MECORDS INDIA LTD., MUMBAI V. ITO - 14(2)(3), MUMBAI

ITA 4812/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3165 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 10-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAKSHMI NAYAKLD
• Assessee Lawyers: I P MEHTALD
• Keywords: FORM 26AS
• Section: 143(3)

Judgement Text

ITA NO.4812/MUM/2018 ASSESSMENT YEAR :2014-15 MECORDS INDIA LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4812/MUM/2018 ( / ASSESSMENT YEAR : 2014-15 ) MECORDS INDIA LTD. 802, SWASTIK CHAMBERS SION-TROMBAY ROAD MUMBAI. / VS. INCOME TAX OFFICER - 1 4 ( 2 ) (3) ROOM NO.461 AAYKAR BHAVAN M.K. ROAD, MUMBAI. %& ./ ./PAN/GIR NO. AAACM-3324-N ( &( /APPELLANT ) : ( )*&( / RESPONDENT ) ASSESSEE BY : SHRI I.P. MEHTA-LD.AR REVENUE BY : MS. JYOTI LAKSHMI NAYAK-LD. DR / DATE OF HEARING : 05/02/2020 / DATE OF PRONOUNCEMENT : 12/03/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2014-15 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-22, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-22/IT-10696/2016-17 DATED 08/05/ 2018 ON FOLLOWING GROUNDS OF APPEAL: - ITA NO.4812/MUM/2018 ASSESSMENT YEAR :2014-15 MECORDS INDIA LIMITED 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ACTION OF A.O PAR TLY IN DISALLOWING INTEREST EXPENSE TO THE EXTENT OF RS.7,08,213/- THAT TOO WITHOUT APP RECIATING FACTS AND CIRCUMSTANCES OF THE CASE FULLY AND PROPERLY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ACTION OF A.O IN RESPECT OF ADDITION MADE ON ACCOUNT OF DIFFERENCE IN INTEREST INCOME SHO WN IN PROFIT LOSS ACCOUNT & 26 AS OF THE ASSESSEE AMOUNTING TO RS.2,39,192/- AS UNDI SCLOSED INCOME THAT TOO WITHOUT APPRECIATING FACTS AND CIRCUMSTANCES OF THE CASE F ULLY AND PROPERLY. 2. WE HAVE CAREFULLY HEARD THE SUBMISSIONS MADE BY BOTH REPRESENTATIVES. WE HAVE ALSO PERUSED RELEVANT MATE RIAL ON RECORD. OUR ADJUDICATION TO ISSUE RAISED IN THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ASSESSED FOR YEAR UNDER CONS IDERATION 143(3) ON 29/12/2016 WHEREIN THE RETURNED LOSS OF RS.150.7 6 LACS WAS REDUCED TO RS.141.29 LACS ON ACCOUNT OF INTEREST DISALLOWAN CE AND CERTAIN UNDISCLOSED INTEREST INCOME. 3.2 UPON PERUSAL OF FINANCIAL STATEMENTS, IT TRANSP IRED THAT THE ASSESSEE ADVANCED LOAN OF RS.31.87 LACS TO ONE OF T HE DIRECTORS SHRI AJIT G.MEHTA AND ANOTHER ADVANCE OF RS.27.14 LACS TO AN ENTITY MEHTA GROWELL HOLDINGS LTD. THE ADVANCES WERE STATED TO BE GIVEN AS ADVANCE AGAINST SALARY AND ADVANCE AGAINST PURCHASE OF PROP ERTY RESPECTIVELY. NO INTEREST WAS CHARGED AGAINST THESE ADVANCES. THE ASSESSEE COULD NOT SUBSTANTIATE THE BUSINESS EXPEDIENCY OF GRANTIN G THESE ADVANCES. RESULTANTLY, LD. AO ESTIMATED INTEREST DISALLOWANCE @12% AGAINST THESE ADVANCES U/S 36(1)(III) WHICH CAME TO RS.7.08 LACS. 3.3 UPON PERUSAL OF FORM 26AS, IT TRANSPIRED THAT T HE ASSESSEE RECEIVED INTEREST OF RS.12.98 LACS. HOWEVER, IN THE BOOKS OF ACCOUNT, ITA NO.4812/MUM/2018 ASSESSMENT YEAR :2014-15 MECORDS INDIA LIMITED 3 INTEREST INCOME WAS REFLECTED AS RS.10.59 LACS. ACC ORDINGLY, THE DIFFERENTIAL OF THE TWO I.E. RS.2.39 LACS WAS ADDED AS UNDISCLOSED INTEREST INCOME. 4. UPON FURTHER APPEAL, LD. CIT(A) OBSERVED THAT IN APPELLATE ORDERS FOR AYS 2010-11 TO 2013-14, THE ADVANCES GIVEN BY T HE ASSESSEE TO THESE PARTIES WERE HELD TO BE FOR NON-BUSINESS PURP OSE. FURTHER, THE PLEA THAT THE OWN FUNDS FAR EXCEEDED THESE ADVANCES WAS ALSO REJECTED FOLLOWING ITS OWN OBSERVATIONS GIVEN IN AY 2010-11. THE ADDITION MADE ON THE BASIS OF FORM 26AS WAS ALSO UPHELD SINCE THE RE WAS MISMATCH BETWEEN THE AMOUNT REFLECTED IN FORM 26AS VIS--VIS AMOUNT REFLECTED IN FINANCIAL STATEMENTS. AGGRIEVED, THE ASSESSEE IS UN DER FURTHER APPEAL BEFORE US. 5. UPON DUE CONSIDERATION, WE FIND THAT INTEREST DI SALLOWANCE MADE IN AY 2010-11 WAS SUBJECT MATTER OF APPEAL BEFORE THIS TRIBUNAL VIDE ITA NO. 1013/MUM/2016 ORDER DATED 04/10/2019 WHEREIN TH E DISALLOWANCE WAS DELETED, INTER-ALIA, BY OBSERVING THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS TO MAKE THE ADVANCES. THIS DECISION WAS F OLLOWED BY THIS VERY BENCH IN ASSESSEES OWN CASE FOR AY 2011-12, I TA NO. 1014/MUM/2016 ORDER DATED 28/01/2020 WHEREIN INTERE ST DISALLOWANCE WAS AGAIN DELETED. THEREFORE, FACTS BEING PARI-MATE RIA THE SAME, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF TRIBU NAL FOR EARLIER YEARS, WE DELETE THE INTEREST DISALLOWANCE AND ALLOW GROUND N O.1 OF THE APPEAL. 6. THE ADDITION OF RS.2.39 LACS ON ACCOUNT OF UNDIS CLOSED INTEREST INCOME WOULD REQUIRE NO INTERFERENCE ON OUR PART SI NCE NO EXPLANATION HAS BEEN ADDUCED BEFORE US EXPLAINING THE DISCREPAN CIES. GROUND NO.2 STAND DISMISSED. ITA NO.4812/MUM/2018 ASSESSMENT YEAR :2014-15 MECORDS INDIA LIMITED 4 7. THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH, 2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 12/03/2020 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 23),4 , 4 , / DR, ITAT, MUMBAI 6. 3567 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.