Sh Chandra Kumar Bhatia, V. The ITO 3 (2),

ITA 588/IND/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1407 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 04-07-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: MANISH VAIDYA
• Keywords: Unexplained cash credit; Gift; Retraction; Reassessment proceedings
• Section: 139(1); 139(4); 147; 68; 148

Judgement Text

PAGE 1 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. :ACFPB4434C I.T.A.NO.588/IND/2005 A.Y. : 2000-01 SHRI CHANDRA KUMAR BHATIA, INCOME-TAX OFFICER, C/O D.M.WOLLEN MILLS, VS 3(2), 51, LAXMIBAI NAGAR, INDORE. INDORE. APPELLANT RESPONDENT I.T.A.NO.591/IND/2005 A.Y. : 2000-01 INCOME-TAX OFFICER, SHRI CHANDRA KUMAR BHATIA, 3(2), VS C/O D.M.WOLLEN MILLS, INDORE. 51, LAXMIBAI NAGAR, INDORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI MANISH VAIDYA, C. A. DEPARTMENT BY : SMT. APARNA KARAN, SR. DR DATE OF HEARING : 20.10.2009 O R D E R PER GUPTA, A.M. THESE CROSS APPEALS ARISE OUT OF THE ORDER OF THE L D. CIT(A) DATED 27.04.2005 FOR ASSESSMENT YEAR 2000-01. 2. THESE APPEALS WERE FIXED FOR HEARING. HOWEVER, T HE LEARNED COUNSEL VIDE HIS LETTER DATED 10.12.2009 SOUGHT ADJ OURNMENT BY MERELY PAGE 2 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, STATING THAT HE WOULD BE AWAY FROM INDORE. ON PERUS AL OF THE ORDER SHEET, IT WAS NOTED THAT THIS APPEAL CAME UP FOR HEARING O N 29.4.2008, 23.7.2008, 15.9.2008, 17.12.2008, 19.3.2009 AND 29.6.2009 AND EXCEPT FOR ONE OCCASION, THIS CASE WAS ADJOURNED ALWAYS AT THE REQ UEST OF THE ASSESSEE. THE REASONS STATED BY THE LEARNED COUNSEL WHILE SE EKING ADJOURNMENTS INDICATED THAT THAT THE ADJOURNMENTS HAD BEEN SOUG HT MERELY TO AVOID THE HEARING. IN THIS VIEW OF THE MATTER, THE APPLICATIO N FOR ADJOURNMENT WAS REJECTED. ON THE DATE OF HEARING, SHRI MANISH VAIDY A, THE PARTNER OF THE FIRM OF AUTHORIZED REPRESENTATIVE APPEARED AND FILE D ANOTHER APPLICATION FOR ADJOURNMENT, WHICH WAS ALSO REJECTED BY THE BEN CH. THEREAFTER, HE WAS ASKED TO ARGUE THE MATTER ON MERITS. IN RESPONS E TO WHICH HE REPLIED THAT HE HAD TO MAKE NO ARGUMENTS IN CASE OF APPEAL FILED BY THE ASSESSEE AND IN CASE OF APPEAL OF THE REVENUE, HE PREFERRED TO RELY ON THE ORDER OF THE LD. CIT(A). 3. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, IN THE CASE OF REVENUES APPEAL RELIED ON THE ORDER OF THE A.O. AND IN THE CASE OF THE ASSESSEES APPEAL, SHE PREFERRED TO RELY ON THE ORD ER OF THE LD. CIT(A). 4. IN THE REVENUES APPEAL, GROUND RAISED BY THE REV ENUE, READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1 5.48 LAKHS OF UNEXPLAINED CASH CREDITS AND AN AMOUNT OF PAGE 3 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, RS. 3,80,291/- SURRENDERED DURING THE SURVEY U/S 133A. 5. THE FACTS, IN BRIEF, ARE THAT THE A.O. REQUIRED TH E ASSESSEE TO EXPLAIN THE UNSECURED LOANS TAKEN BY THE ASSESSEE F ROM FRIENDS AND RELATIVES AMOUNTING TO RS. 33,41,000/-. THE A.O. MA DE CERTAIN ENQUIRIES WHEREBY THE ASSESSEE FURNISHED COPY OF ACCOUNTS WIT H REMARK OF THE CREDITORS CONFIRMING THE BALANCES APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE A.O. ALSO FOUND THAT IN CERTAIN C ASES EVEN THE COPY OF ACCOUNT NOR ANY OTHER DETAIL OF THE TRANSACTIONS HA D BEEN FURNISHED. THE A.O., ACCORDINGLY, HELD THAT THE ASSESSEE FAILED TO DISCHARGE ITS LEGAL OBLIGATIONS AS ENVISAGED U/S 68 OF THE ACT AND MADE AN ADDITION OF RS. 15,48,000/- IN RESPECT OF 19 CREDITORS. FURTHER, T HERE WAS A SURVEY IN THE CASE OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATIO N , WHEREIN IT WAS FOUND THAT THE ASSESSEE HAD ACCEPTED GIFTS WORTH RS . 14 LAKHS ON DIFFERENT OCCASIONS AND ALSO SURRENDERED RS. 10 LAKHS DURING THE COURSE OF SURVEY. THE ASSESSEE HAD ALSO CLAIMED THAT VARIOUS EXPENSES WERE INCURRED BY THE ASSESSEE FROM GIFTS RECEIVED BY HIM, ON THE OCCASIO N OF THE MARRIAGE IN THE FAMILY OF THE ASSESSEE. THE A.O. TREATED THE GI FTS AS UNEXPLAINED. HOWEVER, HE DID NOT MAKE ANY SEPARATE ADDITION FOR THE REASON THAT AN ADDITION OF RS. 10 LAKHS HAD ALREADY BEEN MADE TO T HE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THIS, THE ASSESSEE CARRIED T HE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTENDED THA T THE A.O. SHOULD PAGE 4 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, HAVE ACCEPTED THE RETRACTION MADE BY THE ASSESSEE I N THE COURSE OF SURVEY AS THE SAME WAS GIVEN UNDER DURESS AND WITHOUT ESTA BLISHING THE CORRECT FACTS. THE ASSESSEE ALSO GAVE VARIOUS EXPLANATIONS REGARDING THE GENUINENESS OF THE GIFTS RECEIVED AT THE TIME OF MA RRIAGE. THE ASSESSEE ALSO RELIED ON THE C.B.D.T. CIRCULAR REGARDING ITS PLEA THAT NO ADDITION COULD BE MADE MERELY ON THE BASIS OF A STATEMENT OF ASSESSEE WITHOUT ANY MATERIAL OR EVIDENCE. THE ASSESSEE ALSO RELIED ON V ARIOUS JUDICIAL DECISIONS IN REGARD TO ITS CLAIM THAT WRONG STATEME NT COULD BE RETRACTED. THE ASSESSEE ALSO GAVE EXPLANATIONS REGARDING CREDI TS IN THE CAPITAL ACCOUNT AND EXPENDITURE THERFROM ON THE OCCASION OF THE MARRIAGE. THE LD. CIT(A) HELD THAT A.O. HAD NOT JUDICIALLY APPREC IATED THE DETAILS OF EXPENSES AND SOURCES THEREOF IN THE COURSE OF ASSES SMENT PROCEEDINGS. HE FURTHER HELD THAT NO ADDITION COULD BE SUSTAINED ME RELY ON THE BASIS OF A STATEMENT WITHOUT ANY EVIDENCE ON RECORD. THE LD. C IT(A) FURTHER HELD THAT IN THE REMAND REPORT, WHICH WAS GIVEN AFTER SI X MONTHS, THE A.O. DID NOT GIVE ANY SPECIFIC COMMENTS ON THE VARIOUS PIECE S OF EVIDENCE SUBMITTED BY THE ASSESSEE AND MERELY REITERATED THE STAND OF ORIGINAL PROCEEDINGS. IN THESE CIRCUMSTANCES, THE LD. CIT(A) DELETED THE ADDITION OF RS. 10 LAKHS. HE, HOWEVER, HELD THAT OUT OF TOTA L GIFTS OF RS. 7,75,182/-, 10 % AMOUNT THEREOF COULD NOT BE TREATED AS GENUINE . HENCE, HE DIRECTED THE A.O. TO ADD SUCH AMOUNT AS INCOME OF THE ASSESS EE. THUS, A RELIEF OF RS. 3,80,921/- I.E. RS. 10 LAKHS (-) RS. 6,19,709 /-, BEING 90 % OF RS. PAGE 5 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, 7,75,182/-) WAS ADDED. AGGRIEVED BY THIS, THE REVEN UE IS IN APPEAL BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ARGUED THE MAT TER AT LENGTH AND PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED TO RELY ON THE ORDER OF THE LD. CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH TH E SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT IN REGARD TO ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF SUNDRY CREDITORS, THE LD. CIT(A) HAS CALLED THE REMAND REPORT FROM THE A.O. WHEREIN NO SPECIFIC DEFICIENCI ES/SHORTCOMINGS HAVE BEEN POINTED OUT ON THE VARIOUS EVIDENCES SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A). IT IS ALSO NOTED THAT OTHER CIRCUMSTANTIAL EVIDENCE SUCH AS RECEIVING OF LOANS THROUGH BANKING CHANNEL, SUBMISSION OF TAX DETAILS OF SUCH CREDITORS AND PAYMENT OF INTEREST T HROUGH ACCOUNT PAYEE CHEQUES ALSO SUPPORT THE CLAIM OF THE ASSESSEE. IT IS ALSO NOTED THAT NO INDEPENDENT INQUIRY HAS BEEN DONE BY THE ASSESSING OFFICER FROM THE SUNDRY CREDITORS. IN VIEW OF THESE FACTS AND CIRCUM STANCES, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE AD DITION MADE BY THE ASSESSING OFFICER. THUS, THIS PART OF THIS GROUND O F THE REVENUE IS DISMISSED. 9. AS REGARDS THE OTHER ISSUE, IT IS NOTED THAT THERE WAS A SURVEY IN THE CASE OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATIO N WHEREIN THE ASSESSEE PAGE 6 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, DECLARED AN AMOUNT OF RS. 10 LAKHS. THE ASSESSEE SU BSEQUENTLY RETRACTED FROM SUCH DECLARATION. THE ASSESSEE HAD ALSO RECEIV ED VARIOUS GIFTS ON THE OCCASION OF THE MARRIAGE IN HIS FAMILY, WHICH WERE ALSO TREATED AS INGENUINE BY THE ASSESSING OFFICER. HOWEVER, NO SEP ARATE ADDITION WAS MADE AS THE SAME WERE TREATED AS COVERED BY THE AMO UNT SURRENDERED BY THE ASSESSEE. THE LD. CIT(A) HAS FOUND THAT VARIOUS EVIDENCES WERE PRODUCED BEFORE THE A.O., WHICH WERE NOT PROPERLY A PPRECIATED. THE LD. CIT(A) HAS ALSO CALLED THE REMAND REPORT FROM THE A .O., WHEREIN NO SPECIFIC OBSERVATIONS HAVE BEEN MADE BY THE ASSESSI NG OFFICER AS MENTIONED BY THE LD.CIT(A) IN THE APPELLATE ORDER. IN THE BACKGROUND OF THESE FACTS, WE ARE OF THE VIEW THAT THE RETRACTION MADE BY THE ASSESSEE IS DULY SUBSTANTIATED BY THE EVIDENCES SUBMITTED BY T HE ASSESSEE SUBSEQUENTLY. HENCE, THE SAME NEED TO BE ACCEPTED. WE ALSO FIND THAT GIFTS HAVE BEEN TAKEN ON THE OCCASION OF THE MARRIA GE AND SUITABLE EXPLANATIONS HAVE BEEN GIVEN. HENCE, IN THESE CIRCU MSTANCES, WE HOLD THAT THE DECISION OF THE LD. CIT(A) IS CORRECT IN L AW. HENCE, THIS PART OF THIS GROUND OF THE REVENUE IS ALSO REJECTED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 11. NOW WE SHALL TAKE UP THE ASSESSEES APPEAL IN I.T. A.NO. 588/IND/2005. 12. FIRST, WE WILL DEAL WITH R NO. 3, WHICH READS AS U NDER :- PAGE 7 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, 3. THAT THE LD. CIT(A) ERRED IN HOLDING THAT THE IMPUGNED NOTICE ISSUED U/S 148 AND THE ASSESSMENT PROCEEDINGS ARE VALID AND PROPER. IT IS SUBMITTED T HAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS P ER LAW THE NOTICE ISSUED U/S 148 AS WELL AS THE ASSESSMENT PRO CEEDINGS ARE ILLEGAL AND BAD IN LAW. 13. THE FACTS, IN BRIEF, ARE THAT THE A.O. ISSUED NOTI CE U/S 148 AT THE TIME WHEN THE ASSESSEE WAS HAVING TIME TO FILE RETU RN U/S 139(4) OF THE INCOME-TAX ACT, 1961. HENCE, THE ASSESSEE CLAIMED T HAT NOTICE ISSUED U/S 148 WAS A CASE OF MERE SUSPICION AND, THEREFORE, RE ASSESSMENT PROCEEDINGS WERE NULL AND VOID. THE LD. CIT(A) FOUN D THAT THE ASSESSEE HAD NOT FILED RETURN EITHER U/S 139(1) OR 139(4) OF THE ACT AND THERE WAS NO PROHIBITION IN THE LAW ON THE POWERS OF THE A.O. TO ISSUE NOTICE U/S 148 DURING THE PERIOD AVAILABLE WITH THE ASSESSEE TO FI LE RETURN U/S 139(4), RATHER EXPLANATION 2(A) TO SECTION 147 EMPOWERED TH E A.O. FOR DOING SO, IN CASE WHERE IN HIS OPINION, SOME INCOME HAS ESCAP ED ASSESSMENT. THE LD. CIT(A) ALSO HELD THAT THE DECISIONS RELIED ON B Y THE ASSESSEE WERE NOT APPLICABLE AS IN THOSE CASES ASSESSMENT PROCEEDINGS WERE ALREADY PENDING WITH REFERENCE TO THE RETURNS FILED EARLIER. ACCORD INGLY, HE REJECTED THIS GROUND OF THE ASSESSEE. PAGE 8 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, 14. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT OFFER ANY ARGUMENTS AND THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 15. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUS ED THE MATERIAL AVAILABLE ON RECORD. 16. IN OUR OPINION, THE REASSESSMENT PROCEEDINGS INITI ATED BY THE ASSESSING OFFICER IN THE FACTS AND CIRCUMSTANCES OF THE CASE ARE AS PER THE PROVISIONS OF LAW. HENCE, WE HOLD THAT THERE IS NO MERIT IN THIS GROUND OF THE ASSESSEE. ACCORDINGLY, THE SAME IS DISMISSED. 17. GROUND NO.1 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN MAKING THE ADDITION O F RS. 6,19,709/- BEING 90 % OF CASH GIFTS OF RS. 6,88,565 /- RECEIVED AT THE TIME OF MARRIAGE CEREMONY OF HIS DA UGHTER. IT IS SUBMITTED THAT ON FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) OUGHT TO HAVE ACCEPTED THE GIFTS AS GENUINE AND ALLOWED THE SAME. 18. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED TO HAVE RECEIVED CASH GIFTS WORTH RS. 6,88,565/-. THE LD. CIT(A) TRE ATED 10% OF SUCH GIFTS AS GENUINE AND CONFIRMED THE ADDITION IN RESPECT OF THE BALANCE AMOUNT OF RS. 6,19,709/- FOR THE REASON THAT THE ASSESSEE FAI LED TO PROVE THE GENUINENESS OF SUCH GIFTS. AGGRIEVED BY THIS, THE A SSESSEE IS IN APPEAL BEFORE US. PAGE 9 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, 19. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT OFFER ANY ARGUMENT. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, PLACED RELIANCE ON THE ORDER OF THE CIT(A). 20. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH TH E PARTIES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 21. WE FIND THAT THE ASSESSEE HAS CLAIMED TO HAVE RECE IVED THESE GIFTS IN CASH IN THE DENOMINATION OF RS. 101/- TO RS. 500 0/- AND MAJORITY OF THE GIFTS ARE IN THE RANGE OF RS. 1,000/-. THE ASSESSEE HAS FURNISHED THE NAME OF PERSONS WHO HAS GIVEN SUCH GIFTS THE ASSESSEE H AS ALSO FURNISHED AFFIDAVIT IN SUPPORT OF HIS CLAIM OF RECEIVING SUCH GIFTS. IT IS ALSO NOTED THAT THE A.O. HAS MADE THIS ADDITION MERELY FOR THE REASON THAT CONFIRMATIONS OF THE RESPECTIVE DONORS NOR THEY COU LD BE PRODUCED BEFORE THE A.O. FOR VERIFICATION. THE LD. CIT(A), THOUGH, OBSERVED THAT THERE COULD BE PRACTICAL DIFFICULTY IN PRODUCING PERSONS IN SUCH LARGE NUMBERS, HOWEVER, HE HAS ACCEPTED ONLY 10 % OF SUCH GIFTS AS GENUINE. HOWEVER, HE HAS NOT GIVEN ANY BASIS FOR ACCEPTING SUCH PERCE NTAGE. IN OUR SOCIETY, THESE ARE THE SOCIAL OCCASIONS, WHERE PEOPLE DO CON TRIBUTE. IT IS ALSO TRUE THAT IT MAY BE VERY MUCH EMBARRASSING FOR THE ASSES SEE AS WELL AS DONORS FOR SUBMITTING THESE CONFIRMATIONS AS WELL AS APPEA RING IN PERSON BEFORE A.O. WE FURTHER FIND THAT OTHER EVIDENCES SUCH AS B ILL OF CONTRACTOR OF FOOD OR ATTENDANCE OF SUCH A LARGE NUMBER OF PERSON S HAS NOT BEEN DISPUTED. IT IS ALSO NOTED THAT THE ASSESSEE HAS CL AIMED TO HAVE INCURRED A PAGE 10 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, GOOD SUM ON THE OCCASION OF THE MARRIAGE WHICH ALSO REFLECTS THE STATUS OF THE FAMILY OF THE ASSESSEE. THUS, IF THE FACTS ARE TAKEN INTO CONSIDERATION AS A WHOLE, THEN IT CANNOT BE SAID THAT THE ASSESSE E CANNOT RECEIVE THIS MUCH SUM ON THE OCCASION OF THE MARRIAGE. IN OUR OP INION, THE BURDEN OF PROVING A POINT ALWAYS SHIFTS AND THE REVENUE AUTHO RITIES CANNOT BE JUSTIFIED IN MAKING AN ADDITION, JUST BECAUSE THE A SSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE CERTAIN TRANSACTIONS IN THE MA NNER IN WHICH THEY WANT. WE ARE FURTHER OF THE VIEW THAT IN SUCH CASES, AS S TATED EARLIER, CERTAIN FURTHER ENQUIRIES SHOULD BE MADE BEFORE MAKING AN A DDITION, SO THAT SOME BASIS IS CREATED INDEPENDENT OF THE ASSESSEES OBLI GATION, SO AS TO JUSTIFY SUCH ADDITION, WHICH THE REVENUE AUTHORITIES HAVE N OT DONE SO IN THE PRESENT CASE AS NONE OF THE DONORS HAS BEEN APPROAC HED DIRECTLY EVEN AFTER HAVING THE LIST THEREOF. THUS, TAKING INTO C ONSIDERATION THE ENTIRE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT NO ADDITION IS CALLED FOR ON THIS ACCOUNT. THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED. 22. GROUND NO.2 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF RS. 6,41,599/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST INCOME. IT IS SUBMITTED THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE SAID INCOME WAS NEVE R RECEIVED BY THE APPELLANT AND HENCE NOT INCLUDIBLE IN HIS TOTAL INCOME. PAGE 11 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, 23. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE HAD DEP OSITS WITH D.M. WOOLEN MILLS PRIVATE LIMITED, WHERE ON INTEREST RS. 6,41,599/- WAS DUE. HOWEVER, THE ASSESSEE HAD NOT SHOWN THE SAME AS ITS INCOME. THE ASSESSEE CLAIMED THAT IT WAS DONE SO AS THE ASSESSE E HAD NOT CLAIMED DEDUCTION OF INTEREST/BROKERAGE PAID BY IT ON MARKE T BORROWINGS. THE A.O., HOWEVER, ADDED THE SAME TO THE TOTAL INCOME O F THE ASSESSEE AS M/S. D.M. WOOLEN MILLS PRIVATE LIMITED HAD SHOWN THE SAM E PAYABLE TO THE ASSESSEE. AGGRIEVED BY THIS, THE ASSESSEE CARRIED T HE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS SUBMITTED THA T THIS ADDITION HAD BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF NOTE ATTACHED WITH THE RETURN OF INCOME, WHEREAS THE FACT WAS THAT M/S. D. M. WOOLEN MILLS PRIVATE LIMITED HAD SUBSEQUENTLY DECIDED NOT TO PAY SUCH INTEREST BY PASSING A RESOLUTION IN ITS BOARD MEETING ON 31.10. 2002 DUE TO TIGHT LIQUIDITY POSITION OF THE COMPANY. HENCE, IN FACT, NO INCOME WAS ACTUALLY EARNED BY THE ASSESSEE. THE ASSESSEE ALSO CONTENDED THAT AS PER REAL INCOME THEORY, WHICH WAS JUDICIALLY SETTLED, ONLY T HE INCOME, WHICH ACTUALLY ACCRUED TO THE ASSESSEE OR RECEIVED BY THE ASSESSEE COULD BE TAXED. HENCE, FOR THIS REASON ALSO, THE SAME WAS NO T TAXABLE. THE LD. CIT(A), HOWEVER, HELD THAT INCOME HAD ALREADY ACCRU ED TO THE ASSESSEE AND NON-REALIZATION THEREOF ON ACCOUNT OF THE RESOL UTION PASSED BY THE PAYEE COMPANY COULD NOT ALTER THE NATURE OF RECEIPT IN THE HANDS OF THE ASSESSEE IN ANY MANNER. HE FURTHER HELD THAT IT WAS A CASE OF DELAYED PAGE 12 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, WAIVER OF INCOME TO SUIT REQUIREMENTS OF THE ASSESS EE, WHO WAS THE MANAGING DIRECTOR OF THE PAYEE COMPANY. AGGRIEVED B Y THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 24. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT OFFER ANY ARGUMENT. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, RELIED PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 25. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH TH E SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. IT IS NOTED THAT THE ASSESSEE IS THE MANAGING DIRECTOR OF THE PAYEE COMPANY. HENCE, THE ASSESSEE IS IN A POSITION TO INFLUENCE THE POLICY O F SUCH COMPANY, PARTICULARLY WHEN SUCH COMPANY IS A PRIVATE LIMITED COMPANY. FURTHER, FROM THE PERUSAL OF ASSESSMENT ORDER AS WELL AS APP ELLATE ORDER, IT IS EVIDENT THAT NO DOCUMENTARY EVIDENCE HAVE BEEN BROU GHT ON RECORD BY THE ASSESSEE TO SHOW THE COMPELLING CIRCUMSTANCES OF TH E DEBTOR COMPANY TO SHOW IT WAS NOT IN A POSITION TO PAY THE INTEREST. THUS, IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT SUCH ACTION OF WAIVE R OF INTEREST IS NOTHING BUT AN EXERCISE TO SERVE THE INTERESTS OF THE ASSES SEE, HENCE, SUCH INTEREST RECEIVABLE IS CHARGEABLE AS THE INCOME OF THE ASSES SEE. WE FURTHER HOLD THAT, IN THESE CIRCUMSTANCES, REAL INCOME THEORY DO ES NOT COME INTO PLAY AT ALL. ACCORDINGLY, WE CONFIRM THE FINDINGS OF THE LD. CIT(A). THUS, THIS GROUND OF THE ASSESSEE IS DISMISSED. 26. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ST ANDS PARTLY ALLOWED. PAGE 13 OF 13 I.T.A.NO. 588 &591/IND/05 CHANDRA KUMAR BHATIA, 2. TO SUM UP, THE REVENUES APPEAL STANDS DISMISSED AN D ASSESSEES APPEAL STANDS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 12 TH NOVEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 12 TH NOVEMBER, 2009. CPU* 49D11