THE ITO 8(3)(2), MUMBAI V. M/S. STANDARD TIN WORKS PVT. LTD, MUMBAI

ITA 3581/MUM/2008

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9446 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 03-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B D PATIL
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI RAJENDRA (ACCOUNTANT MEMBER) ITA NO.3581/MUM/2008 ASSESSMENT YEAR: 2005-06 ITO 8(3)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. STANDARD TIN WORKS PVT LTD., STANDARD HOUSE, DSOUZA COMPLEX, OFF SAFED PAUL, K.A.ROAD, KURLA, MUMBAI-72 PA NO.AAECS 1544 E (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI B.D.PATIL RESPONDENT BY: SMT. VASANTI PATEL DATE OF HEARING: 3 .12.2012 DATE OF PRONOUNCEMENT: 5 .12.2012 ORDER PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2005-06 AGAINST ORDER DATED 24.3.2008 OF LD CIT(A)-XXIX, MUMBAI ON THE F OLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT(A) ERRED IN DELETING THE AOS DISALLOWANCE OF E XCESSIVE INTEREST OF RS.1,18,264 WITHOUT APPRECIATING THE FACTS OF THE C ASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD CIT(A) ERRED IN DELETING THE AOS ADDITION OF RS.1,70,137 ON ACCOUNT OF INTEREST PAID ON LOAN FUNDS WHICH HAVE BEEN TREATED AS UNEXP LAINED CASH CREDIT U/S.68 FOR A.Y. 2003-04 WITHOUT APPRECIATING THE FA CTS OF THE CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD CIT(A) ERRED IN DIRECTING THE AO TO VERIFY THE FACTS AND M AKE ADDITION OF MODVAT IN RESPECT OF CLOSING STOCK, WITHOUT APPRECIATING T HE FACTS OF THE CASE THAT THE AO HAS MADE ADDITION OF RS.14,95,525 IN RESPECT OF MODVAT CREDIT BY INVOKING THE PROVISIONS OF SECTION 145A OF THE I.T. ACT. 2. IN RESPECT OF GROUND NO.1, FACTS ARE THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND DEALING IN METAL CONTAINERS, C APS, CLOSURES, METAL TABLETS, TRAYS, SPRAYERS, TIN CONTAINERS AND TIN ARTICLES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ITA NO.3581/MUM/2008 ASSESSMENT YEAR: 2005-06 2 THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD BOR ROWED FUNDS FROM FRIENDS, RELATIVES AND OTHER PARTIES TO WHOM IT HAD PAID INTEREST @ 9% TO 19.2%. FURTHER, ASSESSEE HAD PAID INTEREST ON BORROWED FUNDS OF RS.3,47,592 @ 18 TO 19.2%. IT WAS IN THIS BACKDROP THAT AO WAS OF THE VIEW THAT ASSESSEE HAD INCURRED AN INCREASED LIABILITY BY BORROWING AT HIGHER RATES AND, ACCORDINGLY, DISALLOWED EXCESS RATE OF INTEREST OF RS.1,18,264. AGGRIEVED, ASSESSEE FILED APPEAL BEFORE LD CIT(A), WHO FOLLOWING HIS OWN DECISION FOR ASSESSMENT YEARS 2003-04 AND 2004-05, DELETED THE A DDITION MADE BY THE AO. HENCE, THIS APPEAL BY THE REVENUE. 3. AT THE TIME OF HEARING, LD A.R. CONTENDED THAT T HIS ISSUE IS SQUARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A. NO.6353/M/2007 DA TED 25.11.2009 AND FOR A.Y 2004-05 IN I.T.A. NO.60/MUM/2008 DT.27.5.2009 AND PRODUCED COPY OF THE ORDERS OF THE TRIBUNAL TO SUBSTANTIATE HIS SUBMISSION. LD D. R. COULD NOT CONTROVERT THE SUBMISSIONS OF LD A.R. 4. WE HAVE HEARD LD REPRESENTATIVES OF PARTIES AND PERUSED ORDERS OF AUTHORITIES BELOW. WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F LD CIT(A) TO INTERFERE. LD CIT(A) IN THE IMPUGNED ORDER OBSERVED THAT ASSESSEE HAD BORRO WED TWO LOANS TOTALING TO RS.3 LACS @ 19.2% WHEREAS MOST OF THE LOANS HAVE BEEN BO RROWED @ 18% WHICH SEEMS TO BE REASONABLY IN VIEW OF THE BANK LIABILITY @ 18%. WE FIND THAT AGAINST THE DECISIONS OF LD CIT(A), DEPARTMENT HAD COME IN APPEALS BEFORE TH E TRIBUNAL FOR ASSESSMENT YEARS 2003-04 AND 2004-05, WHICH HAVE BEEN DISMISSED. IN VIEW OF THIS, WE UPHOLD THE ORDER OF LD CIT(A) AND REJECT GROUND NO.1 OF APPEAL TAKEN BY DEPARTMENT. 5. IN RESPECT OF GROUND NO.2, LD D.R. RELIED ON ORD ER OF AO. HOWEVER, LD A.R. SUBMITTED THAT SIMILAR ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE APPEAL FILED BY DEPARTMENT FOR ASSESSMENT YEAR 2003-04. HE SUBMITT ED THAT THE DISALLOWANCE OF INTEREST IS IN RESPECT OF LOANS WHICH WERE TAKEN BY THE ASSESSEE IN PRECEDING ASSESSMENT YEAR AND THE TRIBUNAL RESTORED THE MATTER TO THE FI LE OF AO TO CONSIDER THE GENUINENESS OF LOAN AFRESH AFTER AFFORDING REASONABLE OPPORTUNI TY OF HEARING TO THE ASSESSEE AND CONSIDERING SUCH DETAILS AS MAY BE FILED BEFORE HIM . HE SUBMITTED THAT MATTER COULD BE RESTORED TO THE FILE OF AO IN VIEW OF THE AFORESAID ORDER OF THE TRIBUNAL DATED ITA NO.3581/MUM/2008 ASSESSMENT YEAR: 2005-06 3 25.11.2009(SUPRA) FOR ASSESSMENT YEAR 2003-04. LD D.R. SUBMITTED THAT HE HAS NO OBJECTION TO RESTORE THE MATTER TO THE FILE OF AO. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF LD REPRESE NTATIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. WE OBSERVE THAT AO HAS DISAL LOWED INTEREST CONSIDERING THAT THE LOANS HAD BEEN TREATED AS UNEXPLAINED CASH CREDIT U /S.68 OF THE ACT IN ASSESSMENT YEAR 2003-04. WE OBSERVE THAT THE TRIBUNAL RESTORED THE MATTER VIDE ITS ORDER DATED 25.11.2009(SUPRA) TO THE FILE OF AO TO CONSIDER THE GENUINENESS OF LOAN AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN VIEW OF ABOVE, WE RESTORE THIS ISSUE TO THE FILE OF AO TO CONSIDER THE GENUINENESS OF LOANS AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO. 2 IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN RESPECT OF GROUND NO.3 OF APPEAL, LD D.R. REL IED ON ORDER OF AO AND WHEREAS LD A.R. SUBMITTED THAT SAME VERY ISSUE HAS BEEN CON SIDERED BY THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 IN I.T.A. NO.60/M/2008 ORDE R DATED 27.5.2009(SUPRA), WHEREIN, THE TRIBUNAL BY RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAHAVIR ALUMINIUM CO., 297 ITR 77(DEL) C ONFIRMED THE ACTION OF LD CIT(A) AND DISMISSED THE GROUND OF APPEAL TAKEN BY DEPARTM ENT. 8. ON CONSIDERATION OF ABOVE SUBMISSIONS OF LD REPR ESENTATIVES OF PARTIES AND ORDER OF LD CIT(A) AS WELL AS EARLIER ORDER OF THE TRIBUN AL DATED 27.5.2009(SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD C IT(A). HENCE, WE UPHOLD THE ORDER OF LD CIT(A) BY REJECTING GROUND NO.3 OF APPEAL TAKEN BY DEPARTMENT. 9. IN THE RESULT, APPEAL FILED BY DEPARTMENT IS PAR TLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 5 TH DECEMBER, 2012 SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 5 TH DECEMBER, 2012 PARIDA ITA NO.3581/MUM/2008 ASSESSMENT YEAR: 2005-06 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),XXIX, MUMB AI 4. COMMISSIONER OF INCOME TAX, 8 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI