Income Tax Appellate Tribunal - Indore
Tripti Agarwal, Bhopal vs Acit 1(2), Bhopal on 7 November, 2016
आयकर अपील य अ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE ी डी.ट .गरा सया, या यक सद य तथा ी ओ.पी.मीना, लेखा सद य के सम% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER आ.अ.सं./ I.T.A. No. 214/Ind/2014 %नधा'रण वष' /Assessment Year: 2010-11 Smt. Tripti Agarwal, ACIT, Prop. Tripti Agarwal Vs. 1(2), Bhopal Classes, E-2/126, Arera Colony, Bhopal.
था.ले.सं./PAN: AA अपीलाथ /Appellant यथ /Respondent अपीलाथ क ओर से/Appellant by Shri Girish Agarwal, CA यथ क ओर से/Respondent by Shri Mohd. Javed, Sr. DR सुनवाई क तार ख 04.10.2016 Date of hearing उ घोषणा क तार ख 07.11.2016 Date of pronouncement आदे श /O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR.
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-I, Bhopal I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 2 of 18 [hereinafter referred to as the CIT(A)] dated 13.02.2013 and pertains to assessment year 2010-11 as against appeal decided in assessment order passed u/s 143(3) of the Act dated 14.02.2013 of ACIT,1(2) Bhopal [hereinafter referred to as the AO].
2. Ground no.1 is of general nature, hence, does not require any adjudication.
3. Ground no.2 relates to disallowance of interest to the extent of Rs. 8,49,600/-.
4. The AO noted that the assessee has debited an amount of Rs. 51,64,843/- as interest to Bank and others. It was also noticed that the assessee had given loans and advances amounting to Rs. 70.80 lakhs to relatives and other persons without charging any interest. A show cause notice was issued to the assessee as to why interest @ 12 % should not be disallowed out of interest paid by the assessee. However, no reasons for advances given to relatives and others was furnished. Therefore, the AO disallowed interest of Rs. 8,49,600/- being 12 % of Rs. 70.80 lakhs, treating the I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 3 of 18 same as not utilized for the business purposes. The AO has also noted that the assessee has taken fresh secured loan of Rs. 337.39 lakhs from Bank.
5. Aggrieved with the order, the assessee has filed the appeal before the CIT(A).
6. It was submitted before the CIT(A) that the findings of the AO that the assessee has taken fresh secured loans of Rs. 337.39 lakhs from Bank is factually wrong and incorrect as the secured loan outstanding as on 31.03.2009 were Rs. 474.65 lakhs and as on 31.03.2010 were at Rs. 337.39 lakhs. Therefore, the findings of the AO that fresh loans taken during the year at Rs. 337.39 lakhs is factually incorrect. The assessee had also submitted a comparative position of loans and advances which are reproduced at page 4 of the appellate order, according to which loans and advances given to seven persons were at Rs. 38.95 lakhs as on 31.03.2009, which were increased to Rs. 70.80 lakhs as on 31.03.2010. However, the ld. CIT(A) was not satisfied with the explanation and accordingly confirmed the addition made by the AO. I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 4 of 18
7. Being not satisfied, the assessee has filed this appeal before this Tribunal.
8. The Ld. Counsel for the assessee submitted that the AO noted an absolutely incorrect finding from the balance sheet that the assessee has taken fresh secured loan of Rs. 337.39 lakhs from Banks is incorrect. As the secured loans as on 31.03.2009 were at Rs. 373.65 lakhs which were at Rs. 337.39 lakhs as on 31.03.2010. Thus, there is reduction of Rs. 137.26 lakhs in the loan liability in the impugned order. The ld. Authorized Representative of the assessee further submitted that outstanding unsecured interest free loans were at Rs. 38.95 lakhs as on 31.03.2009, which were at Rs. 70.80 lakhs a on 31.03.2010. Thus, there was increase in loan liability in the impugned year by Rs. 31.85 lakhs. The ld. Authorized Representative of the assessee contended that from the same balance sheet as referred by the AO, it can be verified that the assessee had owned capital being a proprietor at Rs. 90.69 lakhs, whereas interest free owned secured loan taken were at Rs. 23.28 lakhs. Thus, the assessee had interest I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 5 of 18 free funds available in the impugned year at Rs. 113.97 lakhs as against the interest free advances given during the year at Rs. 31.85 lakhs. Thus, the interest free funds available with the assessee are more than the amount advanced. Therefore, notional disallowance of interest @ 12 % on the total loan amount of Rs. 70.80 lakhs is not justified. In support of this proposition, the ld. Authorized Representative of the assessee placed reliance in the case of Hero Cycles Private Limited vs. CIT, Civil Appeal No. 514/2008 dated 5th November, 2015, and also placed reliance in the case of Ram Kishan Verma, (2015) 64 taxman.comm 358 (Raj) and Abhishek Industries Limited, S. A. Builders Limited, (2007) 288 ITR 1 (S.C.).
9. We have heard the rival submissions and have perused the material available on record. We find that the assessee had interest free funds available at Rs. 113.97 lakhs whereas interest free loan and advances given during the year were at Rs. 31.85 lakhs. However, this aspect has not been examined by the ld. CIT(A). We, therefore, deem it fit to remit back the issue to the file of CIT(A) for fresh adjudication after I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 6 of 18 ascertaining the fresh loan taken during the year and non interest bearing funds available with the assessee during the year. This ground is allowed for statistical purposes.
10. Ground no. 3 relates to sustaining addition of Rs. 53,111/- alleging reconciliation difference.
11. Facts emanating from the orders of the lower authorities are that the assessee has shown credit outstanding of Rs. 53,111/- was payable to M/s. Atul Publicity, the genuine creditor to whom payments were made always by cheque and proper TDS have been deducted. However, the ld. CIT(A) has confirmed the said addition by observing that the assessee was asked to furnish his explanation on 28.12.2012, but the assessee has not furnished any reconciliation or explanation regarding the difference.
12. Before us, it was contended that the credit was appearing in the books of the said creditor, who had accounted the said sum as received. Accordingly, it is the creditor, who, how to explain such a credit in his books of I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 7 of 18 accounts and not the assessee. Therefore, the addition of Rs. 53,111/- may be deleted.
13. We have heard the rival submissions and find that M/s. Atul Publicity has denied to have any outstanding against the assessee as on 31.03.2010 in response to their reply to notice u/s 133(6) of the Act. Therefore, we are not inclined to interfere in the finding of the lower authorities. Accordingly, this ground of appeal is dismissed.
14. Ground no. 4 relates to addition of Rs.10 lakhs u/s 68 as unexplained cash receipts from a farmer Shri Moolchand towards advance received against sale consideration of agriculture land at Village Samardha.
15. Facts apropos of this ground are that the assessee has shown introduction of cash of Rs. 7 lakhs on 22.11.2009 and Rs. 3 lakhs on 07.12.2009 aggregating to Rs. 10 lakhs in her books of accounts. It was also noted that the assessee made cash payment of Rs. 9 lakhs on 28.03.2009. It was explained that Rs.10 lakhs was received as advance against sale consideration of Rs. 16 lakhs by her husband from Shri I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 8 of 18 Moolchand against sale agreement of land situated at Village Samardha in the joint name with her husband. Shri Moolchand is a farmer of Village Seania Onkara and was doing cultivation on batai on assessee's un-irrigated farm land at Village Samardha. It was submitted that later on the said person became disinterested and requested the assessee's husband to return the earnest money and accordingly, after deduction of Rs. 1 lakh, her husband returned Rs. 9 lakhs to Shri Moolchand on 28.03.3010. However, the AO did not accept the above contention of the assessee due to the reason that she could not furnish any supporting evidences like sale agreement with the purchaser, identity and creditworthiness of the alleged purchaser Shri Moolchand and genuineness of the transaction. The AO has also recorded statement of Shri Moolchand u/s 131 wherein he could not give satisfactory answer regarding cash payment and cash received. It was noted that Shri Moolchand had only one acre of ancestral land, where he was earning Rs. 50,000/- per annum and had joint family consisting of three sons and their wives and I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 9 of 18 children. The AO also observed that as per statement of Shri Moolchand,he paid Rs. 2 lakhs, Rs. 5 lakhs and Rs. 2 lakhs i.e. in three instalments but as per books of the assessee, money was shown to be received in two instalments of Rs. 7 lakhs and Rs. 3 lakhs.
16. Before the CIT(A), the same submissions were reiterated. However, the CIT(A) has observed that the assessee has failed to substantiate his submission with any cogent and impeachable evidence. The assessee has not adduced any documentary evidence in the form of any agreement to sale entered with Moolchand for the sale of property for consideration of 16 lakhs. It is unbelievable that a person would pay earnest money of Rs. 10 lakhs out of total consideration of Rs. 16 lakhs without entering into any formal agreement. The ld. CIT(A) further noted that there is inconsistency in the statement of Shri Molchand and facts stated by the assessee as Shri Moolchand had stated that he had made the payments in three isntalments, whereas the assessee had introduced cash in his books of accounts in two I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 10 of 18 instalments. Further, Shri Moolchand owned only one acre of land and earning Rs. 50,000/- per annum having family of ten members. Therefore, the assessee failed to satisfactorily explain the source of credit entries aggregating to Rs. 10 lakhs in cash in her books of accounts. Hence, the ld. CIT(A) upheld the addition of Rs.10 lakhs. However, the ld. CIT(A) has deleted the addition of Rs. 9 lakhs claimed to have been withdrawn in cash as the same were out of cash available in the books of accounts.
17. Before us, the ld. Authorized Representative of the assessee submitted that the assessee has received Rs. 10 lakhs from Shri Moolchand, an agriculturist, who owned up the transaction towards advance against credit sale consideration of Rs. 16 lakhs. Since he could not arrange for the entire credit amount, the sale got cancelled and Rs. 9 lakhs were returned to Shri Moolchand by Shri Anil Agrawal husband of the assessee. It was submitted that Moolchand has appeared before the AO wherein in his statement Shri Moolchand has accepted the transaction. Therefore, the I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 11 of 18 assessee has discharged his primary onus. Hence, the AO could not ask the source ,of source as held in the case of Metachem Industries Limited, (2001) 245 ITR 160 (MP) and Sumerchand Jain, (2007) 292 ITR 241( MP). The ld. CIT(A) has deleted the addition of Rs. 9 lakhs returned by the assessee to Shri Moolchand, which was duly accounted for and confirmed by him in his statement against which the Department is not in appeal. Therefore, the Department accepted the entries made in the books of accounts for receipt of advance and return of the same advance. Accordingly, it was urged that the addition confirmed by the ld. CIT(A) may be deleted.
18. On the other hand, the ld. Senior Departmental Representative submitted that the transaction entered into alleged sale of agricultural land with Shri Moolchand is not supported by any documentary evidence. The assessee has failed to produce the agreement to sale of land. Hence, the story advanced by the assessee is not believable. Further, Shri Moolchand, Agriculturist was not of any means as he was doing batai on the un-irrigated land of the assessee only. I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 12 of 18 Therefore, the ld. Sr. Departmental Representative supported the orders of the lower authorities.
19. We have considered the facts and perused the material available on record. We find that the claim of the assessee that Rs. 10 lakhs were received as advance against the proposed agreement to sale of land for Rs. 16 lakhs to Shri Moolchand. However, we find that the assessee has not been able to produce any agreement to sale with regard to alleged transaction. Further, the assessee has introduced cash in her books of accounts on 22.11.2009 of Rs. 7 lakhs and Rs. 3 lakhs on 07.12.2009 aggregating to Rs. 10 lakhs, whereas Shri Moolchand has stated in his statement that he paid Rs. 2 lakhs, Rs. 5 lakhs and Rs. 2 lakhs in three instalments. Hence, there is inconsistency with reference to the books of accounts and statement of Shri Moolchand. We also note that in reply to question no. 5 of his statement, Shri Moolchand has stated that he paid Rs. 10 lakhs in three instalments but he does not remember the date on which these instalments were given and the year on which the payments were made, I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 13 of 18 nor has any documentary evidence to prove that such amount was given by him. It is further noticed that Shri Moolchand had only one acre of ancestral land whereas he was earning only Rs. 50,000/- per annum for a joint family having ten members. Therefore, in absence of any documentary evidence in the form of any agreement to sale entered with Shri Moolchand for the sale of property for a consideration of Rs. 16 lakhs cannot be accepted as correct. Further, the amount is claimed to have been returned back in the month of March. Hence, we are inclined to accept the findings of lower authorities. Therefore, no interference is called for. The case laws cited by the ld. Authorized Representative of the assessee relates to introduction of capital by a partner or investment of money by a purchaser of the property, therefore, distinguishable on facts and circumstances of the present case and hence, the findings of lower authorities are upheld. Accordingly, this ground of appeal is dismissed.
20. Ground no. 6 relates to sustaining the addition of caution money of Rs. 4,43,800/-.
I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 14 of 18
21. Briefly stated, the facts of the case are that the assessee has received to have shown caution money of Rs. 4,43,800/- during the year under consideration . It was submitted that such caution money was also received in the past years, which had accumulated to Rs. 20,78,330/-. It was also noted that the assessee had shown return of caution money of Rs. 20,000/- only to the students during the year. The AO required the assessee to furnish the details including names , complete address and receipt/payments slip of all the students, but the assessee has furnished names of the students, copy of ledger account only. Therefore, the AO did not accept the contention of the assessee and concluded that caution money was the integral part of the fee received from the students and chargeable to tax. Accordingly, the AO made addition of Rs. 4,43,800/-.
22. In appeal, the ld. CIT(A) noted that the assessee had shown liability on account of caution money to the extent of Rs. 25,02,120/- as on 31.03.2010. The assessee claimed to have returned caution money of Rs. 19,45,000/- to the I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 15 of 18 students and the balance amount of Rs. 5,40,000/- was stated to be returned back as income in the profit and loss account of financial year 2011-12 relevant to assessment year 2012-13, but the ld. CIT(A) noted that it is strange to note that the assessee was not having complete addresses of the students as despite opportunity given by the AO during the assessment proceedings. Therefore, considering the totality of facts, the addition was confirmed.
23. Before us, the ld. Authorized Representative of the assessee submitted that the assessee has received Rs. 4,43,800/- from various students during the year as caution money alongwith fee, which has been shown as liability and not credited to the profit and loss account. It was submitted that caution money is not un-usual receipts in coaching institutions and the practice of treating the same as liability has been adopted for the past many years being refundable to the students earned leaving the institute. The ld. Authorized Representative of the assessee also submitted the details of caution money refunded in subsequent years is reflected at I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 16 of 18 paper book page 31-47. It was further submitted that unclaimed portion of caution money was transferred to profit and loss account in assessment year 2012-13 as shown at page 48 of the paper book. Therefore, it was contended that caution money received is an integral part of the total fee collection from the students which has been accepted, accounted and disclosed in the regular books of accounts. When fee component other than caution money has not been disputed and accepted, as such the AO and ld. CIT(A) are not justified in treating the amount of caution money from the same students paid as part of total fee as unexplained creditors.
24. We have heard the rival submissions and have perused the material available on record. We find that the assessee has failed to furnish the required complete details i.e. address of the students, payment slips during the course of assessment proceedings. It was claimed that details of caution money student-wise has already been furnished vide letter dated 28.12.2012 before the AO and the refund of caution I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 17 of 18 money is also shown in debit side of the said ledger account. The balance caution money has been refunded to the student on leaving in the subsequent year. It was submitted during the assessment proceedings that tabulation of such details will take atleast 15 - 20 days time because the Accountant had gone out of station. It was submitted that money receipts are by cheque and receipts are in the nature of liability and not income. The ld. CIT(A) disbelieved the assessee considering the circumstances of the case and principle of human probability. Considering the facts and circumstances of the case, we are of the opinion that one more opportunity is to be allowed to the assessee to furnish the requisite details before the AO regarding each student and payments thereof. Therefore, this issue is restored back to the file of AO to make a fresh assessment after examining all the details as required after making necessary enquiries in this regard. Therefore, this ground is allowed for statistical purposes.
25. Ground no. 7 relates to charging of interest u/s 234A, 234-B and 234-C which are of consequential nature. I.T.A.No. 214/Ind/2014-A.Y.2010-11 Smt. Tripti Agarwal, Bhopal Page 18 of 18
26. In the result, the appeal is partly allowed for statistical purposes.
The order has been pronounced in open court on the 7th November, 2016.
Sd/- Sd/-
(डी.ट
.गरा सया) (ओ.पी.मीना)
या यक सद य लेखा सद य
(D.T.GARASIA) (O.P.MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
*दनांक /Dated : 7th November, 2016.
CPU*