Sh.Pawandeep Singh, V. DCIT, Mohali

ITA 83/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9868 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 15-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 83/CHD/2016 ASSESSMENT YEAR: 2009-10 SHRI PAWANDEEP SINGH, VS THE DCIT, SCF 64, PHASE-2, CIRCLE6(1), MOHALI. MOHALI. PAN: ANDPS3022N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 15.06.2016 DATE OF PRONOUNCEMENT : 17.06.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2 CHANDIGARH DATED 21.12.2015 FOR ASSESSMENT YEAR 2009-10. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 3. ON GROUND NO. 1, ASSESSEE CHALLENGED THE DISALLOWANCE OF INTEREST OF RS. 9,35,259/-. BRIEF FACTS OF THE ISSUE ARE THAT ASSESSEE IS DOING BUSINESS OF RUNNING A PETROL PUMP. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS CLAIMED EXPENSES IN THE PROFIT & LOSS ACCOUNT WHICH IS DULY AUDITED. IT WAS FURTHER NOTE D THAT ASSESSEE HAS REDUCED HIS TAXABLE INCOME BY 2 RS. 9,35,259/- AS INTEREST PAID. THE ASSESSING OFF ICER QUESTIONED ON THE ALLOWABILITY OF THIS EXPENDITURE AND IN REPLY TO THAT, THE ASSESSEE SUBMITTED THAT THE INTEREST FREE LOANS WERE RAISED FOR ACQUIRING PETRO L PUMP IN THE YEAR 1999-2000. THIS LOAN WAS REPAID B Y RAISING LOAN FROM M/S SHREE RAM DASS RICE & GENERAL MILLS AND HENCE, INTEREST PAID CLAIMED AS EXPENDITU RE. THE ASSESSING OFFICER WAS NOT SATISFIED THAT MONEY RAISED ON WHICH INTEREST WAS PAID WAS UTILIZED FOR BUSINESS PURPOSE, HENCE MADE THE ABOVE DISALLOWANCE . 4. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT INTEREST FREE LOANS FROM FRIENDS AND RELATIVES WERE OBTAINED IN HIS PERSONAL BANK IN THE YEAR 1999-2000 FOR ACQUIRING PETROL PUMP. FOR REPAYING THESE LOAN S, FUNDS HAVE BEEN BORROWED FROM M/S SHREE RAM DASS RICE & GENERAL MILLS FROM 2004 ONWARDS AND INTEREST LIABILITY HAS BEEN CLAIMED AS DEDUCTION FROM BUSINE SS INCOME. THE LD.CIT(APPEALS), HOWEVER, WAS NOT SATIS FIED WITH THE EXPLANATION OF THE ASSESSEE AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 6.3 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 6.3 THE SUBMISSION OF THE APPELLANT HAVE BEEN CO NSIDERED AND FOUND THAT THE CLAIM OF INTEREST AS BUSINESS EXPEND ITURE IS COMPLETELY OUT OF THE CONTEXT AND DEVOID OF MERIT. ASSESSING OFFIC ER HAS NOTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AND I N THE BALANCE SHEET A LIABILITY TOWARDS M/S RAM DASS RINCE & GENERAL MILL S OF RS. 30,77,175/- IS OUTSTANDING ON WHICH INTEREST OF RS 3,13,615/- IS DEBITED IN P&L ACCOUNT TO THIS PARTY AS THIS LOAN HAS BEEN UTILIZED FOR BUSINESS PURPOSE. THE AMOUNT OF LIABILITY ON WHICH ASSESSEE IS CLAIMING INTEREST 3 OF RS 9,35,259/- IS NOT FINDING ANY PLACE IN THE BA LANCE SHEET. THE, APPELLANT FAILED TO ESTABLISH BEFORE THE ASSESSING OFFICER AND ALSO DURING THE APPELLATE PROCEEDINGS THAT THE MONEY BORROWED O N WHICH INTEREST OF RS 9,35,2597- CLAIMED AS DEDUCTION WAS UTILIZED FOR THE PURPOSE OF BUSINESS. THEREFORE AO HAS RIGHTLY DISALLOWED THIS CLAIM OF INTEREST AND ADDITION MADE BY THE AO 9,35,259/- IS THEREFORE CO NFIRMED. GROUND OF APPEAL NO 2 IS DISMISSED. 5. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE AUTHOR ITIES BELOW. THE AUTHORITIES BELOW HAVE SPECIFICALLY FOU ND FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE WHICH ARE AUDITED AND FROM THE BALANCE SHEET THAT LIABILITY TOWARDS M/S RAM DASS RICE & GENERAL MILLS HAVE BEEN OUTSTANDING IN A SUM OF RS. 30,77,175/- AND ASSESSE E HAS DEBITED AN INTEREST OF RS. 3,13,615/- IN THE PR OFIT & LOSS ACCOUNT AGAINST THIS PARTY. SINCE THE AFORE SAID LOAN HAS BEEN UTILIZED FOR THE BUSINESS PURPOSE OF THE ASSESSEE, THIS INTEREST INCURRED AS MENTIONED IN TH E PROFIT & LOSS ACCOUNT, HAS BEEN ALLOWED TO THE ASSESSEE. THE ASSESSEE, HOWEVER, WITHOUT MENTIONIN G ANY DETAILS IN THE BOOKS OF ACCOUNT OR IN THE PROFI T & LOSS ACCOUNT MADE FURTHER CLAIM OF RS. 9,35,259/- A S INTEREST PAID TO M/S SHREE RAM DASS RICE & GENERAL MILLS. THE ASSESSING OFFICER WAS, THEREFORE, JUSTI FIED IN HOLDING THAT SUCH ADDITIONAL INTEREST COULD BE ALLO WED IF THE AMOUNT OF LOAN HAS BEEN UTILIZED FOR CARRYIN G ON BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER WA S ALSO JUSTIFIED IN HOLDING THAT AMOUNT ON WHICH INTE REST 4 OF RS. 9,35,259/- HAS BEEN PAID, DO NOT FIND ANY PL ACE IN THE BALANCE SHEET OF THE ASSESSEE, MEANING THERE BY, EVEN THE LOAN ON WHICH ALLEGED INTEREST OF RS. 9,35,255/- HAVE BEEN STATED TO BE PAID, HAVE NOT BE EN ENTERED INTO THE BOOKS OF ACCOUNT OR THE AUDITED ACCOUNTS OF THE ASSESSEE. IT IS A CLEAR CASE OF IN FLATING THE EXPENDITURE ON ACCOUNT OF ALLEGED INTEREST PAID TO M/S SHREE RAM DASS RICE & GENERAL MILLS. IN THE ABSENCE OF ANY EVIDENCE ON RECORD OR ANY RELEVANT ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, SU CH A CLAIM OF THE ASSESSEE CANNOT BE ALLOWED. THE ASSES SEE FAILED TO ESTABLISH BEFORE THE AUTHORITIES BELOW TH AT ALLEGED MONEY BORROWED ON WHICH INTEREST OF RS. 9,35,259/- CLAIMED AS DEDUCTION, WAS UTILIZED FOR T HE PURPOSE OF BUSINESS. THE LD. COUNSEL FOR THE ASSES SEE MERELY CONTENDED THAT IN THE EARLIER YEAR 2005-06, ASSESSEE MADE A SIMILAR CLAIM WHICH HAVE NOT BEEN DISALLOWED BY THE ASSESSING OFFICER IN THE ORDER UN DER SECTION 143(3) DATED 30.11.2007, COPY OF WHICH IS F ILED AT PAGE 18 OF THE PAPER BOOK. HE HAS ALSO CLAIMED THAT IN SUBSEQUENT YEAR ALSO, SUCH CLAIM WAS MADE IN THE PROFIT & LOSS ACCOUNT. THE CONTENTION OF LD. COUNS EL FOR THE ASSESSEE IS DEVOID OF ANY MERIT BECAUSE THE FINDING OF FACT RECORDED NOW IN ASSESSMENT YEAR UND ER APPEAL HAS NOT BEEN REBUTTED BY ASSESSEE THROUGH AN Y EVIDENCE OR MATERIAL ON RECORD. EVEN IN ASSESSMENT YEAR 2005-06, ASSESSING OFFICER HAS NOT CONSIDERED AND DISCUSSED THIS ISSUE AT ALL AND AS SUCH, THERE IS N O 5 QUESTION OF ALLOWING SIMILAR CLAIM IN FAVOUR OF THE ASSESSEE. MAY BE ASSESSING OFFICER WAS NEGLIGENT I N NOT TAKING RELEVANT ISSUE IN THE ASSESSMENT ORDER A ND THEREFORE, THE ASSESSEE WOULD NOT BE ENTITLED FOR A NY DEDUCTION ON ACCOUNT OF SPECIFIC FINDING OF FACT RECORDED BY THE AUTHORITIES BELOW AGAINST THE ASSES SEE IN ASSESSMENT YEAR UNDER APPEAL. MERELY BECAUSE EARLIER AUTHORITIES BELOW HAVE NOT TAKEN UP THIS IS SUE OR EXAMINED, WOULD NOT BE A GROUND FOR ASSESSEE TO CLAIM INAPPROPRIATE AND INCORRECT DEDUCTION OF INTE REST IN ASSESSMENT YEAR UNDER APPEAL. 6. CONSIDERING ABOVE DISCUSSION AND IN THE ABSENCE OF ANY EVIDENCE ON RECORD, I AM NOT INCLINED TO INT ERFERE WITH THE ORDERS OF AUTHORITIES BELOW. THE GROUND O F APPEAL NO. 1 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY, DISMISSED. 7. ON GROUND NO. 2, ASSESSEE CHALLENGED ADDITION OF RS. 38,589/- ON ACCOUNT OF CLAIM OF LOSS DUE TO EVAPORATION OF PETROL ON ESTIMATE BASIS. BRIEF FAC TS OF THE ISSUE ARE THAT ASSESSEE IS CLAIMING SHORTAGE ON ACCOUNT OF EVAPORATION OF PETROL AT 1.2% AS AGAINST THE NORMAL EVAPORATION AT 0.75%. ON BEING QUESTIONED, ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM WITH SUPPORTING EVIDENCE AND THEREFORE, ASSESSING OFFICE R RESTRICTED EVAPORATION LOSS @ 0.75% AND DISALLOWED EXCESS CLAIM AND MADE THE ADDITION OF RS. 38,589/-. NO 6 FURTHER MATERIAL WAS FILED BEFORE THE LD. CIT(APPEA LS), THEREFORE, LD. CIT(APPEALS) FOUND IT TO BE REASONAB LE DISALLOWANCE AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 8. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF AUTHORITIE S BELOW. THE LD. COUNSEL FOR THE ASSESSEE ON GROUND NO. 1 REFERRED TO THE ASSESSMENT ORDER FOR ASSESSMENT Y EAR 2005-06 UNDER SECTION 143(3) DATED 30.11.2007 IN WHICH THE IDENTICAL ISSUE HAVE BEEN CONSIDERED BY T HE ASSESSING OFFICER IN DETAIL IN WHICH ASSESSEE CLAIM ED SHORTAGE ON ACCOUNT OF EVAPORATION IN PETROL AT 1% WHEREAS AS PER ASSESSING OFFICER, THE GUIDELINES OF IOC COMPANY PROVIDED NORMAL EVAPORATION AT 0.75%. THE ASSESSEE'S COUNSEL AGREED FOR DISALLOWANCE OF RS.25,000/- ON THIS ISSUE. SINCE THE ASSESSEE AGRE ED BEFORE ASSESSING OFFICER IN PRECEDING ASSESSMENT YE AR 2005-06 THAT GUIDELINES OF IOC PROVIDED EVAPORATION NORMAL LOSS AT 0.75% WHICH FACT IS ADOPTED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR UNDER APPEAL A S WELL, THEREFORE, THERE IS NO MERIT IN THIS GROUND O F APPEAL OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE MERELY CONTENDED THAT FROM WHERE ASSESSING OFFICER HAS TAKEN THE NORMAL EVAPORATION AT 0.75% I S WITHOUT ANY MERIT BECAUSE THE ASSESSEE AGREED TO TH E SAME BEFORE ASSESSING OFFICER EVEN IN PRECEDING 7 ASSESSMENT YEAR 2005-0-6. THIS GROUND HAS NO MERIT AND SAME IS, ACCORDINGLY, DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 17 TH JUNE, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD