Narendra Shamjibhai Majithiya, Surat vs Department Of Income Tax

ITO, Shri Narendra Shamjibhai Ward-9(3), Majithiya, Surat Prop: Pooja Textorium, 11/54, Chowk Bazar, Main Road, Surat PAN : ACZPM 0774 G

अपीलाथ / अपीलाथ / (Appellant) ू यथ यथ / थ / (Respondent)

Revenue by : Shri M.K. Singh, Sr. DR.

Assessee(s) by : Shri R.N. Vepari, AR

सु नवाई क! तार#ख / Date of Hearing : 18/05/2015 घोषणा क! तार#ख / Date of Pronouncement: 22/05/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

This is an appeal filed by the Revenue and is directed against the order of the Commissioner of Income-tax (Appeals)-V, Surat dated 08.08.2011, pertaining to the Assessment Year 2008-09.

2. Ground No. 1 of the Revenue's appeal reads as under:-:-

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,76,453/- on account of disallowance of expenses.

3. We have heard both the parties and perused the material placed before us. Before the Assessing Officer, the assessee did not appear and did not furnish any details or even did not produce the books of accounts. The ITA No.3093/Ahd/2011 ITO vs. Shri Narendra Shamjibhai Majithiya AY: 2008-09 2

Assessing Officer, therefore, disallowed 25% of the expenditure. On appeal, the CIT(A) deleted the same with the following findings:-

"ii. Instead of disallowing 25% of expenditure in straight way, the A.O. should have thought of comparing it with earlier years. I find the expenditure reasonable compared to earlier year. Hence, the addition made on this account is hereby deleted and the ground of appeal is allowed."

4. However, at the time of hearing before us, we asked the ld. Counsel for the assessee to point out from the figures of the receipt as well as the expenditure of the year under consideration and the preceding year so as to justify that the expenditure is reasonable as compared to earlier years. We also asked whether any such details were furnished before the CIT(A) on the basis of which the CIT(A) recorded the finding that the expenditure was reasonable compared to earlier years. The ld. Counsel fairly stated that no such details were furnished before the CIT(A) and even in the paper-book filed by the assessee before us, no such details have been included. He, therefore, submitted that this ground may be decided on merits.

5. We find that the Assessing Officer has recorded the finding that the assessee has debited the total expenses of Rs.7,05,813/- under various heads. But, no books of accounts and no ledger accounts have been furnished. Without books and vouchers, naturally the Assessing Officer could not verify whether the expenses were incurred for the purpose of business or not and therefore, he disallowed 25% of the expenses. No such details have been furnished either before the CIT(A) or before us. Therefore, we are of the opinion that the CIT(A) was not justified in deleting the disallowance of expenses. We, therefore, reverse Ground No.1 of the Revenue's appeal and restore the disallowance of Rs.1,76,453/-.

ITA No.3093/Ahd/2011 ITO vs. Shri Narendra Shamjibhai Majithiya AY: 2008-09 3

6. Ground No.2 of the Revenue's appeal reads as under:-

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.16,07,000/- on account of unsecured loan.

7. The finding of the CIT(A) in this regard reads as under:-

"iii. So far as the addition on account of unsecured loan u/s 68 is concerned, it is found that all the loans are old ones except one loan of Rs.4,00,000/-. For this new loan all the necessary evidences have been submitted. Therefore, the source of this unsecured loan stands explained and accordingly the addition made on this account is hereby deleted and the ground of appeal is allowed."

8. We have heard both the parties and perused the material placed before us. We find that at page No.31, the assessee has given the summary of unsecured loans which reads as under:-

Sr. No. Name Amount Rs. Remark 1. Binita N. Majithia 50,000 Old 2. Damyantiben N. Majithia 4,00,000 Confirmation, PA No etc given 3. Manharbhai S. Majithia 6,72,000 Old 4. N.S. Majithia 3,50,000 Old 5. Shobhnaben N. Majithia 1,35,000 Old Total... 16,07,000

9. From this summary, it is evident that except the loan of Rs.4,00,000/- from Damyantiben N. Majithia, all other credits are old credits. At page No.32, the assessee has given the accounts of all other creditors, except Damyantiben N. Majithia. From these copies of accounts, it is evident that all the credits are opening balance brought forward and there is no fresh credit during the year under consideration. Now, from page No.33 onwards, there is evidence with regard to Damyantiben N. Majithia; at Page No.33, there is her confirmation in which her PAN is mentioned; at Page No.34, her IT returns; at page No.36, her bank pass-book from where the ITA No.3093/Ahd/2011 ITO vs. Shri Narendra Shamjibhai Majithiya AY: 2008-09 4

cheque of Rs.4,00,000/- was issued; at page No.37, there is photocopy of PAN card; at page No.39, there is her balance-sheet in which the advance of Rs.4,00,000/- to the assessee has been disclosed. From these evidences, the we concur with the finding of the CIT(A) that, except one loan of Rs.4,00,000/-, all other loans are old loans and with regard to loan of Rs.4,00,000/- the assessee has filed necessary evidences to discharge the onus of proving the cash credit. Therefore, we uphold the order of CIT(A) in this regard and reject the Ground No.2 of the Revenue's appeal.

10. Ground No.3 of the Revenue's appeal reads as under:-

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.14,19,274/- on account of disallowance of interest.

11. At the time of hearing before us, the ld. Departmental Representative stated that there is some typographical error in this ground and the addition of Rs.14,19,274/- was not on account of disallowance of interest but it was on account of disallowance of sundry creditors. He, therefore, submitted that instead of the word 'interest', the word 'sundry creditors' may be deemed to be substituted. The ld. Counsel for the assessee has no objection to this request of the ld. Departmental Representative. We, therefore, treat the Ground No.3 to be modified as under:-

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.14,19,274/- on account of disallowance of sundry creditors.

12. We have heard both the parties and perused the material placed before us. We find that the CIT(A) deleted the addition with the following observations:-

ITA No.3093/Ahd/2011 ITO vs. Shri Narendra Shamjibhai Majithiya AY: 2008-09 5

"iv. So far as the addition on account of sundry creditors is concerned, they are all related to purchases and are reflected in the books of account. Hence, the addition made on this account is hereby deleted and the ground of appeal is allowed."

13. We find that at page No.40 of the paper-book, the assessee has given the list of sundry creditors and thereafter from page No.41 onwards, he has given the copy of account of each and every creditors and from which he pointed out that there was a running account in respect of each and every person. The credit was mainly on account of purchases. These copies of accounts have been forwarded to the Assessing Officer in remand proceedings and no adverse comments have been given by him. In the above circumstances, in our opinion, the CIT(A) was fully justified in deleting the addition which was made by the Assessing Officer on the presumption that the entire sundry creditors shown in the balance-sheet was bogus. We, therefore, uphold the order of the CIT(A) in this regard and reject the ground No.3 of the Revenue's appeal.

14. Ground No.4 of the Revenue's appeal reads as under:-

"4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.41,962/- on account of interest expenses."

15. We have heard both the parties and perused the material placed before us. The assessee has claimed interest of Rs.41,962/- while computing the income from house properties. The Assessing Officer disallowed the interest on the ground that the assessee did not furnish the certificate from financial institution. However, before the CIT(A), the assessee furnished the certificate from Standard Chartered Bank in which the Bank has certified the interest amount of Rs.41,962/-. This additional evidence was forwarded by ITA No.3093/Ahd/2011 ITO vs. Shri Narendra Shamjibhai Majithiya AY: 2008-09 6

the CIT(A) to the Assessing Officer. The Assessing Officer has not given any adverse remarks on this certificate of Standard Chartered Bank with regard to interest payable by the assessee. In view of the above, we do not find any justification to interfere with the order of the CIT(A) with regard to Ground No.4 and the same is upheld. Thus, the Ground No.4 of the Revenue's appeal is rejected.

16. In the result, the Revenue's appeal is partly allowed.

Order pronounced in the Court on 22nd May, 2015 at Ahmedabad.

Sd/- Sd/-

(S. S. GODARA) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 22/05/2015 Biju T., PS

षत Copy आदे श क! ूितिल)प अमे)षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू यथ / The Respondent. 3. संबंिधत आयकर आयु, / Concerned CIT 4. आयकर आयु,(अपील) / The CIT(A)

5. )वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

/ BY ORDER, आदे शानु सार

TRUE COPY Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad