Hukam Chand Gupta Fabrics Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4633/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0225 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI S HAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO.4633/DEL/2010 ASSESSMENT YEAR : 2006-07 HUKAM CHAND CHAND FABRICS VS. D.C.I.T., PVT. LTD., 1589, OLD MARWARI CIRCLE 12(1), KATRA, NAI SARAK, DELHI-6 NEW DELHI PAN NO.AABCH 5437 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.S. SINGHVI, CA RESPONDENT BY : SMT. MONA MOHANTY , SR. DR. ORDER PER SHAMIM YAHYA, AM: THIS IS AN ASSESSEE'S APPEAL DIRECTED AGAINST THE O RDER OF LD CIT(A)-XI, NEW DELHI DATED 24.08.2010 FOR ASSESSMEN T YEAR 2006-07. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS THAT TH E LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE CLAIM OF BAD DEB T. 3. IN THIS CASE, THE ASSESSING OFFICER NOTED THAT A SSESSEE HAD CLAIMED BAD DEBT AMOUNTING TO RS.2,33,388/- DURING THE YEAR. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT FU RNISHED ANY 4633-201 0-HCGF 2 EVIDENCE TO SHOW WHEN THIS AMOUNT WAS OFFERED AS IN COME AND ALSO NOT FURNISHED EVIDENCE WHETHER THIS AMOUNT HAS BEEN ACT UALLY WRITTEN OFF IN THE BOOKS OF ACCOUNT. 4. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) CONFI RMED THE ADDITION HOLDING THAT ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM IN ABSENCE OF EVIDENCE. 5. AGAINST THIS, ASSESSEE IS IN APPEAL BEFORE US. LEARNED COUNSEL FOR THE ASSESSEE PRODUCED BEFORE US LEDGER ACCOUNTS OF THE SAID PARTY WHERE SALE ENTRIES HAVE BEEN MADE. HE ALSO SHOWED THE PROFIT AND LOSS AMOUNT WHERE THE AMOUNT HAS BEEN WRITTEN OFF. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS IN VIEW OF THE FRESH EVIDENCES BEING SUBMITTED. IN OUR CONSIDERED OPINI ON, THE MATTER NEEDS TO BE REMITTED TO THE FILE OF THE ASSESSING O FFICER TO EXAMINE THEM AND ADJUDICATE ACCORDINGLY. HENCE, THE ISSUE STAND S REMITTED TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY THAT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 7. THE NEXT ISSUE RAISED IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION ON ACCOUNT OF NOTIONAL INTE REST IN RESPECT OF LOAN OF `3 LAC. ON THIS ACCOUNT, ASSESSING OFFICER NOTE D THAT ASSESSEE HAS DEBITED AN AMOUNT OF `29,66,681/- BEING UNSECURED L OANS OBTAINED BY 4633-201 0-HCGF 3 THE ASSESSEE COMPANY @15%. ASSESSING OFFICER FURTH ER FOUND THAT ASSESSEE HAS GIVEN INTEREST FREE LOANS TO SHRI N.C. SHARMA AMOUNTING TO ` 3 LAC. THE ASSESSEE PAID INTEREST ON IT, WHICH WORKS OUT TO `45,000/- AND ADDED THE SAME TO THE ASSESSEE S INCOME AND THE LEARNED CIT(A) CONFIRMED THE ADDITION. AGAINST THIS ORDER, ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASS ESSEE HAD A SHARE CAPITAL AMOUNT OF `19,72,500/- RESERVED AND SURPLU S AMOUNT OF `26,71,449/-. HE FURTHER SUBMITTED THAT ASSESSEE H AD A SALE OF `27,38,76,150/- AND PROFIT AND LOSS ACCOUNT, BALANC E OF `16,71,449/- . HENCE, LEARNED COUNSEL ARGUED THAT ASSESSEE HAD ADEQUATE NON- INTEREST BEARING FUNDS OF ITS OWN TO GRANT THE SAID LOAN. HE FURTHER ARGUED THAT ASSESSING OFFICER HAS NOT BEEN ABLE TO PROVE NEXUS BETWEEN INTEREST BEARING FUNDS AND THE LOAN GRANTED . LEARNED DR COULD NOT CONTROVERT THE SUBMISSIONS OF THE ASSESSE E. 9. UPON CAREFUL CONSIDERATION, WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE ASSESSEES COUNSEL THAT ASSESSEE HAS ADEQUATE NON- INTEREST BEARING FUNDS AND ASSESSING OFFICER HAS NO T BEEN ABLE TO PROVE ANY NEXUS BETWEEN THE INTEREST BEARING FUNDS AND TH E LOAN GRANTED OF `3 LAC. IN RESULT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 4633-201 0-HCGF 4 10. IN THE RESULT, THIS APPEAL OF THE ASSESSEE STAN DS ALLOWED. PRONOUNCED IN OPEN COURT ON 11.03.2011 SOON AFTER T HE CONCLUSION OF THE HEARING OF THE APPEAL. SD/- SD/- ( I.P. BANSAL ) ( SHAMIM YAH YA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.11.03.2011. NS COPY FORWARDED TO:- 1. HUKAM CHAND GUPTA FABRICS PVT. LTD., 1589, OLD MARW ARI KATRA, NAI SARAK, DELHI-110006 2. DCIT, CIRCLE 12(1), NEW DELHI 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).