NIKI AGRO PRODUCTS PVT. LTD., JALGAON vs. ACIT, CIRCLE - 2, JALGAON

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ITA/99/2014HC BombayHCBM03017862201423 March 2018Author: HON'BLE SHRI JUSTICE S V GANGAPURWALA,HON'BLE SHRI JUSTICE ARUN M. DHAVALE4 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal, considering the observations of the Commissioner (Appeals), held that Mr. S.G. Mittal had shown the amount of Rs. 3,61,500 as his income by way of interest received from the appellant. The authorities had safely concluded that the company had in fact paid this amount to Shri S.G. Mittal during assessment year 2008-2009 outside its books of account, which amounts to unexplained expenditure. The Tribunal found that the theory that interest was not paid could not be accepted. Given the concurrent findings of the authorities, the Tribunal concluded that no substantial question of law arose and dismissed the appeal.

What were the facts?

The appeal concerns assessment year 2008-2009. The Assessing Officer (AO) made an addition of Rs. 3,61,500, treating it as unexplained expenditure under Section 69 of the Income Tax Act. This amount was found in the accounts of Mr. Satishchand G. Mittal, who showed it as income received from the assessee, Niki Agro Products Pvt. Ltd. The addition was confirmed by the Commissioner (Appeals) and the Income Tax Appellate Tribunal. The assessee contended that the amount was shown as interest receivable by Mr. Mittal and was not actually paid. The department argued that all authorities consistently held the interest was paid by the assessee to Mr. Mittal.

What were the issues?

1. Whether the Tribunal erred in confirming the addition of Rs. 3,61,500 as unexplained expenditure under Section 69 of the Income Tax Act, 1961, when the amount was shown as interest receivable and not actually paid by the assessee? Assessee's Contention: The assessee argued that the amount of Rs. 3,61,500 was shown as interest receivable by Mr. S.G. Mittal and was not actually paid. The show cause notice and assessment order considered this as interest payable by the assessee. The assessee contended that unless the amount is actually paid, it cannot be brought within the purview of unexplained expenditure. The assessee relied on the Delhi High Court judgment in CIT vs. Lubtec India Ltd. (2009) 311 ITR 175. Revenue's Contention: The revenue submitted that all authorities had consistently held that the amount of interest was paid by the assessee to Shri S.G. Mittal.

Which sections of the Income-tax Act were involved?

Section 69

AI-generated summary — verify with the full judgment below

1 ita 99.14 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO. 99 OF 2014 Niki Agro Products Pvt. Ltd., Jalgaon ..    Appellant Versus ACIT, Range ­ 2, Jalgaon ..    Respondent Shri Subodh P. Shah, Advocates for the Appellant. Shri Alok Sharma, Standing Counsel for the Respondent. CORAM : S. V. GANGAPURWALA AND A. M. DHAVALE, JJ. CLOSED FOR ORDERS ON : 13.02.2018 ORDER PRONOUNCED ON : 23.03.2018 ORDER (Per S. V. Gangapurwala, J.) :­

. The appeal pertains to assessment year 2008­2009. The assessing officer has made addition of Rs. 3,61,500/­.     The   said addition   is   confirmed   by   the   Commissioner   Appeals   and   the Income Tax Appellate Tribunal.  The addition was in respect of treating Rs. 3,61,500/­ as unexplained expenditure U/Sec. 69 of the Income Tax Act (for short "I. T. Act").   The amount of Rs. 3,61,500/­ was found in the accounts of one Mr. Satishchand G. Mittal.     He   has   shown   it   as   his   income   received   from   the assessee.

2 ita 99.14

2.

Mr. Shah, the learned counsel for the appellant submits that, the amount of Rs. 3,61,500/­ is shown as interest receivable by Mr. S. G. Mittal.  The amount is not actually paid.  According to   the   learned   advocate,   show   cause   notice   was   issued   on 29.11.2010, which states that, the amount of Rs. 3,61,500/­ is shown  as   receivable  from   Niki  Agro   i.  e.  the   assessee.     The assessing officer considered this as amount payable to Shri S. G. Mittal   and,   therefore,   added   the   income.     The   Commissioner Appeals inferred that, an amount of Rs. 3,61,500/­ was in fact Appeals in its judgment has observed thus : "As regards appellant's contention that AO was not justified in treating Rs. 3,61,500/- as its unexplained expenditure u/s 69 as it did not pay the amount, I find that all circumstantial evidences contradict the appellant's submission in regard to payment of interest. The undisputed facts of the case are (i) the company received Rs. 50 lac in cash as loan on interest (ii) the said loan was repaid on 7/11/2007 as per the letter dt. 27/11/2007 written by Shri Satishchand to Shri Kantilal Jain (iii) interest was due as on 27/11/2007 and (iv) Shri Satishchand offered interest of Rs. 3,61,500/- for taxation in his return of income for AY 2008-2009. Since Shri Satishchand has shown this interest of Rs. 3,61,500/- as his income, it could be safely concluded that the company had in fact paid this amount to Shri Satishchand during AY 2008-09 outside its regular books of accounts. The loan as mentioned above was on interest. There was no question of recovery of any paper relating to receipt of interest from the premises of Shri Satishchand as the search took place on 22/11/2007

4 ita 99.14 and the interest was not paid till 27/11/2007. AO under the facts and circumstances of the case was justified in treating the said expenditure of Rs. 3,61,500/- as appellant's unexplained expenditure. The addition is confirmed and appellant's ground in this regard is dismissed."

6.

Considering aforesaid observations, it is clear that, Mr. S. G. Mittal had shown the income of Rs. 3,61,500/­ as his income by way   of   interest   received   from   the   appellant   and   as   such authorities have safely concluded that the company had in fact paid this amount to Shri S. G. Mittal during assessment year 2008­2009   out   side   its   books   of   account.     It   tantamounts   to unexplained expenditure.  The theory that interest was not paid, cannot   be   accepted.     Considering   aforesaid   observations   and concurrent   findings,   no   substantial   question   of   law   arises. Appeal as such is dismissed no costs. [A. M. DHAVALE, J.]               [S. V. GANGAPURWALA, J.] bsb/March 18

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