Aman Bir Singh, Chandigarh V. DCIT, Chandigarh

ITA 933/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6918 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 03-01-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 23-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Question of law
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NOS.926 TO 932/CHD/2016 ASSESSMENT YEARS: 2003-04 TO 2009-10 MOHINI SINGH VS. THE DCIT H.NO. 152, SECTOR 9-B CENTRAL CIRCLE-I, CHANDIGARH CHANDIGARH PAN NO. ABZPS6055R ITA NOS.933 TO 939/CHD/2016 ASSESSMENT YEARS: 2003-04 TO 2009-10 AMAN BIR SINGH VS. THE DCIT H.NO. 152, SECTOR 9-B CENTRAL CIRCLE-I, CHANDIGARH CHANDIGARH PAN NO. ABZPS6054Q ITA NOS.940 TO 946/CHD/2016 ASSESSMENT YEARS: 2003-04 TO 2009-10 MOHAN BIR SINGH VS. THE DCIT H.NO. 152, SECTOR 9-B CENTRAL CIRCLE-I, CHANDIGARH CHANDIGARH PAN NO. ABZPS6057P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. SUDHIR SEHGAL DEPARTMENT BY : SHRI. S.K. MITTAL DATE OF HEARING : 29/06/2017 DATE OF PRONOUNCEMENT : 31/08/2017 ORDER PER BENCH THESE 21 APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A COMMON ORDER. IT WAS AGREED BY BOTH SIDES THAT A COMMON IS SUES AROSE FOR THE PURPOSE OF ADDRESSAL BY THE BENCH IN ALL THE APPEALS AND THERE FORE THEY ADVANCED SIMILAR CONTENTIONS. IT IS IN THESE CIRCUMSTANCES THAT THES E APPEALS ARE BEING DISPOSED OF BY A COMMON ORDER. THE APPEAL NO. 926/CHD/2016 FOR THE A Y 2003-04 AND APPEAL NO. 930/CHD/2016 FOR THE AY 2007-08 HAVE BEEN TAKEN CON CURRENTLY AS THE LEAD CASE. 2. THE ISSUES INVOLVED IN ALL THESE APPEALS ARE IDE NTICAL TO THE GROUNDS MENTIONED AS UNDER: 1 THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN SUSTAINING T HE ADDITION OF RS. 1,64,781/- TO THE ALREADY RETURNED INCOME OF RS. 1,33,475/-. 2. THAT THE CONFIRMATION OF ADDITION BY THE WORTHY CIT (A) IS NOT VALID, SINCE NO INCRIMINATING EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH U/S 132 ON 17 TH OF SEPTEMBER, 2008 WITH REGARD TO THE ABOVE ISSUE OF D ISALLOWANCE OF INTEREST AND AS PER 2 SETTLED LAW, NO ADDITION COULD BE MADE IN THE ASSES SMENT FRAMED BY THE ASSESSING OFFICER U/S 153A (I) (B) R.W.S. 143(3) OF THE INCOM E TAX ACT, SINCE NO INCRIMINATING MATERIAL HAVE BEEN FOUND DURING THE COURSE OF SEARCH WITH RE SPECT TO THE ABOVE ADDITION. 3. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL, THE DISALLOWANCE OF INTEREST TO THE TUNE OF RS. 1,64,781/- AS SUSTAINED BY THE WORT HY CIT (A) IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132(1) OF THE INCOME TAX ACT, 1961 WAS CONDUCTED ON M/S HOT MILLIONS GROUP O F CASES ON 17/09/2008 BY THE INVESTIGATION WING (INCOME TAX), CHANDIGARH AND FOL LOWING PREMISES WERE COVERED U/S 132(1) OF THE INCOME TAX ACT, 1961:- A) HOUSE NO. 152, SECTOR 9B, CHANDIGARH B) SCO 196-197, SECTOR 17C, CHANDIGARH HEAD OFFICE OF M/S HOT MILLIONS GROUP C) H.NO. 166, SECTOR 36A, CHANDIGARH 4. DURING THE ASSESSMENT PROCEEDING UNDER SECTION 1 53A VIDE THE ASSESSMENT ORDER DT. 24/12/2010 THE