ACIT, Rohtak V. M/s. Raksha Metals, Rohtak

ITA 4706/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65252 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMARDR
• Assessee Lawyers: KAPIL GOYAL
• Keywords: Unexplained cash credit; Additional evidence; Commercial expediency
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENC H BEFORE SHRI U.B.S. BEDI , JM & SHRI A.N. PAHUJA, AM ITA NO.4605/DEL/2011 ASSESSMENT YEAR:2008-09 RAKSHA METALS, 695-A, SANT NAGAR CIVIL ROAD, ROHTAK V/S . ACIT, ROHTAK CIRCLE, ROHTAK [PAN : AAHFR9414Q] (APPELLANT) (RESPONDENT) ITA NO.4706/DEL/2011 ASSESSMENT YEAR:2008-09 ACIT, ROHTAK CIRCLE, ROHTAK V/S . RAKSHA METALS, 695-A, SANT NAGAR CIVIL ROAD, ROHTAK (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI KAPIL GOYAL, AR REVENUE BY SH. B.R.R.KUMAR,DR DATE OF HEARING 01-08-2012 DATE OF PRONOUNCEMENT 09-08-2012 O R D E R A.N.PAHUJA:- THESE CROSS APPEALS- FILED ON 18.10.2011 BY THE ASS ESSEE AND ON 28.10.2011 BY THE REVENUE AGAINST AN ORDER DATED 29 -08-2011 OF THE LD. CIT(A)- ROHTAK, RAISE THE FOLLOWING GROUNDS:- I.T.A .NO. 4605/DEL/2011[ASSESSEE] 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST FACTS AND IS BAD IN LAW . 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING ADDITION OF ` . 22,59,972/- IN THE NAMES OF FOLLOWING CASH CREDITORS AS INCOME ON ACCOUNT OF ALLEGED UNEX PLAINED CASH CREDITS U/S 68 OF THE INCOME TAX ACT, WITHOUT ANY J USTIFICATION & COGENT REASON:- I.T.A .NOS..4706 & 4605/DEL/2011 2 (I) PARMILA DEVI 2,74,770/- (II) RAJIV SINGLA 1,65,000/- (III) RAJ SHREE 1,85,000/- (IV) DEEPAK KUMAR 1,96,308/- (V) KAMLA RANI 2,09,064/- (VI) SANGITA SINGLA 2,05,155/- (VII) NITIN SINGLA 6,59,675/- (VII) SAURABH GUPTA 1,90,000/- (IX) VINOD KUMAR 1,75,000/- 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN CONFIRMING THE ADDITION OF ` 2,47,410/- IN NOT CHARGING INTEREST ON INTEREST FREE ADVANCE TO THE FOLLOWING PERSONS:- NAME OF PERSON AMOUNT OF INTEREST (I) BHAWNA SINGLA 74,355/- (II) TINA SINGLA 48,000/- (III) VIKAS & SONS (HUF) 1,02, 415/- (IV) SUMIT SINGLA (HUF) 22,640/- 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE ADDITIONAL COMMISSIONER OF INCOME TAX IN CHARGING INTEREST U/S 234-B & 234-C. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR FORG O ANY GROUND OF APPEAL AT THE TIME OF ITS HEARING. I.T.A .NO.4706 /DEL/2011[REVENUE] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS ADMITTI NG THE ADDITIONAL EVIDENCES AT THE APPELLATE STAGE IN CONTRAVENTION T O THE PROVISIONS OF RULE 46A OF INCOME TAX RULES, 1962, WHERE THE ASSES SEE WAS AFFORDED FULL OPPORTUNITY TO DO SO TIME AND AGAIN A T THE TIME OF ASSESSMENT PROCEEDINGS AND THAT THE ASSESSEE FILED THE SAME BEFORE THE LD. CIT(A) AND NOT BEFORE THE AO, THE APPROPRIA TE FORUM TO CONTEST THE SAME. 2. ADVERTING FIRST TO SOLE GROUND IN THE APPEAL OF THE REVENUE AND GROUND NO.2 IN THE APPEAL OF THE ASSESSEE,FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT E-RETURN DECLARING INCOME OF ` 16,80,206/- FILED ON 27-09-2008 BY THE ASSESSEE, TRADING IN FLAT ROLLED STEELS, TIN PLATES, BLACK PL ATES AND ALLIED ITEMS ETC., AFTER BEING PROCESSED U/S 143 (1) OF THE INCOME-TAX ACT,1 961[HEREINAFTER REFERRED TO AS THE ACT] ,WAS SELECTED FOR SCRUTINY WITH THE SER VICE OF A NOTICE U/S 143(2) OF THE ACT ISSUED ON 21-09-2009. DURING THE COURSE OF PR OCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT ASSESSEE REFLECTE D UNSECURED LOANS OF ` I.T.A .NOS..4706 & 4605/DEL/2011 3 2,18,68,270/-. TO A QUERY BY THE AO, SEEKING DETAI LS OF UNSECURED LOANS AND CONFIRMATION OF THE PARTIES, THE ASSESSEE IS STATED TO HAVE SUBMITTED THE RELEVANT DETAILS.ON PERUSAL OF THESE DETAILS, THE AO FOUND T HAT BEFORE ISSUING CHEQUES TO THE ASSESSEE, THE RESPECTIVE PARTIES, THOUGH STATIO NED AT DIFFERENT PLACES, HAD OPENED THEIR BANK ACCOUNTS AT ROHTAK AND DEPOSITED CASH THEIR IN. TO A FURTHER QUERY BY THE AO REGARDING GENUINENESS OF THE TRANSA CTIONS AND CREDITWORTHINESS OF THE PARTIES, THE ASSESSEE MERELY STATED THAT THE SAID PARTIES HAD ADVANCED LOANS OUT OF THEIR OWN FUNDS. SINCE THE ASSESSEE D ID NOT ESTABLISH GENUINENESS OF THE LOANS AND CREDITWORTHINESS OF THE PARTIES AN D COPY OF ACCOUNT OPENING FORMS OBTAINED FROM UNION BANK OF INDIA, ROHTAK, RE VEALED THAT THE ACCOUNT HOLDERS RESIDED IN JIND WHILE THEY OPENED BANK ACCO UNTS AT ROHTAK AND MOST OF THE ACCOUNTS WERE OPENED IN THE SAME DAY AND INTROD UCER WAS ALSO COMMON IN THE MOST OF THE CASES, THE AO WAS OF THE OPINION TH AT THE ASSESSEE HAD INTRODUCED HIS OWN CASH IN THEIR BUSINESS THROUGH THESE PARTIES. SINCE THE ASSESSEE FAILED TO DISCHARGE THE ONUS LAID DOWN UPO N IT NOR PLACED BEFORE THE AO ANY DOCUMENTARY EVIDENCE ,ESTABLISHING THE CREDITWO RTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS, THE AO ADDED THE F OLLOWING AMOUNTS IN TERMS OF PROVISIONS OF THE SEC. 68 OF THE ACT :- SR. NO. NAME OF THE PARTY AMOUNT OF UNSECURED LOANS [IN ` ] 1. SMT. PRAMILA DEVI 2,74,770/- 2. SH. SANJEEV SINGLA 1,65,000/- 3. RAJ SHREE 1,85,000/- 4. DEEPAK KUMAR 1,96,308/- 5. KAMLA RANI 2,09,064/- 6. SANGITA SINGLA 2,05,155/- 7. NITIN SINGLA 6,59,675/- 8. DARSHNA GUPTA 7,00,000/- 9. DEEPTI GUPTA 1,00,000/- 10. KAMLESH DEVI 1,00,000/- 11. NEERAJ GARG 19,00,000/- 12. NARMDA DEVI 2,50,000/- 13. MADAN LAL 2,50,000/- 14. RAJINDER PARSHAD SINGLA 10,00,000/- 15. RAM BHAJ MITTAL 3,00,000/- 16. SANDEEP MITTAL 2,00,000/- 17. SANDEEP MITTAL, HUF 3,00,000/- 18. SHAVITRI DEVI 5,00,000/- 19. SOURABH SINGLA 1,90,000/- I.T.A .NOS..4706 & 4605/DEL/2011 4 20. SURESH GUPTA 5,00,000/- 21. VINOD KUMAR 1,75,000/- TOTAL 83,59,972/- 3. ON APPEAL, THE ASSESSEE CONTENDED THAT ALL THE C REDITORS WERE IT ASSESSEES AND OUT OF 21 CREDITORS, 9 CREDITORS AT S L. NO.1 TO 7,19 & 21 ABOVE OPENED THEIR BANK ACCOUNTS IN UNION BANK OF INDIA, ROHTAK WITH THEIR OWN FUNDS. SINCE THE ASSESSEE WAS IN NEED OF MONEY IN THOSE DA YS, HE ASKED THE CREDITORS TO ADVANCE MONEY THROUGH CHEQUES AT THE EARLIEST. THE ASSESSEE SUBMITTED THAT COPIES OF CONFIRMATIONS AND BANK STATEMENTS OF THESE 9 CREDITORS WERE FILED BEFORE THE AO. IT WAS FURTHER POINTED OUT THAT THE REMAINING 12 CREDITORS ADVANCED LOAN FROM THEIR BANK ACCOUNTS. THE ASSESSE E ALSO SUBMITTED CONFIRMATIONS ALONG WITH BANK STATEMENTS/IT RETURN OF THE SAID 12 CREDITORS AND FILED AN APPLICATION UNDER RULE 46A OF THE IT RULES ,1962 ON THE GROUND THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FUR NISHING THESE DOCUMENTS BEFORE THE AO. CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE AND REMANDED TH E MATTER TO THE AO FOR ENQUIRY REPORT. THE LD. CIT(A), AFTER ADMITTING ADD ITIONAL EVIDENCE AND HAVING REMAND REPORT DATED10/12.8.2011FROM THE AO AS ALSO COMMENTS OF THE ASSESSEE THEREON, CONCLUDED AS UNDER:- 4. THE AO IN THE REMAND REPORT DATED 10/12.8.2011 STATED THAT 9 CASH CREDITORS APPEARED BEFORE HIM AND THEIR STATEMENTS WERE RECORDED(2CASH CREDITORS ARE AGED 85 YEARS AND 1 CR EDITOR IS UNDER TREATMENT AND IS ON BED REST AND THEREFORE COULD NO T BE PRODUCED BY THE APPELLANT).THE AO AFTER VERIFYING THE AFFIDAVIT S, BANK STATEMENTS, IT RETURNS AND THE STATEMENTS TAKEN BY HIM OPINED T HAT THE SOURCES OF ALL THE 12 CASH CREDITORS HAVE BEEN DULY EXPLAIN ED. 5. I HAVE CONSIDERED THE ISSUE AND THE SUB MISSIONS MADE BY THE AR. AS REGARDS THE 12 CASH CREDITORS, THE A O IN THE REMAND REPORT GAVE A CLEAR FINDING THAT THE GENUINE NESS, IDENTITY AND CREDITWORTHINESS OF THE CREDITORS HAS BEEN ESTA BLISHED. IN VIEW OF THIS, THE ADDITION ON ACCOUNT OF THESE 12 C REDITORS IS DELETED. THIS LEAVES THE ADJUDICATION FOR THE REMA INING 9 CASH CREDITORS WHO HAVE OPENED THEIR BANK A/CS ON THE SA ME DAY IN ROHTAK WITH A COMMON INTRODUCER THOUGH THEY BELONGE D TO JIND. FROM THE BANK STATEMENTS, IT IS EVIDENT THAT THE ON LY TRANSACTIONS AFTER THE OPENING OF BANK A/CS BY A NOMINAL AMOUNT OF RS. 1,000/- ARE DEPOSIT OF CASH IDENTICAL TO THE LOAN AMOUNT AN D ISSUANCE OF CHEQUE TO THE APPELLANT ON THE SAME DAY. THE AR MA DE FEEBLE I.T.A .NOS..4706 & 4605/DEL/2011 5 ATTEMPT TO ARGUE THAT THESE 9 CASH CREDITORS ARE GE NUINE AND CREDITWORTHY. ON THE FACTS, AS HIGHLIGHTED ABOVE, IT IS EVIDENT THAT THESE ALLEGED 9 CREDITORS ARE PERSONS OF NO MEANS. THE CONTENTION OF THE AR THE AO SHOULD HAVE ISSUED SUMM ONS TO THE CREDITORS TO APPEAR BEFORE HIM IS NOT TENABLE AS TH E ONUS IS ON THE APPELLANT TO DISCHARGE THE BURDEN AND ONLY AT HIS REQUEST, THE AO COULD HAVE ISSUED SUMMONS AND THE AR COULD NOT PROD UCE ANY EVIDENCE THAT THE AO WAS REQUESTED BY THE APPELLANT TO ISSUE SUMMONS ON HIS BEHALF. IF THESE CASH CREDITS ARE G ENUINE, THE APPELLANT SHOULD HAVE UTILIZED THE REMAND PROCEEDIN GS BEFORE THE AO TO PRODUCE THESE CREDITORS. WHEN THE APPELLANT FILED ADDITIONAL EVIDENCE REGARDING THE REMAINING 12 CRED ITORS AND PRODUCED THEM BEFORE THE AO, IT IS NOT KNOWN AS TO WHY SUCH OPPORTUNITY WAS NOT AVAILED BY THE APPELLANT IN RES PECT OF THE ABOVE MENTIONED 9 CASH CREDITORS. IN VIEW OF THE A BOVE, THE ACTION OF THE AO IN ADDING THE LOANS FROM 9 CASH CR EDITORS (SR. NOS. 1 TO 7, 19 & 21) AMOUNTING TO RS. 22,59,972/- U/S 68 OF THE ACT IS UPHELD. THE GROUND OF APPEAL IS THEREFORE P ARTLY ALLOWED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LD. CIT(A), UPHOLDING ADDITION OF ` 22,59,972/- IN RELATION TO 9 CREDITORS AT SERIAL NOS. 1 TO 7, 19 & 21 OF THE CHART EXTRACTED IN PARA 2 OF THE IMPUGNED ORDER WHILE THE REVENUE IS IN APPEAL BEFORE US AGAINST FI NDINGS OF THE LD. CIT(A),DELETING THE ADDITION TO THE EXTENT OF .` 61 LACS. THE LD. DR WHILE CARRYING US THROUGH THE IMPUGNED ORDER SUBMITTED THAT THAT T HE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962. ON THE OTHER HAND, LD. AR POINTED OUT THAT THE REVE NUE HAS NOT OBJECTED TO THE DELETION OF ADDITION TO THE EXTENT OF ` . 61 LACS AND INSTEAD PREFERRED AN APPEAL ONLY ON THE GROUND OF VIOLATION OF RULE 46A OF INCO ME TAX RULES, 1962. SINCE THE LD. CIT(A) CONCLUDED THAT THE ASSESSEE WAS PREV ENTED BY SUFFICIENT CAUSE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FROM S UBMITTING THE RELEVANT EVIDENCE IN RESPECT OF 12 CREDITORS, THE LD. CIT(A) WAS JUSTIFIED IN ADMITTING ADDITIONAL EVIDENCE AND THEREAFTER, REMANDING THE MATTER FOR INQUIRY AND REPORT. ACCORDINGLY, THERE IS NO MERIT IN THE GROUND OF THE REVENUE ARGUED, THE LD. AR . AS REGARDS THE ASSESSEES APPEAL, THE LD. AR WHILE SUBMITTING AN AFFIDAVIT DATED 9.7.1992 OF SHRI ARUN KUMAR JAIN, ADVOCATE, AVERRIN G THAT THE DOCUMENTS MENTIONED IN THE PAPER BOOK PAGE NOS.1 TO 32 WERE FILED BEFORE THE AO AT THE TIME OF THE ASSESSMENT PROCEEDINGS. HERE IT MAY BE POINTED OUT THAT SHRI SHYAM LAL GUPTA & SH. RAGHAV GUPTA,ADVOCATES, APPEARED BE FORE THE AO ,AS I.T.A .NOS..4706 & 4605/DEL/2011 6 MENTIONED IN THE ASSESSMENT ORDER. THE LD. AR FURT HER SUBMITTED A COPY OF LETTER DATED 27-07-2012 FROM THE ACIT, ROHTAK THAT THE ASS ESSEE FILED A COPY OF BANK ACCOUNT STATEMENT AND RETURN RECEIPT IN THE NAMES O F FOLLOWING CASH CREDITORS AT THE TIME OF ASSESSMENT PROCEEDINGS FOR THE ASSESSME NT YEAR 2008-09:- S.NO. NAME OF THE CASH CREDITOR AMOUNT[IN ` ] 1. PRAMILA DEVI 2,74,770/- 2. SANJEEV SINGLA 1,65,000/- 3. RAJ SHREE 1,85,000/- 4. DEEPAK KUMAR 1,96,308/- 5. KAMLA RANI 2,09,064/- 6. SANGITA SINGLA 2,05,155/- 7. NITIN SINGLA 6,59,675/- 8. SAURAB SINGLA 1,90,000/- 9. VINOD KUMAR 1,75,000/- 5.. WHILE REFERRING TO COPY OF ORDER SHEET MAINTAI NED BY THE AO IN THE ASSESSMENT FOLDER AND DECISION DATED 25-11-201 OF T HE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT(A) VS. M/S AM AR CHAND & SONS, THE LD. AR ARGUED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF ` 22,59,972/- AND IT WOULD BE IN THE INTEREST OF JUST ICE IF MATTER IS RESTORED BACK FOR READJUDICATION. 6. ON THE OTHER HAND, THE LD. DR SUPPORTED THE FIND INGS OF THE LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE INDISPUTABLY, THE AMOUNT OF ` 83 ,59,972/- WAS RECEIVED FROM NEW CREDITORS BY WAY OF UNSECURED LOANS IN THE YEAR UNDER CONSIDERATION. DESPITE OPPORTUNITY ALLOWED BY THE AO ,ASKING THE ASSESSEE TO ESTABLISH THE GEN UINENESS OF FRESH CREDITORS AND THEIR CREDITWORTHINESS, THE ASSESSEE DID NOT FU RNISH SUFFICIENT MATERIAL TO THE SATISFACTION OF THE AO. AS A RESULT, ADDITION OF ` 83 ,59,972/- U/S 68 OF THE ACT WAS MADE . ON APPEAL, THE LD. CIT(A) ,AFTER ADMITTING A DDITIONAL EVIDENCE IN RESPECT OF 12 CREDITORS(OTHER THAN THOSE SPECIFIED AT 1 TO 7, 19 & 21 OF THE LIST EXTRACTED IN PARA 2 ABOVE) AND IN THE LIGHT OF REMAND REPORT DAT ED 10/12.8.2011 OF THE ACIT, DELETED THE ADDITION TO THE EXTENT OF ` 61 LACS. AS IS APPARENT FROM THE FINDINGS OF THE LD. CIT(A) AND THE AFORESAID REMAND REPORT DATE D 10/12.8.2011 OF THE ACIT, WE DO NOT FIND ANY VIOLATION OF RULE 46A OF THE IT RULES,1962 NOR THE REVENUE I.T.A .NOS..4706 & 4605/DEL/2011 7 PLACED BEFORE US ANY MATERIAL, SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW. IN THE ABSENCE OF ANY BASIS, WE DO NOT FIND ANY MERIT IN T HE GROUND OF APPEAL RAISED BY THE REVENUE. THEREFORE, GROUND RAISED BY THE REVENU E IS DISMISSED. 8 AS REGARDS GROUND NO.2 IN THE APPEAL OF THE A SSESSEE, THE LD. CIT(A) OBSERVED IN THE IMPUGNED ORDER THAT THE 9 CREDITORS SPECIFIED AT 1 TO 7, 19 & 21 OF THE LIST EXTRACTED IN PARA 2 ABOVE WERE PERSONS OF NO MEANS AND THE ASSESSEE FAILED TO DISCHARGE THE ONUS LAID DOWN UPON IT NOR PRODUCED THESE PERSONS BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS OR EVEN IN THE REMAND PROCEEDINGS. THE LD. AR NOW APPEARING BEFORE US CONTENDED THAT T HE ASSESSEE HAD PLACED THE RELEVANT DETAILS BEFORE THE AO AND THUS, HAD DISCHA RGED THE ONUS LAID DOWN UPON IT .BESIDES, THE LD. AR RELIED UPON DECISION IN M/S AMAR CHAND & SONS(SUPRA). ON THE BASIS OF DETAILS PLACED IN THE PAPERBOOK ,N OW FILED BEFORE US, POSITION, IN NUTSHELL, EMERGES AS UNDER: SL NO . NAME OF THE CREDITOR/ADDRES S IN THE CONFIRMATION INCOME SHOWN IN RETURN FOR AY 2008-09/ADDRESS IN THE RETURN DATE OF OPENING BANK ACCOUNT/AM OUNT/BANK A/C NO. DATE OF DEPOSIT OF CASH/AMOUN T DATE OF ISSUE OF CHEQUE TO THE ASSESSEE/ AMOUNT 1 PRAMILA DEVI H.NO. 453A, WARD NO.31, PRITI NAGAR, HISSAR 128000/ROHTAK ROAD,JIND 14.1.2008/ 1000/ 3092020100 74956 28.1.2008/ 180000 28.1.2008/ 180000 2 SANJEEV SINGLA 707/19,NEW HOUSING BOARD,PANIPAT 124100/CHAURI GALI,JIND 12.1.2008/ 1000/ 3092020100 74952 28.1.2008/ 165000 28.1.2008/ 165000 3 RAJ SHREE HOUSE NO. 509,GALI 125000/HOUSE NO. 509,JIND 12.1.2008/ 1000/ 3092020100 28.1.2008/ 185000 28.1.2008/ 185000 I.T.A .NOS..4706 & 4605/DEL/2011 8 NAINWALI,WARD 19,JIND 74953 4 DEEPAK KUMAR HOUSE NO. 1317,WARD NO. 19,GOHANA 105000/HANSI ROAD JIND 14.1.2008/ 1000/ 3092020100 74958 28.1.2008/ 175000 28.1.2008/ 175000 5 KAMLA RANI HOUSE NO. 1317,WARD NO. 19,JIND 128000/SARAFA GALI JIND 14.1.2008/ 1000/ 3092020100 74957 28.1.2008/ 165000 28.1.2008/ 165000 6 SANGITA SINGLA HOUSE NO. 707,WARD NO. 19,JIND 125000/HOUSE NO. 676/10,JIND 14.1.2008/ 1000/ 3092020100 74955 28.1.2008/ 150000 28.1.2008/ 150000 7 NITIN SINGLA C/O NARESH KUMAR,JIND 165070/NARAIN KARYANA JIND NA/NA/ 3092020100 72166 23.10.2007/ 190000 &17.1.2008/ 200000 23.10.2007 /190000 &17.1.200 8/200000 8 SAURABH SINGLA,SARAFAW ALI GALI,JIND ASS NARESH KUMAR,JIND NA/NA/ 3092020100 72165 23.10.2007/ 190000 23.10.2007 /190000 9 VINOD KUMAR 483A,PRITI NAGAR,HISAR 104230/ BHIWANI ROAD,JIND 1.4.2007/ 1000/ 3092020100 74951 28.1.2008/ 175000 28.1.2008/ 175000 8.1 AS IS EVIDENT FROM THE AFORESAID DETAILS, ALL THE AFORESAID PERSONS(EXCEPT AT SL NO.7 & 8 ABOVE , THOUGH RESIDING AT DIFFERENT PLACE S VIZ. PANIPAT, HISAR, GOHANA & JIND, ASSEMBLED AT ROHTAK AT THE SAME TIME AND DAY ,OPENED THEIR BANK ACCOUNTS ON THE SAME DAY IN THE SAME BRANCH OF UNIO N BANK OF INDIA AT ROHTAK AND HAVING CONSECUTIVE BANK A/C NOS. STARTING FROM 309202010074951 TO309202010074958. INTRODUCER OF THE BANK ACCOUNT WAS IN MOST OF THE CASES I.T.A .NOS..4706 & 4605/DEL/2011 9 WAS THE SAME. EACH OF THEM OPENED THE BANK A/C WITH ` `1000/- ON 12/14.12007 & THEN ON 28.1.2007 DEPOSITED CASH IN THEIR ACCOUN TS AND ISSUED CHEQUE TO THE ASSESSEE ON THE SAME DAY . APPARENTLY, THERE IS A PATTERN IN THE WAY BANK ACCOUNTS WERE OPENED AT ROHTAK BY THE PERSONS RESI DING IN DIFFERENT CITIES AND CASH WAS DEPOSITED ON THE SAME DAY IN THEIR ACCOUNT S AND CHEQUE ISSUED TO THE ASSESSEE ON SAME DAY I.E. 28.1.2007. THE PATTERN WA S COMMON TO EACH OF THEM; THE AMOUNTS WERE RECEIVED ON THE SAME DATE. IN THE LIGHT OF THESE FACTS, THE LD. AR PLEADED BEFORE US THAT THE ALL THE AFORESAID 9 CREDITORS ,BEING IT ASSESSES, ,FILING THEIR RETURNS WITH AO AT JIND, IT WAS FOR T HE AO AT JIND TO QUESTION THE SAID CREDITORS AS HELD BY THE HONBLE JURISDICTIONAL HI GH COURT IN M/S AMAR CHAND & SONS(SUPRA). AS IS APPARENT FROM THE FINDINGS OF T HE LD. CIT(A), THE LD. CIT(A) DID NOT ANALYSE THE AFORESAID DETAILS STATED TO HAVE BE EN FURNISHED BEFORE THE AO NOR RECORDED ANY FINDINGS ON THE CREDITWORTHINESS O F EACH OF THE AFORESAID NINE CREDITORS OR EVEN GENUINENESS OF THE TRANSACTIONS . THE LD. CIT(A) DID NOT ELABORATE BY ANALYZING FACTS OF EACH OF THE CREDITO R NOR REFERRED TO ANY MATERIAL AS TO HOW THE ONUS RELATING TO CREDITWORTHINESS OF THESE CREDITORS AND GENUINENESS OF THE TRANSACTIONS IS NOT ESTABLISHED BY THE ASSESSEE. IT IS WELL ESTABLISHED THAT ONUS IS ON THE ASSESSEE TO ESTAB LISH IDENTITY AND CREDITWORTHINESS OF THE CREDITORS APART FROM GENUIN ENESS OF THE TRANSACTIONS. MERELY ESTABLISHING THE IDENTITY OF THE CREDITOR IS NOT ENOUGH AS HELD IN SHANKAR INDUSTRIES VS. CIT (1978) 114 ITR 689 (CAL);C. KANT & CO. VS. CIT (1980) 126 ITR 63 (CAL);PRAKASH TEXTILE AGENCY VS. CIT (1980) 121 ITR 890 (CAL); ORIENTAL WIRE INDUSTRIES PVT. LTD. VS. CIT (1981) 131 ITR 68 5 (CAL);CIT VS UNITED COMMERCIAL & INDUSTRIAL CO. PVT. LTD. (1991) 187 IT R 596, 599 (CAL.); AND CIT VS. KORLAY TRADING CO. LTD. (CAL.) 232 ITR 820.BESIDES, MERE FILING OF CONFIRMATORY LETTERS DOES NOT DISCHARGE THE ONUS THAT LIES ON TH E ASSESSEE AS HELD IN BHARATI PVT. LTD. VS. CIT (1978 111 ITR 951 (CAL);CIT VS. W .J. WALKAR & CO. (1979) 117 ITR 690, 694 (CAL)AND CIT VS. UNITED COMMERCIAL & I NDUSTRIAL CO. (P) LTD. (1991) 187 ITR 596, 599 (CAL).MOREOVER, MERE FURNISHING OF THE PARTICULARS OR PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN I T MAKE A NON-GENUINE TRANSACTION GENUINE AS CONCLUDED IN CIT VS. PRECISI ON FINANCE CO. PVT. LTD. (1994) 208 ITR 465, 470, 471 (CAL); NIZAM WOOL AGEN CY VS.CIT (1992) 193 ITR 318, 320 (ALL)AND CIT VS. UNITED COMMERCIAL & INDUS TRIAL CO. (P) LTD. 187 ITR I.T.A .NOS..4706 & 4605/DEL/2011 10 596 (CAL.). HONBLE APEX COURT IN CIT VS. P. MOHAN AKALA,291 ITR 278(SC) OBSERVED THAT A BARE READING OF SECTION 68 SUGGESTS THAT THER E HAS TO BE CREDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY AN ASSESSEE; SUCH CREDIT HA S TO BE OF A SUM DURING THE PREVIOUS YEAR; AND THE ASSESSEES OFFER NO EXPLANATI ON ABOUT THE NATURE AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS; OR THE EX PLANATION OFFERED BY THE ASSESSEES IN THE OPINION OF THE ASSESSING OFFICER I S NOT SATISFACTORY, IT IS ONLY THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME-T AX AS THE INCOME OF THE ASSESSEES OF THAT PREVIOUS YEAR. THE EXPRESSION 'TH E ASSESSEES OFFER NO EXPLANATION' MEANS WHERE THE ASSESSEES OFFER NO PRO PER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CR EDITED IN THE BOOKS MAINTAINED BY THE ASSESSEES. IT IS TRUE THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESS EES AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATE RIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF T HE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. 8.2 HONBLE DELHI HIGH COURT IN INDUS VALLEY PR OMOTERS LTD. VS. CIT,305 ITR 202(DEL.) HELD AS UNDER: IT IS WELL-SETTLED THAT THE ASSESSEE MUST DISCHARG E THE BURDEN OF PROVING THE IDENTITY OF THE CREDITORS AND ALSO TO GIVE THE SOUR CE OF THE DEPOSITS. IN OTHER WORDS, THE CREDITWORTHINESS OF THE DEPOSITORS MUST BE ESTABLISHED TO THE SATISFACTION OF THE ASSESSING OFFICER. WHERE THERE IS AN UNEXPLAINED CASH CREDIT, IT IS OPEN TO THE ASSESSING OFFICER TO HOLD THAT IT IS INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE ASSESSING OFFICER TO SHO W THAT INCOME IN QUESTION COMES FROM ANY PARTICULAR SOURCE. 8.3 HONBLE JURISDICTIONAL HIGH COURT IN BLOWELL AUTO (P) LIMITED VS. CIT , 219 CTR 185(P&H) OBSERVED THAT IT IS FOR THE ASSESSEE TO PROVE NOT ONLY THE IDENTITY OF THE CREDITOR, BUT THE CAPACITY OF THE CREDITOR T O ADVANCE THE MONEY AND ALSO THE GENUINENESS OF THE TRANSACTION. IN ANOTHER DECISION IN AMAR CHAND & SONS(SUPRA),HONBLE HIGH COURT CONCLUDED AS UNDER :- WE FEEL THAT THE SUBMISSION IS ABSOLUTELY UNTENABLE AS THE ASSESSEE CANNOT BE ASKED TO SHOW CREDIT WORTHINESS OF HIS CREDITOR AND THE ASSESSING OFFICER OF THAT CREDITOR CAN ADD THE SAID AMOUNT TO THE INCOME OF THAT CREDITOR IF HE IS NOT SATISFIED BY THE EXPLANATION GIVEN AND IT IS NOT POSSIBLE FOR THE ASSESSEE TO PR OVE THE SOURCES OF THE CREDITORS. IT HAS ALSO BEEN RECORDED AS A MATT ER OF FACT THAT THE AMOUNTS HAVE BEEN RECEIVED BY WAY OF BANKING CHANNE L AND, THEREFORE, IT WAS FOR THE ASSESSING OFFICERS OF THE SAID CREDITORS TO QUESTION THE SAID CREDITORS, WHO WERE INCOME TAX AS SESSES AND IN I.T.A .NOS..4706 & 4605/DEL/2011 11 THE ABSENCE OF ANY EVIDENCE, THE ASSESSING OFFICER COULD NOT HAVE TREATED THE SAID AMOUNT AS BELONGING TO THE ASSESSE E FROM HIS UNDISCLOSED SOURCES. 9. IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS AND CONSIDERING THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE BEFORE US, A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT THE ORDER HAS BEEN PASS ED BY THE LD. CIT(A) ,WITHOUT EVEN ANALYZING AS TO HOW THE CREDITWORTHINESS OF EA CH OF THE AFORESAID NINE CREDITORS OR GENUINENESS OF THE TRANSACTIONS WITH THEM, IS ESTABLISHED OR OTHERWISE. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. HONBLE DELHI HIGH COURT IN THEIR DECISION IN VODAFONE ESSAR LTD. VS. DRP,196 TAXMAN423(DELHI) HE LD THAT WHEN A QUASI JUDICIAL AUTHORITY DEALS WITH A LIS, IT IS OBLIGATO RY ON ITS PART TO ASCRIBE COGENT AND GERMANE REASONS AS THE SAME IS THE HEART AND SOUL O F THE MATTER AND FURTHER, THE SAME ALSO FACILITATES APPRECIATION WHEN THE ORDER I S CALLED IN QUESTION BEFORE THE SUPERIOR FORUM. THE REQUIREMENT OF RECORDING OF REA SONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CO NCEPT OF FAIR PROCEDURE. THE REQUIREMENT OF RECORDING OF REASONS BY THE QUASI-JU DICIAL AUTHORITIES IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RUL E OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION-MAKING PROCESS. WE MA Y REITERATE THAT A DECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS . STATE OF PUNJAB,(1995)1SCC 760(SC)]. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. CIT(A) DID NOT HAVE THE BENEFIT OF AFORESAID DECISION IN AMAR CHAND & S ONS(SUPRA), WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR DECIDING THE ISSUE RAISED IN THE GROUND N.O 2 IN THE APPEAL OF THE ASSESSEE AFRESH IN ACCORDANCE WITH LAW IN THE LIGH T OF OUR AFORESAID OBSERVATIONS AND VARIOUS JUDICIAL PRONOUNCEMENTS, INCLUDING THOS E REFERRED TO ABOVE AND OF COURSE, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO B OTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A ) SHALL PASS A SPEAKING ORDER, BRINGING OUT CLEARLY AS TO HOW CREDITWORTHINESS OF EACH OF THE NINE CREDITORS AND GENUINENESS OF THE TRANSACTIONS WITH THEM, IS ESTAB LISHED OR OTHERWISE. WITH THESE OBSERVATIONS, GROUND NO. 2 IN THE APPEAL OF THE ASSESSEE IS DISPOSED OF. I.T.A .NOS..4706 & 4605/DEL/2011 12 10. GROUND NO. 3 IN THE APPEAL OF THE ASSESSEE RELATES TO DISALLOWANCE OF ` 2,74,410/- ON ACCOUNT OF INTEREST IN RELATION TO I NTEREST FREE ADVANCES TO MS. BHAWNA SINGLA,TINA SINGLA, VIKAS & SONS,HUF, SUMIT SINGLA,HUF. THE AO NOTICED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE ADVANCED LOAN OF ` 63,02,287/- TO DIFFERENT PARTIES MENTIONED IN SCHED ULE VII OF THE BALANCESHEET, WITHOUT CHARGING ANY INTEREST WH ILE IT BORROWED FUNDS OF ` 7,95,91,775/- BY WAY OF SECURED LOANS AND ` 2,18,68,270/- AS UNSECURED LOANS AND PAID INTEREST OF ` 96,04,140/- THEREON..SINCE THE ASSESSEE DIVERTED IN TEREST BEARING FUNDS TOWARDS INTEREST FREE ADVANCES , THE AO DISALLOWED AN AMOUNT OF ` 7,56,274 @12% ON THE AMOUNT OF ` 63,02,287/- TOWARDS INTEREST FREE ADVANCES. 11. ON APPEAL, THE ASSESSEE CONTENDED THAT ADVANC ES TO PERSONS AT SL. NO. 3,4,6 & 11 OF THE CHART REPRODUCED IN PARA 7 OF THE IMPUGNED ORDER WERE FOR PURCHASE OF OFFICE/GODOWN AT MUMBAI AND IN RESPECT OF ADVANCE OF ` 1,27,712/- AT SL. NO.2, INTEREST OF ` 1,42,377/- HAD BEEN CHARGED. THE INTEREST FREE ADVA NCES TO PERSONS AT SL. NO.1,7,8 & 10 WERE TO THE FAMILY MEM BERS OF PARTNERS OF THE FIRM WHILE INTEREST HAD BEEN CHARGED FROM PARTY AT SL. N O.5. ADVANCES OF ` 22,48,519/- WERE TO SUPPLIERS WHILE ADVANCE TO PERSON AT SL. NO . 9 WAS FOR THE PURPOSE OF BOOKING ORDERS. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO ONLY IN RELATION TO ADVANCES TO PERSONS AT SL. NOS. 1,7,8 & 10 I.E. FAMILY MEMBERS OF THE PARTNERS AND DELETED THE REMAINING DISALLOWANCE. 12. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAIN ST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSE E DID NOT MAKE ANY ARGUMENT BEFORE US. BUT IN THE WRITTEN SUBMISSIONS IT IS MEN TIONED THAT THE ADDL. CIT DISALLOWED INTEREST IN RELATION TO INTEREST FREE AD VANCES TO THE AFORESAID PERSONS TO THE EXTENT OF ` 2,47,410/- WHILE ACCORDING TO THEIR CALCULATION, IN TEREST AMOUNTED TO ` 1,17,070/-.IT WAS FURTHER SUBMITTED THAT THE ASSESS EE RECEIVED INTEREST FREE LOANS TO THE EXTENT OF ` 30 LACS DURING THE YEAR AND WHEN INTEREST FREE FUND S WERE UTILIZED IN PROVIDING INTEREST FREE ADVANCES , NO I NTEREST COULD BE DISALLOWED. ON THE OTHER HAND, THE LD. DR SUPPORTED THE FINDINGS I N THE IMPUGNED ORDER. I.T.A .NOS..4706 & 4605/DEL/2011 13 13. WE HAVE GONE THROUGH THE FACTS AND CIRCUMST ANCES OF THE CASE AS ALSO THE WRITTEN SUBMISSIONS ON BEHALF OF THE ASSESSEE. THE ISSUE BEFORE US RELATES TO DISALLOWANCE OF INTEREST @ 12% ON ADVANCES TO RELA TIONS OF THE PARTNERS SPECIFIED AT SL. NOS. 1,7,8 & 10 OF THE CHART EXTRA CTED IN PARA 7 OF THE IMPUGNED ORDER, THE ASSESSEE HAVING FAILED TO ESTABLISH THAT THE INTEREST FREE ADVANCES WERE GIVEN OUT OF INTEREST FREE BORROWINGS. THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO ON THE GROUND THAT THE ASSESSEE FAILED TO D EMONSTRATE THAT THE FUNDS GIVEN TO THE RELATIVES OF PARTNERS WERE FOR BUSINE SS PURPOSES OR WERE FROM THE NON-INTEREST BEARING FUNDS AVAILABLE WITH THEM NOR SUBMITTED ANY CASH FLOW STATEMENT BEFORE HIM. EVEN BEFORE US, THOUGH IT IS STATED IN THE WRITTEN SUBMISSIONS THAT THE ASSESSEE RECEIVED INTEREST FR EE LOANS TO THE EXTENT OF 30 LACS DURING THE YEAR AND UTILIZED TOWARDS INTEREST FREE ADVANCES, NOT AN IOTA OF EVIDENCE HAS BEEN PLACED BEFORE US IN SUPPORT OF TH IS PLEA NOR SUCH A PLEA SEEMS TO HAVE BEEN MADE BEFORE THE LOWER AUTHORITIE S. THE LD. AR DID NOT EVEN FURNISH THE DATES OF SUCH ADVANCES, WHAT TO TALK OF NEXUS BETWEEN BORROWINGS AND ADVANCES. AS IS APPARENT FROM THE IMPUGNED OR DER, BEFORE THE AO OR THE LD. CIT(A), THE ASSESSEE DID NOT PLACE ANY EVIDENCE AS TO HOW THE FUNDS BORROWED BY IT HAD BEEN UTILIZED AND WHAT WAS THE C OMMERCIAL EXPEDIENCY IN SUCH BORROWINGS. IN THIS CONNECTION, THE RELEVANT PROVISIONS OF SECTION 36(1)(III) OF THE ACT PROVIDE FOR DEDUCTION OF INTEREST ON THE BORROWED FUNDS RAISED FOR BUSINESS PURPOSES. ONCE THE ASSESSEE CLAIMS ANY SUC H DEDUCTION, THE ONUS IS ON THE ASSESSEE TO SATISFY THE AO THAT LOANS RAIS ED BY THE ASSESSEE WERE USED FOR BUSINESS PURPOSES. IF IN THE PROCESS OF EXAMINA TION OF CLAIM FOR SUCH A DEDUCTION, IT TRANSPIRES THAT THE ASSESSEE HAD DIVE RTED CERTAIN FUNDS TO RELATIVES OF THE PARTNERS, WITHOUT ANY INTEREST, THERE WOUL D BE A VERY HEAVY ONUS ON THE ASSESSEE TO BE DISCHARGED BEFORE THE AO TO THE EFFE CT THAT IN SPITE OF PENDING LOANS ON WHICH THE ASSESSEE WAS INCURRING THE LIAB ILITY TO PAY INTEREST, STILL THERE WAS JUSTIFICATION FOR DIVERSION OF FUNDS TO RELATI VES OR SISTER CONCERNS FOR NON- BUSINESS PURPOSES . IN MADHAV PRASAD JATIA V. CIT [ 1979] 118 ITR 200 (SC) HONBLE SUPREME COURT OBSERVED THAT UNDER S. 10(2)( III) OF THE 1922 ACT( NOW SEC. 36(1)(III) OF THE 1961 ACT), THREE CONDITIONS WERE REQUIRED TO BE SATISFIED IN ORDER TO ENABLE THE ASSESSEE TO CLAIM A DEDUCTION I N RESPECT OF INTEREST ON BORROWED CAPITAL, NAMELY, (A) THAT MONEY (CAPITAL) MUST HAVE BEEN BORROWED BY I.T.A .NOS..4706 & 4605/DEL/2011 14 THE ASSESSEE, (B) THAT IT MUST HAVE BEEN BORROWED F OR THE PURPOSE OF BUSINESS, AND (C) THAT THE ASSESSEE MUST HAVE PAID INTEREST O N THE SAID AMOUNT AND CLAIMED IT AS A DEDUCTION. IT WAS ALSO HELD THAT TH E EXPRESSION 'FOR THE PURPOSE OF BUSINESS' OCCURRING UNDER THE PROVISION IS WIDER IN SCOPE THAN THE EXPRESSION 'FOR THE PURPOSE OF EARNING INCOME, PROFITS OR GAINS'. I N THE CASE UNDER CONSIDERATION, THERE IS NOTHING IN THE ORDER OF LOWER AUTHORITIES TO SUGGEST THAT THE ASSESSEE DISCHARGED THE ONUS LAID DOWN UPON THEM THAT BORR OWED FUNDS HAD INDEED BEEN UTILIZED FOR THE PURPOSE OF ITS BUSINESS SO AS TO E NTITLE IT TO CLAIM DEDUCTION U/S 36(1)(III) OF THE ACT. IN CASE THE ASSESSEE HAD SOM E SURPLUS AMOUNT WHICH, ACCORDING TO HIM, COULD NOT BE REPAID PREMATURELY T O ITS CREDITORS, STILL THE SAME WERE EITHER REQUIRED TO BE CIRCULATED AND UTILISED FOR THE PURPOSE OF BUSINESS OR TO BE INVESTED IN A MANNER IN WHICH IT GENERATES INCOM E AND NOT THAT THESE WERE DIVERTED TOWARDS RELATIVES OF PARTNERS FREE OF INT EREST . THIS WOULD RESULT IN NOT PRESENTING THE TRUE AND CORRECT PICTURE OF THE ACCO UNTS OF THE ASSESSEE AS AT THE COST BEING INCURRED BY THE ASSESSEE, THE RELATIVES OF PARTNERS WOULD BE ENJOYING THE BENEFITS THEREOF. IT CANNOT BE HELD THAT THE F UNDS TO THE EXTENT DIVERTED TO RELATIVES OF PARTNERS WITHOUT CHARGING ANY INTEREST , WERE REQUIRED BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS AND LOANS TO THAT E XTENT WERE REQUIRED TO BE RAISED. UNLESS THE INTEREST FREE LOAN GOES TO ADVAN CE BUSINESS INTEREST OF THE ASSESSEE, THERE CANNOT BE ANY COMMERCIAL EXPEDIENCY . 13.1 IN THE INSTANT CASE, THE ASSESSEE MISERAB LY FAILED TO ESTABLISH THAT THE INTEREST FREE ADVANCES WERE GIVEN OUT OF INTEREST F REE BORROWINGS NOR EVEN ESTABLISHED ANY COMMERCIAL EXPEDIENCY IN ADVANCING FUNDS WHILE EVEN NO CASH FLOW STATEMENT WAS PLACED BEFORE LOWER AUTHORITIES AND EVEN BEFORE US. THERE IS NOTHING TO SUGGEST THAT INTEREST FREE LOANS OBTAINE D BY THE ASSESSEE WERE UTILIZED IN ADVANCING INTEREST FREE FUNDS TO THE RELATIVES O F THE PARTNERS NOR EVEN DATE OF SUCH ADVANCES IS EVIDENT.. 14. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. AR DID NOT PLACE ANY MATERIAL BEFORE US, CONTROVERTING THE AFORESAID FIN DINGS OF THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW, WE ARE NOT INCL INED TO INTERFERE. HOWEVER, THE AO SHALL VERIFY AS TO WHETHER WORKING OF DISALLOW ANCE IS CORRECT, THE LD. AR I.T.A .NOS..4706 & 4605/DEL/2011 15 HAVING SUBMITTED BEFORE US THAT DISALLOWANCE ACTUAL LY WORKED OUT TO ` 1,17,070/- AS AGAINST DISALLOWANCE OF ` 2,47,410/- MADE BY THE AO IN RELATION TO INTEREST F REE ADVANCES TO THE FOUR RELATIVES OF PARTNERS. SUBJECT TO THESE DIRECTIONS, GROUND NO. 3 IN THE APPEAL OF THE ASSESSEE IS DISMISSED. 15. GROUND NO. 4 IN THE APPEAL OF THE ASSESSEE RELATES TO LEVY OF INTEREST U/S 234 B & 234C OF THE ACT.. SINCE THE LD. AR ON BEHAL F OF THE ASSESSEE DID NOT MAKE ANY SUBMISSIONS ON THIS GROUND WHILE T HE LEVY OF INTEREST U/S 234B & 234C OF THE ACT BEING MANDATO RY [COMMISSIONER OF INCOME TAX. VS ANJUM M. H. GHASWAL A AND OTHERS,252 ITR 1(SC), AFFIRMED BY HON'BLE APEX COUR T IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449(S C) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564(SC)], THIS GROUND IS DISMISSED. 16. GROUND NO. 1 IN THE APPEAL OF THE ASSESSEE BEIN G GENERAL IN NATURE NOR ANY SPECIFIC SUBMISSIONS HAVING BEEN MADE BEFORE US ON THIS GROUND ,DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITION AL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO. 5 IN THE IR APPEAL, ACCORDINGLY, BOTH THESE GROUNDS ARE DISMISSED.. 17. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US . 18. IN THE RESULT, APPEAL OF THE REVENUE IS DISM ISSED WHILE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . SD/- SD/- (U.B.S.BEDI) (A.N.PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER COPY FORWARDED TO: 1. ASSESSEE I.T.A .NOS..4706 & 4605/DEL/2011 16 2. ACIT ROHTAK CIRCILE,ROHTAK 3. CIT,ROHTAK 4. CIT(APPEALS),ROHTAK 5. DR:F BENCH, ITAT,NEW DELHI 6. GUARD FILE ASSISTANT REGISTRAR ITAT, NEW DELHI