M/S. STAINLESS INVESTMENT LTD.,NEW DELHI vs. ITO, NEW DELHI

PER DIVA SINGH, J.M. The present appeal has been filed by the assessee assailing the correctness of the order dated 19.09.2014 of the CIT(A)-XII, New Delhi pertaining to 2011-12 assessment year on the following grounds :- “

1. On facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals)(CIT (A)) erred in not deleting the addition of Rs. 20,58,412/- made on account of alleged interest income on the advances given by the appellant.

2. On facts and in the circumstances of the case and in law, the lower authorities erred in holding/confirming the above addition without establishing direct nexus to the effect that interest bearing borrowing were diverted in giving interest free advances.

3. On facts and in the circumstances of the case and in law, the Id. CIT (A) erred in confirming the above addition which is contrary to the established principle of taxation that tax cannot be levied on notional income.

4. Without prejudice, the Id. CIT (A) ought to have deleted the addition of interest since the claim of the appellant on account of interest expenses was only in a negligible sum.

5. The appellant craves leave to add, amend, and modify all or any of the above grounds of appeal.”

2. Ld. AR inviting attention to the issues raised submitted that on identical issue in similar facts the ITAT in the case of the assessee has restored the issue for verification. Inviting attention to the copy of the order dated 28.09.2016 in stated on similar facts, the issue was restored with the following direction :- “7. After hearing both the parties and perusing the materials available on record we find that the ld. AR has submitted the details of unsecured loans and advances as on 31.03.2010 & 31.03.2009 which is placed at paper book page

21. On perusal of the same, it reveals that no unsecured loans are shown to have been advanced by the assessee to the Gagan Infra Energy Ltd. in financial year 2008-09. These details show that a loan of Rs.3.06 crores was given only in the year under consideration. However, contrary to it, the Assessing Officer has recorded a finding that the assessee had given interest bearing loan to this party during the F.Y. 2008-09 on which the assessee has shown interest income of Rs.9,55,383/-. This finding of the Assessing Officer stands in sharp contradiction with the details of loans submitted by the assessee, which needs verification at the stage of Assessing Officer before arriving at any conclusion on this count. Secondly, as per details given by the assessee to substantiate the source of funds, as noted above, it is found that the assessee has shown to have advanced loan to the said company of Rs.105 lacs on 11.11.2009 out of dividend received from Jindal Steel and Power Ltd. whereas from the bank statement placed at page No. 24 of the paper book, it is clear that closing balance as on 05.11.2009 was of Rs.1,96,536.82 and on 09.11.2009, an amount of Rs.1.05 crores had been credited, the source of which has been mentioned in hand writing as “refund from Advani”. On 11.11.2009, a cheque of Rs.105 lacs is shown to have been issued – marked as advance to Gagan. Therefore, there appears contradiction in the declared source of advance submitted before the Assessing Officer and as shown in the bank statement. Therefore, in our opinion, this aspect of the case also needs proper verification as to the exact source of advance given by the assessee to M/s. Gagan Infra Energy Ltd. Unless clear facts are brought on record, the issue cannot be properly adjudicated at this stage. We, therefore, deem it proper to restore the matter to the file of the AO for deciding the issue de novo in accordance with law after making proper verification of the facts and by giving reasonable opportunity of being heard to the assessee.”

3. Considering the aforesaid order and the grounds before the ITAT in the present appeal, the Ld. Sr. DR stated that grounds raised

in the immediately preceding assessment year are identical. He agreed that the issue pertains to advances given to the very same party one of whom is common i.e. M/s Gagan Infra Energy Ltd.. Accordingly, it was submitted he would have no objection if the issue is set-aside and restored for verification in the light of the directions of the ITAT.

4. I have heard the rival submissions and perused the material available on record, I find that in the light of the submissions of the parties before the Bench the impugned order deserves to be set aside. Accordingly, since the facts and circumstances and position of law on the issues raised continues to remain the same and in the absence of any change in the material facts and circumstances, respectfully following the order of the Co-ordinate Bench which is a Division Bench order passed in the immediately preceding Assessment year in order to main parity of reasoning, the issue is restored to the file of the Assessing Officer with identical directions as in the immediately preceding assessment year. Needless to say that a reasonable opportunity of being heard shall be granted to the assessee.