ASSESSING OFFICER HAD DISALLOWED INTEREST PAID BY THE ASSESSEE ON UNSECURED LOANS TAKEN FOR BUSINESS PURPOSES OWING T O THE ABSENCE OF THE NEXUS BETWEEN THE LOANS TAKEN FROM DIFFERENT PARTIES AND THE INTRODUCTION OF THE SAME AS CAPITAL WITH M/S HOT MILLIONS. THE MATTER WENT BEF ORE THE CIT(A) WHEREIN THE DISALLOWANCE OF INTEREST HAS BEEN CONFIRMED OWING T O THE ABSENCE OF NEXUS BETWEEN LOAN TAKEN AND AMOUNT TRANSFERRED TO THE PARTNERS C APITAL ACCOUNT THE MATTER FURTHER TRAVELLED TO THE HONBLE ITAT, CHANDIGARH BENCH IN ITA NO. 1092 TO 1098/CHD/2012 WHEREIN THE MATTER WAS RESTORED TO THE FILE OF THE AO WITH DIRECTION TO ALLOW THE INTEREST WHEREVER THE NEXUS IS PROVED. 5. DURING THE SET ASIDE ASSESSMENT PROCEEDING THE A O REPEATED THE SAME ADDITION. THE MATTER FURTHER TRAVELLED TO THE CIT(A ) AND VIDE ORDER DT. 21/07/2016 CIT(A) DIRECTED THE AO TO EXAMINE WHETHER WHILE COMPUTING THE DISALLOWANCE OF INTEREST FOR AN ASSESSMENT YEAR THE AMOUNT OF LOAN WHERE THE NEX US BETWEEN THE AMOUNT BORROWED AND THE FUNDS INVESTED IN THE PARTNER CONC ERN HAS BEEN HELD TO BE PROVED WERE ALSO TAKEN INTO ACCOUNT FOR COMPUTING THE DISA LLOWANCE AND IF SO TO BE RECOMPUTED THE DISALLOWANCE ACCORDINGLY. FOR THE SA KE OF BREVITY THE RELEVANT PARA OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER: THE AR OF THE APPELLANBT HOWEVER CONTENDED THAT THE ASSESSING OFFICER HAD COMPUTED THE DISALLOWANCE OF INTEREST BY INCLUDING EVEN THOSE CASES WHERE THE ASSESSING OFFICER HAD HIMSELF HELD THAT THE NEXS WA S PROVED BETWEEN THE BORROWED FUNDS AND THE FUNDS INVESTED INTEREST IN T HE PARTNERSHIP CONCERN. AS SEEN FROM THE CHART REPRODUCED ABOVE WITH REGARD TO THE AY 2003-04 THERE IS NO SINGLE CASE WHERE THE ASSESSING OFFICER HAS HELD TH AT SUCH NEXUS WAS PROVED. THE DISALLOWANCE OF INTEREST EXPENSES COMPUTED BY THE A SSESSING OFFICER FOR THE AY 2003-04 WAS ACCORDINGLY JUSTIFIED. AS REGARDS THE C OMPUTATION OF DISALLOWANCE OF INTEREST FOR THE OTHER ASSESSMENT YEARS IS CONCERNE D, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE WHETHER WHILE COMPUTING THE DIS ALLOWANCE OF INTEREST FOR ANY AY, THE AMOUNT OF LOANS, WHERE THE NEXUS BETWEE N THE AMOUNTS BORROWED AND THE FUNDS INVESTED IN THE PARTNERSHIP CONCERN H AS BEEN HELD TO BE PROVED, WERE ALSO TAKEN INTO ACCOUNT FOR COMPUTING THE DISA LLOWANCE AND IF SO RE- COMPUTE THE DISALLOWANCE ACCORDINGLY. 3 6. THE ASSESSEE CAME BEFORE THE TRIBUNAL WITH NEW G ROUND OF APPEAL WHICH WAS NOT TAKEN BEFORE THE LD. CIT(A). 7. THE LD. AR ARGUED THAT THIS IS A NEW LEGAL GROUN D OF APPEAL WITH REGARD TO THE FACTS THAT SINCE NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH AND AS SUCH NO DISALLOWANCE OF INTEREST COULD BE MA DE AS MADE BY THE AO. RELIANCE IS BEING PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 229 ITR 383 , IN WHICH, IT HAS BEEN HELD AS UNDER: APPEAL(TRIBUNAL)- ADDITIONAL GROUND- NOT RAISED B EFORE CIT(A)- TRIBUNAL DECLINED TO ENTERTAIN THE SAME-NOT JUSTIFIED- TRIBUNAL HAS J URISDICTION TO EXAMINE A QUESTION OF LAW WHICH ARISES FROM THE FACTS AS FOUND BY THE AUTHORITIES BELOW AND HAVING A BEARING ON THE TAX LIABILITY OF THE ASSESSEE. 8. THE LD. DR OBJECTED TO THE ADDITIONAL GROUND TAK EN WHICH HAVE BEEN OVERRULED IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COUR T. 9. BEFORE US THE LD. DR BROUGHT ISSUE TO THE NOTICE OF THE ITAT CHANDIGARH BENCH IN ITA NO. 433 TO 437/CHD/2014 FOR AY 2008-09 IN THE C ASE OF M/S MALAR BUILDERS PVT. LTD. VS. ACIT WHEREIN THE ISSUE OF ADDITION OR DISALLOWANCE IN ASSESSMENT FRAMED BY THE AOS UNDER SECTION 153 A WHEREIN IT WAS DEALT IN DETAIL THE ISSUE WHETHER ANY ADDITION COULD BE MADE IN ABSENCE OF THE INCRIMINATING MATERIAL FO UND DURING THE COURSE OF SEARCH. THE HONBLE ITAT CHANDIGARH BENCH FURTHER GOING THR OUGH THE ENTIRE GAMUT OF SECTION 153(A), 153(B) AND 153(C), CASE OF CIT VS. KABUL CH AWLA, 61 TAXMANN.COM 412(DELHI), CIT VS RRJ SECURITIES 380 ITR 612 AND PR. CIT VS. L ATA JAIN IN ITA NO. 274/2016 DT. 29/04/2016 HELD THAT IN THE ABSENCE OF ANY INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE ASSESSMENT PROCEEDING HAVI NG NOT ABATED AT THE TIME OF SEARCH THE AO HAS NO JURISDICTION TO MAKE THE ADDIT ION UNDER SECTION 153A. THIS RATIO IS APPLICABLE IN THE CASE OF THE ASSESSEE FOR THE AY 2 003-04 TO 2006-07. HENCE THE DISALLOWANCE MADE BY THE AO FOR THESE YEARS STANDS DELETED. 10. PERTAINING TO AY 2007-08 TO 2009-10 THE ASSESSE E HAS SUBMITTED DETAIL SHOWING THE NEXUS BETWEEN THE LOANS TAKEN AND THE LOANS GIV EN FROM VARIOUS PARTIES, THE DETAILS ARE AS UNDER: 4 11 K.C. SINGH 48000 58350 - 480000 45,600 12 VINAY SINGH - - - 1,00,000 12,000 5 6 7 8 11. THE DETAILS SUBMITTED BY THE ASSESSEE HAVE BEEN PERUSED IN DETAIL AND ON EXAMINATION OF THE RECORDS AVAILABLE REGARDING THE LOANS TAKEN AND LOANS GIVEN TO THE PARTIES THE FOLLOWING AMOUNT OF INTEREST IS BEING U PHELD AS THE NEXUS COULD NOT BE PROVED: MOHINI SINGH, CHANDGARH (HOT MILLIONS) CHART SHOWING THE AMOUNT OF INTEREST WHICH IS DISAL LOWABLE ASSESSMENT YEAR 2007-08 SL. NO. NAME AMOUNT ON WHICH INTEREST HAS BEEN DISALLOWED INTEREST DISALLOWED REMARKS 1 JAGBIR SINGH NA NA NA 2 VAHSA MAN SINGH 234800 RS. 28,176/- NEXUS DENIED 3 KC SINGH 480000 24387 (RS. 58350 DISALLOWED BY AO) NEXUS OF RS. 280000/- HAS BEEN PROVED AS PROVIDED NEXUS OF RS. 200000 WAS NOT PROVED THE DISALLOWANCE CANNOT EXCEED 58350/480000*200000= 24387 4 VINAY SINGH - - - ASSESSMENT YEAR 2008-09 SL. NO. NAME AMOUNT ON WHICH INTEREST HAS BEEN DISALLOWED INTEREST DISALLOWED REMARKS 1 JAGBIR SINGH 275000 RS.. 33000/- RS. 25000 WAS PR EVIOUS LOAN TAKEN PRIOR TO AY 2003-04 AND FOR NEW LOAN OF RS. 250000 TAKEN IN AY 2007-08 NEXUS OF THE SAME WAS DENIED. 2 VAHSA MAN SINGH 234800 RS. 28,176/- NEXUS DENIED 3 KC SINGH 480000 19000 (RS. 45600 DISALLOWED BY THE AO) THE NEXUS OF RS. 200000 WAS NOT PROVED THE DISALLOWANCE CANNOT EXCEED 45600/480000*200000= 19000 4 VINAY SINGH - 12000 ASSESSMENT YEAR 2009-10 SL. NO. NAME AMOUNT ON WHICH INTEREST HAS BEEN DISALLOWED INTEREST DISALLOWED REMARKS 1 JAGBIR SINGH 275000 33000 RS. 25000 WAS PREVIOUS LOAN TAKEN PRIOR TO AY 2003-04 AND FOR NEW LOAN OF RS. 250000 TAKEN IN AY 2007-08 NEXUS OF THE SAME WAS DENIED BY THE AO MERELY ON THE BASIS OF TIME GAP OF 2 MONTHS. 2 VAHSA MAN SINGH 234800 28,176 SAME AS GIVEN IN CH ART OF AY 2008-09 3 KC SINGH 480000 19000 SEE NOTE OF AY 2008-09 4 VINAY SINGH 100000 12000 MOHANBIR SINGH, CHANDGARH (HOT MILLIONS) CHART SHOWING THE AMOUNT OF DEDUCTION OF INTEREST W HICH IS DISALLOWABLE ASSESSMENT YEAR 2007-08 SL. NO. NAME AMOUNT ON WHICH INTEREST DISALLOWED AMOUNT OF INTEREST REMARKS 1 K C SINGH NA NA NA 9 ASSESSMENT YEAR 2008-09 SL. NO. NAME AMOUNT ON WHICH INTEREST DISALLOWED AMOUNT OF INTEREST REMARKS 1 K C SINGH 340000 28800 (DISALLOWED 48000) NEW ADDITION OF RS. 200000, NEXUS OF 1 LAKHS PROVED IN PREVIOUS AY, THUS, ADDITION TO SUSTAIN 40800/340000*240000=24000 2 VINAY SINGH NA 11178 RS. 100000(FRESH LOAN TAKEN AND NEXUS WAS NOT PROVED AS DATE OF INVESTMENT NOT MENTIONED) ASSESSMENT YEAR 2009-10 SL. NO. NAME AMOUNT ON WHICH INTEREST DISALLOWED AMOUNT OF INTEREST REMARKS 1 K C SINGH 340000 28800 REFER CHART OF AY 2008-09 2 VINAY SINGH 100000 16000 REFER CHART OF AY 2008-0 9 AMANBIR SINGH, CHANDGARH (HOT MILLIONS) CHART SHOWING THE AMOUNT OF DEDUCTION OF INTEREST W HICH CAN IS DISALLOWABLE ASSESSMENT YEAR 2007-08 SL. NO. NAME AMOUNT ON WHICH INTEREST DISALLOWED INTEREST DISALLOWED REMARKS 1 K C SINGH 240000 10500 NEXUS OF FRESH LOAN OF 1.5 LAKHS DENIED DISALLOWANCE SHALL NOT EXCEED= 16800/240000*150000= 10500 2 VINAY SINGH - - - ASSESSMENT YEAR 2008-09 SL. NO. NAME AMOUNT ON WHICH INTEREST DISALLOWED INTEREST DISALLOWED REMARKS 1 K C SINGH 240000 18000 (28800 DISALLOWED BY AO) EXPLANATION OF 1.4 LAKHS ALREADY PROVIDED IN AY 2006-07. NEXUS OF FRESH LOAN OF 1.5 LAKHS DENIED DISALLOWANCE SHALL NOT EXCEED= 28800/240000*100000=18000 2 VINAY SINGH 100000 11178 NEXUS OF FRESH LOAN OF R S. 100000 NOT PROVED MERELY BECAUSE THE DATE OF INVESTMENT WAS NOT MENTIONED. ASSESSMENT YEAR 2009-10 SL. NO. NAME AMOUNT ON WHICH INTEREST DISALLOWED INTEREST DISALLOWED REMARKS 1 VASHA MAN SINGH 417400 14088 THE FIGURE OF THE IN TEREST CALCULATED BY THE LD. AO IS INCORRECT IN THE CASE OF VARSHA MAN SINGH AS IN THE PREVIOUS ASSESSMENT YEARS INTEREST OF ONLY 14088 WAS DISALLOWED ON THE SAME AMOUNT OF LOAN AND THAT TOO WAS CONTINUOUSLY BEING DISALLOWED FROM AY 2007-08. 2 K C SINGH 240000 18000 (21600 DISALLOWED BY AO) NEXUS OF FRESH LOAN OF 1.5 LAKHS DENIED MERELY BECAUSE THE DATE OF RECEIPT OF LOAN NOT MENTIONED. 3 VINAY SINGH 100000 11178 NEXUS OF FRESH LOAN OF R S. 10 100000 NOT PROVED NAME ASSESSMENT YEARS INTEREST UPHELD MOHINI SINGH 2007-08 52563 2008-09 92176 2009-10 92176 MOHANBIR SINGH 2007-08 0 2008-09 39978 2009-10 44800 AMANVEER SINGH 2007-08 10500 2008-09 29178 2009-10 43266 12. IN THE RESULT ALL THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED. THE ORDER IS PRONOUNCED ON 31/08/2017 IN THE OPEN C OURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE