ACIT, LUCKNOW vs. SAHARA INDIA FINANCIAL CORP. LTD., LUCKNOW

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ITA 547/LKW/1999Status: DisposedITAT Delhi20 January 2022AY 1995-965 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, relying on previous ITAT and High Court orders in similar cases. The additions made by the AO were deleted.

What were the facts?

The Revenue appealed against the CIT(A)'s deletion of additions related to lapsed deposits, disallowance of interest, deletion of expenses, and disallowance of other expenses. The assessee also filed a cross-objection.

What were the issues?

Whether lapsed deposits and certain expenses constitute the assessee's income and if interest payments are disallowable. The verifiability of expenses from account books was also an issue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 254,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI

Before: Sh. Kul BharatDr. B. R. R. Kumar

For Appellant: Adv. Sh. Arpit Goel, CA
Hearing: 12.01.2022Pronounced: 20.01.2022

Heard together (2 matters)

ITA No.547/LKW/1999
CO No. 26/LKW/1999

Read from the judgment's own cause title. This page is filed under one of them.

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-II, Lucknow, dated 15.03.1999. The assessee has also filed Cross Objection.

2 CO No. 26/Del/1999 Sahara India Financial Corp. Ltd.

2.

Lapse of deposits and disallowance of interest:

2.1. The ld. CIT(A) deleted the addition of Rs.2,03,50,74,911/- made by the AO on account of non- furnishing of details of deposits which remained in the books of the assessee as lapsed / defaulted / non-refunded /un-claimed accounts, which the Revenue held that , the amount in substance is forfeited and thus constituted assessee's own income, in view of Supreme Court's Judgments in the Cases of T.V.S. Sundarem 222 ITR 337 and Laxmi Vilas Bank 86 Taxman 231.

2.2. For the Assessment Year 1994-95 in dated 13.09.2005 Para/Page 6-11/2-5. the Co- ordinate Bench of ITAT deleted at similar addition. Also the pattern of addition has been followed as in the case of M/s Sahara Investment India Limited, in which case the Hon'ble High Court has deleted the addition in Income Tax Application No. 30 of 2000 dated 18.11.2003,holding that deposits are Capital receipts and no part thereof cannot be treated as revenue receipts. Hence, in keeping with the order of the ITAT and the Hon’ble High Court, we decline to interfere with the order of the Ld. CIT(A). The same ratio applies to the disallowance of interest payment of Rs.9,49,70,102/- too.

3 CO No. 26/Del/1999 Sahara India Financial Corp. Ltd.

3.

Deletion of expenses: 3.1. The Ld. CIT(A) has deleted the disallowances/addition of Rs.5,30,47,019/- and Rs.9.60 crores of interest, on borrowed capital used for non-business advances and parking one funds with the agents in collection a/c or floating funds, without appreciating the facts that the claim of the assessee was not wholly and exclusively for business purposes.

3.2. Assessment Year 1994-95 in Dated 13.09.2005 Para/Page 25-36/11-14 ITAT deleted similar additions. Issue of imputing notional interest on funds pending remittance stands also covered by the combined order for Assessment Years 1989-90, 1991-92 & 1992-93 in ITA Nos. 372, 373 & 374 (Alld) of 1996 dated 30.06.1998 Para/Page 43-46/30-31 & 75/47 Assessment Year 1996-97 in I.T.A. No. 747/ALLD/2000 dated 26.05.2003 Para/Page 72-74/47-48.

3.3. keeping with the order of the ITAT and the Hon’ble High Court, we decline to interfere with the order of the Ld. CIT(A).

4 CO No. 26/Del/1999 Sahara India Financial Corp. Ltd.

4.

Disallowance of expenses of Rs.29,51,170/-: 4.1. The Ld. CIT(A) deleted the addition of Rs.29.51 Crores made on account of expenses. The Revenue aggrieved that these expenses have not been verifiable from the books of account as supporting vouchers were not produced by the assessee.

4.2. We find that similar addition made in Assessment Year 1994-95 has been deleted by ITAT vide its order dated 13.09.2005 in ITA No. 198/Alld./1999. Also, the Assessing Officer himself in Assessment Year 1992-93 deleted similar addition made on account of reimbursement of expenses to agent at Page 8 of the order u/s 143(3)/254/148 dated 15.03.2002 and disallowed 35% of expenses being consequential to addition of 35% of deposits as unexplained.

4.3. In Assessment Year 1992-93, the ITAT in case of M/s Sahara India Mutual Benefit Co. Limited in Appeal No. 99/Lko/01 dated 31.05.2005 as similar facts & circumstances deleted the addition made referring the order of assessee company in Assessment Year 1992-93 passed by Assessing Officer u/s 143(3)/254/148 dated 15.03.2002.

4.4. Keeping with the order of the ITAT and the Hon’ble High Court, we decline to interfere with the order of the Ld. CIT(A).

5 CO No. 26/Del/1999 Sahara India Financial Corp. Ltd.

5.

In the result, the appeal of the Revenue is dismissed and the Cross Objection of the assessee is dismissed as in- fructuous as the appeal of the Revenue stands dismissed. Order Pronounced in the Open Court on 20/01/2022.

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