Sh. Madan Lal Bassi Prop. M/s Suraj Udyog, Ludhiana V. ACIT, Circle -1, Ludhiana

ITA 575/CHANDI/2022

AI Insights

This case involves an appeal by Shri Madan Lal Bassi against the order of the Ld. CIT(A), NFAC, Delhi, concerning the Assessment Year 2011-12. The primary contention was regarding the disallowance of interest on advances given to M/s Sunmac Bike Pvt. Ltd., which the Assessee argued was not properly considered by the A.O. of NFAC. The Tribunal noted that despite the Assessee's absence at the hearing and lack of further submissions, the Ld. CIT(A) had already provided substantial relief by reducing the disallowance significantly. The Tribunal upheld the Ld. CIT(A)'s decision, emphasizing the need for proper documentation and justification for any further claims.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135503 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 31-07-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “बी” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ᮰ी आकाश दीप जैन, उपा᭟यᭃ एवं ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA NO. 575/Chd/2022 िनधाᭅरण वषᭅ / Assessment Year : 2011-12 Shri Madan Lal Bassi Prop. M/s Suraj Udyog, C-106, Focal Point, Ludhiana-141010 बनाम The ACIT, Circle-1 Aayakar Bhawan, Rishi Nagar, Ludhiana-141001, Punjab ᭭थायी लेखा सं./PAN NO: ABFPB7839N अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : None राज᭭व कᳱ ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 19/09/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 21/09/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A), NFAC, Delhi dt. 22/06/2022 pertaining to Assessment Year 2011-12. 2. At the outset it is noted that inspite of notice being served on the assessee scheduling the hearing for 19/09/2023, none has appeared on the scheduled date of hearing nor any adjournment application was filed. Given that the matter is pending since 01/08/2022, we deem it appropriate not to adjourn the matter any further and decide the same basis the material available on the record. 3. In the present appeal, the Assessee has raised the following grounds of appeal: 1. The A.O. of NFAC has not considered the findings of ITAT regarding Cash Flow Statement; hence the illogical addition of Rs. 4 Lacs made on adhoc basis requires to be deleted. 2. That the NFAC A.O. has decided the appeal on the basis of documents submitted as called for but has not provided proper opportunity of being heard inspite of written request, hence the arbitrary additions of Rs. 4 Lacs should be deleted. 3. The A.O. of NFAC has made the addition on adhoc basis, without pin pointing the reasons of additions, hence the addition has been made on the basis of surmises and conjectures and the same may please be deleted. 4. The assessee craves to leave, amend, alter or take additional grounds of appeal before or at the time of hearing. 2 4. Briefly, the facts of the case are that the assessee has filed his return of income declaring total income of Rs. 1,07,82,780/-. Subsequently, the assessment was completed under section 143(3) dt. 26/03/2014. Thereafter, the matter travelled in appeal before the Coordinate Bench who has set aside the matter relating to disallowance of interest under section 36(1)(iii) of the Act, in respect of advances given to M/s Sunmac Bike Pvt. Ltd. to the file of the AO to decide the same afresh. 4.1 Thereafter, notices were issued and submissions were called for and after taking the same into consideration but not found the same acceptable, it was held by the AO that the assessee has given huge amount of advances to sister concern M/s Sunmac Bike Pvt. Ltd. and no interest has been charged. It was held that the assessee has merely stated that he had sufficient funds but has failed to establish any nexus between the interest free funds and interest free loans given to M/s Sunmack Bike Pvt. Ltd. 4.2 It was held by the AO that the loan has been given during the year out of CC/OD Accounts for which the assessee has incurred interest burden but has not charged any interest from the said concern and also no business benefits has been derived. Further the assessee contended that he has sufficient funds in the shape of capital etc is not acceptable as the position has to seen at the time of advancing the said loan and the capital of the assessee is invested in the fixed assets and no fresh capital has been introduced at the time of giving the loan. Therefore addition of Rs. 19,89,342/- as made in the original assessment proceedings under section 143(3) vide order dt. 26/03/2014 was sustained. 5. Against the said findings, the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A) has returned a finding that the assessee had contended that he has given Bank FD’s as security against OD/CC loan and hence actual interest charged by the bank was only 1% which was the differential between Bank FD and OD loan rates. The Ld. CIT(A) held that all the amounts have to be shown at gross, with separate disclosure of interest earned and interest expenses, the argument of only net interest liability at 1% cannot be accepted. The A.O. has however not inquired on this particular issue, other than stating that assessee had that the amounts of unsecured loans on which it was paying interest while nil interest was being charged from M/s Sunmac Bike Pvt. Ltd. The 3 ld CIT(A) further held that it would meet the end of justice and bring an end to litigation and promoting voluntary tax compliance and increase in good tax payer services, such that the disallowance on interest is restricted to only Rs. 4,00,000/-. Assessee hence gets relief of the balance and the appeal of the assessee was partly allowed. 6. Against the said findings and the direction of the Ld. CIT(A) the assessee is in appeal before us. 7. None has appeared on behalf of the assessee nor have any written submissions been filed. We have heard the Ld. DR who has supported the order of the ld CIT(A). We have also carefully perused the material available on the record. We find that taking into consideration the entirety of facts and circumstances of the case including the decision and directions of the Coordinate Bench in the first round of appellate proceedings, submissions made by the assessee before the AO and the findings of the AO, the Ld. CIT(A) has given appropriate relief to the assessee by reducing the disallowance from Rs. 19,89,342/- to Rs. 4,00,000/- and in absence of any explanation/submissions forthcoming from the assessee, we do not find any infirmity in the said findings of the Ld. CIT(A), hence the same are hereby confirmed. 8. In the result, appeal of the Assessee is dismissed. Order pronounced in the open Court on 21/09/2023. Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG Date: 21/09/2023 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 5. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar