9911796707
TMI Blog2012 (7) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year. (2) The learned CIT(A) has erred in confirming the addition of Rs. 85,7407-made by A.O. on account of deposits u/s. 68 of the I. T. Act. (3) The assessee craves for liberty to amend, modify and add any grounds of appeal or additional evidences." 2.1 Brief facts regarding the first issue till the assessment stage are noted by Ld. CIT(A) in par 2.1 of his order which is reproduced below: "2.1 The A.O noted that during the year share application money increased to Rs. 35 lacs during the year under consideration. On inquiry, it was found that the increase in share application money was in respect of six parties as under:- 1. Siddhivinayak Metal Tubes P Ltd. Rs. 9,00,000/- 2. Rushi Iron Extrusion P. Ltd. Rs. 10,00,000/- 3. Neelam Overseas P. Ltd. Rs. 10,00,000 4. Vardhaman Metal (India) Rs. 2,00,000/- 5. Padmavati Steel (India) Rs. 2,00,000/- 6. Kundan Steel Rs. 2,00,000/- Total- Rs. 35,00,000/- Letter were issued to the above parties were returned unserved with the remarks that "closed", "left", etc. Notices u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year 2003-04. The order of Ld. CIT(A) in that year is dated 29.08.2008 and the same is without considering this judgement of Hon'ble Apex Court rendered in the case of Lovely Exports (supra) and also in the case of Divine Leasing and Finance Ltd. (supra). In these two cases, it was held by the Hon'ble Apex Court that if the share application money is received by the assessee company from the alleged bogus share holders, whose names are given to the A.O. then the department is free to proceed to reopen their individual assessments in accordance with law but no addition can be made in the hands of the company who has received the share application money. In the present case, the assessee has provided to the A.O. not only the names of the shareholders but their addresses along with PAN and Bank statements etc. Hence, the assessee has discharged its primary onus and, therefore, in the light of these two judgments of Hon'ble Apex Court, the addition made by the A.O. with regard to receipt of share application money cannot be sustained. The same is deleted. Ground No.1 is allowed. 2.2 Regarding ground No.2, the brief facts are that it is noted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) [called, CIT(A)] is bad in law as well on facts on the following grounds; (1) The learned CIT(A) has erred in confirming the addition of Rs. 37,00,000/- made by A.O. u/s. 68 for increase in share application money during the year. (2) The assessee craves for liberty to amend, modify and add any grounds of appeal or additional evidences." 3.1 It was agreed by both the sides that the issue involved in the present appeal is only one i.e. regarding addition made by the A.O. in respect of receipt of share capital during this year and this issue is identical to ground No.1 in assessment year 2002-03 and hence, the same can be decided on the similar lines. In that year, we have deleted the addition as per para 2.1.4 above and hence, on the same lines, in the present year also, this addition is deleted because we find that in the present year also, the assessee has submitted all the information such as confirmation of the share applicants as well as address and PAN and their bank statement etc. as in assessment year 2002-03. In the result, this appeal of the assessee is allowed. 4. Now, we take up the assessee's appeal in I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. The A.O. issued notice u/s 133(6) to these applicants which were received unserved, therefore, the A.O. made addition of total amount of share application money received in this year of Rs. 53 lacs as well as opening balance of Rs. 50.55 lacs. In this manner, he made addition of Rs. 80.45 lacs in respect of unsecured loan and of Rs. 103.55 lacs in respect of share application money total of Rs. 184 lacs. Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) but without success and now, the assessee is in further appeal before us. 4.1.3 It is submitted by the Ld. A.R. before us that there was opening balance of share application money of Rs. 72 lacs received during he assessment year 2002-03 and 2003-04 and there is further receipt of Rs. 112 lacs during the present year out of which Rs. 31.55 lacs was regarding share application money and Rs. 80.45 lacs was for unsecured loan. It was submitted that in respect of receipt of share application money, no addition is justified and it was agreed by both the sides that this issue is identical to ground No.1 raised in assessment year 2002-03 and 2003-04 and the same can be decided on similar lines because confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee before the A.O. and also produced before us in the paper book whereas, the A.O. has not brought on record any adverse material in spite of having so much material on record and his only basis is that the notice issued to these persons u/s 133(6) had come back unserved and the assessee could not produce these persons. When so much material are available on record, the A.O. could have made independent inquiry from the bank as well as form the A.O. of the creditors and without doing so and without bringing any adverse material on record, addition made cannot be sustained. The same is, therefore, deleted. Grounds No.1 & 2 of the assessee's appeal are allowed. 4.2 Ground No.3 is as under: "(3) The learned CIT(A) has erred in confirming the addition of Rs. 2,12,112/- made by A.O, in respect of repairs to plant & machinery." 4.2.1 Brief facts of the case are that it is noted by the A.O. in the assessment order that assessee has claimed repair expenses of Rs. 3,34,700/- whereas, in the immediately preceding year, such claim was only Rs. 1,22,588/-. The A.O. asked the assessee to explain the increase in the expenditure of Rs. 2,12,112/-. The A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only Rs. 56,426/-. The A.O. asked the assessee to explain huge increase in the expenditure of Rs. 1,52,198/-. The A.O. has noted that the assessee has failed to offer the reasons for such increase and the A.O. disallowed the same. Being aggrieved, the assessee carried the matter in appeal before ld. CIT(A) but without success and now, the assessee is in further appeal before us. 4.3.2 It is submitted by the Ld. A.R. before us that the quantitative details of production for the present year and preceding year are available on page 48 of the paper book and form the same, it can be seen that the production in the present year is 926 units as against 526 units in the preceding year. It was submitted that when there is increase in the production quantity, increase in factory expenses is reasonable and justified. 4.3.3 Ld. D.R. supported the orders of the authorities below. 4.3.4 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that as per the P & L account for the present year available on page 55 of the paper book containing figures of preceding year also, the sales of the present year is Rs. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee carried the matter in appeal before Ld. CIT(A) who has held that a certificate of C.A. was produced before him regarding payment of interest as per which, Rs. 4 lacs was paid by the assessee towards interest accrued up to the due date of filing of return of income and to this extent, he deleted the disallowance and confirmed the balance disallowance of Rs. 4,48,715/-. Now, the assessee is in appeal before us for part disallowance confirmed by Ld. CIT(A). 4.4.2 Before us, it was submitted by the Ld. A.R. of the assessee that this was also submitted by the assessee before Ld. CIT(A) that disallowable portion of interest accrued u/s 43B of Rs. 4,03,880/- has already been shown in the tax audit repot and the same was already added back by the assessee in the computation of income and, therefore, this disallowance made by the A.O. and confirmed by Ld. CIT(A) amounts to double disallowance. It was submitted that this issue may be restored back to the file of the A.O. for a fresh decision after verifying this aspect. 4.4.3 Ld. D.R. of the revenue supported the order of Ld. CIT(A). 4.4.4 We have considered the rival submissions, perused the material on record and have gone th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the orders of authorities below. 4.5.4 We have considered the rival submissions, perused the material on record and have gone through the order of authorities below and the judgement cited by the Ld. A.R. of the assessee. We find that there is no dispute about the fact that such advances are given by the assessee to some parties and the assessee could not explain the purpose of giving such advances and the A.O. has made addition of Rs. 21,533/- on account of interest on such advance @ 10% of the amount of advance. In the light of these facts, we examine the applicability of the judgment of Hon'ble Gauhati High Court cited by the Ld. A.R. In that case, it was held by the Hon'ble Gauhati High Court that when there is no finding to the effect that actually the loan had been granted on interest or that interest has actually been collected and collection of interest was not reflected in the account, no addition can be made on account of notional interest. In the present case also, there is no allegation of the A.O. that such advances were granted on interest or the interest was received on such advances and, therefore, in the light of this judgment of Hon'ble Gauhati High Court, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as under: "The order of learned Commissioner of Income-tax(Appeals) [called, CIT(A)] is bad in law as well on facts on the following grounds; (1) The learned CIT(A) has erred in confirming addition of Rs. 1,38,00,000/- made by A.O. in respect of unsecured loans." 5.1 It was submitted by the Ld. A.R. that unsecured loan was received in the present year from three parties and from all these three parties, assessee has furnished confirmation as well as addresses and PAN and also submitted their bank statements and, therefore, the assessee has fulfilled all the three ingredients i.e. identity and creditworthiness of loan creditors as well as genuineness of transaction and, therefore, no addition is justified. 5.1.1 Ld. D.R. of the revenue supported the orders of authorities below. 5.1.2 We have considered the rival submissions, perused the material on record an have gone through the orders of authorities below. We find that from all the three loan creditors, assessee has furnished loan confirmation containing address and PAN and also submitted bank statements of these loan creditors and there is no cash deposit in these bank accounts of the loan credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
