RAMANLAL VITHALDAS AND CO., V. ADDL CIT RG 14(1),

MA 544/MUM/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0981 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 22-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PRAVIN SANGHVI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI .. , ! '#$ % % % % & '( , ) '#$ '* BEFORE SHRI P.M. JAGTAP, AM AND SHRI. SHRI AMIT SHU KA, JM +%+% % #, 544 /MUM/2012 ARISING OUT OF ITA NO. 5149/MUM/2009 ( ), / %0/ ), / %0/ ), / %0/ ), / %0/ / / / / ASSESSMENT YEAR : 2006-07) +%+% % #, 545 /MUM/2012 ARISING OUT OF ITA NO. 5150/MUM/2010 ( ), / %0/ ), / %0/ ), / %0/ ), / %0/ / / / / ASSESSMENT YEAR : 2007-08) M/S RAMANLAL VITHALDAS & CO., CORNER OF MIRCHI GALI, SHEIKH MEMON STREET, MUMBAI 400 002. , , , , / VS. ADDL.COMMISSIONER OF INCOME-TAX, RANGE 14(1), 2 ND FLOOR, EARNESH HOUSE, NARIMAN POINT, MUMBAI- 21. $2 ! './ PAN : AAAFR1209E ( 23 / // / APPELLANT ) .. ( 4523 / RESPONDENT ) 23 6 7 ' / APPLICANT BY : SHRI PRAVIN SANGHVI 4523 6 7 ' / RESPONDENT BY : MS. NEERAJA PRADHAN ',% 6 ! / // / DATE OF HEARING : 23-8-13 890 6 ! / DATE OF PRONOUNCEMENT : 30-8-13 # ' / O R D E R PER P.M. JAGTAP, A.M . : .. , ! '#$ BY THESE TWO MISC. APPLICATIONS, THE ASSESSEE IS SE EKING RECTIFICATION OF THE MISTAKES ALLEGED TO HAVE CREPT IN THE ORDER OF THE TRIBUNAL DATED 15-06-2012 PASSED IN ITA NO. 5149/MUM/2009 AND ITA NO. 5450/MUM/2010 FOR ASSESSMENT YEARS 2006-07 AND 2007-08. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE FIRST MISTAKE WHICH IS ALLE GED TO HAVE CREPT IN THE ORDER OF THE MA 544 & 545/MUM/2012 2 TRIBUNAL IN BOTH THE YEARS AS MENTIONED IN THE PRES ENT MISC. APPLICATIONS FILED BY THE ASSESSEE AND FURTHER REITERATED BY ITS LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US IS THAT THE FOLLOWING GROUNDS RAISED IN T HE APPEALS FILED BEFORE THE TRIBUNAL HAVE NOT BEEN CONSIDERED AND DECIDED BY THE TRIBUNA L:- IN DISALLOWING INTEREST AT 12% IN RESPECT OF INTERE ST FREE ADVANCES GIVEN WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE PURPOSES FOR WHICH SUCH ADVANCES WERE GIVEN AND WITHOUT APPRECIATING THAT T HESE WERE GIVEN FOR FURTHERING OF BUSINESS INTEREST. IN NOT APPRECIATING THAT SOME ADVANCES WERE GIVEN I N EARLIER YEARS AND REPRESENTED STICKY ADVANCES WHERE INTEREST WAS NOT RECOVERABLE. 3. IN THIS REGARD, IT IS NOTED THAT THE ISSUE RELAT ING TO DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF INTER EST EXPENDITURE WAS RAISED BY THE ASSESSEE IN THE RELEVANT GROUNDS OF ITS APPEALS AND THE SAME WAS DECIDED BY THE TRIBUNAL AFTER NARRATING THE RELEVANT FACTS IN PARA 5 OF ITS ORDER AS UNDER:- WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON T HIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. COUNSEL FO R THE ASSESSEE HAS PLACED ON RECORD A COPY OF BALANCE-SHEET OF THE ASSESSEE AS O N 31ST MARCH, 2006 AT PAGE NO.17 OF HIS PAPER BOOK AND PERUSAL OF THE SAME SHO WS THAT ALTHOUGH OWN FUNDS IN THE FORM OF PARTNERS CAPITAL TO THE EXTENT OF R S. 4,27,17,913/- WERE AVAILABLE WITH THE ASSESSEE AT THE RELEVANT TIME, INTEREST TH EREON AMOUNTING TO RS. 45,20,113/- WAS PAID AND CLAIMED AS EXPENDITURE BY THE ASSESSEE. THE REMAINING FUNDS AVAILABLE WITH THE ASSESSEE WERE IN THE FORM OF SECURED AND UNSECURED LOANS AND IT IS NOT CLEAR FROM THE MATERIAL PLACED BEFORE US AS TO WHETHER ANY SUCH LOAN FUNDS AVAILABLE WITH THE ASSESSEE WERE IN TEREST FREE SO AS TO SAY THAT INTEREST FREE ADVANCES WERE GIVEN OUT OF SUCH INTER EST FREE FUNDS AS CLAIMED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AS WELL A S BEFORE US. WE, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO VERIFY WHETHER SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE WITH THE ASSESSEE AT THE RELEVANT TI ME TO GIVE INTEREST FREE ADVANCES AND- TO DECIDE THIS ISSUE AFRESH ON THE BA SIS OF SUCH VERIFICATION. GROUND NO.1 & 2 ARE ACCORDINGLY TREATED AS ALLOWED FOR THE STATISTICAL PURPOSE. 4. AS OBSERVED FROM THE NOTINGS MADE IN THE LOG BO OK AT THE TIME OF HEARING OF THE APPEAL OF THE ASSESSEE, THE CONTENTIONS RAISED ON B EHALF OF THE ASSESSEE OF HAVING GIVEN THE RELEVANT ADVANCES FOR SOME BUSINESS PURPOSE WAS NOT SUPPORTED BY ANY EVIDENCE. SIMILARLY, WHAT WAS RELEVANT FOR THE PURPOSE OF DEC IDING THE ISSUE RELATING TO DISALLOWANCE OF INTEREST WAS TO SEE THE FUND FLOW P OSITION OF THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION TO ASCERTAIN WHETHER THE INTERE ST FREE ADVANCES FOR NON-BUSINESS PURPOSE WERE GIVEN OUT OF INTEREST FREE FUNDS AVAIL ABLE WITH THE ASSESSEE AT THE RELEVANT MA 544 & 545/MUM/2012 3 TIME AND NOT THE POSITION OF FUND FLOW AS WAS EXIST ED IN THE EARLIER YEAR. ACCORDINGLY THE MATTER WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE A.O. WITH A DIRECTION TO VERIFY THIS POSITION AND DECIDE THE ISSUE AFRESH ON THE BA SIS OF SUCH VERIFICATION. KEEPING IN VIEW THIS POSITION CLEARLY EMERGING FROM THE RELEVA NT RECORD, WE ARE OF THE VIEW THAT ALL THE ISSUES RAISED BY THE ASSESSEE IN GROUND NO. 1 & 2 IN BOTH THE YEARS WERE PROPERLY CONSIDERED AND DECIDED BY THE TRIBUNAL AND THERE IS NO MISTAKE ON THIS COUNT IN THE ORDER OF THE TRIBUNAL AS ALLEGED BY THE ASSESSEE IN THE PRESENT MISC. APPLICATIONS. 5. AS REGARDS THE SECOND MISTAKE ALLEGEDLY POINTED OUT BY THE ASSESSEE IN THE PRESENT MISC. APPLICATIONS THAT THE AFFIDAVIT FILED BY THE ASSESSEE AS PER THE DIRECTION OF THE TRIBUNAL TO THE EFFECT THAT LOAN CONFIRMATION F ROM THE SIX CREDITORS HAD BEEN FILED BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS HAS NOT BEEN CONSIDERED BY THE TRIBUNAL WHILE DECIDING THE ISSUE IN GROUND NO. 9, IT IS OBSERVED THAT THE ISSUE RAISED IN GROUND NO. 9 OF THE ASSESSEES APPEAL WAS DECIDE D BY THE TRIBUNAL VIDE PARA 19 OF ITS ORDER WHICH READS AS UNDER:- 19. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. ALTHOUGH T HE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT CONFIRMATIONS OF ALL THE 15 LOAN CREDITORS WERE FILED BY THE ASSESSEE DURING THE COURSE OF ASS ESSMENT PROCEEDINGS BEFORE THE A.O., IT IS OBSERVED THAT A SPECIFIC FINDING HA S BEEN GIVEN BY THE A.O. IN THE ASSESSMENT ORDER THAT CONFIRMATIONS OF SIX LOAN CRE DITORS NAMELY GAMANLAL V. MEHTA, K.N. DARYANANI, MONISH K. CHHABARIA, SRICHAN D A. GULANI, UGAM LODHA & VIMLA S. GULANI WERE NOT FILED BY THE ASSES SEE. SINCE THE SUBMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US IS CONTRARY TO THE FINDING CATEGORICALLY RECORDED BY THE A.O. IN THE ASSESSMEN T ORDER, HE WAS DIRECTED BY US TO FILE AN AFFIDAVIT AFFIRMING ON OATH THAT CONF IRMATIONS OF THE SAID SIX CREDITORS WERE FILED BY THE ASSESSEE BEFORE THE A.O . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. HE, HOWEVER, HAS FAILED TO FILE SUCH AN AFFIDAVIT. AS REGARDS CONFIRMATIONS OF THE REMAINING NINE CREDITO RS FILED BY THE ASSESSEE, A PERUSAL OF THE COPIES OF THE SAID CONFIRMATIONS PLA CED IN THE ASSESSEES PAPER BOOK SHOWS THAT THE RELEVANT INFORMATION SUCH AS, P ERMANENT ACCOUNT NUMBERS, ASSESSMENT DETAILS, THE OCCUPATION AND SOURCE OF IN COME OF THE CONCERNED LOAN CREDITORS WAS NOT CONTAINED IN THE SAID CONFIRMATIO NS. IN SOME OF THE CONFIRMATIONS, IT IS MENTIONED THAT THE CONCERNED L OAN CREDITORS ARE NOT ASSESSABLE TO INCOME-TAX. IN SUCH A SITUATION, THE ONUS IN OUR OPINION WAS ON THE ASSESSEE TO ESTABLISH THE CAPACITY OF THE CONCERNED CREDITORS BY FILING THE RELEVANT DOCUMENTARY EVIDENCE SHOWING THEIR SOURCE OF INCOME, AVAILABILITY OF FUNDS AT THE RELEVANT TIME ETC. AND SINCE THE ASSES SEE HAS FAILED TO DO SO, WE ARE OF THE VIEW THAT THE PRIMARY ONUS THAT LAY ON THE A SSESSEE TO ESTABLISH THE CAPACITY OF THE CONCERNED CREDITORS TO GIVE THE LOA NS AS ALSO THE GENUINENESS OF THE RELEVANT TRANSACTIONS HAS NOT BEEN DISCHARGED S ATISFACTORILY IN TERMS OF MA 544 & 545/MUM/2012 4 SEC.68. WE, THEREFORE, CONFIRM THE ADDITION MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT (A) U/S.68 AS ALSO THE DIS ALLOWANCE MADE ON ACCOUNT OF INTEREST PAID ON SUCH LOANS, WHICH ARE TREATED AS U NEXPLAINED CASH CREDITS. GROUND NO.9 OF THE ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. 6. AS NOTED BY THE TRIBUNAL IN PARA 19, THE AFFIDAV IT AS DIRECTED BY THE TRIBUNAL WAS NOT FILED BY THE ASSESSEE AND ALTHOUGH THE ASSESSEE HAS NOW FILED A COPY OF LETTER ENCLOSING THE SAID AFFIDAVIT DULY ACKNOWLEDGED BY T HE DISPATCH SECTION OF THE TRIBUNAL ON 27-4-12, THE SAID AFFIDAVIT IS NOT AVAILABLE IN THE CASE RECORDS EVEN NOW. IN THE ABSENCE OF THE SAID AFFIDAVIT AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THERE IS A MISTAKE APPARENT FROM RECORD I N THE ORDER OF THE TRIBUNAL IN NOT CONSIDERING THE SAID AFFIDAVIT. MOREOVER, A PERUSA L OF THE COPY OF THE SAID AFFIDAVIT NOW PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSE E SHOWS THAT THE CLAIM OF THE ASSESSEE OF HAVING FILED THE CONFIRMATIONS OF SIX CREDITORS DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ACCOUNTANT OF THE ASSESSEE IS OU GHT TO BE SUPPORTED BY THE AFFIDAVIT FILED BY THE PARTNER OF THE ASSESSEE AND NOT BY THE AFFIDAVIT FILED BY THE SAID ACCOUNTANT. IN OUR OPINION, THE SAID AFFIDAVIT FILED BY THE PAR TNER OF THE ASSESSEE WHO WAS NOT PRESENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THEREFORE CANNOT BE ASSIGNED ANY EVIDENTIARY VALUE ESPECIALLY WHEN THERE WAS A CLEAR -CUT FINDING RECORDED BY THE A.O. THAT THE CONFIRMATIONS OF THE SIX CREDITORS WERE NO T FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE, THEREFORE, FI ND NO MERIT IN THE MISC. APPLICATIONS FILED BY THE ASSESSEE AND DISMISS THE SAME. 7. IN THE RESULT, THE MISS. APPLICATIONS F ILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUG. 2013. . # ' 6 890 ! :#,; 30-8-13 9 6 SD/- SD/- ( AMIT SHUKLA ) ( P.M. JAGTAP ) ! '#$ / JUDICIAL MEMBER ) '#$ / ACCOUNTANT MEMBER MUMBAI ; :#, DATED 30-8-13 %.),.'./ RK , SR. PS MA 544 & 545/MUM/2012 5 # ' 6 4)&+ H +0 # ' 6 4)&+ H +0 # ' 6 4)&+ H +0 # ' 6 4)&+ H +0/ COPY OF THE ORDER FORWARDED TO : 1. 23 / THE APPELLANT 2. 4523 / THE RESPONDENT. 3. I () / THE CIT(A)- CONCERNED, MUMBAI 4. I / CIT CONCERNED, MUMBAI 5. +%L 4)), , , / DR, ITAT, MUMBAI D BENCH 6. / M / GUARD FILE. # ',' # ',' # ',' # ',' / BY ORDER, '5+ 4) //TRUE COPY// N N N N/ // /'O 'O 'O 'O ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI