KRISHAN BEHARI GOYAL, Jaipur V. ITO, Jaipur

ITA 691/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5388 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 691/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI KRISHNA BEHARI GOYAL 1-28, F-78, LAL BAHADUR NAGAR, DURGAPURA, TONK ROAD, JAIPUR CUKE VS. THE ITO WARD- 5 (3) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACIPG 3378 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27/01/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 09 /03/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 23-07-2014 FOR THE ASSESSME NT YEAR 2009-10 WHEREIN FOLLOWING GROUNDS ARE RAISED. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 6,37,927/- OUT OF RS. 20,78,044/- MADE BY AO BY ALL EGING THE EMPLOYMENT OF INTEREST BEARING FUNDS IN GIVING INTEREST FREE ADVANCES TO VARIOUS PARTIES WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). ITA NO. 691/JP/2014 SHRI KRISHNA BEHARI GOYAL VS. ITO , WARD- 5 (3), JA IPUR . 2 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN APPLYI NG THE PROVISIONS OF RULE 8D OF INCOME TAX RULES IN SPITE OF THE FACT THAT HE HIMSELF HAS ADMITTED THAT NEXUS BETWEE N THE BORROWED FUNDS AND THE INTEREST FREE ADVANCES WERE NOT ESTABLISHED. THEREFORE, THE ADDITION OF RS. 6,37,92 7/- SUSTAINED BY THE LD. CIT(A) DESERVES TO BE DELETED. 1.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT THE AFOREMENTIONED NEXUS DOES NOT GET E STABLISHED IPSO FACTOR MERELY BY POINTING OUT THE FACT THAT AS SESSEE HAD TAKEN UNSECURED LOANS, ESPECIALLY WHEN THE ASSESSEE WAS HAVING SUFFICIENT FUNDS OF ITS OWN IN THE SHAPE OF OPENING CAPITAL TO ADVANCE THE SAME TO VARIOUS PARTIES, THU S THE AO HAD FAILED TO DISCHARGE HIS ONUS TO ESTABLISH THE N EXUS AND THEREFORE, THE ADDITION SO SUSTAINED BY THE LD. CI T(A) DESERVES TO BE DELETED. 2.1 AT THE OUTSET OF THE HEARING THE LD. AR OF THE ASSESSEE PRAYED THAT THE ISSUE ABOUT INTEREST FREE ADVANCES IS COVERED I N FAVOUR OF THE ASSESSEE BY FOLLOWING ORDERS OF THE ITAT IN ASSESSEE'S OWN C ASE WHEREIN SUCH ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. (I) ITA NO. 218/JP/2008 FOR THE ASSESSMENT YEAR 200 4-05 VIDE ORDER DATED 13-02-2009 AT PARA 4 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS SUBMITTED THA T FROM THE ADVANCES GIVEN TO M/S. DWARKA GEMS LTD., THE ASSESS EE HAS RECEIVED INTEREST OF RS.1,63,313/- AND DUE TO HEAVY LOSSES THE OTHER TWO FIRMS FAILED TO PAY INTEREST. FROM THE PE RUSAL OF THE RECORD, IT APPEARS THAT THE AO HAS IGNORED THE PURP OSE OF LOANS GIVEN WHICH WERE GIVEN FOR BUSINESS NEEDS AND EXPEDIENCY AND THEREFORE, IN THE CIRCUMSTANCE AND FACTS OF THE CASE AND THE EXPLANATION GIVEN, THE ASSESSEE CO ULD NOT RECEIVE THE INTEREST FROM THE PERSONS TO WHOM THE L OANS HAVE BEEN GIVEN. THE LOANS TAKEN HAVE BEEN USED WHOLLY A ND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THEREFO RE, DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE, T HE ITA NO. 691/JP/2014 SHRI KRISHNA BEHARI GOYAL VS. ITO , WARD- 5 (3), JA IPUR . 3 ASSESSEE COULD NOT EARN THE INCOME AND THEREFORE, N O DISALLOWANCE CAN BE MADE. THE DISALLOWANCE SO UPHEL D BY THE LD. CIT(A) IS DIRECTED TO BE DELETED. THUS GROUND NO. 1 TO 3 OF THE ASSESSEE ARE ALLOWED. (II) ITA NO. 1046/JP/2010 FOR THE ASSESSMENT YEAR 2007- 08 VIDE ORDER DATED 11-02-2011 AT PARA 5 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT THE LD. CIT(A ) HAS ALLOWED THE ISSUE FOLLOWING THE ORDER OF THE TRIBUN AL FOR ASSESSMENT YEAR 2004-05 AND ORDER OF THE LD. CIT(A) FOR ASSESSMENT YEAR 2006-07 WHERE ALSO SIMILAR ADDITION S WERE MADE AND HIS PREDECESSOR HAS ALLOWED THE ISSUE IN F AVOUR OF THE ASSESSEE FOLLOWING THE ORDER OF THE TRIBUNAL FO R ASSESSMENT YEAR 2004-05. SINCE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSES SEE FOR EARLIER YEARS, THEREFORE, WE SEE NO REASON TO INTER FERE WITH THE FINDINGS OF THE LD. CIT(A) WHO HAS ALSO ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE ORDER OF THE TRIBUNAL FOR EARLIER YEAR. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A). 2.2 THE LD. AR OF THE ASSESSEE FURTHER PLACED FOLLO WING CASE LAWS TO THIS EFFECT:- (I) CIT VS. RELIANCE UTILITIES & POWER LTD. 313 ITR 340 (BOM.) (II) CIT VS. PHIL CORPORATION LTD. 224 CTR 226 (B OM.) (III) INTERGLOBE ENTERPRISES LTD. VS. DCIT (ITA NO . 1362 & 1032/DEL/2013 DATED 4-4-2014 (DEL. BENCH) (IV) EICHER MOTORS LTD. VS. DCIT (ITA NO. 207 & 525/DEL/2013 DATED 12-12-2014 (DEL. BENCH.) (V) ULTRA MARINE & PIGMENTS LTD. VS. ACIT (ITA NO. 2775/MUM/2005 DATED 30-12-2011 (MUMBAI BENCH) ITA NO. 691/JP/2014 SHRI KRISHNA BEHARI GOYAL VS. ITO , WARD- 5 (3), JA IPUR . 4 2.3 THE LD. DR RELIED ON THE ORDER OF LOWER AUTHORI TIES. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORDS TH AT THE FACTS INDICATED BY THE ASSESSEE ARE SIMILAR TO HIS OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 2007-08 WHEREIN THE TRIBUNAL HAS ALLOWE D THE ISSUE IN QUESTION IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FO LLOWING THE DECISIONS OF THE ITAT JAIPUR BENCH (SUPRA), THE ISSUE AS TO DISA LLOWANCE OF AN AMOUNT OF RS. 6,37,927/- BY THE LD. CIT(A) TOWARDS INTERES T FREE ADVANCE IS ALLOWED. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED . 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 9 / 03/201 6 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 /03/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI KRISHNA BEHARI GOYAL, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 5 (3), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 691/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR