Shri Pawan Kumar v. Commissioner Of Income Tax-Ii, Rishi Nagar, Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: January 10, 2013 ITA No. 269 of 2012 Shri Pawan Kumar …Appellant Versus Commissioner of Income Tax-II, Rishi Nagar, Ludhiana …Respondents CORAM:HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MS. JUSTICE RITU BAHRI Present:Mr. S.K. Mukhi, Advocatefor the appellant. 1To be referred to the Reporters or not?2Whether the Judgment should be reported in theDigest2Whether the Judgment should be reported in theDigest HEMANT GUPTA, J. (ORAL) The appellant is in appeal under Section 260-A of theIncome Tax Act, 1961 (for short 'the Act') against an order dated17.05.2012 (A-3) passed by the Income Tax Appellate TribunalBench-A, Chandigarh (for short 'the Tribunal') in ITA No.1119/CHD/2011 in respect of the assessment year 2008-09. Theappellant has raised the following substantial questions of law: “(i)Whether under the facts and circumstances of thecase, the ITAT is justified in confirming addition of `3,00,000/- on estimate basis by arbitrarily rejecting thebooks being duly audited, ignoring report of NationalAnalytical Laboratory, ignoring that assessee is using oldmachinery and oil cakes have has to contain appreciableamount of oil for sale in market towards animal feed?(ii)Whether under the facts and circumstances of thecase, the ITAT is justified in confirming addition of ` 2,89,220/- on account of interest on business loan to M/sShri R.R.Foods, a business firm of the son of the appellanthaving given out of commercial expediency?” Learned counsel for the appellant has vehementlyargued that the assessee sought report from the NationalAnalytical Laboratory, Nabha in respect of yield for the cottonseeds but in spite of said report, the Tribunal has assessed theyield @ 11% as against 9.85% declared by the assessee inrespect of oil from cotton seeds. The Assessing Officer has adopted the yield at 11%and made addition of ` 8,68,800/- in income. The said additionwas reduced by the Commissioner of Income Tax(A) to ` 2 lacsbut the Tribunal accepted the appeal of the Revenue andincreased the yield and made addition to the extent of ` 3 lacs. We do not find any merit in the arguments raised bylearned counsel for the appellant. A perusal of the order passedby the Tribunal shows that in the previous year, the appellant hasgiven the quantity of cotton seed, mustard and ground nutcrushed separately but in the year in question, the yield of oil andoil cakes have been given in consolidated form. The sales of oiland oil cakes have been shown in the manufacturing account inconsolidated form although there is wide variation in the marketprice in these products. The Tribunal also noticed the fact thatassessee has preferred to put up a consolidated account ofdifferent types of oil seeds for the reasons best known to him.The Tribunal also noticed the fact that there was wide variation inthe percentage of yield of oil, sale rates of oil and oil cakes in themarket, but keeping in view the yield disclosed by the appellant in the consolidated form not only the books of account were rejectedbut also the yield was assessed in a particular manner. The orderpassed by the Tribunal is based upon pure findings of fact. Wefind that first substantial question of law does not arise forconsideration. In respect of the second substantial question of law,the assessee has advanced two advance interest free loan of` 1,60,000/- and ` 10 lacs to the firm of his son from his cashcredit account. The appellant paid interest on the amountoverdrawn. The Assessing Officer disallowed interest amountingto ` 2,89,270/- @ 15% paid by the assessee on such amount.Since the assessee has advanced loan from his cash creditaccount on which the interest was paid by the appellant,therefore, such interest has been rightly disallowed asexpenditure. The plea of the assessee the amount being advanceinterest free loan has rightly been not accepted. In respect of the second substantial question of law,the assessee has advanced two advance interest free loan of` 1,60,000/- and ` 10 lacs to the firm of his son from his cashcredit account. The appellant paid interest on the amountoverdrawn. The Assessing Officer disallowed interest amountingto ` 2,89,270/- @ 15% paid by the assessee on such amount.Since the assessee has advanced loan from his cash creditaccount on which the interest was paid by the appellant,therefore, such interest has been rightly disallowed asexpenditure. The plea of the assessee the amount being advanceinterest free loan has rightly been not accepted. In view of the findings recorded, we do not find anymerit in the present appeal. Dismissed. (HEMANT GUPTA)JUDGE 10.01.2013Atul/Vimal (RITU BAHRI) JUDGE