M/S KANDOI POWDERS MFG. CO. PVT. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR

ITA 417/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6105 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 02-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA JCIT DHK
• Assessee Lawyers: S L PODDAR
• Keywords: Rule of consistency
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 417/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 M/S KANDOI POWDERS MFG. CO. PVT. LTD., F-381-382, ROAD NO. 9F, VKI AREA, JAIPUR. CUKE VS. D.C.I.T., CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCK 0316 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/06/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08/06/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A)-IV, JAIPUR DATED 01/03/2018 FOR THE A.Y. 2014 -15. THE ONLY ISSUE INVOLVED IN THE APPEAL IS AGAINST SUSTAINING THE AD DITION OF RS. 15,96,592/- MADE ON ACCOUNT OF RESTRICTING THE RATE OF INTEREST TO 13.5% WHEREAS THE ASSESSEE HAS PAID INTEREST @ 18%. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS O F MANUFACTURING AND TRADING OF METAL POWDERS AND COPPER WIRE ROADS. R ETURN OF INCOME ITA 417/JP/2018_ M/S KANDOI POWDERS MFG. CO. P. LTD. VS DCIT 2 WAS FILED ON 5/11/2014 DECLARING NIL INCOME. THE ASSE SSMENT WAS FINALIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT NIL INCOME ON 20/12/2016. THE ASSESSING OFFICER FOUND TH AT THE ASSESSEE HAS PAID INTEREST @ 18% TO THE PERSONS AS SPECIFIED IN S ECTION 40A(2)(B) OF THE ACT. 3. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR HAS SUBMITTED THAT DURING THE YEAR, THE ASSESSEE HAS PAID INTERES T OF RS. 63,86,369/- @ 18% TO THE PERSONS COVERED U/S 40A(2)(B) OF THE ACT . THE ASSESSING OFFICER RESTRICTED THE PAYMENT @ 13.5% PER ANNUM BY HOLDING THAT THE PAYMENT OF INTEREST IS UNREASONABLE, ABNORMAL AND E XCESSIVE. THE ASSESSING OFFICER ALSO OBSERVED THAT AVERAGE RATE O F PAYMENT OF INTEREST TO OTHER PERSONS WHO ARE NOT RELATED TO THE ASSESSEE C OMES TO 13.5% AND HE HELD THAT THE DISALLOWANCE TO THIS INTEREST PAID WAS NOT FOR LEGITIMATE NEED OF THE BUSINESS OF THE ASSESSEE. THE LD AR HAS SUBM ITTED THAT THE COMPARISON OF PAYMENT OF INTEREST BETWEEN BANK, OTHE RS AND TO RELATIVES IS UNREASONABLE WITHOUT CONSIDERING THE QUANTUM OF LOAN S TAKEN AND THE PERIOD FOR WHICH SUCH LOANS HAVE BEEN TAKEN. FURTHER THE LD AR SUBMITTED THAT THIS ADDITION HAS BEEN MADE WITHOUT CONSIDERING THE PAST HISTORY OF THE ASSESSEE WHEREIN SIMILAR INTEREST WAS PAID AT TH E RATE OF SAME RATE OF INTEREST TO THESE PERSONS IN THE PAST YEARS AND NO DISALLOWANCE WAS MADE. HE ALSO EMPHASIZED THAT THE ASSESSEE OF EARLIER YEA RS WAS MADE U/S ITA 417/JP/2018_ M/S KANDOI POWDERS MFG. CO. P. LTD. VS DCIT 3 143(3) OF THE ACT. LD. AR VEHEMENTLY SUBMITTED THAT RULE OF CONSISTENCY SHOULD HAVE BEEN FOLLOWED AND NO ADDITION OR DISALLO WANCE SHOULD HAVE BEEN MADE. 4. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE FIND THAT THE ASSESSMENT FOR THE A.Y. 2011-12 TO 2013-14 WAS MADE UNDER SCRUTINY ASSE SSMENT U/S 143(3) OF THE ACT. THE ASSESSEE HAS MADE PAYMENT OF INTERE ST IN THOSE YEARS TO THESE PERSONS ALSO @ 18%. THERE IS NO NEW FACTS OR CI RCUMSTANCES HAVE BEEN BROUGHT ON RECORD TO JUSTIFY THE DISALLOWANCES. THE RULE OF CONSISTENCY IS A SETTLED PROPOSITION OF LAW AND WHERE VER THERE IS SAME SET OF FACTS AND CIRCUMSTANCES EXIST THEN THE SETTLED P ORTION SHOULD NOT BE DISTURBED. THE HON'BLE SUPREME COURT IN THE CASE O F DURGA PRASAD MORE VS CIT 82 ITR 540 (SC) HELD THAT THE DECISION REACHED IN ONE YEAR WOULD BE A COGENT FACTOR IN THE DETERMINATION OF A SIMILA R POINT IN THE FOLLOWING YEAR. THE HONBLE KERALA HIGH COURT IN THE CASE OF C IT VS. KRISHAN VARIER 308 ITR 823 (KER) HAS ALSO HELD THAT A FINDING IN A SUBSEQUENT YEAR IGNORING WITHOUT MATERIAL THE CONCLUSION ARRIVED AT EARLIER WOULD BE VITIATED IN LAW. SIMILARLY THE HONBLE RAJASTHAN HIGH COURT I N THE CASE OF SARDAR ITA 417/JP/2018_ M/S KANDOI POWDERS MFG. CO. P. LTD. VS DCIT 4 KEHAR SINGH VS CIT 195 ITR 769 (RAJ) HAS ALSO VIEWED THAT WHERE NO FRESH FACTS WERE AVAILABLE BEFORE THE AUTHORITY GIVING THE LATER DECISION, THE AUTHORITY WAS NOT ENTITLED TO UNSETTLE THE EARLIER F INDING. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS KUSUM BAD ER 185 ITR 70 (RAJ) HAS ALSO HELD THAT WHERE THE AUTHORITY GIVING THE E ARLIER DECISION HAD TAKEN INTO CONSIDERATION ALL THE FACTS, THE LATER AUTHORI TY WAS NOT ENTITLED TO UNSETTLE THE EARLIER FINDING. IN THIS CASE, THE NAT URE OF BUSINESS OF THE ASSESSEE REMAINED THE SAME, THE NATURE OF BOOKS OF ACCOUNT REMAINS THE SAME, THE PAYMENT OF INTEREST ALSO REMAINS THE SAME AND IN SUCH A SITUATION, THERE WAS NO JUSTIFICATION FOR DISALLOWANC E PART OF INTEREST TREATING THE SAME AS EXCESS AND UNREASONABLE. AFTER CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, WE DIRECT THE ASSESSI NG OFFICER TO ALLOW WHOLE OF INTEREST PAID. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/06/2018. SD/- SD/- FOT; IKY JKO HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 TH JUNE, 2018 *RANJAN ITA 417/JP/2018_ M/S KANDOI POWDERS MFG. CO. P. LTD. VS DCIT 5 VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S KANDOI POWDERS MFG. CO. PVT. LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., CENTRAL CIRCLE-3, JAIPU R. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 417/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR