S.K. AGRAWAL & SONS (HUF), KORBA(CG) V. ITO, WARD- 2, KORBA(CG)

ITA 84/BIL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2432 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 19-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H M MOHARANA
• Assessee Lawyers: PRAKASH CHAND AGARWAL
• Keywords: Principle of natural justice; Onus to prove

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT ( JM) SHAMIM YAH Y A (AM) , , ./ I.T.A. NO. 84/BI/2013 ( / ASSESSMENT YEAR : 2008 - 09 ) S.K.AGRAW AL & SONS (HUF), AGROHA MARG, KORBA / VS. ITO, WA RD - 2, MAHANADI COMPLEX, NIHARIKA ROAD, KORBA ./ ./ PAN/GIR NO. : AAOHS 1222A ( / AP PELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRAKASH CHAND AGARWAL / RESPONDENT BY : SHRI H.M.MOHARANA / DATE OF HEARING : 1 8 - 02 - 2016 / DATE OF PRONOUNCEME NT : 19 - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM A N ORDER OF THE LD CIT(A), BILASPUR DATED 8.2.2013. T HE ONLY GROUND RAISED BY THE ASSESSEE IS AS UNDER: THAT ON THE FACTS AND CIRCUMST ANCES OF THE CASE, THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,37,124/ - MADE BY THE AO ON THE BASIS OF HYPOTHETICAL ASSUMPTIONS BY DISALLOWING OF THE INTEREST EXPENSES PAID TO BANK , CLAIMED BY THE ASSESSEE WITHOUT CONSIDERING THE SUBMISSION EXP LANATION GIVEN BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. T HE ABOVE ADDITION IS BAD IN LAW AND AGAINST THE PRINCIPAL OF NATURAL JUSTICE. T HE UNSUSTAINABLE ADDITION SO CONFIRMED MAY KINDLY BE DELETED. 2 I.T.A. NO.84/BI/2013 / ASSESSMENT YEAR : 2008 - 09 PRAKASH AGARWAL 2. THE ONLY ISSUE AS EMERGED FROM THE CORR ESP ONDING ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE I.T.ACT, 1961 DATED 30 .12.2010 IS THAT IN A SITUATION WHEN THE ASSESSEE IN HIS INDIVIDUAL CAPACITY I S IN THE BUSINESS OF TRUCK PLYING RAISED LOAN FROM THE BANK, WHETHER THE DISALLO WANCE OF INTEREST OF RS.2,37,124/ - WAS JUSTIFIABLE. 3. THE FACTS HAVE REVEALED THAT THE ACCOUNTS WERE MAINTAINED AS PER THE PROVISIONS OF SECTION 44AB OF THE I.T.ACT, 1961. A CCORDING TO THE AO, THE ASSESSEE HAS NOT ESTABLISHED THE NECESSITY AND THE BUSIN ESS EXPEDIENCY IN RESPECT OF LOAN RAISED FROM THE BANK. A CCORDING TO THE AO, IT APPEARED THAT INTEREST ON THE SAID LOAN AS CLAIMED IN THE PROFIT & LOSS ACCOUNT WAS NOT JUSTIFIABLE, HENCE, THE SAME WAS TAXED IN THE HANDS OF THE ASSESSEE. B EING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4. BEFORE THE LD CIT(A), IT WAS REITERATED THAT MERELY ON GUESS WORK, THE AO HAD MADE THE DISALLOWANCE ALTHOUGH IT WAS VERY MUCH ESTABLISHED THAT THE LOAN WAS TAKEN FOR THE BUSINESS PURPOSES. H OWEVER, LD CIT(A) WAS NOT CONVINCED AND CONFIRMED THE ACTION OF THE AO IN THE FOLLOWING MANNER: THE SUBMISSION MADE BY THE LD. AR WAS CONSIDERED CAREFULLY WITH REFERENCE TO MATERIAL AVAILABLE ON RE CORD. THE APPELLANT USED TO FILE RETURN OF INCOME OF INCOM E OF THE EARLIER YEARS ON THE BASIS OF PROVISIONS OF SECTION 44AE OF THE ACT. HE OWNS THREE TRUCKS. THE TURNOVER OF DIE YEAR FROM TRANSPORTATION ACTIVITIES BY USE OF THE TRUCKS OWNED HAVE EXCEEDED THE SPECIFIED LIMIT AND THEREFORE, THE APPELLANT GOT HIS AC COUNT BOOKS AUDITED AND DISCLOSED INCOME AT 3.80% OF THE TURNOVER. THE ONLY OBJECTION OF THE AO WAS FAILURE OF 3 I.T.A. NO.84/BI/2013 / ASSESSMENT YEAR : 2008 - 09 PRAKASH AGARWAL THE APPELLANT TO EXPLAIN JUSTIFICATION OF INTEREST PAID TO THE BANK CLAIMED AS ADMISSIBLE EXPENDITURE U/S 36( 1))(III) ) OF THE ACT. THE APPELLANT HAS NOT EXPLAINED THE SAME IN ANY PROCEEDINGS UNDER THE ACT. THE ONUS TO PROVE THAT THE INTEREST ON JOAN IS AN ADMISSIBLE EXPENDITURE LIES WITH THE APPELLANT. THE APPELLANT HAS AVAILED A CASH CREDIT LIMIT OF RS. 3 7,00,000/ - WITH UCO BANK, TRANSPORT NAGAR, KORBA THROUGH HIS CASH CREDIT ACCOUNT NO. 3080 AGAINST FIXED DEPOSIT OF RS. 17,05,364/ - AND PAID INTEREST OF RS. 2,37,124/ - . IT IS THE ONUS OF THE APPELLANT TO EXPLAIN NEXUS OF LOAN OBTAINED FROM THE BANK WITH THE BUSINESS ACTIVITIES OF PLYING TRUCKS ALRE ADY OWNED BY HIM. THIS HAS NOT BEEN DONE IN ANY PROCEEDINGS UNDER THE ACT. RATHER, THE APPELLANT WHOLLY RELIED ON FANTASTIC EXPLANAT ION SUBMITTED BY THE LD. AR. IT IS NOT THE LAW THAT ANY OR EVERY NARRATION BY THE LD. AR MUST BE ACCEPTED. LT MUST BE AN EXP LANATION ACCEPTABLE TO THE FACTS OBTAINED BY THE DEPARTMENT DURING THE PROCEEDINGS UNDER THE ACT AND IT IS MISERABLY MISSING IN THE PRESENT CASE SINCE THE APPELLANT HAS NOT TENDERED ANY EV IDENCE TO EXPLAIN THAT THE CASH CREDIT LIMIT UTILIZED IN THE BANK AG AINST THE LOAN WERE INVESTED IN TRANSPORTATION BUSINESS AGAINST WHICH THE APPELLANT HAS SHOWN PROFIT. MOREOVER, THE NATURE OF WORK IN PROGRESS DISCLOSED IN THE RETURN AND ITS CORRECTNESS HAS NOT BEEN EXPLAINED AND DEMONSTRATED WITH COGENT EVIDENCES. IN VIE W OF THE ABOVE, THE GROUND OF APPEAL IS DISMISSED. 5. ON THIS SHORT ISSUE, WE HAVE HEARD BOTH THE SIDES. F ROM THE SIDE OF THE ASSESSEE, SHRI PRAKASH CHAND A GARWAL, LD A.R. APPEARED AND INFORMED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE APPEARED BEFORE THE AO AND INFORMED THAT LOAN WAS TAKEN FOR THE BUSINESS PURPOSES AND THE INTEREST WAS PAID ON THE SAID LOAN, WHICH WAS CLAIMED IN THE PROFIT AND LOSS ACCOUNT DUE TO THE REASON THAT THE LOAN HAS A DIRECT NEXUS WITH THE BUSINESS ACTIVIT Y OF THE ASSESSEE. I N OUR CONSIDERED OPINION, THE AO HAS NOT GIVEN ANY SPECIFIC REASON FOR THE SAID DISALLOWANCE. H E HAS MERELY P RESUMED THAT THERE WAS NO NEXUS BETWEEN THE BUSINESS ACTIVITY WITH THE LOAN TAKEN FROM THE BANK. O N THE OTHER HAND, THE EXP LANATION OF THE ASSESSEE WAS THAT THE LOAN WAS RAISED TO RUN THE 4 I.T.A. NO.84/BI/2013 / ASSESSMENT YEAR : 2008 - 09 PRAKASH AGARWAL BUSINESS OF TRUCK HIRING. T HE INCOME WAS SHOWN FROM THREE TRUCKS AND TO RUN THE TRUCKS, SAID LOAN WAS OBTAINED FR OM THE BANK. E VEN, LD CIT(A) HAS NOT GIVEN ANY SPECIFIC FINDINGS THAT ON WHA T BASIS HE HAS PRESUMED THAT THE CLAIM OF INTEREST U/S.36(1)(III) WAS NOT FOR THE BUSINESS PURPOSES OF THE ASSESSEE. HE HAS MADE A GENERAL REMARK THAT EVERY EX PLANATION OF THE ASSESSEE COULD NOT BE ACCEPTED. AS AGAINST THAT, THE ASSESSEE HAS VEHEMENTLY C ONTESTED THAT THE ACCOUNTS OF THE ASSESSEE ITSELF HAVE DEMONSTRATED THAT THE CASH CREDIT LIMIT WAS UTILIZED TOWARDS THE TRANSPORTATION BUSINESS OF THE ASSESSEE. L D A.R. HAS ALSO EXPLAINED THAT THERE WAS NO OTHER ACTIVITY OF THE ASSESSEE EXCEPT TRANSPORTAT ION BUSINESS, HENCE, THERE WAS NO POSSIBILITY OF DIVERSION OF LOAN FOR ANY OTHER PURPOSES BUT FOR BUSINESS PURPOSE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO P LACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JCIT VS. BEEKAY ENGINEERING CORPORATION (2010) 325 ITR 384 (CHH), THE ORDERS OF THE AUTHORITIES BELOW ARE HEREBY REVERSED AND THE AO IS DIRECTED TO DELETE THE ADDITION. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED., ORDER PRONOUNCED IN THE OPEN COURT ON 19 /02/2016 . S D/ - SD/ - ( , ) ( , ) SHAMIM Y AHY A , ACCOUNT ANT MEMBER MUKUL SHRA WA T , JUDICIAL M EM BER RAIPUR , DATED 19 / 02 /20 1 6 5 I.T.A. NO.84/BI/2013 / ASSESSMENT YEAR : 2008 - 09 PRAKASH AGARWAL . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1 . THE APPELLANT : S.K.AGRAW AL & SONS (HUF), AGROHA MARG, KORBA 2. / THE RESPONDENT: ITO, WA RD - 2, MAHANADI COMPLEX, NIHARIKA ROAD, KORBA 3. ( ) / THE CIT(A) - BILASPUR 4. / CIT , BILASPUR 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP: RAIPUR