RAMANLAL VITHALDAS & CO., MUMBAI V. A.C.I.T.14(1), MUMBAI

ITA 5774/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71991 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 20-05-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 12-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: APURVA R SHAH
• Keywords: Unexplained cash credit; Opportunity of being heard; Rule of consistency

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.5774/M/2011 (AY: 2008 - 2009) M/S. RAMANLAL VITHALDAS & CO, 333, SHAIKH MEMON STREET, CORNER OF MIRCHI GALLI, NEAR JUMMA MASJID, MUMBAI 400 002. / VS. ACIT - 14(1), 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021. ./ PAN : AAAPB 9537 H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI APURVA R. SHAH / REVENUE BY : SHRI RITESH MISRA / DATE OF HEARING : 12.12.2013 / DATE OF PRONOUNCEMENT : 18 .12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 12.8.2011 IS AGAINST THE OF CIT (A) - 25, MUMBAI DATED 21.6.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. IN DISALLOWING INTEREST IN RESPECT OF INTEREST FREE ADVANCES GIVEN WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE PURPOSES FOR WHICH SUCH ADVANCES WERE GIVEN AND WITHOUT APPRECIATING THAT THESE WERE GIVE FOR FURTHERING OF BUSINESS INTEREST. 2. IN NOT APPRECIATING THAT SOME ADVANCES WERE GIVEN IN EARLIER YEARS AND REPRESENTED STICKY ADVANCES WHERE INTEREST WAS NOT RECOVERABLE. 3. IN DISALLOWING 20% OF ADVERTISEMENT EXPENSES WITHOUT APPRECIATING THAT THE FACTS OF THE CURRENT YEAR WERE DIFFERENT FROM THOSE OF EARLIER YEARS. 4. IN DISALLOWING INTEREST PAID ON LOANS TREATED IN EARLIER YEARS AS UNEXPLAINED CREDITS. 3. AT THE OUTSET, REFERRING TO ABOVE MENTIONED GROUND NOS. 1 AND 2, SHRI APURVA R SHAH, LD COUNSEL FOR THE ASSESSEE, MENTION ED THAT THE IDENTICAL ISSUES WERE CAME UP FOR ADJUDICATION BY THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.5149/M/2009 (AY 2006 - 2007) AND ITA NO.5450/M/2010 (AY 2007 - 2008), DATED 15.6.2012. IN THIS 2 REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO PARA 5 OF THE SAID ORDER OF THE TRIBUNAL AND MENTIONED THAT WHILE ADJUDICATING THE ISSUE, THE TRIBUNAL FELT IT APPROPRIATE TO RESTORE THE MATTER TO THE FILES OF THE AO TO DECIDE THE ISS UE AFRESH WITH A DIRECTION TO VERIFY WHETHER SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE WITH THE ASSESSEE AT THE RELEVANT TIME TO GIVE INTEREST FREE ADVANCES. LD COUNSEL SUBMITTED THAT THE PRESENT ISSUE MAY BE DECIDED IN ACCORDANCE CITED ORDER OF THE TRIBUNAL. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE REVENUE AUTHORITI ES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISION OF THE TRIBUNAL (SUPRA). ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL DATED 15.6.2012, WE FIND THAT PARA 5 OF THE TRIBUNALS ORDER IS REL EVANT IN THIS REGARD AND FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAME IS REPRODUCED AS UNDER: 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERI AL ON RECORD. THE LD COUNSEL F OR THE ASSESSEE HAS PLACED ON RECORD A COPY OF BALANCE SHEET OF THE ASSESSEE AS ON 31 ST MARCH, 2006 AT PAGE NO.17 OF HIS PAPER BOOK AND PERUSAL OF THE SAME SHOWS THAT ALTHOUGH OWN FU N DS IN THE FORM OF PARTNERS CAPITAL TO THE EXTENT OF RS. 4,27,17,913/ - WERE AVAILABLE WITH T HE ASSESSEE AT THE RELEVANT TIME, INTEREST THEREON AMOUNTING TO RS. 45,20,113/ - WAS PAID AND CLAIMED AS EXPENDITURE BY THE ASSESSEE. THE REMAINING FUNDS AVAILABLE WITH THE ASSESS E E WERE IN THE FORM OF SECURED AND UNSECURED LOANS AND IT IS NOT CLEAR FROM T HE MATERIAL PLACED BEFORE US AS TO WHETHER ANY SUCH LOAN FUNDS AVAILABLE WITH THE ASSESSEE WERE INTEREST FREER SO AS TO SAY THAT INTEREST FREE ADVANCES WERE GIVEN OUT OF SUCH INTEREST FREE FUNDS AS CLAIMED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AS WE LL AS BEFORE US. WE, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE TO THE FILES OF THE AO WITH A DIRECTION TO VERIFY WHETHER SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE WITH THE ASSESSEE AT THE RELEVANT TIME TO GIVE INTEREST FREE ADVANCES AND TO DECIDE THIS ISSUE AFRESH ON THE BASIS OF SUCH VERIFICATION. GROUND NO.1 AND 2 ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES . 6. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AND ALSO FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT THE GROUND NOS. 1 AND 2 RAISED IN THE INSTANT APPEAL SHOULD ALSO BE REMANDED TO THE FILES OF THE AO. ACCORDINGLY, WE REMAND THE SAID GROUND NO.1 AND 2 TO THE FILES OF THE AO WITH IDENTICAL DIRECTIONS TO DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . ACCORDINGLY, GROUND NO.1 &2 ARE ALLOWED FOR STATISTICAL PURPOSES. 3 7. REFERRING TO GROUND NO.3 , WHICH RELATES TO THE DISALLOWANCE OF 20% OF ADVERTISEMENT EXPENSES, LD COUNSEL BROUGHT OUR ATTENTION TO PARA 11 OF THE SAID ORDER OF THE TRIBUNAL DATED 15.6.2012 (SUPRA). IN THIS REGARD, LD COUNSEL MENTIONED THAT WHILE ADJUDICATING THE ISSUE, THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE BY DE LETING THE IDENTICAL ADDITION MADE IN THOSE ASSESSMENT YEARS. 8. ON THE OTHER HAND LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT RECORD FIL ED BEFORE US. WE HAVE ALSO PERUSED THE FACTS AND FIGURES AND FID THAT THE IMPUGNED PAYMENTS THROUGH BANKING CHANNELS , THERE IS NO CASH PAYMENTS. IN THIS REGARD, WE FIND THAT THE SAID PARA 11 OF THE TRIBUNALS ORDER IN ASSESSEES OWN CASE (SUPRA) IS RELEV ANT HERE AND THE SAME READS AS UNDER: 11. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED RELEVANT MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE DETAILS OF RELEVANT EXPENSES PLACED AT PAGE NO.33 & 34 OF THE PAPER BOOK. A S REGARD EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF ADVERTISEMENT EXPENSES , THE DETAILS OF WHICH ARE GIVEN ON PAGE NO.33 OF THE ASSESSEES PAPER BOOK, IT IS OBSERVED THAT THE SAME REPRESENTED PAYMENTS MADE TO SPECIFIC PARTIES AND ORGANIZATIONS FRO M WHI CH EVEN TAX AT SOURCE WAS DEDUCTED IN MANY CASES. HAVING REGARD TO THE DETAILS SO FURNISHED BY THE ASSESSEE, IT IS DIFFICULT TO AGREE WITH THE VIEW OF THE AUTHORITIES BELOW THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ADVERTISEMENT INVOLVED ANY UNVERIF IABLE ELEMENT SO AS TO WARRANT ANY DISALLOWANCE. WE, THEREFORE, D ELETE THE DISALLOWANCE MADE BY THE AO OUT OF ADVERTISEMENT EXPENSES AND CONFIRMED BY THE LD CIT (A) AND ALLOW ED GROUND NO.5 OF THE ASSESSEES APPEAL. 10. CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE AND FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT THE GROUND NO.3 RAISED BY THE ASSESSEE SHOULD BE ALLOWED IN FAVOUR OF THE ASS ESSEE. ACCORDINGLY, THE GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED . 11. REFERR ING TO GROUND NO.4 , LD COUNSEL MENTIONED THAT THIS GROUND RELATES TO THE UNEXPLAINED CREDITS ADDED IN THE EARLIER ASSESSMENT YEARS AND THE SAID ADDITION WAS CONFIRMED BY THE TRIBUNAL. THEREFORE, THIS ISSUE BECOMES REDUNDANT IN VIEW OF THE FINDING RELATING TO THE UNEXPLAINED CREDITS. ACCORDINGLY, LD COUNSEL MENTIONED THAT THE SAME MAY DISMISSED AS ACADEMIC. CONSIDERING THE CONSEQUENTIAL NATURE OF THE IS SUE, WE DISMISS THE GROUND NO.4 AS CONSEQUENTIAL. 4 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONO UNCED IN THE OPEN COURT ON 1 8 T H DECEMBER, 2013. S D / - S D / - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 1 8 .12.2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI