SH SUSHIL LODHA, Jaipur V. ITO, Jaipur

ITA 33/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47991 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Section: 131

Judgement Text

1 ITA 33-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 33/JP/2011 ASSTT. YEAR : 2005-06. SHRI SUSHIL LODHA, VS. THE INCOME-TAX OFFICER, 62, KESHAV NAGAR, HAWA SARAK, WARD 2(3), JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJEEV SOGANI RESPONDENT BY : MS. ROSHANTA MEENA ORDER DATE OF ORDER : 22/07/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2005-06. 2. THERE ARE FOUR GROUNDS RAISED BY THE ASSESSEE. GROUND NO. 4 IS GENERAL IN NATURE. 3. GROUND NO. 3 IS AGAINST SUSTAINING THE VARIOUS E XPENSES WAS NOT PRESSED, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 4. GROUND NO. 1 IS AGAINST CONFIRMING THE ACTION OF THE AO IN DISALLOWING LOSS OF RS. 14,027/- OF M/S. ELECTRO MEDICOPTICS (PROPRIETA RY CONCERN) OF THE ASSESSEE. 5. THE AO DISALLOWED THE CLAIM OF LOSS OF RS. 14,02 7/- OF PROPRIETORSHIP CONCERN OF THE ASSESSEE BY OBSERVING THAT NO SALES OR PURCHASE ACTIVITY HAS BEEN DONE DURING THE YEAR. THE LD. CIT (A) HAS ALSO CONFIRMED THE ACTIO N OF THE AO. 2 6. AFTER CONSIDERING THE WRITTEN SUBMISSIONS AND PE RUSING THE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS GROU ND. IT IS NOTICED THAT TRADING ACTIVITIES WERE STARTED IN EARLIER YEAR AND THERE WAS AN OPENI NG STOCK OF RS. 2,45,635/- BROUGHT FORWARD FROM THE EARLIER YEAR. A TENDER APPLICATIO N FEE OF RS. 100/- WAS DEPOSITED IN THIS YEAR ALONG WITH RS. 3,300/- WITH THE P.M.O. BHILWAR A. KEEPING IN MIND THIS ACTIVITY, IT CAN BE EASILY HELD THAT THE BUSINESS HAS ALREADY BE EN SET UP AS ASSESSEE HAS ALREADY MADE PURCHASES. IN CASE OF SAURASHTRA CEMENT AND CHEMICA L IND. LTD., 91 ITR 170 (GUJ.), THE HONBLE GUJARAT HIGH COURT HAS HELD THAT A BUSINESS IS SAID TO HAVE COMMENCED WITH THE FIRST PURCHASE OF ITS STOCK IN TRADE AND THE DATE W HEN THE FIRST SALE IS MADE IS NOT MATERIAL IN THAT RESPECT. 7. SIMILARLY, IN CASE OF ESPN SOFTWARE INDIA PVT. L TD., 301 ITR 368 (DEL.) IT HAS BEEN HELD THAT BUSINESS IS NOTHING MORE THAN A CONT INUOUS COURSE OF ACTIVITIES AND FOR COMMENCEMENT OF BUSINESS ALL THE ACTIVITIES WHICH G O TO MAKE UP THE BUSINESS NEED NOT BE COMMENCED SIMULTANEOUSLY. AS SOON AS AN ACTIVIT Y WHICH IS THE ESSENTIAL ACTIVITY IN THE COURSE OF CARRYING ON THE BUSINESS IS STARTED, THE BUSINESS MUST BE SAID TO HAVE COMMENCED. 8. IN CASE OF VENKATASWAMI NAIDU & CO., 35 ITR 594 (SC), THE HONBLE SUPREME COURT HAS HELD THAT THE MERE ACT OF PURCHASE ITSELF CAN BE CONSIDERED TO BE TRADE WHEN THE INTENTION IS THAT THE ARTICLES PURCHASED ARE TO BE SOLD AT A LATER DATE. 9. TAKING INTO CONSIDERATION THE ABOVE JUDICIAL PRO NOUNCEMENTS BY THE HONBLE APEX COURT AS WELL AS BY THE HONBLE HIGH COURT, WE ARE OF THE VIEW THAT THE BUSINESS OF THE ASSESSEE HAS COMMENCED AND EXPENDITURE INCURRED ARE ALLOWABLE. THERE IS NO DISPUTE THAT THE EXPENSES CLAIMED BY ASSESSEE HAS BEEN INCU RRED AND THEY ARE RECORDED IN THE 3 BOOKS OF ACCOUNT. IN VIEW OF THESE FACTS AND CIRCU MSTANCES, WE ALLOW THE LOSS CLAIMED BY ASSESSEE. 10. REMAINING GROUND IS AGAINST CONFIRMING THE ADDI TION OF RS.92,607/- MADE UNDER SECTION 68. 11. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT ASSESSEE HAS TAKEN LOANS OF RS. 40,000/- AND RS. 50,000/- FROM SHRI SATYA NARAI N GUPTA AND M/S. CRAFT PALACE. INTERESTS OF RS. 1,380/- AND RS. 1,227/- HAS BEEN D EBITED. IN THIS WAY TOTAL AMOUNT PAYABLE REMAINS AT RS. 92,607/- WHICH WAS ADDED BY THE AO. THE LD. CIT (A) HAS ALSO CONFIRMED THE ACTION OF THE AO AS ASSESSEE COULD NO T PRODUCE THE PARTIES. 12. AFTER CONSIDERING THE SUBMISSIONS AND THE ORDER S OF THE AUTHORITIES BELOW, IT IS NOTED THAT THE ASSESSEE HAS FILED CONFIRMATIONS, LO AN WAS TAKEN THROUGH ONE BROKER SHRI GHANSHYAM TAMBI, SUMMONS UNDER SECTION 131 WERE ISS UED AND SERVED. THEREFORE, ONUS LAY UPON ASSESSEE WAS DULY DISCHARGED. IT IS FURTH ER SEEN THAT THE LOAN WAS TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND IT HAS BEEN REPAID IN SUBS EQUENT YEAR THROUGH CHEQUE. INTEREST HAS ALSO BEEN PAID ON THE LOANS TAKEN. THEREFORE, W E ARE OF THE CONSIDERED VIEW THAT THE AO AND LD. CIT (A) WERE NOT JUSTIFIED IN DISALLOWIN G THE CLAIM OF THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF ORISSA CORPORA TION PVT. LTD., 159 ITR 78 (SC) HAS HELD THAT WHERE THE ASSESSEE FURNISHES FULL DETAILS REGARDING THE CREDITORS, IT IS UP TO THE DEPARTMENT TO PURSUE THE MATTER FURTHER TO TRACE TH ESE AND EXAMINE CREDITWORTHINESS. 12.1. IN CASE OF ROHINI BUILDERS, 256 ITR 360 (GUJ. ), THE HONBLE GUJARAT HIGH COURT HAS HELD THAT WHERE THE ASSESSEE HAS PROVED THE IDE NTITY OF CREDITORS AND THE AMOUNT WERE RECEIVED BY ACCOUNT PAYEE CHEQUE, THE INITIAL BURDE N ON THE ASSESSEE IS DISCHARGED. 4 12.2. SIMILAR VIEW HAS BEEN EXPRESSED IN CASE OF S AROGI CREDIT CORPORATION, 103 ITR 344 (PAT.) BY HONBLE PATNA HIGH COURT. THEREFORE, WE ARE OF THE CONSIDERED VIEW ONUS LAY UPON THE ASSESSEE HAS BEEN DULY DISCHARGED AND ADDITION MADE AND SUSTAINED BY THE LOWER AUTHORITIES ARE LIABLE TO BE DELETED. ACCORD INGLY, ADDITION OF RS. 92,607/- IS DELETED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. 14. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22 .7.2011. SD//- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- SHRI SUSHIL LODHA, JAIPUR. THE ITO, WARD 2(3), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 33/JP/2011) BY ORDER, AR ITAT JAIPUR.