Shri Kaushikkumar Vrajlal Patadia, Ahmedabad V. The Income Tax Officer, Ward-2(1), Ahmedabad

ITA 631/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94530 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N C AMIN
• Section: 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER, AND SHRI MANISH BORAD, ACCOUNTANT MEMBER. ITA. NO. 631/AHD/2015 (ASSESSMENT YEAR:2008-09) SHRI KAUSHIKKUMAR VRAJLAL PATADIA PROP OF: SHREE HARIDARSHAN JEWELLERS, 3 RD FLOOR, NAVNEET PLAZA, B/S MUNICIPAL MARKET, C.G.ROAD, NAVRANGPURA, AHMEDABAD 380009 APPELLANT VS. INCOME TAX OFFICER, WARD-2(1), PRATYAKSHKAR BHAVAN, NR.PAJRAPOLE, AMBAVADI, AHMEDABAD - 380015 RESPONDENT PAN: AGAPP0526C / BY ASSESSEE : SHRI N. C. AMIN, A.R. / BY REVENUE : SHRI RAJDEEP SINGH, SR. D.R. /DATE OF HEARING : 05.10.2015 /DATE OF PRONOUNCEMENT : 14.10.2015 ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 2 - ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008- 09, ARISES FROM ORDER OF THE CIT(APPEALS)-10, AHMEDABAD, DATED 06 TH FEBRUARY, 2015 PASSED IN APPEAL NO. CIT(A)-10/ITO WARD-2(1)/15/2014-15, IN PROCEEDINGS U/S.143(3) R.W.S.147 & 144A OF THE INCO ME TAX ACT, 1961, HEREAFTER THE ACT. 2. THE ASSESSEES TWO SUBSTANTIVE GROUNDS RAISED IN THIS APPEAL CHALLENGE ADDITION OF RS.71,46,345/- AS UNDER VALUATION OF CLOSING STOCK OF GOLD AND SECTIO N 40(A)(IA) DISALLOWANCE OF RS.7,38,096/- MADE BY THE ASSESSING OFFICER AND AFFIRMED IN THE LOWER APPELLA TE PROCEEDINGS. THE ASSESSEE-INDIVIDUAL MANUFACTURES AND TRADES GOLD ORNAMENTS THROUGH A PROPRIETARY CONCERN UNDER THE NAME AND STYLE OF M/S. HARIDARSHAN JEWELL ERS. HE FILED RETURN ON 10.10.2008 ADMITTING INCOME OF RS.59,390/-. THE ASSESSING OFFICER COMPLETED A REG ULAR ASSESSMENT ON 17.10.2012 INTER ALIA DISALLOWING BUSINESS AND INTEREST EXPENDITURE OF RS.34,005/- AN D RS.28,910/-; RESPECTIVELY THEREBY ASSESSING TOTAL I NCOME AS RS.1,22,305/-. THE ASSESSEE DOES NOT SEEM TO HA VE FILED ANY APPEAL AGAINST THESE TWO DISALLOWANCES. 3. THE CASE FILE REVEALS THAT ASSESSING OFFICER THEREAFTER FORMED REASONS TO BELIEVE THAT ASSESSEE S ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 3 - INCOME LIABLE TO BE ASSESSED HAD ESCAPED ASSESSMENT FOR WANT OF TDS DEDUCTION ON INTEREST EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT OF RS.20,03,811/-. THIS CULMINATED IN ISSUANCE OF SECTION 148 NOTICE ON 03.07.2012. THE ASSESSEES SOUGHT FOR REOPENING REASONS. THE ASSESSING OFFICER DULY FURNISHED THE SAME. THE ASSESSEE IN TURN REITERATED THE INCOME ALREADY RETURNED. THE ASSESSING OFFICER TOOK UP REASSESSME NT AND PASSED FINAL ORDER ON 10.02.2014 MAKING THE IMPUGNED ADDITION OF UNDERSTATEMENT OF CLOSING STOC K AND SECTION 40(A)(IA) IN QUESTION. THE CIT(A) UPHO LDS THE SAME. THIS LEAVES THE ASSESSEE AGGRIEVED. 4. WE COME TO FIRST ISSUE OF UNDERSTATEMENT OF CLOS ING STOCK OF GOLD JEWELLERY AMOUNTING TO RS.71,46,345/- . THE ASSESSEE APPEARS TO HAVE FILED A SECTION 144A PETIT ION IN THE COURSE OF RE-ASSESSMENT. THE ADDL. CIT SOUGHT FOR NECESSARY DETAILS OF GOLD JEWELLERY STOCK GIVEN IN AUDIT REPORT I.E. RELEVANT WEIGHT UNIT, QUANTITATIVE PART ICULARS OF 24 CARAT GOLD, ORNAMENTS CREDIT, MANUFACTURED AN D SOLD IN DUE FORMAT ALONG WITH CUSTOMER ISSUED JEWEL LERY AND THE GOLD MELTED FOR MAKING ORNAMENTS WITH CONVERSION METAL BEING ADDED WITH THE SAME IN THIS PROCESS. 5. WE PROCEED FURTHER AND FIND THAT ASSESSEES REPL Y DATED 12.02.2013 FORMS PART OF THE PAPER BOOK AT PA GE 61 TO 63. HE PLEADED WEIGHING UNIT OF THE GOLD IN QUESTION TO BE IN GMS. HE FILED DETAILS OF OPENING STOCK ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 4 - OF 24 CARAT GOLD, 24 CARAT GOLD ARTISAN/PARTY, 22 C ARAT ORNAMENTS, 22 CARAT ARTISAN/PARTY AND MANI MOTI STO NES OF RS.48,74,233/- AS PER THEIR QUANTITY, RATE AND V ALUE. CLOSING STOCK STATED WAS OF RS.95,69,799/-. THE AD DL. CIT ISSUED A LETTER DATED 23.02.2013 ASKING FOR FUR THER EXPLANATION; IF ANY, AND RECONCILIATION IN QUANTITY IN ABOVE STATED TABULATION. THE ASSESSEES REPLY THER ETO CAME ON 28.02.2013 INTER ALIA SUBMITTING ITS OPENIN G AND CLOSING STOCK OF GOLD JEWELLERY ALONG WITH ITS AVERAGE PRICE ETC. THE ADDL. CIT PASSED SECTION 144A ORDER ON 15.03.2013. HE VERIFIED GOLD JEWELLERY OPENING STO CK, ITS CONVERSION AS STANDARD GOLD AND CUSTOMER RECEIVED G OLD. HE ACCORDINGLY DETERMINED TOTAL STANDARD GOLD USED FOR THE JEWELLERY TO BE 91,476.02 GMS., PREPARED A FURT HER TABULATION OF JEWELLERY SOLD / ISSUED DURING PREVIO US YEAR AS 1,12,317.848 GMS. THEREBY ARISING AT A DIFFERENT IAL FIGURE AS 7,662.408 GMS. IN THE CLOSING STOCK ON 31.03.2008. THE ADDL. CIT ACCORDINGLY COMPUTED THE IMPUGNED ADDITION @ RS.932.65 PER GRAM RESULTING IN THE IMPUGNED ADDITION FIGURE OF RS.71,46,344.82. H E DIRECTED THE ASSESSING OFFICER TO MAKE THE CONSEQUE NTIAL ADDITION TO FRAME RE-ASSESSMENT ACCORDINGLY. 6. THE CIT(A) UPHOLDS THE IMPUGNED ADDITION OF UNDE R STATEMENT OF CLOSING STOCK AS UNDER: 5.1. THE FIRST EFFECTIVE GROUND OF APPEA L IS REGARDING ADDITION OF RS.71,46,345/- ON ACCOUNT OF UNDERSTATE MENT OF CLOSING STOCK. ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 5 - DURING THE ASSESSMENT PROCEEDINGS THE AO MADE ADDITION OF RS.71,46,345/- ON ACCOUNT OF UNDERSTATE MENT OF STOCK BASED ON DIRECTIONS GIVEN BY THE ADDL.CIT, RA NGE - 2, AHMEDABAD (THE ADDL.CIT) IN THIS REGARD. DURING THE APPEAL PROCEEDINGS, THE APPELLANT SUBMIT TED THAT DIFFERENCE IN VALUATION OF CLOSING STOCK AS WO RKED OUT BY THE ADDL.CIT OCCURRED BECAUSE THE ADDL.CIT DID NOT TAKE INTO ACCOUNT THE FACT THAT 8000 GMS OF STANDARD GOLD TAK EN ON LOAN FROM THE SBI HAVE BEEN ADDED TWICE IN THE STOC K- ONE AT THE TIME WHEN THE LOAN WAS RAISED, SECOND WHEN THE SBI RAISED THE INVOICE. AS PER THE APPELLANT, THE ADDL. CIT FAILED TO CONSIDER THIS FACT. THE RIVAL SUBMISSIONS HAVE BEEN CONSIDERED. THE ADDL.CIT HAS GIVEN DETAILED WORKING OF CLOSING STOC K IN HIS ORDER DATED 15.3.13 PASSED U/S.144A OF THE ACT BEFO RE ARRIVING AT THE CONCLUSION THAT THERE IS AN UNDERST ATEMENT OF CLOSING STOCK OF GOLD TO THE EXTENT OF 7666.408 GM AS ON 31.3.08. ACCORDINGLY, HE DIRECTED THE AO TO ADD THE AMOUNT OF RS.71,46,944.82 ON ACCOUNT OF SUPPRESSION OF CLOSIN G STOCK FOR THE YEAR. THE APPELLANT'S MAIN SUBMISSION WAS T HAT THE ADDL.CIT FAILED TO TAKEN INTO ACCOUNT THE FACT THAT THE APPELLANT HAD TAKEN A LOAN OF 8000 GMS OF GOLD FROM SBI WHICH WAS LATER CONVERTED INTO PURCHASE. THE APPELL ANT HAD TAKEN GOLD LOAN AGAINST FDS. LATER THIS GOLD LOAN W AS CONVERTED INTO PURCHASE OF 8000 GMS OF GOLD AND PAY MENT WAS MADE BY ENCASHING THE FDS. THE APPELLANT'S MAIN CONTENTION IS THAT THE MISTAKE IN WORKING BY ADDL.C IT HAS OCCURRED SINCE WHEN LOAN WAS TAKEN, IT WAS ENTERED INTO STOCK. LATER WHEN THE LOAN WAS CONVERTED INTO PURCH ASE, THE STOCK WAS SIMULTANEOUSLY DEBITED AND CREDITED. THUS THE STOCK WAS CREDITED TWICE BY 8000 GMS AND DEBITED ON CE BY 8000 GMS. THUS EFFECTIVELY THERE WAS ADDITION OF 80 00 GMS ONLY. BUT WHILE ARRIVING AT HIS WORKING, THE ADDL.C IT DID NOT TAKE THIS FACT INTO ACCOUNT. THOUGH THE APPELLANT S UBMITTED AS ABOVE AND GAVE EVIDENCE IN SUPPORT OF THE SAME BUT THE EXPLANATION GIVEN IS NOT CONVINCING. THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT THE DIFFERENCE IN CLOSI NG STOCK AS WORKED OUT BY THE ADDL.CIT WAS MERELY BECAUSE THE A DDL.CIT DID NOT TAKE INTO CONSIDERATION THE LOAN OF 8000 GM S RETURNED TO SBI. FURTHER, THE ACCOUNTING PRACTICE FOLLOWED B Y THE APPELLANT IN ACCOUNTING FOR 8000 GMS OF GOLD IS NOT CONSISTENT. WHEN THE GOLD OF 8000 GMS IS RECEIVED AS LOAN IT IS SHOWN IN 'PARTY RECEIPT'. THIS ACCOUNT INCLUDES ALL GOLD REC EIVED FROM VARIOUS PARTIES TO BE USED FOR MAKING JEWELLERY. TH E TOTAL OF 'PARTY RECEIPT' IS SHOWN AT 34040.200 GMS. HOWEVER, WHEN THE LOAN IS RETURNED THE ENTRY IS SHOWN UNDER THE H EAD 'PARTY ISSUE'. THERE IS SINGLE ENTRY OF 8000 GMS IN THIS A CCOUNT. IF IN ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 6 - 'PARTY RECEIPT' GOLD RECEIVED FROM VARIOUS PARTIES IS SHOWN, THEN WHY IN 'PARTY ISSUE' THERE IS ONE SINGLE ENTRY . THE APPELLANT FAILED TO CONVINCINGLY CLARIFY THIS DISCR EPANCY. FURTHER, THE SHORTAGE WORKED IS OF 7662.40 GMS OF GOLD, WHILE THE APPELLANT IS TRYING TO EXPLAIN THIS THROUGH LOA N OF GOLD FROM SBI WHICH IS 8000 GMS. THE QUANTITIES WORKED OUT BY THE ADDL.CIT AND EXPLAINED BY THE APPELLANT DO NOT RECO NCILE. 