M/s. Goodwill Auto Agencies, Jaipur V. Assistant Commissioner Of Income Tax, Circle-5, Jaipur

MA 47/JPR/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0642 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 18-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA CIT A
• Section: 254(2)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM MA. NO. 47/JP/2020 (ARISING OUT OF ITA NO. 122/JP/2019) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15 M/S GOODWILL AUTO AGENCIES, S-3, JANTA COLONY, JAIPUR. CUKE VS. THE ACIT, CIRCILE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFG 4705 F VIHYKFKHZ@ AP PE LLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VINOD KUMAR GUPTA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A.S. NEHRA (ADDL.CIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 18/12/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 22/12/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE PRESENT MISC. APPLICATION HAS BEEN FILED BY THE ASSESSEE AGAINST THE DECISION OF THE CO-ORDINATE BENCH IN ITA NO. 122/JP /2019 DATED 13.03.2020. 2. DURING THE COURSE OF HEARING, THE LD AR SUBMITTE D THAT THERE ARE CERTAIN MISTAKES APPARENT FROM THE FACE OF THE RECO RD WHICH HAS RESULTED IN AN ALTOGETHER DIFFERENT DECISION RENDER ED BY THE TRIBUNAL AND REQUESTED THAT THE SAME MAY BE CONSIDERED AND IN TH E INTEREST OF MA NO. 47/JP/2020 M/S GOODWILL AUTO AGENCIES. VS. ACIT 2 JUSTICE, THE ORDER SO PASSED MAY BE RECALLED AND TH E MATTER BE HEARD AFRESH. OUR REFERENCE WAS DRAWN TO MISTAKES AS STA TED IN MISC. PETITION THE CONTENTS THEREOF READ AS UNDER: 1. THAT IN THIS CASE THE APPEAL WAS DECIDED BY TH IS HONBLE ITAT VIDE COMBINED ORDER FOR ITA NO.121 & 122/JP/2019 DA TED 13.03.2020. COPY OF THE SAME IS ENCLOSED HEREWITH A ND MARKED AS ANNEXURE A. BOTH THE APPEALS WERE LISTED FO R HEARING ON SAME DATE I.E. 27.02.2020 AND COMMON PAPER BOOKS AN D COMMON CASE LAWS PAPER BOOKS WERE FILED FOR BOTH TH E APPEALS. THIS MA IS LIMITED TO THE ORDER ARISING OUT OF ITA NO.122/JPR/2019 FOR AY 2014-15. 2. THAT HOWEVER, IN THE SAID ORDER, CERTAIN GLARING AND PATENT MISTAKES APPARENT FROM THE FACE OF THE RECORD WERE NOTICED, RESULTING IN AN ALTOGETHER DIFFERENT DECISION WHICH DECISION, WOULD NOT HAVE BEEN THE SAME, HAD THESE MISTAKES WERE NOT THERE. THE SAME ARE BEING SUBMITTED HEREIN BELOW. 3. MISTAKE 1: DURING THE COURSE OF HEARING BEFORE H ONBLE ITAT, THE ASSESSEE APPLICANT SUBMITTED THAT ASSESSE E IS HAVING SUFFICIENT INTEREST FREE FUNDS AVAILABLE IN THE FOR M OF PARTNERS CAPITAL ACCOUNT AND INTEREST FREE LOANS TO THE EXTE NT OF 1.47 CRORES, COMING FROM EARLIER YEARS. HONBLE ITAT HAS RECORDED THE FINDING FOR AY 2013-14 (IN ITA NO.121/JP/2019) AND ACCEPTED THE AVAILABILITY OF SUFFICIENT INTEREST FREE FUNDS. FOR THE SUBJECTED ASSESSMENT YEAR (AY 2014-15) HONBLE ITAT RECORDED ITS FINDING AT PAGE-5, PARA-7 AS UNDER: FOR THE ASSESSMENT YEAR 2014-15, ALL OTHER FACTS R EMAINED THE SAME EXCEPT THE CHANGE OF POLICY OF PARTNERSHIP FIR M REGARDING PAYMENT OF INTEREST TO THE PARTNERS ON CAPITAL ACCO UNT DESPITE RECORDING THIS FINDING, THE DISALLOWANCE OF INTEREST WAS CONFIRMED WITHOUT CONSIDERING THE AVAILABILITY OF I NTEREST FREE LOANS TO THE EXTENT OF RS.1,47,33,308/. MA NO. 47/JP/2020 M/S GOODWILL AUTO AGENCIES. VS. ACIT 3 4. MISTAKE 2: 4.1 IT IS PERTINENT OF NOTE THAT HONBLE ITAT DECID ED THE APPEAL IN ITA NO.121/JP/2019, IN THE FAVOR OF ASSESSEE ADMITT ING THAT THE AMOUNT OF RS.38,15,680/- SHOWN AS INTEREST FREE ADV ANCE TO VARIOUS PARTIES IS THE BALANCE BROUGHT FORWARD FROM THE EARLIER YEAR, THEREFORE, NO FRESH INTEREST FREE ADVANCES WE RE GIVEN DURING THE YEAR UNDER CONSIDERATION. 4.2 DURING THE COURSE OF HEARING BEFORE THE HONBLE ITAT, THE ASSESSEE APPLICANT SPE CIFICALLY SUBMITTED THAT THE OPENING BALANCE OF LOANS AND ADV ANCES WERE RS.38,15,680.78/-. DURING THE YEAR UNDER CONSIDERAT ION, ONE LEDGER ACCOUNT NAMELY M/S GOODWILL AGENCIES, WHIC H WAS IN THE NATURE OF BUSINESS ACCOUNT WAS RE-CLASSIFIED UNDER THE HEAD LOANS AND ADVANCES AND DUE TO THIS THE AMOUNT OF LOANS AN D ADVANCES GOT INCREASED AND APPEARED THAT FRESH LOANS OF RS.1 7,65,268/- WERE GIVEN BUT IN EFFECT THERE WAS NO OUTGOING OF F UNDS AND IT WAS A MERE RE-CLASSIFICATION OF ACCOUNTS. IN FACT, INSTEAD OF GIVING ANY FRESH LOANS THE ASSESSEE RECEIVED REPAYMENT OF RS.16,46,253/-. DUE TO RECLASSIFICATION ONLY THE CL OSING BALANCE OF LOANS AND ADVANCES GOT INCREASED (RS.38,15,680.78 ( OPENING BALANCE) +RS.34,11,520.36 (OPENING BALANCE OF RECLA SSIFIED LEDGER ADDED UNDER THIS HEAD) RS.16,46,253 (REPAYM ENT RECEIVED DURING THE YEAR). THE ASSESSEE APPLICANT A LSO SUBMITTED THE GROUP SUMMARY AND LOANS AND ADVANCES CONTAINING PARTY WISE DETAILS AND THESE FACTS AND SUBMISSIONS WERE A LSO SUBMITTED BEFORE THE LOWER AUTHORITIES. 4.3 THUS, THE FACTUAL POSITION AVAILABLE IN THE CAS E IN HAND WAS SIMILAR TO EARLIER YEAR AND EVEN THOUGH THE SUBMISS IONS MADE VIDE PARA 3.1 TO 3.5 AT PAGE 6 TO 9 HONBLE ITAT A PPEARS TO HAVE COMPLETELY ESCAPED THE KIND ATTENTION OF HONBLE IT AT. 5. MISTAKE 3: 5.1 THE CONTENTION OF THE ASSESSEE WITH REGARDS TO THE AVAILABILITY OF INTEREST FREE FUNDS IN THE FORM OF PARTNERS CAPITAL MA NO. 47/JP/2020 M/S GOODWILL AUTO AGENCIES. VS. ACIT 4 ACCOUNT, WAS NOT APPRECIATED BY THE HONBLE BENCH B Y RECORDING ITS FINDING, AS UNDER (PAGE-5, PARA-7 OF ORDER): 7. FOR THE ASSESSMENT YEAR 2014-15, ALL OTHER FACT S REMAINED THE SAME EXCEPT THE CHANGE OF POLICY OF THE PARTNERSHIP FIRM REGARDING PAYMENT OF INTEREST TO THE PARTNERS ON TH E CAPITAL ACCOUNT. THEREFORE, TO THE EXTENT OF THE PARTNERS CAPITAL, THE SAME WOULD NOT BE CONSIDERED AS NON INTEREST BEARIN G FUND. LD.A/R HAS POINTED OUT THAT EVEN THE PROFIT OF THE ASSESSEE FIRM FOR THE YEAR IS MORE THAN THE SAID AMOUNT. WE DO NO T FIND ANY SUBSTANCE IN THIS CONTENTION AS THE PROFIT OF THE P ARTNERSHIP FIRM CANNOT BE REGARDED AS THE FUNDS AVAILABLE WITH THE PARTNERSHIP FIRM AS IT HAS TO BE SHARED BETWEEN THE PARTNERS AS PER THE PROFIT SHARING RATIO. ONCE THE PARTNERS CAPITAL BECOMES A N INTEREST BEARING FUND, THEN THE SAID CONTENTION OF THE ASSES SEE CAN NOT BE ACCEPTED AND TO THAT EXTENT THE NON INTEREST BEARIN G FUNDS OF THE ASSESSEE HAS TO BE CONSIDERED EXCLUDING PARTNERS C APITAL. THEREFORE, THE FACTS FOR THE ASSESSMENT YEAR 2014-1 5 ARE DISTINGUISHABLE FROM THE PRECEDING YEAR IN VIEW OF THE CHANGE OF POLICY OF THE ASSESSEE FIRM TO PAY THE INTEREST ON PARTNERS CAPITAL. ACCORDINGLY, IN THESE FACTS AND CIRCUMSTANCES, THE DISALLOWANCE OF INTEREST MADE BY THE AO OF RS.8,37,142/- FOR THE AS SESSMENT YEAR 2014-15 IS UPHELD. 5.2 BEFORE THE HONBLE ITAT, IN THE WRITTEN SUBMIS SION, IT WAS SPECIFICALLY SUBMITTED THAT ALTHOUGH THE FIRM IS PA YING INTEREST TO THE PARTNERS BUT THE SAME IS ON FIXED CAPITAL BALAN CE ONLY WHICH STOOD AT RS.1,50,00,000/- AND REMAINING CAPITAL OF RS.1,69,40,266/- IS INTEREST FREE AND AVAILABLE TO USE FOR GIVING INTEREST FREE ADVANCES AND OTHER BUSINESS PURPOSES. WHILE DECIDING THE APPEAL FOR PRECEDING ASSESSMENT YEAR, THE HONBLE ITAT ADMITTED THE AVAILABILITY OF FUNDS IF PARTNERS CAPITAL IS NON INTEREST BEARING BY HOLDING AS UNDER:- WE FURTHER NOTE THAT THE ASSESSEE HAS NOT PAID THE INTEREST ON THE PARTNERS CAPITAL UPTO 2013-14 AND, THEREFORE, THE BALANCE IN MA NO. 47/JP/2020 M/S GOODWILL AUTO AGENCIES. VS. ACIT 5 THE PARTNERS CAPITAL ACCOUNT WOULD BE TREATED AS N ON INTEREST BEARING FUNDS OF THE ASSESSEE FIRM HONBLE ITAT HAS APPRECIATED THE FACT THAT IN THE S UBJECTED YEAR THE ASSESSEE PAID INTEREST ON PARTNERS CAPITAL BUT THE INTEREST WAS PAID ON FIXED CAPITAL OF RS.1,50,00,000/- ONLY AND REMAINING CAPITAL WAS INTEREST FREE . THE SUBMISSIONS EVEN TH OUGH MADE VIDE PARA 1.3 PG. 3 OF THE WRITTEN SUBMISSION FILED BEFORE HONBLE ITAT APPEARS TO HAVE COMPLETELY ESCAPED THE KIND AT TENTION OF HONBLE ITAT. 6. MISTAKE 4: 6.1 THE ASSESSEE APPLICANT CITED CERTAIN DECISIONS BUT, THE HONBLE ITAT DID NOT CONSIDER THOSE DECISIONS BY H OLDING (AT PG. 5 BOTTOM) AS UNDER:- THOUGH THE LD.A/R OF THE ASSESSEE HAS REFERRED VA RIOUS DECISIONS OF HONBLE HIGH COURTS, HOWEVER, NEITHER AN PROPER CITATION IS REFERRED NOR THE COPIES OF THE SAME ARE FILED BEFORE US. THEREFORE, IN THE ABSENCE OF CITATION OF THOSE DECI SIONS AS WELL AS THE COPIES, IT WAS NOT POSSIBLE TO CONSIDER THOSE D ECISIONS MERELY REFERRED BY THE LD.A/R OF THE ASSESSEE. 6.2 THUS, IT APPEARS THAT THE ENTIRE FINDINGS RECOR DED BY THE HONBLE ITAT, WITH GREAT RESPECT, DOES NOT COME OUT AFTER CONSIDERING THE VARIOUS DECISIONS CITED, AS THE HON BLE BENCH COULD NOT FIND THE COPIES OF THE SAME. FIRSTLY, THE INCONVENIENCE CAUSED IS REGRETTED. THE ASSESSEE SUBMITTED THE COM MON CASE LAWS PAPER BOOKS FOR BOTH THE APPEALS AS BOTH THE A PPEALS WERE LISTED FOR HEARING ON THE SAME DAY, COMMON FACTS WE RE INVOLVED AND A COMBINED ORDER HAS BEEN PASSED BY THE HONBLE ITAT. WE ARE SUBMITTING HERE WITH THE COPIES OF ALL THE DECI SIONS CITED AND RELIED UPON BY THE ASSESSEE AND THE RATIO LAID IN T HOSE CASES, KINDLY BE APPLIED ON THE FACTS OF THE PRESENT CASE. AS THE CASE OF ASSESSEE IS COVERED BY DECISION OF HONBLE KARNATAK A HC IN THE CASE OF CIT VS SRIDEVE ENTERPRISES (COMBINED CASE L AWS PAGE MA NO. 47/JP/2020 M/S GOODWILL AUTO AGENCIES. VS. ACIT 6 NO.30) AND VARIOUS OTHER CASE LAWS CITED THEREFORE IT IS REQUESTED THAT THE APPELLANT KINDLY NOT BE DEPRIVED THE BENEF IT OF THE CITED JUDGMENTS. 7. THESE MISTAKES HAVE SUBSTANTIALLY AFFECTED THE CONCLUSION DRAWN BY THE HONBLE ITAT WHICH, IF NOT COMMITTED, MIGHT HAVE CHANGED THE ULTIMATE CONCLUSION BUT FOR THIS REASON . THE COMMITMENT OF THESE PATENT MISTAKES HAVE RESULTED I N A GREAT MISCARRIAGE OF JUSTICE AND SERIOUSLY ADVERSELY AFFE CTED AND HAVE PREJUDICED THE INTEREST OF THE ASSESSE. 8. ALL THE ABOVE MISTAKES ARE APPARENT, GLARING AN D PATENT HENCE, REQUIRE A SUITABLE RECTIFICATION U/S 254(2) OF THE ACT. 9. AN AFFIDAVIT OF THE APPELLANT IN SUPPORT OF THE CONTENTION IS ENCLOSED HEREWITH AND MARKED AS ANNEXURE 2. 10. A CHALLAN OF RS.50/- SHOWING PAYMENT TOWARDS T HE FEE PRESCRIBED IS ENCLOSED HEREWITH. 3. THE LD. DR IS HEARD WHO HAS OPPOSED THE MISCELLA NEOUS APPLICATIONS FILED BY THE ASSESSEE AND SUPPORTED TH E ORDER AND FINDINGS OF THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY T HE COORDINATE BENCH. CONSIDERING THE VARIOUS MISTAKES POINTED OUT BY THE LD AR, WE FIND THAT THESE FACTUAL MATTERS WHERE CONSIDERED WILL HAVE A BEARING ON THE FINAL OUTCOME AND FINDINGS OF THE COORDINATE BENCH AND TH EREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER SO PASSED BY THE COORDINATE BENCH BE RECALLED AND HEARD AFRESH. THE ORDER THUS PASSED B Y THE COORDINATE MA NO. 47/JP/2020 M/S GOODWILL AUTO AGENCIES. VS. ACIT 7 BENCH IS HEREBY RECALLED FOR FRESH HEARING. REGIST RY IS DIRECTED TO LIST THE MATTER IN DUE COURSE. IN THE RESULT, MISC. APPLICATION FILED BY THE ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/12/2020. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/12/2020. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S GOODWILL AUTO AGENCIES, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { MA NO. 47/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR