Gondwana Enterprises, New Delhi V. ITO, New Delhi

ITA 4686/DEL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0122 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 16-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: KG SOMANI
• Keywords: Rejection of books of accounts; Business income; Opportunity of being heard
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C , NEW DELHI BEFORE SH. G. C. GUPTA , VICE PRESIDENT AND SH. N. K. SAINI, AM ITA NO. 4686 /DEL/201 1 : ASSTT. YEAR : 2008 - 09 GONDWANA ENTERPRISES, 3/15, ASAF ALI ROAD, NEW DELHI - 1100 02 VS INCOME TAX OFFICER, WARD 30(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A AFG2043D ASSESSEE BY : SH. K. G. SOMANI, CA REVENUE BY : SH. T. VASANTHAN , SR. DR DATE OF HEARING : 16 .0 4 .2015 DATE OF PRONOUNCEMENT : 30 .06 .2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.08.2011 OF LD. CIT(A) - XX V , NEW DELHI . 2 . FOLLOWING GROUND S HAVE BEEN RAISED IN THIS APPEAL : 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST THE LAW, FACTS AND CIRCUMSTANCES OF THE CASE AND MUST BE QUASHED. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION IN THE TRADING ACCOUNT OF RS. 13,57,633/ - . ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 2 3. THAT THE ADDITION TO THE TR ADING ACCOUNT, WITHOUT ASSIGNING ANY SIGNIFICANT DEFECT IN THE ACCOUNTS AND IGNORING ALL THE EVIDENCES PRODUCED BY THE ASSESSEE FIRM IS ABSOLUTELY UNJUSTIFIED AND UNCALLED FOR AND HENCE THE ADDITION MAY BE DELETED. 4. THAT THE COMMISSIONER OF INCOME TAX ( APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF GROSS PROFIT TO THE DECLARED SALE AND HENCE THE BASIS OF ARRIVING AT THE SALE FIGURES IS WITHOUT ANY BASIS, WHATSOEVER. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE D ISALLOWANCE OF RS. 81,468/ - , BEING THE TDS DEDUCTED FROM THE SUPPLIES MADE TO EAST CENTRAL RAILWAYS, TREATING AS CONTRACT, INSTEAD OF SUPPLIED TO RAILWAYS, AND THE ENTIRE SALE OF RS. 77,78,724/ - HAVE BEEN ACCOUNTED FOR BY THE ASSESSEE AS SALES, IN ITS BOOK S OF ACCOUNTS AND, THEREFORE, MERELY, BECAUSE TAX AT SOURCE HAS BEEN DEDUCTED BY RAILWAYS, IT DOES NOT BECOME ADDITIONAL SALE. 6. THAT THE DISALLOWANCE, OUT OF INTEREST PAID TO PARTNERS AMOUNTING TO RS. 65,540/ - IS UNCALLED FOR AND NOT IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT AND THEREFORE THE DISALLOWANCE BE DELETED. 7. THAT THE ENTIRE BOOKS OF ACCOUNTS, INCLUDING BILLS, EXCISE RECORDS, SALES TAX RECORDS, ETC. HAVE BEEN MADE AVAILABLE AND THE SO - CALLED DIFFERENCE IN THE SALES, ALLEGED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS IMAGINARY AND ON ACCOUNT OF THE FACT THAT HE HAS NEITHER UNDERSTOOD NOR ENQUIRED INTO THIS ALLEGED DIFFERENCE IN THE SALES. ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 3 8. THAT, WITHOUT PREJUDICE TO THE ABOVE, NO OPPORTUNITY, WHATSOEVER, HAS BEEN GI VEN BEFORE MAKING THE HUGE ADDITION AND, THEREFORE, THE ORDER IS AGAINST THE LAW OF JUSTICE AND NEEDS TO BE STRUCK DOWN. 3. DURING THE COURSE OF HEARING GROUND NO. 1 WAS NOT PRESSED AND G ROUND NOS. 7 & 8 ARE CO - RELATED TO OTHER GROUNDS, THEREFORE, THES E GROUNDS DO NOT REQUIRE ANY COMMENT ON OUR PART. 4. VIDE GROUND NOS. 2 TO 4 THE GRIEVANCE OF THE ASSESSEE RELATES TO THE CONFIRMATION OF TRADING ADDITION OF RS. 13,57,633/ - MADE BY THE AO. 5. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESS EE FILED E - RETURN OF INCOME ON 30.09.2008 DECLARING LOSS OF RS. 12,19,664/ - WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 06.06.2009. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO DURING THE COURS E OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD SHOWN TURNOVER OF RS. 2,29,42,643/ - SHOWING G.P RATE OF 5.69%. THE AO WORKED OUT THE VALUE OF SALE IN THE FOLLOWING MANNER: RS. 1,98,27,129/ - E.D. 30,72,713/ - E.C. 6,147/ - HEC 30,735 / - ADD. G.P. RATIO 5.69% 13,08,248/ - TOTAL RS. 2,43,00,296/ - ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 4 6 . THE AO CONSIDERED THE DIFFERENCE IN THE SALES SHOWN BY THE ASSESSEE AND WORKED OUT BY HIM AS UNDISCLOSED INCOME OF THE ASSESSEE AND MADE THE ADDITION OF RS. 13,57,633/ - (RS.2,43,00,296/ - - RS.2,29,42,663/ - ). 7 . BEING ARRIVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE AO MADE THE ADDITION ON THE BASIS OF WORKING OF GROSS PROFIT WHICH WAS 5.69% AND ALREADY INCLUDED IN THE TURNOVER OF THE ASSESSEE. IT WAS FURTHE R SUBMITTED THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WERE AUDITED, THEREFORE, THE ADDITION MADE BY THE AO WAS NOT JUSTIFIED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUBMI T THE FULL DETAILS OR EXPLANATION S AS TO WHY THERE WAS A DIFFERENCE IN THE SALES FIGURES WHICH WERE SUBMITTED BEFORE THE EXCISE AUTHORITIES AND WHY THERE WAS A DIFFERENT AND LOWER FIGURE IN THE P & L ACCOUNT . HE, THEREFORE, CONFIRMED THE ADDITION MADE BY T HE AO. 8 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND FURTHER SUBMITTED THAT THE GROSS PROFIT WAS ALREADY INCLUDED IN THE SALES AND THE AO ADDED THE SAME AGAIN TO WORK OUT THE I MAGINARY FIGURE OF THE SALE S . THEREFORE, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 5 9. IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE AO WORKED OUT THE FIGURES OF SALES BY ADDING THE GROSS PROFIT IN THE FIGURE OF THE SALES SHOWN BY THE ASSESSEE. HOWEVE R, HE HAD NOT REJECTED THE BOOKS OF ACCOUNTS AND ALSO ACCEPTED ALL OTHER COMPONENTS OF THE TRADING ACCOUNT I.E. THE OPENING & CLOSING STOCK AND THE PURCHASE S & GROSS PROFIT . HE ONLY DOUBTED THE SALES FIGURE WHICH WAS WORKED OUT BY HIM BY ADDING THE GROSS P ROFIT SEPARATELY IN THE SALES DISCLOSED BY THE ASSESSEE. IT IS AN ADMITTED FACT THAT THE SALES VALUE ALWAYS INCLUDES THE PROFIT WHICH CANNOT BE ADDED AGAIN FOR WORKING OUT THE FIGURE OF THE SALE. IN OUR OPINION THE AO WAS NOT JUSTIFIED WHILE ADDING THE GRO SS PROFIT AGAIN IN THE SALES ALREADY DISCLOSED BY THE ASSESSEE AND IN MAKING THE IMPUGNED ADDITION. IN THE PRESENT CASE, IT IS ALSO NOTICED THAT THE AO NEITHER REJECTED THE BOOKS OF ACCOUNTS BY INVOKI NG THE PROVISIONS OF SECTION 145 (3) OF THE ACT NOR POINT ED OUT ANY INFLATED PURCHASE OR SUPPRESSED SALES. HE ALSO DID NOT DOUBT THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED BY THE ASSESSEE, THEREFORE, THE IMPUGNED ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, THE SAME IS DELETED. ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 6 11. NEXT ISSUE VIDE GROUND NO. 5 RELATES TO THE CONFIRMATION OF DISALLOWANCE OF RS. 81,468/ - MADE BY THE AO ON ACCOUNT OF TDS DEDUCTED FROM THE SUPPLIES MADE. 12. THE F ACT S RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD CLAIMED CREDIT FOR TDS AMOUNTING TO RS. 81,468/ - BEING DEDUCTED BY EAST CENTRAL RAILWAY, HAJIPUR FROM THE CONTRACT RECEIPT OF RS. 77,78,724/ - . HE WAS OF THE VIEW THAT THE ASSESSEE HAD CLAIMED THE CRED IT OF TDS AMOUNTING TO RS. 81,468/ - WITHOUT OFFERING INCOME OF RS. 77,78,724/ - . HE, THEREFORE, DISALLOWED THE SAME AND THE ADDITION TO THE INCOME OF THE ASSESSEE . 13. BEING ARRIVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE A O WAS NOT JUSTIFIED TO MAKE THE DISALLOWANCE OF TDS CREDIT . IT WAS FURTHER SUBMITTED THAT THE RECEIPT FROM THE EAST CENTRAL RAILWAY, HAJIPUR WAS ALREADY INCLUDED IN THE SALES/TURNOVER OF THE ASSESSEE. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE FORM NO. 16A FURNISHED BY THE ASSESSEE REVEALED THAT THE GROSS RECEIPT OF RS. 77,78,724/ - , NET RECEIPT OF RS. 73,91,777/ - AND THE TDS CREDIT OF RS. 81,468/ - . HE FURTHER OBSERVED THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUBMIT THE FULL DETAILS REGARDING THE SALES AMOUNT OF RS. 2,29,42,663/ - AS CLAIMED IN THE PROFIT AND LOSS ACCOUNT AND HAD ALSO FAILED TO SUBMIT ANY DETAILS OR ANY RECONCILIATION TO ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 7 SHOW WHETHER THE SALES AMOUNTING TO RS. 2,29,42,663/ - ALSO INCLUDED THE RECEIPT OF RS. 77,78,724/ - AGAINST WHICH THE ASSESSEE HAD CLAIMED THE TDS CREDIT OF RS. 81,468/ - . ACCORDINGLY, THE DISALLOWANCE MADE BY THE AO WAS CONFIRMED. 14. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE GROSS RECEIPTS OF RS. 77,78,724/ - WERE ALREADY INCLUDED BY THE ASSESSEE IN THE TOTAL SALES AMOUNTING TO RS. 2,29,42,663/ - AND THE TDS AMOUNTING TO RS. 81,468/ - WAS DEDUCTED BY THE EAST CENTRAL RAILWAY, HAJ IPUR, T HEREFORE, THE CREDIT WAS CLAIMED FOR THE SAID AMOUNT ON ACCOUNT OF TAX DEDUCTED AT SOURCE. IT WAS FURTHER SUBMITTED THAT THE TDS WAS WRONGLY DEDUCTED BY THE RAILWAYS FROM THE SUPPLY BILLS (A REFERENCE WAS MADE TO PAGE NO 50 OF THE ASSESSEE S PAPER B OOK WHICH IS THE COPY OF CLARIFICATION DATED 23.08.2011 REGARDING DEDUCTION OF TAX ISSUED BY THE EAST CENTRAL RAILWAY, HAJIPUR). IT WAS ACCORDINGLY SUBMITTED THAT THE TDS WHICH WAS WRONGLY DEDUCTED BY THE RAILWAY WAS CLAIMED BY THE ASSESSEE BUT THERE WAS N O DIFFERENCE IN THE FIGURES OF THE SALES, A S SUCH THE DISALLOWANCE MADE BY THE AO WAS NOT JUSTIFIED AND THE LD. C IT(A) WRONGLY CONFIRMED THE SAME . 15. IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 8 16. WE HAVE CONSIDER ED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSEE COULD NOT FURNISH THE RELEVANT DETAILS BEFORE THE AUTHORITIES BELOW REGARDING THE INCLUSION OF THE REC EIPTS AMOUNTING TO RS. 77,78,724/ - IN THE TOTAL SALES OF RS. 2,29,42,663/ - . IT ALSO APPEARS THAT THE CERTIFICATE ISSUED BY THE EAST CENTRAL RAILWAY, HAJIPUR (COPY OF WHICH IS PLACED ON PAGE NO. 50 OF THE ASSESSEE S PAPER BOOK) RELATING TO WRONG DEDUCTION O F THE TDS WAS NOT CONSIDERED BY THE AO AS WELL AS BY THE LD. CIT(A). WE, THEREFORE, DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE OF THE AO TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW. WE ALSO DIRECT THE AO TO VERIFY AS TO WHETHER THE TOTAL RECEIPTS OF RS. 77,78,724/ - FROM THE RAILWAY HAD BEEN INCLUDED BY THE ASSESSEE IN THE GROSS SALES AND THE TDS WAS WRONGLY DEDUCTED , IF T HE AFORE SAID FACTS AS CLAIMED BY THE ASSESSEE WERE FOUND TO BE CORRECT THEN NO ADDITION IS CALLED FOR. ACCORDINGLY, THI S ISSUE IS SET ASIDE TO THE FILE OF THE AO. 17. THE LAST ISSUE VIDE GROUND NO. 6 RELATES TO THE DISALLOWANCE OUT OF INTEREST PAID TO THE PARTNERS. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT IN THE CAPITAL ACCOUNTS OF THE PARTNERS THERE WERE DEBITED BALANCE AND THE ASSESSEE HAD AVAILED VARIOUS CREDIT FACILITIES FROM BANKS & FINANCIAL INSTITUTIONS AND WAS PAYING INTEREST ON THOSE LOANS. THE AO WORKED OUT THE INTEREST AMOUNTING TO RS. 65,5 40/ - ON THE DEBIT BALANCE OF TH E ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 9 PARTNERS BY APPLYING THE RATE OF 15% AND MADE THE ADDITION OF RS. 65,540/ - . 18. BEING AGGRIEVED, T HE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD THE CREDIT BALANCE OF RS. 22,28,877/ - I N THE CAPITAL ACCOUNT IN THE BALANCE SHEET AND HAD SHOWN LOSS OF RS. 12,26,144/ - IN THE DEBIT SIDE OF THE BALANCE SHEET. IT WAS FURTHER SUBMITTED THAT THE PARTNERS HAD NOT OVERDRAWN ANY MONEY FROM THE FIRM. THE DETAILS OF THE CAPITAL ACCOU NT AT THE END OF THE YEAR UNDER CONSIDERATION AND AT THE END OF THE PREVIOUS YEAR WAS FURNISHED WHICH READ AS UNDER: SL. NO. NAME OF THE PARTNERS CLOSING BALANCE AS ON 31.03.2007 (AY 2007 - 08) (RS.) CLOSING BALANCE AS ON 31.03.2008 (AY 2008 - 09) (RS.) 1. SH. B L SOMANI 54, 447/ - 54,447/ - 2. SMT. SANTOSH SOMANI 1,42,143/ - 1,42,143/ - 3. SH. V S MAHESHWARY 5,04,217/ - 4,96,845/ - 4. MRS SARITA MAHESHWARY 14,05,054/ - 14,33,282/ - 5. MS SUDHA MAHESHWARY 1,02,159/ - 1,02,160/ - TOTAL 22,08,021/ - 22, 28,877/ - 19. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE DID NOT SUBMIT THE FULL CAPITAL ACCOUNT OF THE PARTNERS EVEN THOUGH THE SAME WAS SPECIFICALLY ASK ED , SO IT WAS DIFFICULT TO UNDERSTAND AS TO WHY THE ASSESSEE HAD NOT APPORTIONED THE LOSS TO THE PARTNERS OF THE FIRM AND HAD NOT REDUCED THE CREDIT BALANCE OF THE PARTNERS IN THE RESPECTIVE CAPITAL ACCOUNTS WHICH WOULD HAVE GIVEN A ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 10 CLEAR BALANCE SHEET ABOUT THE NET OF THE CAPITAL OF THE FIRM. HE FURTHER OB SERVED THAT THE ASSESSEE HAD DELIBERATELY SHOWN THE LOSS OF THE FIRM ON THE DEBIT SIDE OF THE BALANCE SHEET WITHOUT REDUCING/DISTURBING THE CAPITAL ACCOUNTS OF THE PARTNERS OF THE ASSESSEE FIRM . THE LD. CIT(A ) ALSO OBSERVED THAT WHEN THE EXPLANATION OF THE ASSESSEE WAS ASKED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS TO WHY THE LOSS WAS NOT APPORTIONED TO THE RESPECTIVE PARTNERS, THE ASSESSEE EXPLAINED THAT THE SAME HAD BEEN DONE DELIBERATELY TO GIVE A ROSY PICTURE OF THE BALANCE SHEET ABOUT THE CREDIT WORTHINESS OF THE ASSESSEE FIRM FOR THE PURPOSE OF TAKING LOANS FROM THE BANK. THE LD. CIT(A) HELD THAT THE ASSESSEE WAS NOT MAINTAINING THE BOOKS OF ACCOUNTS IN A PROPER MANNER AND THE SAME WERE NOT RELIABLE. HE ALSO OBSERVED THAT IT WAS APPARENT THAT IF THE ASSESSEE HAD APPORTIONED THE LOSS TO THE CAPITAL ACCOUNT OF THE RESPECTIVE PARTNERS, THERE WOULD HAVE BEEN DEBIT BALANCE IN THE CASE OF PARTNER S CAPITAL ACCOUNT AND AS SUCH THE AO WAS JUSTIFIED TO MAKE THE ADDITION. 20. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT PAID INTEREST TO ANYONE EXCEPT TO THE BANKS. THEREFORE, THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE PARTI CULARLY WHEN THE AMOUNT RAISED FROM THE BANK WAS UTILIZED FOR BUSINESS PURPOSES AND THERE WAS NO DEBIT BALANCE IN THE PARTNERS CAPITAL ACCOUNT. ACCORDINGLY, IT WAS SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTI FIED. ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 11 21. IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT APPORTIONED T HE LOSS IN THE CAPITAL ACCOUNT, AND THE AMOUNT SHOWN IN THE CREDIT OF THE PARTNERS WAS FABRIC ATED . IT WAS ALSO SUBMITTED THAT THE ASSESSEE ON THE ONE HAND RAISED THE LOAN FROM THE BANK , ON THE OTHER HAND AMOUN T WAS WITHDRAWN BY THE PARTNERS, THERE FORE DISALLOWANCE WAS RIGHTLY MADE BY THE AO AND THE LD. CIT(A) WAS FULLY JUSTIFIED IN CONFIRMING THE SAME . 22. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSEE HAD NOT ADJUSTED THE AMOUNT OF LOSS IN THE CAPITAL ACCOUNT OF THE PARTNERS , ONL Y ON THAT BASIS, THE AO CONSIDERED THAT THERE WAS DEBIT BALANCE IN THE PARTNERS CAPITAL ACCOUNT. IN THE PRESENT CASE, IT IS ALSO NOTICED THAT THE ASSESSEE WAS HAVING OPENING BALANCE IN THE PARTNERS CAPITAL ACCOUNT AT RS. 22,08,021/ - AND EVEN IF LOSS AMOUNT ING TO RS. 12,26,144/ - WAS TO BE ADJUSTED, THERE WAS NO DEBIT BALANCE IN THE PARTNERS CAPITAL ACCOUNT. IN THE INSTANT CASE, THE ASSESSEE CLAIMED THAT NO INTEREST WAS PAID TO ANYONE EXCEPT TO THE BANK FROM WHOM LOAN WAS RAISED FOR THE BUSINESS PURPOSES. HOW EVER, IT APPEARS THAT THE SAID FACT WAS NOT EXAMINED BY THE AO OR BY THE LD. CIT(A) . WE, THEREFORE, IN THE ABSENCE OF CLEAR FACT S ON RECORD, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE ALSO FACT TO THE FILE OF THE AO TO BE ITA NOS. 4686 /DEL /2011 GONDWANA ENTERPRISES 12 ADJUDICATED AFRESH IN ACCORDANCE WITH LAW, AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 23 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 30 /06 /2015 ) SD/ - SD/ - (G. C. GUPTA ) (N. K. SAINI) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 30 /06 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPON DENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR