M/S. OM SHANTI HOUSING ,MUMBAI V. INCOME TAX OFFICER 20(2)(3), MUMBAI

ITA 4092/MUM/2024

AI Insights

The case involves Om Shanti Housing, a partnership firm engaged in property development, which appealed against the order of the Commissioner of Income Tax (Appeals) sustaining a disallowance of Rs. 1,02,03,318 as interest paid to seven parties. The disallowance was initially made by the Assessing Officer (AO) during the scrutiny of the firm's return for A.Y. 2015-16. The Tribunal's decision to reverse the disallowance was based on the principle of consistency, referencing a previous ITAT decision where similar disallowances were overturned for the same parties in A.Y. 2013-14. The Tribunal also noted that no new loans were taken during the year from the parties involved, and the loans pertained to earlier years where interest had been allowed in previous assessments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470899 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-11-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 16-08-2024
• Other Referred Cases: UOI Vs. Kamlakshi Finance Corporation Ltd, Agarwal Warehousing & Leasing Ltd, ASI Industries Ltd Vs DCIT, CIT Vs. Smt. Sushila Devi Khadaria, ITO Vs. Anant Shelters (P) Ltd, CIT Vs. Vrinder Rawlley, CIT Vs. Shibganj Electric Cables P Ltd, ITO Vs. Deep Darshan Properties Pvt Ltd, DCIT Vs. M/s Manish Flour Mills Pvt Ltd, ACIT Vs. Hanuman Agarwal, Kunjal Synergies (P.) Ltd vs Deputy Commissioner of Income-tax, Deputy Commissioner of Income-tax vs Hetal Nitin Shah, Navneet Agarwal vs Income-tax Officer, Ward- 35 (3), Kolkata, Principal Commissioner of Income-tax v Bairagra Builders (P.) Ltd., Santosh Khunteta vs. Income-tax Officer, Shri Vasant Ramji Savla vs. ACIT, ITO vs. Shri Nemichand Lalchand Jain, M/s. Keynote Fincorp Limited vs. DCIT, ITA No. 2118/Ahd/2014 M/s Deep Darshan Properties Pvt Ltd, ITA No. 2160/Ahd/2014 Aajivan Computers Pvt Ltd, ITA No. 2116/Ahd/2014 M/s Karmveer Real Estate Pvt Ltd, ITA No. 2157/Ahd/2014 Dignity Securities Trading Pvt Ltd, ITA No. 2119/Ahd/2014 M/s Blue Hill Properties Pvt ltd, CIT Vs Odeon Builders (P.) Ltd, Hon'ble High Court (Madras) in case of Agarwal Warehousing & Leasing Ltd, CIT Vs. Smt. Sushila Devi Khadaria, ITO Vs. Anant Shelters (P) Ltd, CIT Vs. Vrinder Rawlley, CIT Vs. Shibganj Electric Cables P Ltd, ITO Vs. Deep Darshan Properties Pvt Ltd, DCIT Vs. M/s Manish Flour Mills Pvt Ltd, ACIT Vs. Hanuman Agarwal, Kunjal Synergies (P.) Ltd vs Deputy Commissioner of Income-tax, Deputy Commissioner of Income-tax vs Hetal Nitin Shah, Navneet Agarwal vs Income-tax Officer, Ward- 35 (3), Kolkata, Principal Commissioner of Income-tax v Bairagra Builders (P.) Ltd., Santosh Khunteta vs. Income-tax Officer, Shri Vasant Ramji Savla vs. ACIT, ITO vs. Shri Nemichand Lalchand Jain, M/s. Keynote Fincorp Limited vs. DCIT, ITA No. 2118/Ahd/2014 M/s Deep Darshan Properties Pvt Ltd, ITA No. 2160/Ahd/2014 Aajivan Computers Pvt Ltd, ITA No. 2116/Ahd/2014 M/s Karmveer Real Estate Pvt Ltd, ITA No. 2157/Ahd/2014 Dignity Securities Trading Pvt Ltd, ITA No. 2119/Ahd/2014 M/s Blue Hill Properties Pvt ltd, CIT Vs Odeon Builders (P.) Ltd, Hon'ble High Court (Madras) in case of Agarwal Warehousing & Leasing Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: ANISH SHAH
• Keywords: Opportunity of being heard; Rule of consistency; Principle of natural justice; TDS; Opportunity of cross examination
• Section: 142(1); 143(2); 250; 143(1); 64; 22; 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No. 4092/Mum/2024 (Assessment Year: 2015-16) Om Shanti Housing 2nd Floor, 20-B, Sugra Bldg, 16th Tribhuvan Road, Near Dream Land Cenema, Grant Road, Mumbai – 400 004. Vs. ITO, Ward 20(2)(3) Piramal Chambers, Dr. SS Rao Marg, Lalbaug, Mumbai – 400012. PAN/GIR No. AABF04424B (Applicant) (Respondent) Assessee by Shri Anish Shah Revenue by Shri Krishna Kumar, CIT(DR) सुनवाई क\u0002 तारीख/Date of Hearing 06.11.2024 घोषणा क\u0002 तारीख/Date of Pronouncement 13.11.2024 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order 24.06.2024, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (‘Ld. CIT(A)’), for the assessment year 2015-16. The assessee has raised the following grounds of appeal: 2 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai 1. 1. On the facts and in the circumstances of the case and in law the learned CIT (A)- NFAC erred in deciding the appeal by holding as follows: The learned CIT (A) erred in sustaining disallowance of Rs. 1,02,03,318/- being interest paid to the following 7 parties as your appellant failed to prove genuineness of expenditure and thereby sustaining reduction of closing work-in-progress from Rs.15,59,04,259/- to 14,57,00,941/-. Sr. No Name of the party Interest Amount (Rs) claimed and included in closing work in progress 1 M/s Divyanshi Gems Pvt Ltd 7,37,553/- 2 M/s Manbhawan Exim Pvt ltd 8,11,308/- 3 M/s Siddham Gems Pvt Ltd 26,50,225/- 4 M/s Radhe Krishna Gems Pvt Ltd 41,53,261 5 M/s Kaushali Impex Pvt Ltd 10,53,647/- 6 M/s Namo Diamonds Pvt Ltd 6,77,101/- 7 M/s Varshit Enterprises 1,20,223/- Interest on Loan (total) 1,02,03,318/- 2. The learned CIT (A) erred in passing order without giving adequate opportunity of being heard even though requested vide letter dated 6th April 2022 & 21* August 2023 which is contrary to provisions of law and natural justice. 3. On the facts and in the circumstances of the case and in the law, Ld. National Faceless Appeal Centre (NFAC) erred in confirming (a) The addition of Rs 1,02,03,318/- which was done by the learned AO without providing to the appellant any material or clarification relied upon by the DDIT (Inv) Surat vide notice dated 11th December 2017. (b) The disallowance of entire interest on loan of Rs. 1,02,03,318/- by merely relying on the inquiry made by DDIT (Inv)-1,Surat without any independent enquiry made by the AO and without providing any supporting report or other evidences relied upon by him. 3 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai (c) The addition which was made by the learned AO by coming to the conclusion without calling for any further information if he needed particularly when the papers called for by him were submitted and in not affording proper and reasonable opportunity. Your appellant voluntarily could not submit further information in the last week of the December, 2017 which was not demanded by the learned A.O., more so when he did not seek any further clarification. 4. On the facts and in the circumstances of the case and in law, the Ld. Jurisdictional Assessing Officer erred in making disallowance and learned CIT (A) erred in confirming the entire disallowance of Rs. 1,02,03,318/- on account of interest on loan of erroneous presumptions although several documents related to the loan creditors were submitted during the course of Assessment & Appellate Proceedings which are available in the paper book submitted to CIT (A) vide letter dated 6th April 2022 & 21 August, 2023. a) Confirmation b) Return of Income c) Bank statement highlighting loan taken and repaid d) Audited Financial e) Details of TDS deducted in respect of Interest expenses. f) All the loan creditors are assessed to tax. 5. a) On the facts and circumstances of the case and in law, the Learned NFAC has erred in ignoring to the fact that the learned A.O. erred in erroneously and hurriedly, unjustifiably coming to the adverse conclusion without relying on the decision of the learned CIT (Appeal) dated 20th June 2017 for AY 2013-14 on similar facts and circumstances in the assessee's favour. The order passed by the AO has caused great injustice to your appellant and is merely on conjectures and surmises. b) The learned NFAC erred in not considering to the following 4 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai i) The Disallowance of interest paid of Rs 62,54,440/- & addition of Rs 8,90,00,000/- u/s 68 in respect of borrowings taken from below same