TMI Blog2019 (2) TMI 2057X X X X Extracts X X X X X X X X Extracts X X X X ..... olding 57.27% of the shares as on March 2009 and that after GDR s issue came, that the holding of Saluja family came down to 19.45%. AO has tried to infer that because the shareholding of the promoter had come down after the GDR s issue, it was not a company in which the public was interested and, hence, the proviso to section 68 of the Act was to be applied. CIT(A) has observed that from the details of shareholding of the promoter family given by the AO in the assessment order that it had increased from 95.30 lacs shares to 2.77 crores shares as a result of the conversion of GDR into shares. A perusal of the details / chart, as reproduced of the assessment order reveals that though after conversion, the number of shares had increased which was obvious, however, the percentage of holding i.e. from 57.27% before the issue of GDR s had decreased to 8.37%, though the number of shares increased to 2.77 Crores. It is a matter of fact that once the GDR s were cancelled for conversion to the shares, the number of shares will increase. The observation of the Ld. CIT(A) that shareholding has increased is against the facts on the file. As likely that once the GDR is issued, the shareholdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment year 2010-11 have held that the additions made in the absence of any incriminating material in an assessment made u/s 153A of the Act, as per settled position of law, are not sustainable and thus the assessment framed u/s 153 A has been set aside, hence under the circumstances, the income assessed as per the original assessment framed/finalized for AY 2010-11 will remain sustained as such including the disallowance, if any made u/s 14A of the Act, subject to modification by any decision of any appellate authority on any issue in an appeal / rectification application in respect of originally framed assessment order dated 17.09.2017. Disallowance u/s 14A is restricted to the extent of tax exempt income earned by the assessee. Value of the short stock as undisclosed income - addition by estimating the profit at 25% as against declared by the appellant at 3.54% - HELD THAT:- CIT(A) has not pointed out any extra facts and circumstances of the case to enhance the estimation of the GP rate from 10% to 25%. In view of this, the action of the CIT(A) in this respect is set aside and we direct that the addition of unaccounted profit to be computed @ 10% as was applied by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Sh. Aditya Kumar, CA Ms. Kanika Gupta, CA For the Revenue : Smt. Renu Amitabh, CIT DR ORDER Per Sanjay Garg, Judicial Member: The captioned cross appeals for different assessment years have been preferred by the assessee and Revenue against the order of the Commissioner of Income Tax (Appeals), Jalandhar [hereinafter referred to as CIT(A)]. 2. First, we shall deal with the appeal of the assessee in ITA No. 157/Chd/2018 for assessment year 2010-11. ITA No. 157/Chd/2018 (A.Y. 2010-11): 3. In this appeal the assesse/appellant has taken following grounds of appeal:- 1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar is against law and facts on the file in as much as he was not justified to uphold the action of the Ld. Assessing Officer in framing assessment u/s 153A despite the fact that no incriminating material was found during the course of search. 2. That Ld. CIT(A) gravely erred in holding that the assessment framed by the Ld. Assessing Officer was not beyond the period of limitation prescribed under the Act. 3. That Ld. CIT(A) was not justified to arbitraril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation ITA No. 523 of 2013 reported in (2015) 279 CTR 0389 (Bombay) and of the Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla 234 Taxman 300 (Delhi) and subsequent decision of the Delhi High Court in the case of Principal CIT Vs. Meeta Gutgutia Prop M/s Ferns N Petals , ITA 306/2017 and others decided vide order dated 25.5.2017. 6. The Ld. DR has also been fair enough to admit that no incriminating material was found in the case during the search action and that the facts and issue involved are squarely covered by the aforesaid decisions. We find force in the contention of the Ld. AR. Admittedly, the assessment for the year under consideration stood completed on the date of search. No incriminating material, whatsoever, in relation to the share application money/GDR was found. It has been time and again held by the various High Courts that if no incriminating material is found during the search action, the addition in the case of already concluded assessment cannot be made while framing assessment u/s 153A of the Act. Reliance in this respect can be placed in the case of CIT Vs. Continental Warehousing Corporation ITA No. 523 of 2013 reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the transactions executed by the assessee outside India and on account of that the Assessing officer referred the matter to the JS(FT TR) in respect of the Global Depository Receipt (GDR) received by the assessee from foreign entities. The time frame for framing assessment was accordingly extended by the competent authority. We, therefore, do not find any merit on this issue and this ground of appeal of the assessee is hereby dismissed. 10. Ground Nos. 3, 4 5 : So far as the issue raised vide these grounds, the assessee has agitated on merits of the additions made by the Assessing officer in respect of proceeds of GDRs issued by the appellant holding the same as unexplained credit. 11. Brief facts of the case, as extracted from the order of the CIT(A), are that the appellant is a limited company engaged in the business of manufacturing and trading of yarn, garments, towel, knitted cloth and running a dyeing house etc. A search and seizure operation under section 132 of the Income Tax Act, 1961 was conducted in the case of the appellant on 11.09.2013. In pursuance to the search operation, proceedings under section 153 A of the Act were initiated by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f funds in the account of the appellant is concerned. It is submitted that these funds have been raised by the lead managers to the issue from various investors who are based outside India and after deducting their commission the net funds are transferred to the appellant company. 5.14 The appellant was asked to furnish the name and address of the investors, who subscribed to the issue of GDRs issued by the company. The details were examined by the AO and it is found that in each of the series of GDRs issued by the appellant only a handful of the investors have subscribed to the GDR issue. AO has gone through the incriminating material collected in the course of search (details given in page no. 3 of the assessment order) and made elaborate enquiries in the course of assessment proceedings which reveal that each of the GDR issue made by the appellant company was in fact a private placement of GDRs. The list of subscribers to each of the GDR issue has been given in the assessment order and was also filed by the appellant in the course of present proceedings. It is seen from the same that not more than seven persons have subscribed to the issue of GDRs. 5.15 The appellant was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not offer any explanation about nature and source of money- or (ii) the explanation offered by the assessee is found to be not satisfactory by the Assessing Officer, then, such amount can be taxed as income of the assessee. The onus of satisfactorily explaining such credits remains on the person in whose books such sum is credited. If such person fails to offer an explanation or ;he explanation is not found to he satisfactory then the sum is added to the total income of the person. Certain judicial pronouncements have created doubts about the onus of proof and the requirements of this section, particularly, in cases where the sum which is credited as share capital, share premium etc. Judicial pronouncements, while recognizing that the pernicious practice of conversion of unaccounted money through masquerade of investment in the share capital of a company needs to be prevented, have advised a balance to be maintained regarding onus of proof to be placed on the company. The Courts have drawn a distinction and emphasized that in case of private placement of shares the legal regime should be different from that which is followed in case of a company seeking share capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the AO through the competent authority after the completion of assessment proceedings was forwarded to the appellant by the undersigned vide letter dated 18.12.2017. In the course of present proceedings. The appellant has submitted that prima-facie it appears that no adverse finding has been given by any foreign jurisdiction. The purpose was to obtain information with regard to the identity, creditworthiness and genuineness of the transactions. The appellant has admitted in the written submissions filed before the AO and also in the course of present proceedings that no copy of bank account was furnished for Investec Bank, Zurich with regard to the funds received from Series-II and for Series- III of GDR issue. AO has further stated that appellant has failed to provide the financial trail of the GDR proceeds in so far as the debit appearing in the bank accounts of the investors was not correspondingly found credited in the bank account of the appellant. 5.20 AO has followed the principles of natural justice and forwarded details, of certain bank accounts allegedly received from the competent authority in respect of certain investors who had made investment in the GD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any activities/transactions and the said order too was only an interim order. After considering all this factors, I find that the fact of having raised capital through a private placement which have been camaflouged as a public issue stands exposed. I do not find force in the contentions of the appellant that simply on account of the fact that money has been received through banking channel, the onus which is cast upon the appellant stands discharged. 5.24 It is pertinent to note that volume of the GDR issues made by the company in different years and the subsequent cancelation and conversion into equity shares created doubts about the genuineness of the transaction. The appellant has in the written submissions filed admitted that in terms of the provisions of section 68 of the Act, the primary onus to explain the nature and source of the amount so found to be credited is on the assessee. The expression 'nature' encompasses bringing on record evidence about nature of the receipt, be it loan, advance, share application money, etc. The expression 'source' envisages establishing the identity and creditworthiness of the source/ person from whom the amount is receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20006082 Standard Chartered Bank IN301524 10023704 Serics-2 Citibank NA IN300054 10067517 Deutsche Bank AG IN300167 10009079 ICICI Bank Ltd IN301348 20013093 Series- 3 Citibank NA IN300054 10013912 Deutsche Bank AG IN300167 10067517 Series -4 DBS Bank Ltd. IN303307 10000158 Deutsche Bank AG IN300167 10104412 5.27 It is seen from the above table that all the GDRs after being cancelled and converting them into the shares of the appellant company have got transferred to the DP Accounts of 11 beneficiaries, who have purchased these shares at a fraction of the cost of issue of GDRs. Further, it is seen that the volume of these shares being traded is apparent from the data which is captured for bulk deals e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e report. The appellant in the course of present proceedings has failed to controvert the findings given by the Assessing officer on this issue and could not bring any evidence on record to support his contentions that funds were utilized for the purposes of business. The appellant has made bald statements that GDR proceeds were utilized by the appellant purely for the purpose of purchasing capital assets and for undertaking business expansion. However, in the absence of any evidence being furnished by the appellant to substantiate his contentions and coupled with the fact that none of the companies to whom funds were stated to have been paid are found to be existing, I find that AO was justified in holding that GDR proceeds received by the appellant have not been utilised for the business purposes. AO has brought evidence on record that funds have been used for the purposes of purchasing assets (real estate) in the name of concerns controlled directly/indirectly by the family members of the promoters of the company. 5.32 Thus, considering all these factors, 1 hold that appellant has failed to establish the identity, creditworthiness of the investors-subscribers to the GDR issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture into private markets overseas, the appellant raised fours series of GDR issues over a period of these years and raised capital of 651 crores. It is submitted that each GDR represented one hundred equity shares of par value of Rs.10 and such underlying shares of the GDR was duly listed on the Luxemburg Stock Exchange and traded on the Euro MTF Market. It is submitted that GDR issue is considered to be a 'private placement' in cases where no offering circular is placed before the overseas exchange, the approval of overseas exchange is not obtained and listing fees is not paid i.e. when the issue is not listed on the stock exchange. However, in this case the appellant had complied with requirements and the GDRs were duly listed on stock exchange. That the appellant raised four series of GDR issue over a period of three years and raised the capital. 17. The counsel for the assessee has further submitted that in the course of assessment as well as appellate proceeding, the process involved in the issuance of GDRs, role of the Overseas Depository Bank, Lead Managers/Underwriters to the issue was duly explained. It is submitted that the GDR issue may be in the form of a &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized for business, capital expansion and meeting working capital requirements. He in this respect has relied upon various documents/financial statements also. However, without further going into this question, we are of the view that issue in this appeal is not relating to the utilization of the funds. Even if it is assumed that the assesse company has misutilized its funds that, in our view, can not be said to be an income tax dispute. The issue in this appeal is relating to the establishment of source of funds. Though the case of the assesse is that the funds were utilized for business, capital expansion and meeting working capital requirements, however, in our view, the observations of the of the lower authorities on the utilization or misutilization of funds, is not relevant to the issue under adjudication, hence, we do not deem fit to go deep on this point . 20. Further, the counsel for the appellant has submitted that the assesseee/appellant had made all out efforts and submitted the requisite evidences not only to prove the genuineness of the transactions but also the financial trail of the money having been paid by the investors. The appellant filed copy of its bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the relevant laws of their state; regular income-tax assessees of the relevant countries. Further, the amounts received by the appellant were duly reflected in the regular books of accounts and the financial statements of the said concerns/parties duly furnished. Even that the that the investors in the appellant company were large fund houses and had made investments in well-known and reputed entities and all the funds were registered as either FII's or Funds with SEBI and their details were also available with the regulators. 22. Further on the issue of onus on the appellant to establish the source of the source after the amendment to section 68 of the Act vide Finance Act 2012 by way of insertion of proviso to the said section the Ld. counsel has submitted that no addition can be made in this case u/s 68 of the IT Act. It is explained that the said proviso applies only in respect of closely held private companies and excludes public companies from its purview. Thus, a public company is not statutorily required to establish the source of source. It is stated that additional onus has been placed only on private limited companies owing to the fact that in case of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lient ID of the persons was available. That since shares were available with the depository, hence, the assessee did not have the names of such persons. Despite providing of the details, the Assessing officer did not get it verified from the depository as to who those persons were. 26. Though, the Ld. CIT(A), from the data captured from the Stock Exchange, mentioned that these shares have been got transferred to the DP account of eleven beneficiaries who have purchased these shares at a low cost, however, there is no evidence on the file that those 11 parties who have purchased the shares, as alleged by the Revenue, are the directors or promoters of the assessee company. On the other hand it is the case of the assesse that these shares never reverted to the company or to any of the promoters of the company. Under the circumstances, adverse inference in this respect cannot formed on the basis mere assumptions of the revenue authorities. Further, we note that there is a contradictory observation of the Assessing officer and that of the CIT(A) in this respect. The Assessing officer has observed that the promoters i.e Saluja family was holding 57.27% of the shares as on March 2009 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been grossly violated by the Assessing officer. The main plea of the assessee in this respect is that the assessee has not been afforded opportunity of being heard and to controvert / rebut the allegations of the Assessing officer. The time period to frame the assessment including the extended period was expiring on 30.1.2017. However, the Ld. Assessing officer at the fag end of the limitation period i.e. 27.1.2017 issued a lengthy questionnaire to the assessee and asked the assessee to furnish detailed reply and explanation in this respect. Even the Assessing officer proceeded to frame the impugned assessment on the basis of incomplete and vague information and without even independently verifying and considering the reply of the assessee on this issue. 29. The assessee making all out efforts tried to rebut / reply to the allegations and furnished the required details vide reply dated 30.1.2017, however, in the evening, the Assessing officer, without going through the reply and evidences furnished by the assessee, framed the assessment. The Ld. counsel has also invited our attention to para 1.1 and para 8 of the assessment order wherein it has been mentioned by the Assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f natural justice. 31. Ground No. 6 : Vide ground No.6, the assessee has agitated the disallowance of expenditure u/s 14A of the Income Tax Act which was initially made by the appellant while filing the return of income. The brief facts relevant to the issue are that a search operation was conducted at the business premises of the appellant company on 11.09.2013. During the search proceedings the appellant / assessee made a statement that in a keen desire to purchase peace of mind and to avoid litigation and multiplicity of proceedings, the assessee hereby offer a sum of Rs. 80 crore as additional income over and above the book results, to cover various discrepancies such as cash, stock, assets, deductions, disallowable expenses etc; out of which, a sum of Rs. 4.54 crores, Rs. 7.09 Croresand Rs.23.28 crores for A.Y. 2010-11, 2011-12 and 2012-13 respectively were offered/made as disallowance of expenditure incurred for earning of tax exempt income under the provisions of u/s 14 A of the I.T. Act in the return of income filed in response to the notice under section 153A of the IT Act. However, subsequently in the course of assessment proceedings, the appellant filed a letter w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has further placed reliance on the orders passed by the Hon'ble Chandigarh Bench of The Income Tax Appellate Tribunal in the case of the appellant for AY 2009-10. itself on identical issue. 33. The Ld. CIT(A), however rejected the above stated contentions raised by the assesse observing as under: 1 have carefully considered the contentions of the appellant, assessment order passed by the AO and find that the issue of disallowance agitated by the appellant does not arise out of the order passed by the AO.I do not find the discussion pertaining to this issue from the assessment order and further, appellant has also failed to point out this fact with reference to the order. Second issue, which arises for consideration is whether CIT-A can take up an issue for consideration on which no addition has been made by the AO and also on which no discussion is there in the order itself. Thus, legally no claim can be entertained at this stage. 6.7 Thus, I hold that a settled issue cannot be disturbed at this stage of the proceedings. In view of these facts, appeal filed on this ground is dismissed. 34. Before us, the Ld. Counsel for the assesse has submitted that the Ld.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. 36. The facts of the case in hand are on better footing. In the case in hand, though the assessee offered the additional income on account of disallowance U/s 14A of the Act for taxation in the return of income, however the assesse has taken the plea of excess amount offered during the assessment proceedings itself, but the Ld. AO failed to adjudicate this issue. During the first appeal before CIT(A) also, the assesse has specifically taken this plea, however the Ld. CIT(A) has declined to accept this plea, which in the light of the decision of the Hon ble supreme court(supra) was supposed to be considered. The full bench of the Hon ble Bombay High Court in the cases of Ahmedabad Electricity Company Ltd. vs. CIT and Godavari Sugar Mills Ltd. vs. CIT by way of a common order dated 30.04.1992 (1993) 199 ITR 351 has observed that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the stages, either by the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dt. 31st October, 1989, providing that the assessed income under section 143(3) shall not be less than the returned income was considered by the Hon ble High Court and it was held that as per proviso to section 119 of the Act, the Board cannot issue instructions to the Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner as well as not to interfere with the discretion of the Commissioner in exercise of his appellate functions. It was further held that the AO, while exercising his quasi judicial powers, was not bound by the said circular and should have exercised his powers independently. The Hon ble High Court, therefore, directed the AO to make the assessment without keeping in mind the said circular. It may be further observed that the Hon ble Bombay High Court in the case of Pruthvi Brokers Shareholders Pvt. Ltd. ITA No.3908 of 2010 decided on 21.06.12, while relying upon the various decisions of the Hon ble Supreme Court and other Hon ble High Courts has held that even if a claim is not made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch action or that the aforesaid surrender can be related to part of any other income of the assessee. Even otherwise it has been held time and again by various Courts of law that a retracted surrender of income without any corroborative or any relatable evidence of any undisclosed income of the assessee cannot be made sole basis for addition to the income of the assessee. Moreover, the amount offered as disallowance relating to this issue is on account of notional disallowance of expenditure which may be attributable to earning of tax exempt income of the assessee. Under the circumstances, even if an assessee surrenders some amount as disallowance u/s 14A of the Act or otherwise has offered certain amount under the provisions of section 14A of the Act, however later on, the assessee demonstrates that as per the settled law the said disallowance of expenditure has wrongly been offered / agreed to and that as per the settled law his disallowance actually should be of a lower amount, in our view, that aspect can be looked into even at the appellate stage. This Tribunal is not of a penal jurisdiction to punish the litigants for their mistakes. Even the Income Tax Authorities are supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 (P H) and in the case of CIT Faridabad v. Lakhani Marketing INC 226 Taxmann 45 (P H); Hon'ble Delhi High Court in the case of Cheminvest Ltd Vs. ITO (2015) 378 ITR 33 (Delhi) and of the Hon'ble Gujarat High Court in the case of Corrtech Energy P. Ltd. (2014) 45 Taxman.com 116 and further of the Hon'ble Allahabad High Court in the case of CIT Vs. M/s Shivam Motors (P) Ltd (2014) 272 CTR (All) 277. 42. In view of the proposition of law laid down in the above referred to decisions and also considering the overall facts and circumstances of the case, in our view, it will be proper to restrict the disallowance u/s 14A of the Act, , for the respective assessment years upto the total tax exempt income earned by the assesse irrespective of the amount of disallowance offered/s 14A in the return of income. 43. However, since we have already, while adjudicating ground No.1 of the appeal for assessment year 2010-11 have held that the additions made in the absence of any incriminating material in an assessment made u/s 153A of the Act, as per settled position of law, are not sustainable and thus the assessment framed u/s 153 A has been set aside, hence under the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not abated on the date of search. In view of this, we do not find any merit in this ground and the same is accordingly dismissed. 46. Ground No.2 : Ground No.2 is on the limitation point of framing the assessment u/s 153A of the Act. In view of our findings given above on ground No.2 of the assessee s appeal in ITA No.157/Chd/2018 for assessment year 2010-11, we do not find any merit on this issue. 47. Ground Nos. 3 4 : These grounds are identical to ground Nos. 3 4 of the assessee s appeal for assessment year 2010-11 in ITA No. 157/Chd/2018. In view of our findings given above while deciding ground Nos. 3 4 of the appeal for assessment year 201-0-11, these grounds of appeal are decided in favour of the assessee and the additions made by the Assessing officer on this issue are ordered to be deleted. 48. Ground No.5 : Vide this ground the assessee has agitated the action of the CIT(A) in framing / upholding the assessment observing that the principles of natural justice have been grossly violated by the Assessing officer. This issue has also been deliberated upon by us vide ground No.5 of the assessee appeal in assessment year 2010-11 and our findings arrived a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 4. That Ld. CIT(A) has relied on a lot of irrelevant data marshalled by the Ld. Assessing Officer while upholding the above mentioned addition of Rs. 241,64,40,094/-. 5. That Ld. CIT(A) was not justified in upholding the assessment despite the fact that principles of natural justice were grossly violated by the Ld. Assessing Officer in framing of assessment. 6. That Ld. CIT(A) was not justified to uphold the action of the Ld. Assessing Officer in not considering the appellant's request for not making any disallowance u/s 14A which was initially made by the appellant while filing the return of income. 7. That the Ld. CIT(A) was not justified in not adjudicating the ground relating to not allowing the set off of loss decaled in the return at Rs. 29,01,51,706/-. 53. We find that all the grounds raised in this appeal (except ground No. 7) are exactly similar to that of the grounds raised by the assessee for assessment year 2010-11 in ITA No. 157/Cdh/2018, wherein, all the issues have been deliberated upon by us at length and in view of our findings given against each of the respective issue separately, the grounds are disposed of accordingly. 54. Ground No. 7: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has further submitted that difference in the amount of stock as per the books of account and as per physical verification was worked out to 2.31% of the total value of stock shown in the books of account. 59. The Ld. CIT(A) though accepted the contention of the assessee that the total unaccounted sales made outside books of account cannot be treated as unexplained income of the assessee. He also accepted the contention of the assessee that no addition was warrantied on account of unaccounted purchases in this case as the unaccounted sales were made out of the duly account for purchases by the assessee. However, he estimated the unaccounted profit @ 25% as against 10% GP rate applied by the Assessing officer. The assesse, though, had declared the GP rate at 3.54%. 60. We find from the impugned order that the Ld. CIT(A) has not pointed out any extra facts and circumstances of the case to enhance the estimation of the GP rate from 10% to 25%. In view of this, the action of the CIT(A) in this respect is set aside and we direct that the addition of unaccounted profit to be computed @ 10% as was applied by the Assessing officer on the amount of unaccounted sales in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestments Private Limited and Rythm Textiles Apparel Park Limited. The Assessing Officer, therefore, disallowed a sum of Rs. 79,75,547/- (calculated @12% on the amounts advanced) out of interest account. The Ld. CIT(A) however, deleted the disallowance made by the Assessing officer observing as under:- In view of the judgment of Hon'ble Supreme Court in the case of Hero Cycles Ltd and also of Honorable jurisdictional High Court in the case of Kapsons (supra) (which is after the decision of Abhishek Industries) where it has been held (that no disallowance could be made under this section if availability of sufficient interest free funds in the business has been established. Accordingly, taking these facts and judicial decisions into account, AO is being directed to delete the disallowance of Rs. 79,75,547 made on this account. Thus, appeal filed by appellant on this ground is allowed. 68. The Ld. Dr has assailed the order of the CIT(A) while relying upon the order of the assessing officer on this issue. 69. However, the Ld. Counsel for the assesse has submitted that the said advances were received back during the year under appeal only as the same were granted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t find any reason to interfere in the order of the CIT(A) on this issue. The ground raised by the Revenue, thus, stands dismissed. 71. Ground No.2 : Vide ground No.2 of the appeal, the Revenue has agitated the action of the CIT(A) in deleting the disallowance of Rs. 39,84,576/- on account of employees contribution of ESIC, FP and EPF u/s 36(1)(iii) of the Act. 72. The brief facts relating to the issue are that the Assessing officer has made the disallowance of Rs. 39,84,576/- on account of late payment of contribution to Employees Provident Fund and ESI by resorting to the provisions of section 36(1)(v) of the Act. The disallowance was made as the payments were not made before the stipulated dates. 73. Before the Ld. CIT(A), the assessee submitted that the details of the date of payment made towards Provident Fund and ESI by the assessee have been duly given to the Assessing Officer, which have been reproduced in the Assessment order at page 5. From the details, it appeared that payments were made by the assessee before the due date of filing of return for the year under consideration. It was also submitted that this issue has been considered by the Hon'ble Jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of income. Since the Ld. CIT(A) has given a factual findings, after going through the details, hence, at this stage, we do not find it a fit case to refer the matter to the file of the Assessing officer to verify the details of payments. In view of this, we do not find any merit in the appeal of the Revenue on this issue also. 76. Ground No.3 raised by the Revenue is general in nature and needs no adjudication. In the result, the appeal of the Revenue is dismissed. ITA No: 303/Chd/2018 (A.Y. 2014-15). 77. In this appeal the only effective ground raised by the Revenue reads as under:- Whether the Ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 2,17,51,819/- made by the Assessing officer u/s 36(i)(iii) on account of proportionate disallowance of interest expenditure on non-business interest free advances made by the assessee. 78. This ground is identical to that has been taken by the Revenue in the appeal for assessment year 2012-13 in ITA No. 302/Chd/2018. 79. In view of our findings given above, we do not find any merit in this appeal of the Revenue and the same is accordingly dismissed. The appeal of the Revenue is hereby di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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