KETAKI BENARA, AGRA V. INCOME TAX OFFICER , AJMER

ITA 858/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2020 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 20-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 858/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 SMT. KETAKI BENARA, 1205, PROFESSOR COLONY, HARI PARWAT, AGRA (U.P.) CUKE VS. THE ITO, WARD 2(1), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AMPPS 9801 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE (A.D. ON RECORD) JKTLO DH VKSJ LS @ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/03/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 20/03/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 07.09.2017 OF LD. CIT (A), AJMER FOR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND:- LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING:- 1. DISALLOWANCE OF RS. 11,212,785/- OUT OF INTEREST PAID TO PARTIES ON LOAN PROCURED DURING THE YEAR. 2. ANY OTHER MATTER WITH THE PRIOR APPROVAL OF THE BENCH. ITA NO. 858/JP/2017 SMT. KETAKI BENARA VS. ITO 2 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE WHEN THIS APPEAL WAS CALLED FOR HEARING DESPITE THE NOTICE ISSUED TO THE ASSESSEE WAS DULY SERVED VIDE ACKNOWLEDGEMENT ON RECORD. WE FURT HER NOTE THAT EVEN ON THE LAST DATE OF HEARING I.E. ON 22.01.2018 NONE HAS APPEARED ON THE BEHALF OF THE ASSESSEE AND THEREFORE, AFRESH NOTICE WAS ISSUED WHICH WAS SERVED AS PER THE ACKNOWLEDGEMENT. ON 20. 12.2017 THE LD. AR OF THE ASSESSEE TOOK ADJOURNMENT OF THE HEARING AND THEREFORE, THE CASE HAS BEEN ADJOURNED FROM ONE DATE TO ANOTHER DA TE BECAUSE OF THE REQUEST OF THE ASSESSEE AND SUBSEQUENTLY NONE HAD A PPEARED ON BEHALF OF THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES W E PROPOSE TO HEAR AND DISPOSED OFF THE APPEAL OF THE ASSESSEE EX-PART E. 3. WE HAVE HEARD LD DR AND CAREFULLY PERUSED THE OR DERS OF THE AUTHORITIES BELOW. THE ASSESSING OFFICER WHILE FRAM ING THE ASSESSMENT U/S 143(3) OF THE ACT MADE A DISALLOWANCE OF RS. 11 ,21,785/- ON ACCOUNT OF INTEREST PAYMENT ON THE GROUND THAT THE ASSESSEE MADE INVESTMENT FROM INTEREST BEARING FUND FROM WHICH EI THER ON INCOME IS EARNED OR WOULD BE EARNED IN FUTURE. THE MAJOR INVE STMENT ARE IN PRIVATE COMPANY IN WHICH THE ASSESSEE IS HAVING INT EREST. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT( A) AND FILED THE ITA NO. 858/JP/2017 SMT. KETAKI BENARA VS. ITO 3 WRITTEN SUBMISSIONS AS REPRODUCED BY THE LD. CIT(A) IN PARA 4.2 OF THE IMPUGNED ORDER AS UNDER:- 4.2 THE APPELLANT HAS FILED FOLLOWING WRITTEN SUBM ISSION ON THIS ISSUE: 'THE ASSESSEE IS IN APPEAL BEFORE YOUR HONOUR AGAIN ST THE ORDER OF THE LEARNED ASSESSING OFFICER PASSED U/S 1 43(3) OF THE IT ACT, 1961 DATED 19.12.2016 FOR THE ABOVE REF ERRED YEAR. THE ONLY GROUND OF APPEAL IS DISALLOWANCE OF INTERE ST PAID BY THE ASSESSEE LOANS RAISED BY HER FOR HER BUSINES S ACTIVITIES. THE LEARNED ASSESSING OFFICER WHILE DISALLOWING THE INTEREST AID HAS OBSERVED AS UNDER: ..IT IS CLEAR THAT THE ASSESSEE HAS MADE INVESTMEN T FROM INTEREST BEARING FUNDS FROM WHICH EITHER NO INCOME IS EARNED OR WOULD BE EARNED IN NEAR FUTURE AS MAJOR INVESTMENT ARE IN PRIVATE LIMITED COMPANIES IN WHIC H THE ASSESSEE IS INTEREST OR THE INTEREST OF FAMILY MEMB ERS IS INVOLVED. THE ASSESSEE HAS TAKEN LOAN OF APPROXIMATELY RS.4 .79 CRORE AND THE LOAN FORWARDED TO M/S BENARA BEARING AND PISTON LIMITED IS ONLY RS.2.33 CRORE HENCE BALANCE INTEREST BEARING FUND HAVE BEEN INVESTED IN ASSETS WHICH DO NOT YIELD ANY INCOME AND HENCE THE CURRENT YEAR LOANS H AVE BEEN INVESTED IN ASSETS WHICH DO NOT YIELD ANY INCO ME.' IT IS HUMBLY SUBMITTED THAT THE LEARNED ASSESSING O FFICER HAS NOT PROPERLY APPRECIATED THE FACTS OF THE CASE. THE ENTRE EMPHASIS OF THE LEARNED ASSESSING OFFICER WHI LE ITA NO. 858/JP/2017 SMT. KETAKI BENARA VS. ITO 4 DISALLOWING; INTEREST PAID IS BASED ON THE THEORY T HAT THE INVESTMENT OF FUND HAS NOT YIELDED ANY INCOME DURIN G THE YEAR UNDER CONSIDERATION AND SUCH INVESTMENTS MAY Y IELD INCOME IN FORESEEABLE FUTURE. ANY PRUDENT BUSINESS PERSON DOES NOT INVEST FUNDS FOR IMMEDIATE RESULT BUT KEEP S INTO CONSIDERATION THE PAST, PRESENT AND FUTURE WHILE IN VESTING THE FUNDS. FURTHERMORE, IT SHALL BE OBSERVED THAT THE LEARNED ASSESSING OFFICER HAS TAKEN THE LOANS TAKEN BY THE ASSESSEE AT RS.4.79 CRORE WHEREAS THE SAME IS 2.79 CRORE WHICH IS EVIDENT FROM THE LOANS AND ADVANCES DETAIL S SCANNED IN THE ASSESSMENT ORDER ITSELF OF THIS 2.79 CRORE, ADVANCE HAS BEEN M ADE TO M/S BENARA BEARING &PISTONS LTD TO THE EXTENT OF 2.33 C RORE WHICH ARE INTEREST BEARING AS HAS BEEN STATED BY THE LEAR NED ASSESSING OFFICER HERSELF OUT OF THE BALANCE OF ABO UT RS. 46 LAKHS, ONLY A SUM OF RS. 13.19 LAKHS ARE ADVANCED T O HER SON AND MOTHER-IN-LAW. THE BALANCE FUNDS ARE INVESTED W ITH SHARE BROKING COMPANIES FOR INVESTMENT IN SHARES. THESE INVESTMENTS MAY NOT BE GIVING IMMEDIATE RESULTS BUT WILL DEFINITELY GIVE RESULTS TO THE ASSESSEE IN FORESEEA BLE FUTURE. THE CONCLUSION ARRIVED AT BY THE LEARNED ASSESSING OFFICER IS NOT PROPER APPRECIATION OF BUSINESS PRUDENCE. VARIOUS HIGHER COURTS HAVE OBSERVED AND HELD THAT A N ASSESSING OFFICER CANNOT SIT IN THE PLACE OF THE AS SESSEE AND GUIDE HIM TO RUN THE BUSINESS. IT IS UPON THE ASSES SEE HOW TO RUN THE BUSINESS. A PRUDENT BUSINESS PERSON TAKES D ECISION WITH FAR REACHING VISION WHICH HAS TO BE RESPECTED. AN INVESTMENT MADE NOW MAY NOT BRING IMMEDIATE RESULTS BUT WILL BEAR FRUITS IN FUTURE. SUCH DECISIONS HAS TO BE APP RECIATED AND EVALUATED KEEPING ALL FACTORS IN CONSIDERATION. ITA NO. 858/JP/2017 SMT. KETAKI BENARA VS. ITO 5 IN VIEW OF THE FACTS STATED ABOVE THE CONCLUSION AR RIVED AT BY THE LEARNED ASSESSING OFFICER OF DISALLOWING INT EREST IS NOT JUSTIFIED AND IT IS PRAYED THAT THE SAME MAY KI NDLY BE ALLOWED.' AFTER CONSIDERING THESE WRITTEN SUBMISSIONS THE LD. CIT(A) HAS CONSIDERED AND DECIDED THIS ISSUE IN PARA 4.3 AS UN DER:- 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STATEMENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAREFULLY. THE APPELLANT EITHER DURING T HE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS HAS NOT FURNISHED ANY FUND FLOW STATEME NT OR BALANCE SHEET TO SHOW THAT INTEREST BEARING FUNDS H AVE BEEN UTILIZED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF EARNING THE INCOME CHARGEABLE UNDER THE HEAD 'INCOM E FROM OTHER SOURCES'. IN VIEW OF THE FACTS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY DISALLOWED THE INTEREST OF RS. 11,21,785/-. ACCORDINGLY, THE DISALLOWANCE OF RS. 11,21,785/- MADE BY THE AO IS HEREBY CONFIRMED. FROM THE WRITTEN SUBMISSIONS AS REPRODUCED ABOVE I T REVEALS THAT THE ASSESSEE DISPUTED THE QUANTUM OF THE LOANS AND ADVA NCE GIVEN TO M/S BENARA BEARING AND PISTON LIMITED HOWEVER, THERE IS NO DENIAL THAT BORROWED FUND HAS BEEN USED BY THE ASSESSEE FOR GIV ING THE ADVANCE TO THE COMPANIES AND OTHER RELATIVES AS WELL AS INVEST ED IN SHARES OF PRIVATE COMPANIES. THUS, IN THE ABSENCE OF ANY INCO ME FROM THESE INVESTMENTS AND FURTHER IN THE ABSENCE OF FUND FLOW STATEMENT IT CANNOT ITA NO. 858/JP/2017 SMT. KETAKI BENARA VS. ITO 6 BE ACCEPTED THAT THE INTEREST EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING THE INCOME. THE ASSESSEE HAS NOT FILED ANYTHING BEFORE THIS TRIBUNAL IN SUPPORT OF T HE CLAIM AND THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE FOR WANT OF N ECESSARY DETAILS AND EVIDENCES. HENCE, WE DO NOT FIND ANY ERROR OR I LLEGALITY IN THE ORDER OF THE LD. CIT(A) QUA THIS ISSUE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/03/2018 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20/03/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. KETAKI BENARA, AGRA (U.P.) 2. IZR;FKHZ@ THE RESPONDENT- ITO WARD 2(1), AJMER. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 858/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR