M/s. Rolex Rings Pvt. Ltd., RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Circle-1, RAJKOT-GUJARAT

ITA 90/RJT/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89141 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 23-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M L MEENA CIT DR
• Assessee Lawyers: RD LALCHANDANI
• Section: 143(3)

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL RAJKOT BENCH: RAJKOT 0 00 0 0 00 0 , , , , ! ' ! ' ! ' ! ', , , , #$ #$ #$ #$ BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NO.90/RJT/2012 ' (' ' (' ' (' ' ('/ // / ASSESSMENT YEAR: 2004-05 M/S. ROLEX RINGS PVT LTD GONDAL ROAD, VILLAGE: KOTHARIA, DIST: RAJKOT PAN : AACCR 3790 B VS THE DCIT, CIRCLE-1, RAJKOT )* )* )* )* / // / (APPELLANT) +, +, +, +, )* )*)* )* / // / (RESPONDENT) ASSESSEE(S) BY : SHRI R.D. LALCHANDANI, ADVOCATE REVENUE BY : SHRI M.L. MEENA, CIT - DR - . ' // // / DATE OF HEARING : 18/02/2015 0( . ' / / DATE OF PRONOUNCEMENT: 27/02/2015 1 1 1 1/ // / O R D E R PER BENCH : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, RA JKOT DATED 03.02.2012 FOR THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE HAS RAISED A SOLITARY GROUND WHICH READS AS UNDER:- THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN C ONFIRMING THE DISALLOWANCE OF RS.300000 ON ACCOUNT OF INTEREST. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143(3) OF TH E INCOME-TAX ACT (HEREINAFTER REFERRED TO AS 'THE ACT') WAS FRAMED V IDE ORDER DATED 29/12/2006, THEREBY THE ASSESSING OFFICER (AO IN SH ORT) MADE DISALLOWANCE OF THE INTEREST EXPENSES AMOUNTING TO RS.3,00,000/- , DISALLOWANCE OF ITA NO. 90-RJT-2012 ROLEX RINGS PVT LTD V. DCIT AY 2004-05 - 2 - RS.1,05,622/- ON ACCOUNT OF POP WRITTEN OFF & WIND MILL POP WRITTEN OFF AND AN AD-HOC DISALLOWANCE OF RS.1,00,000/- OUT OF EXPENSES ON VEHICLE, SCOOTER AND TELEPHONE. AGAINST THE AFORESAID ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHO , AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE DISALLOWAN CES OF RS. 1,05,622/- ON ACCOUNT OF POP WRITTEN OFF & WIND MILL POP WRITTEN OFF AND RS. 1,00,000/- ON ACCOUNT OF EXPENSES ON VEHICLE, SCOOTER AND TELE PHONE. HOWEVER, DISALLOWANCE OF RS.3,00,000/- MADE ON ACCOUNT OF IN TEREST EXPENSES WAS RESTORED. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDERS OF THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF RS.3,00,000/- MADE ON ACCOUNT OF INTEREST EXPENSES. HE SUBMITTED THAT BOTH THE AUTHORITIES BELOW FAILED TO TAKE NOTE OF THE FA CT THAT THE ASSESSEE HAS BEEN MAKING BUSINESS TRANSACTIONS WITH A FIRM NAMEL Y M/S. IMPULSE STEEL IN WHICH MR. RAJESH MEHTA AND MR. SANDEEP MEHTA WER E THE PARTNERS TO WHOM THE ASSESSEE ADVANCED INTEREST-FREE ADVANCES. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AFORESAID ADVANCES WERE GIVEN AS A SECURITY TO THE PURCHASES MADE FROM THE FIRM. 5. ON THE CONTRARY, LD. CIT-DR SUBMITTED THAT IF TH E SUBMISSIONS OF THE ASSESSEE THAT THE BUSINESS TRANSACTIONS WERE MADE W ITH THE FIRM IS ACCEPTED, THAT GOES AGAINST THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS GROSSLY FAILED TO DEMONSTRATE BY PLACING ANY WRITTEN AGREEM ENT WITH THE FIRM THAT THE ADVANCES IN QUESTION WERE GIVEN AS A SECURITY A GAINST THE SUPPLIES MADE BY THE FIRM. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) DECIDED THIS ISSUE BY OBSERVING AS UNDER:- ITA NO. 90-RJT-2012 ROLEX RINGS PVT LTD V. DCIT AY 2004-05 - 3 - 5. I HAVE PERUSED THE CONTENTS OF THE ASSESSMENT O RDER AS WELL AS SUBMISSIONS OF THE AR OF THE APPELLANT. THE ASSESSI NG OFFICER HAS MADE PROPORTIONATE DISALLOWANCE OUT OF INTEREST EXPENSES CLAIMED ON THE INTEREST FREE ADVANCES MADE TO BOTH SHRI SANDEEP & SHRI RAJE SH MEHTA FOR WITHOUT ANY REASON APPARENTLY. IN HIS SUBMISSIONS, THE AR O F THE APPELLANT HAS SUBMITTED THAT THE APPELLANT HAS A BUSINESS DEALING WITH THE FIRM WHEREIN BOTH MEHTAS ARE PARTNERS AND THE ADVANCE MADE WAS THEREFORE IN THE NATURE OF SECURITY AGAINST PURCHASES. THIS ARGUMENT OF THE APPELLANT IS NOT CONVINCING FROM ANY ANGLE. HAD IT BEEN A SECURITY, THEN WHY IT HAS BEEN GIVEN TO THE PARTNERS INSTEAD OF THE FIRM ITSELF? F URTHER, THE ULTIMATE BENEFIT HAS ACCRUED TO THE INDIVIDUALS WHICH CANNOT BE TERM ED AS A BUSINESS TRANSACTION. THUS, THE APPEAL ON THIS GROUND IS DIS MISSED. 7. THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSE E IS THAT THE ADVANCES TO SHRI RAJESH MEHTA AND SHRI SANDEEP MEHTA WERE GI VEN OUT OF BUSINESS EXPEDIENCY AS THE SAID PERSONS WERE THE PARTNERS OF THE FIRM FROM WHOM THE ASSESSEE WAS AFFECTING THE PURCHASES. WE DO NO T SEE ANY MERIT IN THIS ARGUMENT OF THE ASSESSEE THAT THE ADVANCES WERE GIV EN FOR BUSINESS EXPEDIENCY TO THE PARTNERS OF THE FIRM AS THE ASSES SEE HAS NOT PLACED ANY AGREEMENT ON RECORD SUGGESTING THAT THE ADVANCES WE RE GIVEN AS A SECURITY TO THE PURCHASES MADE BY THE ASSESSEE. THE ASSESSEE HAS ALSO NOT PLACED ON RECORD ANY DECLARATION FROM THE PARTNERS OF THE FIR M DECLARING THAT THE IMPUGNED AMOUNT WAS RECEIVED AS A SECURITY. IN ABS ENCE OF SUCH EVIDENCE, WE ARE UNABLE TO ACCEPT THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE; HENCE THE GROUND RAISED BY THE ASSESSEE IS REJECTED . 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS REJECTED. ORDER PRONOUNCED IN THE COURT ON 27 TH FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- ( N.S. SAINI) ACCOUNTANT MEMBER (KUL BHARAT) JUDICIAL MEMBER AHMEDABAD; DATED 27/02/2015 *BIJU T. ITA NO. 90-RJT-2012 ROLEX RINGS PVT LTD V. DCIT AY 2004-05 - 4 - 1 1 1 1 . .. . +'2 +'2 +'2 +'2 32(' 32(' 32(' 32(' / COPY OF ORDER FORWARDED TO:- 1. )* / APPELLANT- 2. +,)* / RESPONDENT- 3. 7 ' 8 / CONCERNED CIT/DIT 4. 8() / THE CIT(A)-II, RAJKOT 4 . 2! ; +' , , / DR, ITAT, RAJKOT 5 . ; <' = > / GUARD FILE. 1 1 1 1 / BY ORDER, TRUE COPY ? ?? ?/ // /@ @ @ @ ( DY./ASSTT.REGISTRAR) / ITAT, RAJKOT