Shri Mahesh Meetal , Lucknow V. Income Tax Officer, Lucknow

ITA 581/LKW/2012

• Counselvise Citation: 58123714 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y B SRIVASTAVA
• Assessee Lawyers: YOGESH AGRAWAL
• Keywords: Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.581/LKW/2012 ASSESSMENT YEAR:2008-09 SHRI. MAHESH MEETAL L/H LATE SHRI. SHYAM MANOHAR MEETAL 342,AMINABAD ROAD, GANESH GANJ LUCKNOW V. INCOME TAX OFFICER V(3) LUCKNOW TAN/PAN:AGJPM3946L (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. YOGESH AGRAWAL, ADVOCATE RESPONDENT BY: SHRI. Y. B. SRIVASTAVA, D.R. DATE OF HEARING: 03 11 2014 DATE OF PRONOUNCEMENT: 16 01 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON FOLLOWING GROUNDS:- 1 . LEARNED COMMISSIONER OF INCOME TAX (APPEALS-II) ERRED ON FACTS & IN LAW IN UPHOLDING THE FOLLOWING ADDITION MADE BY THE LD. A.O RANGE V(3). LUCKNOW IN ASSESSMENT ORDER U/S 143(3) DATED 24/12/2010 AT RS.5,84,080/- BY MAKING A ADDITION OF RS.3,70,411/- TO THE RETURNED INCOME OF RS.2,13,670/-UNDER FOLLOWING HEADS: UPHOLDING THE DISALLOWANCE OF INTEREST EXPENSES : RS.3,55,142/- UPHOLDING THE ADDITION OF INTEREST : RS.9,821/- TOTAL : RS.3,64,963/- 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS-II) ERRED ON FACTS & LAW IN UPHOLDING THE DISALLOWANCE OF INTEREST AMOUNTING 3,55,142/-. :- 2 -: 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS-II), ERRED ON FACTS & LAW IN UPHOLDING THE ADDITION OF INTEREST AMOUNTING RS. 9821/-. 2. THROUGH THESE GROUNDS, THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES AND ALSO ADDITION ON ACCOUNT OF INTEREST RECEIPT WERE CHALLENGED. 3. WITH REGARD TO THE DISALLOWANCE OF INTEREST EXPENSES, IT IS NOTICED THAT THE ASSESSING OFFICER HAS MADE ADDITION AT RS.3,55,142/- ON ACCOUNT OF DISALLOWANCE OF INTEREST, HAVING OBSERVED THAT THE ASSESSEE HAS ADVANCED INTEREST FREE LOAN OF RS.51 LAKHS TO RUPALI MITTAL, DAUGHTER-IN-LAW OF THE ASSESSEE WITHOUT ANY COMMERCIAL EXPEDIENCY OF ASSESSEES BUSINESS. ACCORDINGLY, CORRESPONDING INTEREST PAID BY THE ASSESSEE AT RS.3,55,142/- WAS DISALLOWED. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT DURING ASSESSMENT YEAR UNDER CONSIDERATION, THE FINANCIAL TRANSACTIONS WERE UNDERTAKEN WITH THE FAMILY MEMBERS WITHOUT INTEREST AND THE AMOUNT OF ADVANCE OF RS.51 LAKHS TO RUPALI MITTAL WAS GIVEN ON 31.3.2008 OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. THE INTEREST FREE CAPITAL BALANCE AVAILABLE WITH THE ASSESSEE AS ON 31.3.2008 WAS 31.48 LAKHS AND RS.17.21 LAKHS AS INTEREST FREE OUTSTANDING FROM M/S FAIR INTERMEDIATE INVESTMENT PVT. LTD. FURTHER THE ASSESSEE HAS INTEREST FREE FUNDS AVAILABLE FROM HIS WIFE, SMT. ANURADHA MEETAL DURING THE YEAR. THE OPENING BALANCE OF ANURADHA MEETAL WAS RS.23.47 LAKKHS AND BALANCE AS ON 11.3.2008 WAS RS.51.98 LAKHS AND MOST OF THE BALANCE WAS REPAID IN THE LAST OF THE MONTH I.E. 31.3.2008. THEREFORE, THE ASSESSEE HAD INTEREST FREE FUNDS AVAILABLE WITH HIM ROUND THE YEAR, FROM WHICH THE ASSESSEE HAS ADVANCED LOAN TO RUPALI MEETAL. BEING NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) HAS CONFIRMED THE ADDITION. :- 3 -: 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US AND HAS INVITED OUR ATTENTION TO THE COPY OF THE STATEMENT OF RUPALI MEETAL TO DEMONSTRATE THAT AT DIFFERENT POINT OF TIME INTEREST FREE LOAN WAS ADVANCED TO RUPALI MEETAL AND AT THE END OF THE FINANCIAL YEAR, THE OUTSTANDING AMOUNT WAS OF RS.51 LAKHS. FROM THE STATEMENT OF ACCOUNT OF SMT. ANURADHA MEETAL AVAILABLE AT PAGE 8 OF THE COMPILATION OF THE ASSESSEE, THE ASSESSEE HAS TRIED TO EXPLAIN THAT AT DIFFERENT POINT OF TIME, ASSESSEE HAS RECEIVED INTEREST FREE ADVANCES FROM ANURADHA MEETAL AND ON 25.2.2008 THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE WAS AT RS.51,98,963/-. FROM THE BALANCE SHEET AVAILABLE AT PAGE 11 OF THE COMPILATION OF THE ASSESSEE, IT IS EVIDENT THAT THE ASSESSEE HAS ALSO RECEIVED INTEREST FREE FUNDS FROM M/S FAIR INTERMEDIATE INVESTMENT PVT. LTD. AT RS.17,21,264/-. THEREFORE, FROM THE AFORESAID STATEMENTS OF ACCOUNT, IT IS CLEAR THAT ADVANCE TO RUPALI MEETAL, DAUGHTER- IN-LAW OF THE ASSESSEE WAS GIVEN AT DIFFERENT POINT OF TIME DURING THE WHOLE FINANCIAL YEAR AND SIMILARLY ASSESSEE HAS ALSO RECEIVED INTEREST FREE ADVANCES FROM HIS WIFE, SMT. ANURADHA MEETAL DURING THE ENTIRE ASSESSMENT YEAR. THEREFORE, THE ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS, WHICH WERE ADVANCED TO HIS DAUGHTER-IN-LAW AT DIFFERENT POINT OF TIME. IF THE ADVANCES WERE GIVEN, IT IS THE DISCRETION OF THE ASSESSEE TO CHARGE INTEREST OR NOT ON THE ADVANCES GIVEN TO HIS DAUGHTER-IN-LAW. SINCE THE TRANSACTIONS ARE FAMILY TRANSACTIONS AND INTEREST IS NOT CHARGED FROM HIS DAUGHTER-IN-LAW, THE CORRESPONDING DISALLOWANCE OF PAYMENT OF INTEREST CANNOT BE MADE, AS AT THE RELEVANT POINT OF TIME THE INTEREST FREE FUND WAS AVAILABLE WITH THE ASSESSEE. WE, THEREFORE, FIND NO MERIT IN THIS DISALLOWANCE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DELETE THE ADDITION OF RS.3,55,142/-. 6. WITH REGARD TO THE OTHER ADDITION OF RS.9,821/-, IT IS NOTICED THAT THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS RECEIVED INTEREST FROM HDFC BANK AND ICICI BANK AT RS.14,344/-, WHICH WERE NOT SHOWN. :- 4 -: 7. IN APPEAL, THE ASSESSEE HAS DEMONSTRATED THAT THE INTEREST OF RS.4,513/- WAS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDING ON 31.3.2008 AS INTEREST RECEIVED FROM BANK. BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) GRANTED RELIEF OF RS.4,513/- AND MADE ADDITION OF THE BALANCE AMOUNT OF RS.9,821/-. 8. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT HE HAS NOT RECEIVED ANY INTEREST OF RS.9,821/- AS OBSERVED BY THE ASSESSING OFFICER AND THE LD. CIT(A). THE TOTAL INTEREST RECEIVED BY THE ASSESSEE WAS OFFERED TO TAX AFTER TAKING THE SAME INTO ACCOUNT IN PROFIT AND LOSS ACCOUNT. SINCE NOTHING HAS BEEN PLACED ON RECORD BY THE REVENUE EXCEPT THE ORDER OF THE ASSESSING OFFICER, WE ARE OF THE VIEW THAT THESE FACTS CAN BE VERIFIED BY THE ASSESSING OFFICER. IF THE ASSESSEE HAS IN FACT RECEIVED INTEREST FROM BANKS AT RS.14,334/- AND HAS OFFERED ONLY RS.4,513/- IN THE PROFIT AND LOSS ACCOUNT, THE BALANCE CAN BE ADDED. OTHERWISE, IF THE INTEREST RECEIVED HAS ALREADY BEEN OFFERED BY THE ASSESSEE TO TAX, NO ADDITION IS CALLED FOR. ACCORDINGLY, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE FACTS AND TO ADJUDICATE IT AS PER LAW. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:16 TH JANUARY, 2015 JJ:0801 :- 5 -: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR