Smt. Vijayalaxmi Garg, PALI V. ACIT, Central Circle-2, JODHPUR

ITA 88/JODH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70164 (ITAT-JODHPUR)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Gift
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 88/JODH/2013 (A.Y. 2009-10) SMT. VIJAYLAXMI GARG, VS ACIT, CENTRAL CIRCLE-2, PROP. RAMDAS AMRITLAL JODHPUR. BHERUGHARH, PALI. PAN NO. AAYPG2367G (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT KOTHARI. DEPARTMENT BY : SH. N.A. JOSHI- DR. DATE OF HEARING : 23/08/2013. DATE OF PRONOUNCEMENT : 30/08/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), JAIPUR, DATED 18/01/2013. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L :- 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ORDE R PASSED BY THE A.O. WHICH WAS BAD IN LAW AND BAD ON FACTS AND IS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTIC E. 2 2. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADHOC TRADING ADDITION OF RS. 5 LAKHS MADE BY THE A.O. TH E ADDITION SO SUSTAINED IS BAD IN LAW AND BAD ON FACT S. 3. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OUT OF INTEREST MADE BY THE A.O. AMOUN TING TO RS. 22,66,198/-. THE ADDITION SO SUSTAINED IS B AD IN LAW AND BAD ON FACTS. 4. THE LD. CIT(A) HAS ERRED IN SUSTAINING INTEREST CHARGED U/S 234B AND 234C. 5. THE APPELLANT PRAY FOR SUITABLE COSTS. 6. THE APPELLANT CRAVES LIBERTY TO ADDITION, AMEND, ALTER AND MODIFY ANY OF THE GROUND OF APPEAL ON OR BEFORE ITS HEARING BEFORE YOUR HONOUR. 3. GROUND NO. (1) WAS NOT PRESSED BY LD. A.R. AT TH E TIME OF THE HEARING, THEREFORE, THIS GROUND STANDS DISMISSED AS NOT PRESSED. GROUND NOS. 5 AND 6 ARE FORMAL IN NATURE AND DONT REQUIRE ANY SPECIFIC ADJUDICATION. GROUND NO. (4) RELATES TO CH ARGING OF INTEREST U/S 234 AND 234C. THIS GROUND CANNOT BE ALLOWED BECAUSE THESE ARE MANDATORY PROVISIONS. THE ASSESSEE IS, HOWEVER, ENT ITLED TO CONSEQUENTIAL RELIEF GRANTED. THEREFORE, GROUND NO. (4) IS DISMISSED. 3 4. THE FACTS APROPOS GROUND NO. (2) ARE THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF IRON, STEEL AND A.C. SHEETS, ON WHOLESALE BASIS. THE ASSESSEE IS A PROPRIETOR OF M/S. RAMDAS AMRIT LAL. THE ASSESSEE HAS DISCLOSED TOTAL TURNOVER OF THE YEAR A T RS. 29,79,86,866/- ON WHICH GROSS PROFIT OF RS. 1,01,61,474/- GIVING G .P. RATE OF 3.41% HAS BEEN SHOWN. IN THE IMMEDIATE PAST ASSESSMENT YEAR O N SALES OF RS. 23,31,67,892/- THE ASSESSEE HAD SHOWN G.P. OF RS. 2 ,80,14,525/- GIVING G.P. RATE OF 12.01%. THUS, THE A.O. HAS FOUND THAT THE G.P. RATE DISCLOSED IN THIS YEAR WAS VERY LOW AS COMPARED TO THE LAST YEAR. IT WAS EXPLAINED THAT IN THE LAST YEAR THE ASSESSEE HAD SU RRENDERED A SUM OF RS. 1,81,71,250/- ON ACCOUNT OF EXCESS STOCK. IN CA SE THIS AMOUNT IS REDUCED THAN THE G.P. RATE WOULD WORK OUT TO 4.14% (IN THE LAST YEAR). IT WAS ALSO NOTICED THAT THE ASSESSEE HAD NOT PRODU CED THE STOCK REGISTER AND THE QUANTITATIVE DETAILS DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. FROM THE AUDIT REPORT ALSO IT IS NOTIC ED THAT IN COLUMN NO. 28, THE AUDITOR HAD MENTIONED THAT THE QUANTITY DE TAILS PRINCIPLE ITEMS OF GOODS TRADED ARE NOT AVAILABLE SINCE STOCK DETAILS NOT PRODUCED BEFORE US FOR VERIFICATION. THEREFORE, BO OKS OF ACCOUNT WERE REJECTED U/S 145(3) OF THE ACT, AND A LUMP SUM ADDI TION OF RS. 5 LAKHS WAS MADE. THIS ADDITION WAS CHALLENGED BEFORE LD. C IT(A) BUT HE HAS ALSO CONFIRMED IT. NOW, THE ASSESSEE IS IN SECOND A PPEAL. 4 5. WE HAVE HEARD RIVAL SUBMISSIONS. WE HAVE FOUND T HAT THERE IS NO VALID REASON FOR REJECTING THE BOOKS OF ACCOUNT. TH E BOOKS CANNOT BE REJECTED ON ACCOUNT OF FALL IN G.P. RATE ALONE. OTH ERWISE ALSO, THE FALL IN THE G.P. RATE STANDS EXPLAINED. BE THAT AS IT MA Y, THE IMPUGNED ADHOC ADDITION CANNOT BE UPHELD AND WE DELETE THE S AME AND ALLOW GROUND NO. 2 OF ASSESSEES APPEAL. 6. THE FACTS OF GROUND NO. (3) ARE THAT DURING THE YEAR THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS IN HER PERSONAL CA PACITY WHICH DO NOT FORM PART OF THE AUDIT REPORT. IN THESE PERSONA L ACCOUNTS THE ASSESSEE HAS SHOWN INTEREST OF RS. 22,66,198/- PAID TO VARIOUS RELATIVES AND FAMILY MEMBERS AND HAS BEEN CLAIMING IN THE COM PUTATION OF INCOME AS DEDUCTION IN HER PROPRIETARY BUSINESS. IT WAS STATED THAT, IN FACT, THESE BORROWED FUNDS WERE INVESTED IN THE PRO PRIETARY BUSINESS AND THE INTEREST IS RELATED TO THOSE INVESTMENTS. F URTHER, IT WAS NOTICED THAT SHE HAD MADE GIFTS AGGREGATING TO RS. 2,80,00,000/- TO VARIOUS MEMBERS OF HER FAMILY. THUS, UNSECURED LOAN S HAVE INCREASED FROM RS. 3,47,10,533/- IN THE LAST YEAR TO RS. 4,63 ,63,343/- WHEREON INTEREST HAS BEEN PAID. SHE HAS CLAIMED INTEREST EX PENSES OF RS. 20,10,512/- IN HER PROPRIETARY CONCERN M/S. RAM DAS AMRIT LAL AND RS. 22,66,198/- IN HER PERSONAL CAPACITY. FROM THE ABOV E THE A.O. HAS 5 INFERRED THAT SHE HAS ROUTED THE MONEY BY TAKING LO ANS FROM RELATIVES AND FAMILY MEMBERS WHICH WAS GIVEN TO THEM BY WAY O F GIFTS TOTALING TO RS. 2.8 CRORES AND HAS CLAIMED INTEREST OF RS. 2 2,66,198/- IN HER PERSONAL CAPACITY WHICH HAS NO DIRECT CONNECTION TO THE INVESTMENT IN BUSINESS OR BUSINESS ACTIVITIES. HENCE THE A.O. HAS DISALLOWED THIS CLAIM OF THE ASSESSEE. 7. AGGRIEVED, THE ASSESSEE WENT BEFORE LD. CIT(A) S TATING THAT SIMILAR CLAIM OF PAYMENT OF INTEREST HAD BEEN ALLOW ED BY THE A.O. IN THE A.Y. 2008-09 AMOUNTING TO RS. 22,46,940/-. IT WAS ALSO STATED THAT THE CREDITORS / MONEY BORROWED IN PERSONAL SET OF A CCOUNTS PERTAINED TO EARLIER ASSESSMENT YEARS AND NOT TO THIS YEAR. I T WAS FURTHER STATED THAT THE AGGREGATING GIFTS TO RS. 2.80 CRORES WERE NOT GIVEN FROM THE BORROWED FUNDS BECAUSE FUNDS WERE BORROWED IN F.Y. 2007-08 AND GIFTS ARE GIVEN IN THE F.Y. 2008-09. THAT THE CAPITAL ACC OUNT OF THE ASSESSEE HAD BALANCE OF RS. 7.76 CRORES OUT OF WHICH GIFTS A GGREGATING TO RS. 2.80 CRORES ARE GIVEN. BUT THE LD. CIT(A) WAS NOT C ONVINCED AND HAS CONFIRMED THIS ADDITION. 6 8. BEFORE US BOTH PARTIES HAVE REITERATED THEIR EAR LIER ARGUMENTS. AFTER CONSIDERING RIVAL STANDS, WE HAVE FOUND THAT THE LOANS WERE TAKEN BY THE ASSESSEE IN THE EARLIER YEAR AND NOT DURING THIS YEAR. EVEN IN A.Y. 2008-09 THE A.O. HAS ALLOWED SIMILAR INTEREST AMOUNT OF RS. 22,46,940/- PAID. THE BORROWED MONEY PERTAINED TO P ERSONAL ACCOUNTS PERTAINING TO EARLIER YEARS AND NOT TO THE A.Y. 200 9-10. THUS, ONE CAN EASILY INFER THAT THE GIFTS WERE NOT GIVEN FROM OUT OF THE BORROWED FUNDS. THE MONEY BORROWED HAS BEEN UTILIZED IN THE BUSINESS. THERE IS NO CONTRARY EVIDENCE TO PROVE OTHERWISE. THERE IS N O PROOF THAT THE GIFTS WERE MADE OUT OF THE BORROWED FUNDS. ACCORDIN GLY, WE REVERSE THE FINDING OF LD. CIT(A) AND ALLOW THIS GROUND OF APPEAL. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2013. VL/ 7 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR