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TMI Blog2009 (11) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... rs are petty artisans moving from place to place and have mostly no permanent residential addresses - Assessing Officer observed that from the reply of the assessee, the assessee has not been able to satisfactorily explain the identity and genuineness of the transactions - From the orders of tax authorities below, it becomes clear that they have not disputed that in the manufacturing business of utensils, the assessee has to incur the polishing expenses - the order of the ld. CIT(A) in restricting the disallowance at the rate of 15 per cent as detailed in his order is upheld - In the result, the appeal filed by the assessee and the appeal filed by the revenue are dismissed - 2004 and 2747 (Delhi) of 2009 - - - Dated:- 26-11-2009 - D.R. Singh, Deepak R. Shah, JJ. H.K. Lal for the Appellant. H.L. Mittal for the Respondent. Order Per D.R. Singh, Judicial Member. These two appeals - one filed by the revenue and the other filed by the assessee arising from the order of the CIT(A) passed in Appeal Nos. 226/7-08, dated 20-3-2009, were heard together and are being disposed of by this common order for the sake of convenience. 2. In its appeal, the revenue has tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debit balance has been in the account M/s. Kesho Ram Industries on the opening day of the year, i.e., 1-4-2004, amounted to Rs. 29,97,360 which stood reduced to Rs. 1,36,360 as on 31-3-2005 on account of payments received from them. The assessee further contended before the Assessing Officer that against the above interest-free advances to M/s. Kesho Ram Industries, the assessee s own interest-free funds consisting of partners accounts and their deceased father, an ex-partner, amounted to Rs. 27.68 crores as on 1-4-2004 and Rs. 26.77 crores as on 31-3-2005. Hence, interest-free advances made to M/s. Kesho Ram Industries constituted an insignificant fraction of the interest-free funds available with the assessee. The assessee s is a case of mixed funds where assessee s own capital retained profits and other interest-free funds available with it and borrowings are mixed. In view of the above facts and settled legal position, there is no justification for disallowance of any part of payment on interest. Although in earlier years part of interest has been disallowed but the matter is yet pending in appeals. 4.1 On considering the above submissions, the Assessing Officer observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment years 2001-02 and 2002-03 for the reason as discussed in the said orders, this ground of appeal is dismissed. 6. We have considered the rival contentions of both the parties, perused the records and carefully gone through the orders of tax authorities below. In the instant case, it is not in dispute that in assessment year 2001-02, the proportionate interest to the debit balance in the name of sister concern M/s. Kesho Ram Industries was disallowed by the Assessing Officer by calculating the same at the rate of 14 per cent applicable to the cash credit account, because there was a direct nexus between the advances to the sister concern and the interest bearing funds. The disallowance was upheld by the CIT(A) and the same was confirmed in the case of this very assessee by ITAT, New Delhi, Bench-E vide consolidated order dated 3-8-2007 in ITA No. 5533/Delhi/2004 and C.O. No. 5514/Delhi/2004 for assessment year 2001-02. In the year under consideration, there is no change in facts in the proportionate disallowance made by the Assessing Officer as the debit balance in the case of same sister concern, M/s. Kesho Ram Industries, was reduced on account of which the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee an opportunity to distinguish the facts of the case (3) not considered the relevant decision of various High Courts, Supreme Court and ITAT on the main aspects. However, we have chosen not to dispose of these written submissions on merits because, in our opinion, the same are not relevant, firstly because the assessee has not filed any miscellaneous application against that order (supra) for rectification of the order (supra) on the above grounds and secondly in view of the ratio of the decision (supra) of Delhi High Court which clearly lays down that if an issue under consideration before a Bench of a Tribunal on same facts has already been considered and adjudicated upon by a co-ordinate Bench in the case of same assessee for an earlier assessment year, the Tribunal is bound to follow the decision of the co-ordinate Bench. As a result of the discussion hereinabove, the ground No. 1 of the cross-objection filed by the assessee is rejected. 7. Now, we shall deal with ground No. 2 of the appeal of the assessee and ground No. 1 of the appeal of the revenue involving an identical issue of polishing charges claimed by the assessee. Both are in appeal before us on the reasoning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfactorily explain the identity and genuineness of the transactions. He further observed that for charging expenses, it is necessary to prove that the services have actually been rendered by the persons to whom these payments were made and for that identity of the persons and genuineness of the transactions is also required to be proved by the assessee. Otherwise, anyone can claim any amount of expenditure. In this case, the assessee has filed a general reply stating that polishing was necessary for utensils to sell them and these persons to whom polishing charges were paid are common men and the assessee has no interactions with the individual artisans who change place and residences frequently and mostly live in jhuggies and slum areas. Further, according to the Assessing Officer, the burden of proving that the expenditure was incurred wholly and exclusively for the purposes of business lay on the assessee which he failed to discharge and hence for want of evidence the Assessing Officer accepted 50 per cent of the claim of the assessee and made disallowance of Rs. 1,01,18,242 out of Rs. 3,02,74,918 claimed by the assessee. 8. Aggrieved with the order of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entire claim of payment of polishing charges of the utensils to the workers. 9.3 We may also like to mention here that the explanation of the assessee regarding it is difficulties faced in the manufacturing business of utensils in employing workers, like scarcities due which they have to employ casual workers as they are moving from place to place hence have no permanent residential address. Therefore, the assessee is unable to supply addresses and confirmations as the assessee has no interactions with them. These explanations are sine qua non for absolving the assessee from discharging onus cast upon him in proving the genuineness of claim of payment made to workers for polishing charges. 9.4 When the question of determining specific disallowances or additions comes before the Tribunal for consideration, the members of the Tribunal as a Judge cannot lose site of the fact that in case they start showing benevolence towards such explanations of the assessees or that their NP rate has increased from the previous year and start allowing the total claims of the assessees, even though they miserably failed to discharge their onus by producing supportive evidence, if there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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