7. THE LEARNED AUTHORIZED REPRESENTATIVE OPENS UP H IS ARGUMENTS BEFORE US. HE REFERS TO ALL FACTS AND CIRCUMSTANCES NARRATED HEREINABOVE FOR ASSAILING TH E IMPUGNED ADDITION OF CLOSING STOCKS UNDERSTATEMENT. OUR ATTENTION IS INVITED TO PAGES 96-149 COMPRISING OF THE RELEVANT LEDGER ACCOUNT INVOLVING OPENING/CLOSI NG STOCK, WEIGHT BALANCE DULY MAINTAINED. PAGE 102 COMPRISES OF THE ASSESSEES GOLD LOAN TRANSACTIONS OF 2000 GR. EACH ON 22.09.2007 AND 08.10.2007. PAGE 1 03 REPRESENTS IN IDENTICAL THIRD ENTRY OF 4000 GMS GOL D LOAN TRANSACTION DATED 12.10.2007. THIS IS FOLLOWED BY PAGE 106 INVOLVING OTHER TRANSACTION OF SBI GOLD LOAN ACCOUNT INVOLVING 800 GMS. THE ASSESSEE INVITES OU R ATTENTIONS TO ITS FORMER THREE GOLD LOAN TRANSACTIO NS HEREINABOVE WHEREIN HE HAD SHOWN TRANSACTION TYPE A S ISSUED TO PARTIES ALONG WITH RECEIPTS OF THE RESPEC TIVE GOLD QUANTITY WITHOUT ACTUALLY ENTERING THE SAME UN DER THE HEAD ISSUE. HOWEVER, HE HAD ADDED THIS GROSS WEIGHT OF 8000 IN THE CORRESPONDING GROSS AND NET W EIGHT CATEGORIES. COMING TO THE 4 TH TRANSACTION STATED TO BE GOLD LOAN PURCHASED, IT IS SUBMITTED THAT THE TRANS ACTION TYPE SHOWN IS PARTY. THE RECEIPT OF GOLD SHOWN I N GROSS AND NET WEIGHT IS ZERO. THE ISSUE HEAD SHOWS GOLD GROSS AND NET QUANTITY AS 8000 BY REDUCING THE SAME FROM THAT ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 7 - CARRIED FORWARD FROM EARLIER. THE ASSESSEES CASE IS ACCORDINGLY THAT OF HAVING SQUARED UP THE GOLD LOAN PURCHASE ACCOUNT WITH THE EARLIER THREE TRANSACTION S HEREINABOVE. THE ASSESSEE FURTHER TAKES US TO PAGE 156 OF THE PAPER BOOK I.E. SUBMISSIONS MADE IN THE LOWER APPEL LATE PROCEEDINGS AND NECESSARY RECONCILIATION AT PAGES 1 82 AND 183 OF THE RECORD. HE CLARIFIED THAT THE IMPUG NED DIFFERENTIAL FIGURE OF 7666.408 GMS. IS IN FACT PU RE GOLD SUBSEQUENTLY BECOMING 8000 GMS. BECAUSE OF ALLOY MATERIAL ADDITION. THE ASSESSEE ACCORDINGLY PRAYS FOR ACCEPTANCE OF THIS FIRST SUBSTANTIVE GROUND. 8. THE REVENUE STRONGLY SUPPORTS THE IMPUGNED CLOSING STOCK UNDERSTATEMENT MADE BY THE LOWER AUTHORITIES. IT ARGUES THAT THE SAME HAS ARISEN DU E TO ASSESSEES FAILURE IN RECONCILIATION OF THE STOCK D IFFERENCE. 9. HEARD BOTH SIDES. CASE FILE PERUSED. RELEVANT FACTS STAND NARRATED IN THE PRECEDING PARAGRAPHS. THE SA ME ARE NOT REPEATED FOR THE SAKE OF BREVITY. THE DISP UTE BETWEEN THE PARTIES QUA ADDITION OF RS.71,46,345/- MADE ON ACCOUNT OF UNDERSTATEMENT OF GOLD CLOSING STOCK. THE ASSESSEE ATTRIBUTES THE SAME TO HIS GOLD LOAN AVAIL ED AND THE VERY QUANTITY PURCHASED LATER ON FOLLOWED BY SQUARING UP THEREOF (SUPRA). THE SAME IS VERY MUCH EVIDENT FROM A PERUSAL OF THE PAPER BOOK COMPRISING OF VOUCHER NOS., VOUCHER DATES, PARTICULARS, TRANSACTI ON ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 8 - TYPE, GROSS AND NET WEIGHT RECEIPTS, GROSS AND NET WEIGHT ISSUED AND GROSS AND NET WEIGHT GOLD BALANCE AS ELABORATED IN ASSESSEES ARGUMENT. WE REITERATE TH AT THERE ARE THREE SBI GOLD LOAN TRANSACTION ON 22.09.2007, 08.10,2007 AND 12.10.2007 OF GOLD WEIGH ING 2000 GMS. EACH ON FIRST TWO OCCASIONS AND 4000 GMS. ON THE LAST ONE. A CORRESPONDING INCREASE IS SHOWN IN GROSS WEIGHT THEREOF. THIS IS FOLLOWED BY ANOTHER SBI GO LD LOAN PURCHASE TRANSACTION ON 11.02.2008 UNDER PART Y CATEGORY WITHOUT INVOLVING ANY CORRESPONDING RECEI PT SINCE ALREADY SHOWN EARLIER BUT THIS TIME, HE SQUAR ED UP THE EARLIER QUANTITY BY REDUCING ISSUED TRANSACTION HAD OF 8000 GMS. FROM THE GROSS WEIGHT CARRIED FORWARD OF 8087.542 GMS. RESULTING IN CONSEQUENTIAL STOCK OF 87.542 GMS. ONLY. THIS APPEARS TO BE THE DISPUTED FIGURE BETWEEN THE PARTIES. THEY ADMIT IN THE COURSE OF H EARING THAT THIS ISSUE IN ESSENCE IS OF RE-CONCILIATION OF GOLD STOCK ONLY. THE CIT(A) REFERS TO PARTY ISSUE ACCO UNTING TREATMENT AND ASSESSEES FAILURE IN RE-CONCILING TH E IMPUGNED DISCREPANCY. HE QUOTES SECTION 144A DIRECTION (SUPRA) IN THIS REGARD. IT IS TO BE SEEN THAT THE SAID DIRECTION NO WHERE TAKEN INTO ACCOUNT THE IMPU GNED GOLD LOAN TRANSACTIONS (SUPRA) IN DETERMINING THIS UNDERSTATEMENT OF 7662.408 GMS. SUBJECT MATTER OF O UR ADJUDICATION. THIS IS ALSO NOT THE REVENUES CASE THAT THE ASSESSEES BOOKS DEPECTING ALL OF ITS GOLD STO CK HEREINABOVE AND FORMING PART OF CASE RECORD ARE NOT IN ANY WAY MAINTAINED PROPERLY. WE ARE FURTHER OF THE VIEW ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 9 - THAT ONCE THE ASSESSEE EXPLAINS THIS SQUARING UP INVOLVING 8000GMS OF GOLD, THE DIFFERENTIAL FIGURE IN QUESTION OF 7662.408 GMS. ACCORDINGLY FORMS ONLY P ART THEREOF. WE OBSERVE IN THESE FACTS THAT THIS ISSUE IS NOT TO BE REMANDED BACK FOR FRESH ADJUDICATION SINCE AL L THE RELEVANT FACTS ARE ALREADY ON RECORD AND DESERVES TO BE DECIDED IN ASSESSEES FAVOUR AND AGAINST THE REVENU E. WE ORDER ACCORDINGLY. THE IMPUGNED ADDITION OF UNDERSTATEMENT OF CLOSING STOCK OF GOLD AMOUNTING T O RS.71,46,345/- STANDS DELETED. 10. THIS LEAVES US WITH THE SECOND ISSUE OF SECTION 40(A)(IA) DISALLOWANCE OF RS.7,38,096/- OF INTEREST EXPENDITURE FOR WANT OF TDS DEDUCTION. THE ASSESSE ES CASE THROUGH OUT IS THAT THE IMPUGNED DISALLOWANCE IS NOT APPLICABLE QUA THE AMOUNTS ALREADY PAID AND THE SAME HAS TO BE CONFINED QUA THE SUMS REMAINING AS PAYABLE AS ON 31.03.2008. THERE IS NO DISPUTE THAT TRIBUNALS SPECIAL BENCH DECISION IN MERYLIN SHIPPI NG & TRANSPORT VS. ADDL. CIT 146 TTJ 1 (VIZAG) ACCEPTED THIS PLEA. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. SIKANDAR KHAN N TUNVAR (2013) 33 TAXMANN.COM 33 HAS REVERSED THE TRIBUNALS DECISION AND HOLDS THAT SEC TION 40(A)(IA) COVERS BOTH PAID AND PAYABLE AMOUNTS ON T HE CLOSING DAY OF RELEVANT ACCOUNTING PERIOD. THEREFO RE, WE REJECT THIS FIRST ARGUMENT OF THE ASSESSEE. THE LO WER AUTHORITIES ACTION IS ACCORDINGLY UPHELD ON THIS COUNT. ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 10 - THE ASSESSEES NEXT ARGUMENT IS THAT IT HAD PROVIDED ALL PAN AND INCOME TAX DETAILS OF ITS TWO INTEREST PAYEES I.E. M/S. RELIANCE CAPITAL AND GE M ONEY QUA PAYMENTS MADE OF RS.2,50,931/- AND RS.4,87,165/ - RESPECTIVELY SUBJECT MATTER TOTALING TO RS.7,38,096 /- IN QUESTION. THE ASSESSEES CASE ACCORDINGLY RESTS ON APPLICATION OF SECOND PROVISO TO SECTION 40(A)(IA). IT QUOTES A CO-ORDINATE BENCH DECISION IN RAJIV KUMAR AGARWAL VS. ADDL. CIT ITA NO. 337/AGRA/2013 DECIDED ON 29.05.2013 HOLDING THAT THE ABOVE STATED PROVISO IS CURATIVE IN NATURE. AND SECTION 40(A) (IA) DISALLO WANCE IS NOT SUSTAINABLE AS LONG AS AN ASSESSEE CANNOT BE TR EATED AS AN ASSESSEE IN DEFAULT. THE HONBLE DELHI HIGH COURT IN ITA 160/2015 CIT VS. ANSAL LAND TOWNSHIPS DECIDE D ON 26.08.2015 UPHOLDS THE TRIBUNALS REASONING HEREINABOVE AFTER ALMOST REPRODUCING THE ENTIRE OPE RATIVE PART IN EXTEMPORE. THE ASSESSEE SUBMITS ACCORDINGL Y THAT ITS PAYEE ALREADY STAND ASSESSED QUA THE IMPUG NED INTEREST INCOME AND HE CANNOT BE HELD AS THE ASSESS EE IN DEFAULT BY VIRTUE OF APPLICATION OF SECOND PROVISO TO SECTION 40(A)(IA) R.W.S. 201 OF THE ACT. THE REVEN UE FAILS TO CONTROVERT THIS FACTUAL POSITION. WE NOTICE FRO M THE CASE FILE THAT THE ASSESSEE HAS RAISED THIS PLEA IN PRINCIPLE BEFORE THE LOWER AUTHORITIES AS WELL. HO WEVER, SAME HAS NOT BEEN CONSIDERED IN DETAIL. WE ACCORDI NGLY ACCEPT ASSESSEES ARGUMENT IN PRINCIPLE AND DIRECT THE LD. ASSESSING OFFICER TO PASS A FRESH ORDER AS PER LAW BY TAKING INTO ACCOUNT ALL THE NECESSARY FACTS AND THE ABOVE ITA NO.631/AHD/2015 (SHRI KAUSHIKKUMAR V. PATADIA V S. ITO) A.Y. 2006-07 - 11 - STATED CASE LAW. THIS SECOND SUBSTANTIVE GROUND IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER. 11. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 14 TH DAY OF OCTOBER, 2015. SD/- SD/- (MANISH BORAD) (S. S. GODA RA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 14/10/2015 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE . ! / CONCERNED CIT 4. !- / CIT (A) (. )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1. + 23 4 5 / GUARD FILE. BY ORDER / . // . /0