The CESTAT has recorded finding that there is prima facie finding of suppression of production and clandestine removal. The balance sheets thus will not reflect the true and correct financial position of the company. The Tribunal was lenient enough in directing the appellant to deposit only Rs. 1 crore and waiving the remaining amount of Excise duty and penalty, which together with would amount to about Rs. 16 crores. We, therefore, do not find any substantial question of law for consideration and interference in this appeal. The Central Excise Appeal is accordingly dismissed in-limine.
The question as to whether the business is derived from or attributable to SLR or non-SLR funds would not make any difference for the purposes of qualifying the interest earned by the cooperative bank under Section 80P (2) (a) (i) as the deposits of surplus idle money available from working capital, including reserves, excess collection of interest tax and other incomes are all attributable to the business of banking. The interest from such deposits cannot be said to be beyond the legitimate business activities of the bank.
The assessee has not come out with the case that in the opening stock, the excise duty was not included. The explanation furnished by the assessee is that since in the subsequent assessment year, the turnover was less than one crore of rupees and as such, the goods were not liable to excise duty, therefore, in the closing stock of the relevant assessment year, the excise duty has not been added, is not legally tenable.
In the present case, the income tax return of the donor namely Dr. Chitranjan Jain and his wife Nisha Jain was filed before the Assessing Authority. No finding has been recorded by Assessing Authority or the CIT Appeal or the ITAT that return filed by Dr. Chitranjan Jain and the Nisha Jain were fake, fabricated or false one. Once genuineness of return is not in dispute then there appears to be no reason to disbelieve that the amount was paid by Dr. Chitranjan Jain.
The interim order makes a mention about the guidelines laid down by Hon’ble Apex Court in its judgment dated 5.1.2004 in Ajay Gandhi v. B. Singh [2004] 134 Taxman 537 providing for a Collegium comprising the President, ITAT and two Senior Most Vice Presidents. A reference has also been made to a D.O letter dated 2.11.2012 (Annexure-4)from former officiating President, ITAT Sri G.E. Veerabhadrappa.. presently Senior Most Vice-President, ITAT to Sri Karwa (R-2 and 3), who has taken over as officiating President, ITAT w.e.f. 1.9.2012.
The partnership firm was formed on 5.7.1990 and on 7.7.1990 Master Shishir Garg deposited Rs. 1,90,000/- and Rs. 72,000/- as capital money with the Firm through bank clearance of two bank drafts. The accounting period being financial year i.e. ending on 31st of March, 1991, the Firm could not have any income at the time of its formation. The identity of the depositor i.e. Master Shishir Garg was not in issue at any point of time before the Income Tax Authorities. They treated the said deposit by Master Shishir Garg. This being so, if for one reason or the other, they were not satisfied with the financial capability of Master Shishir Garg, the amounts could have been added at the hands of Master Shishir Garg and not at the hands of Firm.
The argument of the learned counsel for the respondent-assessee that merely participation of the assessee will not validate the reassessment proceeding if the notice is invalid, is of no help, in view of the fact that the question of validity of notice under Section 147 of the Act is not in issue. The only defect which could be pointed out is that the assessment year was not mentioned in the reasons recorded by the Assessing Officer.
The Tribunal recorded findings that the assessee had produced the return of income filed by the relevant shareholders who had paid share application money. The assessee had also produced the confirmation of share holders indicating the details of addresses, PAN and particulars of cheques through which the amount was paid towards the share application money.
It appears that nothing is available from the record that advances/loan without interest were ever given for business purposes. It was for the personal use of Director or family members and after obtaining the loan/advances, the borrower never made any effort to repay the loan amount nor did the assessee company made any effort to recover the said loan from the borrower. In fact assessee company allowed its Director and family members to use its funds for their personal benefits. This cannot be intention of the statute which allowing the payment interest on borrowed funds for business purpose under section 36 (1)(iii) of the Act. Therefore, the interest on borrowed funds can not allowed for a longer period even the funds are not being used for the business purpose.
Assessee had produced relevant evidence before the CIT (Appeals) establishing that all the persons, who had deposited the share application, were not fictitious persons. Most of them were identifiable; they made the payment by cheques and most of them were assessed to Income-tax. The Tribunal has given further relief to the assessee and has not accepted the argument of the department that the explanation furnished by the assessee for the addition under Section 69 on account of unexplained investment was not to the satisfaction of the Assessing Officer.
