SAFEFLEX INTERNATIONAL LTD., Jaipur V. ITO, Jaipur

ITA 696/JPR/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6208 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI DCIT DR DHK
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Additional evidence; Accommodation entries; Onus to prove; Condonation of delay
• Section: 43B; 143(3); 10AA; 68; 56

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 696/JP/2014 & 702/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2010-11 & 2011-12 M/S. SAFEFLEX INTERNATIONAL LTD. 15, JAI JAWAN SCHEME NO. 1 TONK ROAD, JAIPUR CUKE VS. THE ITO WARD- 6(4) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAJCS 7201 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI RAJEEV SOGANI, CA JKTLO DH VKSJ LS@ REVENUE BY:SMT. POONAM RAI, DCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/03/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/04/2018 VKNS'K@ ORDER PER BHAGCHAND, AM BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF THE LD. CIT(A)-2, JAIPUR DATED 10-09-2014 AND 04-04-2016 FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12 RESPECTIV ELY. 2.1 AT THE OUTSET OF THE HEARING, THE BENCH OBSERVE D THAT THE APPEAL FOR THE ASSESSMENT YEAR 2011-12 IS FILED BY THE ASSESSE E IS LATE BY 22 DAYS ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 2 FOR WHICH THE ASSESSEE FILED THE APPLICATION DATED 08-07-2016 FOR CONDONATION OF DELAY WITH FOLLOWING PRAYERS. AS ASSESSMENT ORDER U/S 143(3) FOR THE A.Y. 2011- 12 WAS PASSED VIDE ORDER DATED 17-02-2014. THE FIRST A PPEAL WAS PREFERRED ON 18-03-2014 BEFORE THE LD. CIT(A)-2 , JAIPUR. APPEAL AGAINST THE ORDER U/S 143(3) WAS PARTIALLY D ISMISSED BY LD. CIT(A)-2, JAIPUR VIDE ORDER DATED 04-04-2016 . THE SAID ORDER WAS RECEIVED BY THE COMPANY ON 17-04-201 6 AND ACCORDINGLY, IT WAS SUPPOSED TO FILE THE APPEAL WIT HIN 60 DAYS I.E. BY16-06-2016. THE PRESENT APPEAL IS DELAY ED BY 22 DAYS. IT IS FURTHER SUBMITTED THAT AGE OF MY FATHER IS AB OVE 80 YEARS. HIS HEALTH IS NOT WELL SINCE MARCH 2016 A ND THEREFORE, HE IS BED RIDDEN. HE IS STAYING IN UDAIP UR RIGHT NOW AND I HAVE TO FREQUENTLY VISIT UDAIPUR TO TAKE CARE OF HIM. AS THE HEALTH ISSUE OF MY FATHER OCCUPIED MY M IND, THE TIME LIMIT OF FILING THE APPEAL SKIPPED MY ATTENTIO N. I THEREFORE, MAKE A HUMBLE PRAYER THAT ON ACCOUNT O F THE ABOVE REASON DELAY IN FILING APPEAL MAY PLEASE BE CONDONED. RELIANCE IS PLACED ON THE FOLLOWING JUDIC IAL PRONOUNCEMENTS. (I) COLLECTOR, LAND ACQUISITION VS MST. KATIJI[1987]167 ITR 471 (SC) (II) M/S. GMG ENGINEER INDUSTRIES VS ISSA GREEN POWER SOLUTION (CIVIL APPEAL NO.4473/2015) WITH A.C . GOVINDARAJ AND ORS VS M. KRISHNAMOORTHY & ORS.(CIVI L APPEAL NO.4473/2015): TO THIS EFFECT, THE ASSESSEE HAS ALSO FILED THE AF FIDAVIT GIVING THE REASON FOR SUCH DELAY IN LATE FILING THE APPEAL BEFORE ITA T. ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 3 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE, AFFIDAVIT OF THE ASSESSEE AND ALSO TH E CASE LAWS (SUPRA), IT IS OBSERVED THAT THERE IS SUFFICIENT CAUSE IN PREVENTI NG THE ASSESSEE TO FILE THE APPEAL IN TIME. HENCE, THE DELAY IN FILING THE APPEAL BY THE ASSESSEE IS CONDONED. 3.1 NOW WE TAKE UP BOTH THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12 FOR ADJUDICATIO N IN WHICH THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL . ITA NO. 696/JP/2014- A.Y.2010-11 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 15.00 LACS U/S 68 OF THE I.T. ACT, 1961 ON ACCOUNT OF SHARE CAPITAL SUBSCRIBED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 22,500/- U/S 69 OF THE I.T. ACT, 1961 ON ACCOUNT OF ALLEGED UNDISCLOSED COMMISSION PAYMENT 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 4,33,429/- BY DISALLOWING EXEMPTION U/S 10AA ON ACC OUNT OF INTEREST ON FDR. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE AO ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 4 IN RESTRICTING THE DEDUCTION U/S 10AA TO RS. 1,00,6 4,922/- AS AGAINST RS. 1,06,11,921/- CLAIMED BY ASSESSEE. 5. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 23,017/-ON ACCOUNT OF DISALLOWANCE U/S 43B OF THE I .T. ACT, 1961. ITA NO. 702/JP/2016- A.Y.2011-12 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE AO IN TREATING THE INTEREST ON FDR OF RS. 3,32,342/- A S INCOME FROM OTHER SOURCES AND THEREBY RESTRICTING THE DE DUCTION U/S 10AA OF I.T. ACT, 1961 AMOUNTING TO RS. 4,43,59,235 /- AS AGAINST CLAIMED DEDUCTION OF RS. 4,46,88,897/-. THE ACTION OF LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND A GAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED DEL ETING THE SAID ADDITION OF RS. 3,32,342/- ALLOWING DEDUCTION U/S 10AA AT RS. 4,46,88,897/- AS CLAIMED BY THE ASSESSEE COM PANY. 4.1 APROPOS GROUND NO. 1 AND 2 OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 2.4.1 I HAVE EXAMINED THE FACTS OF THE CASE, ASSESSMENT ORDER, THE SUBMISSIONS OF THE APPELLANT AND THE CASE LAWS CITED BY THE APPELLANT AND THE ASSESSING OFFIC ER, THE APPELLANT HAS STATED THAT IN THE STATEMENTS OF DIRE CTORS OF THE SHARE APPLICANT COMPANIES, THERE IS NO MENTION OF T RANSACTIONS WITH THE APPELLANT BEING IN THE NATURE OF ACCOMMODA TION ENTRIES. IT HAS FURTHER BEEN SUBMITTED THAT IF THE SHARE APPLICANT COMPANIES HAVE PROVIDED ACCOMMODATION ENTRIES TO ON E DOES NOT NECESSARILY IMPLY THAT ACCOMMODATION ENTRIES HA VE ALSO BEEN PROVIDED TO THE APPELLANT. A PERUSAL OF THE ST ATEMENTS OF SHRI S.N. GADIA AND SMT. LAITHA CHAUHAN SHOWS THAT THE ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 5 MODUS OPERANDI OF THESE COMPANIES WAS TO COLLECT CA SH, DEPOSIT THE CASH IN THE PERSONAL BANK ACCOUNTS DIRECTORS, E MPLOYEES OR KNOWN PERSONS; THEREAFTER ISSUE THE CHEQUES IN THE NAME OF M/S. CONVIENT HOUSING FINANCE LTD. AND M/S. MEWAD EQUIPMENT PVT. LTD WHO IN TURN WOULD ISSUE THE CHEQ UES FOR THE SHARE APPLICATION MONEY TO THE CONCERNS DESIROU S OF OBTAINING THE ACCOMMODATION ENTRIES. COPIES OF BANK STATEMENTS SHOWING HUGE DEPOSIT OF CASH IN BANK FRO M WHERE CHEQUES HAVE BEEN ISSUED TO THE SHARE APPLICANTS SU PPORT THE STATEMENTS MADE BY THE DIRECTORS. IT WAS ALSO STATE D THAT FOR PROVIDING THESE ACCOMMODATION ENTRIES, COMMISSION @ 1.5% OF THE SHARE APPLICATION MONEY WAS CHARGED. IT HAS FURTHER BEEN STATED BY SHRI S.N. GADIA THAT THE ABOVE MENTIONED TWO CONCERNS DO NOT CONDUCT BUSINESS ACTIVITY (ANSWER T O Q. NO. 3 OF THE STATEMENT U/S 131(1) RECORDED ON 18-03-2013 ). ALSO THEY HAVE NOT FILED ANY RETURN OF INCOME. IN SUCH A SITUATION, THE ONLY INFERENCE THAT CAN BE DRAWN IS THAT THESE COMPANIES ARE ENGAGED ONLY IN THE BUSINESS OF PROVIDING ACCOM MODATION ENTRIES BY ACCEPTING CASH, DEPOSITING IT IN THE BAN K ACCOUNTS AND ISSUING CHEQUES TO THE DESIROUS PERSONS IN LIEU OF COMMISSION. THEREFORE, IT WOULD NOT MAKE A MATERIAL DIFFERENCE WHETHER THE NAME OF THE APPELLANT HAS NO T BEEN SPECIFICALLY MENTIONED BY THE DIRECTORS OF THE SHAR E APPLICANT IN THE STATEMENTS RECORDED BY THE INCOME TAX DEPARTMEN T. 2.4.2 THE RATIO OF THE VARIOUS CASE LAWS CITED BY T HE APPELLANT IS THAT THE BURDEN OF PROOF WITH RESPECT TO SHARE APPLICATION MONEY RECEIVED THROUGH BANKING CHANNELS LIES ON THE ASSESSEE TO THE EXTENT OF PROVING THE IDENTITY OF THE SHARE APPLICANTS. ONCE THE EXISTENCE OF THE SHARE APPLICA NT IS PROVED, THE BURDEN SHIFTS TO THE REVENUE TO ESTABLISH THAT SUCH INVESTMENT HAS COME FROM THE ASSESSEE ITSELF (SHREE BARKHA SYNTHETICS LTD. [2006] 155 TAXMAN 289 (RAJ). IN THI S CASE, THE APPELLANT HAS DISCHARGED HIS ONUS WITH RESPECT TO T HE IDENTITY OF THE SHARE APPLICANTS WHO HAVE GIVEN SHARE APPLICATI ON MONEY TO THE APPLICANT THROUGH BANKING CHANNEL. TO THI S EXTENT, THE APPELLANT HAS DISCHARGED HIS ONUS. THEREAFTER THE O NUS HAS SHIFTED TO REVENUE WHICH HAS IN THIS CASE SHOWN THA T THE SHARE ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 6 APPLICANTS DO NOT CONDUCT ANY BUSINESS ACTIVITY AND HAVE NO SOURCE OF INCOME EXCEPT COMMISSION RECEIVED FROM PR OVIDING ACCOMMODATION ENTRIES. IN THIS CASE, THE DIRECTORS OF THE SHARE APPLICANT COMPANIES HAVE STATED THAT THEY ARE ENGAG ED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES BY ACCE PTING CASH FROM THE DESIROUS PERSONS, DEPOSITING IT IN TH E BANK ACCOUNTS OF THE DIRECTORS AND EMPLOYEES AND THEREAF TER GIVING CHEQUES FOR SHARE APPLICATION MONEY IN LIEU OF COMM ISSION. THE REVENUE HAS THEREFORE, ESTABLISHED THAT THE INV ESTMENT FOR THE SHARE APPLICATION MONEY HAS COME FROM THE ASSES SEE ITSELF. MERELY PROVING THE IDENTITY OF THE SHARE APPLICANTS WHO HAVE GIVEN MONEY THOROUGH BANKING CHANNELS WILL NOT SUFF ICE IN SUCH A SITUATION. THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY SATISFACTORY EXPLANATION TO COUNTER THE FINDINGS OF THE ASSESSING OFFICER THAT THE SOURCE OF THE SHARE APPL ICATION MONEY HAS NOT COME FROM THE SHARE APPLICANT BUT FRO M THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, ADDITION OF RS. 15,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF UNEXPLAINED CASH CREDIT THROUGH SHARE APPLICATION M ONEY U/S 68 OF THE I.T. ACT IS CONFIRMED. ALSO ADDITION OF RS. 22,500/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISS ION @ 1.5% GIVEN FOR OBTAINING THE ACCOMMODATION ENTRIES IS CONFIRMED. GROUND NO. 1 AND 2 ARE DISMISSED. 4.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE LOWER AUTHORITIES HAVE ERRED IN CONFIRMING THE ADDITION OF RS. 15.00 LACS U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL SUBSCRIBED AND FURTHER ERRED IN CONFIRMING THE ADDITION OF RS. 22,500/- U/S 69 OF THE ACT ON ACCOUNT OF UNDISCLOSED COMMISSION PAYMENT WH ICH SHOULD BE DELETED. THE LD.AR OF THE ASSESSEE FILED THE WRITTE N SUBMISSION MAINLY PRAYING AS UNDER:- ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 7 3.17 THUS, ONCE THE EXISTENCE OF THE SUBSCRIBE RS WAS PROVED, THE ONUS AND HEAVY BURDEN SHIFTS ON THE REV ENUE TO ESTABLISH THAT EITHER THE SHARE APPLICANTS WERE BOG US OR THE MONEY BELONGED TO THE ASSESSEE COMPANY ITSELF. IN V IEW OF THIS, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSE E COMPANY. AT BEST, IF THE AO WAS NOT SATISFIED, THE ADDITION COULD HAVE BEEN MADE IN THE HANDS OF THE COMPANIES/ INDIVIDUAL S WHO HAD PROVIDED THE ENTRIES. 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING MADE THE ADDITION OF RS. 15. 00 LACS U/S 68 OF THE ACT AND RS. 22,500/- U/S 69 OF THE ACT RESPECTIVEL Y IN THE HANDS OF THE ASSESSEE BY OBSERVING AS UNDER:- 8.4 IN THE ASSESSEE COMPANYS CASE THERE IS DI RECT EVIDENCE IN THE FORM OF STATEMENT OF SHRI SATYA NAR AIN GADIYA AND SMT. LALITA CHAUHAN WHO WERE DIRECTORS AND SHAR E HOLDERS IN THE ABOVE MENTIONED COMPANIES AND THEY HAVE ADMI TTED THAT THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIE S TO THE NEEDY PERSONS ON COMMISSION BASIS. THE MODUS OPERAN DI HAS ALSO BEEN ADMITTED WHEREIN THEY HAVE STATED THAT TH EY HAVE RECEIVED CASH FROM THE BENEFICIARY PARTIES AND THEN DEPOSITED THE CASH RECEIVED IN THEIR INDIVIDUAL BANK ACCOUNTS OR THE ACCOUNTS OF THEIR STAFF AND CLOSELY CONNECTED PERSO NS AND THEREAFTER CHEQUES ARE ISSUED IN THE NAMES OF THE C OMPANIES WHICH ARE CONTROLLER BY SHRI SATYA NARAIN GADIYA AS SUCH THESE COMPANIES ARE INDULGED IN PROVIDING ACCOMMODATION E NTRIES TO THE NEEDY PERSONS. THE SUBMISSIONS FILED BY THE ASS ESSEE HAS STATED NOTHING ABOUT THE SOURCE OF DEPOSIT IN THE I NDIVIDUAL ACCOUNTS WHICH IS THE BASIS OF THE FUNDS TRANSFERRE D TO THE ASSESSEE COMPANYS ACCOUNT AS SHARE APPLICATION MON EY. AS SUCH I AM CONVINCED THAT THE ASSESSEE COMPANY HAS R ECEIVED ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 8 SHARE APPLICATION MONEY OF RS. 15,00,000/- AS MENTI ONED ABOVE WHICH IS NOTHING BUT THE ACCOMMODATION ENTRY OBTAIN ED THROUGH THE AFOREMENTIONED SO CALLED PERSONS. IN VIEW OF THE ABOVE DISCUSSION AND CLENCHING EVIDENCE AVAILABLE ON RECORD IN RESPECT OF ALL THE ACCOMMODATION ENTRIES A SUM OF RS. 15,00,000/- IS A DDED AS UNEXPLAINED CASH CREDITS WITHIN THE MEANING OF SECT ION 68 OF THE I.T. ACT, 1961. 9. COMMISSION ON ACCOMMODATION ENTRIES: IN THE STATEMENTS RECORDED SHRI SATYA NARAIN GADIYA HAS AD MITTED THAT THE ACCOMMODATION ENTRIES WERE PROVIDED ON COM MISSION BASIS AND HE WAS CHARGING COMMISSION @ 1.5% OF THE ENTRY PROVIDE. AS SUCH THE ASSESSEE HAS PAID COMMISSION @ 1.5% OF THE SHARE APPLICATION AS SUCH RS. 22,500/- PAID AS COMMISSION WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT . IN VIEW OF THE ABOVE DISCUSSION AND CLENCHING EVIDENCE AVAILABLE ON RECORD IN RESPECT OF ALL THE ACCOMMODATION ENTRIES A SUM OF RS. 22,500/- IS ADDE D AS UNDISCLOSED COMMISSION PAYMENTS WITHIN THE MEANING OF SECTION 69B OF THE I.T. ACT, 1961. IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED THE A CTION OF THE AO. IT IS ALSO NOTED THAT THE LD.AR OF THE ASSESSEE DURING TH E COURSE OF HEARING SUBMITTED HEREUNDER THAT THE LOWER AUTHORITIES HAVE VIOLATED THE PRINCIPLES OF NATURAL JUSTICE. 3.6 (I) THE AO FAILED TO PROVIDE THE COPIES OF STAT EMENTS USED AGAINST THE ASSESSEE COMPANY. (II) THE AO SHOULD NOT HAVE USED THE EVIDENCE WI THOUT EXAMINING IN CHIEF SHRI S.N. GADIA AND SMT. LALITHA CHAUHAN BY HIMSELF. ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 9 (III) THE AO WAS DUTY BOUND TO ALLOW CROSS EXAMI NATION OF SHRI S.N. GADIYA AND SMT. LALITHA CHAUHAN WHOSE STA TEMENTS WERE USED AGAINST THE ASSESSEE COMPANY BECAUSE IT IS A PRAGMA TIC REQUIREMENTS OF FAIR PLAY IN ACTION. THE LD.AR OF THE ASSESSEE RELIED ON THE DECISION OF HON'BLE SUPRME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES, CIVIL APP EAL NO. 4228 OF 2006 DATED 02-09-20156 WHEREIN IT WAS HELD THAT WHE RE OPPORTUNITY FOR CROSS EXAMINATION IS NOT GIVEN, IT IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IN VIEW OF THE ORDERS OF THE LOWER AUTHORI TIES, SUBMISSIONS OF THE LD.AR OF THE ASSESSEE AND THE PRESENT FACTS & CIRCU MSTANCES OF THE CASE, IT WILL BE IN THE INTEREST OF EQUITY AND JUSTICE TO RE STORE BOTH THE GROUNDS TO THE FILE OF THE AO TO DECIDE IT AFRESH BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO SUBMIT THE RELEVANT DOCUMENTS/ DETAILS AS TO THE CASE BEFORE THE AO FOR RESOLVING THE ISSUES IN QUESTION. THUS GROUND NO. 1 AND 2 OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5.1 APROPOS GROUND NO. 3 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 3.1 THE ASSESSING OFFICER HAS NOT INCLUDED INTERE ST ON BANK FDRS AMOUNTING TO RS. 4,33,729/- AS A PART OF THE E LIGIBLE PROFIT FOR CLAIMING EXEMPTION U/S 10AA. THE ASSESSING OFFICER HAS HELD AS UNDER:- ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 10 I WOULD LIKE TO PLACE RELIANCE ON THE JUDICIAL PRONOUNCEMENT ON THE ISSUE UNDER CONSIDERATION. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS SRE E RAM HONDA POWER EQUIPMENT 289 ITR 475 (DELHI) HAS HELD THAT THE INTEREST INCOME EARNED ON DEPOSITS IS TO BE TAXABLE AS INCOME FORM OTHER SOURCES U/S 56 OF THE ACT. SIMILAR VIEW HAS ALSO BEEN EXPRESSED IN OTHER DECIS IONS PARTICULARLY APEX COURTS DECISION IN THE CASE OF TUTICORIN ALKALIES AND FERTILIZERS AND ALSO IN CIT VS AUTO KAST LTD 248 ITR 110 (SC), CIT VS V. GOPPINATHAN, CONSOLIDATED FIBRES VS CIT AND K RAVINDRANATHAM V/S DCIT (ASSTT.) 262 ITR 669. ALL T HE ABOVE JUDICIAL PRONOUNCEMENT SUPPORT THE VIEW THAT THE INTEREST INCOME IS INCOME FROM OTHER SOURCES. THIS ISSUE WAS ALSO RAISED DURING THE SCRUTINY ASSESSMENT PROCEEDINGS FOR A.Y. 2009-10 WHEREIN THE AO HAS HEL D THAT INTEREST ON FDRS IS INCOME FROM OTHER SOURCES . THIS ISSUE WAS ALSO RAISED DURING THE SCRUTINY ASSESSMENT PROCEEDING FOR A.Y. 2009-10 WHEREIN THE AO HAS HELD THAT INTEREST ON FDRS IS INCOME FROM OTHER SOURCES. IN VIEW OF THE ABOVE FACTS AS WELL AS THE PAST HISTORY OF THE CASE OF THE ASSESSEE AND HE IS NOT E LIGIBLE FOR CLAIMING EXEMPTION U/S 10AA ON THIS COMPONENT O F THE INCOME AS SHOWN IN THE PROFIT AND LOSS ACCOUNT. 3.2 THE APPELLANT HAS CLAIMED THAT THE INTEREST INC OME HAS BEEN DERIVED FROM THE EXPORT BUSINESS OF THE SEZ. 3.3 IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENT, IT IS HELD THAT INTEREST IN BANK FDRS IS INCOME FROM OTHER SOURCES AND THIS INTEREST INCOME HAS NOT BEEN DERIVED FROM EXPORT. THEREFORE, IT CAN NOT BE INCLUDED IN THE PROFITS & GAINS FROM EXPORT. IN VIEW OF THE ABOVE , THE ACTION OF THE ASSESSING OFFICER IN REDUCING THE FDR INTEREST FROM PROFIT & GAINS FROM BUSINESS AND PROFESSION AND INCLUDING IT UNDER THE HEAD INCOME FROM OTHER SOURCES IS CONFIRMED. NO EXEMPTION U/S 10AA CAN BE CLAIMED ON THIS INTEREST INCOME. GROUND NO. 3 IS DISMISSED. 5.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION OF RS. 4,33,429/- ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 11 BY DISALLOWING EXEMPTION U/S 10AA OF INTEREST ON FD R. THE LD.AR OF THE ASSESSEE FURTHER VIDE LETTER DATED 3-08-2017 PRAYED FOR ADMISSION OF THE FOLLOWING ADDITIONAL EVIDENCE. THE APPELLANT MOST HUMBLY PRAYS FOR ADMISSION OF THE FOLLOWING ADDITIONAL EVIDENCE:- S.N. PARTICULARS PAGE NO QUICK REFERENCE 1. SANCTION LETTER OF ADDITIONAL TERM LOAN AND WORKING CAPITAL LIMIT FROM PUNJAB NATIONAL BANK 1 TO 17 9 & 11 DURING THE PROCEEDINGS BEFORE AO AND LD. CIT(A), TH E ASSESSEE COMPANY SUBMITTED THAT THE INVESTMENTS IN FDRS ARE INCIDENTAL TO THE BUSINESS OF THE ASSESSEE COMPANY AND THE SAID FACT WAS NOT D ISPUTED BYB THE LOWER AUTHORITIES. THUS THE ASSESSEE COMPANY WAS UNDER BO NA FIDE BELIEF THAT THE SUBMISSIONS ALONE WILL SUFFICE AND DID NOT PRESENT THE SAME BEFORE THE AO AND LD. CIT(A). HOWEVER, THE EVIDENCE IS VITAL AND GOES TO THE ROOT OF THE MATTER WHICH IS BEFORE THE ITAT FOR ADJUDICATION. THUS IN VIEW OF ABOVE, IT IS PRAYED THAT THE EVIDENCE MAY KINDLY BE TAKEN ON RECORD, CO NSIDERED AND OBLIGED SINCE IT IS CRUCIAL FOR DECIDING THE APPEAL BEFORE THE BE NCH. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENT:- CIT VS TEXT HUNDRED INDIA (P) LTD. (2011) 239 CT R (DEL) 263. 5.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE LOWER AUTHORITIES AND OBJECTED TO THE ADMISSION OF ADDIT IONAL EVIDENCE FILED BY THE LD.AR OF THE ASSESSEE. 5.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING MADE THE ADDITION OF RS. 4,33 ,429/- BY ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 12 DISALLOWING EXEMPTION U/S 10AA OF THE ACT ON ACCOUN T OF INTEREST ON FDR BY OBSERVING AS UNDER:- 4.2 THE NATURE OF THE INCOME AS WELL AS ASSESSEE' S CONTENTION HAVE BEEN CONSIDERED AND BEFORE TAKING F INAL VIEW, I WOULD LIKE TO PLACE RELIANCE ON THE JUDICIA L PRONOUNCEMENTS ON THE ISSUE UNDER CONSIDERATION. TH E HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS SRE E RAM HONDA POWER EQUIPMENT 289 ITR 475 (DELHI) HAS HELD THAT THE INTEREST INCOME EARNED ON DEPOSITS IS TO BE TAX ABLE AS INCOME FROM OTHER SOURCES U/S 56 OF THE ACT. SIMILA R VIEW HAS ALSO BEEN EXPRESSED IN OTHER DECISIONS PARTICUL ARLY APEX COURTS DECISION IN THE CASE OF TUTICORIN ALKALIES AND FERTILIZERS AND ALSO IN CIT VS AUTO KAST LTD 248 I TR 110 (SC), CIT VS V. GOPPINATHAN, CONSOLIDATED FIBRES V S CIT AND K RAVINDRANATHAM V/S DCIT (ASSTT.) 262 ITR 669. ALL THE ABOVE JUDICIAL PRONOUNCEMENT SUPPORT THE VIEW T HAT THE INTEREST INCOME IS INCOME FROM OTHER SOURCES. THIS ISSUE WAS ALSO RAISED DURING THE SCRUTINY ASSESSMENT PROCEEDI NGS FOR A.Y. 2009-10 WHEREIN THE AO HAS HELD THAT INTEREST ON FDRS IS INCOME FROM OTHER SOURCES. THIS ISSUE WAS ALSO RAISED DURING THE SCRUTINY ASSESSMENT PROCEEDING FOR A.Y. 2009-10 WHEREIN THE AO HAS HELD THAT INTEREST ON FDRS IS IN COME FROM OTHER SOURCES. IN VIEW OF THE ABOVE FACTS AS W ELL AS THE PAST HISTORY OF THE CASE THE INTEREST ON FDR AMOUNT ING TO RS. 4,33,729/- IS ASSESSED AS INCOME FROM OTHER SOURCES OF THE ASSESSEE AND HE IS NOT ELIGIBLE FOR CLAIMING EXEMPT ION U/S 10AA ON THIS COMPONENT OF THE INCOME AS SHOWN IN TH E PROFIT AND LOSS ACCOUNT. IN THIS CASE, THE LD.AR OF THE ASSESSEE HAS FILED T HE ADDITIONAL EVIDENCE PRAYING THAT IT IS A VITAL MATTER OF THE ISSUE IN Q UESTION WHICH GOES TO THE ROOT OF THE MATTER. IT IS ALSO NOTED THAT THIS ADDI TIONAL EVIDENCE WAS NOT ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 13 PRODUCED BEFORE THE LOWER AUTHORITIES. LOOKING TO T HE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, IT WILL BE IN THE INTERE ST OF EQUITY AND JUSTICE TO RESTORE THE ISSUE IN QUESTION TO THE FILE OF THE AO TO DECIDE IT AFRESH TAKING INTO CONSIDERATION THE ADDITIONAL EVIDENCE (SUPRA) AND DECIDE THE ISSUE BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSES. 6.1 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NOS. 4 AND 5. HENCE, THE SAME AR E DISMISSED BEING NOT PRESSED. 7.1 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN IT A NO. 702/JP/2016 RAISING THE SOLITARY GROUND AS UNDER:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING THE INTEREST ON FDR OF RS. 3,32,342/- AS INCOME FROM OTHER SOURCES AND THEREBY RESTRICTING THE DEDUCTION U/S 10AA OF I.T. ACT, 1961 AMOUNTING TO RS. 4,43,59,235/- AS AGAINST CLAIMED DEDUCTION O F RS. 4,46,88,897/-. THE ACTION OF LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, A RBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED DEL ETING THE SAID ADDITION OF RS. 3,32,342/- ALLOWING DEDUCTION U/S 1 0AA AT RS. 4,46,88,897/- AS CLAIMED BY THE ASSESSEE COMPANY. 8.1 APROPOS SOLITARY GROUND OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2011-12 (SUPRA), THE FACTS AS EMERGES FROM THE ORDE R OF THE LD. CIT(A) ARE AS UNDER:- ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 14 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASS ESSING OFFICER DISALLOWED AN AMOUNT OF RS. 3,32,342/- EARNED FROM INTEREST ON FDRS IN THE BANK. THE SAME WAS ASSESSED AS INCOME FROM O THER SOURCES AND CLAIM OF EXEMPTION UNDER SECTION 10AA WAS NOT ALLOW ED ON THIS AMOUNT. THE ISSUE IS COVERED IN THE PREVIOUS YEAR B Y THE ORDER OF MY PREDECESSOR DATED 10-09-2014 WHEREIN IT HAS BEEN HE LD AS FOLLOWS:- IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS, I T IS HELD THAT INTEREST ON BANK FDRS IS INCOME FROM OTHE R SOURCES AND THIS INTEREST INCOME HAS NOT BEEN DERIVED FROM EXPORT. THEREFORE, IT CANNOT BE INCLUDED IN THE PROFIT & G AIN DERIVED FROM EXPORT. IN VIEW OF THE ABOVE, THE ACTION OF T HE ASSESSING OFFICER IN REDUCING THE FDR INTEREST FROM PROFIT & GAINS FROM BUSINESS AND PROFESSION AND INCLUDING IT UNDER THE HEAD INCOME FROM OTHER SOURCES IS CONFIRMED. NO EXEMPT ION U/S 10AA CAN BE CLAIMED ON THIS INTEREST INCOME. IN VIEW OF THE ABOVE, THIS GROUND OF THE ASSESSEE I S DISMISSED. 8.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO MENTION THA T THE SIMILAR ISSUE FOR THE ASSESSMENT YEAR 2010-11 HAS BEEN RESTORED TO THE FI LE OF THE AO FOR AFRESH ADJUDICATION. SINCE THE FACTS AND CIRCUMSTAN CES OF THE ISSUE IN QUESTION ARE SAME, THEREFORE, THE DECISION TAKEN IN THE ASSESSMENT YEAR 2010-11 SHALL APPLY MUTATIS MUTANDIS IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2011-12 ALSO. THUS THE APPEAL OF TH E FOR THE ASSESSMENT YEAR 2011-12 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.696/JP/2014 SHRI SAFEF LEX INTERNATIONAL LTD VS ITO, WARD- 6(4) ,JAIPUR 15 9.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL FOR THE ASSESSMENT YEAR 2011-12 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04 -04-2018. SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/04/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SAFEFLEX INTERNATIONAL LRD, JA IPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6(4), 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.696/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR