The ACIT- 2(1), Bhopal V. Shri Surajbhan Agrawal, Bhopal

ITA 352/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4856 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: ASHWINI RINWA
• Section: 133A

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 352/IND/2013 A.Y. 2008-09 ACIT 2(1) BHOPAL :: APPELLANT VS SURAJBHAN AGRAWAL, PROP. M/S. DWARKADAS SURAJBHAN, BHOPAL PAN AASPA 1758 K :: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY SHRI ASHWINI RINWA DATE OF HEARING 26.8.2013 DATE OF PRONOUNCEMENT 26 .8.2013 O R D E R PER JOGINDER SINGH , JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 13.12.2102 OF THE LEARNED FIRST APPELLATE AUTHORITY . THE FIRST GROUND PERTAINS TO DELETING THE ADDITION OF RS.12,57,128/- MADE ON 2 ACCOUNT OF DIFFERENCE IN STOCK, ADMITTED DURING SUR VEY, AND DECLARED IN PROFIT AND LOSS ACCOUNT. 2. DURING HEARING OF THIS APPEAL, THE ASSERTION MAD E BY SHRI R.A. VERMA, LEARNED SENIOR DR, IS IN SUPPORT TO THE ASSE SSMENT ORDER BY CONTENDING THAT THERE WAS A DIFFERENCE IN GOLD STOC K DURING SURVEY AND THE ASSESSEE DULY ADMITTED THE SAME. IT WAS CON TENDED THAT THE ASSESSEE ACCEPTED THE UNDISCLOSED INCOME TO THE TUN E OF RS. 20 LACS ON ACCOUNT OF SHORTAGE OF GOLD ORNAMENTS AND EXCESS OF STOCK OF SILVER. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORDER. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE. AS PER THE REVENUE, AN AMOUNT OF RS. 20 LACS WAS ACCEPTED AS UNDISCLOSED INCOME BY THE ASSESSEE ON A CCOUNT OF SHORTAGE OF GOLD ORNAMENTS WEIGHING 758.475 GMS AND EXCESS STOCK OF SILVER AT 91.134 KMS. THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE DULY DISCLOSED A SUM OF RS.7,42,872/- BY C REDITING IT TO THE PROFIT AND LOSS ACCOUNT WITH RESPECT TO SHORTAG E IN GOLD 3 JEWELLERY. THE LEARNED ASSESSING OFFICER DID NOT AC CEPT THE PLEA OF THE ASSESSEE ON THE GROUND THAT IF THE ASSESSEE WAS AWARE OF TRANSFER OF STOCK TO ABHUSHAN JEWELLERS, HOW AND WH Y THIS FACT WAS NOT DISCLOSED WHILE RECORDING THE STATEMENT DURING SURVEY PROCEEDINGS. THE IMPUGNED ADDITION OF RS. 12,57,128 /- WAS, THEREFORE, MADE. 2.2 ON APPEAL BEFORE THE LEARNED CIT(A), IT WAS CL AIMED BY THE ASSESSEE THAT DURING SURVEY PHYSICAL INVENTORY OF GOLD AND SILVER ORNAMENTS AND ALSO OF CASH WAS PREPARED BY THE SURV EY PARTY AND GOLD ORNAMENTS WEIGHING 1439.280 GMS, SILVER ORNAME NTS WEIGHING 1135.134 KMS AND CASH AMOUNTING TO RS. 3,06,585/- W ERE FOUND. THERE IS UNCONTROVERTED FINDING IN THE IMPUGNED ORD ER THAT THE LEARNED CIT(A) DULY VERIFIED DIFFERENT SILVER ACCOU NTS WHICH WERE SUBMITTED BY THE ASSESSEE DURING SURVEY AND THE ASS ESSING OFFICER OVERLOOKED THE STOCK OF SILVER/SILVER ORNAMENTS COP IES OF WHICH WERE MADE AVAILABLE AT THE TIME OF SURVEY. THE CORRECT EXCESS STOCK OF SILVER WAS 71.295 KMS VALUED AT RS.7,40,515/- WHICH WAS OFFERED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. WE ARE ALSO IN AGREEMENT WITH THE FINDING OF THE LEARNED CIT(A) TH AT SO FAR AS THE 4 SHORTAGE IN GOLD ORNAMENTS IS CONCERNED, ONLY PROFI T EMBEDDED IN THE SALE CAN BE TAKEN AS INCOME OF THE ASSESSEE. T HERE IS FURTHER UNCONTROVERTED FINDING THAT CORRECT DIFFERENCE OF I NCOME HAS BEEN OFFERED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCO UNT. IN VIEW OF THESE FACTS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. IT IS AFFIRMED. 3. THE NEXT GROUND PERTAINS TO DELETING THE DISALLO WANCE OF RS.2,74,779/- MADE ON ACCOUNT OF INTEREST EXPENSES. THE LEARNED SENIOR DR DEFENDED THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE IMPUGNED ORD ER. 3.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASS ESSEE MADE PAYMENT OF INTEREST TO THE TUNE OF RS.10,99,117/-. THE OBSERVATION OF THE ASSESSING OFFICER IS THAT SUCH PAYMENT WAS M ADE TO THE PERSONS COVERED U/S 40A(2)(B) AT THE RATE OF 15% WH ICH IS ON HIGHER SIDE. THE LEARNED ASSESSING OFFICER WORKED OUT THE FIGURE AT RS.2,74,779/- AS EXCESSIVE, CONSEQUENTLY DISALLOWED . ON APPEAL, THE LEARNED CIT(A) CONSIDERED THE FACTS AND THE SUB MISSIONS OF THE ASSESSEE AND CONCLUDED AS UNDER :- 5 10. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER AND SUBMISSIONS OF THE APPELLANT. I FIND THAT THE A.O. FAILED TO DEMONSTRATE THAT THE BORROWED FUNDS WERE NOT USED BY THE APPELLANT FOR THE PURPOSES OF HIS BUSIN ESS. I DO FIND FORCE IN THE SUBMISSION OF THE APPELLANT TH AT THE SAME RATE OF INTEREST OF 15% WAS PAID BY THE APPELL ANT IN THE LAST YEAR AND NO SUCH DISALLOWANCE WAS MADE, THUS, THERE IS NO REASON TO HOLD THAT THE INTEREST RATE OF 15% IS TOO HIGH DURING THE YEAR UNDER CONSIDERATION . I AM CONVINCED WITH THE SUBMISSION OF THE APPELLANT T HAT GOING BY THE DEFINITION OF THE TERM RELATIVE U/S 2( 41), ALL THE PERSONS ARE NOT SPECIFIED PERSONS U/S 40A(2)(B) . I FIND THAT THE APPELLANT HAS PAID SAME RATE OF INTER EST TO SPECIFIED AND NON SPECIFIED PERSONS WHICH IS ALSO INDICATIVE OF THE MARKET RATE. I AM OF THE CONSIDE RED OPINION THAT THE RATE OF INTEREST ON SECURED LOANS FROM THE BANKS CANNOT BE COMPARED WITH THE RATE OF INTER EST ON UNSECURED LOANS. THE CASE OF THE APPELLANT CERTA INLY FINDS STRENGTH FROM THE DECISION IN ITO VS. CHAMBAM AL ROOPCHAND (2001) 70 TTJ(ASR) 43 AND SETH FAQUIRCHAND KARWA & SONS VS. CIT (1996) 135 TAXMAN 126 (CHD. TRI.) IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, CO NCLUSION DRAWN IN THE IMPUGNED ORDER AND THE ASSERTION MADE BY THE LEARNED RESPECTIVE COUNSEL ALONG WITH THE FACTS AVAILABLE O N RECORD ARE KEPT IN JUXTAPOSITION AND ANALYSED, WE FIND THAT THERE I S UNCONTROVERTED FINDING IN THE IMPUGNED ORDER THAT THE SAME RATE OF INTEREST WAS PAID BY THE ASSESSEE IN LAST YEAR AND NO SUCH DISAL LOWANCE WAS MADE. EVEN OTHERWISE, UNLESS AND UNTIL CORROBORATI VE MATERIAL IS BROUGHT ON RECORD, IT IS NOT EXPECTED FROM THE ASSE SSING OFFICER TO 6 CONCLUDE THAT THE INTEREST RATE OF 15% WAS TOO HIGH . AT THE SAME TIME, THE INTEREST RATE ON SECURED LOAN FROM BANKS CANNOT BE COMPARED WITH INTEREST RATE ON UNSECURED LOAN. THE BUSINESSMAN KNOWS HIS INTEREST BEST. THE ASSESSING OFFICER IS N OT EXPECTED TO SIT IN THE CHAIR OF THE BUSINESSMAN AND DECIDE THE REAS ONABLENESS OF RATE OF INTEREST THAT TOO WITHOUT BRINGING ANY CORR OBORATIVE MATERIAL ON RECORD. IN VIEW OF THESE FACTS, ON THIS GROUND ALSO WE FIND NO JUSTIFICATION TO INTERFERE WITH THE CONCLUSION DRAW N BY THE LEARNED CIT(A) AND UPHOLD THE SAME. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LEARNED COUNSEL OF BOTH THE SIDES AT THE CONCLUS ION OF THE HEARING ON 26.8.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 26.8.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-2020 7