Shri Kamlesh Gangaram Mali, Ahmedabad V. The Dy.CIT, Circle-9, Ahmedabad

ITA 3617/AHD/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9973 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMOYJAN PAL
• Assessee Lawyers: S N DIVETIA
• Section: 68

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.3617/AHD/2015 / ASSTT. YEAR: 2011-12 M/S.KAMLESH GANGARAM MALI A-48, VADILAL PARK LBS MARG, BAPUNAGAR AHMEDABAD 382 350 PAN : ADEPM 0249 E VS. THE DCIT CIR.9, AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : MS.SOMOYJAN PAL, SR.DR ! / DATE OF HEARING : 01/04/2019 '#$ ! / DATE OF PRONOUNCEMENT: 02/04/2019 %& / O R D E R ASSESSEE IS IN APPEAL BEFORE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)-5, AHMEDABAD DATED 4.11.2015 PASSED FOR T HE ASSTT.YEAR 2011-12. 2. IN THE FIRST GROUND OF APPEAL, GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION OF RS.12.89 LAKHS. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS FIL ED HIS RETURN OF INCOME ON 29.3.2012 DECLARING TOTAL INCOME AT RS .27,22,490/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSU ED AND SERVED UPON THE ASSESSEE. ON PERUSAL OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS RECEIVED RS.12.89 LAKHS FR OM 76 ITA NO.3617 /AHD/2015 2 INDIVIDUALS. HE DIRECTED THE ASSESSEE TO EXPLAIN T HE SOURCE OF THESE AMOUNTS. THE ASSESSEE HAS SUBMITTED A LIST O F 76 PERSONS FROM WHOM HE HAS TAKEN RS.12.89 IN RANGE OF RS.15,0 00/- TO RS.19,000/- PER PERSON. THE ASSESSEE HAS COMPILED THE DETAILS BEFORE THE AO, WHEREIN HE HAS DISCLOSED PAN OF EACH CREDITOR, DATE OF RECEIPT OF AMOUNT AND CONFIRMATION AND DATE OF REPAYMENT. SUCH DETAILS HAVE BEEN TABULATED AND AR E PLACED ON PAGE NO.63 OF THE PAPER BOOK. THE AO DID NOT ISSUE ANY SHOW CAUSE NOTICE TO THE CREDITORS, RATHER HE DIRECTED T HE ASSESSEE TO PRODUCE CREDITORS BEFORE THE AO. TO THE QUERY OF T HE AO, THE ASSESSEE HAS PRODUCED FIVE-SIX PERSONS OUT OF THE 7 6 PERSONS. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, AND WITH AID OF SECTION 68, HE MADE ADDITION. APPEA L TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE DETAILS COMP ILED IN TABULAR FORM WOULD REVEAL THAT THE ASSESSEE HAS GIVEN PAN O F EACH CREDITOR. HE HAS GIVEN DATES ON WHICH THESE AMOUNT S HAVE BEEN TAKEN. HE HAS GIVEN THE DETAILS OF CONFIRMATION. HE HAS ALSO SUBMITTED THE DETAILS OF REPAYMENTS. ALL THESE AMO UNTS HAVE BEEN REPAID EITHER IN THE ASSTT.YEAR 2011-12 OR IN THE YEAR 2013. THE FINANCIAL YEAR IN WHICH THESE PAYMENTS WERE MAD E HAVE ALSO BEEN INDICATED IN THE DETAILS. I HAVE GONE THROUGH ALL THESE DETAILS. SECTION 68 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESS EE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLA NATION ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION OFFER ED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN TH E SUM SO CREDITED IN ITA NO.3617 /AHD/2015 3 THE ACCOUNTS MAY BE TREATED AS INCOME OF THE ASSESS EE OF THAT PREVIOUS YEAR. 5. A PERUSAL OF THE DETAILS SUBMITTED IN THE TABULA R FORM WOULD INDICATE THAT THE ASSESSEE HAS GIVEN BASIC DETAILS TO THE AO. THE LD.AO DID NOT ISSUE ANY SUMMONS TO ANY OF THE CREDI TORS. HE SIMPLY DIRECTED THE ASSESSEE TO PRODUCE BEFORE HIM. THE ASSESSEE HAS PRODUCED FOUR-FIVE CREDITORS, BUT THE AO COULD NOT CONDUCT INQUIRY ON ACCOUNT OF PAUCITY OF TIMES, BECAUSE HE HAS TAKEN UP ASSESSMENT PROCEEDINGS FOR SCRUTINY VERY LATE. IN VIEW OF THE ABOVE DETAILS, I AM OF THE VIEW THAT IT IS THE AO W HO FAILED TO CONDUCT INQUIRY. HAD HE ISSUED NOTICE TO THESE IND IVIDUALS AND THEY DID NOT RESPONDENT, THEN PROBABLY HE MAY BE JU STIFIED TO ASK FOR FRESH EVIDENCES OR FRESH ADDRESSES ETC. BUT HE CANNOT ADD THE CASH CREDIT WITHOUT MAKING ANY INQUIRY. I ALLOW TH IS GROUND OF APPEAL AND DELETE THE DISALLOWANCE. 6. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE A SSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISA LLOWANCE OF ELECTRICITY EXPENSES AT RS.91,500/-. 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS.30,50 LAKHS IN JANUARY, 2011 WITH M/S.RAT NA DEEP INFRA PVT. LTD. WITHOUT ANY INTEREST. THE LD.AO HARBOURE D A BELIEF THAT INTEREST BEARING FUNDS WERE ADVANCED TO INTEREST FR EE LOANS. THEREFORE, HE DISALLOWED THE INTEREST EXPENDITURE O F RS.91,500/- BY CHARGING INTEREST ON THESE DEPOSITS OF RS.30.50 LAKHS AT THE RATE OF 12%. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. ITA NO.3617 /AHD/2015 4 8. BEFORE ME, THE ASSESSEE HAS DEMONSTRATED THAT HE HAS INTEREST FREE FUNDS IN THE CAPITAL ACCOUNT TO THE T UNE OF RS.39,08,727/-. HONBLE GUJARAT HIGH COURT IN THE CASE OF RAGHUVIR SYNTHETICS, 354 ITR 222 HAS HELD THAT WHER E THE ASSESSEE HAS MORE INTEREST FREE FUNDS, THEN IT COUL D BE PRESUMED THAT THE ADVANCES ARE GIVEN OUT OF SUCH INTEREST FR EE FUNDS. THEREFORE, IT CAN BE CONSTRUED THAT THESE INTEREST FREE FUNDS WERE GIVEN BY THE ASSESSEE FROM HIS INTEREST FREE CAPITA L ACCOUNT. NO DISALLOWANCE ON ACCOUNT OF INTEREST EXPENDITURE CAN BE MADE. THIS GROUND OF APPEAL IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 2 ND APRIL, 2019. SD- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 02/04/2019