M/S CHHOTALAL NARAYANDAS, Nagpur V. CIT-II, Nagpur

ITA 93/NAG/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1610 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: C J THAKAR
• Keywords: Revision of order
• Section: 143(3); 263

Judgement Text

1 ITA NO. 93/NA G/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 93/NAG/2013 ASSESSMENT YEAR : 2008 - 09. M/S CHOT A ALAL NARAYANDAS, COMMISSIONER OF INCOME - TAX - II, NAGPUR. VS. NAGPUR. PAN AABFC 1868K. APPELLANT. RESPONDENT. APPELLANT BY : SHRI C.J. THAKAR. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 04 - 11 - 2015. DATE OF PRONOUNCEMENT : 18 TH NOV., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX - II, NAGPUR U/S 263 OF I.T. ACT DATED 18 - 01 - 2013 FOR ASSESSMENT YEAR 2008 - 09. THE GROUNDS RAISED READ AS UNDER : 1. ORDER OF LEARNED C.I.T. PASSED UNDER SECTION 263 OF I.T. ACT, 1961 IS WITHOUT JURISDICTION AND BAD IN LAW . 2. ORDER PASSED BY A.O. U/S 143(3) AFTER DUE SCRUTINY WAS PROPER ON FACTS AND WAS ALSO LEGAL. IT WAS NEITHER ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE COULD NOT BE REVISED U/S 263. 3. LEARNED C.I.T. FAILED TO SEE AND APPRECIATE THAT EVEN AF TER CONSIDERING DEBITS IN VARIOUS A/CS. LIKE LIC A/C., SCOOTER A/C., SHARES A/C., LAND - HOUSE BUILDING A/C. RELATING TO PARTNERS THERE WAS AN OVERALL CREDIT BALANCE IN PARTNERS CAPITAL A/C AND HENCE HE ERRED IN ASSUMING THAT PART OF THE INTEREST BEARING BO RROWED FUND WAS DIVERTED FOR PERSONAL USE OF PARTNERS. 2 ITA NO. 93/NA G/2013 2. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE STATED THAT IN THIS CASE LEARNED CIT HAS EXERCISED HIS JURISDICTION U/S 263 ON THE PROPOSITION THAT ASSESSEE S PARTNER S HAD ACTUALLY DEBIT BALANCE IN THE FIRM AND HENCE THE INTEREST PAID TO THE PARTNERS IS DIVERSION OF INTEREST BEARING FUNDS OF THE ASSESSEE FIRM. LEARNED COUNSEL IN THIS REGARD VEHEMENTLY DISPUTED THE FINDING THAT THERE WAS ACTUALLY DEBIT BALANCE OF THE PARTNERS. HE CONTENDED THAT ACTUALLY THERE WAS CREDIT BALANCE AND THE LEARNED CIT HAS FAILED TO APPRECIATE THE SAME. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US A PAPER BOOK WHICH CONTAINED CONSOLIDATED LEDGER ACCOUNT. BY WAY OF THIS CONSOLIDATED LEDGER ACCOUNT LEARNED COUNSEL TRIED TO SHOW THAT ACTUALLY THERE WAS A CREDIT BALANCE. 3. UPON CAREFUL CONSIDERATION WE FIND THAT THIS CONSOLIDATED LEDGER ACCOUNT BALANCE WAS NOT SHOWN TO THE AUTHORITIES BELOW. ASSESSEES PLEA IS THAT VARIOUS ACCOUNTS OF THE PARTNERS WERE SCATTERED UNDER DIFFERENT HEADS IN THE BOOKS OF THE FIRM. THOUGH THIS ASPECT WAS NOTED BY THE LEARNED CIT HE HAS NOT PROPERLY APPRECIATED THE SAME. UPON CAREFUL CONSIDERATION WE FIND THAT IT CANNOT BE SAID THAT THERE WAS ANY INFIRMITY IN THE ORDER OF LEARNED CIT IN EXERCISING JURISDICTION U/S 263 BUT THE DIRECTION GIVEN IN THE CONCLUDING PARAGRAPH NEEDS MODIFICATION. PRIMA FACIE THE PARTNERS CAPITAL ACCOUNT SHOW DEBIT BALANCE AND THE AO HAS NOT EXAMINED THE ASPECT OF PAYMENT OF INTEREST TO PARTNERS WHEN ACTUALLY THERE WAS A DEBIT BALANCE. WE ALSO NOTE THAT IT IS THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THERE WERE SEVERAL HEADS UNDER WHICH PARTNERS CAPITAL ACCOUNT WAS DISTRIBUTED AND IF THE SAME ARE CONSOLIDATED, ACTUALLY THERE WOULD NOT BE ANY DISALLOWANCE ON ACCOUNT OF DIVERSION OF INTEREST B EARING FUND OR DRAWING ANY ADVERSE INFERENCE ON PAYMENT OF INTEREST TO THE PARTNERS. INSTEAD OF DIRECTING TO ADD BACK THE AMOUNT IN QUESTION, LEARNED CIT COULD HAVE RESTORED THE ISSUE TO THE AO FOR VERIFICATION. WE FIND THAT THERE IS COGENCY IN THIS ASPECT OF THE SUBMISSION . AS A RESULT WE REMIT THE ISSUE TO THE 3 ITA NO. 93/NA G/2013 FILE OF THE AO. THE AO SH ALL EXAMINE THE ISSUE IN THE LIGHT OF ASSESSEES SUBMISSION IN THIS REGARD AND THE PAPER BOOK NOW BE ING SUBMITTED. 4. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF NOV., 2015. SD/ SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 18 TH NOV., 2015. COPY FORWARDED TO : 1. M /S CHOTALAL NARAYANDAS, KIRANA OLI, ITWARI, NAGPUR. 2. I.T.O., WARD - 3(3) , NAGPUR. 3. C.I.T. - II, NAGPUR. 4. D.R., ITAT, NAGPUR. 5. GUARD FILE TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR