Shiv Kumar Prop. M/s. Ankur Bansal & Co., Haryana V. ITO, Karnal

ITA 4884/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74316 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 10-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RENUKA JAIN GUPTA
• Keywords: Proportionate interest; Commercial expediency

Judgement Text

ITA NO. 4884/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4 884/ DEL/201 2 A.Y. : 2009-10 SHIV KUMAR PROP. M/S ANKUR BANSAL & CO., SHOP NO. 70, NEW GRAIN MARKET, INDRI, DISTRICT, KARNAL, (HARYANA)-132041 (PAN:- ACTPK9938L) VS. ITO, WARD NO. 4, KARNAL, AAYAKAR BHAWAN, SECTOR-12, KARNAL (HARYANA) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : S H. GURJEET SINGH, CA ASSESSEE BY : SMT. RENUK A JAIN GUPTA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), KARNAL DATED 24.7.2012 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A), KARNAL HAS ERRED IN LAW IN CONFIRMING T HE DISALLOWANCE OF RS. 72,000/- U/S. 36(1)(III) OF TH E I.T. ACT, 1961 OUT OF INTEREST PAID, MADE BY THE LD. AO ON ACCOUNT OF DEEMED INTEREST CHARGED ON THE ADVANCE MADE DUE TO BUSINESS EXPEDIENCY, WITHOUT APPRECIATING THE FACTS. HENCE, THE DISALLOWANCE CONFIRMED BY THE CIT(A) BE KINDLY DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A), KARNAL HAS FURTHER ERRED IN LAW IN CONFIRMING THE HUGE ADDITION OF RS. 1,67,831/- MADE BY THE AO ON ACCOUNT OF ALLEGED LOW HOUSE HOLD ITA NO. 4884/DEL/2012 2 WITHDRAWALS BY THE ASSESSEE TO THE TUNE OF RS. 72,169/- WITHOUT ANY BASIS AND ONLY ON THE CONJECTURES AND SURMISES. HENCE, THE ADDITION CONFIRMED BY THE CIT(A) BE KINDLY DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A), KARNAL HAS FURTHER ERRED IN LAW IN CONFIRMING RS. 2,08,525/- I.E. 50% DISALLOWANCE OU T OF TOTAL EXPENSES BOOKED IN THE PROFIT AND LOSS ACCOUNT MADE BY THE AO AGAINST THE FACTS AND CIRCUMSTANCE OF THE CASE. HENCE, THE DISALLOWANCE CONFIRMED BY THE CIT(A) BE KINDLY DELETED. 4. THAT THE APPELLANT CRAVES LEAVE TO AMEND/ ADD MORE GROUNDS OF APPEAL AT THE TIME OF HEARING WITH THE PERMISSION. IT IS REQUESTED THAT THE DEDUCTION BE KINDLY ORDER ED TO BE DELETED IN ACCORDANCE WITH LAW AND ANY OTHER PROPER RELIEF ALSO BE KINDLY GIVEN. 3. APROPOS CONFIRMING THE DISALLOWANCE OF RS. 72000 /- DURING THE ASSESSMENT PROCEEDINGS AO NOTED THAT TH E ASSESSEE MADE INTEREST FREE ADVANCE OF RS. 6 LACS TO ONE RAJNI GUPTA. THE AO ASKED THE ASSESSEE TO JUSTIFY THE IN TEREST FREE ADVANCE OF RS. 6 LACS TO SMT. RAJNI GUPTA IN VIEW O F THE FACT THAT PAYMENT OF INTEREST CLAIMED AS EXPENSE. THE ASSE SSEE SUBMITTED THAT SMT. RAJNI GUPTA IS A PARTNER IN THE FIRM M/S SHREE HANS RICE MILLS, TAROARI FOR WHOM BULK OF PURCHASE IS DONE AN D COMMISSION HAS BEEN EARNED AND HENCE CLAIMED THAT THE INTEREST FREE ADVANCE WAS MADE FOR BUSINESS PURPOSES. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND TENABLE BY THE AO. THE AO NOTED THAT ONE HAND THE ASSESSEE PAID INTEREST AMOUNTING TO RS. 3,56,328/- TO THE BANK AND OTHER PARTIES BUT ON THE OTHER HAND DID NOT CHARGE ANY INTEREST FROM THE INTEREST FREE ADVANCE OF RS. 6 LACS MADE TO SM T. RAJNI GUPTA. THE PROPORTIONATE INTEREST WORKED OUT ON THIS ADVA NCE WAS, THEREFORE, DISALLOWED BY THE AO OUT OF CLAIM OF IN TEREST. 4. UPON ASSESSEES APPEAL LD. CIT(A) CONFIRMED THE ADDITION. ITA NO. 4884/DEL/2012 3 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. LD. COUNSEL OF THE ASSESSEE PLEADED THAT THERE WAS COMM ERCIAL EXPEDIENCY IN MAKING THE INTEREST FREE ADVANCE TO SMT. RAJNI GUPTA. HE ALSO PLEADED THAT THERE WERE SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. LD. DR ON THE O THER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. UPON CA REFUL CONSIDERATION, WE FIND THAT ASSESSEE HAS GIVEN INTE REST FREE FUNDS TO RAJNI GUPTA, WHO IS PARTNER IN ANOTHER FIRM FROM W HOM THE ASSESSEE MADE TRANSACTIONS. HENCE, WE NOTE THAT THERE IS NO DIRECT TRANSACTION WITH RAJNI GUPTA, AS SUCH, WE DO NOT FI ND ANY COMMERCIAL EXPEDIENCY INVOLVED IN MAKING THE INTERE ST FREE ADVANCE TO HER. WE FURTHER FIND THAT NO PLEA AS TO AVAILABILITY OF INTEREST FREE FUNDS WAS CANVASSED TO THE AUTHORITIE S BELOW. HENCE, THE SAME CANNOT BE ENTERTAINED AT THIS JUNCTURE. ACCORDINGLY, WE AFFIRM THE ORDER OF THE AUTHORITIES BELOW ON THIS I SSUE. 7. APROPOS CONFIRMING THE ADDITION OF RS. 1,67,831/ -. ON THIS ISSUE AO NOTED THAT ASSESSEE HAS INCURRED ONLY RS. 72,169/- FOR HOUSEHOLD EXPENSES. AO OPINED THAT TH IS WAS NOT SUFFICIENT. HE NOTED THAT ASSESSEES FAMILY CONSI STING OF SELF, WIFE AND THREE CHILDREN, ONE OF WHICH IS KID AND STUDYIN G IN SCHOOL. AO ESTIMATED THE SAID EXPENSES AT RS. 20,000/- AND AC CORDINGLY, MADE THE ADDITION OF RS. 1,67,831/-. 8. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED BE FORE THE LD. CIT(A). LD. CIT(A) AFFIRMED THE ADDITION. 9. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE REITERATED THAT ASSESSEE IS LIVING IN RURAL ITA NO. 4884/DEL/2012 4 AREA AND THE ADDITION HAS BEEN MADE WITHOUT ANY BAS IS. HE FURTHER CLAIMED THAT IN THE CASE OF ONE MR. ROSHAN LAL WHO HAS A SIMILAR FAMILY STRUCTURE, THE AO VIDE HIS ORDER DATED 2.11. 2011 HAS ALLOWED HOUSEHOLD WITHDRAWALS OF RS. 1,15,000/- FOR THE YEA R, WHILE IN THE ASSESSEES CASE, IT IS ESTIMATED TO RS. 2,40,000/-. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT SINCE IN SIMILAR CASE, AO HAS MADE ESTIMATION OF RS. 1.15 LACS. HENCE, WE HOL D THAT HOUSEHOLD WITHDRAWALS OF THE ASSESSEES FAMILY SHOULD ALSO BE CONSIDERED AT RS. 1,15,000/-. 11. APROPOS CONFIRMING THE ADDITION OF RS. 2,08,4 25/- ON THIS ISSUE AO NOTED THAT ASSESSEE HAS NOT PRODU CED ANY VOUCHERS IN RESPECT OF THE EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT AND GENUINENESS OF THE SAME CANNOT BE ASC ERTAINED. HENCE, THE AO DISALLOWED @50% OF THIS EXPENSE WHICH CAME TO RS. 2,08,425/-. 12. UPON ASSESSEES APPEAL LD. CIT(A) NOTED THAT AS SESSEE HAD NOT PRODUCED ANY BILLS AND VOUCHERS BEFORE HIM ALSO. HENCE, HE CONFIRMED THE AOS ACTION. 13. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 14 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE EXPENSE S CLAIMED BY THE ASSESSEE SHOULD HAVE BEEN ALLOWED, AS THE SAME WERE DULY REFLECTED IN THE BOOKS OF ACCOUNT. HOWEVER, WE NOT E THAT BOTH THE AUTHORITIES BELOW HAVE NOTED THAT THE ASSESSEE HAS NOT PRODUCED ANY BILLS OR VOUCHERS BEFORE THEM. UNDER THE CIRCU MSTANCES, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE OR DERS OF THE AUTHORITIES BELOW. IT WAS INCUMBENT UPON THE ASSES SEE TO PRODUCE THE NECESSARY VOUCHERS AND BILLS BEFORE THE AUTHORI TIES BELOW, WHICH ITA NO. 4884/DEL/2012 5 HE FAILED TO DO SO. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT DISALLOWANCE OF 50% OF EXPENSES CLAIMED NEEDS TO BE SUSTAINED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/3/2014 . SD/- SD/- [ [[ [A. D. JAIN A. D. JAIN A. D. JAIN A. D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 14/3/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES