Late Sh. Ghansham Dass Through L/H Sh.Devinder Singh, Chandigarh V. DCIT-CC-1, Chandigarh

ITA 5/CHANDI/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5518 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 09-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 153A; 64; 20

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I N C O M E T A X A P P E L L A T E T R I B U N A L D I V I S I O N B E N C H , “ A ” , C H A N D I G A R H B E F OR E SH R I N . K . SA I N I , V I C E P R E SI D E N T & S H R I S U D H A N S HU SR I V A S T A V A , J U D I C I A L M E M B E R आयकर अपील सं./ ITA Nos. 5 to 7/C H D / 2 0 2 1 नधा रण वष / Assessment Years : 2 0 1 5 - 1 6 t o 2 0 1 7 - 1 8 Late Sh. Ghansham Dass, Through L/H Sh. Davinder Singh, SCO 168-169, Sector 34, Chandigarh बनाम The DCIT, Central circle-1, Chandigarh थायी लेखा सं./PAN NO: AANPD3889R अपीलाथ /Appellant यथ /Respondent Hearing though video Conferencing नधा रती क ओर से/Assessee by : Shri Tej Mohan Singh, Advocate राज व क ओर से/ Revenue by : Sh. Vivek Nangia, CIT DR स ु नवाई क तार$ख/Date of Hearing : 15.12.2021 उदघोषणा क तार$ख/Date of Pronouncement : 28.12 .2021 आदेश/Order P er S u d h an sh u S ri va s ta va , J u d i c ia l M e mb e r: T he se t h re e a pp e a ls h av e b e e n p re f e rr e d by th e a s s es s e e a n d pe r t a in t o a s s es s m en t y e a rs 20 15 -1 6, 2 01 6 - 17 a n d 2 0 1 7- 1 8, w he re i n , t he as s e s s ee h a s c h al l en ge d th e c o m m on or de r o f t h e Co m mi s s i o n er o f In c o m e Ta x ( A p pe al s )- 3, G urg ao n w hi c h ha s b e en p a s se d v i de o rde r da t ed 3 1. 5. 20 19. S i nc e t he s e a pp ea l s i nv ol ve d a n ide n t i c a l i s s ue , th ey w er e he ar d t o ge th er a n d a r e be i n g d is p os e d o f t h r oug h t hi s c o m m o n or d e r. 2. Br i e f fa c ts o f t he c a s e a re t ha t t h e a s s e ss ee (si nc e e xp i re d ) w as on e o f t h e as s e s s ee s co v e r e d un de r a se a rc h a n d s eiz u r e op e r a t i o n u /s ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 2 13 2 o f t he I nc o me Ta x A c t , 1 9 6 1 ( i n s ho r t ' t h e A c t ') , w h i ch w as ca r r i e d ou t a t t he b us i n e s s an d re s i d e n ti a l p re m i s es o f M / s S ha m J e w e l le rs gr o up o f c as e s . T h e s a id s e a r c h t o ok pl a c e on 1 5 . 0 9. 2 01 6. The o ri gi na l re t ur n o f i nc o me h ad b e e n fi l ed de cl a ri ng in co me a t ‘n i l ’ f or t h e a s s es s men t y ea rs 2 01 5- 1 6 a nd 20 1 6 -1 7. F or t he as s es s me nt ye ar 2 0 1 7- 18 , t he re t u rn o f i n co m e w a s fi l e d r e f l e c t i n g i nc om e o f Rs . 29, 9 2, 9 40 / -. In r es p ons e t o no ti c es i s su e d u /s 15 3 A o f th e A c t , t he as s e s s ee ag ai n re t ur n e d t he s a me i nc o me as i n t h e or i g in al I nc o me -t a x r e t ur ns . D uri n g t he co u rs e o f a s s es s m en t pr oc ee di ngs , t he A s s e s s in g o f fi ce r no te d t h a t t he as s e s s ee h a d de c l a re d i nt er e s t e x pe n d i t u r e o f Rs . 68, 8 9, 5 04 / - i n a s s es s men t y e a r 2 01 5- 1 6, i n t e r es t e xp e n d it ur e o f R s. 65 , 57, 3 40 /- i n a s s es s men t y ea r 2 0 16- 17 a n d i n te re s t ex p en di tu re o f Rs . 16, 82 , 9 64 / - i n a s s es s men t ye a r 20 17 - 18. Th e A s s es s i ng o f fi c e r c onf ro nt e d th e a s s es s e e on t he is s u e o f i nt e re s t e x pe nd i t ur e an d th e a s se s se e w as a s ke d to j us t i fy t he r ea s o n fo r c l a i mi ng i nt e re st e xp e n di t ur e w h ic h w a s p ai d t o M /s S ha m F a sh io n M a ll in a l l t he t h r e e y e a rs i n w h ic h th e ass e s s ee w a s a p ar tn e r. It w a s t h e as s e s s ee ’s c o nt en ti on be f o re t h e A s s es s ing o f fi c e r t h a t th e s a id e x p e nd it ur e o f in te re s t w a s on a cc o u n t o f i nt er e s t ch a rg ed b y t h e fi r m o n a cc ou n t o f d eb it b a l a n c e o f th e pa rt ne r i n t h e c a p i t al o f t he fi r m. It w a s s ub mi t t e d b y t h e a s se s s e e t h at t he i n t e r es t ha d to be p a i d d u e t o e xc es s bor r ow i n gs b y t h e a s s e s se e . T he A s s e s s in g offi c e r fu rt he r n ot e d t ha t t h e a m o un t w i t hd ra w n fr o m t he f i r m h a d be en util i s ed fo r p a y m e n t o f a d va n c e t a x / i n c o m e t a x a nd, t h e r e fo r e , a s p e r t he A s se s si ng o ffi c er , t he s a i d a mou nt w a s no t an a ll ow a b l e ex p en di tu re a s t he pa y m en t o f ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 3 i nc o me t ax / a d va n c e t ax w a s a pe r s o na l l i a b i l i t y of t he as s e s s ee . Th e A s s es s i ng o f fi ce r p r oc e e de d t o d i s a l l o w an a mo un t of Rs . 12 , 8 6, 36 1 /- i n a s s es s men t ye a r 2 0 15- 16, an a mo u nt o f Rs . 1 4, 5 9, 18 9/ - in a s s es s me n t ye a r 2 01 6 - 17 a n d a mo un t o f Rs . 17, 0 4, 38 0/ - i n a s s ess me n t ye a r 2 01 7 - 18 , be i ng i nt e r es t pa i d by th e a s se s s e e on a cc ou nt o f p a y me nt o f i n c o me t a x / ad v an ce ta x. 2. 1 A ggr i e v e d, t he a s s es s e e c a rr i e d t h e m at t e r t o th e F ir s t A ppe l l a t e A ut h or i t y cha l l e n g i ng t he a d d i t i o n / d i s al l ow an ce of i n t e re s t . H ow ev er , t he c o nt e n t i o ns o f t he a s s es s e e d i d n ot f in d a ny f av o ur w i th t he F i r s t A ppe l la t e A u t h or i t y an d h e c o n fi r m e d t he d is a l lo w a nc e o f i n t e re st i n a l l t he t hr ee ye ar s un d e r c o ns i d e ra ti on . 2. 2 A ggr i e v e d, t h e as s e s s ee is now be fo r e t h is T ri bu na l c h a ll e n gi ng t he a b ov e s uc h d i sa l l o w an c e a n d t he gr o un ds ra i s ed by t h e as s e s s ee i n t he r es p ec t i v e a s s es s m ent y e a r s ar e a s un de r : - ITA No. 5/Chd/2021 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the framing the assessment u/s 153A rws 143(3) of the Act without there being any incriminating material having been found during the course of search relating to the said year and as such the assessment framed is illegal, arbitrary & unjustified which merits to be quashed. 2. That the Ld. Commissioner of Income Tax (Appeals) has failed to consider the decision of the Hon'ble Delhi High Court rendered in the case of Meeta Gutgutia reported in 395 ITR 526 and the SLP filed by the revenue against this decision which stands dismissed vide order reported in 96 taxmann.com 468(SC) wherein it has been held that invocation of section 153A to re-open concluded assessments of assessment years earlier to search was not justified in absence of incriminating material found during search qua each such earlier ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 4 assessment year besides other decisions rendered in the case of Kabul Chawla reported in 380 ITR 573, Mala Builders of the jurisdictional IT AT and as such the assessment framed is illegal, arbitrary & unjustified 3. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the addition of Rs. 12,86,361/- made on account of disallowance of interest paid to M/s Sham Fashion Mall which is not liable to be made in view of Ground No. land 2 since no incriminating material has been found during search in respect of the impugned addition and as such the assessment framed is illegal, arbitrary & unjustified 4. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the disallowance of interest to the tune of Rs. 12,86,361/- paid on account of amount withdrawn for payment of taxes from M/s Sham Fashion Mall in utter disregard of the submissions made during the course of appellate proceedings which is arbitrary and unjustified. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 6. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable ITA No. 6/Chd/2021 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the framing the assessment u/s 153A rws 143(3) of the Act without there being any incriminating material having been found during the course of search relating to the said year and as such the assessment framed is illegal, arbitrary & unjustified which merits to be quashed. 2. That the Ld. Commissioner of Income Tax (Appeals) has failed to consider the decision of the Hon'ble Delhi High Court rendered in the case of Meeta Gutgutia reported in 395 ITR 526 and the SLP filed by the revenue against this decision which stands dismissed vide order reported in 96 taxmann.com 468(SC) wherein it has been held that invocation of section 153A to re-open concluded assessments of assessment years earlier to search was not justified in absence of incriminating material found during search qua each such earlier assessment year besides other decisions rendered in the case of Kabul Chawla reported in 380 ITR 573, Mala Builders of the jurisdictional IT AT and as such the assessment framed is illegal, arbitrary & unjustified ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 5 3. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the addition of Rs. 14,59,189/- made on account of disallowance of interest paid to M/s Sham Fashion Mall which is not liable to be made in view of Ground No. land 2 since no incriminating material has been found during search in respect of the impugned addition and as such the assessment framed is illegal, arbitrary & unjustified 4. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the disallowance of interest to the tune of Rs. 14,59,189/- paid on account of amount withdrawn for payment of taxes from M/s Sham Fashion Mall in utter disregard of the submissions made during the course of appellate proceedings which is arbitrary and unjustified. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 6. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable ITA No. 7/Chd/2021 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the framing the assessment u/s 153A rws 143(3) of the Act without there being any incriminating material having been found during the course of search relating to the said year and as such the assessment framed is illegal, arbitrary & unjustified which merits to be quashed. 2. That the Ld. Commissioner of Income Tax (Appeals) has failed to consider the decision of the Hon'ble Delhi High Court rendered in the case of Meeta Gutgutia reported in 395 ITR 526 and the SLP filed by the revenue against this decision which stands dismissed vide order reported in 96 taxmann.com 468(SC) wherein it has been held that invocation of section 153A to re-open concluded assessments of assessment years earlier to search was not justified in absence of incriminating material found during search qua each such earlier assessment year besides other decisions rendered in the case of Kabul Chawla reported in 380 ITR 573, Mala Builders of the jurisdictional IT AT and as such the assessment framed is illegal, arbitrary & unjustified 3. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the addition of Rs. 17,04,380/- made on account of disallowance of interest paid to M/s Sham Fashion Mall which is not liable to be made in view of Ground No. land 2 since no ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 6 incriminating material has been found during search in respect of the impugned addition and as such the assessment framed is illegal, arbitrary & unjustified 4. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the disallowance of interest to the tune of Rs. 17,04,380/- paid on account of amount withdrawn for payment of taxes from M/s Sham Fashion Mall in utter disregard of the submissions made during the course of appellate proceedings which is arbitrary and unjustified. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 6. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable 3. 0 A t t he o ut s e t, t he L d. A ut h or i s e d R e pre s e n t a t i ve (A R) s u b mi t t e d t ha t o n l y g r ou nd N o. 3 i n al l th e t hre e a pp e a ls w a s b ei n g pr es s e d a n d t h a t gr o un d s N os . 1, 2 a nd 4 w e re n o t b e i ng p re s se d. A cco r d i ng l y, g ro un d N os . 1, 2 an d 4 a re d is mi s s ed a s no t pr e s s e d. 3. 1 Wi t h re s p e c t t o t h e o nl y e ffe c t i ve g r o u nd r e m a in i n g, t h e L d . A R s ub m i tt e d t ha t t h e A s s es s in g o f fi ce r h ad ma de t h i s d i s al l ow an c e on t h e re a s o ni ng t ha t th e i mp ug ne d a mo un t s h av e b e e n w i th dra w n f o r t h e pa y m e n t o f i nc o me -t a x. T he Ld. A R s ub m it t e d t h a t u ndi s pu t e d l y t he a s s es s e e had w i t h d ra w n t h e a m o un t s fo r t he p ur p os e o f pa y me nt o f t a x a nd ha d c l ai me d i n te r e s t pa i d o n t he d ebi t b al a n c e o n a c c o u nt o f e xc es s bo r ro w i ng s, w he r e as , t he fi r m ha d s how n i n t e r es t c har g e d fr o m t h e a s s es s e e a s it s i nc o me . I t w as s u b mi t t e d t h at i t is a l s o b e yo n d an y do ub t t ha t t he a m o un t o f t a x p ai d b y t he a s s e ss e e w as no t b e i ng c la i me d as e xp e n di t u re a n d i t w a s o nl y t h e i n t e re s t pa id o n t he b o r row i ngs w h i c h ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 7 w as be i n g cl a i m ed a s exp e n d i tu r e. It w a s s ub mi t te d th at th e s a i d di s a l l ow a nc e , as ma de b y t he A s s es s i ng o f fi c e r a n d a s up he l d b y t h e Ld . CI T(A ) , w a s b o th e rr on eo us a s w e l l a s i l l e g a l a n d w as n ot s us t a i na bl e i n t h e ey es o f l aw . I t w as s ub mi tt e d t h a t t h e i n t e re st p a i d by t he p a rt ne r on hi s de bi t b a l a nc e i s a l w ay s a de d u c t i bl e e xp e n dit u re i n t he ha nd s o f t he p ar tn er a n d s in ce t h e fi r m h a d a l r ea d y s how n t hi s in te r e s t c h a rg ed fr o m t h e pa rt n e r as i n co me , t h e re c a n b e no d ou bl e ta x a t i o n o f t he s a m e a mou nt . It w as f urt he r s u b mi t t e d t ha t j u s t a s t h e a s s e s s e e r ec e i ve d i nt er es t o n t h e cr e di t b a l an c e l y i n g w i th t he fi r m i n t h e s a me pa r l a nc e , t he pa rt n e rs a l s o pa i d i nt e re s t on t h e d e b i t b a l an ce a nd t h er e w as no t h i ng w r o ng w i t h i t . I t w as s ub m i tt e d t ha t t he i mpu g n e d d is a l l o w a n c e , be i ng b a d i n la w , sho ul d b e de le t ed . 4. 0. P e r c on tr a, th e L d . CI T D R s ub mi t t e d th at t he L d. F ir s t A ppe l la t e A ut h or i t y h a d r i g ht l y u p h e l d t h e d is a l l o w a n c e . T h e L d. C I T D R s up p ort e d t h e c o nc ur r e n t o r de rs o f t he au th or i t ie s be l o w . 5. 0 We ha v e h e a r d t he ri va l s ub m is s i ons a nd ha v e a ls o pe r us e d t h e m at er ia l on re c o rd. T h e f a c t s o f t h e c a se a re n o t in d i s p u te . Th e onl y re a s o n fo r w hi c h th e A s s es s i ng o f fi ce r s ee ms t o h a ve m a de t h e i mpu gne d di s al l ow anc e i n a l l t h e t hr e e y e a rs u nd e r c o ns i de r a t i o n i s t ha t t he a s se s s e e ha d m ade w i t hdr a w al s f o r t h e pu rp os e of p a y me nt o f t a x es a nd h a d c l a i m e d i n te re s t s uc h pa i d a s e xp e n di t u re . We a gr ee w i t h th e c on t e n t i o n o f t he L d. A R t h a t s i n ce t he a s s e ss e e par t n e r is e n t i t l ed t o i nt er es t r e c e iv ed o n t h e c r e d it b a l a n ce o f c a pi t a l , w hi c h be c o me s h is ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 8 ‘i n c o m e ’ , si mi l a r l y , t he as s e s s ee / pa r t ne r i s a ls o l i a b le t o p a y i nt e r e s t on t he d e bi t ba l a n c e / e xc e s s w it hd r a w a l s fr o m t he pa r t n e rs h i p fi r m a nd by t h e sa m e re as o n i ng a n d lo gi c i t be c o me a s ex pen di tu re w hi c h i s t o b e de d uc t e d w h i l e c o m put i n g t he t a x a b le i nco me o f a p ar t n e r o f t he f ir m. In ou r v i e w t oo, o nc e t h e p ar t n e r ha s w i t hd ra w n a n a mou n t fr o m th e fi r m, i t b e co me s i mm a t e ri al as to w h a t e nd it p ut t o us e . Th e a m ou n ts w i th d ra w n ma y b e u ti l is e d b y t he as s e s s ee / p a r t ne r fo r t he pu r p os e o f m ee ti ng h ous e - h ol d e x p e ns es , ma k i n g i n ve s t m e n ts o r e v e n fo r th e pu r pos e o f pa yi ng t ax a n d i t i s n ot w i t h in t he pur vi e w o f t he I n c o m e - t a x a ut ho ri t i es t o de te r m i ne a n d d ic t a t e a s t o how t he f un d s s o w i t hdr aw n a re p ut to u s e b y t h e a ss e s s e e / pa rt ne r . 5. 1 A l th o ug h , i t is a s e tt l ed p r o pos i t i o n t h a t t h e t a x p ai d in r es pe c t o f i nc o me i s no t a d e du c t i b l e e x pe ns e , i t i s n o t t he ca se he r e. B ot h t h e l ow er a ut ho r i t i e s b el ow t o ha v e e nt ir el y mi s c o ns tr ue d t he fa c t ua l m at ri x an d h av e pr o ce ed ed o n a n as s um p t i o n t ha t t he a s s es s e e / p ar t n e r w as cl a i m i n g e xp e ndi t u re i n r es p ec t to i nc o me t a x / a d v an ce t ax pa id , w he re as , th e as s e ss ee h as onl y cl a i m e d e xp e n di t u re i n r es pe c t o f i nt er es t o n e xc e ss w i t h dr a w a ls m ad e , w hi c h w e r e u t ili s e d for t h e pu r pos e o f p a y i n g i n c o me t a x / a dv an c e t a x . T he r e f or e , i n o ur c ons i de re d op in io n , bot h t he l ow e r a u t ho ri t i es h av e e n t i r el y mi s s ed t h e c as e i n po in t a n d h a ve ma d e t h e i m p u gn e d d is a l l o w a nc e w hi c h ca nn o t be s us t a i n e d. T h e re fo r e, w hi le s et t in g a s i d e t he ord e rs o f t he Ld . ITA Nos. 5 to 7-Chd-2021 Latd Sh. Ghansham Dass, Chandigarh 9 CI T(A ) , w e di re c t t he A s s e s s in g o ffi c er t o d el e te th e i m pu gn ed di s a l l ow a nc e i n al l th e t hr e e ye a rs un d e r co ns i d er at i on. 6. 0 In th e fi n a l r es u lt , al l t h e t h re e a p p ea l s s t a nd p a rt l y a l l ow ed . O rde r p ro no un c e d o n 28. 12 . 2 02 1 . Sd/- Sd/- ( N. K. SAINI) (SUDHANSHU SRIVASTAVA) Vice President Judicial Member Dated : 28.12.2021 “आर.के.” आदेशक त+ल,पअ-े,षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु .त/ CIT 4. आयकरआय ु .त (अपील)/ The CIT(A) 5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar