ITO, Himachal Pradesh V. Shri Sukh Ram, Ghaziabad

ITA 4865/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3900 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 18-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 08-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Assessee Lawyers: T R TALWAR
• Keywords: Search and seizure; Notional interest
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 4865/DEL/10 ASSTT. YEAR 2004-05 ITO, MANDI, VS. SUKH RAM DISTT. MANDI, R/O D-42, HIMACHAL PRADESH KAUSHAMBI, GHAZIABAD AAKPR1306E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KISHORE B, SR. DR RESPONDENT BY: SHRI T.R. TALWAR, ADVOCATE. ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT(A) DATED 3 RD AUGUST 2010 PASSED FOR ASSTT. YEAR 2004-05. THE SO LITARY GRIEVANCE OF THE REVENUE IS THAT LD. CIT(A) HAD ERR ED IN DELETING THE ADDITION OF ` 30 LACS. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED HIS RETURN OF INCOME ON 31.10.2004 DECLARING IN INCOME OF ` 3,11,867/-. THE ASSESSEE HAD ALSO DECLARED AGRICULTURAL INCOME OF ` 3,52,170/-FOR RATE PURPOSES . IT EMERGES OUT FROM THE ASSTT. ORDER THA T A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE PREMISES OF ASSESSEE U/S 132 OF THE ITA NO. 4865/DEL/10 ASSTT. YEAR 2004-05 2 INCOME TAX ACT ON 16 TH AUGUST, 1996. DURING THE COURSE OF SEARCH, IT REVEALED THAT ASSESSEE HAD LENT ` 2.05 CRORE TO ONE SHRI CHANKER KANT KHEMKA @ 2.5% PER MONTH. SHRI KHEMKA HAS ADMITTED T HIS FACT BEFORE THE CBI. IT REVEALED THAT ` 1 CRORE REMAINED WITH SHRI KHEMKA ON THE DAY OF SEARCH. HENCE, AO HAS OBSERVED THAT INTEREST @ 2.5% HAD ACCRUED TO THE ASSESSEE WHICH DESERVES TO BE ASSESS ED IN HIS HANDS. HE WORKED OUT THE INTEREST INCOME OF ` 30 LAC AND MADE THE ADDITION. THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWING TH E ITAS ORDER. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ASSTT. Y EAR 2003-04 NOTIONAL INTEREST COMPUTED BY THE AO HAS BEEN DELETED AND TH E TRIBUNAL HAS UPHELD THE ORDER THE LD. CIT(A). THE RELEVANT OBSE RVATION OF THE ITAT IN ITA NO. 1891/D/2009 FOR ASSTT. YEAR 2003-04 READ AS UNDER :- 3. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL WHEREIN ADDITIONS ON ACCOUNT OF ACCRUED INTEREST INCOME AMOUNTING TO RS. 30,00,000/-, WHICH WAS DELETED BY THE CIT (A), WAS UPHELD BY THE TRIBUNAL, AFTER HAVING FOLLOWING OBSERVATIONS: WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSE RVED THAT THE SHRI KHEMKA HIMSELF IN HIS STATEMENT RECORDED BY TH E REVENUE AUTHORITIES HAD CATEGORICALLY STATED THAT NO INTERE ST WHATSOEVER WAS PAID BY HIM TO THE ASSESSEE FROM APRIL, 1996 ON WARDS AND THERE IS NO DISPUTE ABOUT THE SAME. FURTHER, THERE IS NO OTHER MATERIAL ON RECORD TO SHOW THAT ANY INTEREST WAS PA ID BY SHRI KHEMKA TO THE ASSESSEE FOR THE PERIOD FROM APRIL, 1 996 ONWARDS. IT IS ALSO AN ADMITTED POSITION THAT NO B OOKS OF ACCOUNT WERE MAINTAINED BY THE ASSESSEE FOR THE YEA R UNDER CONSIDERATION AND IN THE ABSENCE OF ANY MERCANTILE SYSTEM OF ACCOUNTING BEING FOLLOWING BY THE ASSESSEE, HIS TOT AL INCOME INCLUDING INTEREST INCOME WAS DECLARED AND CHARGED TO TAX ON CASH BASIS. IN THESE CIRCUMSTANCES EVEN IF IT IS AS SUMED THAT ITA NO. 4865/DEL/10 ASSTT. YEAR 2004-05 3 INTEREST INCOME WAS ACCRUED TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION ON THE AMOUNT ADVANCED TO SHRI KHEMKA , WE ARE OF THE VIEW THAT THE SAME HAVING ADMITTEDLY NOT BEE N RECEIVED BY THE ASSESSEE IN THAT YEAR, COULD NOT BE ASSESSED TO TAX IN HIS HANDS. IN THAT VIEW OF THE MATTER, WE FIND NO INFIR MITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) IN DELETING THE AD DITION MADE BY THE AO ON ACCOUNT OF SUCH INTEREST AND UPHOLDING THE SAME, WE DISMISS THIS APPEAL FILED BY THE REVENUE. 4. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION ARE IN PERIMATERIA, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF THE CIT (A) ON THIS GROUND. 3. LD. CIT(A) HAS FOLLOWED THIS ORDER OF THE ITAT. THERE IS NO DISPARITY ON FACTS. THEREFORE, RESPECTFULLY FOLLOWI NG THE ORDER OF ITAT, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENU E. IT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.5.2011. SD/- S D/- [K.G. BANSAL] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27.5.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGI STRAR, ITAT