The DCITRange-2, Ahmedabad V. Shri Navnitlal Chimanlal Patel, Ahmedabad

ITA 846/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9679 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NO.845/AHD/2011 (ASSESSMENT YEAR: 2006-07) DY.CIT, CIRCLE-2, RANGE-2, AHMEDABAD APPELLANT VS. SHRI PARASAR NAVNITLAL PATEL, 420/KALUPUR, CHOKHA BAZAR, KALUPUR, AHMEDABAD-380001 RESPONDENT PAN: ABRPP6753F & ITA. NO.846/AHD/2011 (ASSESSMENT YEAR: 2006-07) DY.CIT, CIRCLE-2, RANGE-2, AHMEDABAD APPELLANT VS. SHRI NAVNITLAL CHIMANLAL PATEL, 420/KALUPUR, CHOKHA BAZAR, KALUPUR, AHMEDABAD-380001 RESPONDENT 2 ITA NOS.845, 846 & 847/AHD/11 FOR A.Y. 06-07 PAN: ABRPP6755D & ITA. NO.847/AHD/2011 (ASSESSMENT YEAR: 2006-07) DY.CIT, CIRCLE-2, RANGE-2, AHMEDABAD APPELLANT VS. SMT. MEENABEN NAVNITLAL PATEL, 420/KALUPUR, CHOKHA BAZAR, KALUPUR, AHMEDABAD-380001 RESPONDENT PAN: ABRPP6754C /BY APPELLANT : SHRI DINESH SINGH, SR. D.R. /BY RESPONDENT : SHRI A. C. SHAH, A.R. /DATE OF HEARING : 21.07.2015 /DATE OF PRONOUNCEMENT : 27.07.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE THREE APPEALS FILED BY REVENUE PERTAIN TO DIF FERENT ASSESSEES ARE ARISING OUT FORM THE ORDERS OF CIT(A) -XIV, AHMEDABAD, DATED 22.12.2010 FOR ALL THREE ASSESSMEN T YEARS 3 ITA NOS.845, 846 & 847/AHD/11 FOR A.Y. 06-07 ON SIMILAR ISSUE. SO, THEY ARE BEING DISPOSED OF B Y WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 845/AHD/2011, REVENUE HAS FILED THE A PPEAL ON THE FOLLOWING GROUNDS: 1) THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS.10,00,000/- MADE BY THE AO AS INCOME U/S.2(24) R.W.S. 28(IV) OF THE IT ACT, HOLDING THAT REMISSION OF UNSECURED LOANS COULD NOT BE SUBJECTED TO TAX BY INVOKING SECTION 28(IV) OF T HE ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORD ER OF THE ASSESSING OFFICER TO THE EXTENT MENTIONED ABOVE , SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. 2.1 ASSESSING OFFICER MADE ADDITION OF RS.10,00,000 /- BEING AMOUNT WRITTEN OFF SINCE NOT PAYABLE ON THE G ROUND THAT SAME WAS TRADING RECEIPT IN AS MUCH AS IT IS A CAPITAL RECEIPT AND THAT NO DEDUCTION WAS ALLOWED, WHICH WA S DELETED BY CIT(A). SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE INTER ALIA SUBMITTING THAT CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.10,00,000/- MA DE BY ASSESSING OFFICER AS INCOME U/S.2(24) R.W.S. 28(IV) OF THE ACT HOLDING THAT REMISSION OF UNSECURED LOANS COULD NOT BE SUBJECTED TO TAX BY INVOKING SECTION 28(IV) OF THE ACT. ACCORDINGLY, ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON OTHER HAND, LEAR NED AUTHORIZED REPRESENTATIVE SUPPORTING THE ORDER OF C IT(A) AND SUBMITTED THAT THIS ISSUE IS COVERED BY DECISION IN CASE OF 4 ITA NOS.845, 846 & 847/AHD/11 FOR A.Y. 06-07 CHIMANLAL DOSHABHAI IN APPEAL NO.70/2009-10 FOR A.Y . 2006-07, DATED 28.09.2010, WHICH HAS BEEN FOLLOWED BY CIT(A) WHILE GRANTING RELIEF TO ASSESSEE. 2.2 ASSESSEE CARRIES ON BUSINESS IN SHARES AND SECU RITIES. ASSESSEE TOOK A LOAN OF RS.10,00,000/- FROM M/S. RA JKAMAL ENTERPRISE ON 10 TH NOVEMBER, 2000 FOR THE PURPOSE OF BUSINESS. ASSESSEE PROVIDED INTEREST OF RS.1,72,64 0/- UPTO 31 ST MARCH, 2002 AND WAS CLAIMED AS DEDUCTION. SUBSEQUENTLY, THE PARTY WAS NOT TRACEABLE AND THERE FORE THE PRINCIPAL AMOUNT OF RS.10,00,000/- WAS WRITTEN OFF TO CAPITAL ACCOUNT AND INTEREST OF RS.1,72,640/- (WHICH WAS CL AIMED AS DEDUCTION IN EARLIER YEAR) WAS WRITTEN BACK TO PROF IT & LOSS ACCOUNT AND WAS OFFERED FOR TAXATION U/S.41. ASSES SING OFFICER HAS ADDED THE AMOUNT OF RS.10,00,000/- WRIT TEN OFF TO CAPITAL ACCOUNT BEING LOAN RECEIVED FROM M/S. RA JKAMAL ENTERPRISE AS STATED ABOVE. SINCE ASSESSEE IS CAR RYING ON SHARAFI BUSINESS AND HAS RECEIVED LOAN IN COURSE OF BUSINESS. IN APPEAL, CIT(A) OBSERVED THAT ASSESSEE DID NOT CA RRY ON SHARAFI BUSINESS. THE OBSERVATION OF ASSESSING OFF ICER IN ASSESSMENT ORDER IS ONLY A CASUAL OBSERVATION WITHO UT ADDUCING ANY EVIDENCE. SHARAFI BUSINESS MEANS THE ASSESSEE ACCEPTS THE DEPOSITS FROM PUBLIC AND LENDS TO PUBLIC. IN PRESENT CASE, ASSESSEE HAS NOT ACCEPTED ANY DEPOSIT FROM PUBLIC AND HAS NOT LENT THROUGH PUBLIC . CERTAIN DEPOSITS ARE ACCEPTED FROM RELATIVES AND THEY ARE U TILIZED FOR THE PURPOSE OF CARRYING ON BUSINESS FOR SHARES AND SECURITIES. THEREFORE, IT WAS FOUND THAT ASSESSEE DOES NOT 5 ITA NOS.845, 846 & 847/AHD/11 FOR A.Y. 06-07 CARRY ON SHARAFI BUSINESS AND THEREFORE, IT CANNOT BE SAID THAT THE BENEFIT HAS ARISEN IN COURSE OF BUSINESS. THE BENEFIT OR PERQUISITES SHOULD BE OTHER THAN CASH. IN PRESE NT CASE, LOAN RECEIVED FROM M/S. RAJKAMAL ENTERPRISE IS WRIT TEN OFF TO CAPITAL ACCOUNT. THE AMOUNT IS WRITTEN OFF SINCE T HE DEPOSITOR WAS NOT TRACEABLE. IN THIS FACTUAL BACKG ROUND, CIT(A) OBSERVED THAT SIMILAR ISSUE IN CASE OF CHIMA NLAL DOSHABHAI IN APPEAL NO.70/2009-10 FOR A.Y. 2006-07, DATED 28.09.2010 HAS BEEN DECIDED IN FAVOUR OF ASSESSEE B Y OBSERVING AS UNDER: 5.5 THE COUNSEL FOR THE APPELLANT HAS DRAWN MY ATTENTION TO THE RECENT DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT(A) V/S. JINDAL EQUIPMENTS LEASING & CONSULTANCY SERVICES LTD. 37 DTR 172(DEL) WHEREIN IT HAS BEEN HELD THAT WAIVER / WRITE OFF PR INCIPAL AMOUNT OF LOAN IS NOT TAXABLE AS BENEFIT OR PERQUIS ITES U/S.28(IV) BECAUSE THE BENEFITS OR PERQUISITES SHOU LD BE OF THE NATURE OTHER THAN CASH. THIS DECISION HAS FOLL OWED THE CASES OF MAHENDRA & MEHENDRA 261 ITR 501(BOM) AND ALEMBIC P. LTD. 130 ITR 168 (GUJ). FOLLOWING THE SAME, ADDITION OF RS.10,00,000/- MADE U/S.28(IV) R.W.S.2(24) WAS DELETED. LEARNED AUTHOR IZED REPRESENTATIVE POINTED OUT THAT SAID DECISION OF CI T(A) HAS BEEN CONFIRMED BY ITAT, AHMEDABAD C BENCH IN CASE OF M/S. CHIMANLAL DOSABHAI NARODIA IN ITA NO.217/AHD/2 011 FOR A.Y. 2006-07 BY OBSERVING AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THIS ISSUE IN THE PRESENT CASE IS ABOUT THE TAXABILITY OF WRITTEN BACK AMOUNT OF LOAN . LD. CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE HAS GI VEN A FINDING THAT THE ASSESSEE WAS NOT CARRYING ON THE 6 ITA NOS.845, 846 & 847/AHD/11 FOR A.Y. 06-07 BUSINESS OF OBTAINING LOANS AND THEREFORE THE REMIS SION OF LOAN CANNOT BE CONSIDERED TO BE A BENEFIT ARISING O UT FROM THE BUSINESS. WE FIND THAT LD. CIT(A) WHILE DECIDI NG THE ISSUE IN FAVOUR OF THE ASSESSEE HAD RELIED ON THE D ECISIONS CITED THEREIN AND ALSO THE DECISION OF HONBLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS. CHETAN CHEMICALS PVT. LTD. 267 ITR 770. BEFORE US, REVENUE HAS NOT BROUG HT ANY CONTRARY BINDING DECISION IN ITS SUPPORT NOR CO ULD POINT ANY DISTINGUISHABLE FEATURE OF THE DECISIONS RELIED BY A.R. WE THEREFORE FIND NO REASON TO INTERFERE W ITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 3. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASO NING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT (A) WHO HAS DELETED THE ADDITION OF RS.10,00,000/- MADE BY ASSE SSING OFFICER HOLDING THAT REMISSION OF UNSECURED LOANS C OULD NOT BE SUBJECTED TO TAX BY INVOKING SECTION 28(IV) OF T HE ACT. SAME IS UPHELD. 4. IN ITA NO. 846/AHD/2011, REVENUE HAS FILED THE A PPEAL ON THE FOLLOWING GROUNDS: 1) THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS.10,00,000/- MADE BY THE AO AS INCOME U/S.2(24) R.W.S. 28(IV) OF THE IT ACT, HOLDING THAT REMISSION OF UNSECURED LOANS COULD NOT BE SUBJECTED TO TAX BY INVOKING SECTION 28(IV) OF T HE ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORD ER OF THE ASSESSING OFFICER TO THE EXTENT MENTIONED ABOVE , SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. 5. SIMILAR ISSUE AROSE IN ITA NO. 845/AHD/2011 IN C ASE OF SHRI PARASAR NAVNITLAL PATEL, WHEREIN FOLLOWING THE CASE OF 7 ITA NOS.845, 846 & 847/AHD/11 FOR A.Y. 06-07 M/S. CHIMANLAL DOSABHAI NARODIA (SUPRA), WE UPHOLD THE ORDER OF CIT(A). FACTS BEING SIMILAR, SO, FOLLOWIN G THE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DELETED THE ADDITION OF RS.10,00,000 /- MADE BY ASSESSING OFFICER HOLDING THAT REMISSION OF UNSE CURED LOANS COULD NOT BE SUBJECTED TO TAX BY INVOKING SEC TION 28(IV) OF THE ACT. SAME IS UPHELD. 6. IN ITA NO. 847/AHD/2011, REVENUE HAS FILED THE A PPEAL ON THE FOLLOWING GROUNDS: 1) THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS.20,00,000/- MADE BY THE AO AS INCOME U/S.2(24) R.W.S. 28(IV) OF THE IT ACT, HOLDING THAT REMISSION OF UNSECURED LOANS COULD NOT BE SUBJECTED TO TAX BY INVOKING SECTION 28(IV) OF T HE ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORD ER OF THE ASSESSING OFFICER TO THE EXTENT MENTIONED ABOVE , SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. 6.1 SIMILAR ISSUE AROSE IN CASE OF SHRI PARASAR NAV NITLAL PATEL, AND SHRI NAVNITLAL CHIMANLAL PATEL, WHEREIN FOLLOWING THE CASE OF M/S. CHIMANLAL DOSABHAI NARODIA (SUPRA) , WE UPHOLD THE ORDER OF CIT(A). FACTS BEING SIMILAR, S O, FOLLOWING THE SAME REASONING, WE ARE NOT INCLINED TO INTERFER E IN THE FINDING OF CIT(A) WHO HAS DELETED THE ADDITION OF RS.20,00,000/- MADE BY ASSESSING OFFICER HOLDING TH AT REMISSION OF UNSECURED LOANS COULD NOT BE SUBJECTED TO TAX BY INVOKING SECTION 28(IV) OF THE ACT. SAME IS UPH ELD. 8 ITA NOS.845, 846 & 847/AHD/11 FOR A.Y. 06-07 7. AS A RESULT, ALL THREE APPEALS FILED BY REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF JULY, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 27/07/2015 S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE !# / ASSESSEE $ %&%'( ) / CONCERNED CIT * )+ / CIT (A) ,-./00'(1 '( 123#&# / DR, ITAT, AHMEDABAD 4/5678 / GUARD FILE. BY ORDER / #9 1 :; 2% '( 123#&#< STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 21.07.2015 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 22.07.2015 4) DATE OF CORRECTION 23.07.2015 5) DATE OF FURTHER CORRECTION 6) DATE OF FINAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON