ITA No. 2581/Del/2012
Asstt.Year: 2008-09
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES `C' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER
ITA NO. 2581/DEL/2012
ASSTT.YEAR: 2008-09
Gauri Shankar, vs ACIT,
Prop. M/s Pee Gee International, Circle-35(1),
D-203, Vivek Vihar, New Delhi.
New Delhi-110095
(PAN: AAXPS7465G)
(Appellant) (Respondent)
Appellant by: Shri K. Sampath, Adv.
Respondent by: Shri Satpal Singh, Sr.DR
O R D E R
PER CHANDRAMOHAN GARG, J.M.
This appeal has been preferred by the assessee against the order of the
CIT(A), New Delhi dated 16.02.2012 in Appeal No.161/09-10 for AY 2008-09.
2. The assessee has raised following grounds in this appeal:-
"That on the facts and in the circumstances of the
case and in law, the ld. CIT(A) erred in confirming the
following actions of the Assessing Officer-
i) In treating loan obtained by the appellant in a sum of Rs. 15
lakhs as unexplained and making an addition of Rs.15 lakh
on that account;
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Asstt.Year: 2008-09
ii) In making an addition of Rs.33,535/- being the amount of
interest on the loan."
3. Brief facts of the case are that the assessee Sh. Gauri Shankar is the
proprietor of the firm M/s Pee Gee International & M/s Prem Wire Industries.
The assessee is engaged in the business of trading of ferrous and non-ferrous
metals. The assessee filed his return of income electronically on 21.8.2008
declaring taxable income of of Rs.5,85,030/-. The case was selected for scrutiny
and the assessment was completed u/s 143(3) on 30.11.2010 on total enhanced
income of Rs. 21,56,880/- (Total taxable Income of Rs, 5,85,030/- plus
disallowance made Rs. 15,71,845/-) and demand notice u/s 156 creating
additional demand of tax of Rs. 722,167/- was served upon the assessee on
22.12.2010. The assessee, during assessment proceedings, admitted the total
disallowances of Rs.38,311/- made on account of personal use of expenses
relating to telephone, car expenses, Diwali festival, scooter expenses and
business promotion expenses. The admitted tax thereon amounting to Rs.
12,000/- is also deposited on 31.12.2010. The assessee however did not agree
to the other addition amounting to Rs.15,33,534/- (including interest of
Rs.33,534/-) made by the ld. AO under section 68 of the Income Tax Act, 1961
on account of non-submission of copy of ITR and bank statement of the lender
M/s Swastik Trading Company.
4. Against the above addition and aggrieved by the said assessment order,
the assessee preferred an appeal before us.
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Asstt.Year: 2008-09
Ground No.1
5. Apropos ground no.1, we have heard arguments of both the sides and
carefully perused the relevant material and record placed before us. Ld.
Counsel appearing for the assessee submitted that the AO has erred in treating
the loan amount of Rs. 15 lakh obtained by the asessee as an unexplained cash
credit u/s 68 of the Act. Ld. Counsel further contended that the AO wrongly
held that the assessee has not established the genuineness of the transactions and
creditworthiness of the creditors as the assessee filed sufficient evidence to
prove the same and the AO was not justified in holding that the AO did not
discharge its onus to establish the genuineness and creditworthiness of the said
transaction. Ld. Counsel further contended that the CIT(A) was also not
justified in holding that the assessee did not file a copy of the bank account and
ITR of the creditor despite the fact that the CIT(A) noted that the assessee
received loan through cheque from the book of accounts of the assessee.
6. Ld. Counsel reiterated its arguments, which were made before lower
authorities and submitted that the assessee received amount of Rs. 1.5 lakh from
Swastik Trading Co. and returned the same on 3.7.2008 with interest of total Rs.
15,60,354 to the loaner through assessee's debtor M/s Prem Wire Industries,
Mumbai and the TDS on interest paid was also deducted and deposited with the
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Asstt.Year: 2008-09
Department. He has drawn our attention to paper book of the assessee and
submitted that all detail was placed before the AO and the CIT(A).
7. Ld. DR supported the orders of the authorities below and submitted that
the assessee did not discharge its statutory onus to prove that the alleged loan
transaction was genuine and the assessee did not file copies of the bank
statement and ITR of the creditor to establish its creditworthiness, hence
addition so made was quite justified.
8. On careful consideration of above submissions, we note that the assessee
has verified in the first page of its paper book that all documents including bank
statement of M/s Swastik Trading Co. was submitted before the lower
authorities. The DR has also not disputed the fact that the assessee received
money through banking channels from M/s Swastik Trading Co. and the same
was returned on 3.7.2008 with interest. The DR has also not disputed the fact
that the assessee deducted TDS on interest paid and the same was deposited
with the department as per applicable provisions of the Act.
9. Hence, we are not in agreement with the conclusion of the CIT(A) that
the assessee did not discharge its onus cast upon him to prove the genuineness
of the transaction as well as creditworthiness of the creditor. The AO has not
brought out any adverse fact to show and establish that the impugned
transaction was an accommodation entry. Accordingly, we are inclined to hold
that the authorities below were not well within its jurisdiction and justified in
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Asstt.Year: 2008-09
making and confirming the addition so made by the AO u/s 68 of the Act,
treating the amount of loan as unexplained cash credit in the hands of the
assessee. Accordingly, ground no. 1 of the assessee is allowed and the AO is
directed to delete the addition.
Ground No.2
10. Apropos ground no.2, ld. Counsel submitted that the AO was not justified
in making addition of Rs.33,535/- being the amount of interest paid by the
assessee to M/s Swastik Trading Co. on loan. Ld. Counsel also contended that
the assessee deducted TDS on the interest paid and deposited the same with the
department.
11. Ld. DR replied that the assessee has not raised this ground before CIT(A)
and there are discrepancies in the figures reflected in entry dated 3.7.2008 and
the amount claimed by the assessee, hence, the AO was right in disallowing the
same.
12. On careful consideration of above submissions, we observe that the
assessee has claimed Rs.33,534/- as interest paid on loan from M/s Swastik
Trading Co. On the other hand, from paper book page no. 16, we note that the
amount of Rs.15,60,354 was credited to the bank account of M/s Swastik
Trading Co. by the assessee through M/s Prem Wire Industries. In this
situation, we are inclined to hold that since by the earlier part of this order, we
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Asstt.Year: 2008-09
have held that the assessee company received a sum of Rs.15,00,000 as loan
from M/s Swastik Trading Co. and the same was returned on 3.7.2008 along
with interest, therefore, we further hold that the interest paid by the assessee on
said loan is allowable expenditure u/s 37(1) of the Act. But for the purpose of
quantification of interest actually paid and TDS deducted therefrom and
deposited with the department, we restore the issue for this limited purpose to
the file of the AO with a direction that the interest paid and TDS deposited by
the assessee on the loan from M/s Swastik Trading Co. shall be quantified
afresh and allowed to the assessee after affording due opportunity of hearing on
this limited issue. Accordingly, ground no. 2 of the assessee is deemed to be
allowed as indicated above.
13. In the result, appeal of the assessee is allowed on ground no. 1 and
deemed to be allowed for statistical purposes on ground no.2.
Order pronounced in the open court on 28.11.2014.
Sd/- Sd/-
(G.D. AGRAWAL) (CHANDRAMOHAN GARG)
VICE PRESIDENT JUDICIAL MEMBER
DT. 28th NOVEMBER, 2014
`GS'
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ITA No. 2581/Del/2012
Asstt.Year: 2008-09
Copy forwarded to:-
1. Appellant
2. Respondent
3. C.I.T.(A)
4. C.I.T.
5. DR
By Order
Asstt.Registrar
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