Parveen Kumar Goel, Ludhiana V. ITO, Ludhiana

ITA 828/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9062 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 828/CHD/2015 ASSESSMENT YEAR: 2012-13 SHRI PARVEEN KUMAR GOEL, VS THE ITO, SHOP NO. 29, WARD V(3), TARUNDEEP MARKET, KHANNA. LUDHIANA. PAN: AAUPG5325J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VARDHMAN JAIN RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 03.10.2016 DATE OF PRONOUNCEMENT : 05.10.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2, LUDHIANA DATED 01.09.2015 FOR ASSESSMENT YEAR 2012-13. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. EARLIER THIS APPEAL WAS DISMISSED FOR DEFAULT, HOWE VER, BY ALLOWING MISCELLANEOUS APPLICATION OF THE ASSESS EE, THE APPEAL OF THE ASSESSEE WAS RESTORED FOR HEARING ON MERITS. 2 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 4 OF THE APPEAL. SAME IS DISMISSED AS WITHDRAWN. 4. ON THE REMAINING GROUND NOS. 1 TO 3, THE ASSESSE E CHALLENGED THE DISALLOWANCE OF RS. 2,29,930/- UNDER SECTION 36(1)(III) OF THE INCOME TAX ACT. 5. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER NOTED THAT ASSESSEE HAS MADE INTEREST FREE ADVANCES AS PER CHART IN EARLIER YEARS TO THE FOLLO WING PARTIES I.E. SHRI NITIN SINGLA RS. 8,00,000/-, M/S RAJNISH GOEL & SONS (HUF) RS. 7,30,000/- AND SHRI NARINDER BANSAL RS. 2,50,000/-, TOTALING TO RS. 17,80,000/-. THE ASSESSEE SUBMITTED THAT THESE INTEREST FREE ADVANCE S WERE MADE IN EARLIER YEARS AND NO ADVANCES HAVE BEE N MADE IN ASSESSMENT YEAR UNDER APPEAL. THE CAPITAL OF THE ASSESSEE PROPRIETOR ARE AS UNDER : I) PROPRIETORS CAPITAL RS. 42,86,253/- II) UNSECURED LOANS RS. 1,81,82,921/- 6. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND FOLLOWING THE DECISI ON OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES 286 ITR 1 DISALLOWED THE INTERE ST OF RS. 2,29,930/- UNDER SECTION 36(1)(III) OF THE ACT. THE ASSESSEE PLEADED BEFORE LD. CIT(APPEALS) THAT ADVAN CE WAS OF RS. 19,80,000/- IN PRECEDING MANY ASSESSMENT 3 YEARS AND IN THE CASE OF SHRI RAJNISH GOEL, THE AMO UNT HAS REDUCED BY TAKING BACK RS. 2 LACS ON DIFFERENT DATES. THE LD. CIT(APPEALS), HOWEVER, CONFIRMED THE ADDITI ON AND DISMISSED APPEAL OF THE ASSESSEE. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW ADDITION IS WHOLLY UNJUSTIFIED. THE CONTENTIONS RA ISED BEFORE THE AUTHORITIES BELOW HAVE NOT BEEN DISPUTED BY THE AUTHORITIES BELOW. THE ASSESSEE HAS FILED COPI ES OF THE ACCOUNTS OF ALL THE THREE PARTIES TO WHOM INTER EST FREE ADVANCES HAVE BEEN GIVEN IN EARLIER YEARS, COP IES OF WHICH ARE FILED AT PAGE 9 TO 21 OF THE PAPER BOOK. IN THE CASE OF SHRI NITIN SINGLA, ADVANCE OF INTEREST FREE WAS GIVEN IN JUNE,2010 IN A SUM OF RS. 8 LACS, THEREFOR E, IT WAS OPENING BALANCE IN ASSESSMENT YEAR UNDER APPEAL . IN THE CASE OF M/S RAJNISH GOEL & SONS (HUF), THE INTEREST FREE ADVANCE WAS GIVEN FROM NOVEMBER,2007 TO MARCH,2011 IN A SUM OF RS. 9,30,000/- AND IN NOVEMB ER AND DECEMBER, 2011, RS. 1 LAC EACH HAVE BEEN RECEIV ED BACK BY THE ASSESSEE, THEREFORE, OPENING BALANCE REMAINED IN ASSESSMENT YEAR UNDER APPEAL IN A SUM O F RS. 7,30,000/-. IN THE CASE OF SHRI NARINDER BANSA L, THE ADVANCE WAS GIVEN IN AUGUST,2006 IN A SUM OF RS. 2,50,000/- WHICH REMAINED OPENING BALANCE IN SUBSEQUENT ASSESSMENT YEARS AND EVEN IN ASSESSMENT YEAR UNDER APPEAL, IT WAS OPENING BALANCE. ACCORDI NG TO THE ASSESSEE, NO DISALLOWANCE OUT OF INTEREST HAVE BEEN MADE IN EARLIER YEARS. THE INTEREST FREE BORROWING S ARE 4 MORE THAN THE INTEREST FREE ADVANCES. EVEN THE ASSESSEE'S CAPITAL ON ACCOUNT OF PROPRIETOR IS ALSO MORE THAN THE INTEREST FREE ADVANCES GIVEN ABOVE. HON'B LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KAPSON ASSOCIATES 381 ITR 204 HELD THAT, WHEN ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE ADVANCES TO COVER I NTEREST FREE ADVANCES, NO DISALLOWANCE SHOULD BE MADE UNDER SECTION 36(1)(III) OF THE ACT. SIMILAR VIEW IS TAKEN BY HON'BLE SUPREME COURT IN THE CASE OF HERO CYCLES PV T. LTD. 379 ITR 347 IN WHICH THE DECISION IN THE CASE OF ABHISHEK INDUSTRIES LTD. (SUPRA) HAVE BEEN OVER-RUL ED. 8. CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTAN CES, I AM OF THE VIEW THAT ADDITION IS WHOLLY UNJUSTIFIE D. I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE TH E ADDITION OF RS. 2,29,930/-. GROUND NOS. 1 TO 3 OF APPEAL OF THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 5 TH OCTOBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD