Sri MTV Manikya Ratnakaa., Nidadavole V. The ITO, Ward-2., Tanuku

ITA 345/VIZ/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2819 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-07-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Set aside
• Section: 144

Judgement Text

ITA NO.345 OF 07 MTV MANIKYA RATNAKAR, NIDADAVOLE PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.345/VIZAG/2007 ASSESSMENT YEAR: 2003-04 M.T.V. MANIKYA RATNAKAR NIDADAVOLE VS. ITO WARD-2, TANUKU (APPELLANT) PAN NO: ADPPM 9415 R (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, (DR) ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18-04-2007 PASSED BY LEARNED CIT(A), RAJAHMUNDRY AN D IT RELATES TO THE ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED BY THE ASSESSEE RELATE TO THE FOLLOWING ISSUES: A) DISALLOWANCE OF INTEREST OF RS. 53,770/- NOT DE BITED TO P&L A/C B) DISALLOWANCE OF INTEREST OF RS.85,949/- DEBITE D TO P&L A/C. C) ADDITION ON ACCOUNT OF DIFFERENCES NOT RECONCI LED RS.1,34,049/- D) ADDITION ON ACCOUNT OF DOMESTIC EXPENSES RS.1,0 0,000/- 3. THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FR OM HOUSE PROPERTY AND SHARE INCOME FROM PARTNERSHIP FIRM. THE ASSESSM ENT WAS COMPLETED BY THE ASSESSING OFFICER TO THE BEST OF HIS JUDGMENT U /S 144 OF THE ACT BY MAKING VARIOUS ADDITIONS TO THE INCOME RETURNED BY THE ASSESSEE. THE APPEAL PROCEEDINGS, THE LEARNED CIT(A) CALLED FOR R EMAND REPORT FROM THE ASSESSING OFFICER AND ALLOWED THE APPEAL PARTLY. HE NCE THE ASSESSEE IS IN APPEAL BEFORE US SEEKING FURTHER RELIEF. ITA NO.345 OF 07 MTV MANIKYA RATNAKAR, NIDADAVOLE PAGE 2 OF 5 4. THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF I NTEREST EXPENDITURE OF RS.53,770/- CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER NOTICED THAT, APART FORM THE INTEREST EXPENDITURE CLAIMED IN THE PROFIT AND LOSS A/C, THE ASSESSEE HAD CLAIMED A FURTHER INTEREST EXPENDITURE OF RS.53,770/-. SINCE THE ASSESSEE DID NOT FURNISH THE DETAILS IN THIS RE GARD, THE A.O DISALLOWED THE SAID CLAIM. DURING THE COURSE OF THE APPELLATE PROCEEDINGS/REMAND PROCEEDINGS, IT WAS EXPLAINED THAT THE SAID INTERES T WAS PAID TO 5 LOAN CREDITORS, FROM WHOM THE ASSESSEE HAD BORROWED LOAN S IN THE YEAR 1994 FOR THE PURPOSE OF MAKING INVESTMENT IN THE BUSINESS. HOWEVER, THE ASSESSEE DID NOT FURNISH VARIOUS DETAILS CALLED FOR BY THE A SSESSING OFFICER DURING THE COURSE OF REMAND PROCEEDINGS. HENCE THE LEARNED CIT (A) CONFIRMED THE SAID ADDITION. 4.1 THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEES CLAIM FOR DEDUCTION OF IDENTICAL INTEREST PAYMENTS HAS BEEN ALLOWED IN THE EARLIER YEARS AND ONLY DURING THE YEAR UNDER CONSID ERATION, THE ASSESSING OFFICER HAS DOUBTED THE CLAIM. THE LEARNED AUTHORIS ED REPRESENTATIVE EXPLAINED THAT THE ASSESSEE HAD BORROWED THE LOAN F OR THE PURPOSE OF MAKING CAPITAL CONTRIBUTION IN HIS BUSINESS CONCERN S AND HENCE THE LOANS WERE NOT REFLECTED IN THE BUSINESS BOOKS. HOWEVER T HE AUTHORISED REPRESENTATIVE DID NOT FURNISH THE DETAILS OF SAID LOANS BEFORE US ALSO. HENCE WE ARE OF THE VIEW THAT THE MATTER HAS TO BE EXAMINED AFRESH AND ACCORDINGLY WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO CONSIDER THE CLAIM OF THE ASSESSEE AFR ESH IN ACCORDANCE WITH THE LAW. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE N ECESSARY DETAILS THAT MAY BE CALLED FOR BY THE ASSESSING OFFICER. 5. THE NEXT ISSUE RELATES TO DISALLOWANCE OF INTERE ST OF RS.85,949/- THAT WAS REFLECTED IN THE PROFIT & LOSS ACCOUNT. IN THE R EMAND PROCEEDINGS, THE ASSESSEE EXPLAINED THAT THE ABOVE SAID INTEREST WAS PAID ON THE LOANS TAKEN FROM STATE BANK OF INDIA, M/S BALAJI STEEL SYNDICAT E AND SMT. Y. RAMA ITA NO.345 OF 07 MTV MANIKYA RATNAKAR, NIDADAVOLE PAGE 3 OF 5 SUNDARI. THE ASSESSEE EXPLAINED THAT THE SAID LOANS WERE TAKEN FOR PURCHASING A SITE AT RAJAHMUNDRY. IN THE REMAND PR OCEEDINGS THE ASSESSEE CLAIMED THAT THE SITE WAS LET OUT FOR A RENT OF RS. 5,000/- AND HENCE THE IMPUGNED INTEREST OF RS.85,949/- SHOULD BE ALLOWED AGAINST THE RENTAL INCOME. HOWEVER, IN THE REMAND REPORT THE ASSESSIN G OFFICER REPORTED THAT HE COULD NOT VERIFY WHETHER THE ASSESSEE HAS OFFERE D THE ABOVE SAID RENTAL INCOME OF RS.5000/-. BEFORE THE LEARNED CIT (A) THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE GAVE A CONTRADICTORY EXPLANATION THAT THE IMPUGNED LOANS WERE INVESTED IN A PARTNERSHIP FIRM NAMED M/S AMBIKA TELE SERVICES. IN VIEW OF THE CONTRADICTORY EXPLANATIONS , THE LEARNED CIT (A) CONFIRMED THE SAID ADDITION. 5.1 BEFORE US, THE LEARNED AUTHORISED REPRESENTATIV E SUBMITTED THAT THE LOANS WERE TAKEN FOR THE PURPOSE OF PURCHASING OF A SITE. HOWEVER, HE DID NOT CLARIFY ABOUT THE CONTRADICTORY EXPLANATIONS FU RNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS. THE ASSESSEE ALSO DID NOT FURNISH ANY MATERIAL TO SHOW THAT HE RECEIVED THE RENTAL INCOME OF RS.5000/ - ON LETTING OF THE SITE AND THE SAME WAS OFFERED TO TAX. IN THESE CIRCUMSTAN CES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF THE LE ARNED CIT (A) ON THIS ISSUE. 6. THE NEXT ISSUE RELATES TO THE ADDITION OF RS.1,3 4,049/- ON ACCOUNT OF DIFFERENCE IN THE OUTSTANDING BALANCES BETWEEN THE BOOKS OF THE ASSESSEE AND THE ACCOUNT COPIES OBTAINED FROM THE THREE CONC ERNS IN WHICH THE ASSESSEE IS A PARTNER. THE DETAILS OF DIFFERENCES A S GIVEN IN THE ASSESSMENT ORDER ARE EXTRACTED BELOW: S.NO NAME PER A/C COPY PER BALANCE SHEET DIFFERENCE 1 AGRAJ PROPERTY DEVELOPERS 1,08,927 7,529 1,01,398 2 AMBICA TELE SERVICES 4,70,930 4,73,481 2,551 3 M. CHALAMAIAH, ELURU 5,30,918 5,00,818 30,100 TOTAL 1,34,049 ITA NO.345 OF 07 MTV MANIKYA RATNAKAR, NIDADAVOLE PAGE 4 OF 5 THE ASSESSING OFFICER ADDED THE ABOVE SUM OF RS.1,3 4,049/- TREATING THE DIFFERENCES AS BALANCE SHEET DIFFERENCES. IN THE REM AND PROCEEDINGS, THE ASSESSEE EXPLAINED THAT THE DIFFERENCE RELATING TO M/S AGRAJ PROPERTY DEVELOPERS PERTAINS TO TRANSACTIONS ENTERED IN THE EARLIER YEARS, I.E. THERE WAS NO DIFFERENCE IN THE TRANSACTIONS ENTERED DURIN G THE YEAR UNDER CONSIDERATION. IN RESPECT OF M/S AMBICA TELE SERVIC ES, THE ASSESSEE DID NOT RECONCILE THE DIFFERENCE. THOUGH THE ASSESSEE OFFER ED CERTAIN EXPLANATIONS IN RESPECT OF M/S M.CHALAMIAH, THE ASSESSING OFFICE R WAS NOT CONVINCED WITH THE SAME. BASED ON THE REMAND REPORT, THE LEA RNED CIT (A) SUSTAINED THE ENTIRE ADDITION OF RS.1,34,049/-. 6.1 THERE IS NO DISPUTE WITH REGARD TO THE FACT THA T THERE WAS NO DIFFERENCE IN THE TRANSACTIONS ENTERED BY THE ASSES SEE AND M/S AGRAJ PROPERTY DEVELOPERS DURING THE YEAR UNDER CONSIDERA TION AND THE ENTIRE DIFFERENCE OF RS.1,01,398/- PERTAINS TO THE TRANSAC TIONS ENTERED IN THE EARLIER YEARS. IN THESE CIRCUMSTANCES, IT IS NOT PR OPER TO MAKE THE SAID ADDITION OF RS.1,01,398/-, SINCE THERE IS NO DIFFER ENCE IN THE TRANSACTIONS ENTERED DURING THE YEAR UNDER CONSIDERATION. THE A DDITION, IF ANY, IS CALLED FOR ONLY IN THE EARLIER YEARS TO WHICH THE DIFFEREN CES RELATE. ACCORDINGLY WE ORDER FOR THE DELETION OF RS.1,01,398/- PERTAINING TO M/S AGRAJ PROPERTY DEVELOPERS. 6.2 IN RESPECT OF M/S AMBICA TELE SERVICES, THE ASSESSEE DID NOT OFFER ANY EXPLANATION AND ACCORDINGLY THE ADDITION OF RS. 2,551/- HAS TO BE SUSTAINED. IN RESPECT OF THE DIFFERENCE IN THE CASE OF M/S M. CHALAMAIAH, THOUGH THE ASSESSEE HAS OFFERED CERTAIN EXPLANATION S, THE SAME WAS NOT CONVINCING TO THE TAX AUTHORITIES. FROM THE READING OF PARA 6.2 OF THE ORDER OF LEARNED CIT(A), WE NOTICE THAT THE ASSESSEE HAS NOT RECONCILED THE DIFFERENCE; INSTEAD TRIED TO EXPLAIN THE DIFFERENCE ON THE BASIS OF PROBABILITIES. BEFORE US, THE ASSESSEE DID NOT FUR NISH ANY RECONCILIATION ITA NO.345 OF 07 MTV MANIKYA RATNAKAR, NIDADAVOLE PAGE 5 OF 5 STATEMENT. IN THESE CIRCUMSTANCES, WE HAVE NO OTHER OPTION BUT TO SUSTAIN THE ADDITION OF RS.30,100/- PERTAINING TO M/S M.CHA LAMIAH. WE ORDER ACCORDINGLY. 7. THE NEXT ISSUE RELATES TO THE ADDITION OF RS .1.00 LAKH TOWARDS PERSONAL EXPENSES. SINCE THE ASSESSEE DID NOT WITHDRAW ANY MONEY TOWARDS PERSONAL EXPENSES, THE ASSESSING OFFICER ADDED A SU M OF RS.1.00 LAKH TO THE TOTAL INCOME OF THE ASSESSEE. IN THE APPEAL PR OCEEDINGS, THE LEARNED CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.5 0,000/- AFTER CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSESSEE. BEFORE US, THOUGH THE ASSESSEE HAS PRAYED FOR FURTHER RELIEF, HE DID NOT FURNISH A NY MATERIAL WHICH WOULD WARRANT A FURTHER RELIEF. HENCE, WE DO NOT FIND AN Y REASON TO INTERFERE WITH THE DECISION OF LEARNED CIT(A) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKAR AN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 24-09-2010 COPY TO 1 SHRI M.T.V. MANIKYA RATNAKAR, C/O MADIPALLI V.A.SREERAMJ EE, D.NO.11 - 4 - 133, NIDADAVOLE, WEST GODAVARI DISTT. 2 THE ITO WARD-II, TANUKU 3 4. THE CIT RAJAHMUNDRY THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM