ACIT, Sikar V. SHREE VISHNU BIDI TRADING CO., Sikar

ITA 761/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1549 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: T C JAIN
• Keywords: Opportunity of being heard
• Section: 2; 11

Judgement Text

1 ITA 761-12 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : A JAIPUR. BEFORE SHRI B.R. MITTAL AND SHRI B.R. JAIN ITA NO. 761/JP/2012 ASSTT. YEAR : 2008-09. THE ACIT, CIRCLE, VS. M/S. SHREE VISHNU BIDI TRA DING SIKAR. CO., STATION ROAD, SIKAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. KHANDELWAL RESPONDENT BY : SHRI T.C. JAIN DATE OF HEARING : 21.01.2013. DATE OF PRONOUNCEMENT : 23.01.2013. ORDER PER B.R. JAIN, A.M. THIS APPEAL BY REVENUE AGAINST THE ORDER DATED 28. 06.2012 OF LD. CIT (A)-III, JAIPUR RAISES THE FOLLOWING GROUNDS :- (I) THE CIT (A) HAS ERRED IN DELETING THE ADDITIO N OF RS. 7.64.206/- MADE UNDER SECTION 40A(2)(B), SIMPLY ON THE BASIS O F DECISION IN ASSESSMENT YEAR 2006-07 AND BY IGNORING THE MODIFIC ATIONS IN THE PREVAILING RATE OF INTEREST IN THE ASSESSMENT YEAR 2008-09. (II) THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,84,933/- MADE ON ACCOUNT OF SUPPRESSED INTEREST RECEIPTS. 2. IN GROUND NO. 1, BRIEFLY THE FACTS ARE THAT ASSE SSEE HAS PAID INTEREST ON PRIVATE BORROWINGS @ 14% PER ANNUM. TO THESE PARTIES, THE ASSESSEE IN THE EARLIER YEARS HAD PAID INTEREST @ 18%. THE ASSESSING OFFICER IN THE E ARLIER YEAR MADE DISALLOWANCE UNDER 2 SECTION 40A(2)B) OF THE ACT BUT THE SAME STOOD DELE TED BY APPELLATE TRIBUNAL BY ITS ORDER DATED 28.09.2010 IN ITA NO. 189/JP/2010. THE ASSES SING OFFICER BEING OF THE VIEW THAT THE PAYMENT OF INTEREST TO SPECIFIED PERSONS IS EXC ESSIVE AND CONSIDERING THAT THE PAYMENT @ 12% PER ANNUM IS REASONABLE, DISALLOWED THE BALAN CE OF 2% OF INTEREST PAYMENT AS EXCESSIVE AND UNREASONABLE. 3. THE LD. CIT (A) CONSIDERING THE PAST HISTORY OF THE ASSESSEE, FOUND NO JUSTIFICATION IN CONSIDERING THE INTEREST PAYMENT @ 14% TO BE EXCESSIVE. THE DISALLOWANCE MADE TO THE EXTENT TO 2% PER ANNUM TO THE SPECIFIED PERSONS THUS STOOD DELETED. 4. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW AS TO HOW TH E INTEREST PAYMENT OF 14% TO THE SPECIFIED PERSONS IS CONSIDERED EXCESSIVE BY HIM. THE APPELLATE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 189/JP/2010 ASSESSMENT YEAR 200 6-07 HAS ALREADY CONSIDERED PAYMENT OF 18% INTEREST TO THE SAME PERSONS AS REAS ONABLE AND HAD DELETED THE DISALLOWANCE MADE UNDER SECTION 40A(2)(B) OF THE AC T. WE, THEREFORE, FIND NO INFIRMITY IN THE DECISION REACHED BY LD. CIT (A) IN DELETING THE DISALLOWANCE. ACCORDINGLY GROUND RAISED IN APPEAL STANDS REJECTED. 5. IN GROUND NO. 2, THE REVENUES CASE IS THAT THE ASSESSEE HAS CLAIMED CREDIT OF TAX DEDUCTED AT SOURCE ON THE INTEREST INCOME OF RS. 1, 84,933/- ON THE FIXED DEPOSIT WITH ITS BANK. THE ASSESSEE HAS NOT DISCLOSED THE SAID INTE REST INCOME AS INCOME OF THE YEAR UNDER CONSIDERATION NOR ITS CLAIM THAT THE SAID INTEREST INCOME HAS BEEN DECLARED AS INCOME OF ASSESSMENT YEAR 2007-08 WAS GOT VERIFIED FROM THE A SSESSMENT RECORD. THE LD. CIT (A), 3 HOWEVER, WITHOUT HIMSELF VERIFYING THE FACT ACCEPTE D THE VERSION OF THE ASSESSEE MERELY ON THE BASIS OF HIS SUBMISSION. HE, THEREFORE, HAS ERRED IN DELETING THE ADDITION. 6. ON THE OTHER HAND, LD. COUNSEL FOR ASSESSEE MADE REFERENCE TO VARIOUS DOCUMENTS CONTAINED AT ITS PAPER BOOK PAGES 11 & 13 IN THE SH APE OF BANK INTEREST STATEMENT AND PAGES 12 & 13 IN THE SHAPE OF TDS ACCOUNT. IT HAS ALSO MADE REFERENCE TO ASSESSEES PAPER BOOK PAGES 9 & 10 SHOWING OTHER RECEIPTS AND INTEREST INCOME AS WELL AS PAGES 16 AND 18 WHICH ARE CERTIFICATES ISSUED BY THE BANK. R EFERENCE HAS ALSO BEEN MADE TO ITS LETTER DATED 18.11.2010 LAID BEFORE THE ASSESSING O FFICER IN ASSESSMENT PROCEEDINGS CLAIMING THAT THIS INTEREST RECEIPT OF RS. 1,84,932 /- RELATING TO FINANCIAL YEAR 2006-07 WERE SHOWN AS ITS INCOME BY THE ASSESSEE IN RELEVANT ASS ESSMENT YEAR 2007-08. SINCE THESE FACTS WERE AVAILABLE BEFORE THE LD. CIT (A), IT CAN NOT BE SAID THAT HE HAS NOT APPLIED HIS MIND BEFORE ACCEPTING THE FACTS CLAIMED BY THE ASSE SSEE. IT, THEREFORE, HAS BEEN CONTENDED THAT THERE IS NO ERROR COMMITTED BY LD. C IT (A) IN DELETING THE ADDITION. 7. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. THE ASSESSEE HAS NOT LAID ON RECORD A COPY OF RETURN OF INCOME FILED FOR ASSESSM ENT YEAR 2007-08 IN ORDER TO ESTABLISH ITS CLAIM THAT THE INTEREST INCOME OF RS. 1,84,932/ - STOOD ASSESSED AS ITS INCOME FOR ASSESSMENT YEAR 2007-08. THE ASSESSING AUTHORITY B ROUGHT THIS AMOUNT TO TAX AS INCOME OF THE YEAR UNDER CONSIDERATION FOR THE SOLE REASON THAT THE ASSESSEE HAS CLAIMED CREDIT OF TAX DEDUCTED AT SOURCE ON SUCH BANK INTEREST BUT HA S NEITHER DISCLOSED THIS INCOME IN CURRENT YEAR NOR ITS CLAIM OF DISCLOSURE IN PRECEDI NG YEAR WAS VERIFIABLE FROM EARLIER YEARS RETURN. IN THIS VIEW OF THE MATTER AND IN O RDER TO RENDER SUBSTANTIAL JUSTICE TO PARTIES, WE CONSIDER IT APPROPRIATE TO REMIT THE MA TTER BACK TO THE ASSESSING AUTHORITY SO THAT THE CLAIM AS IS BEING MADE BY THE ASSESSEE IS GOT VERIFIED AND ISSUE ADJUDICATED AFRESH 4 IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE A ND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, REVENUES APPEAL STANDS PARTLY AL LOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23.1. 2013. SD/- SD/- ( B.R. MITTAL ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 23/01/2013. D/- COPY FORWARDED TO :- THE ACIT, CIRCLE, SIKAR. M/S. SHREE VISHNU BIDI TRADING CO., SIKAR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 761/JP/2012) BY ORDER, AR ITAT JAIPUR.