M/s. Stainless Investment Ltd., New Delhi V. ITO, New Delhi

ITA 6460/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7147 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 08-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 27-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ON FACTS; IN CIRCUMSTANCES OF
• Keywords: Opportunity of being heard; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I, NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER ITA NO.6460/DEL/2014 ASSESSMENT YEAR : 2011-12 STAINLESS INVESTMENT LTD., 28, NAJAF GARH ROAD, NEW DELHI VS. ITO, WARD- 9(2), NEW DELHI PAN : AAFCS 9433 H (APPELLANT) (RESPONDENT) O R D E R PER DIVA SINGH, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 19.09.2014 OF THE CIT(A)-XII, NEW DELHI PERTAINING TO 2011-12 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS :- 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)(CIT (A)) ERRED IN NOT DELET ING THE ADDITION OF RS. 20,58,412/- MADE ON ACCOUNT OF ALLEGED INTEREST INC OME ON THE ADVANCES GIVEN BY THE APPELLANT. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LOWER AUTHORITIES ERRED IN HOLDING/CONFIRMING THE ABOVE A DDITION WITHOUT ESTABLISHING DIRECT NEXUS TO THE EFFECT THAT INTERE ST BEARING BORROWING WERE DIVERTED IN GIVING INTEREST FREE ADVANCES. 3. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ID. CIT (A) ERRED IN CONFIRMING THE ABOVE ADDITION WHICH IS CONTRARY TO THE ESTABLISHED PRINCIPLE OF TAXATION THAT TAX CANNOT B E LEVIED ON NOTIONAL INCOME. 4. WITHOUT PREJUDICE, THE ID. CIT (A) OUGHT TO HAVE DELETED THE ADDITION OF INTEREST SINCE THE CLAIM OF THE APPELLANT ON ACCOUN T OF INTEREST EXPENSES WAS ONLY IN A NEGLIGIBLE SUM. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, AND MO DIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2. LD. AR INVITING ATTENTION TO THE ISSUES RAISED S UBMITTED THAT ON IDENTICAL ISSUE IN SIMILAR FACTS THE ITAT IN THE CASE OF THE ASSESSEE HAS REST ORED THE ISSUE FOR VERIFICATION. INVITING ATTENTION TO THE COPY OF THE ORDER DATED 28.09.2016 IN ITA NO.2511/DEL/2014 STATED ON SIMILAR FACTS, THE ISSUE WAS RESTORED WITH THE FOLLOWING DI RECTION :- 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD WE FIND THAT THE LD. AR HAS SUBMITTED THE DE TAILS OF UNSECURED LOANS AND ADVANCES AS ON 31.03.2010 & 31.03.2009 WHICH IS PLA CED AT PAPER BOOK PAGE 21. ON PERUSAL OF THE SAME, IT REVEALS THAT NO UNSECURE D LOANS ARE SHOWN TO HAVE BEEN ADVANCED BY THE ASSESSEE TO THE GAGAN INFRA EN ERGY LTD. IN FINANCIAL YEAR 2008-09. THESE DETAILS SHOW THAT A LOAN OF RS.3.06 CRORES WAS GIVEN ONLY IN THE YEAR UNDER CONSIDERATION. HOWEVER, CONTRARY TO IT, THE ASSESSING OFFICER HAS APPELLANT BY SHRI K. SAMPATH, ADV. & SHRI N. RAJA KUMAR, ADV. RESPONDENT BY SHRI F.R. MEENA, SR.DR DATE OF HEARING 08-11-2016 DATE OF PRONOUNCEMENT 06-01-2017 2 ITA NO.6460/DEL/2014 RECORDED A FINDING THAT THE ASSESSEE HAD GIVEN INTE REST BEARING LOAN TO THIS PARTY DURING THE F.Y. 2008-09 ON WHICH THE ASSESSEE HAS S HOWN INTEREST INCOME OF RS.9,55,383/-. THIS FINDING OF THE ASSESSING OFFICE R STANDS IN SHARP CONTRADICTION WITH THE DETAILS OF LOANS SUBMITTED BY THE ASSESSEE , WHICH NEEDS VERIFICATION AT THE STAGE OF ASSESSING OFFICER BEFORE ARRIVING AT ANY C ONCLUSION ON THIS COUNT. SECONDLY, AS PER DETAILS GIVEN BY THE ASSESSEE TO S UBSTANTIATE THE SOURCE OF FUNDS, AS NOTED ABOVE, IT IS FOUND THAT THE ASSESSEE HAS S HOWN TO HAVE ADVANCED LOAN TO THE SAID COMPANY OF RS.105 LACS ON 11.11.2009 OUT O F DIVIDEND RECEIVED FROM JINDAL STEEL AND POWER LTD. WHEREAS FROM THE BANK S TATEMENT PLACED AT PAGE NO. 24 OF THE PAPER BOOK, IT IS CLEAR THAT CLOSING BALA NCE AS ON 05.11.2009 WAS OF RS.1,96,536.82 AND ON 09.11.2009, AN AMOUNT OF RS.1 .05 CRORES HAD BEEN CREDITED, THE SOURCE OF WHICH HAS BEEN MENTIONED IN HAND WRITING AS REFUND FROM ADVANI. ON 11.11.2009, A CHEQUE OF RS.105 LACS IS SHOWN TO HAVE BEEN ISSUED MARKED AS ADVANCE TO GAGAN. THEREFORE, THERE APPEAR S CONTRADICTION IN THE DECLARED SOURCE OF ADVANCE SUBMITTED BEFORE THE ASS ESSING OFFICER AND AS SHOWN IN THE BANK STATEMENT. THEREFORE, IN OUR OPINION, T HIS ASPECT OF THE CASE ALSO NEEDS PROPER VERIFICATION AS TO THE EXACT SOURCE OF ADVAN CE GIVEN BY THE ASSESSEE TO M/S. GAGAN INFRA ENERGY LTD. UNLESS CLEAR FACTS ARE BROU GHT ON RECORD, THE ISSUE CANNOT BE PROPERLY ADJUDICATED AT THIS STAGE. WE, THEREFOR E, DEEM IT PROPER TO RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE ISSUE DE NOVO IN ACCORDANCE WITH LAW AFTER MAKING PROPER VERIFICATION OF THE FACTS AND B Y GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. CONSIDERING THE AFORESAID ORDER AND THE GROUNDS BEFORE THE ITAT IN THE PRESENT APPEAL, THE LD. SR. DR STATED THAT GROUNDS RAISED IN THE IM MEDIATELY PRECEDING ASSESSMENT YEAR ARE IDENTICAL. HE AGREED THAT THE ISSUE PERTAINS TO AD VANCES GIVEN TO THE VERY SAME PARTY ONE OF WHOM IS COMMON I.E. M/S GAGAN INFRA ENERGY LTD.. A CCORDINGLY, IT WAS SUBMITTED HE WOULD HAVE NO OBJECTION IF THE ISSUE IS SET-ASIDE AND RES TORED FOR VERIFICATION IN THE LIGHT OF THE DIRECTIONS OF THE ITAT. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD, I FIND THAT IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES BEFORE THE BENCH THE IMPUGNED ORDER DESERVES TO BE SET ASIDE. ACCORDINGLY, SINCE THE FA CTS AND CIRCUMSTANCES AND POSITION OF LAW ON THE ISSUES RAISED CONTINUES TO REMAIN THE SAME A ND IN THE ABSENCE OF ANY CHANGE IN THE MATERIAL FACTS AND CIRCUMSTANCES, RESPECTFULLY FOLL OWING THE ORDER OF THE CO-ORDINATE BENCH WHICH IS A DIVISION BENCH ORDER PASSED IN THE IMMED IATELY PRECEDING ASSESSMENT YEAR IN ORDER TO MAIN PARITY OF REASONING, THE ISSUE IS RES TORED TO THE FILE OF THE ASSESSING OFFICER WITH IDENTICAL DIRECTIONS AS IN THE IMMEDIATELY PRECEDIN G ASSESSMENT YEAR. NEEDLESS TO SAY THAT A REASONABLE OPPORTUNITY OF BEING HEARD SHALL BE GRA NTED TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 6 TH JANUARY, 2017. SD/- SD/- SD/- S (A. N. MISHRA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SUJEET/AMIT KUMAR 3 ITA NO.6460/DEL/2014 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI