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Gauri Shankar, Prop. M/s Pee Gee International, D-203, Vivek Vihar, New Delhi-110095 Vs ACIT, Circle-35(1), New Delhi.
December, 03rd 2014
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;


                                                                                1
ITA No. 2581/Del/2012
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.

                                                                                2
ITA No. 2581/Del/2012
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



                                                                                 3
ITA No. 2581/Del/2012
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
                                                                                4
ITA No. 2581/Del/2012
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





                                                                                 5
ITA No. 2581/Del/2012
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'




                                                                                 6
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




                                          7

 
 
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