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TMI Blog2024 (12) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... I accept the contention of the assessee that granting of interest free advances to potato growers in order to tie the farmers for keeping their crop with the cold storage of the assessee, so that the assessee can earn rent from the potatoes kept by the farmers in the cold storage of the assessee, is out of business expediency as stated by the assessee. The assessee has furnished list of 549 persons who have kept 169054 packets of potatoes with the assessee, wherein rent of Rs. 77,76,480/- was earned by the assessee, and duly offered to tax. No defect is pointed out by any of the authorities. Accordingly, the addition made by the Assessing Officer is directed to be deleted. The assessee succeeds in its appeal. - Shri Ramit Kochar, Accountant Member For the Assessee : None For the Revenue : Sh. Shailendra Srivastava, Sr. DR ORDER This appeal in ITA No.125/Agr/2022 for the assessment year 2011-12 has arisen from the appellate order dated 17.05.2022(DIN Order No. ITBA/NFAC/S/250/2022-23/1043044014(1)) passed by learned Commissioner of Income-tax(Appeals),NFAC, Delhi, which in turn has arisen from the assessment order dated 29.12.2018 passed by Assessing Officer u/s. 143(3) r.w.s. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 143(2) of the Act on 05.12.2018. During re-assessment proceedings, the assessee submitted before the AO that the amount deposited in the bank account is out of potato rent received and repayment of advances received from the farmers. The assessee also submitted list of farmers, and produced cash book which was test checked by the Assessing Officer. Assessing Officer observed that the assessee has given interest free advances to the potato growers during the year under consideration of Rs. 1,70,04,076/-, whereas it has raised interest bearing loans from the bank and interest paid on such loan has been debited in the profit and loss account. The assessee was required by the AO to explain as to how the amount of interest paid on borrowed capital is for the purpose of business, and as to why the same should not be disallowed as no interest has been charged on the advances given to farmers/potato growers. Assessee submitted that if it had not given interest free advances to farmers, the farmers would not store their potato in its cold storage. Hence, giving interest free advances to farmers is out of business expediency. Assessing Officer asked the assessee to produce 20 farmers for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest free advances to the farmers to bring their potatoes to assessee s cold storage. The assessee charges rent for storing the potatoes. It was submitted that if the assessee had not given interest free advances to the farmers, they would not have stored their potatoes in assessee s cold storage. Ld. CIT(Appeals) rejected the contention of the assessee and held that the Assessing Officer was right in holding that giving such advances to the farmers is not out of business expediency and hence, the appeal of the assessee was dismissed by the ld. CIT(Appeals). 5. Assessee being aggrieved filed second appeal with the Tribunal. When this appeal was called for hearing, none appeared on behalf of the assessee nor any adjournment application is filed. On earlier occasions also, there was no appearance entered on behalf of the assessee and the assessment records were called from the department to be produced before the Bench vide directions dated 20.11.2024. Ld. Sr. DR has produced the assessment records before the Bench. I proceed to adjudicate this appeal in the absence of the assessee. Ld. DR has supported the orders of the authorities below and submitted that the authorities below h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income under new PAN- AACCG9653J, and the assessee submitted during reassessment proceedings that return of income originally filed may be treated as return of income filed in pursuance to notice u/s. 148 of the Act. PAN of the erstwhile firm was not updated by Bank of India with the new PAN of the company. Assessee has duly filed return of income under the new PAN of the company, while the case of the assessee was reopened u/s. 147 on the ground that the assessee has not filed return of income for the impugned assessment year and cash of Rs. 74 lacs were deposited in the bank account. Thus, it Is due to non updatation of new PAN in the bank account with Bank of India, Shikohabad, after conversion of assessee from partnership firm to Company, although it is not the case of the Revenue that Rs. 74 lacs deposited by the assessee in its bank account with Bank of India, Shikohabad were not incorporated in the books of accounts of the assessee company or it represent undisclosed income which is not accounted for or disclosed to Revenue. Proceeding further, I have observed that the assessee has claimed to have advanced interest free loan to the farmers to the tune of Rs. 1,70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmers. The powers of ld. CIT(A) are co-terminus with the powers of the AO including power of enhancement. I have perused the material from the assessment records produced before me, and I have observed that the farmers have affirmed to have received interest free advances from the assessee and they were keeping their crop of potatoes with the assessee s cold storage and were giving rent to the assessee for storing their potato crop in the assessee s cold storage. I directed the ld. Sr. DR to produce assessment records, which was produced before the Bench. On perusal of the assessment records, I directed ld. Sr. DR to file with the Bench, details of rent received by the assessee from 549 persons as submitted by the assessee before the AO during assessment proceedings which was part of assessment record, and ld. Sr. DR has filed the details of rent received containing names of 549 persons from whom the assessee has received rent for keeping 169054 packets of potatoes thereby earning rent of Rs. 77,76,480/-. No defect or deficiency is pointed out in these details by any of the authorities below. I also directed ld. Sr. DR to file audited financial statements, on perusal of which, I ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133(6), if he is not satisfied with the contentions of the assessee. Similar powers are vested with ld. CIT(A), which are co-terminus with the AO. None of the authorities below exercised their powers to get to the bottom of the matter to unravel truth. The objective being to bring to tax the correct income in the hands of the correct assessee and for the correct assessment year, which is the mandate of the 1961 Act. I am of the considered view that assessee has duly explained the business expediency for giving interest free advances to potato growers ie to tie up with the farmers so that the farmers keep their potato crop/produce in the cold storage of the assessee, and the assessee can earn rent from potatoes kept by the farmers in the cold storage of the assessee. Revenue cannot sit in the arm chair of businessman and then decide how the business is to be run. Rather, it is the businessman who has to arrange their business affairs keeping in view the business expediencies in order to maximise their revenues and profits. Reference is drawn to the judgment and order of Hon ble Supreme Court in the case of S.A. Builders (2007) 158 Taxman 74(SC). In the instant case, the business exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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