Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (11) TMI 531 - ITAT AHMEDABAD

2016 (11) TMI 531 - ITAT AHMEDABAD - TMI - Addition as unexplained cash credits - addition as interest expenditure on the aforementioned cash credits - Held that:- A.O. had made two additions which were not there in the first assessment order. Therefore, the assessment order to this extent is not as per the directions of the Tribunal and these two additions deserve to be deleted. Considering the facts in totality, as stood at the time of original assessment stage qua the directions of the Tribun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y apply on the facts of the case wherein the Hon'ble High Court has held that where there is a mixture of own funds and loan funds, then the presumption is that the interest free advances have been made out of own funds.Advances were made for business purposes. We set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition - Unexplained cash credits addition - Held that:- If the transaction is done by account payee cheque then the identity of the payer goes into obliv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

MC and electricity bills. Considering these facts in totality, we do not find any reason for making the impugned addition. We, accordingly, set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition - Assessee appeal allowed - ITA. No. 852/AHD/2012 - Dated:- 18-10-2016 - Shri N. K. Billaiya, Accountant Member And Shri Mahavir Prasad, Judicial Member Appellant by : Shri J.P. Shah with Anil N. Shah, A.R. Respondent by : Shri Prasoon Kabra, Sr. D.R. ORDER Per N. K. Bill .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owance of interest of ₹ 34,92,619/-. (iii) The assessee is aggrieved by the addition of ₹ 61,29,000/- as unexplained cash credits which was received by the assessee- company from the members of Co-op. Societies. 3. This is the second round of litigation. The first round of litigation emanated from the assessment order dated 28.03.2001 made u/s. 143(3) of the Act wherein the assessment was completed by making following additions to the returned loss of ₹ 4,15,862/-. (i) Unexplai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Tribunal had set aside the issue to the files of the A.O. for deciding afresh as per the directions. The relevant finding of the Tribunal reads as under:- 10. We have considered the rival submissions and perused the material on record. In our considered view the assessee has made out a prima facie case that money actually does not belong to him but belong to members but this does not really discharge the onus cast upon him to explain deposits/loans in reject of which assesses had only submitt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ter, share certificate, name of the member in the list of govt. audit report, resolution for admission of the member, share contribution, in the case of transfer, application of transfer/unit, copy of the bill, proof of death, copy of will, date entered in the transfer register of the society municipal tax bill, electricity bill etc. The assessee will submit copies of the paper books to the Assessing Officer along with this full chart containing 24 columns and information about all the 77 member .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed. This view, we are taking on the basis of various judgments of the Courts as under:- 1. CIT vs. Divine Leasing and Finance Ltd. (2008) 299 ITR 268 (Del); 2. A One Housing Company Ltd. Vs. ITO (2008) 299 ITR (AT) 327 (Del); 3. CIT vs. Electropolychem Ltd. (2007) 294 ITR 661 (Mad) 4. CIT vs. Illac Investments (P) Ltd. (2006) 287 ITR 135 (Del) 5. Uma Polymers (P) Ltd. Vs. DCIT (2006) 284 ITR 001 (AT) Jodhpur 6. Shree Barkha Synthetics Ltd. Vs. ACIT (2006) 283 ITR 377 (Raj.) 7. CIT vs. Down Town .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f money not found explained in the hands of the depositor then department is free to take action in his hands. 13. Thus, we set aside the two appeals and restore the matter to the file of Assessing Officer for deciding afresh as per our direction above and as per law. 14. In the result, the appeal of assessee and that of Revenue both are allowed for statistical purposes. 6. In pursuance to the directions of the Tribunal, the A.O. completed the assessment and computed the assessed income as follo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere not there in the first assessment order. Therefore, the assessment order to this extent is not as per the directions of the Tribunal and these two additions deserve to be deleted. Per contra, the ld. D.R. stated that since the directions of the Tribunal were to decide the issues afresh. Therefore, the A.O. was free to make other additions also. 8. We have given a thoughtful consideration to the submissions made by the representatives of both sides qua the first grievance mentioned elsewhere. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

yond the directions of the Tribunal and has made fresh additions. 2.4 Binding Nature of Orders of Tribunal: (1) The first Appellate Authority or the Assessing Officer is bound by the orders of the Tribunal. Even where the assessee or the department has pursued the matter in reference proceedings, it does not act as a kind of stay of operation of the order of the Tribunal. (2) The Assessing Officer cannot ignore the decision taken by the Tribunal in favour of the assessee and take a contrary view .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders 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 "acce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he matter has been highlighted by this Court in Bhopal Sugar Industries vs. Income Tax Officer. Bhopal [AIR 1961 SC 182] in the following terms (Page 622): (a) "If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plication was subsequently withdrawn. The Judicial Commissioner was not sitting in appeal over the Tribunal and we do not think that, in the circumstances of this case, it was open to him to say that the order of the Tribunal was wrong and, therefore there was no injustice in disregarding that order. As we have said earlier such a view is destructive of one of the basic principles of the administration of justice." 9. Considering the facts in totality, as stood at the time of original asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The second grievance relates to the addition of ₹ 34,92,619/-. While scrutinizing the return of income, the A.O. noticed that the assessee has debited interest expenses of ₹ 35,59,129/-. In the first assessment order, the A.O. has disallowed the entire sum of ₹ 35,59,129/- as the assessee failed to establish that the interest free advances were for business purpose. In the present assessment order, the A.O. disallowed ₹ 34,92,619/- reducing the original disallowance of &# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ut that the interest free funds available with the assessee were ₹ 7.29 crores whereas the alleged interest free advances were to the tune of ₹ 6.96 crores. The ld. counsel further stated that advances to Samarthkrupa Co-op. Housing Society was in fact nothing but advances for purchase of flats for facilitating the execution of scheme for which the company also entered into development agreement with the society. The ld. counsel further stated that similar is the nature of interest f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of the authorities below and with the assistance of the ld. counsel; we have gone through the relevant documentary evidences brought on record in the light Rule 18(6) of the Appellate Tribunal Rules. We find force in the contention of the ld. counsel. As mentioned elsewhere, the interest free funds available with the assessee are in excess of the interest free advances made by it. The ratio laid down by the Hon'ble High Court of Bombay in the case of Reliance Utilities and Power 313 ITR 34 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me was explained to the A.O. during the course of the assessment proceedings itself. The relevant submission made before the A.O. read as under:- 6. Reference to balance Sheet shows that, the interest free advances of ₹ 3,15,41,406/- alleged to have made by the assessee Company to Samarthakrupa Co. Op. Housing Socy. Ltd. is in fact nothing but the sundry debtors and include the amount for purchase of flats for facilitating the execution of scheme for which the Company also entered in to de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ociety on which society need not and did not paid any interest. Considering this aspect, in fact, Company did not advanced any non bearing non business purpose interest free advances Of ₹ 3,15,41,406 to Samarthkrupa Co.op. Housing Society but as against that-, it had a net credit amount of ₹ 32,24,094 (Rs.3,47,65,500 Credit Less: Rs . 3,15,41,406 ). Hence, no interest is requires to be disallowed on this advance of ₹ 3,15,41,406. 7. With regard to alleged interest free advances .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as credit balance pertain to the same party and it's members for the development of the scheme undertaken by the Company and therefore no interest is disallowable on ₹ 63,70,000 stated as above. 8. Reference to the details given on page S-14 also shows that, the purpose for which the amount was advanced. The amount include ₹ 1,34,90,633 paid for Swastik Co-Op. housing Society Ltd. Plot No. 85. As the Company can not directly purchase the plot in' it's name, with a view to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

facts, it is clear that, the advance is purely for the business purposes and no interest free advance for non business purposes is given and therefore, on this amount also no interest is required to be disallowed and we request for the same. 15. Considering the facts in totality in the light of the ratio laid down by the Hon'ble Bombay High Court and also considering the fact that the advances were made for business purposes. We set aside the findings of the ld. CIT(A) and direct the A.O. t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mation in respect of the following persons arid"' the assessee has also been not able to submit fresh confirmations in compliance to the order of the Hon'ble ITAT, on its own. Therefore these amount which have not been confirmed as per the ITAT direction is taken as unexplained cash credit Sr.no Party Name Sr. No in silicon valley member List Amount Remarks 1 Ashok K Patel 7 400000 Not found/not served 2 Girish N Chawala 24 200000 Not found/not served 3 Indiraben Manubhai 33 230000 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rmation received 14 N.B.Jani 50 20000 No confirmation received 15 Nitaben N Shah 52 511000 Not found/not served 16 Priti.Purohit 56 125000 No confirmation received 17 Raman G Kher 59 151000 Not found/not served 18 Rameshbhai P Patel 61 101000 No confirmation received 19 Sandhyaben N Jaiswal 64 850000 Not found/not served 20 Shoe valley 69 850000 Not found/not served 21 Vakil Jayantital G(HUF) 75 490000 No confirmation received Total 6129000 As the assessee failed to furnish any explanation or de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re the allottees of the flat wherever the PAN details were available; the same was made available to the A.O. The ld. counsel further pointed out that in addition to the above details municipal tax bill from the Ahmedabad Municipal Corporation, wherein the name of the respective member appears and the details of the flat/shop on which municipal tax is assessed by the AMC, were also provided to the A.O. along with electricity bills, copy of sale deed and confirmations of the payments made by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version