parties in AY 2013-14 was already deleted by the learned Commissioner of Income tax (Appeals) vide order dated 20th June 2017 & same was confirmed by Hon'ble ITAT vide order dated 10th January 2020. Name of the party Amount of Interest disallowed in A.Y 2015-16 Remarks M/s Kaushali Impex Pvt Ltd 10,53,647/- Relief already given for parties in A.Y 2013-14 by Ld.CIT(A) & Hon’ble ITAT M/s Radhe Krishna Gems Pvt Ltd 41,53,261 M/s Siddham Gems Pvt Ltd 26,50,225/- M/s Divyanshi Gems Pvt Ltd 7,37,553/- M/s Manbhawan Exim Pvt ltd 8,11,308/- Total Interest 94,05,994/- ii) We also state that no new loans were taken during the year from below mentioned parties The loan pertains to earlier years wherein interest paid was duly allowed by learned Assessing officer during the course of earlier year Assessment proceedings. Name of the party Amount of Interest disallowed in A.Y 2015-16 Remarks Namo Diamonds Pvt Ltd 6,77,101 The Loan was taken in A.Y 2014-15 (2nd April 2013) Varshit Enterprises 1,20,223 The Loan is old loan taken in the A.Y 2010- 11 (30th April 2009). Principle amount is already repaid. Total Interest 7,97,324 iii) The Learned assessing officer had erred in not specifically mentioning relevant reasons for addition in the Assessment order. 6. Your appellant craves leave to add, amend, alter or delete any of the foregoing grounds of appeal. 5 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai 2. All the grounds raised by the assessee are inter related and inter connected and relates to challenging the order of CIT(A) in sustaining of disallowance of Rs. 1,02,03,318/-. Therefore, we have decided to adjudicate the above grounds through the present consolidated order. 3. The Ld. AR appearing on behalf of the assessee reiterated the same arguments as raised by him before the revenue authorities and relied upon written submissions filed before us. 1) The Appellant is a partnership firm engaged in the business of property development. Your Appellant ventured into a project of redevelopment at Parel, Mumbai, wherein redevelopment project has not yet commenced. The redevelopment has not started as the tenants have not vacated the premises. Hence the firm has not declared any income in the return of income filed 2) Your appellant had filed Return of Income on 30th September 2015 for A.Y. 2015-16 declaring Income at Rs NIL. The return was processed u/s 143(1) of the Income tax Act 1961. Subsequently case was selected for scrutiny under CASS and statutory notice was issued u/s 143(2) & 142(1) of the Income tax Act 1961.The Appellant had replied to the notice from time to time as follows :- Notice u/s of the Income Tax Act 1961. Date of Compliance 142(1) 10th March 2017 142(1) 19th June 2017 142(1) 8th August 2017 142(1) 8th September 2017 142(1) 19th December 2017 3) The Learned Assessing officer passed an Assessment order u/s 143(3) of the Income tax 19th December 2017 Act 1961 dated 27th December 2017 disallowing interest of Rs 1,02,03,318 being paid 6 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai to the below mentioned parties and reduced closing work in progress from Rs. 15,59,04,259/- to 14,57,00,941/-. Sr. No Name of the party Interest Amount (Rs) claimed and included in closing work in progress 1 M/s Divyanshi Gems Pvt Ltd 7,37,553/- 2 M/s Manbhawan Exim Pvt ltd 8,11,308/- 3 M/s Siddham Gems Pvt Ltd 26,50,225/- 4 M/s Radhe Krishna Gems Pvt Ltd 41,53,261 5 M/s Kaushali Impex Pvt Ltd 10,53,647/- 6 M/s Namo Diamonds Pvt Ltd 6,77,101/- 7 M/s Varshit Enterprises 1,20,223/- Interest on Loan (total) 1,02,03,318/- 4) The appellant thereafter preferred appeal before CIT (A) on 11st January 2018 against the assessment order dated 27th December 2017. 5) The Appellant has made below written submission to the learned Commissioner of Income tax (Appeal) from time to time Date of Notice Date of Compliance 23rd March, 2022 6th April 2023 16th August, 2023 21st August 2023 6) The Learned CIT (A) (NFAC) without providing opportunity of being heard even though requested multiple times vide letter dated 6th April 2022 & 21st August 2023 & also ignoring the decision given by learned CIT (A) & Hon'ble ITAT, Mumbai for AY 2013-14 in our own case, has proceeded with passing the order u/s 250 of the Income tax Act 1961 dated 24th June 2024 confirming the addition made by the learned Assessing officer. Thereby he did great injustice to your appellant as decision given in preceding year on same facts was not followed. 7) The Learned NFAC has erred in ignoring the fact that the learned A.O. erred in erroneously and hurriedly, unjustifiably coming to the adverse conclusion without relying on the decision of the learned CIT (Appeal) dated 20th June 2017 for AY 2013-14 on similar facts and circumstances in the assessee's favour. It 7 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai erred in not considering the fact that on the basis of facts and evidence on record the learned CIT(A) had directed to delete addition in respect of borrowings from same parties and had further held that appellant was entitled to deduction of interest paid to same parties. The order passed by the AO has caused great injustice to your appellant and is merely on conjectures and surmises. 8) i) The disallowance of interest paid of Rs 62,54,440/- & addition of Rs 8,90,00,000/-u/s 68 in respect of borrowings taken from below same parties in AY 2013-14 was already deleted by the learned Commissioner of Income tax (Appeals) vide order dated 20th June 2017 & same was confirmed by Hon'ble ITAT vide order dated 10th January 2020. Name of the party Amount of Interest disallowed in A.Y 2015-16 Remarks M/s Kaushali Impex Pvt Ltd 10,53,647/- Relief already given for parties in A.Y 2013-14 by Ld.CIT(A) & Hon’ble ITAT M/s Radhe Krishna Gems Pvt Ltd 41,53,261 M/s Siddham Gems Pvt Ltd 26,50,225/- M/s Divyanshi Gems Pvt Ltd 7,37,553/- M/s Manbhawan Exim Pvt ltd 8,11,308/- Total Interest 94,05,994/- ii) We also state that no new loans were taken during the year from below mentioned parties.The loan pertains to earlier years wherein interest paid was duly allowed as deduction by the learned Assessing officer during the course of earlier year Assessment proceedings. Name of the party Amount of Interest disallowed in A.Y 2015-16 Remarks Namo Diamonds Pvt Ltd 6,77,101 The Loan was taken in A.Y 2014-15 (2nd April 2013) Varshit Enterprises 1,20,223 The Loan is old loan taken in the A.Y 2010- 8 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai 11 (30th April 2009). Principle amount is already repaid. Total Interest 7,97,324 iii) The Learned assessing officer had erred in not specifically mentioning relevant reasons for addition in the Assessment order. iv) We like to rely on the judgement of Hon'ble ITAT (Mumbai) in case of ASI Industries Ltd Vs DCIT (ITA Nos 2400, 2401, 2402/M/2021) which states that rule of consistency needs to be followed by the department. The doctrine of \"Res-judicata\" when translated to English means \"a matter decided\". Simply put the doctrine predicates that no man can be tried twice for the same cause or, to put it in legal terms a matter/issue which has already been adjudicated cannot be raised again either in the same court or in a different court. This doctrine mitigates the possibility of multiple, repetitive and vexatious legal proceedings thereby avoiding unnecessary wastage of resources and strain on the legal system while also leading to a modicum of consistency in proceedings over time. In common law the doctrine of Res- judicata enables a judge in a suit, when confronted with a suit that is identical to or substantially the same as an earlier/periods one, to by applying this principle to preserve the effect of the earlier judgement. The justification for applying this doctrine lies in the desire to promote efficiency and fairness and reduce unnecessary litigation. For a defendant, this doctrine enables him by relying in the absence of any change in the underlying facts or circumstances to obtain the same judgement as in an earlier case. The rule of consistency enables stability in the entire tax assessments and appellate process. However, while it is incumbent on tax authorities to apply it in letter and spirit The order passed by the Tribunal are binding on all tax authorities functioning under the jurisdiction of the tribunal. We rely upon the Judgement of Hon'ble Supreme Court in case of UOI Vs. Kamlakshi Finance Corporation Ltd AIR 1992 SC 711 that states \"The principles of judicial discipline requires that the order 9 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department in itself an objectionable phrase and is subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent appellate court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws\". The same was duly considered by Hon'ble High Court (Madras) in case of Agarwal Warehousing & Leasing Ltd ([2002] 124 TAXMAN 440 (MP) 9) Judgement wherein information received from investigation wing cannot be taken as basis for addition u/s 68 of the Income tax Act 1961. a) Kunjal Synergies (P.) Ltd vs Deputy Commissioner of Income-tax [2024] 161 taxmann.com 672 (Kolkata - Trib.) b) Deputy Commissioner of Income-tax vs Hetal Nitin Shah [2024] 159 taxmann.com 1618 (Mumbai - Trib.) c) Navneet Agarwal vs Income-tax Officer, Ward- 35 (3), Kolkata [2018] 97 taxmann.com 76 (Kolkata - Trib.) d) Principal Commissioner of Income-tax v Bairagra Builders (P.) Ltd. [2024] 164 taxmann.com 162 (Bombay High Court) e) Santosh Khunteta vs. Income-tax Officer [2024] 163 taxmann.com 416 (Delhi Trib.) f) Shri Vasant Ramji Savla vs. ACIT in ITA No.6123/Mum/2017 g) ACIT vs. Rajesh M. Shah (HUF) in ITA No.7105/Mum/2016 h) M/s. Keynote Fincorp Limited vs. DCIT in ITA Nos. 1643 &1647/Mum/2018 i) ITO vs. Shri Nemichand Lalchand Jain in ITA No.159/Mum/2017 10 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai Further Judgments ITA No. In case of 2118/Ahd/2014 M/s Deep Darshan Properties Pvt Ltd 2160/Ahd/2014 Aajivan Computers Pvt Ltd 2116/Ahd/2014 M/s Karmveer Real Estate Pvt Ltd 2157/Ahd/2014 Dignity Securities Trading Pvt Ltd 2119/Ahd/2014 M/s Blue Hill Properties Pvt ltd j. We rely on the following judgments:- Sr. No Particulars Citation Deciding Authority I CIT Vs. Smt. Sushila Devi Khadaria 319 ITR 413 High Court of Bombay II ITO Vs. Anant Shelters (P) Ltd 51 SOT 234 ITAT Mumba III CIT Vs. Vrinder Rawlley 366 ITR 232 High Court of Punjab & Haryana IV CIT Vs. Shibganj Electric Cables P Ltd 115 ITR 408 High Court of Calcutta V ITO Vs. Deep Darshan Properties Pvt Ltd ITA No 2117 & 2118//Mum/2014 ITAT Mumbai VI Rohini bulders Vs. DCIT 76 TTJ 0521 ITAT Ahd VII DCIT Vs. M/s Manish Flur Mills Pvt Ltd ITA No. 6792/M/2016 ITAT Mumbai VII ACIT Vs. Hanuman Agarwal 40 CTR 0015 High Court of Patna 10) Failure to provide opportunity of cross examination is serious flaw CIT v. Vatican Land base (P.) Ltd. [2016] 67 taxmann.com 372 (Delhi) Smt. Mahdi Gupta v. DCIT [2006] 8 SOT 691 (MUM.) Addl. CIT vs. Miss Lata Mangeshkar [1974] 97 ITR 696 (Boom.) 11 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai Principal Commissioner of Income-tax v. Shri Pushcart Construction Co. [2023] 154 taxmann.com 22 (Gujarat) Kishinchand Chellaram Vs CIT 125 ITR 713(SC). Andaman Timber Industries vs. Commissioner of Central Excise (62 taxmann.com3) C. Vasantlal & Co. Vs. CIT 45 ITR 206 (SC) Hon'ble High Court New Delhi in the case of M/s Agson Global Pvt. Ltd. v. PCIT (2021) ITA 68/2021 & CM No. 9319/2021), CIT Vs Odeon Builders (P.) Ltd [2019] 110 taxmann.com 64 (SC 11) Principle of Natural Justice The principles of natural justice are not defined in any statute. Yet, they are accepted and enforced. In practical terms, the essential principles of natural justice are the following: ➤ Justice should not only be done but seen to be done ➤ One cannot be a judge in his own cause. ➤ No party should be condemned unheard. ➤ Impartial hearing must be extended to the person against whom a charge is framed to state his case. ➤ Final decision should be by way of a speaking order, for such an order prevents any bias or prejudice creeping into the decision. ➤ The Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd v CIT (1954) 26 ITR 775 (SC) and Chuharmal v CIT (1998) 172 ITR 250(SC) the court held that\" although strict rules of the Evidence Act do not 12 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai apply to income tax proceedings assessment cannot be made based on imagination and guesswork. The substantive and normal rule of evidence applies together with the principle of natural justice.\" ➤ The Hon'ble Supreme Court in the case of Umacharan Shaw & Bros v.CIT (1959) 37 ITR 21(SC) the Court held that suspicion, however, strong cannot take place of evidence. Your appellant therefore humbly prays that justice be given by deleting the addition made by the learned AO.) 4. On the other hand the Ld. DR appearing on behalf of the revenue relied upon the orders passed by the revenue authorities. 5. We have heard the counsels of both the parties, we have also perused the material placed on record, documents filed before us, judgments cited by both the parties and also the orders passed by the revenue authorities. From the records, we noticed that assessee is a partnership firm engaged in the business of property development and filed the return of income which was processed under Sec. 143(1) of the Act, subsequently the case was selected for scrutiny and after serving statutory notices and providing opportunity of hearing the order of assessment was passed by the AO u/s 143(3) of the Act thereby disallowing the interest of Rs. 1,02,03,318/- being paid to the 7 parites, the details of which are herein below and reduced closing work-in-progress for Rs. 15,59,04,259/-. 13 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai Sr. No Name of the party Interest Amount (Rs) claimed and included in closing work in progress 1 M/s Divyanshi Gems Pvt Ltd 7,37,553/- 2 M/s Manbhawan Exim Pvt ltd 8,11,308/- 3 M/s Siddham Gems Pvt Ltd 26,50,225/- 4 M/s Radhe Krishna Gems Pvt Ltd 41,53,261 5 M/s Kaushali Impex Pvt Ltd 10,53,647/- 6 M/s Namo Diamonds Pvt Ltd 6,77,101/- 7 M/s Varshit Enterprises 1,20,223/- Interest on Loan (total) 1,02,03,318/- 6. Aggrieved by the said order the assessee preferred appeal before the CIT(A), but the Ld. CIT(A) dismissed the appeal and upheld the addition /disallowance made by the AO. 7. Now after evaluating the records, we found that Ld. CIT(A) sustained disallowances of Rs. 1,02,03,318/-, being interest paid to the 7 parties as the assessee fail to prove genuineness of expenditure thereby sustaining reduction of closing work-in-progress. But, Ld. CIT(A) has ignored very important fact that the disallowance of interest paid of Rs. 62,54,440/- and addition of Rs. 8,90,00,000/- u/s 68 of the Act was in respect of borrowing taken from below mentioned 5 parties which are exactly the same which were there in A.Y 2013-14 and in respect of whom the additions have already been deleted by Ld. CIT(A) vide order dated 20.06.2017 and the same was also confirmed by the Coordinate Bench of ITAT vide order dated 10.01.2020, the details of those 5 parties are mentioned below: 14 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai Name of the party Amount of Interest disallowed in A.Y 2015-16 Remarks M/s Kaushali Impex Pvt Ltd 10,53,647/- Relief already given for parties in A.Y 2013-14 by Ld.CIT(A) & Hon’ble ITAT M/s Radhe Krishna Gems Pvt Ltd 41,53,261 M/s Siddham Gems Pvt Ltd 26,50,225/- M/s Divyanshi Gems Pvt Ltd 7,37,553/- M/s Manbhawan Exim Pvt ltd 8,11,308/- Total Interest 94,05,994/- 8. We also noticed that no new loan was taken during the year under consideration from the remaining two parties and that loan pertains to earlier years, wherein interest paid by the assessee was duly allowed as deduction by the AO during the course of earlier assessment proceedings, the details are which mentioned herein below: Name of the party Amount of Interest disallowed in A.Y 2015-16 Remarks Namo Diamonds Pvt Ltd 6,77,101 The loan of Rs. 68,60,000 was taken in the A.Y 2014-15 (2nd April 2013). The Principle amount of loan taken earlier was accepted in the past & hence question of disallowance of interest thereon does not arise. Varshit Enterprises 1,20,223 The loan of Rs. 60,00,000 is old loan taken in A.Y 2010-11 (30th April 2009). The Principle amount of loan taken earlier was accepted in the past & 15 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai Hence question of disallowance of interest thereon does not arise. Total Interest 7,97,324 9. Since the AO has not specifically mentioned the relevant reasons for making additions in the assessment order, therefore, the order of Ld.AO and upheld by the CIT(A) is not sustainable in the eyes of law. We further noticed that during the course of assessment proceedings several documents relating to loan creditors were submitted by the assessee which are available in the paper book submitted before the CIT(A) vide letter dated 06.04.2022 and 21.08.2023, which contains confirmation, return of income, bank statement highlighting loan taken and repaid, audited financial statement, details of TDS deducted in respect of interest expenses and also documents demonstrated that all the loan creditors are assessed to tax. Since Ld. CIT(A) has ignored the most important fact that on similar facts and circumstances the CIT(A) has already decided in favour of assessee vide order dated 20.06.2017 for A.Y 2013-14 and the appeal of the assessee has also been dismissed by the Coordinate Bench of ITAT vide order dated 10.01.2020, which goes to show that the controversy in question is squarely covered in favour of the assessee by the order of the Coordinate Bench of the ITAT with respect to 5 parties out of 7 namely M/s. Kushali Impex Pvt Ltd, M/s. Radhey Krishna Gems Pvt Ltd, M/s. Sidham Gems Pvt Ltd, M/s. Divyanshi 16 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai Gems Pvt Ltd, M/s. Manbhawan Exim Pvt Ltd as the relief has already been given by the Coordinate Bench of ITAT in respect of the same parties in A.Y 2013-14 and with regard to other two parties namely M/s. Namo Diamonds Pvt Ltd and M/s. Varshit Enterprises Pvt Ltd., no new loan was taken during the year under consideration and loan pertains to earlier years, wherein interest paid was duly allowed by the AO during the course of earlier assessment proceedings. Therefore considering the principles of consistency and judicial discipline, and while relying upon the decision of the Hon’ble Supreme Court in the case of UOI Vs. Kamlakshi Finance Corporation Ltd., AIR 1992 SC 711, the relevant portion of the said order is as under: The principles of judicial discipline requires that the order of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department - in itself an objectionable phrase - and is subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent appellate court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws”. The same was duly considered by Hon'ble High Court (Madras) in case of Agarwal Warehousing & Leasing Ltd ([2002] 124 TAXMAN 440 (MP) 10. we delete the additions made in the present case taking into consideration the order of the ITAT for A.Y 2013-14 in assessee’s own case vide order dated 10.01.2020. 11. In the result, the appeal filed by the assessee is allowed. 17 ITA No. 4092/Mum/2024 Om Shanti Housing, Mumbai Order pronounced in the open court on 13.11.2024. Sd/- Sd/- (PADMAVATHY S) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 13/11/2024 KRK, PS आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant 2. \r\u000eथ\f / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, मु\u0003बई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u000eािपत \rित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai "