TaxTMI 
TaxTMI 
2019 (1) TMI 1852
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- 3,78,175/- 15,12,700/- Freight on cotton Seeds 4,63,860/- 92,772/- 4,63,860/- Hamali 3,43,460/- 68,692/- 3,43,460/- Labour Exp. 4,82,820/- 96,564/- 4,82,820/- Fire wood 3,30,625/- 66125/- 330625/- Urd Bardan 1161122/- 2,32,424/- 11,61,122/- 5,56,377/- 42,94,587/- 3) Commissioner (Appeals) has erred in confirming disallowance of interest of Rs. 13,98,527/- alleged as interest on interest free advances to sister concerns-when appellant has capital account and interest free loans accepted from sister concerns. Appellant pray to allow the same. 4) Appellant prays for just and equitable relief. 5) Appellant prays for cancellation of interest charged u/s.234B. 6) Appellant prays for add, amend, alter, modify and/or withdraw the grounds as occasion may demand." 2. At the time of hearing, Ld. AR of the assessee filed written submissions before the Bench and prayed that the instant case may be decided on the basis of the written submissions. However, we asked the Ld. AR of the assessee to place argument which he refused to do so and insisted that the written ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial cash deposits in to the bank account out of the corresponding cash sales for which no corresponding purchase are available with the assessee along with any evidences. The Assessing Officer concluded that the aforesaid purchases are totally bogus, therefore, in absence of any iota of evidences in the form of purchase bill, books of accounts of sister concern including corresponding purchase sale details etc. and therefore, an amount of Rs. 17,41,834/- was added to the total income of the assessee. 5. During First Appellate proceedings, the CIT(Appeals) analyzed the facts and circumstances as appearing in his order and confirmed the entire amount of Rs. 17,41,834/- under different heads viz. (i) unexplained cash deposit u/s.68 of the Act and (ii) bogus loss u/s.37 of the Act. 6. The assessee in his written submission has stated that the supplier is local supplier having registered under the MVAT. The assessee has produced before the Assessing Officer and CIT(A), purchase bills, Extract of account, quantity statement and nexus with sale bills etc. It is the contention of the assessee in the written submissions that the Assessing Officer disallowed for the reason that 'no del....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee. We find, it is not disputed by the Revenue that broker or so called dalal, they have shown income in their return and that the assessee has also deducted TDS on such payments. Taking into consideration of entire facts and circumstances, the total disallowance of Rs. 15,12,700/- is unjustified and therefore, we restrict the disallowance @20% of the total expenses. Hence, ground No.2 of the appeal is partly allowed. 11. That with regard to the third ground of appeal, the view taken by the Ld. CIT(A) is as under: "13. I have duly considered the submissions of the appellant. The AO noticed that the assessee has taken substantial interest bearing funds from the banks and debited interest of Rs. 24,88,205/- to the profit and loss account. Thus, on one hand, interest was paid on the loans taken from the banks and on the other hand, no interest was charged on loans given to the sister concerns namely, J.J. Oil Industries Pvt. Ltd. Mona Oil Mills, Nilesh Oils Industries & Shree Balaji Udyog. On further verification of records, it was noticed that the assessee had taken petty amounts from the sister concerns occasionally but given substantial amounts to other sister ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ively by the assessee for the purpose of clearing the liability on account of creditors and not utilized for advancing the loans to sister concerns as claimed by the assessee. Therefore, the interest bearing funds had never been utilized for advancing the loans to the sister concerns as alleged by the appellant. Further merely having interest free funds was not sufficient when the nexus between utilization of funds in a particular investment or clearing a particular liability could be proved as done by the AO. On the other hand, the assessee has failed to establish the nexus between the utilization of non-interest bearing funds from one sister concern to other sister concerns in the form of non-interest bearing advances. In this connection, I have also examined the ledger extract of M/s Sanjay Cottonseed Industries for FY 2010-11. The counsel of the appellant has stated that this sister concern had given interest free funds of Rs. 81,92,469/-to the assessee. However if opening balance of Rs. 29,46,957/- and purchases of Rs. 43,71,690/- are excluded, then amount advanced by M/s Sanjay Cottonseed Industries to the appellant stood at Rs. 1,24,06,822/-. As against that, the ap....