TaxTMI 
TaxTMI 
2011 (9) TMI 277
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.... Bank Account Instrument No. Amount Dates Issuing Bank Citi Bank, New Delhi 450586 Rs.10,00,000/- 25.01.0 1 Bank of Punjab,Connaught Place, New Delhi. -do- 450587 Rs.10,00,000/- 03.02.01 -do- -do- 450590 Rs.19,50,000/- 20.02.01 -do- At the time of enquiry M/s. Ankur Marketing admitted that these were mere accommodation entries, against which matching cash was received by it from the assessee. Under the circumstances, noticed u/s 148 of the Act was issued after getting necessary approval. Later on, 10.10.08 a detailed requisition was sent, the assessee delineated the findings made in the case of M/s. Ankur Marketing. Shri Jhalania, FCA, A/R appeared on 05.10.08 with a petition dt. 05.11.08. The case was discussed and examination of the petition of the assessee revealed that no new material could be brought on record by the assessee. Therefore, on 06.11.08 Shri Jhalania, A/R Marketing in this regard was once again brought to his notice. He also asked to produce the party or a confirmation from it to corroborate the claim made by the assessee. However, he express his inability to do so. It is needless to say....
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....her by way of loan or by way of Share Application Money, in the original assessment. The A. O. accepted the said transactions as genuine. Thereafter, on the basis of some information received by the A. O. against the aforesaid transactions, the A.O. could have entertained prima fade belief for assumption of jurisdiction u/s. 147. None the Less for the purpose of making the addition in the reassessment proceedings, the A.O. should have enucleated or brought on record unassailable, concrete and incontrovertible facts that could have clinched the issue in the Departmental favour. This, apparently in view of the law on the subject remains the 'achilles heel' of the assessment order. While appreciating that the Ankur Marketing Ltd. was an outstation party, nothing prevented the A. O. making a reference to the said party u/s 133(6) of the Act, which the A.O. did not do. The AO could have also made on enquiry from the Ankur Marketing Ltd. through his counterpart at Delhi, which was not also been done. The appellant in its written submission has referred to a decision of the Hon'ble Gauhati High Court in Nemi Chand Kothari - Vs. - C.I. T. [(2003) 264 ITR 254, 265) and quoted the rele....
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.... duly recorded by assessee and the transactions are made by account payee cheques and the interest on the said transactions have been paid after deduction of TDS and that AO should have enucleated or brought on record unassailable, concrete and incontrovertible facts that could have clinched the issue in the Departmental favour as observed by ld. CIT(A). Therefore, we find no infirmity in the orders of ld.CIT(A) and we uphold the same. 7. In the result appeal of the revenue is dismissed.8. As regarding Cross Objection No.186/Kol/2010 arising out of ITA No.1982/Kol/2010 at the time of hearing, the ld. Counsel appearing on behalf of assessee has not pressed for the same. Therefore, the same is dismissed as not being pressed. ITA No.1983/Kol/2010 (by the revenue A.Yr. 2006-07) 9. In this appeal, the revenue has raised the following grounds of appeal :- "1. That in the facts and the circumstances of the case, the order of the ld. CIT(A) is erroneous because without any proper reason the CIT(A) accepted the interest free advance for business purposes. 2. That in the facts and the circumstances of the case, the order of the CIT(A) is perverse on the ground that....
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....ort interest burden was jacked up to reduce incidence of tax. In a landmark judgement in the case of Abhisek Industries, 286 ITR 1 (P&H) Punjab & Haryana High Court held that expediency must be proved for justification of claim of interest. Similar views were taken in the case of Ramanand Sagar, 256 ITR 134 (Bom), Stepweld Industries Limited, 228 ITR 171 (SC). In the case of Calcutta Agency Ltd., 19 ITR 191, Hon'ble Apex Court held that onus is on the assessee to prove commercial expediency. Unilaterally Courts have held that commercial expediency has to be proved for claim of any expenditure. The assessee failed to provide any such explanation. Thus, onus was not discharged, even after such was specifically called for. Thus, collusiveness in this case is loud and clear. Clearly, interest burden was being created deliberated to keep the profit of the assessee at a lower level. This was nothing, but a colourable arrangement conjured by the assessee to avoid payment of tax. This can never be allowed. Respectfully following the decisions in the cases of Abhishek Industires, 286 ITR 1 (P&H), Ramanand Sagar, 256 ITR 134 (Bom) Stepwell Industries Limited, 228 ITR 171 (SC), as discu....
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....that if interest @ 12% p.a. would have been charged on such advances made by both the parties, the assessee would have suffered loss of 44,49865 by way of interest payable by it to the said Mauria Udyog. This explanation was given in writing vide assessee's letter dated 26.11.2008 to the A.O. However, from the assessment order, I find that the A. O. has not repudiated this contentions of the assessee. On these facts it cannot be alleged that the said current account transactions with Mauria Udyog were not based on any commercial expediency whatsoever, as the assessee, in my opinion, could establish its contentions that such interest free mutual advances benefited both the parties concerned. The A. O. in support of his case has, however, relied on some court decisions as noted on page-2 of the assessment order. The appellant in its written submission (para 1.5.6) has distinguished the said case decisions and it has been shown that these are some what misplaced. After going through the assessment order and the assessee's arguments in this regard, I feel that the cases as cited by the ld. A.O. could hardly advance his contention, inasmuch as in the cited cased it was found that as ....
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....wards purchase of landed properties. As the title to the said properties were found to be defective on search, such advances were returned in the subsequent year, which will not, in my opinion, prejudice the assessee's case in hand. 1.11. Coming to the balance amount of advance of Rs. 50.00 Lacs, it has been admitted by both the A. O. and the assessee that such advance was made for purchase of Shares. After admission of such fact, I feel that nothing more is required for holding that the proportionate expenditure on interest on account of such interest-free advance for purchase of shares should be disallowed u/s. 36(1) /(iii) of the Act. Such disallowance is called for in view of the fact that such advance was given for earning income exempt from Income-tax. Therefore, in any case proportionate expenses on interest attributable to this amount of advance of Rs. 50.00 Lacs should be disallowed u/s. 14-A (1) of the Act." 10.2. Aggrieved by this the revenue is in appeal before us by taking the above grounds and the assessee has raised the following Cross Objections :- "1. That on the facts and on the circumstances of the case the learned CIT(A) has erred in holding that propor....