Pawan Deep Singh, Sirsa V. ITO, W-2, Sirsa

ITA 371/CHANDI/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3697 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 01-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Set aside
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 371/CHD/2019 / ASSESSMENT YEAR : 2012-13 SHRI PAWAN DEEP SINGH, PROP M/S DEEP AUTOMOBILES, SIRSA VS. THE ITO, WARD-2, SIRSA ./PAN NO. AEZPS 2915M / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI M.R. SHARMA, AR ' ! / REVENUE BY : SH. MANJIT SINGH, CIT DR # $ % /DATE OF HEARING : 07.11.2019 &'() % / DATE OF PRONOUNCEMENT : 07.11.2019 / ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 25.01.2019 OF THE COMMISSIONER OF INCO ME TAX (APPEALS)- 5, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A PPEALS), BEING AGAINST FACTS AND SETTLED LAW IS LIABLE TO BE SET ASIDE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN CONFIRMING REOPENING OF THE CASE, UPHOLDING THE INI TIATION OF PROCEEDINGS U/S 147/148 OF IT ACT, 1961 BY THE ASSE SSING OFFICER, AS NO NEW INFORMATION WAS AVAILABLE WITH H IM. ITA NO. 371-CHD-2019- SHRI PAWAN DEEP SINGH, SIRSA 2 2.1 THAT THE INFORMATION/EVIDENCE RELIED UPON REGARDING REOPENING FOR DISALLOWANCE OF INTEREST OF RS.6,32,0 00/- WAS DULY OBTAINED/VERIFIED AND AVAILABLE BEFORE FIN ALIZING THE ORIGINAL ASSESSMENT ORDER DATED 30.12.2014 IN COMPLIANCE TO QUERY RAISED FOR CHARGING INTEREST FR OM DEBTORS. 2.2 THAT WHOLE OF THE INFORMATION UTILIZED FOR INITIATI NG THE PROCEEDINGS FOR NON PAYMENT OF VAT OF RS. 7,69, 024/- WAS AVAILABLE ON RECORD SINCE THE FRAMING OF ORIGIN AL ASSESSMENT. THAT NON PAYMENT OF THE SAID SUM, IN VI EW OF THE PROVISIONS U/S 43B, WAS A MISTAKE APPARENT FROM RECORD AND THE SAME WAS LIABLE TO BE ADDED U/S 154/ 155 OF IT ACT, 1961. 2.3 THAT THE SQUARELY APPLICABLE DECISIONS OF HON'BLE INCOME TAX APPELLATE TRIBUNALS RELYING UPON OBSERVATIONS OF HON'BLE HIGH COURTS AND APEX COURT & MENTIONED BY LD. COMMISSIONER OF INCOME TAX IN HIS APPELLATE ORDER HAVE BEEN FULLY IGNORED BY HIM. 3. THE LD. COMMISSIONER OF INCOME TAX ERRED IN CONFIRM ING THE DISALLOWANCE OF INTEREST OF RS. 6,32,000/- OUT OF N ET INTEREST PAYMENTS OF RS.25,48,527/-, BY THE ASSESSING OFFIC ER RELYING ON ASSUMPTIONS/CONJECTURES, IGNORING THE FACTS ON RECO RD AND WRITTEN EXPLANATIONS OF THE APPELLANT FOR THE ADVAN CES MADE. 3 . 1 THAT LD. COMMISSIONER OF INCOME TAX SEEMS TO HAVE IGNORED THE CONTENTION OF THE APPELLANT THAT THE AD VANCES FOR PURCHASES OF AGRICULTURAL LAND WERE MADE OUT OF INTEREST FREE CAPITAL FUND , UNSECURED LOANS AND TR ADE CREDITORS AND NONE OF THE ADVANCES IN CURRENT YEAR WERE MADE OUT OF WITHDRAWALS FROM BANK OR OTHER BORROWED FUNDS. 3.2 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SEEMS TO HAVE NOT CONSIDERED AND APPRECIATED THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT AND HON'BLE TRIBUNAL RELIED UPON BY THE APPELLANT AND INCORPORATED BY HIM IN THE APPELLATE ORDER. ITA NO. 371-CHD-2019- SHRI PAWAN DEEP SINGH, SIRSA 3 4. THAT THE APPELLANT CRAVES LEAVE, WITH THE KIND P ERMISSION OF HON'BLE INCOME TAX APPELLATE TRIBUNAL, TO AMEND ADD , ALTER OR MODIFY THE GROUNDS OF APPEAL TILL THE SAME IS FINAL LY HEARD AND DISPOSED-OFF. 3. GROUND NO.1: GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 4. GROUND NO.2: VIDE THIS GROUND, THE ASSESSEE HAS CONTESTED THE VALIDITY OF THE REOPENING OF THE ASSESSMENT U/S 147 READ WITH SECTION 148 OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HA S STATED THAT AS PER THE INSTRUCTIONS OF HIS CLIENT, HE DOES NOT PRE SS GROUND NO.2 REGARDING REOPENING OF THE ASSESSMENT. GROUND NO.2 OF THE APPEAL IS, THEREFORE, DISMISSED AS NOT PRESSED. 5. GROUND NO.3: VIDE THIS GROUND THE ASSESSEE HAS CONTESTED THE ADDITION MADE BY THE LOWER AUTHORITIES ON ACCOUNT O F DISALLOWANCE OUT OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 36(I)(III) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HA S INVITED OUR ATTENTION TO THE IMPUGNED ORDER OF THE ASSESSING OF FICER AS WELL AS OF THE CIT(A), WHEREIN, BOTH THE LOWER AUTHORITIES HA VE DULY EXAMINED AND NOTED THE FACT THAT THE ASSESSEE WAS POSSESSED OF I NTEREST FREE FUNDS TOTALLING RS. 1.19 CRORES. THE ASSESSEE DURING THE YEAR MADE CERTAIN ITA NO. 371-CHD-2019- SHRI PAWAN DEEP SINGH, SIRSA 4 ADVANCES FOR THE PURCHASE OF PROPERTY, HOWEVER, TH E TOTAL ADVANCES MADE FOR PURCHASE OF THE LAND AS STOOD DURING THE Y EAR WERE AT RS. 1.16 CRORES. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD CLAIMED AN INTEREST EXPENDITURE OF RS. 25,48,527, H ENCE, THE DISALLOWANCE U/S 36(1)(III) OF THE ACT WAS ATTRACT ED ON MAKING INTEREST FREE ADVANCES AS THE ASSESSEE MIGHT HAVE USED LOAN BEARING FUNDS FOR THE SAME. THE PLEA OF THE ASSESSEE HAS BEEN THAT SINCE THE ASSESSEE WAS IN POSSESSION OF SUFFICIENT OWN FUNDS, HENCE, THE PRES UMPTION WAS THAT THE ASSESSEE HAD USED HIS OWN / INTEREST FREE FUNDS FOR MAKING THE AFORESAID ADVANCES. HOWEVER, THE ASSESSING OFFICER PRESUMED T HAT THE ASSESSEE WOULD HAVE FIRST EXHAUSTED THE INTEREST FREE FUNDS TOWARDS BUSINESS ASSETS AND THEREAFTER HE MIGHT HAVE USED THE INTER EST FREE FUNDS FOR MAKING INTEREST FREE ADVANCES FOR THE PURCHASE OF P ROPERTY. THE ISSUE, HOWEVER, HAS BEEN OTHERWISE SETTLED BY THE VARIOUS DECISIONS OF THE HIGHER COURTS INCLUDING THAT OF THE RECENT DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT (LTU) VS. RELIANCE INDUST RIES LTD. [2010] 410 ITR 466 (SC), WHEREIN, THE HON'BLE SUPREME COUR T HAS AGAIN CONFIRMED THE PROPOSITION OF LAW THAT IF THE OWN FU NDS / INTEREST FREE FUNDS ARE AVAILABLE WITH THE ASSESSEE TO MEET THE I NVESTMENT, PRESUMPTION WILL BE THAT THE ASSESSEE HAD USED ITS OWN / INTEREST FREE FUNDS FOR THE SAID INVESTMENT. IN VIEW OF THIS, SINCE THE ASSESSEE HAS ESTABLISHED THAT HE WAS POSSESSED OF OWN SUFFICIENT OR INTEREST FREE FUNDS TO MEET THE ITA NO. 371-CHD-2019- SHRI PAWAN DEEP SINGH, SIRSA 5 INVESTMENT, HENCE, THE DISALLOWANCE MADE U/S 36(1 )(III) OF THE ACT IS NOT ATTRACTED. GROUND NO.3 OF THE APPEAL IS HEREBY ALLOWED. 6. GROUND NO.4 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 07.11.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR