M/s. P.Gautam & Co., Ahmedabad V. ACIT,Cir-11( Now Circle -5(3), Ahmedabad

ITA 3276/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5942 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JYOTISH M SHAH
• Keywords: Unexplained cash credit; Proportionate interest; Additional evidence; Fair market value
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER M/S. P. GAUTAM & CO, NANDANVAN OPP: TOWN HALL, ELLISBRIDGE, AHMEDABAD PAN: AACFP2004M (APPELLANT) VS THE ACIT, CIR - 11 (NOW CIR - 5(3), AHMEDABAD (RESPONDENT) THE A CIT, CIR - 5(3), AHMEDABAD (APPELLANT) VS M/S. P. GAUTAM & CO, NANDANVAN OPP: TOWN HALL, ELLISBRIDGE, AHMEDABAD PAN: AACFP2004M (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI JYOT ISH M. SHAH , A.R. DATE OF HEARING : 15 - 01 - 2 018 DATE OF PRONOUNCEMENT : 07 - 03 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - I T A NO . 3276 / A HD/20 15 A S SESSMENT YEAR 2011 - 12 ITA NO. 39/AHD/2016 ASSESSMENT YEAR 2011 - 12 I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 2 THIS CROSS APPEAL FILED BY ASSESSEE AND REVENUE FOR A.Y. 2011 - 12 , AR ISE FROM ORDER OF THE CIT(A) - 5 , AHM EDABAD DATED 14 - 10 - 2015 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SH ORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - ITA NO. 39/AHD/2016 (1) 'THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL ON THE ISSUE REGARDING THE DELETION OF UNEXPLAINED CREDIT BALANCE OF RS.35,10,103/ - MA DE BY ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL ON RECORD BY THE ASSESSING OFFICER. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5,02,015/ - MADE ON ACCOUNT OF INTEREST ON L OANS ADVANCE. (3) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7,52,460/ - MADE ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO SUBMIT ANY DETAILS OF SERVICES RENDERED BY THE PARTIES OR ANY BILLS. (4) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1,42,800/ - MADE ON ACCOUNT OF RENTAL INCOME. 3. THE ASSESSEE HAS FILED RETURN OF INCOME ON 19 TH SEPTEMBER, 2 011 DECLARING TOTAL INC OME OF RS . 35 , 82 , 398/ - . SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF T HE ACT ON 21 ST SEP, 2012. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF ADVERTISING AGENCIES AND MULTI - MEDIA SERVICES. THE BRIEF FACT S OF THE C ASE ARE DISCUSSED UNDER THE DIFFERENT GROUNDS OF APPEAL AS FOLLOWS: - UNEXPLAINED CREDIT BALANCE OF RS. 35,10,103/ - 4. ON SCRUTINY THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAS SHOWN DEBTORS/CREDITORS CLOSING BALANCE FROM TIMES OF INDIA AND GUJARAT SAMACHAR AS ON 31 ST MARCH, 2011 IN HIS BOOKS OF ACOCUNT S A T R S . 13 , 964 , 41/ - AND RS . 26 , 37 , 321/ - RESPECTIVELY. W HEREAS AS PER THE AFORESAID DEBTOR /CREDITOR THE CLOSING BALANCE AS ON 31 ST MARC H, 2011 APPEARING IN THEIR BOOKS OF ACCOUNT W ERE RS. 13,31,071 / - AND RS . 58 , 64 ,427/ - RESPECTIVELY. THEREFORE, THE ASSESSING OFFICER NOTICED THAT I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 3 THERE WAS DI SCREPANCIES IN THE FIGURE OF PURCHASES MADE BY THE ASSESSEE FROM GUJARAT SAMACHAR AND DIFFERENCES IN CLOSING BALANCE WITH SANDESH LTD. COSEQUENTLY , THE ASSESSING OFFICER HAS ADDED THE DIFFERENCE OF RS. 32,27,106/ - AND RS . 65 , 370 / - RESPECTIVELY TO T HE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED. 5. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CI T(A) HAS ALLOWED THE A PPEAL OF T HE ASSESSEE BY OBSERVING AS UNDER: - DECISION: 8.4. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. THE AO HAS MADE ADDITION OF RS.35,10,103/ - ON ACCOUNT OF - DIFFERENCES IN CLOSING BALANCE WITH NEWS PAPERS AS UNEXPLA INED CREDIT BALANCE. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS FURNISHED CERTAIN NEW EVIDENCES RECONCILING THE CLOSING BALANCE WITH NEWS PAPERS. A REMAND REPORT WAS CALLED FOR FROM THE AO. THE APPELLANT HAS FURNISHED REJOINDER ON THE RE MAND REPORT OF THE A.O. IN THE REMAND REPORT, THE AO HAS MERELY REITERATED WHAT WAS STATED IN THE ASSESSMENT ORDER AND HAS NOT GIVEN ANY \ COMMENTS ON THE DOCUMENTS PRODUCED DURING THE COURSE OF APPELLATE PROCEEDINGS. FROM THE DETAILS FILED BY THE APPELLAN T, IT IS SEEN THAT THERE IS NO OUTSTANDING BALANCE OF NEWS PAPERS WITH THE APPELLANT. IT IS ALSO PERTINENT TO MENTION HERE THAT IDENTICAL ADDITION WAS MADE BY THE A.O. FOR THE A.Y. 2010 - 11, WHICH WAS DELETED BY THE CIT(A). CONSIDERING THESE FACTS, THE ADDI TION MADE BY THE A.O. IS DELETED. THE GROUND OF APPEAL IS ALLOWED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE HAS FURNISHED THE ADDITIONAL EVIDENCES BEFORE THE L D. CIT(A) BY WHICH THE ASSESSEE HAS RECONCILED THE AFORESAID DIFFERENCES AS APPEARING IN THE BOOKS OF ACCOUNT OF THE DEBTOR/CREDITO R AND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER HAS FAILED TO CONTROVERT THE CORRECTNESS OF THE RECONCI LIATION AND THE ADDITIONAL EVIDENCES FURNISHED DURING THE REMAND PROCEEDINGS. THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD.CIT(A). ACCORDINGLY THE APPEAL OF THE REVENUE ON THIS ISSUE IS DISMISSED. ADDITION OF RS . 5 , 02 ,015/ - ON ACCOUNT OF INTERST ON LOAN /ADVANCES I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 4 7 . ON PERUSAL OF THE BALANCE SHEET, THE ASSESSING OFFICER NOTICED THAT AS SESSEE HAS ADVANCED LOANS OF RS. 38 , 25 , 820/ - . ON SCRUTINY THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT CHARGED INTEREST ON SUCH ADVA NCES HOWEVER THE INTEREST HAS BEEN PAID ON THE LOANS AVAILED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT ASSESSEE HAS BEEN PAYING INTEREST @ 15% ON THE LOAN BORROWED . CONSEQUENTLY THE ASSESSING OFFICER HAS CHARGED INTEREST @ 15% ON THE AD VANCES OF RS. 33 , 46 , 773/ - ADVANCED BY THE ASSESSSEE TO SARVA SHANTI PROPERTY PVT. LTD . T HEREFORE AN A MOUNT OF RS. 5 , 02 , 015/ - INTEREST EXPENDITURE PAID TO SARVA SHANTI PROPERTY PVT. LTD WAS DEISALLOWED. AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8 . AG GRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL BY OBSERVING AS UNDER: - DECISION: 5.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. THE AO HAS MADE ADDITION OF RS.5,02,050/ - ON T HE GROUND THAT ADVANCES WITH THE SARVA SHANTI PROPERTIES PVT. LTD. IS NOTHING BUT ASSESSEE'S OWN INTEREST BEARING FUNDS WHICH IS ADVANCED WITHOUT ANY BUSINESS EXIGENCY. THEREFORE, THE AO HAS DISALLOWED THE PROPORTIONATE INTEREST. 5.4. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAS CONTENDED THAT THE AMOUNT IS NOT AN ADVANCE BUT IT IS A CONVERSION OF DEBT. THE SUBMISSION OF THE APPELLANT IS CONSIDERED. THE FACTS OF THE CASE ARE THAT THE APPELLANT HAD RELEASED ADVERTISEMENT ON BEHALF OF TWO COMP ANIES AND SINCE THEY WERE NOT ABLE TO MAKE REPAYMENT OF THE AMOUNT, THEY SUPPLIED STEEL BARS AS PER DIRECTION OF THE APPELLANT TO SARVA SHANTI PROPERTIES PVT. LTD. WHICH IS A GROUP CONCERN OF THE APPELLANT COMPANY. THE MOU ENTERED INTO IN THIS REGARD HAS B EEN SUBMITTED BY THE APPELLANT. THE AMOUNT DUES ON SARVA SHANTI PROPERLY PVT. LTD. IS THEREFORE NOT AN ADVANCE BUT CONVERSION OF A DEBT OF ONE PARTY TO ANOTHER PARTY. IT IS PERTINENT TO MENTIONED HERE THAT THE SAME ADDITION WAS MADE IN THE A.Y. 2010 - 11 WH ICH WAS DELETED BY THE CIT(A) - XVI, AHMEDABAD VIDE ORDER IN APPEAL NO. CIT(A) - XVI/DCIT/CIR. 11/051/13 - 14 DTD. 10.09.2014 AFTER CONSIDERING THE FACTS OF THE CASE. THEREFORE, CONSIDERING THE FACTS OF THE CASE AND FOLLOWING THE DECISION OF THE ID. CIT(A), THE ADDITION IS DELETED. THUS, THE GROUND OF APPEAL IS ALLOWED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS CLEAR FROM THE FINDINGS OF THE LD.CIT(A) THAT THE ASSESSEE HAD NOT EXTENDED ANY ADVANCE TO ITS RELATED CONCERN BUT THE I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 5 IMPUGNED AMOUNT WAS DUE TO THE ASSESSEE ON ACCOUNT OF CONVERSION OF DEBT. AS THE ASSESSS HAS ISSUED ADVERTISEMENT ON BEHALF OF TWO PARTIES WHO HAD FAILED TO MAKE PAYMENT TO THE ASSESSEE THEREFORE ON THE DIRECTION OF THE ASSESSEE THEY HAVE SUPPLIED STEEL MATERIAL TO THE RELATED CONCERN OF THE ASSESSEE. CONSEQUENTLY, THE AMOUNT DUE FROM THE REL A TED CONCERN TO THE SUPPLIERS W AS CON VERTED TO THE DEBT DUE TO THE ASSESSEE BY THE RELATED CONCERN . THEREFORE WE DO NOT FIND ANY ERROR IN THE DECISION OF THE LD. CIT(A). ACCORDINGLY THE APPEAL OF THE REVENUE ON THIS ISSUE IS DISMISSED. DISALLOWANCE O F COMMISSION EXPENSES OF RS . 7 , 52 , 460/ - 10. THE ASSESSEE HAS CLAIMED COMMISSION EXPENSES OF RS . 8 , 16 , 778/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE ASSESS EE FAILED TO SUBSTANTIATE THE SERVICES RENDERED BY THE PERSONS TO WHOM THE COMMISSION WAS PAI D , THEREFORE , HE HAS DISALLOWED AN AMOUNT OF RS. 7 , 52 , 460/ - 11 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF T HE ASSESSEE BY OBSERVING AS UNDER: - DECISION: 7.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. THE AO HAS MADE ADDITION OF RS.8,16,778/ - OF COMMISSION EXPENSES ON THE GROUND THAT THE ASSESSEE HAS FA ILED TO FURNISH ANY DETAILS WITH REGARD TO THE SERVICES RENDERED BY THE ABOVE PERSONS, THE GENUINENESS OF THE SAID EXPENSES HAS NOT PROVED. THE APPELLANT HAS CONTENDED THAT IT HAS FURNISHED ALL THE DETAILS BEFORE THE AO REGARDING THE COMMISSION EXPENSES. I T IS ALSO CONTENDED THAT THE SIMILAR ADDITION WAS MADE IN THE A.Y. 2007 - 08, 2009 - 10 AND 2010 - 11 WHICH WAS DELETED BY THE CIT(A). CONSIDERING THE FACTS OF THE CASE AND FOLLOWING THE EARLIER ORDERS, THE ADDITION MADE BY THE A.O. IS DELETED. THUS, THE GROUND OF APPEAL IS DELETED. 12. D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS SPECIFICALLY ASKED TO PROVIDE THE INFORMATION/EVIDENCES IN RESPECT OF SERVICES RENDERED BY THE PARTIES TO WHOM THE COMMISSIONS WERE PAID . THE LD. CIT(A) HAD DELETED THE ADDITION ON SIMPLY REFERRING THAT TH E SIMILAR ADDITIONS WERE ALSO I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 6 D ELETED IN THE PRECEDING YEAR. WE OBSERVE THAT ASSESSEE HA S NOT FURNISHED CONFIRMATION S FROM THE SALE PARTIES TO DEMONSTRATE THAT SALE WERE MATERIALIZED T HROUGH THE PARTIES TO WHO M THE COMMISSION WERE PAID. DURING THE COURSE OF A SSESSMENT PROCEEDINGS THE ASSESSEE WAS SPECIFICALLY CONFRONTED WITH THE ISSUE OF PROVING THE MATERIAL FACT OF PROVING THE SERVICES RENDERED BY THE PARTIES TO WHOM THE COMMISSION WAS PAID. THE LD. CIT(A) H AS SIMPLY PLACED RELIANCE ON THE DECISION OF LD.CIT(A) DELETING SIMILAR ADD ITIONS IN THE PRECEDING YEARS. EVEN IN THE PRECEDING YEAR ORDER OF LD.CIT(A) FOR ASSESSMENT YEAR 2007 - 08 PLACED IN THE PAPER BOOK THE ASSESSEE HAD NOT FURNISH ED SPECIFIC INFORMAT ION O F CONFIRMATION S FROM THE SALES PARTIES TO DEMONSTRATE THAT SALE W ERE EFFECTED THROUGH THE PARTIES TO WHOM THE COMMISSION WERE PAID . W E OBSERVE THAT THERE IS DEFICIENCY OF INFORMATION AND INCOMPLETE APPRAISAL OF SERVICES RENDERED BY THE PERSONS TO WHOM COMMISSION WERE PAID. BECAUSE OF ABOVE INFIRMITIES IT APPEAR S TO BE INFEASIBLE TO ADJUDICATE THE IMPUGNED ISSUE IN FAIR AND EQUITABLE MANNER. T HEREFORE , WE CONSIDER IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) TO RE - ADJUDICATE IT DE - NOVO AFTE R REMOVING THE ABOVE ANOMALY AND PASS A SPEAKING ORDER AS PER LAW AFTER TAKING INTO CONSIDERATION THE CONFIRMATION S FROM THE SALES PARTIES AS ELABORATED SUPRA. ACCORDINGLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ADDITI ON OF RS. 1 , 42 , 800/ - ON RENTAL INCOME 1 3 . THE ASSESSING OFFICER ON EXAMINATION OF STATEMENT OF TOTAL INCOME FILED BY THE ASSESSEE NOTICED THAT ASSESSEE HAS SH OWN INCOME OF RS . 7 , 200 IN RESPECT OF PROPERTY S ITUATED AT NANDAN VAN OPPOSITE TOWN HALL , E LLIS - BRI DGE, AHMEDABAD. THE ASSESSEE SUBMITTED THAT THE AFORESAID PROPERTY WAS PURCHASED IN 1994 AND THE TENANT HAD BEEN PAYING RENT OF RS. 600 PER MONTH FROM THE DATE OF PURCHASE OF PROPERTY. THE ASSESS ING OFFICER HAD NOT ACCEPTED T HE EXPLANATION OF THE ASESSEE AND OBSERVED THAT I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 7 THE FAIR MARKET VALUE OF THE PROPERTY WOULD BE ON THE HIGHER SIDE THAN THE VALUE SHOWN IN THE RETURN OF INCOME. THEREFORE, THE ASSESSING OFFICER HA D ADOPTED THE FAIR MARKET VALUE OF T HE PROP ERTY AT RS. 2 , 04 , 000 / - BY ASSUMING RENT OF RS. 17 , 000 / - PER MONTH . CONSEQUENTLY HE HAS MADE ADDITION OF RS. 1 , 42 , 8 00 / - TO THE TOTAL INCOME OF THE ASSESSEE. 1 4 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: - DE CISION: 9.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. THE AO HA S MADE ADDITION OF RS. 1,42,800/ - AS HOUSE PROPERTY INCOME HOLDING THAT MONTHLY RENT OF PROPERTY SHOULD BE RS . 17,000/ - . THE AO HAS HELD THAT THE FMV OF THE PROPERTY WAS MUCH HIGHER THEN WHAT HAD BEEN SHOWN BY THE APPELLANT AND BASED ON THE INSPECTORS REPORT THE AO HAS HELD THAT FMV OF RS. 17,000/ - P.M. IS REASONABLE. SIMILAR ADDITION MADE IN THE A.Y. 2010 - 11 WAS DELETED BY THE ID. CIT(A). CONSIDERING THE FAC TS, THE ADDITION MADE BY THE AO IS DELETED. THE GROUND OF APPEAL IS ALLOWED. 15 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE SIDES ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. WE OBSERVE THAT THE ASSESS ING OFFICER HAS MADE THIS ADDITION ON THE BASIS OF GENERAL ASSUMPTION WITHOUT ESTABLISHING THE PAYMENT OF HI G HER RENT WITH ANY SPECIFIC RELEVANT MATERIAL. THEREFORE WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A). ACCORDINGLY THE APPEAL OF THE REVENUE ON THIS ISSUE IS DISMISSED. 1 6 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - ITA NO. 3276/AHD/2015 1. THE COMMISSIONER OF INCOME TAX (APPEALS), AHMEDABAD - 5 ERRED IN CONFIRMING DISALLOWANCE OF INTEREST U/S 40(A)(2)(B) OF RS. 1,89,642/ - . THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN STATING THAT APPELLANT HAS NOT FURNISHED ANY JUSTIFICATION FOR CHARGING HIGHER RATE OF INTEREST. THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS), TO CONFIRM DISALLOWANCE WITHOUT DEALING WITH WRITTEN SUBMISSION SUPPORTED BY TRIBUN AL JUDGMENTS IS INVALID AND BAD IN LAW. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN CONFIRMING CHARGE OF INTEREST U/S 234 - D AND 244 - A AS CONSEQUENTIAL AND MANDATORY. I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 8 THE COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN NOT CONSIDERING AND DEALING WITH SUBMISSION THAT AS NO REFUND IS RECEIVED BY WAY OF INTIMATION U/S 143(1), CHARGE OF INTEREST U/S 234 - D AND 244 - A IS INVALID. 3. THE COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN CONFIRMING CHARGE OF INTEREST U/S 234 - B AS CONSEQUENTIAL AND MANDATOR Y. THE COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN NOT CONSIDERING AND DEALING WITH SUBMISSION THAT AS LESS CREDIT FOR TDS IS GIVEN, CHARGE IS INCORRECT. 1 7 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HA S ACCEPTED LOAN @ 15% FROM THE PARTIES SPECIFIED U/S. 40 ( A )( 2 )(B) OF THE ACT HOWEVER PAID INTEREST @12% ON THE LOANS OBTAINED FROM OTHERS. ON SCRUTINY THE ASSESSING OFFICER OBSERVED THAT THE PAYMENT OF INTEREST @ 15% TO THE SPECIFIED PARTIES WAS NOT JUSTIF IED , CONSEQUENTLY THE ASSESSING OFFICER HAS ADDED THE INTEREST @ 3% AMOUNTING TO RS. 1 , 89 , 642/ - TO THE TOTAL INCOME OF THE ASSESSEE CONSIDERING THE SAME AS EXCESSIVE. 1 8 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINE D THE ADDITION BY OBSERVING AS UNDER: - DECISION: 10.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. THE AO HAS MADE ADDITION OF RS.1,89,642/ - U/S.40A(2)(B) OF THE ACT. THE AO HAS OBSERVED THAT THE ASSESSEE HAS GIVEN ADVANC ES AND ACCEPTED LOANS ON INTEREST @12% FROM OTHERS AND @15% FROM THE PERSONS SPECIFIED U/S.40A(209B) OF THE ACT. THE AO HAS HELD THAT THE ASSESSEE HAS FAILED TO FURNISH ANY JUSTIFICATION FOR PAYMENT OF HIGHER RATE OF INTEREST TO THE PERSONS SPECIFIED U/S. 40A(20(B) OF THE ACT. THEREFORE, THE AO HAS MADE THE ADDITION. THE APPELLANT HAS CONTENDED THAT PAYMENT @ 15% CANNOT BE CONSIDERED AS EXCESSIVE OR UNREASONABLE AND THERE ARE JUDICIAL PRONOUNCEMENTS UPHOLDING INTEREST RATE OF 28 TO 30% HAS VALID. 10.4. THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT ARE CONSIDERED. THE APPELLANT HAS NOT FURNISHED ANY JUSTIFICATION FOR CHARGING HIGHER RATE OF INTEREST FROM THE PERSONS SPECIFIED U/S. 40A(2)(B) OF THE ACT DURING ASSESSMENT PROCEEDING AS WELL AS DURIN G THE APPELLATE PROCEEDINGS. CONSIDERING THE FACTS OF THE CASE THE ADDITION MADE BY THE AO IS JUSTIFIED AND THE SAME IS CONFIRMED. THUS, THE GROUND OF APPEAL IS DISMISSED. 19 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS A UNDISPUTED FACT THAT THE ASSESSEE HAS PAID INTEREST @12% ON THE LOAN OBTAINED FROM OTHER HOWEVER, PAID INTEREST @ 15% ON THE LOANS OBTAINED FROM THE PERSONS SPECIFIED U/S 40A(2)(B).THE ASSESSEE FAILED TO SUBSTANTIATE THE REASON FOR PAYMENT OF HIGHER R ATE OF INTEREST TO I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 9 THE SPECIFIED PERSONS WITH ANY RELEVANT MATERIAL. THE FACTS OF THE CASE OF THE ASSESSEE ARE DISTINGUISHABLE FROM THE JUDICIAL PRONOUNCEMENT PLACED IN THE PAPER BOOK AS THE ASSESSEE COULD NOT DEMONSTRATE JUSTIFICATION OF PAYING INTEREST @ 15% TO THE PERSONS SPECIFIED U/S 40A(2)(B) COMPARED TO INTEREST PAID @12% ON THE LOAN OBTAINED FROM OTHER S . THEREFORE WE UPHOLD THE DECISION OF THE LD.CIT(A) ON THIS ISSUE . ACCORDINGLY THE APPEAL OF THE ASSESSEE IS DISMISSED. 20 . WE FIND THAT GROUND NOS. 2 & 3 OF THE ASSESSEE HAVE NO MERIT AS WE OBSERVE THAT INTEREST U/S. 234 - A,234 - B AND 23 4 - D ARE OF THE CONSEQUENT NATURE AND TO BE CHARGED MANDATORILY AS PER PROVISION OF LAW. THEREFORE GROUND NOS. 2 & 3 OF THE ASSESSEE ARE DISMISSED . 21 . IN THE RESULT GROUND NO.1, 2 AND 4 OF THE REVENUE ARE DISMISSED AND GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. THE GROUND 1, 2 AND 3 OF APPEAL OF THE ASSESSEE ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 07 - 03 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 07 /0 3 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6 . GUARD FILE. I.T.A NO S . 3276 /AHD/20 15 & 39/AHD/2016 A.Y. 2011 - 12 PAGE NO M/S. P GAUTAM & CO. VS. ACIT 10 BY ORDER/ , / ,