Pr. Commissioner Of Income Tax-I, Chandigarh v. Sh. Ravinder Kumar Gupta

ITA No. 7 of 2018 I1IIN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH. ITA No. 7 of 2O18Decided on : 04.07.2018 Pr. Commissioner of Income Tax-I, Chandigarh ... Appellant Versus Sh. Ravinder Kumar Gupta r/o House No. 250, Sector 19-A, Chandigarh, ... Respondent od CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE AVNEESH JHINGAN Present ;Ms. Urvashi Dhugga, Sr. Standing Counselfor the appellant. TT AE AVNEESH JHINGAN, J. 1,The Revenue (hereinafter referred to as the 'appellant') has filedthis appeal against the order 12.07.2017 passed by the Income TaxAppellate Tribunal, Chandigarh (in short, ‘the Tribunal’) allowing the appealof the assessee. |As per the appellant following substantial questions of lawarise: (i) “Whether on thefacts and circumstances ofthe case Hon'bleITAT was correct in law in holding that Pr. CIT was notright in invoking the provisions of the section 263 of the ITAct as inadequate enquiry was conducted by the assessingofficer in the case and where inadequate enquiry has beenconducted the Pr. CIT can invoke the provisions of section 263 of the ITAct particularly in view of the applicability ofclause 'a' of ‘Explanation 2' to the provision ofsection 263of the IT Act which has been inserted w.e.f. 1.6.2015. (ii) “Whether on the facts and circumstances of the caseHon'ble ITAT was correct in law to set aside the order ofPr. CIT as the cases relied upon by the Hon'ble ITAT aredistinguishable on facts as compared to the facts of the caseofthe assessee.”” 3)The assessment year involved is 2012-13. The bare factsnecessary for adjudication of the present appeal as narrated in the appealare that the return filed by the assessee were selected for scrutiny and theassessment under Section 143(3) of the Income Tax Act, 1961 (for short 'theAct') was finalized vide order dated 31.12.2014. The assessing officer madeadditions of=5,92,193/- on account of low net profit rate and|442,000/- onaccount of disallowance of interest free advance given for non-businessPUTPOSes. 4On the basis of audit objection, Section 263 of the Act wasinvoked. Revision was done on the ground that the Assessing Officer hadnot verified and examined the loan advanced amounting to=84,92,000/- bythe assessee to his wife allegedly for business purposes. Further assesseehad not substantiated that the loan given to the wife had no nexus with theborrowed funds. Vide order dated 22.02.2016, the assessment order was setaside and assessing officer was directed to carry out the investigation asper discussion in the revisional order and thereafter frame the assessmentafresh 5 Being aggrieved of the order, the assessee preferred an appealbefore the Tribunal. During the pendency of the appeal, the assessing ITA No. 7 of 2018 officer in pursuance of the remand, framed assessment vide order dated21 1227016. 6.The Tribunal vide order dated 12.07.2017 accepted the appealof the assessee. The Tribunal allowed the appeal holding that there was nofinding in the order passed under section 263 of the Act that the assessmentorder was erroneous. The Tribunal examined the issue raised by the CIT onmerits as well and adjudicated the same in favour of the assessee. vaWe have heard the learned counsel for the appellant. § Learned counsel for the appellant contended that the Tribunalerred in setting aside the order passed under Section 263 of the Act.Assessment order was rightly revived as Assessing Officer had not madeadequate enquiry about the loan advanced to the wife of the assessee as towhether it was for business purposes and not made from the borrowedfunds. OQSince we do not find any infirmity in the findings recorded bythe Tribunal on merits, accordingly it is not considered appropriate toexpress any opinion on the ambit of Section 263 of the Act. vaWe have heard the learned counsel for the appellant. § Learned counsel for the appellant contended that the Tribunalerred in setting aside the order passed under Section 263 of the Act.Assessment order was rightly revived as Assessing Officer had not madeadequate enquiry about the loan advanced to the wife of the assessee as towhether it was for business purposes and not made from the borrowedfunds. OQSince we do not find any infirmity in the findings recorded bythe Tribunal on merits, accordingly it is not considered appropriate toexpress any opinion on the ambit of Section 263 of the Act. 10.The assessee advanced a loan ota85,00,000/- to his wife forconstruction of super structure on the land owned by her in Mullanpur. Thesuper structure was to be used by the husband for conducting his business.The statements and evidence to this effect were produced before theAssessing Officer and the same have been relied upon by the Tribunal.Even the CIT while exercising powers under Section 263 of the Act did notdispute that the said issue was examined during the assessment proceedings.In the replies filed before the Assessing Officer it was pleaded thatconstruction of godown on the land owned by assessee's wife was for ITA No. 7 of 2018 -4- business of assessee and for this purpose the loan of |485,00,000/- wasadvanced. It was established that the loan was given for business purposes.11)The second issue that the assessee failed to establish that theloan advanced was not from the borrowed funds cannot be sustained in viewof the factual findings recorded by the Tribunal. During the assessmentproceedings the assessee had substantiated that he had his own capitalamounting to|3,36,63,807/- which in itself was sufficient for advancing alloan ofe85,00,000/-. Thus, assessee had his own funds available. 12.This Court in case reported as (2016) 381 ITR 107:2015 (84)RCR (Civil) 20 titled asBright Enterprises Pvt. Ltd. Vs. Commissioner ofIncome Tax, Jalandhar,expressing similar view taken by the BombayHigh Court in Commissioner of Income Tax Vs. Reliance Utilities &Power Ltd., (2009) 313 ITR 340,held as follows :- “16.As we noted earlier, the funds reserves of theappellant were sufficient to cover the interestfree advances made by it ofRs.10.29 crores toits sister company. We are _ entirely iagreement with the judgment of the BombayHigh Court in Commissioner ofIncome TaxVs. Reliance Utilities & Power Ltd.,(2009)313 ITR 340, para-10, that if there are interestfreefunds available a presumption would arisethat investment would be out of the interestfree funds generated or available with thecompany if the interest free funds weresufficient to meet the investment. Learned counsel for the appellant-revenue has not been able to ITA No. 7 of 2018 point out any error in the order passed by the Tribunal warrantinginterference by this Court. Thus, no substantial questions of law arise.14.The appeal is dismissed. | AJAY KUMAR MITTAL]JUDGE 04.07.2018pankaj baweja | AVNEESH JHINGAN |JUDGE Whether speaking/reasoned ?Yes /NoWhether reportable ?Yes /No