Dy. Commissioner of Income Tax, Bareilly V. M/s. Khandelwal Warehousing (P) Ltd., Bareilly

ITA 365/LKW/2012

• Counselvise Citation: 36523714 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.365/LKW/2012 ASSESSMENT YEAR:2008 - 09 DY.C.I.T., CIRCLE - 1, BAREILLY. VS. M/S KHANDELWAL WAREHOUSING (P) LTD., 35 - A, CIVIL LINES, GANGAPUR, BAREILLY. AACCK2518E (APPELLANT) (RESPONDENT) APPELLANT BY SHRI AMIT NIGAM, D. R. RESPONDENT BY SHRI SHUBHAM RASTOGI, C.A. DATE OF HEARING 22/07/2014 DATE OF PRONOUNCEMENT 0 5 /09/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A), BAREILLY, DATED 22/03/2012 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS IN LAW AND ON FACTS AS THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE INTEREST OF RS.3,41,6000/ - ON TERM LOAN. THE ASSESSEE WAS REQUIRED TO FURNISH THE FULL AND COMPLETE EVIDENCE OF TERM LOAN AND USE THEREOF IN CONNECTION WITH THE BUSINESS ACTIVITIES BUT THE ASSESSEE FAILED TO FURNISH ANY SATISFACTORY EXPLANATION DOCUMENTARY EVIDENCE. THE A.O. DISALLOWED THE EXCESS CLAIM OF INTEREST OVER INTEREST PAID IN THE IMMEDIATELY PRECEDING Y EAR I.E. RS.3,41,000/ - (4,07,007 - 65,407) 2. THAT THE CIT(A) BAREILLY HAS WRONGLY DELETED THE ADDITION OF RS.18,40,133/ - ON ACCOUNT OF ADDITION AGAINST CREDIT IN BANK ACCOUNT U/S 69 ON PRESUMPTIVE BASIS. ON 2 EXAMINATION OF COPY OF BANK ACCOUNT IT WAS OBSERV ED THAT THE ASSESSEE HAS CREDITED AN AMOUNT OF RS.43,29,320/ - IN ITS BANK ACCOUNT. ON THE OTHER HAND THE ASSESSEE HAS DISCLOSED GROSS RECEIPTS OF RS.9,69,187/ - ONLY AS RENT RECEIVED AGAINST THE WAREHOUSING PROPERTY LET OUT TO VARIOUS TENANTS, AND AFTER GIV ING EFFECT TO AUTO SWEEP TRANSACTION SYSTEM ENTRY OF RS.15,20,000/ - THERE REMAINS AN AMOUNT OF RS.18,40,133/ - FROM UNDISCLOSED SOURCES. AS THE ASSESSEE FAILED TO FURNISH THE NAMES AND COMPLETE POSTAL ADDRESSES OF THE TENANTS AS WELL AS COPY OF ACCOUNTS OF T HE ASSESSEE IN HIS BOOKS OF ACCOUNTS INCLUDING COPY OF FORM NO. 16 THROUGH WHICH PAYMENTS HAVE BEEN MADE BY THEM AND TDS WAS MADE, AN AMOUNT OF RS.18,40,133/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. THAT THE CIT (A) BAREILLY HAS WRONGLY DELETED THE ADDITION OF R S.5,66,923/ - ON ACCOUNT OF DISALLOWANCE OF EXCESS CASH SHOWN IN BALANCE SHEET ON PRESUMPTIVE BASIS. THE BRIEF FACT OF THE ADDITION IS THAT DURING EXAMINATION OF BALANCE SHEET FILED BY THE ASSESSEE IT WAS SEEN THAT THE ASSESSEE HAS DISCLOSE D CASH IN HAND OF RS.6,86,933 / - BUT THE ASSESSEE FAILED TO PRODUCE ANY CASH BOOK OR ANY SUPPORTING EVIDENCE SO THAT IT MAY BE ASCERTAINED THAT CASH BALANCE SHOWN BY THE ASSESSEE WAS GENUINE. HENCE AFTER GIVING EFFECT TO THE AMOUNT OF RS . 1,20,000 / - WHICH WA S DRAWN BY THE ASSESSEE ON 31.03.08 FROM BANK ACC OU NT , THE AMOUNT OF RS.5 , 66,923/ - (6, 86,923 - 1 , 20,000) WAS TREATED AS INCOME FROM UNDISCLOSED SOURCE U/S 69 AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INC OME (APPEALS) IS ERRONEOUS IN LAW AND ON FACTS MAY BE CANCELLED AND TH E ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT DURING THE PRESENT YEAR, THE ASSESSEE HAS DEBITED INTEREST AGAINST THE TERM LOAN IN THE PROFIT & LOSS ACCOUNT RS.4,07,007/ - AN D IN THE PRECEDING YEAR, RS.65,407/ - WAS DEBITED 3 IN THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF INTEREST ON TERM LOAN. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.3,41,600/ - BEING THE DIFFERENCE BETWEEN THE AMOUNT OF INTEREST PAID IN THE PRESENT YEAR AND PR ECEDING YEAR ON THE BASIS THAT THE ASSESSEE COULD NOT SATISFY HIM REGARDING SUCH INCREASE. BEFORE CIT(A) , IT WAS SUBMITTED BY THE ASSESSEE THAT THE LOAN WAS SANCTIONED IN THE LAST YEAR AND INTEREST WAS PAID FOR FEW MONTHS IN THAT YEAR WHEREAS IN THE PRESE NT YEAR , INTEREST WAS PAID FOR WHOLE YEAR AND THE INCREASE IS FOR THIS REASON. THE ASSESSEE ALSO FURNISHED COPY OF PNB TERM LO AN ACCOUNT BEFORE THE CIT(A). I T IS NOTED BY CIT(A) THAT THE TOTAL LOAN ISSUED WAS RS.40 LAC AND LAST INSTALLMENT OF RS.10 LAC W AS DISBURSED BY THE BANK ON 06/10/2006. A CLEAR FINDING IS GIVEN BY CIT(A) THAT THE ASSESSING OFFICER DID NOT DISPUTE THE USE OF FUND AND ALSO USE OF GODOWN FOR BUSINESS PURPOSE DURING THE YEAR. SINCE IN THE PRECEDING YEAR , THE INTEREST WAS NOT PAID FOR FULL YEAR AND IN THE PRESENT YEAR , THE INTEREST IS FOR FULL YEAR, THE INCREASE IN INTEREST ON TERM LOAN IS NOT UNREASONABLE AND HENCE, ON THIS ASPECT , WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. GROUND NO. 1 IS REJECTED. 5. REGARDING GROUND NO. 2, LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT ON PAGE NO. 9, THE CIT(A) HAS REPRODUCED THE COM PLETE DETAILS OF DEPOSIT IN BANKS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THE SAME ARE AS UNDER: PARTICULARS AMOUNT ENTRY RELATES TO ------------------------------------- ----------------- -------------------- OPENING BALANCE 15,395.10 BANKEY BEHARI 1,39,500.00 CURRENT LIABILITIES DHANSHYAM WAREHOUSE 69,750.00 SHOWN IN INCOME AWB INDIA LTD. 4,34,474.00 SHOWN IN INCOME BELL INDIA PVT. LTD. 1,68,754.00 SHOWN IN INCOME ACC CEMENT LTD. 48,724.00 SHOWN IN I NCOME INTT ON TERM LOAN 4,541.00 SHOWN IN INCOME 4 GD BINDAL 70,000.00 LOANS & ADVANCES SAHANI ENTERPRISES 4,50,000.00 UNSECURED LOAN ASRAF SUGAR INDUSTRIES 6,00,000.00 CURRENT LIABILITIES NIZAM 6,10,000.00 LAST YS ADV ANCE . TAKEN BACK CASH DEPOSITED 1,05,000.00 AUTO SWEEP 15,30,000.00 MISC. 75.95 ----------------- 42,79,951.05 ----------------- 7. THEREAFTER IT IS ALSO NOTED BY CIT(A) THAT THE ASSESSEE HAS ALSO FURNISHED CONFIRMATORY LETTERS OF LIABILITIES AND LOANS BEFORE THE ASSESSING OFFICER HIMSELF. THEREAFTER HE HAS NOTED THAT THE ASSESSING OFFICER HAS SIMPLY WORKED OUT TOTAL OF DEPOSITS AND REDUCED THE QUANTUM OF RENT RECEIPTS OF GODOWN AND THE DIFFE RENCE OF RS.18,40,133/ - WAS CONSIDERED AS UNEXPLAINED DEPOSITS IN THE BANK. THERE IS NO FINDING OF FACT GIVEN BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE CONCERNED CREDITORS ON ACCOUNT OF LOAN/C REDIT LIABILITIES OR GENUINENESS OF THE TRANSACTIONS. IN THE ABSENCE OF ANY SUCH FINDING, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. THE TOTAL DEPOSIT INCLUDES UNSECURED LOANS OF RS.4.5 LAC FROM SAHANI ENTERPRISES, CURRENT LIABILITIES OF RS.6 LAC FROM ASHRAF SUGAR INDUSTRIES AND RS.6,10,000/ - BEING LAST YEAR ADVANCE TAKEN BACK FROM NIZAM. REGARDING THE LAST YEAR ADVANCE TAKEN BACK FROM NIZAM , IT CANNOT BE CONSIDERED AS CASH CREDIT FOR MAKING THE ADDITION. REGARDING THE RECEIPT OF RS.4.5 0 LAC AND RS.6 LAC FROM SAHANI ENTERPRISES AND ASHRAF SUGAR INDUSTRIES, WE FIND THAT LEDGER ACCOUNTS ARE AVAILABLE ON PAGE NO. 15 & 16 OF THE PAPER BOOK. IN THE ACCOUNT OF SAHANI ENTERPRISES, THERE IS OPENING CREDIT BALANCE OF RS.4.50 LAC AS AGAINST CLOS ING BALANCE OF RS.5.40 LAC AND HENCE THERE IS NET IN CREASE IN CREDIT BALANCE OF RS.0 . 90 LAC. SINCE CONFIRMATIONS OF THESE PARTIES ARE MADE AVAILABLE BEFORE THE ASSESSING OFFICER WHO HAS NOT GIVEN ADVERSE FINDING, WE FIND NO REASON TO INTERFERE IN THE ORDE R OF CIT(A) ON THIS ISSUE. ACCORDINGLY GROUND NO. 2 IS REJECTED. 5 8. REGARDING GROUND NO. 3, LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ADDITION WAS MADE ON THE BASIS THAT THERE WAS NO CASH WITHDRAWAL FROM BANK AND HAS GIVEN BENEFIT OF RS.1.20 LAC BEING CASH WITHDRAWN BY THE ASSESSEE ON 30/03/2008. BEFORE THE CIT(A), IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT VARIOUS CASH WITHDRAWALS WERE MADE BY THE ASSESSEE IN JANUARY, FEBRUARY AND MARCH 2008 AS HAS BEEN NOTED BY CIT(A) ON PAGE NO. 12 & 13 OF THE HIS ORDER. THESE WITHDRAWALS FROM THE BANK ARE VERIFIABLE FROM BANK STATEMENT AVAILABLE ON PAG E NO. 27 TO 33 OF THE PAPER BOOK. UNDER THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) BECAUSE THE INCREASE IN CASH IS SUPPORTED BY CASH WITHDRAWAL FROM BANK ACCOUNT. HENCE, GROUND NO. 3 IS ALSO REJECTED. 10. IN THE RESULT, T HE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 5 /09/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR