PRAFUL N. SATRA, MUMBAI V. DCIT CEN CIR 33, MUMBAI

ITA 7802/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9431 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Assessee Lawyers: VIJAY MEHTA MRS HARSHA PARMAR; RAJVI SHAH
• Keywords: Depreciation; Additional evidence; Notional interest
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 7802/MUM/2011 (ASSESSMENT YEAR: 2006-07) ITA NO. 7801/MUM/2011 (ASSESSMENT YEAR: 2007-08) SHRI PRAFUL N. SATRA, DEV PLAZA, 2 ND FLOOR, OPP ANDHERI FIRE STATION, S.V. ROAD, ANDHERI (W), MUMBAI -400 058 PAN AHZPS 4559 A VS DY. COMMISSIONER OF INCOME-TAX, CC- 33, AAYAKAR BHAVAN, MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA/ MRS HARSHA PARMAR & SHRI RAJVI SHAH RESPONDENT BY : SHRI PRAVIN KUMAR DATE OF HEARING: 30.10.2012 DATE OF PRONOUNCEMENT: __.11.2012 O R D E R PER VIVEK VARMA, JM: THE ASSESSEE HAS FILED TWO APPEALS FOR ASSESSMENT YEARS 2006- 07 AND 2007-08, AGAINST THE ORDERS OF CIT(A) 41, MUMBAI, B OTH ORDERS, DATED 06.09.2011. APPEAL NO. 7802 ASSESSMENT YEAR 2006-07 : 2. GROUND NO. 1 IS GENERAL. 3. GROUND NO. 2 THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADHOC DISALLOWANCE I.E. 10% OF EXPENSES AMOUNTI NG TO RS 1,21,408/- AS TABULATED HERE IN BELOW: SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 2 NATURE OF EXPENSES AMOUNT RUPEES DISALLOWANCE @ 10% AMOUNT RUPEES MOTOR CAR DEPRECIATION 24,576 2,458 MOTOR CAR EXPENSES 65,699 6,570 MOTOR CAR DEPRECIATION-INDIVIDUAL 10,08,392 1,00,839 MOTOR CAR EXPENSES- INDIVIDUAL 1,15,410 11,541 TOTAL 1,21,408 4. IT WAS SUBMITTED BEFORE US THAT THE ASSESSEE HAS T HREE MOTOR CARS, OUT OF WHICH, TWO CARS ARE USED BY THE ASSESSEE FOR HIS BUSINESS AND ONE CAR IS USED FOR HIS PERSONAL PURPOSES. THE AR CLA RIFIED THAT THE ASSESSEE HAS CHARGED THE EXPENSES WITH RESPECT T O ONLY TWO CARS, WHICH, THE ASSESSEE CLAIMED TO BE USED FOR HIS BUSINESS PURPOSES. 5. THE AR POINTED OUT THAT THE REVENUE AUTHORITIES HAD ERRED IN DISALLOWING THE EXPENSES, AS THE EXPENSES ARE ENTIRELY A TTRIBUTABLE TO THE ASSESSEES BUSINESS PURPOSES. HE, HOWEVER, FOR THE S AKE OF PARITY, PRAYED, THAT IF AT ALL, THE EXPENSES HAVE TO BE DISALLOWED, THE DISALLOWANCE BE RESTRICTED TO 5%, INSTEAD OF 10%, AS DONE B Y THE REVENUE AUTHORITIES. 6. THE DR, RELIED ON THE OBSERVATIONS OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORITIES, WHO HAVE PASSED THE ORDERS IN A RATHER MECHANICAL MANNER, WITHOUT GIVING THE CONSIDERATION THAT T HE ASSESSEE HAS HIMSELF EXCLUDED ONE CAR, WHICH HE CLAIMS TO BE USED FOR HIS PERSONAL PURPOSES. SINCE THE OTHER TWO CARS ARE USED P RIMARILY FOR BUSINESS PURPOSES, WE AGREE WITH THE AR, THAT THE CLAIM M ADE BY THE ASSESSEE HAS TO BE ALLOWED. BUT, ON THE OTHER HAND, SINCE THE CARS ARE REGISTERED IN THE NAME OF THE ASSESSEE, SOME PERSONAL US AGE CANNOT BE DENIED, WHICH, THE AR HAS HIMSELF CONCEDED TO. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 3 8. TAKING INTO CONSIDERATION THE ENTIRE FACTS, WE DEEM IT FIT TO RESTRICT THE DISALLOWANCE TO 5%, AS CONCEDED BY THE AR ON THE AGGREGATE EXPENSES CLAIMED ON THE CARS USED FOR BUSINESS. 9. WE, THEREFORE, SETASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO COMPUTE THE DISALLOWANCE AT 5%, IN PLACE OF 10%. 10. THE GROUND OF APPEAL IS PARTLY ALLOWED. 11. GROUND NO. 3 IS NOT PRESSED, HENCE IT IS REJECTED. 12. GROUND NO. 4 PERTAINS TO DISALLOWANCE OF INTEREST OF RS. 84,000 ON INTEREST FREE LOAN GIVEN TO MR. PANKAJ JOSHI AT RS. 7,00,000. 13. THE ADDITION HAS BEEN MADE BY THE REVENUE AUTHORITIE S, AS THE ASSESSEE FAILED TO EXPLAIN AS TO WHY INTEREST FREE LOAN WAS ADVANCED TO MR. PANKAJ JOSHI, PARTICULARLY ON THE FACTS THAT THE ASSE SSEE HAD CHARGED INTEREST ON THE OTHER LOANS. BEFORE THE CIT(A), T HE ASSESSEE SUBMITTED, DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT Y EAR 2002- 03 THE AO PRESUMED THAT INTEREST FREE LOAN PAID TO MR. PANKAJ JOSHI AMOUNTING TO RS. 7,00,000/- IS OUT OF INTERES T BEARING FUNDS. IN VIEW OF THE SAME NOTIONAL INTEREST @ 12% WAS COMPUTED AND DISALLOWED THE AO HAS FOLLOWED THE SAI D DISALLOWANCE THEREAFTER FOR THE ASSESSMENT YEARS 20 03-04, 2004-05, 2005-06 AND 2006-07. DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT HAS PROVED THE NEXUS THAT THE INTEREST FREE FUNDS HAVE BEEN UTILIZED FOR GIVING THE ABOVE MENTIONED INTEREST FREE LOAN. THE AO HAS STATED THAT ONE CANN OT RESTRICT ONESELF TO ESTABLISHING A ONE-TO-ONE NEXUS BETWEEN THE BORROWED FUNDS AND THE INTEREST FREE ADVANCES. THE OVERALL P OSITION OF THE LIABILITIES AND THEIR APPLICATION IN VARIOUS ASSETS HAS TO BE TAKEN INTO ACCOUNT. 14. THE CIT(A), REJECTED THE ARGUMENTS OF THE ASSESSEE AND APPLYING THE RATIO LAID DOWN IN THE CASE OF CIT VS H.R. SUGAR MILLS L TD. REPORTED IN 87 ITR 363, SUSTAINED THE ADDITION MADE BY THE AO. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 4 15. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 16. BEFORE US, THE AR SUBMITTED THAT THE LOAN TO MR. PANK AJ JOSHI WAS ADVANCED IN 2002-03 AND THIS WAS ONE OF THE ISSUES BEFORE THE CO- ORDINATE BENCH IN THE ASSESSEE CASE IN ITA NO. 6049/MUM /2009 FOR ASSESSMENT YEAR 2002-03. THIS ISSUE WAS RESTORED TO TH E FILE OF THE AO FOR FRESH CONSIDERATION ON FACTS & LAW. 17. SINCE THE ISSUE IS TRAVELLING FROM PRECEDING YEARS, IT IS APPROPRIATE A CONSISTENT VIEW SHOULD BE TAKEN BY THE RE VENUE AUTHORITIES. IN THESE CIRCUMSTANCES, WE DEEM IT FIT TO SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ADJUDICATE THE ISSUE IN LINE AND IN CONSISTENCY THROUGH THE PRECEDING YEARS. THE GRO UND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 18. GROUND NO. 5 PERTAINS TO DOUBLE ADDITIONS OF RS. 1,00,00 ,000, DECLARED BY THE ASSESSEE U/S 132(4). 19. IN THE IMPUGNED ORDER OF THE CIT(A), THE CIT(A) HAS DISM ISSED THE GROUND BEING NON-MAINTAINABLE AS THE ISSUE WAS NOT R AISED BEFORE THE AO. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 20. BEFORE US, THE AR SUBMITTED THAT THE ISSUE WAS NOT A GITATED BECAUSE THERE WAS NO OCCASION FOR THE SAME, AS THE ASS ESSEE HAD ADDED THE DECLARED INCOME IN ITS COMPUTATION (APB 83). WHE N POINTED OUT BEFORE THE CIT(A), THE CIT(A) HELD THAT THE ISSUE WAS N OT TAKEN UP BEFORE THE AO. THE AR SUBMITTED THAT IT WOULD BE FAIR ON BOTH THE SIDES THAT THE ISSUE IS RESTORED TO THE REVENUE AUTHORITIES FO R TAKING INTO CONSIDERATION THE DECLARATION AND GIVING EQUITABLE ADJUSTME NT, SO THAT THE ASSESSEE IS NOT BURDENED WITH DOUBLE ADDITION. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 5 21. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIE S, WHEREIN THE CIT(A) CATEGORICALLY HOLDS, SINCE IT IS NOT BASED ON THE ASSESSMENT ORDER, THEREFORE, THE ASSESSEE HAS NO RIGHT TO RAISE THIS ISSUE WHICH IS NOT PART OF THE ASSESSMENT ORDER IN THE APPELLATE PR OCEEDINGS . THE DR, THEREFORE, PLEADED THAT THE GROUND HAS TO BE HELD TO BE NON MAINTAINABLE. 22. WE HAVE HEARD THE RIVAL ARGUMENTS AND HAVE PERUSED THE COMPUTATION OF INCOME, ON WHICH THE ASSESSEE FILED HIS RETUR N OF INCOME. WE FIND THAT THE AMOUNT DECLARED U/S 132(4) HAS BE EN ADDED SUO MOTO BY THE ASSESSEE AND PAID TAXES THEREON. ON CONTINUAT ION OF THIS FACT, WE AGREE WITH THE CONTENTION OF THE AR THAT ON THIS ADHOC OFFER OF RS. 1,00,00,000, TELESCOPING HAD TO BE GIVEN BY THE REVENUE AUTHORITIES, WHICH WAS DENIED TO THE ASSESSEE. WE, THEREF ORE, IN THE INTEREST OF JUSTICE, RESTORE THE ISSUE TO THE FILE OF THE CI T(A), WHO SHALL ADJUDICATE AND GIVEN REASONED FINDING ON THE ISSUE AND AL SO THAT THE ASSESSEE SHALL NOT SUFFER ANY DOUBLE ADDITION. NEEDLESS TO S AY, PROPER OPPORTUNITY SHALL BE GIVEN TO THE ASSESSEE TO PUT FORTH ARGUMENTS/SUBMISSIONS. 23. THE GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 24. GROUND NO. 6 IS ON ACCOUNT OF ADDITION OF RS. 19,50,401 U/S 68. 25. DURING THE YEAR, THE ASSESSEE ACCEPTED FRESH LOANS FR OM MR. KANAIYALAL LOKURAM SEVANI AT RS. 14,50,401 AND FROM MS. LAT A SHAH, RS. 5,00,000. 26. IT WAS SUBMITTED BY THE AR THAT THE CIT(A) CALLED FOR REMAND REPORT ON THIS ISSUE, WHICH WAS SUBMITTED ON 29.07.2011 (AP B 81 & 82), WHEREIN, THE AO MENTION THAT COMPLETE DETAILS OF MR. KAN AIYALAL LOKURAM, WHICH INCLUDED THE PHOTOCOPY OF PASSPORT AND PR OOF OF SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 6 RESIDENCE WAS PROVIDED. HE ALSO POINTED OUT THAT CONFIRMA TION OF LOAN ADVANCED WAS ALSO FILED WITH RESPECT TO LOAN FROM MS. LATA SHAH. SUBSEQUENT TO THE REMAND PROCEEDINGS, THE ASSESSEE, BE FORE THE CIT(A), REITERATED HIS STAND AND ARGUMENTS AND PRAYED TH AT THE ADDITIONS ARE NOT FOR, SINCE THE ASSESSEE HAS DISCHARGED ITS ONUS. 27. THE CIT(A), MADE REFERENCE TO 1. SUMATI DAYAL VS. CIT -214 ITR 801 (SC) 2. BASANTI BHAI N SHAH VS. CIT -213 ITR 805(BOM) 3. ROSHAN DI HATTI VS. CIT -107 ITR 938 (SC) 4. BIJU PATNAIK VS. CIT -168 ITR 674 (SC) AND IN ANY CASE, REJECTED THE PLEA AND SUBMISSIONS OF THE ASSESSEE & SUSTAINED THE ADDITIONS U/S 68. 28. AGGRIEVED, THE ASSESSEE IS NOW BEFORE ITAT. 29. BEFORE US, THE AR REITERATED HIS SUBMISSIONS MADE BEFOR E THE REVENUE AUTHORITIES AND SUBMITTED THAT COMPLETE DETAILS H AD BEEN PLACED, VIDE LETTER DATED 26.08.2011 (APB 33, 34), THE ASSES SEE HAD DISCHARGED HIS ONUS. THE AR SUBMITTED THAT AFTER THE DISC HARGE OF THE ONUS, THE BURDEN SHIFTS ON THE REVENUE, WHICH THE REVENU E AUTHORITIES CHOSE NOT TO. THE AR, THEREFORE, SUBMITTED THAT, BOTH THE LOANS WERE GENUINE AND NO ADDITION CAN BE MADE ON EITHER LOAN. 30. THE DR RELIED ON THE ORDER OF THE REVENUE AUTHORITIES. 31. WE HAVE HEARD THE ARGUMENTS AND PERUSED THE MATE RIAL PLACED BEFORE US, WE FIND THAT THE ASSESSEE HAD PLACED ALL THE R ELEVANT DOCUMENTS, NEEDED TO PROVE THE GENUINENESS, CREDITWORT HINESS AND IDENTITY OF THE TWO PERSONS, FROM WHOM THE TWO LOANS WERE RAISED. THE ASSESSEE AT FIRST HAS TO DISCHARGE THIS ONUS, WHICH, IN OUR CONSIDERED OPINION HAS BEEN DISCHARGED. AFTER THE INITIAL BURDEN IS DISCH ARGED, IT SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 7 IS SHIFTED ON THE REVENUE AUTHORITIES, IF CERTAIN OTHER ENQU IRIES ARE REQUIRED TO BE MADE. THE REVENUE AUTHORITIES SHOULD HAV E MADE FURTHER ENQUIRIES, IF, ACCORDING TO THEM, THE ADDITION WAS J USTIFIED. SINCE, NO FURTHER ENQUIRIES WERE CONDUCTED, A BALD ASSERTIO N CANNOT BE CONVERTED INTO CONCRETE EVIDENCE, ON WHICH THE ADDITION C AN BE SUSTAINED. IT IS NOT EXPECTED FROM THE ASSESSEE TO PROD UCE THE PASSPORT OF A PERSON LIVING IN A FOREIGN COUNTRY & HAVING INCOME FROM A SOURCE ABROAD AND ALSO WHEN THE ASSESSEE HAS GIVEN PAN DETAILS AND ADDRESS OF THE PERSON, IT WAS FOR THE REVENUE AUTHORITIES TO PROV E THE SAME, IF DOUBTED. WE MUST MENTION HERE THAT ON THIS ISSUE, THE C IT(A) HAD CALLED FOR REMAND REPORT AND WHICH WAS SUBMITTED, WHEREIN ADEQUATE DETAILS WERE SUBMITTED. IF THERE WAS SOMETHING WHICH COUL D NOT BE RELIED UPON, THE AO HAD ALL THE TIME TO ISSUE NOTICES UNDER SECTION 131 TO THE TWO PERSONS AND SOUGHT CLARIFICATIONS, WHICH, HE TOTALLY IGNORE D. 32. IN THESE CIRCUMSTANCES, WE CANNOT SUSTAIN THE ADDITIO N. WE THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION(S). 33. THE GROUND IS ALLOWED. 34. GROUND NO. 7 IS CONSEQUENTIAL. 35. GROUND NO. 8 IS GENERAL. 36. IN THE RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED. APPEAL NO. 7801 ASSESSMENT YEAR 2007-08 : 37. GROUND NO. 1 IS GENERAL. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 8 38. GROUND NO. 2 IS AGAINST ADHOC DISALLOWANCE ON CAR EXPENSES. 39. THE GROUND IS IDENTICAL AND ON SAME FACTS WITH THE ONL Y PERCENTAGE DIFFERENCE OF DISALLOWANCE, THIS YEAR THE DISALLOWAN CE HAS BEEN DONE AT 20% INSTEAD OF 10% IN THE PRECEDING YEAR. 40. IN THE PRECEDING YEAR, WE HAVE RESTRICTED THE DISALLOW ANCE AT 5%. FOLLOWING THE DECISION, WE RESTRICT THE DISALLOWANCE TO 5% ON THE AGGREGATE EXPENSES CLAIMED ON THE CARS USED FOR BUSINESS. 41. GROUND NO. 3 PERTAINS TO ADDITION U/S 68 ON THE LOAN TAKEN FROM MS. HEENA GALA. 42. THE DISALLOWANCE HAS BEEN MADE, AS, AS PER REVENUE AU THORITIES VERSION NO CONCRETE DETAILS WERE FILED BEFORE THE AO. THE C IT(A) ALSO CONFIRMED THE DISALLOWANCE MADE BY THE AO. 43. AGGRIEVED, THE ASSESSEE IS NOT BEFORE THE ITAT. 44. BEFORE US, THE AR SUBMITTED THAT CONFIRMATION, TRANSACT ION DETAIL AND PAN WAS PROVIDED TO THE REVENUE AUTHORITIES V IDE HIS LETTERS DATED 22.12.2008 & 23.12.2008, WHEREIN, MS. HEENA GALA HAD G IVEN ALL HER DETAILS. THE AR PLACED BEFORE US THE WRITTEN SUBMISS IONS AND ALSO THE EVIDENCE THAT WAS SUBMITTED BEFORE THE REVENUE AUTHORITIES AND PLEADED THAT SINCE THE LOAN WAS GENUINE, NO ADDITION SHOULD BE MADE. 45. THE DR ON THE OTHER HAND PLACED HEAVY RELIANCE ON THE ORDERS OF THE REVENUE AUTHORITIES AND THE DECISIONS REFERRED TO IN THE IMPUGNED ORDERS AND PLEADED THAT THE VERY FACT THAT NO EVIDENCE WAS PLACED BEFORE THE AO GOES TO PROVE THAT THE TRANSACTION WAS NOT GENUINE AND THE ADDITION WAS RIGHTLY MADE. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 9 46. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND HAVE ALSO PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO OBSER VES IN THE ASSESSMENT ORDER THAT NO DETAILS WERE FILED, DESPITE REPE ATED REQUESTS, AND ON THE OTHER HAND, THE AR HAS PLACED SUBMISSIONS DA TED 22.12.2008 WHEREIN DETAILS OF LOANS HAD BEEN SUBMITTED AND THE SAME IS ALSO CERTIFIED BY M/S BHUTA SHAH & CO. C.A. AND THE CIT(A ) HAS EXTRACTED THE PORTION OF WRITTEN SUBMISSIONS, WHEREIN IT IS MENTIONED THAT DETAILS OF LOAN WERE PLACED BEFORE THE AO VIDE TWO LET TERS, DATED 22.12.2008 & 23.12.2008. THE EXTRACTED SUBMISSION ALSO MENT ION THAT BANK BOOK AND BANK STATEMENT WERE PLACED BEFORE THE AO VIDE LETTER DATED 15.12.2008 & 16.12.2008. 47. THESE FACTS CAN NEITHER BE BRUSHED ASIDE NOR CAN TH EY BE TAKEN LIGHTLY, BECAUSE EVEN THE CIT(A) HAS ACCEPTED THE SAME A ND NOT TREATED THEM AS ADDITIONAL EVIDENCE. IT IS ALSO A FACT THAT THE RE VENUE AUTHORITIES DID NOT MAKE ANY FURTHER ENQUIRIES ON THE ISSU E. IF AT ALL THE CIT(A) HAD DOUBTED, HE COULD HAVE ASKED FOR A REMAND FROM THE AO, WHICH HE DID NOT. WHAT WE FIND IS THAT THERE ARE BALD OBSERVATION IN THE ORDERS OF THE REVENUE AUTHORITIES WITH REGARD TO THE INSTANT ISSUE. 48. ON GOING THROUGH THE EVIDENCE PLACED ON RECORD, WHICH INCLUDES BANK STATEMENT, CONFIRMATION ALONGWITH WITH PAN, WE DO NOT HAVE ANY REASON TO DISBELIEVE THE ASSESSEE ON THIS ISSUE. 49. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION. 50. GROUND NO. 3 IS ALLOWED. 51. GROUND NO. 4 IS NOT PRESSED, HENCE IT IS REJECTED AS NOT PRESSED. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 10 52. GROUND NO. 5 IS AGAINST THE DISALLOWANCE OF RS. 1,24,70,137 BEING BILL DISCOUNTING CHARGES. 53. IN THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE DE TAILS AND ACCORDING TO THE AO, NO DETAILS WHAT SO EVER WERE FILED. 54. IN THE WRITTEN SUBMISSIONS BEFORE THE CIT(A) AND AS E XTRACTED IN THE IMPUGNED ORDER, IT WAS SUBMITTED THAT THERE WERE ON LY INTEREST EXPENSES PAID TO M/S UTTAM ENTERPRISES ON THE FUNDS BO RROWED FROM THAT PARTY. THE CIT(A), THEREFORE, DISALLOWED THE SAME AS, ACCORDING TO THE CIT(A), THE ONUS FOR THE RIGHTFUL CLAIM WAS ON THE ASSE SSEE, WHICH THE ASSESSEE HAD FAILED TO DISCHARGE. 55. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 56. BEFORE US, THE AR SUBMITTED THAT COMPLETE DETAILS WERE FILED BEFORE THE REVENUE AUTHORITIES. THE AR POINTED OUT THAT DETAILS IN THE FORM OF CONFIRMATION FROM UTTAM ENTERPRISES WERE PLACED (APB 38) WHEREIN THE DETAIL OF INTEREST PAID TO THE TUNE OF RS. 1,44,0 0,000 HAS BEEN MENTIONED, OUT OF WHICH THE ASSESSEE HAD CLAIMED THE INTEREST PAYMENT OF RS 1,24,00,000. TO PROVE HIS POINT FURTHER THAT THE ASSESSEE HAD IN FACT ARRANGED LOANS AND HAD IN FACT PAID INTEREST IN T HE FORM OF BILL DISCOUNTING, THE AR POINTED OUT THAT THE ASSESS EE HAD SHOWN HIS OWN CAPITAL AT RS. 87.91 LACS, WHEREAS THE BALANC E SHEET TOTAL SHOWN AT RS. 109.17 CRORES, WHICH INCLUDES UNSECURED LOANS OF RS. 88.04 CRORES, WHICH PROVES THAT ASSESSEE HAD IN FACT LEGITIMATELY PAID INTEREST AS BILL DISCOUNTING CHARGES TO UTTAM ENTERPRISES. 57. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 11 58. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE MATERIAL PLACED ON RECORD. THE FACT THAT THE CIT(A) ACCEPTED THE EVIDENCE AND ASKED THE AO FOR REMAND REPORT GOES TO PROVE THAT CO MPLETE ENQUIRY WAS CONDUCTED BY THE REVENUE AUTHORITIES AND COMPLETE DETAILS WERE PLACED BEFORE THEM. FROM THE PLAIN LOOK OF THE BALANCE SHE ET ITSELF PROVES THAT THE ASSESSEE IS ACTUALLY RUNNING HIS BUSINES S ON OTHER PEOPLES MONEY AND WITH UNSECURED LOANS STANDING AT STAG GERING RS. 88.04 CRORES, IT IS NOT POSSIBLE THAT THE ASSESSEE WOULD N OT HAVE PAID INTEREST, WHICH HE HAS TERMED AS BILL DISCOUNTING CHARGES AT RS. 1.24 CRORES. LOOKING INTO THESE FACTS WE ARE OF THE CONSIDERED OPINION THAT THE BILL DISCOUNTING CHARGES HAVE BEEN PAID BY THE ASSESS EE AS A REGULAR BUSINESS EXPENSE AND IT DESERVES TO BE ALLOWED. 59. IN THE CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE EXPENSES AS CLAIMED. 60. GROUND NO. 6 IS DISALLOWANCE OF DEDUCTION OF RS. 3,00,000 CLAIMED U/S 80G. 61. THE CIT(A) HAS REJECTED THE GROUND, AS HE OBSERVED THAT NO DISALLOWANCE HAD BEEN MADE BY THE AO ON THIS ACCOUNT. 62. BEFORE THE CIT(A), THE ASSESSEE PLACED RECEIPT OF RS. 3,0 0,000 PAID TO SHREE NAVJEEVAN VIKLANG SEVASHANG. 63. SINCE THE RECEIPT WAS NOT BEFORE THE AO, THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR VERIFICATION. 64. ON PERUSAL OF THE ASSESSMENT ORDER, WE HAVE NOT FOUN D THAT THE DEDUCTION AS CLAIMED, WAS DISALLOWED BY THE AO. SHRI PRAFUL N. SATRA ITA 7802/MUM/2011 ITA 7801/MUM/2011 12 65. SINCE THE RECEIPT WAS NOT BEFORE THE AO, THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR VERIFICATION. 66. SINCE THE ISSUE DOES NOT EMANATE FROM THE ASSESSMEN T ORDER, THE GROUND DOES NOT SURVIVE AS MAINTAINABLE, HENCE IT IS REJECTED. 67. IN THE RESULT: THE APPEAL FILED BY THE ASSESSEE FOR AY 2006-07 IS TREATED AS ALLOWED. THE APPEAL FILED BY THE ASSESSEE FOR AY 2007-08 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21/11/2012. SD/- (D. KARUNAKARA RAO) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 21/11/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- 41 , MUMBAI. 4) THE CIT CENTRAL-III, MUMBAI, 5) THE D.R. C BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN