ACIT Non Corporate Circle 10(1), CHENNAI V. Jindal Steels, CHENNAI

ITA 676/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4033 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVASA RAO VANA JCIT SHRI T

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH : CHENNAI . , !' # $! # % . &' , ) + , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBE R AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./I.T.A. NO.676/CHNY/2018. / ASSESSMENT YEAR : 2013-2014. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 10(1) CHENNAI 600 034. VS. M/S. JINDAL STEELS, NO.45-A, BARNABY ROAD, KILPAUK, CHENNAI 600 010. [PAN AADFJ 7711J] ( -. / APPELLANT) ( /0-. /RESPONDENT) / APPELLANT BY : SHRI. SRINIVASA RAO VANA, JCIT /RESPONDENT BY : SHRI. T. BANUSEKAR, C.A. /DATE OF HEARING : 06-08-2018 ! /DATE OF PRONOUNCEMENT : 07-08-2018 1 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE REVENUE, WHICH IS DIR ECTED AGAINST AN ORDER DATED 19.12.2017 OF COMMISSIO NER OF INCOME-TAX (APPEALS)-12, CHENNAI, IT IS AGGRIEVED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED A DISALLOWANCE OF C3 ,61,07,920/-, ITA NO.676 /2018 :- 2 -: MADE BY THE LD. ASSESSING OFFICER ON A REPAYMENT O F LOAN TO ASSESSEES NAMESAKE IN, BANGALORE. 2. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT ASSESSE E A TRADER IN STEEL, HAD REPAID A LOAN OF C7,65,76,906/ - TO ANOTHER CONCERN NAMED M/S. JINDAL STEELS, BANGALORE. ACCORDING TO T HE LD. DEPARTMENTAL REPRESENTATIVE, ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE FOR THE FUNDS USED FOR MAKING THE ABOVE REP AYMENT. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, ASSESSEE HAD T HROUGH A LETTER DATED 29.02.2016, EXPLAINED THE SOURCE FOR THE LOA N REPAYMENT AND THIS INCLUDED A SUM OF C3,61,07,920/- CLAIMED AS COMING OUT OF CAPITAL OF LIKE AMOUNT INTRODUCED BY ONE OF ITS PAR TNERS SHRI. MOHANLAL JINDAL ON 22.05.2012. HOWEVER, AS PER THE LD. DEPA RTMENTAL REPRESENTATIVE, THE SAID SHRI. MOHANLAL JINDAL HA D INTRODUCED C3,00,00,000/- ONLY AND NOT C3,61,07,920/-. CONTE NTION OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS THAT ASSESSEE COUL D NOT JUSTIFY THE SOURCE FOR THE SUM OF C3,61,07,920/-, CLAIMED TO HA VE RECEIVED FROM ITS PARTNER SHRI. MOHANLAL JINDAL, AND COULD NOT FI LE ANY RECORDS LIKE INCOME TAX RETURN, MEMO, CAPITAL ACCOUNT, BALANCE S HEET OR ANY SUPPORTING SCHEDULES. CONTENTION OF THE LD. DEPARTM ENTAL REPRESENTATIVE WAS THAT ASSESSEE COULD ONLY PRODUC E HIS ACKNOWLEDGEMENT FOR HAVING FILED AN I.T. RETURN. AS PER THE LD. ITA NO.676 /2018 :- 3 -: DEPARTMENTAL REPRESENTATIVE, LD. ASSESSING OFFICER HAD MADE THE ADDITION OF C3,61,07,920/- DUE TO THE INABILITY OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM THAT C3,61,07,920/- WAS REC EIVED FROM ITS PARTNER SHRI. MOHANLAL JINDAL. CONTENTION OF THE L D. DEPARTMENTAL REPRESENTATIVE, WAS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) TOOK AN ERRONEOUS VIEW THAT REPAYMENTS TO M/S. JIN DAL STEELS, BANGALORE HAD COME OUT OF FUNDS INTRODUCED BY SHRI. MOHANLAL JINDAL. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE, A MOUNT INTRODUCED BY SHRI. MOHANLAL JINDAL WAS ONLY C3,00,00,000/- AND ASSESSEE COULD NOT SUBSTANTIATE THE SOURCE OF C3,61,07,920/- OUT O F THE TOTAL LOAN REPAYMENT OF C7,65,76,906/-. 3. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) SUBMITTED THAT ASSESSEE HAD A OVERDRAFT ACCOUNT WITH STATE BANK OF INDIA BEARING ACCOUNT NO.00000010886073792 WITH ITS SME BRANCH, AT CHENNAI. AS PER THE LD. AUTHORISED REPRESENTATI VE, ASSESSEE HAD A DRAWING POWER OF C13,00,00,000/-. RELYING ON THE ST ATEMENT OF THIS ACCOUNT PLACED AT PAPER BOOK PAGES 2 TO 4, LD. AUTH ORISED REPRESENTATIVE SUBMITTED THAT PAYMENT TO M/S. JIND AL STEELS, BANGALORE WAS MADE THROUGH RTGS TRANSFER FROM THIS OVERDRAFT ACCOUNT. ACCORDING TO HIM, EVEN IF THE CREDIT FRO M SHRI. MOHANLAL ITA NO.676 /2018 :- 4 -: JINDAL WAS NOT CONSIDERED, ASSESSEE WAS HAVING SUFF ICIENT SOURCE FOR EXPLAINING THE REPAYMENTS. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. ADDITION MADE BY THE LD. ASSESSING OFFICER WAS FOR A SUM OF C3,61,07,920/- BEING, PAR T OF THE REPAYMENT OF AN EARLIER LOAN TAKEN BY THE ASSESSEE TO M/S. JI NDAL STEELS, BANGALORE. LD. ASSESSING OFFICER HIMSELF STATES IN HIS ORDER THAT ASSESSEE HAD REPAID C7,65,76,906/- TO M/S. JINDAL S TEELS, BANGALORE. HOWEVER, ACCORDING TO THE LD. ASSESSING OFFICER, AS SESSEE COULD NOT PRODUCE SUFFICIENT SOURCE FOR THE SUM OF C3,61,07,9 20/- OUT OF THE ABOVE. LD. ASSESSING OFFICER NOTED THAT SHRI. MOHA NLAL JINDAL FROM WHOM ASSESSEE HAD CLAIMED RECEIPT OF C3,61,07,920/- HAD ACTUALLY GIVEN ONLY C3,00,00,000/-. HOWEVER, A PERUSAL OF T HE OVERDRAFT ACCOUNT STATEMENT OF THE ASSESSEE WITH STATE BANK OF INDIA FOR THE PERIOD FROM 01.4.2012 TO 22.05.2012, PLACED AT PAPE R BOOK PAGES 2 TO 4 CLEARLY SHOW THAT ASSESSEE HAD AN OVERDRAFT LIMIT OF C13,00,00,000/- AND HAD MADE A TRANSFER OF C3,61,07,920/- FROM THE SAID ACCOUNT TO M/S. JINDAL STEELS, BANGALORE ON 22.05.2012. THE PA YMENT WAS EFFECTED FROM OVERDRAFT ACCOUNT EVEN BEFORE ASSESSE E RECEIVED THE SUM OF C3,00,00,000/- FROM ITS PARTNER SHRI. MOHANL AL JINDAL. RELEVANT ENTRIES IN THE OVERDRAFT ACCOUNT APPEARING ON 22.05 .2012 ARE REPRODUCED HEREUNDER:- ITA NO.676 /2018 :- 5 -: TXN DATE VALUE DATE DESCRIPTION REF NO. CHEQUE NO. BRANCH CODE DEBIT CREDIT BALANCE 22 MAY, 12 22 MAY, 12 CHEQUE WDL-JINDAL 13241/SAIL 9930-490663 TRANSFER FROM 10404414793/ 490663 9930 2,59,875 -8,32.96.727.60 22 MAY, 12 22 MAY, 12 CHQ TRANSFER- RTGS, SBINH12143 319345, JINDAL STEELS 10051 10051 13241 3,61,07,970 -11,96,04,697.60 22 MAY, 12 22 MAY,12 TO DEBIT THROUGH CHEQUE SBI TFR 491011 491011 13241 13,47,974 -12,09,52,671.60 22 MAY, 12 22 MAY,12 BY TRANSFER GRPT SBM2205120 783860- MOHANLAL JINDAL TRANSFER FROM 2399484044302 13241 3,00,00,000 -9,09,52,671.60 22 MAY, 12 22 MAY,12 TO DEBIT THROUGH CHEQUE SBI A/C. NO.31360832 085-491012 491012 10666 12,040 -9,09,64,711.60 IN OUR OPINION, IT IS CLEAR THAT REPAYMENT DONE BY THE ASSESSEE WAS FROM ITS OVERDRAFT ACCOUNT AND THERE WAS NO USE OF ANY FUNDS FROM ITS PARTNER FOR SUCH REPAYMENT. IN SUCH CIRCUMSTANCES, WE FEEL THAT THE ADDITION WAS MADE ON A WRONG PRESUMPTION BY THE LD . ASSESSING OFFICER. THE SAID ADDITION IN OUR OPINION WAS RIGHT LY DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). WE DO NOT FIN D ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ITA NO.676 /2018 :- 6 -: (APPEALS). 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED ON TUESDAY, THE 7TH DAY OF AUGUST, 2018, AT CHENNAI. SD ( # $! # % . &' ) ( DUVVURU RL REDDY ) ) / JUDICIAL MEMBER ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 7TH AUGUST, 2018. KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF