M/s Saluja Fabrics, Ludhiana V. ITO, Ludhiana

ITA 376/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9864 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 13-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 376/CHD/2016 ASSESSMENT YEAR : 2008-09 M/S SALUJA FABRICS, VS THE ITO, PLOT NO. 273/274, WARD-I(3), DHANDARI KALAN, LUDHIANA. LUDHIANA. PAN: AALFS2028P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 21.06.2016 DATE OF PRONOUNCEMENT : 22.06.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-1 LUDHIANA DATED 18.02.2016 FOR ASSESSMENT YEAR 2008-09, CHALLENGING THE UPHOLDING OF DISALLOWANCE OF INTEREST OF RS. 34,12, 269/-. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED INTEREST OF RS. 34,12,268/- WHICH HAD BEEN PAID TO THREE SHORT TERM LOAN ACCOUNTS WITH ICICI BANK. THE ASSESSEE WAS AS KED TO INTIMATE THE PURPOSE OF LOAN RAISED AND FURNISH BANK STATEMENT IN SUPPORT OF THESE ACCOUNTS. THE SAME W AS NOT PRODUCED. THE ASSESSING OFFICER HELD THAT THE 2 CONNECTION OF THE PAYMENT WITH THE BUSINESS PURPOSE WAS NOT ESTABLISHED AND DISALLOWED THE SAME. 3. DURING APPELLATE PROCEEDINGS, THE ASSESSEE FILED WRITTEN SUBMISSION WHICH IS REPRODUCED IN THE APPEL LATE ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT INTEREST WAS PAID WITH REGARD TO SHORT TERM LOAN WITH ICICI BANK. DURING THE ASSESSMENT YEAR UNDER APPEAL, NO FRESH L OAN WAS AVAILED BY THE ASSESSEE. THE LOAN WAS STANDING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS ON 31.03.20 07 WHICH COULD NOT BE SQUARED OFF DUE TO NON RECOVERY OF SALE PROCEEDS FROM THE PARTIES. HOWEVER, THE SAME HAS BEEN SQUARED OFF DURING ASSESSMENT YEAR UNDER APPEA L THROUGH THE SALE PROCEEDS. THE LOAN WAS ACQUIRED IN PAST AND HAD BEEN PAID. COPY OF ACCOUNT OF ICICI ST LOA N ACCOUNT AND INTEREST ACCOUNT WERE FILED WITH THE LD . CIT(APPEALS). THE LOAN WAS GRANTED FOR SPECIFIC PU RPOSE AND USE OF THE SAID FUND IS PERIODICALLY MONITORED BY THE LENDING AGENCY. THE LOAN WAS USED FOR BUSINESS PUR POSE ONLY, ON WHICH INTEREST HAD BEEN PAID. THE ASSESSEE ALSO RELIED UPON DECISION OF HON'BLE SUPREME COURT IN TH E CASE OF M/S S.A.BUILDERS LTD. VS CIT 288 ITR 1. 4. THE LD. CIT(APPEALS), AFTER CONSIDERING SUBMISSI ONS OF THE ASSESSEE AND MATERIAL ON RECORD, NOTED THAT INTEREST ON SHORT TERM LOAN ACCOUNT WITH ICICI BANK WAS DISALLOWED BY HOLDING THAT ITS CONNECTION WITH BUSI NESS ACTIVITY DID NOT STAND ESTABLISHED. THE ASSESSEE F AILED TO 3 PROVE THE NEXUS OF THE SAID AMOUNT CLAIMED WITH THE BUSINESS OF THE ASSESSEE. BANK STATEMENT WAS NOT FURNISHED IN SUPPORT OF THE CLAIM. THE ASSESSEE, THEREFORE, FAILED TO ESTABLISH THE NEXUS BETWEEN TH E EXPENDITURE CLAIMED AND THE BUSINESS OF THE ASSESSE E WITH SATISFACTORY SUPPORTING EVIDENCE AND SUPPORTIN G BANK STATEMENTS. THE APPEAL OF THE ASSESSEE WAS, ACCORDINGLY, DISMISSED ON THIS GROUND. 5. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE AUTHOR ITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMI TTED THAT COPY OF THE ACCOUNT OF ICICI SHORT TERM LOAN ACCOUNT AND INTEREST ACCOUNT WERE FILED BEFORE LD. CIT(APPEALS) WHICH ARE ALSO FILED BEFORE ME. HOWEV ER, THE SAME WOULD NOT SERVE ANY PURPOSE. THE ASSESSEE MAINTAINED THREE SHORT TERM LOAN ACCOUNTS WITH ICIC I BANK AS PER THE LEDGER ACCOUNTS. IN THE ASSESSMENT YEAR UNDER APPEAL, ASSESSEE MADE PAYMENTS TO ICICI BANK ON DIFFERENT DATES. THE ASSESSEE EXPLAINED THAT NO FR ESH LOANS HAVE BEEN AVAILED IN ASSESSMENT YEAR UNDER AP PEAL. THE ASSESSEE HAS FAILED TO FURNISH BANK STATEMENTS IN RESPECT OF THESE ACCOUNTS, AS SUCH, THE CONNECTION OF THE PAYMENT OF INTEREST WITH THE BUSINESS ACTIVITIES HA VE NOT BEEN ESTABLISHED BY THE ASSESSEE. EVEN IT IS NOT EXPLAINED BEFORE ME AS TO WHEN THE LOANS HAVE BEEN RAISED AND FOR WHAT PURPOSE. IT IS ALSO NOT PROVED 4 THROUGH ANY EVIDENCE OR MATERIAL ON RECORD THAT SHO RT TERM LOANS WERE TAKEN FOR THE PURPOSE OF BUSINESS. IN THE ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFIC ULT TO BELIEVE THAT SHORT TERM LOANS WERE TAKEN FOR BUSINE SS PURPOSE ONLY. THUS, THE ASSESSEE FAILED TO PROVE T HE NEXUS OF THE AFORESAID AMOUNT CLAIMED WITH THE BUSI NESS OF THE ASSESSEE. THE BANK STATEMENT IS IN POWER AN D POSSESSION OF THE ASSESSEE BUT SAME WAS NOT PRODUCE D BEFORE THE AUTHORITIES BELOW AS WELL AS SAME IS NOT PRODUCED BEFORE THE TRIBUNAL. THESE FACTS, THEREFO RE, PROVE THAT ASSESSEE FAILED TO ESTABLISH THE NEXUS B ETWEEN THE INTEREST EXPENDITURE CLAIMED AND THE BUSINESS O F THE ASSESSEE WITH SATISFACTORY SUPPORTING EVIDENCE AND SUPPORTING BANK STATEMENTS. IN THE ABSENCE OF RELE VANT EVIDENCE ON RECORD, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 22 ND JUNE, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD