Shri Deepak Madanlal Maliwal, Ahmedabad V. The ACIT, Circle - 12, Ahmedabad

ITA 606/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5480 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus loan; Set aside
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SMCBENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO.606/AHD/2016 / ASSTT. YEAR: 2010-2011 SHRI DEEPAK MADANLAL MALIWAL, 5, SAMARATH APARTMENT, OPP. STATE BANK OF HYDERABAD, MANINAGAR, AHMEDABAD-380008. PAN:ALOPM5900G VS. ACIT, CIRCLE-12, AHMEDABAD ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI SAKAR SHARMA , AR REVENUE BY : SHRI VIRENDRA SINGH , SR. DR / DATE OF HEARING : 22/10/2018 / DATE OF PRONOUNCEMENT: 01/11/2018 *+/ O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 6, [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-6/14/13-14 DATED 25 .01.2016 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 28.02.2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEA LS. 1. THE LD.CIT(A), ERRED ON FACTS AND IN LAW IN CONF IRMING DISALLOWANCE OF RS.89,315/- U/S.14A R.W.R 8D/- ITA NO.606/AHD/2016 ASSTT. YEAR 2010-11 2 2. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN CONFI RMING DISALLOWANCE OF INTEREST PAID OF RS.23,75,162/- ON THE OPENING BALA NCE OF UNSECURED LOANS WHICH HAVE BEEN HELD TO BE GENUINE IN EARLIER ASSES SMENT YEARS. THE APPELLANT CRAVES PERMISSION TO ADD, ALTER, AMEN D OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURS E OF HEARING OF APPEAL. 3. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAS BEEN INSTRUCTED BY THE ASSESSEE NOT TO PRESS GROUND NO. 1, THEREFORE, WE DISMISSED THE SAME AS NOT PRESSED. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF PROVIDING FINANCIAL SERVICE AND MON EY LENDING. THE LEARNED ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDING S OBSERVED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES OF RS. 23,75 ,162/- ON THE LOANS WHICH WERE TAKEN IN THE EARLIER YEARS AND IN THAT YEAR TH ESE LOANS WERE HELD AS BOGUS. AS PRINCIPAL AMOUNT OF LOAN TAKEN IN THE EARLIER YE ARS WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED CA SH CREDIT U/S 68 OF THE ACT AS WELL AS THE AMOUNT OF INTEREST THEREON BY THE LE ARNED ASSESSING OFFICER, THEREFORE, THE ASSESSING OFFICER ALSO DISALLOWED TH E INTEREST EXPENSES CLAIMED BY THE ASSESSEE IN RESPECT OF SUCH LOAN IN THE YEAR UNDER CONSIDERATION. 5. IN VIEW OF THE ABOVE, THE LD. AO WAS OF THE VIEW THAT THE INTEREST EXPENSES CLAIMED IN THE YEAR UNDER CONSIDERATION ON SUCH BOGUS LOANS ARE NOT ELIGIBLE FOR DEDUCTION. ACCORDINGLY, AO DISALLOWED THE SAME AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD. CI T(A) WHO CONFIRMED THE ORDER OF THE LD. AO AFTER HAVING RELIANCE IN TH E ORDER OF HIS PREDECESSOR ITA NO.606/AHD/2016 ASSTT. YEAR 2010-11 3 PERTAINING TO THE ASSESSMENT YEAR 2009-2010. ACCORD INGLY, THE DISALLOWANCE OF INTEREST EXPENSES WAS CONFIRMED BY THE LD. CIT(A ). THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: 11.7 IT IS ALSO IMPORTANT TO NOTE THAT THE THOUGH T HE LOAN WAS OUTSTANDING AGAINST THESE PARTIES HOWEVER, THE APPELLANT COULD NOT PROV IDE THE EXACT ADDRESS OF THE PARTIES FROM WHOM LOANS WERE TAKEN AND INTEREST WAS PAID. THE SEQUENCE OF EVENTS SHOWS THAT THE TRANSACTIONS OF THE INTEREST PAYMENT SHOWN BY THE ASSESSEE DO NOT REFLECT THE TRUE AND CORRECT PAYMENT. ON THE SAME I SSUE, THE CIT(A) IN A.Y.2009-10 ALSO UPHELD THE DISALLOWANCE OF INTEREST PAID TO NO N-VERIFIABLE PARTIES. THEREFORE, CONSIDERING THE ALL FACTS MENTIONED ABOVE, THE DISA LLOWANCE MADE BY THE AO WITH RESPECT TO INTEREST OF RS.23,75,162/- IS UPHELD U/S .36(1)(III) OF THE I.T. ACT. THE GROUND IS DISMISSED. 7. BEING AGGRIEVED BY THE LD. CIT(A)S ORDER ASSESS EE IS IN APPEAL BEFORE US. THE LD.AR BEFORE US SUBMITTED THAT THE HONBLE ITAT IN THE OWN CASE OF THE ASSESSEE IN ITA NO.1363/AHD/2014, PERTAINING TO THE ASSESSMENT YEAR 2009-2010 HAS RESTORED THE MATTER TO THE LD.CIT(A) FOR FRESH ADJUDICATION VIDE ORDER DATED 07/07/2017. ACCORDINGLY, THE LD.AR , PRAYED TO RESTORE THE MATTER TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICA TION IN ACCORDANCE WITH THE PROVISION OF LAW. 8. ON THE OTHER HAND, LD. DR, RAISED NO OBJECTION I F THE MATTER IS SET ASIDE TO THE LD. CIT(A) FOR FRESH ADJUDICATION IN ACCORD ANCE WITH THE LAW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE INTEREST WAS DISALLOWED BY THE LD.AO ON THE LOANS WHICH WERE HELD AS BOGUS IN THE EARLIER YEAR BY THE LOWER AUTH ORITIES. HOWEVER, WE FIND THAT THE EARLIER YEAR ORDER HAS BEEN RESTORED BY TH E HONBLE ITAT IN OWN CASE OF THE ASSESSEE (SUPRA). THE RELEVANT EXTRACT OF TH E ORDER IS EXTRACTED BELOW: 6. WE NOW COME TO LATTER ASSESSEES SUBSTANTIVE GRO UND RAISING THE VERY ISSUE OF CORRECTNESS OF SECTION 68 ADDITION OF UNEXPLAINE D UNSECURED LOANS AND SECTION 36(1)(III) INTEREST DISALLOWANCE OF RS.3,74,99,759/ -. IT EMERGES FROM THE ASSESSMENT ORDERS PAGE 14 THAT THERE IS A SIMILARITY OF FACTS IN THE IMPUGNED ASSESSMENT YEAR ITA NO.606/AHD/2016 ASSTT. YEAR 2010-11 4 VIS--VIS THOSE INVOLVED IN RECEDING ASSESSMENT YEA RS WHEREIN THIS TRIBUNALS ORDER (SUPRA) IN REVENUES APPEAL ITA NO.795/AHD/2011 IN ASSESSEES CASE ITSELF HAS RESTORED IDENTICAL ISSUE INVOLVING A SUM OF RS.1,22 ,33,000/- BACK TO THE CIT(A). WE THEREFORE ADOPT THE VERY COURSE OF ACTION HEREIN AS WELL TO REMIT THE INSTANT SUBSTANTIVE GROUND BACK TO THE CIT(A). WE THEREFORE ADOPT THE VERY COURSE OF ACTION HEREIN AS WELL TO REMIT THE INSTANT SUBSTANT IVE GROUND BACK TO THE CIT(A). BOTH ASSESSEE IDENTICAL LATTER SUBSTANTIVE GROUND I S ACCEPTED FOR STATISTICAL PURPOSES. 10. THERE IS NO AMBIGUITY THAT INTEREST EXPENSES IS DISALLOWED UNDER THE YEAR CONSIDERATION HAS DIRECT NEXUS WITH THE UNSECU RED LOAN TAKEN IN THE EARLIER YEARS. SINCE LOAN TAKEN IN THE EARLIER YEAR S HELD AS BOGUS, THEREFORE, THE INTEREST ON SUCH LOAN CLAIMED BY THE ASSESSEE IN TH E YEAR UNDER CONSIDERATION WAS DISALLOWED. 11. HOWEVER, WE FIND THAT THE ISSUE OF LOAN TAKEN B Y THE ASSESSEE IN THE EARLIER YEAR IS PENDING FOR FRESH ADJUDICATION BEFO RE THE LD. CIT(A) IN PURSUANCE TO THE DIRECTION GIVEN BY THE HONBLE ITA T IN THE OWN CASE OF THE ASSESSEE (SUPRA). AS THE ISSUE OF INTEREST EXPENSE S DEPENDS UPON THE OUTCOME OF THE ISSUE PERTAINING TO THE ISSUE OF 2009-10, TH EREFORE, WE ARE INCLINED TO RESTORE THE IMPUGNED ISSUE TO THE FILE OF THE LD. C IT(A) FOR FRESH ADJUDICATION, IN THE LIGHT OF ABOVE STATED DISCUSSIONS AND ACCORD ING TO THE PROVISIONS OF LAW. HENCE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE COURT ON 01/11/2018 AT AHMEDABAD. (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/11/2018 MANISH ITA NO.606/AHD/2016 ASSTT. YEAR 2010-11 5 *+ , -./0 1*0. / COPY OF THE ORDER FORWARDED TO : *+ 2 3 / BY ORDER, 4 / 3 56 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. !'# $$ , / DR, ITAT, 6. #%& ' / GUARD FILE.