GENERAL MI LLS (SUPRA) WAS WITH REGARD TO THE PROCEEDINGS U/S 148 OF THE ACT AND WH ETHER THE SAID PROCEEDINGS U/S 148 OF THE ACT COULD BE INITIATED O N THE BASIS OF INFORMATION REGARDING INFLATING THE VALUE OF THE S TOCK IN THE BANK STATEMENT WAS RECEIVED FROM THE BANK AFTER COMPLETI ON OF ASSESSMENT U/S 143(3) OF THE ACT.. THE HONBLE HIGH COURT HAS HELD THAT THE REOPENING IN SUCH CASES CAN BE DONE. HOWEVER, THE DECISION OF HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DEVGAN RICE & GEN ERAL MILLS (SUPRA) WAS WITH REGARD TO A DIFFERENT CONTEXT AND DID NOT PROVE THAT THE ASSESSEE HAD MADE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 28. MUCH RELIANCE HAS BEEN PLACED BY THE LD. DR ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL VS. CIT REPORTED AT 366 ITR 644. AS REQUIRE D ORDER OF THE CIT(A) IN THE CASE OF SHAKUNTLA THUKRAL WAS PLACED ON RECORD BY THE PARTY AND ON PERUSAL OF THE SAME IN PARA 2.11 TO 2.18 AND AT PAG E 4 OF CIT(A)S ORDER, IT WAS FOUND THAT THE BOOKS OF THE ASSESSEE WERE NOT A CCURATE BECAUSE OF SPECIFIC DEFECT OF NON-RECORDING OF SALES IN THE B OOKS OF ACCOUNT .POINTED OUT. IN PARA 2.8 AT PAGE 6 OF CIT(A)S ORDER IN TH E CASE OF SHAKUNTLA THUKRAL, STOCK STATEMENT FILED ON 04.07.2007 HAS BE EN REPLACED BY OTHER STOCK STATEMENT WHICH ESTABLISHES THAT NO STOCK INV ENTORY WAS PREPARED AT THE CLOSE OF THE FINANCIAL YEAR, WHEREAS THERE ARE NO SUCH FINDING BY THE AO IN ANY OF THE PRESENT APPEALS. 29. FURTHER, IN THE CASE OF SHAKUNTLA THUKRAL (SUPR A), THE LD. CIT(A) HAS RECORDED FINDING AT PARA 2.11 (PAGE 24), OF THE ORD ER THAT THE HIGHER STOCK AS ON 31.03.2005 WAS GIVEN FOR THE PURPOSE OF MAKI NG PAYMENT FOR IMPORT OF MACHINERY CANNOT BE ACCEPTED AS THE PAYME NT FOR PURCHASE OF MACHINERY HAD ALREADY BEEN RELEASED IN FEBRUARY, 20 05. IN PARA 2.12.1 (PAGE 25) OF LD. CIT(A)S ORDER, IT HAS BEEN PERUS ED THAT TAT THERE ARE REPORTS OF PHYSICAL INSPECTION CARRIED OUT BY THE B ANK AUTHORITIES IN RESPECT OF ASSESSEES STOCK AT QUARTERLY INTERVALS IS AVAIL ALE AND SUCH FINDINGS HAS NOT BEEN REBUTTED BEFORE THE ITAT OR BEFORE THE HON BLE HIGH COURT. BUT IN THE PRESENT CASE IN VIEW OF OUR FINDINGS HEREINABOV E, NOTHING HAS BEEN ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 8 ESTABLISHED THAT PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED OUT AS PER FACTS ON RECORD. FURTHER, IN PARA 2.12.2 (PAGE 25), OF CIT(A)S ORDER IN THE CASE OF SMT. SHAKUNTLA THUKRAL (SUPRA), IT HAS BEEN STATED BY THE LD. CIT(A) THAT THE ASSESSEE HAS NOT DISPUTED THE STOC K OF THE VALUE WHICH WAS SUBMITTED TO THE BANK WAS ACTUALLY LYING IN BUS INESS PREMISES AS ON 31.03.2005. BUT IN THE PRESENT APPEAL THE ASSESSEE ALL ALONG BEFORE THE AO AND THE LD. CIT(A) AND BEFORE US STATING THAT THE S TOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BANK. THUS, IN THE CASE OF SMT. SHAKUNTAL THUKRAL (SUPRA), THE AO AFTER POINTING OUT DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE A CATEGORICAL FINDING HAS BEEN GIVEN T HAT THE BOOKS OF ACCOUNT ARE NOT ACCURATE AND MEANING THEREBY THAT THE BOOKS OF ACCOUNT WERE REJECTED. BUT IN THE PRESENT APPEAL, THERE IS NO SUCH FINDING BY THE AO AND NO BOOKS OF ACCOUNT HAVE BEEN REJECTED AND PROVISIONS OF SECTION 145(3) HAVE NOT BEEN INVOKED. IN THE CASE OF SMT. S HAKUNTLA THUKRAL (SUPRA), THE LD. CIT(A) HAS RELIED UPON THE PHYSIC AL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN RESPECT OF ASSESSEES ST OCK AT QUARTERLY INTERVALS, AS MENTIONED HEREINABOVE AND SUCH FINDIN GS HAVE NEITHER BEEN REBUTTED BEFORE THE LD. CIT(A) OR ITAT OR HONBLE H IGH COURT. BUT IN THE PRESENT CASE, THE ASSESSEE HAS ESTABLISHED THAT NO PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED AS PER FACTS ON RECORD. 30. FURTHER AND FINALLY, IN THE CASE OF SHAKUNTLA THUKRAL (SUPRA), THE LD. CIT(A) HAS RECORDED THE FINDING THAT THE ASSESS EE HAS ACCEPTED THAT FACT THAT THE STOCK AS PER STOCK STATEMENT AS ON 31.03.2005 WAS LYING IN THE PREMISES OF THE ASSESSEE.. BUT IN THE PRESENT APPEAL, THE ASSESSEE ALL ALONG STATED BEFORE THE AUTHORITIES BELOW AND BEFO RE US THAT THE STOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BAN K AND THE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE OWNED THE STOCK MORE THAN THE STOCK REFLECTED IN THE BALANCE SHEET AS ON 31.03.2005, WH ICH HAS NOT BEEN DONE IN ANY OF THE CASE REFERRED TO HEREINABOVE. 31. IN VIEW OF THE ABOVE DISCUSSION, THE DECISION O F SMT. SHAKUNTLA THUKRAL (SUPRA) AS RELIED UPON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SANTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DA YAL RICE MILLS ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECORD DURING THE ASSESS MENT PROCEEDINGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSI CAL VERIFICATION OF THE STOCK HAS ACTUALLY BEEN DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMITTED BEFORE THE BANK AUTHORITIES AND DP REGIS TER CANNOT BE RELIED UPON. 33. IN THE CASE OF CIT VS. VEERDIP ROLLER (P) LTD. (2010) 323 ITR 341 (GUJ), THE FACTS ARE THAT THE AO MADE ADDITION ON A CCOUNT OF DIFFERENCE IN THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AN D THE VALUE OF THE STOCK FOUND IN THE BOOKS OF ACCOUNT FURNISHED TO THE INCO ME TAX AUTHORITIES INFLATED STOCK WAS HYPOTHETICAL AND NOT PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED THE STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 9 ASSESSEE. THE ADDITION ON ACCOUNT OF DIFFERENCE FUR NISHED TO THE BANK AS PER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUSTAINED. CONSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONB LE GUJRAT HIGH COURT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPE AL BEFORE THE HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT VIDE IT S ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DEPARTME NT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS CO URTS OF LAW REFERRED TO HEREINABOVE: I) CIT VS. SIDHU RICE & GENERAL MILLS REPORTED IN 2 81 ITR 428 (P&H) II) CIT VS. SANTOSH BOX FACTORY (P) LTD.., 44 IT RE PS. 472 (P&H) III) CIT VS. N. SWAMY REPORTEDE IN 241 ITR 363 (MAD RAS) I) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. II) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTED IN 200 CTR 595 (ALL.) III) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 178 ( J & K) IV) CIT VS. DAS INDUSTRIES, REPORTED IN 303 ITR 199 (AL L.) V) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) VI) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 25 4 (ITAT, ASR.) VII) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPORTED I N 220 TAXMAN 148 (GUJ.) VIII) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). 35. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS M ADE BY THE LD. DR IN HIS WRITTEN SUBMISSIONS AND COUNTER SUBMISSIONS CANNOT HELP THE REVENUE AND ACCORDINGLY, WE FIND NO INFIRMITY IN TH E ORDER OF THE LD. CIT(A) IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPERS (P LTD. IN ITA NO.198(ASR)/2013 IN THE IMPUGNED YEAR. WE FIND THAT THE FIRST ISSUE IS COVERED AGAINST REV ENUE, THEREFORE, FOLLOWING THE ABOVE JUDICIAL PRECEDENTS IN THE CASE OF ASSESSEE ITSELF GROUND NOS.1 TO 5 ARE DISMISSED. ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 10 6. AS REGARDS THE SECOND ISSUE OF NON CHARGING OF I NTEREST, WE FIND THAT LEARNED CIT(A) HAS DEALT WITH THIS ISSUE VIDE PARA 6 & 7 WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED BELOW. 6. THE OTHER IMPUGNED ISSUE PERTAINS TO DISALLOWAN CE OF INTEREST AMOUNTING TO RS.14,81,435/- ON ACCOUNT OF NON-CHARG ING OF INTEREST FROM THREE DEBTORS VIZ SHRI PANKA] GARG, SHRI RACHHPAL S INGH AND M/S SUKHBIR AGRO ENERGY LTD. WHILE DISALLOWING THE AFORESAID IN TEREST, THE AO RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF M/S ABHISHEK INDUSTRIES, 286 ITR 1 READ WITH THE DECISION OF THE HONBLE SUPREME COURT IN S.A. BUILDERS LTD VS. CIT AND ANOTHER [2007] 288 ITR 1. THIS ISSUE HAD ALSO CROPPED UP IN THE ASSESSMENT OF THE APPELLANT FOR A.Y. 2010-11. HOWEVER, THE SUBSEQUENT CONCURRENT APPELLATE ORDERS FOR A.Y. 2010-11 HELD THAT IF INTEREST FREE ADVANCES HAVE NOT BEEN M ADE DURING THE YEAR, THERE CANNOT BE ANY NOTIONAL DISALLOWANCE OF INTERE ST RECKONED AT THE MARKET RATE ON SUCH INTEREST FREE ADVANCES. THIS DE CISION OF THE HONBLE ITAT HAS ALSO BEEN CHALLENGED UNDER SECTION 260A OF THE ACT ON THE GROUND THAT IN THE ABSENCE OF PROOF REGARDING COMME RCIAL EXPEDIENCY IN ADVANCING INTEREST- FREE LOANS OUT OF INTEREST-BEAR ING BORROWED FUNDS, NON- DISALLOWANCE OF INTEREST WOULD BE INCONSISTENT WITH THE JUDICIAL PRECEDENTS AS ALSO THE PROVISIONS OF SECTION 36(1 )(III) OF TH E ACT. 7. IN THE INSTANT CASE, IT IS SEEN THAT THE DEBIT B ALANCES IN THE ACCOUNTS OF SHRI PANKAJ GARG AND SHRI RACHHPAL SINGH AMOUNTING TO RS.50 LACS EACH, ON WHICH THE DISALLOWANCE OF INTEREST OF RS. 12 LAK HS HAS BEEN WORKED OUT ARE OPENING BROUGHT FORWARD BALANCES WITH NO FRESH ADVANCES DURING THE YEAR. RESPECTFULLY FOLLOWING THE DECISION OF THE JU RISDICTIONAL TRIBUNAL IN THE APPELLANT'S OWN CASE FOR A.Y. 2010-11 AND SUBJE CT TO THE OUTCOME OF THE APPEAL UNDER SECTION 260A OF THE ACT, THE SAID DISALLOWANCE OF RS.12 LAKHS IS DIRECTED TO BE DELETED. HOWEVER, IT IS SEE N THAT M/S SUKHBIR AGRO ENERGY LTD. HAS BEEN ADVANCED INTEREST-FREE LOAN DU RING THE YEAR IN A STAGGERED FASHION ON VARIOUS DATES, ON WHICH THE DI SALLOWANCE OF INTEREST HAS BEEN WORKED OUT TO RS.2,81,435/-. SINCE THE APP ELLANT HAS NOT BEEN ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 11 ABLE TO PROVE ANY COMMERCIAL EXPEDIENCY IN SUCH ADV ANCEMENT OF LOAN AND THAT TOO SOURCED FROM BORROWED FUNDS, THE SAID DISA LLOWANCE OF RS.2,81,435/- IS CONFIRMED. IT IS ORDERED ACCORDING LY. WE FIND THAT ASSESSING OFFICER HAD MADE AN ADDITION OF RS.14,81,435/- ON ACCOUNT OF INTEREST ON INTEREST FREE LOANS TO SH . P.K.GARG, SH. RACHHPAL SINGH AND M/S SUKHBIR AGRO ENERGY LTD. OUT OF THESE THREE THE LEARNED CIT(A) DELETED THE ADDITION ON ACCOUNT OF LOANS GIVEN TO SH. PANKAJ GARG, AND SH. RACHHPAL SINGH. THE LEARNED CI T(A) HAS RELIED UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSES SEE ITSELF FOR ASST. YEAR 2010-11 WHEREIN IT HAS BEEN HELD THAT IF THE INTERE ST FREE LOANS WERE GIVEN IN EARLIER YEARS NO SUCH DISALLOWANCE IS WARR ANTED. WE FIND THAT ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAS HIMSE LF NOTED DOWN THAT THE AMOUNT OF RS.50 LAC EACH GIVEN TO SH. PANKAJ GA RG AND SH. RACHHPAL SINGH WAS OUT OF OPENING BALANCES. THEREFORE, RELYI NG UPON THE ORDER OF THE HONBLE TRIBUNAL FOR ASST. YEAR 2010-11 WE HOLD THAT LEARNED CIT(A) HAS PASSED A REASONED AND SPEAKING ORDER AND HAS FO LLOWED THE HONBLE TRIBUNAL ORDER IN THE CASE OF ASSESSEE ITSELF. THE FINDINGS OF HONBLE TRIBUNAL AS CONTAINED IN PARA 38 ONWARDS ARE REPROD UCED BELOW. 38. AS REGARDS GROUND NO.1(II) IN THE CASE OF M/S. EURO INFRASTRUCTURE & POWER LTD, IN ITA NO.571(ASR)/2013 FOR THE ASSESSME NT YEAR 2010-11, WITH REGARD TO CHARGING OF INTEREST FROM DEBTORS. T HE FACTS ARE THAT THE AO MADE AN ADDITION OF RS.6,60,000/- ON ACCOUNT OF NO N CHARGING OF INTEREST FROM DEBTORS TO WHOM NO FRESH ADVANCES HAVE BEEN MA DE DURING THE ASSESSMENT YEAR 2009-10 AND THERE IS ONLY OPENING BROUGHT FORWARD DEBIT BALANCE. IT HAS BEEN ADMITTED BY THE AO THAT NO FRESH ADVANCES HAVE BEEN GIVEN TO DEBTORS DURING THE A.Y. 2009-10 AND THERE IS OPENING BROUGHT FORWARD DEBIT BALANCE OF RS.50,00,000/- ON 01.04.2009 IN THE ACCOUNT OF SH. PANKAJ GARG AND RS.5,00,000/- IN TH E ACCOUNT OF M/S. RAM KUMAR BANSAL, WHICH HAS BEEN CARRIED FORWARD AS ON 31.03.2010. ITA NO.319 (ASR)/2016 ASST. YEAR: 2012-1 3 12 39. THE LD. CIT(A) ON CONSIDERING THE SUBMISSIONS M ADE BEFORE HIM HAS DELETED THE ADDITION, SINCE NO ADVANCE HAS BEEN MAD E DURING THE YEAR AND IT WAS ONLY BROUGHT FORWARD DEBIT BALANCE OUTSTANDI NG IN THE BOOKS OF ACCOUNT OF THE DEBTORS. 40. AFTER HEARING THE PARTIES, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), SINCE NO ADVANCE HAS BEEN MADE DURING THE YEAR AND AS SUCH NO ADDITION CAN BE MADE. THUS, THE GROUND OF THE REVEN UE IS DISMISSED ACCORDINGLY. 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES FIN DINGS THE ISSUE IS SIMILAR, WE DISMISS THE GROUND NO.6 OF APPEAL ALSO. [ 8. IN NUTSHELL, THE APPEAL FILED BY THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 19.07.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:19.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER