Rajendra Rameshbhai Shah, Ahmedabad V. The Dy. Commissioner of Income Tax, Circle-1(2), Ahmedabad

ITSSA 256/AHD/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8879 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-01-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P GUPTA
• Assessee Lawyers: D K PARIKH
• Keywords: Additional evidence; Procedural lapse
• Section: 153A; 139(1); 37; 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ IT(SS)A NO.256 AND 257/AHD/2016 / ASSESSMENT YEAR: 2010-11 AND 2011-12 RAJENDRA RAMESHBHAI SHAH 1, MARUTI HILL BUNGALOWS SATELLITE, AHMEDABAD 380015. PAN : AQCPS 6419 B VS DCIT, CIR.1(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI D.K.PARIKH, AR REVENUE BY : SHRI G.P. GUPTA, CIT-DR / DATE OF HEARING : 10/01/2020 /DATE OF PRONOUNCEMENT : 16/01/2020 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SE PARATE ORDERS OF THE LD.CIT(A)-11, AHMEDABAD OF EVEN DATED I.E. 8.6.2016 PASSED FOR THE ASSTT.YEAR 2010-11 AND 2011-12. 2. GROUNDS TAKEN BY THE ASSESSEE IN BOTH THE YEARS READ AS UNDER: ASSTT.YEAR 2010-11 1. THE ID. CIT-A HAS WRONGLY UPHELD THE DISALLOWANCE O F INTEREST EXPENDITURE OF RS. 16,860/- AND RS.19,815/- FOR THE ASSTT.YEARS 2010- IT(SS)A NO.256 AND 257/AHD/2016 - 2 - 11 AND 2011-12 RESPECTIVELY PAID TO SMT. KANCHANBEN SHAH WHICH IS ALREADY CONFIRMED BY HER LEGAL HEIRS WITHOUT CONSID ERING THE SUBMISSIONS MADE DATED 19-06-2015. 2. THE LEARNED CIT-A HAS WRONGLY UPHELD GENUINE INTERE ST EXPENSE OF RS. 7,81,113/- AND RS.4,02,254/- FOR THE ASSTT.YEAR S 2010-11 AND 2011-12 RESPECTIVELY DISALLOWED BY LD. A.O. 3. THE LD. CIT-A HAS TAKEN DIFFERENT STAND FOR THE ABO VE MENTIONED SAME ISSUE BY DELETING THE ADDITION MADE BY LD A.O. FOR A. Y. 06-07 TO 09- 10 SIMULTANEOUSLY DISMISSED THE APPEAL FOR A. Y. 10 -11 TO 12-13. 3. THE FACTS ON ALL VITAL POINTS ARE COMMON IN BOTH THE ASSESSMENT YEARS. THEREFORE, FOR THE FACILITY OF REFERENCE, W E TAKE THE FACTS FROM THE ASSTT.YEAR 2010-11. THE ASSESSEE HAS FILED HIS RET URN OF INCOME ON 20.6.2012 DECLARING TOTAL INCOME AT RS.1,93,370/-. A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED IN THE CASE OF M/S.MARUTI SAVVY GROUP OF CASES ON 27.4.2011 AND SU BSEQUENT DATES. MARUTI GROUP HAS MANY SUB-GROUPS, AND ONE OF THE CO NCERNS IS M/S.MARUTI DEVELOPERS, WHERE THE ASSESSEE IS A PART NER. SEARCH WAS CONDUCTED ON MARUTI DEVELOPERS ALSO. A NOTICE UNDE R SECTION 153A WAS ISSUED UPON THE ASSESSEE IN BOTH THE YEARS, AND IN RESPONSE TO THE NOTICE, HE HAS FILED RETURN OF INCOME ON 4.1.2012 DECLARING TOTAL INCOME AT RS.1,93,370/-, IN THE ASSTT.YEAR 2011-12 IT HAS FIL ED RETURN OF INCOME ON 20.6.2012 DECLARING TOTAL INCOME AT RS.40,83,880/-. IN OTHER WORDS, THE INCOME DECLARED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 153A IS THE SAME INCOME WHICH WAS ORIGINALLY DECLAR ED UNDER SECTION 139(1) OF THE ACT. 4. DISPUTE BEFORE US RELATES TO DISALLOWANCE OF INT EREST EXPENDITURE. ACCORDING TO THE AO, THE ASSESSEE HAS CLAIMED INTER EST EXPENDITURE IT(SS)A NO.256 AND 257/AHD/2016 - 3 - UNDER SECTION 57(III) OF THE ACT WHEREAS HE FAILED TO ESTABLISH NEXUS BETWEEN THE INCOME SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES, ON WHICH HE HAS INCURRED EXPENDITURE FOR EARNING SU CH INCOME. HE ACCORDINGLY, DISALLOWED CLAIM OF THE ASSESSEE. APP EAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING ORDERS OF THE REVENUE AUTHORITIES CONTENDED THAT BASICALLY, THE L D.REVENUE AUTHORITIES HAVE APPROACHED THE CONTROVERSY WITH THEIR OWN ANGL E. THE CLAIM OF THE ASSESSEE OUGHT TO HAVE BEEN EXAMINED UNDER SECTION 37 OF THE ACT, BECAUSE ON THE LOAN ON WHICH THE ASSESSEE HAS INCUR RED INTEREST EXPENDITURE ARE CONCERNED, THOSE LOANS WERE USED FO R THE PURPOSE OF BUSINESS. FOR BUTTRESSING THIS ARGUMENT, HE DREW O UR ATTENTION TOWARDS THE DETAILS SUBMITTED IN TABULAR FORM ON PAGE NO.43 TO 50 OF THE PAPER BOOK FOR THE ASSTT.YEAR 2010-11, AND ON PAGE NO.45 TO 49. WE ANNEXED THE DETAILS SUBMITTED IN THE ASSTT.YEAR 2010-11 ALO NG WITH THIS ORDER AS ANNEXURE-A . ON THE STRENGTH OF THESE DETAILS, HE SUBMITTED T HAT THE ASSESSEE HAS ESTABLISHED NEXUS BETWEEN THE LOAN REC EIVED BY HIM VIS-- VIS LOAN OBTAINED FROM THE DIFFERENT PERSONS, AND M ADE INVESTMENT IN THE PARTNERSHIP FIRM, FROM WHERE HE WAS GETTING SHA RE OF PROFIT AS WELL AS INTEREST INCOME. AUTHORITIES HAVE FAILED TO EXA MINE THIS NEXUS. THESE DETAILS WERE SUBMITTED BEFORE THE LD.CIT(A) AND A S PECIFIC REQUEST WAS MADE TO EXAMINE THIS ASPECT. THEREFORE, HE PRAYED THAT DISALLOWANCE OF INTEREST EXPENDITURE BE DELETED. IT(SS)A NO.256 AND 257/AHD/2016 - 4 - 6. ON THE OTHER HAND, THE LD.DR CONTENDED THAT NO S UCH STAND WAS TAKEN BY THE ASSESSEE BEFORE THE AO; NOR THESE DETA ILS WERE SUBMITTED BEFORE THE AO. FOR THE FIRST TIME, THESE DETAILS WERE STATED TO BE SUBMITTED BEFORE THE LD.CIT(A) IN THE WRITTEN SUBMI SSIONS, BUT NO FORMAL APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UN DER RULE 46A WAS MADE. THEREFORE, THE LD.CIT(A) HAS RIGHTLY IGNORED SUCH DETAILS IN THE PAPER BOOK. 7. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THESE DOCUMENTS DO EFFECT ULTIMATE TAXABILITY OF TH E ASSESSEE. ONCE A PLEA WAS RAISED BEFORE THE LD.CIT(A) IN THE WRITTEN SUBMISSIONS, THEN IT OUGHT TO HAVE BEEN DEALT WITH. IF THERE WAS SOME P ROCEDURAL IRREGULARITIES THEN EITHER ASSESSEE OUGHT TO BE DIR ECTED TO REMOVE THAT SUCH IRREGULARITIES OR SUBMISSIONS OUGHT TO BE REJE CTED AFTER POINTING OUT THE ALLEGED PROCEDURAL IRREGULARITY. BUT A PERUSAL OF ORDER OF THE LD.CIT(A) WOULD INDICATE THAT COGNIZANCE TO THIS EF FECT WAS NOT TAKEN. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY , WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE IN BOTH YEARS TO THE FILE OF TH E AO FOR FRESH EXAMINATION. THE LD.AO SHALL LOOK INTO THE CLAIM O F THE ASSESSEE UNDER SECTION 37 ON THE GROUND THAT LOANS TAKEN BY THE AS SESSEE WERE USED FOR THE BUSINESS PURPOSE FOR MAKING INVESTMENT IN THE P ARTNERSHIP FIRM. THE ASSESSEE WILL BE AT LIBERTY TO SUBMIT ANY DETAI LS IN SUPPORT OF HIS EXPLANATION FOR THE CLAIM OF INTEREST EXPENDITURE. THE LD.AO SHALL CONSIDER SUCH DETAILS AFTER PROVIDING DUE OPPORTUNI TY OF HEARING TO THE ASSESSEE, AND THEREAFTER, RE-ADJUDICATE THE ISSUE I N BOTH THE YEARS. IT IS NEEDLESS TO MENTION THAT OBSERVATION MADE BY US WIL L NOT IMPAIR OR IT(SS)A NO.256 AND 257/AHD/2016 - 5 - INJURE CASE OF THE REVENUE NOR WILL NOT CAUSE ANY P REJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 16 TH JANUARY, 2020 SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER IT(SS)A.NO.256 AND 257/AHD/2017 (ANNEXURE - 'A' FORMING PART OF THE ORDER) OPENING CLOSING UTILIZATION NAME OF PARTY PURPOSE DATE BALANCE REPAYMENT RECEIPT INTEREST BALANCE AJAY R SHAH-HUF 03-04-2008 5,60,000 1,50,000 85,050 7,95,050 1,50,000 P. K. TRADING REPAYMENT OF LOAN AVI BHADRESHBHAI SHAH 01-06-2008 50,000 4,980 54,980 12,000 RAJENDRA R. SHAH WITHDRAWALS 15,000 RIDHAM ENTERPRISE PARTNERSHIP FIRM 23,000 DEEPAK C. SHAH REPAYMENT OF LOAN JALPABEN A SHAH 05-02-2009 1,00,000 2,000 1,02,000 1,00,000 MARUTI BUILDCON LOAN (INTEREST EARNING) RAJENDRA R SHAH-HUF 05-05-2008 37,500 24,595 24,595 RAJENDRA R. SHAH LIC JOURNAL VOUCHER 07-08-2008 25,000 25,000 MEGHANSH BUILDCON REPAYMENT OF LOAN 22-09-2008 60,000 60,000 AANANT SAXSENA REPAYMENT OF LOAN 22-10-2008 5,000 5,000 TELEPHONE & OTHER WITHDRAWALS 27-11-2008 5,000 5,000 TELEPHONE & OTHER WITHDRAWALS 28-03-2009 40,035 40,035 RAJENDRA R. SHAH LIC JOURNAL VOUCHER 31-03-2009 13,361 37,500 1,59,630 13,361 2,10,491 RAMESHCHANDRA CHIMANLAL SHAH 03-04-2008 8,05,000 1,50,000 1,14,450 10,69,450 1,50,000 P. K. TRADING REPAYMENT OF LOAN RAMESHCHANDRA C. SHAH-HUF 04-04-2008 3,85,000 6,00,000 9,85,000 1,00,000 RAJESH M. MANDAL REPAYMENT OF LOAN 5,00,000 SONAL RAJESHBHAI REPAYMENT OF LOAN 11-04-2008 25,000 25,000 CHINTU J. SHAH REPAYMENT OF LOAN 05-07-2008 30,000 25,000 MEGHANSH BUILDCON REPAYMENT OF LOAN 5,000 AJAY R. SHAH REPAYMENT OF LOAN 31-03-2009 1,22,970 3,85,000 - 6,55,000 1,22,970 11,62,970 RASIKBHAI K SHAH 17-06-2008 2,50,000 23,590 2,73,590 1,25,440 DEEPAKBHAI C. SHAH REPAYMENT OF LOAN 1,25,440 NARENDRA MANILAL MEVADA REPAYMENT OF LOAN SAROJBEN R SHAH 17-06-2008 2,50,000 22,580 2,72,580 2,50,000 NARENDRA MANILAL MEVADA REPAYMENT OF LOAN URVIBEN R SHAH 03-02-2009 1,00,000 1,00,000 1,00,000 MARUTI BUILDCON REPAYMENT OF LOAN SD/- SD/- (AM) (JM) TRANSACTIONS NEXUS OF NEW LOAN RECEIVED DURING THE FINANCIAL YEAR 2008-2009 AND UTILIZATION THEREOF : RAJENDRA R. SHAH IT(SS)A.NO.256 AND 257/AHD/2017 (ANNEXURE - A) OPENING CLOSING UTILIZATION NAME OF PARTY PURPOSE DATE BALANCE REPAYMENT RECEIPT INTEREST BALANCE DIPIKABEN KALPESHBHAI SHAH 10-04-2009 4,00,000 46,685 4,46,685 3,80,000 AJAYBHAI R. SHAH HUF REPAYMENT OF LOAN 8,982 LIC PREMIUM 13,260 WITHDRAWAL NISHANT VINODKUMAR SHETH 19-08-2009 3,00,000 22,100 3,22,100 3,00,000 KAMALBHAI R. CHINAI REPAYMENT OF LOAN PINA GIRISH SHETH 13-10-2009 5,00,000 27,780 5,27,780 5,00,000 SAAVY ORGANIZERS PARTNERSHIP FIRM P K TRADING 10-10-2009 5,00,000 28,270 5,28,270 5,00,000 SAAVY ORGANIZERS PARTNERSHIP FIRM RAJESH M. GANDHI 19-08-2009 4,00,000 29,460 4,29,460 4,00,000 KAMALBHAI R. CHINAI REPAYMENT OF LOAN SONAL RAJESHBHAI 19-08-2009 5,00,000 36,800 5,36,800 5,00,000 KAMALBHAI R. CHINAI REPAYMENT OF LOAN VIKRAM KHUBCHAND SHETH 13-10-2009 5,00,000 27,780 5,27,780 5,00,000 SAAVY ORGANIZERS PARTNERSHIP FIRM RAMESHCAHNDRA C. SHAH 26-08-2009 10,69,450 2,00,000 2,00,000 KAMALBHAI R. CHINAI REPAYMENT OF LOAN 06-01-2010 10,00,000 10,00,000 MAURAYANSH REALTORS PARTNERSHIP FIRM 11-02-2010 5,00,000 5,00,000 MAURAYANSH REALTORS PARTNERSHIP FIRM 03-08-2009 2,00,000 15-03-2010 5,50,000 25-03-2010 1,00,000 1,59,435 10,69,450 8,50,000 17,00,000 1,59,435 20,78,885 RAJENDRA R. SHAH HUF 2,10,491 6,26,591 37,500 16,100 (MAJOUR ENTRY) 31-12-2009 4,00,000 4,00,000 MARUTI DEVELOPERS PVT. LTD. 30% LOAN TO COMPANY 2,10,491 6,26,591 4,37,500 16,100 37,500 TRANSACTIONS NEXUS OF NEW LOAN RECEIVED DURING THE FINANCIAL YEAR 2009-2010 AND UTILIZATION THEREOF : RAJENDRA R. SHAH IT(SS)A.NO.256 AND 257/AHD/2017 (ANNEXURE - 'A' FORMING PART OF THE ORDER) OPENING CLOSING UTILIZATION NAME OF PARTY PURPOSE DATE BALANCE REPAYMENT RECEIPT INTEREST BALANCE BHADRESH R. SHAH HUF 17/03/2011 - 7,00,000 3,220 7,03,220 700000.00 MARUTI REALTIES 22% PARTNERSHIP FIRM JAYESHBHAI V. CHAUDHARY 25/02/2011 - - 25,00,000 27,945 25,27,945 2500000.00 MARUTI REALTIES 22% PARTNERSHIP FIRM RAMESHCHANDRA C. SHAH 06/04/2010 20,78,885 23,28,885 1,50,000 150000.00 MARUTI REALTIES 22% PARTNERSHIP FIRM 20/10/2010 1,00,000 80,870 100000.00 MARUTI PROCON LLP PARTNERSHIP FIRM 20,78,885 23,28,885 2,50,000 80,870 80,870 RAMEHCHANDRA C. SHAH HUF 17/06/2010 - 35,00,000 10,00,000 1,00,000 MARUTI FINE BUILD 28.5% PARTNERSHIP FIRM 19/06/2010 4,50,000 4,50,000 MARUTI FINE BUILD 28.5% PARTNERSHIP FIRM 29/06/2010 15,00,000 1,21,710 15,00,000 MARUTI FINE BUILD 28.5% PARTNERSHIP FIRM - 35,00,000 29,50,000 1,21,710 -4,28,290 URVIBEN R. SHAH 12/05/2010 40,000 11,36,334 6,00,000 6,00,000 MARUTI FINE BUILD 28.5% PARTNERSHIP FIRM 20/10/2010 1,00,000 1,00,000 MARUTI PROCON LLP PARTNERSHIP FIRM 07/03/2011 1,00,000 7,500 1,00,000 MARUTI REALTIES 22% PARTNERSHIP FIRM -40,000 11,36,334 8,00,000 7,500 -3,68,834 SAVVY ORGANIZERS 1,24,68,877 - 2,88,15,839 - 4,12,84,716 TRANSACTIONS WHOLE FUND NON INTEREST BEARING NEXUS OF NEW LOAN RECEIVED DURING THE FINANCIAL YEAR 2010-2011 AND UTILIZATION THEREOF :