SHRI SUBHASH AGARWAL, ALWAR V. PRINCIPAL COMMISSIONER OF INCOME TAX, ALWAR

ITA 701/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3701 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 22-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Audit objection; Set aside
• Section: 143(3); 142(1); 143(1); 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 701/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS: 2014-15. SHRI SUBHASH AGARWAL, 47, SCHEME NO. 1, ARYA NAGAR, ALWAR. CUKE VS. THE PRINCIPAL CIT, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: ABDPA 4322 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 03/08/2018 VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE REVISION ORDER OF LD. PRINCIPAL CIT, ALWAR DATED 22.03.2018 PASSED UNDER SECTION 263 OF THE I.T. ACT FOR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS :- 1. THE ORDER PASSED BY THE LD. PCIT U/S 263 IS IL LEGAL AND BAD IN LAW. 2. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THE ORDER PASSED BY AO AS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE ONLY ON ACCOUNT OF AUDIT OBJECTION RAISED B Y THE AUDIT PARTY IGNORING THAT AO HAS NOT ACCEPTED THE AUDIT O BJECTION. 2 ITA NO. 701/JP/2018 SHRI SUBHASH AGARWAL, ALWAR. 3. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT ORDER PASSED BY AO U/S 143(3) DT. 29.03.2016 ALLOWING THE CLAIM OF INTEREST PAYMENT AGAINST THE INTEREST RECEIPT IS WI THOUT MAKING PROPER ENQUIRY OR VERIFICATION IGNORING THAT THE AO HAS EXAMINED THE CLAIM OF INTEREST PAYMENT AND ALLOWED THE SAME AFTER MAKING COMPLETE ENQUIRY/VERIFICATION. 4. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 5. NECESSARY COST BE ALLOWED TO THE ASSESSEE. 2. THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECT ION 143(3) OF THE IT ACT ON 29 TH MARCH, 2016 ACCEPTING THE RETURNED INCOME OF THE A SSESSEE. SUBSEQUENTLY, THE LD. PR. CIT ON EXAMINATION OF THE RECORD FOUND THAT THE AO DID NOT CONDUCT ANY ENQUIRY ON ACCOUNT OF ALLOWABILITY OF THE CLAIM OF INTEREST EXPENDITURE UNDER SECTION 57(III) AS WELL AS SOME OTHER ISSUES. FINALLY, THE LD. PR. CIT SET ASIDE THE ORDER PASSED BY THE AO WITH THE DIRECTION TO EXAMINE THE ISSUE P ROPERLY AND THEN PASS THE ASSESSMENT ORDER AFRESH. 3. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE FACTS AND CIRCUMSTANCES AS WELL AS THE ISSUES ARE IDENTICAL TO THE APPEAL IN ITA NOS. 699 & 700/JP/2018 IN THE CASE OF SHRI NARESH AGARWAL. THE DETAILS OF INTEREST RECEIVED AND PAID WERE GIVE N BY THE LD. PR. CIT AT PAGES 4 & 5 AS UNDER :- INTEREST RECEIVED (ALL AMOUNTS IN RUPEES) NAME OF PERSON TO WHOM MONEY LENT OPENING BALANCE AS ON 01.04.2013 AMOUNT LENT/REPAID DURING THE YEAR (+ -) BALANCE INTEREST RECEIVED FOR THE YEAR RATE OF INTER EST NANGALWALA AUTO MFG PVT. LTD. (ASSESSEE IS DIRECTOR) 1,69,52,300 (-)1,69,52,300 - 1,84,972 15% 3 ITA NO. 701/JP/2018 SHRI SUBHASH AGARWAL, ALWAR. NANGALWALA CHEMICAL INDUSTRIES (ASSESSEE IS PARTNER 2,90,78,030 5,79,103 2,96,57,133 3,36,083 12% NANGALWALA IMPEX P. LTD 28,46,839 (-) 59,03,647 (-) 30,56,808 33,96,453 15% THE MADHUR GLASS & CHEM. IND (ASSESSEE IS PARTNER) 1,08,44,376 65,78,805 1,74,23,181 35,94,808 12% VIJAY AGARWAL - 9,00,000 9,00,000 1,500 15% BOB DELHI 486 BOB HC 12,361 HDFC BANK 944 IT REFUND 12,610 TOTAL 5,97,21,545 (-)1,47,98,039 4,49,23,506 75,40,217 INTEREST PAID NAME OF PERSON FROM WHOM MONEY BORROWED OPENING BALANCE AS ON 01.04.2013 AMOUNT BORROWED/REPAID DURING THE YEAR (+ -) BALANCE INTEREST PAID FOR THE YEAR RATE OF INTEREST A-ONE FINANCIAL SERVICE PVT. LTD. - 10,00,000 10,00,000 1,50,000 15% ANITA AGARWAL (JAIPUR) - 6,00,000 6,00,000 90,000 15% ARIHANT DHARMARTH NYAS - 50,000 50,000 7,500 15% ASHOK AGARWAL - 35,00,000 35,00,000 4,20,000 12% ASHOK AGARWAL HUF - 10,00,000 10,00,000 1,03,750 15% ASHOK AMERIA - 3,50,000 3,50,000 50,896 15% BHAGWAN DAS GUPTA - 1,00,000 1,00,000 15,000 15% LIC LOAN 1,15,000 1,15,000 10,350 GOVIND RAM NARENDRA KUMAR HUF 2,00,000 - 2,00,000 15,280 15% HDFC LOAN 4,89,17,265 (-) 82,93,334 4,06,23,931 61,98,420 JEETMAL JAIN 10,00,000 1,00,000 11,00,000 1,58,500 15% JEEVANLATA GUPTA 2,00,000 - 2,00,000 30,000 15% KAMLA JAIN 7,00,000 - 7,00,000 1,05,000 15% MITALEE GUPTA - 4,00,000 4,00,000 29,699 10% NAVEEN AGARWAL 2,25,000 - 2,25,000 33,752 15% PAWAN AGARWAL 1,29,236 - 1,29,236 19,385 15% RAJKUMAR AGARWAL 25,214 - 25,214 3,782 15% SAURBH JAIN 1,00,000 7,930 16% SURESH CHAND AGARWAL 5,76,756 - 5,76,756 64,660 12% TOTAL 5,20,88,471 (-)10,93,334 4,16,92,137 75,13,904 THUS IDENTICAL TRANSACTIONS ARE INVOLVED IN THIS CA SE AS IN THE CASE OF SHRI NARESH AGARWAL. BOTH THE PARTIES HAVE ADVANCED IDENTICAL ARGUMENTS AS RAISED IN THE CASE OF SHRI NARESH AGARWAL. 4 ITA NO. 701/JP/2018 SHRI SUBHASH AGARWAL, ALWAR. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, AT THE OUTSET, WE NOTE THAT IDENTICAL ISSUE S HAVE BEEN CONSIDERED BY US IN THE CASE OF SHRI NARESH AGARWAL VS. PR. CIT (SUPRA) IN PARA 4 VIDE EVEN DATE ORDER AS UNDER :- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE ORIGINAL ASSESSME NT UNDER SECTION 143(3) WAS PASSED BY THE AO ON 10 TH FEBRUARY, 2016 AS UNDER :- ASSESSMENT ORDER THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 30. 07.2013 DECLARING TOTAL INCOME OF RS. 12,05,000/-. THE RETU RN WAS PROCESSED U/S 143(1) OF INCOME TAX ACT, 1961 ON 10.05.2013. T HE CASE WAS SELECTED UNDER SCRUTINY THROUGH CASS AND NOTICE U/S 143(2) WAS ISSUED ON 05.09.2014. THE PRELIMINARY QUERY LETTER WAS ISS UED ON 30.10.2014. IN COMPLIANCE TO THESE NOTICES, SH. RAVINDRA SHAH, CA AND A/R OF THE ASSESSEE ATTENDED THE HEARING TIME TO TIME AND FILE D THE DETAILS WHICH ARE PLACED ON RECORD. THE CASE IS DISCUSSED WITH HI M. THE ASSESSEE IS PARTNER IN M/S. AJANTA PLASTIC INDU STRIES AND M/S. VISHAL AGENCIES AND HAS SHOWN INTEREST FROM TH ESE FIRMS. THE ASSESSEE IS DERIVING SALARY FROM M/S. NANGALWALA IM PEX PVT. LTD AND M/S. ZIBAA BUILDERS PVT. LTD. APART FROM THESE, THE ASSESSEE HAS DECLARED INCOME FROM HOUSE PROPERTY, CAPITAL GAIN A ND INCOME FROM OTHER SOURCES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA S EARNED INCOME FROM ABOVE SAID SOURCES AS MENTIONED. AFTER EXAMINING RELEVANT DETAILS/DOCUMENTS AND AFTER DISCUSSION RET URNED INCOME OF RS. 12,05,000/- AS DECLARED BY THE ASSESSEE IS HEREBY A CCEPTED. ASSESSED U/S 143(3) OF THE INCOME TAX ACT 1961. THE INCOME TAX COMPUTATION FORM GENERATED FROM THE SOFTWARE SYSTEM OF THE DEPARTMENT, GIVING THEREIN THE DETAILS OF TAX, INTE REST, CREDIT FOR PREPAID TAXES ETC., FORMS PART OF THIS ORDER, IS AT TACHED HEREWITH. SD/- ( ASMITA PATHAK ) PLACE : ALWAR INCOME-TAX OFFICER, DATED : WARD 1(1), ALWAR. 5 ITA NO. 701/JP/2018 SHRI SUBHASH AGARWAL, ALWAR. THUS IT IS CLEAR THAT THE AO ACCEPTED THE RETURNED INCOME IN THE SUMMARY PROCEEDINGS WHEREAS THERE ARE MULTIPLE TRAN SACTIONS OF LOANS TAKEN BY THE ASSESSEE AS WELL AS GIVEN BY THE ASSES SEE. THE LD. PR. CIT HAS GIVEN THE DETAILS AT PAGES 4 & 5 OF THE IMP UGNED ORDER AS UNDER :- INTEREST RECEIVED (ALL AMOUNTS IN RUPEES) NAME OF PERSON TO WHOM MONEY LENT OPENING BALANCE AS ON 01.04.2012 AMOUNT LENT/ REPAID DURING THE YEAR (+ -) BALANCE INTEREST RECEIVED FOR THE YEAR RATE OF INTER EST NANGALWAL IMPEX PVT. LTD. (ASSESSEE IS A DIRECTOR) 1,04,89,313 (-) 80,33,000 24,56,313 2,78,164 15% GOLDEN VEGPRO LTD. 21,86,007 1,33,721 23,19,728 3,43,222 15% ZIBRA BUILDERS PVT. LTD. (ASSESSEE IS A DIRECTOR) 1,93,06,838 24,00,000 2,7,06,838 37,24,864 18% AJANTA PLASTIC INDUSTRIES (PARTNERS CAPITAL 49,15,426 (-) 60,41,698 (-) 11,26,272 3,95,400 12% VISHAL AGENCIES (PARTNERS CAPITAL) 2,43,949 28,21,000 30,64,949 2,13,202 12% BOB 24,313 - 24,313 7,950 UBI 2,188 (-) 2,188 - 42 BOB, DELHI 19,654 (-) 5,925 13,727 534 BOB, HC 6,10,505 (-) 6,09,1001, 1,405 HDFC BANK 27,956 (-) 27,956 - TOTAL 3,78,26,149 (-) 93,65,146 2,84,61,100 49,63,444 INTEREST PAID (ALL AMOUNTS IN RUPEES) NAME OF PERSON FROM WHOM MONEY BORROWED OPENING BALANCE AS ON 01.04.2012 AMOUNT BORROWED/ REPAID DURING THE YEAR (+ -) BALANCE INTEREST PAID FOR THE YEAR RATE OF INTEREST AMIT JAIN 2,00,000 - 2,00,000 24,000 12% ASHOK KUMAR JAIN 20,00,000 - 20,00,000 2,40,000 12% BOMBAY ELECTRICALS 5,00,000 5,00,000 - 58,500 12% GANPATI TRADERS 10,00,000 - 10,00,000 1,20,000 12% KRANTI CHAND JAIN HUF 2,00,000 - 2,00,000 24,000 12% KRANTI CHAND JAIN 2,00,000 - 2,00,000 24,000 12% MEENAKSHI JAIN 2,00,000 - 2,00,000 24,000 12% PREETI TOMER 4,00,000 - 4,00,000 60,000 15% RAM SINGH 5,00,000 2,00,000 7,00,000 92,500 15.6% SHEETAL JAIN 2,00,000 - 2,00,000 24,000 12% SHUSHILA AGARWAL 6,50,000 (-) 1,50,000 5,00,000 76,438 15% VISHAL AGENCIES (PARTNER OD) 1,07,02,272 - 1,07,02,272 19,26,409 18% LIC LOAN 1,15,000 - 1,15,000 10,350 9% LIC LOAN 3,22,000 - 6 ITA NO. 701/JP/2018 SHRI SUBHASH AGARWAL, ALWAR. HDFC LOAN 2,03,95,832 (-) 11,96,891 1,91,98,941 22,28,677 12.75% TOTAL : 3,72,63,104 (-) 16,46,891 3,56,16,213 52,32,874 AS IT IS EVIDENT FROM THE ABOVE DETAILS THAT THERE ARE VARIOUS TRANSACTIONS OF LOANS GIVEN BY THE ASSESSEE AS WELL AS CAPITAL INTRODUCED IN THE OLD PARTNERSHIP FIRMS BY USING TH E BORROWED FUNDS FROM VARIOUS PARTIES AS WELL AS FROM THE PARTNERSHI P FIRM. THUS THE ASSESSEE HAS BORROWED THE FUND FROM THE PARTNERSHIP FIRM M/S. VISHAL AGENCIES IN THE CATEGORY OF OVER-DRAWING AND AT THE SAME TIME A CAPITAL OF RS. 28,21,000/- WAS ALSO INTRODUCED IN T HE SAME FIRM. THIS IS NOT A NEWLY FORMED FIRM BUT THIS IS AN OLD PARTNERS HIP FIRM AND, THEREFORE, IT IS NOT AN INITIAL INTRODUCTION OF CAP ITAL BY THE PARTNERS. FURTHER, WE FIND THAT THE AO WHILE PASSING THE ASSE SSMENT ORDER HAS NOT RAISED EVEN A QUERY ABOUT THE ALLOWABILITY OF T HE INTEREST UNDER SECTION 57(III) OF THE ACT. THERE IS NO SUCH QUERY RAISED EITHER IN THE NOTICE ISSUED UNDER SECTION 142(1) OR OTHERWISE AND , THEREFORE, EVEN IF THE DETAILS FILED BY THE ASSESSEE WERE CONSIDERED B Y THE AO BUT IF THE SAME ARE NOT EXAMINED IN THE CONTEXT OF ALLOWABILIT Y OF THE CLAIM UNDER SECTION 57(III), THEN THE CASE WOULD CERTAINLY FALL IN THE CATEGORY OF COMPLETE LACK OF ENQUIRY ON A PARTICULAR ISSUE OF A LLOWABILITY OF THE CLAIM OF INTEREST EXPENDITURE UNDER SECTION 57(III) OF THE ACT. FURTHER, THE DETAILS REVEALED THAT THE ASSESSEE HAS RECEIVED THE INTEREST @ 12% FROM M/S. VISHAL AGENCIES, THE PARTNERSHIP FIRM AS AGAINST THE INTEREST CHARGED BY THE SAME FIRM FROM THE ASSESSEE @ 18%, H ENCE THERE IS A DIFFERENCE OF 6% IN THE INTEREST RECEIVED AND PAID BY THE ASSESSEE. ALL THESE ASPECTS WERE NOT EVEN EXAMINED BY THE AO. FU RTHER, THERE IS NO BAR FOR CONSIDERING THE AUDIT OBJECTIONS BY THE LD. PR. CIT IF THE AUDIT OBJECTION REVEALS CERTAIN RELEVANT AND CRUCIAL FACT S ABOUT THE ALLOWABILITY OF THE CLAIM. THEREFORE, WE DO NOT FI ND ANY SUBSTANCE OR MERIT IN THE CONTENTION OF THE LD. A/R ON THIS POIN T AS IT IS CLEAR THAT IT IS A CASE OF LACK OF ENQUIRY PARTICULARLY ON THE ISSUE OF ALLOWABILITY OF THE 7 ITA NO. 701/JP/2018 SHRI SUBHASH AGARWAL, ALWAR. CLAIM UNDER SECTION 57(III) OF THE ACT. THUS THE OR DER OF THE AO SUFFERS FROM ERROR SO FAR AS IT IS PREJUDICIAL TO THE INTER EST OF THE REVENUE. HENCE THE LD. PR. CIT HAS RIGHTLY INVOKED THE PROVI SIONS OF SECTION 263 OF THE ACT AND DIRECTED THE AO TO CONDUCT A PROPER ENQUIRY ON THIS ISSUE. AS REGARDS THE OTHER ISSUES RAISED BY THE L D. PR. CIT IN THE SHOW CAUSE NOTICE, THOSE WERE NOT SPECIFICALLY DISCUSSED IN THE IMPUGNED ORDER AS THE ASSESSEE EXPLAINED SOME OF THE ISSUES WHICH WERE FACTUALLY FOUND TO BE CORRECT. ACCORDINGLY, WE RES TRICT THE FRESH ADJUDICATION OF THE MATTER ONLY ON THE ISSUE OF ALL OWABILITY OF THE CLAIM UNDER SECTION 57(III) OF THE ACT, TO THAT EXTENT TH E IMPUGNED ORDER OF LD. PR. CIT IS UPHELD. FOLLOWING THE ORDER IN THE CASE OF SHRI NARESH AGAR WAL, WE UPHOLD THE IMPUGNED ORDER OF THE LD. PR. CIT ON THE ISSUE OF ALLOWABILI TY OF THE CLAIM UNDER SECTION 57(III) OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 03/08/2018. DAS/ 8 ITA NO. 701/JP/2018 SHRI SUBHASH AGARWAL, ALWAR. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI SUBHASH AGARWAL, ALWAR. 2. THE RESPONDENT THE PRINCIPAL CIT, ALWAR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 701/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR