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ACIT, Circle 19 (1) , New Delhi Versus Smt. Suman Jain

2016 (5) TMI 405 - ITAT DELHI

Addition on account of bogus purchase - Held that:- Since the AO has merely proceeded to make an addition of ₹ 26,86,130/- on the basis of letter dated 19.12.2011, wherein M/s. Sumit Agriculture Industries denied business transaction with Smt. Suman Jain, the same is not sustainable in the eyes of law because Smt. Suman Jain transacted with M/s. Sumit Agriculture Industries only as proprietor of M/s. Sandip Enterprises and not in her individual capacity. This fact has been got rectified by .....

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would not have been filed by M/s. Sumit Agriculture Industries. - Decided against revenue

Disallowance of interest paid on borrowed capital - CIT(A) allowed the claim - Held that:- In the instant case, when from the document produced before the AO, CIT (A) as well as in the additional evidence before the Tribunal by the assessee, it is proved that the loan amount borrowed by the assessee in individual capacity was utilized for earning profit from M/s. Sandip Enterprises, a proprietors .....

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een rightly allowed to be deducted by the CIT (A). So we find no illegality or infirmity in the finding returned by the CIT (A) and consequently, grounds determined against the revenue. - ITA No.3008/Del./2013 - Dated:- 30-3-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT and SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri A.K. Chadha, CA For The Revenue : Smt. Anima Barnwal, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, Assistant Commissioner of Income Tax, Circle 19 (1), N .....

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made by the AO. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition on account of interest paid on borrowed capital amounting to ₹ 35,43,206/- without appreciating the facts on the basis of which addition was made by the AO. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition on account of interest paid on borrowed capital amounting to ₹ 35,43,206/- by admitting ad .....

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re issued and consequently, Shri Devi Dayal Gupta, CA attended the proceedings, filed necessary details and also discussed the case. The assessee is into the business of importer, intender and trader of steel and steel bars and has declared gross profit (GP) rate of 5.52% on the total sales turnover of ₹ 37,70,07,570/- as compared to immediate preceding year s GP rate of 4.68% on the total sales turnover of ₹ 31,72,37,116/-. Consequent upon the notice issued u/s 133 (6) of the Act, M .....

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show-cause notice dated 27.12.2011 to the assessee. Finding the reply filed by the assessee not tenable, the AO treated the total purchase of ₹ 26,86,130/- as bogus purchases and made an addition of ₹ 26,86,130/-. 3. In the profit and loss account, assessee claimed profits and gains from the business and profession to the tune of ₹ 18,00,975/- after deducting interest on personal capital. On failure of the assessee to substantiate the reason for the interest paid on the borrowe .....

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have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 6. First addition made by the AO and deleted by the ld. CIT (A) vide impugned order is on account of bogus purchase to the tune of ₹ 26,86,130/-. Undisputedly, during the assessment proceedings, the AO issued notice dated 12.12.2011 u/s 133(6) of the Act to .....

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n disclosing true facts by the assessee, M/s. Sumit Agriculture Industries confirmed its business transaction with M/s. Sandip Enterprises showing ₹ 18,88,028/- recoverable as on 31.03.2009 vide letter dated 28.12.2011 lying at page 6 of the paper book. 7. During appellate proceedings, the assessee has brought on record copies of accounts in the books of M/s. Sandip Enterprises, proprietorship concern of Smt. Suman Jain showing complete detail of business transaction with M/s. Sumit Agricu .....

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with Smt. Suman Jain, the same is not sustainable in the eyes of law because Smt. Suman Jain transacted with M/s. Sumit Agriculture Industries only as proprietor of M/s. Sandip Enterprises and not in her individual capacity. This fact has been got rectified by the assessee during the appellate proceedings by producing the entire record of M/s. Sandip Enterprises referred hereinbefore. In the given circumstances, there is no question of issuance of second letter dated 28.12.2011 by M/s. Sandip E .....

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ng up the grounds no.2 & 3 for adjudication, we deem it necessary to dispose of the application filed by the assessee for leading additional evidence. Applicant/assessee, Smt. Suman Jain by moving an application under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 sought to prove on record bank proposal and sanction letter dated 10.11.2006 of Bank of India by way of additional evidence in order to prove the fact that the assessee has raised loan of ₹ 3.30 crores and ₹ 3 .....

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udice to the merits of the case. Consequently, the application for additional evidence is hereby allowed. 10. Assessee in the profit & loss account claimed the interest having been paid to the tune of ₹ 35,43,206/- which has been disallowed by the AO on the ground that the assessee could not substantiate the reasons for the interest paid on account of borrowed personal capital introduced by Smt. Suman Jain nor she has produced any supporting evidence i.e. bank statement, personal capit .....

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nt of Capital Account, Personal Loans invested through Capital Account and Bank Loans raised in the past years Year Ended Own funds Personal Loans Invested through Capital Account Total Bank loan raised form UBI (1) (2) (3) [(2)+(3)]=(4) (5) 31.03.2008 968,329.33 33,333,322.00 34,301,651.33 49,383,237.05 31.03.2009 6,988,927.64 33,163,018.25 40,151,945.89 83,082,048.34 In order to get the loan sanctioned from UBI Bank, the Appellant showed net worth of Smt. Suman Jain by showing that Smt. Suman .....

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gible for deduction? 13. Undisputedly, assessee raised the loan of ₹ 3.33 crores and ₹ 3.31 crores. Assessee claimed deduction of interest of ₹ 35,43,206/- on her individual borrowing against profit of ₹ 53,44,181/- of the proprietorship firm of M/s. Sandip Enterprises, a proprietorship concern of the assessee. 14. Undisputedly, during the assessment proceedings, the assessee produced her capital account for financial year 2008-09, datewise saving account for the assessme .....

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ting to ₹ 26,82,682/-) lying at pages 97 to 108 of the paper book. During the appellate proceedings, the assessee also produced loan account of borrowers for financial year 2008-09 lying at pages 121 to 161 of the paper book and also produced confirmation from 10 lenders lying at pages 183 to 197 of the paper book. The aforesaid relied upon documents have been duly verified and have never been disputed by the AO on any account whatsoever who has merely made the addition by returning crypti .....

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