THE DCITVALSAD CIRCLE, VALSAD vs. SHRI SADRUDDIN NINAMUDDIN SHAIKH, VALSAD

HaT , ~u Har4 & FGET BEFORE SHRI CM.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER 31T.35.F.II.T.A No.3440/AHD/2014 faeror ad/Assessment Year 2006-07 Shri Saddruddin N. Shaikh, Prop- Green Park, Kosamba Road, Valsad. PAN:_AIEPS5665D 3-latreff Appellant Vs. The Deputy Commissioner of Income Tax, Valsad Circle, Palak Arcade, Tithal Road, Vaklsad: Teff/Respondent 3T..31.F.I.T.A No.41/Ahd/2015 faerur &dAssessment Year 2006-07 The Deputy Commissioner of Income Tax, Valsad Circle, Palak Arcade, Tithal Road, Vaklsad. Vs. Shri Saddruddin N. Shaikh, Prop-Green Park, Kosamba Road, Valsad PAN: AIEPS5665D 9rrff/Respondent 3roflareff Appellant fufd &1 3k % /Assessee by: Shri $. D. Chheda, CA: TTJFT 31l7 # /Revenue by: Shri B. P. K Panda, Sr. DR: HTarf # aru/ Date of hearing: 3qui401r # arf /Pronouncement on: 08.01.2018 11 -61 - 20 | 8 HTe /QRDER PER 0 PMEENA ACCQUTANI MEMBER: Shri Saddruddin N, Shaikh DCIR - Valsad /.T.A; No.3440 &4/ /Ahd/2014 /A Y.06-07 These are cross appeals by assessee and Revenue is directed against the orders of CIT(A), Valsad, dated 17.11.2014. LLANo3440/Ahd[20l4 for AY2006-0Z:(by assesseel 2. The assessee has taken ground no 1 and 2, which relates to confirmation of notional interest of Rs.1,12,560/- on amount of advanced. 3 We have heard both sides. This case was set-aside by ITAT vide order dated 28.06. 2013 in ITA No.1679/Ahd/2010 to the file of the CIT (A) with direction to obtain a remand report from the AO and decide the matter afresh: Accordingly, in second round of appeal, the CIT(A) noted that the Assessing Officer had not made any comments on ground no.7 concerning disallowance of notional interest of Rs.1,12,560/- However, the appellant, in his counter comments, stated that the appellant has more non- interest bear ring funds than the advances given: Therefore, CIT(A) held that the AO has rightly made disallowances, as the appellant has failed to adduced any evidence that these advances were for business purpose: The learned representative contended that such disallowances were deleted by CIT(A) in first round of appeal, hence, CIT (A) has exceeded his juri iction to confirm such disallowance in second round of appeal: Per contra, Id. Departmental Representative relied on the order of CITIA): We find that the entire first appellate order was set-aside to CIT (A) to be decided afresh, hence, CIT(A) has rightly adjudicated the same in second round of appeal. So far merit of the disallowance is concerned, it is discernible from the ledger account of Shri Ashish D Modi, as appear ring at page no.17 of paper book, that these advances were related to payment of income tax/ advance tax by the Shri Saddruddin N. Shaikh DCIR - Valsad /LT.A, No.3440 &41 /Ahd/2014/A.Y:06-07 Page 3 0f5 assessee on behalf of Shri Ashish D. Modi, hence, these, are apparently for non-business purposes, hence, notional disallowance, of interest is rightly made by the Assessing Officer: However, as rightly pointed out by the Ld. Authorised Representative thaf advances are to be spread over during F.Y.2005-06,and majority of advances were given during the month of March, 2006, hence , disallowance; of interest ought to have calculated on the basis of period of amount of advances given to Shri Ashish Modi. But the Id. AR has failed to give any such working before US. In such circumstances, the disallowance of notional interest is confirmed with a direction to the AO to re-calculate the disallowance of interest on the basis of period for which amount of advances given to Shri Ashish Modi by the assessee: Thus, ground No.1 and 2 of appeal is therefore, partly allowed. IANo: 4LIAHD/2OL5 for AX2006-QZ:lby Revenue) 4 By ground No.1 to 5, the AO has challenged the deletion of unexplained advances amounting to Rs.1 5,76,400/ - against plot of lands, Rs.11,00,000 /- on account of cash credit and disallowance of interest thereon of Rs.1 ,32,000/-by stating that the CIT(A) has erred by giving the decision of inherently contradictory remand report submitted by the AO and in violation of Rule 464. 5 Brief facts are that the assessee has shown payment against the booking of plots in Green Park -4, Zinnat Nagar and Modi Nagar from 27 persons amounting to Rs. 21,89,400 /- as against which the assessee has furnished confirmation from six persons for the amount of Rs.( 6,1 3,000/-, therefore, the AO made addition of Rs.1 5,76,400/- (21,89,400 6,13,000) on this account, Shri Saddruddin N, Shaikh DCIR- Valsad /LT.A No.3440 €41 /Ahd/2014 TA.Y :06-07 Page 40f5 The assessee filed an appeal before CIT(A) wherein the assessee has filed the confirmation from the rema ining persons. After considering the same, the CIT(A); vide his order dated 22.01.2010 has deleted the said addition. However, the Revenue has challenged the said deletion before the ITAT. The Tribunal vide order dated 28.06.2013 in L.T.A, No. 1679 /AHD/2010 has remitted back the issue to the file the CIT(A) to decide the issue afresh after obtaining remand report from the AO_ Consequently, in second round of appeal, the CIT(A) has obtained a remand report from the AO. The AO vide his remand report dated 21.04.2014 has accepted the explanation as given by the AR of the appellant. Accordingly, the CIT(A) has allowed this grounds of appeal: Similarly, with respect to Ground No.2 relating to deletion of addition of unexplained cash credit of Rs.1 1,00,000/- and interest on such cash credit of Rs.1,32,000 /- (Ground No.3) is concerned, we find that the AO has accepted the explanation of the assessee in his remand report dated 21.04.2014. Therefore, theses additions were also deleted by the CIT(A) 6 Being, aggrieved the Revenue filed this appeal before the Tribunal. The Id. DR vehemently supported the order of the AO and contended that the CIT(A) should not have accepted the additional evidence filed under Rule 464 of LT. Rules,1 963 Therefore, it was urged that the order of the AO be restored 7 We have considered the facts and perused the material on record. We find that the Tribunal vide its order dated 28.06.2013 has set-aside whole case to the file of the CIT(A) with the direction to obtain a remand report from the AO and the decide the matter afresh: In compliance thereof, the CIT(A) Shri Saddruddin N, Shaikh V. DCIR - Valsad /LT.A No.3440 &41 /Ahd/2014 TA.Y.06-07 Page 5 of5 has called for a remand report from the AQ and after going through the same find that the AO has accepted the explanation in respect of aforesaid additions. Accordingly, the CIT (A) has deleted the above additions. In such scenario, we find that the CIT(A) was correct in deleting the additions made by the AO. The contention of the Revenue that the CIT(A) has passed his order in violation of Rule 464 does not hold water as the CIT(A) has scrupulously followed the directions of the Tribunal. Further, after examination of facts and evidence as produced before the AO during remand report proceedings has find the explanation of the assessee as correct. In the light of the facts and circumstances, we do not find any infirmity in the order of the CIT(A): Accordingly, the above grounds of appeal of Revenue are dismissed. 8 In the result, the appeal of the Assessee is partly allowed and appeal of Revenue is dismissed. The order pronounced in the open Court on 11 January 2018 Sx/ - S7/ (C.M: GARG) (O.P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER HTdt/ Surat, f2aTie Dated: 11.01.2018 Copy of order forwarded to- Assessee/AO/Pr: CIT / CIT (A)/ITAT (DR) / Guare file of ITAT, By order 0| IzJie Assistant Registrar , Surat Tees tolaor Uath-" 7o1y {T 7n 90a