M/S. UDIT FINANCE CORPORATION, Bhopal V. THE ITO 2(1), Bhopal

ITA 456/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5901 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESHPANDE
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 456/IND/2015 ASSESSMENT YEAR: 2008-09 UDIT FINANCE CORPORATION , 3 SHAMAL ROAD BHOPAL PAN AAAFU2357A VS. ITO WARD 2(1), BHOPAL APPELLANT RESPONDENT APPELLANTS BY SHRI S. S. DESHPANDE, CA RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 27.07.2016 DATE OF PRONOUNCEMENT 27.07.2016 O R D E R PER O.P. MEENA ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-2, BHOPAL [HER EINAFTER REFERRED TO AS THE CIT(A)] DATED 31.03.2015 AND PER TAINS TO ASSESSMENT YEAR 2008-09 AS AGAINST APPEAL DECIDED I N ASSESSMENT ORDER U/S. 143(3) OF INCOME TAX ACT,1961 ( HEREIN AFTER REFERRED TO AS 'THE ACT) DATED 30.12.2010 OF ITO WARD 2(1) BHOPAL [HEREINAFTER REFERRED TO AS THE AO]. I.T.A.NO.456/IND/2015/A.Y. UDIT FINANCE CORPORATION PAGE 2 OF 6 2 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READS A S UNDER :- 1. THAT THE HON`BLE COMMISSIONER OF INCOME TAX - APPEAL WAS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS.8,00,000/- RECEIVED AS FURTHER LOAN FROM M/S. RAJNIKANT & BROTHERS , MATHURA U/S 68 OF THE INCOME TAX ACT,1961 AND INTEREST PAID THEREON OF RS.36,237/- AS IT IS WELL DOCUMENTED AND ON RECORD THAT THE ASSESSEE HAS BEEN ASSESSED ON A NUMBER OF OCCASIONS AND THE SAID PARTY IS AN OLD CREDITOR , ALREADY PUT TO THE TEST OF SCRUTINY ON A NUMBER OF OCCASIONS. 2. THAT THE HON`BLE COMMISSIONER OF INCOME TAX - APPEAL, WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 6,89,331/- MADE ON ACCOUNT OF ALLEGED DIFFERENCE IN INTEREST RATES ADOPTED BY THE APPELL ANT ASSESSEE FOR LENDING TO AND BORROWING FROM VARIOUS PARTIES, IN THE FACE OF FACT, ON RECORD, THAT THE S AME ISSUE HAS BEEN RAISED BY THE ASSESSING OFFICER IN EARLIER ASSESSMENT AND THE SAME HAS BEEN ALLOWED IN FAVOUR OF THE APPELLANT BY THE HON`BLE ITAT. 3. THAT THE HON`BLE COMMISSIONER OF INCOME TAX - APPEAL WAS NOT JUSTIFIED IN NOT GIVING THE APPELLANT ASSESSEE A FULL AND PROPER OPPORTUNITY OF BEING HEARD IN THE MATTER. I.T.A.NO.456/IND/2015/A.Y. UDIT FINANCE CORPORATION PAGE 3 OF 6 3 4. THE APPELLANT ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OF APPEAL OR MODIFY THE GROUNDS OF APPEAL RAISED. 3. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MONEY LENDING, AND FI LED ITS RETURN OF INCOME ON 29.09.2008, SHOWING TOTAL INCOME AT RS.4,79,978/-. THE ASSESSEE HAS TAKEN LOAN OF RS. 8 LACS FROM M/S. RAJNIKANT & BROTHERS, MATHURA ON WHICH INTEREST OF RS. 36,237/- WAS PAID. THE ASSESSEE WAS REQUIRED TO PROV E CREDITWORTHINESS OF THE LENDER FOR WHICH THE ASSESSEE HAS FILED COPY OF LEDGER A/C, CONFIRMATION LETTER AND P AN. HOWEVER, THE A.O. WAS NOT SATISFIED WITH THIS AS THE ASSESSEE HAS NOT FILED COPY OF BANK ACCOUNT, RETURN OF LENDER AND CO PY OF AUDITED ACCOUNT OF LENDER. THEREFORE , THE LOAN WITH INTEREST WAS TREATED AS UNEXPLAINED CASH CREDIT U/S. 68 OF TH E ACT. SIMILARLY, THE A.O. NOTICED THAT THE ASSESSEE HAS C REDITED INTEREST OF RS.41,73,648/- AND DEBITED INTEREST OF RS. 35,73,195/-. THE INTEREST WAS PAID AT THE RATE OF 12 % TO 15% WHEREAS INTEREST WAS CHARGED AT THE RATE OF 10% TO 12 %. NO NEXUS WAS ESTABLISHED FOR CONCESSIONAL RATE OF INTE REST I.T.A.NO.456/IND/2015/A.Y. UDIT FINANCE CORPORATION PAGE 4 OF 6 4 CHARGED AND PAID HIGHER RATE . IT WAS ALSO NOTICED THAT THE ASSESSEE HAS FAILED TO FURNISH DETAILS OF PAYMENTS TO RELATIVES IN TERMS OF PROVISIONS OF SECTION 40A(2)(A) OF THE ACT. IN ABSENCE OF THESE SUCH DETAILS, THE A.O. WORKED OUT E XCESS INTEREST PAID OVER 10% RATE AS PER CHART GIVEN IN A SSESSMENT ORDER AMOUNTING TO RS. 6,89,331/- AND DISALLOWED TH E SAME. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) , BUT NO RELIEF GRANTED FOR NON PROSECUTION OF APPEAL. THE CIT(A) NOTED THAT NUMBER OF OPPORTUNITY OF BEING HEARD WAS ALLOWED TO THE ASSESSEE, BUT HE HAS FAILED TO AVAIL. THEREFORE , CIT(A) , RELYING IN THE CASE OF ESTATE OF LATE TUKOJIRAO HOLKER VS. CWT (1997) 223 ITR 480(MP- INDORE), CIT VS MULTIPLAN INDIA LTD . 38 ITD 320(DEL) AND CIT VS. BHATTACHARGE & ANOTHER'S 118 I TR461, DISMISSED THE APPEAL ON THE BASIS OF MATERIAL AVAIL ABLE ON RECORD. 4. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE A.O. AS WELL LD. CIT(A) HAVE GRI EVOUSLY ERRED IN NOT ALLOWING PROPER, REASONABLE AND MEANING FUL OPPORTUNITY OF BEING HEARD BEFORE PASSING THE ASSES SMENT ORDER. THE ASSESSMENT IS MADE IN TOTAL VIOLATION OF THE I.T.A.NO.456/IND/2015/A.Y. UDIT FINANCE CORPORATION PAGE 5 OF 6 5 PRINCIPLES OF NATURAL JUSTICE, BAD IN LAW AND VITIAT ED IN LAW. THE A.O. DID NOT PRESS FOR THE DETAILS MENTIONED IN THE ASSESSMENT ORDER AND TREATED THE SUM AS UNEXPLAINED ., NOR ANY ENQUIRY WAS MADE TO KNOW THE REASONABLE RATE OF I NTEREST BEING CHARGED AND FAILED TO MAKE ANY EFFORT TO FACT UALLY FIND OUT WHICH ALL OF THE UNSECURED LOANS WERE FROM RELAT IVE AND WHICH WERE NOT. LD. CIT(A) HAS ALSO NOT ALLOWED OPPOR TUNITY OF BEING HEARD BEFORE PASSING ORDER. ACCORDINGLY, THE LD. A.R, HAS REQUESTED THAT THE APPEAL BE RESTORED TO THE FILE O F LD. CIT(A) FOR FRESH ADJUDICATION. 5. THE LD. DEPARTMENTAL REPRESENTATIVE CONCURRED WITH THE SUBMISSION OF THE LD. AR. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTICE D THAT NEITHER THE LD. CIT(A) NOR THE A.O. HAS ALLOWED PR OPER OPPORTUNITY OF BEING HEARD IN REASONABLE MANNER. IN SUCH CIRCUMSTANCES WE ARE OF THE OPINION THAT THE ASSESSE E DESERVE THE OPPORTUNITY OF BEING HEARD . ACCORDINGLY, WE RESTORE THIS APPEAL FOR FRESH ADJUDICATION TO THE FILE OF THE L D. CIT(A) WITH THE DIRECTION THAT THE ASSESSEE BE AFFORDED PROPER OPPORTUNITY I.T.A.NO.456/IND/2015/A.Y. UDIT FINANCE CORPORATION PAGE 6 OF 6 6 TO PRESENT HIS CASE AS WELL AS THE ASSESSEE IS TO EX TEND ALL POSSIBLE COOPERATION IN THE DISPOSAL OF THE CASE. N EVERTHELESS THE ASSESSEE WOULD PROVIDE ALL NECESSARY DOCUMENTAT ION AND COOPERATE IN THE APPELLATE PROCEEDINGS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 25TH, JULY,2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED :2ND AUGUST, 2016. OPM* COPY OF THE ORDER FORWARDED TO : THE ASSESSEE/ PCIT- INDORE/ CIT(A)-I, INDORE, AO/ D R- INDORE BENCH/ GUARD FILE BY ORDER ASSISTANT REGISTRAR OF ITAT, INDORE BENCH