Smt. Kamlesh Lakhani, Faridabad V. ACIT, Faridabad

CO 195/DEL/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6583 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 17-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: S C VASUDEVA
• Keywords: Additional evidence; Deemed dividend
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 1623/DEL/2011 ASSTT. YR: 2005-06 ACIT CIRCLE-II, VS. SMT. KAMLESH LAKHANI, FARIDABAD. 1278, SECTOR-14, FARIDABAD. PAN/GIR NO. AAGPL7936A C.O. NO. 195/DEL/11 ( IN ITA NO. 1623/DEL/2011) ASSTT. YR: 2005-06 SMT. KAMLESH LAKHANI, VS. ACIT CIRCLE-II, 1278, SECTOR-14, FARIDABAD FARIDABAD. (APPELLANT ) ( RESPONDENT ) REVENUE BY : MS. Y. KAKKAR DR ASSESSEE BY : SHRI S.C. VASUDEVA CA O R D E R PER R.P.TOLANI, J.M : THIS IS REVENUES APPEAL AND ASSESSEES CROSS-OBJE CTION AGAINST CIT(A)S ORDER DATED 14-1-2010 RELATING TO A.Y. 200 5-06. 2. CROSS-OBJECTION FILED BY THE ASSESSEE, IS NOT PR ESSED, HENCE DISMISSED. 3. REVENUES APPEAL RAISES FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN FACTS AND IN LAW IN DELETING T HE ADDITION OF RS. 98,50,000/- MADE BY THE ASSESSING OFFICER ON AC COUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF HE INCOME-TAX ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN FACTS AND IN LAW IN DELETING T HE ADDITION OF RS. 98,50,000/- MADE BY THE AO IN IGNORING THE FACT S THAT THE ITA 1623/DEL/11 ACIT VS. KAMLESH LAKHANI 2 ADVANCES MADE OF RS. 1,25,00,000/- ON 19-10-2004 AN D RS. 90,00,000/- ON 17-03-2005 WERE NOT TRADE ADVANCES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACTS THA T THE ASSESSEE HAS CAMOUFLAGED THE PAYMENTS OF RS. 1,25,00,000/- A ND RS. 90,00,000/- BY ROUTING THESE THROUGH THE BUSINESS T RANSACTION ACCOUNT WHEN IN FACT THERE WAS NO BUSINESS TRANSACT ION RELATABLE TO THESE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN FACTS AND IN LAW IN APPRECIATI NG THE FACTS THAT THE ABOVE ADVANCES MADE BY M/S LAKHANI RUBBER UDYOG PVT. LTD. TO LAKHANI INTERNATIONAL WERE REPAID AS S UCH BY LAKANI INTERNATIONAL TO LAKHANI RUBBER UDYOG PVT. L TD. WITHIN A SPAN OF 11 DAYS AND 14 DAYS RESPECTIVELY AND HENC E WERE NOT ADJUSTED TOWARDS ANY TRADE LIABILITY. 5. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HARING OF APPEAL. 4. BRIEF FACTS ARE THAT ASSESSEES ORIGINAL ASSESSM ENT IN THIS CASE WAS FRAMED U/S 143(1). THEREAFTER, NOTICED U/S 148 WAS ISSUED WITH REASONS THAT THE ASSESSEE HAD RECEIVED FOLLOWING DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT, WHICH WERE NOT DISCLOSED: M/S LAKHANI INTERNATIONAL RS. 252.20 LAKHS M/SLAKHANI RUBBER UDYOG PVT. LTD. RS. 52 LAKHS 4.1. THE AO MADE THE ADDITIONS BY FOLLOWING OBSERV ATIONS: THE ASSESSEE HAS 38.56% SHAREHOLDING IN THE LRUPL. ACCORDINGLY, OUT OF THE TOTAL DIVIDEND OF RS. 304.2 0 LACS THE NET BENEFIT OCCURRING TO THE ASSESSEE, HAS BEEN WORKED OUT ON A PRO- ITA 1623/DEL/11 ACIT VS. KAMLESH LAKHANI 3 RATA BASIS. THE AMOUNT OF DIVIDEND ATTRIBUTABLE TO THE ASSESSEE THUS WORKS OUT TO BE 32.38% OF RS. 304.20 LACS = RS . 98,49,996/- R/0 RS. 98,50,000/-. 4.2. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE THE CIT(A) RELYING ON THE RATIO OF DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. RAJ KUMAR 318 ITR 462 DELETED THE ADDITION BY FOLLO WING OBSERVATIONS: KEEPING IN VIEW THE ABOVE FACTUAL AND LEGAL POSITI ON, IT EMERGES THAT THE PAYMENTS WERE MADE BY LRUPL TO M/S LAKHANI INTERNATIONAL ARE AGAINST PURCHASES AND DO NOT FALL WITHIN THE AMBIT OF SECTION 2(22)(E) OF THE ACT. AS REGARDS ALLEGED ADVANCES OF RS. 52.00 LACS MADE BY LRUPL TO M/S LAKHANI RUBBER WORKS, IT HAS BEEN ESTABLISHED FROM THE FACTS DISCUSSED ABOVE THAT LRUPL HAS FIRST TAKEN LOAN FRO M M/S LAKHANI RUBBER WORKS AND REPAYMENT WAS MADE LATER O N. HENCE IT IS NOT A CASE OF LOANS OR ADVANCES GIVEN B Y LRUPL TO M/S LAKHANI RUBBER WORKS. CONSEQUENTLY, THE PROVISI ONS OF SECTION 2(22)(E) OF THE ACT ARE NOT APPLICABLE TO T HE SAID TRANSACTIONS. IN THE LIGHT OF ABOVE DISCUSSION AND THE POSITION OF LAW EMERGING OUT OF THE VARIOUS JUDICIAL RULINGS, T HE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. HENCE THE ADDITION OF RS. 98,50,000/- MADE BY THE AO U/S 2(22)(E) OF THE ACT IS DELETED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. LEARNED DR RELIED ON THE ORDER OF AO. 6. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED ON THE ORDER OF CIT(A) AND CONTENDS THAT SINCE THE CIT(A) ALLOWED THE RELIEF BY HOLDING THAT THE PROVISIONS OF SEC. 2(22)(E) WERE NOT APPLICABLE TO IMPUGNED TRANSACTIONS, THEREFORE, DID NOT CONSIDER OTHER ISS UES IN FAVOUR OF THE ITA 1623/DEL/11 ACIT VS. KAMLESH LAKHANI 4 ASSESSEE, BY OBSERVING THAT LRUPL HAD ACTUALLY REP AID RS. 1.60 CRORES IN RESPECT OF THE ADVANCES RECEIVED FROM M/S LAKHANI I NTERNATIONAL AND THAT THERE WAS NO ADVANCE MADE BY LRUPL TO M/S LAKHANI I NTERNATIONAL IN THE NATURE OF A LOAN. THE FIGURE OF RS. 1.60 CRORES AS MENTIONED BY CIT(A) INCLUDED TWO AMOUNTS OF RS. 1.25 CRORES AND RS. 35 LAKHS. THIS AGGREGATED TO RS. 1.60 CRORES. IT SEEMS THE FIGURE OF RS. 90 L AKHS WAS NOT NOTICED BY CIT(A). HOWEVER, IT IS SUBMITTED THAT THE TWO AMOUN TS OF RS. 1.25 CRORES AND RS. 90 LAKHS REFERRED TO IN THE GROUNDS OF APPE AL WERE GIVEN AS ADVANCES BY M/S LAKHANI INTERNATIONAL TO LRUPL ON 19 TH OCTOBER, 2004 AND 17 TH MARCH, 2005 RESPECTIVELY. THESE WERE NOT ADVANCES B Y LORUPL TO M/S LAKHANI INTERNATIONAL. 6.1. THESE AMOUNTS WERE REPAID BACK BY LRUPL ON 20- 10-04 & 18-03-05 RESPECTIVELY TO M/S LAKHANI INTERNATIONAL. THIS IS EVIDENT FROM THE BANK STATEMENT OF M/S LAKHANI INTERNATIONAL AND COPY OF ACCOUNT OF LRUPL IN THE BOOKS OF ACCOUNT OF M/S LAKHANI INTERNATIONAL. THE COPIES OF BANK STATEMENTS OF M/S LAKHANI INTERNATIONAL AND LRUPL W ITH BANK OF INDIA, FARIDABAD ALONG WITH THE LEDGER ACCOUNT OF LRUPL IN THE BOOKS OF ACCOUNT OF M/S LAKHANI INTERNATIONAL HAVE BEEN FILED SEPARA TELY AS AN ADDITIONAL EVIDENCE. THESE PAPERS HAD NOT BEEN FILED DURING HE COURSE OF APPELLATE PROCEEDINGS. THESE PAPERS BEING IN THE NATURE OF AD DITIONAL EVIDENCE, THE ITA 1623/DEL/11 ACIT VS. KAMLESH LAKHANI 5 APPELLANT HAD REQUESTED FOR THE SAME BEING TAKEN RE CORD TO IMPART JUSTICE. A LETTER DATED 25 TH MAY 2011 HAD BEEN FILED IN THIS REGARD. IT MAY BE ADDED THAT THE POSITION IN RESPECT OF THESE ADVANCES IS SAME A S EXISTS IN THE CASE OF AMOUNT OF RS. 52 LAKHS ADVANCES BY THE M/S LAKHANI RUBBER WORKS TO LRUPL. THE REVENUE HAS ACCEPTED FINDING OF CIT(A) I N RESPECT OF RS. 52 LAKHS AND HAS NOT FILED AN APPEAL AGAINST THE SAID ORDER OF CIT(A). 7. LEARNED DR CONTENDS THAT IN THIS EVENTUALITY TH E ISSUE RAISED IN REVENUES APPEAL ABOUT THE ADDITION OF RS. 98.50 LA CS MAY BE SET ASIDE, RESTORED BACK TO THE FILE OF AO TO DECIDE THE SAME AFRESH. 8. LEARNED COUNSEL FOR THE ASSESSEE, IN REJOINDER, CONTENDS THAT IN THAT CASE THE OTHER FACT ABOUT THERE BEING NO ADVANCE AS MENTIONED IN ABOVE ARGUMENT MAY ALSO BE CONSIDERED. 9. WE HAVE HEARD BOTH THE PARTIES, WHO ARE AGREEABL E TO SET ASIDE THE ISSUE BACK TO THE FILE OF AO TO DECIDE THE SAME AFR ESH ALONG WITH THE ISSUE THAT THERE WERE ADVANCES GIVEN BY M/S LAKHANI INTE RNATIONAL TO LRUPL AND NOT IN THE REVERSE ORDER. IN OUR VIEW THE AO SHALL DECIDE THE ISSUE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALONG W ITH SUPPORTING DOCUMENTS WHICH MAY BE FILED IN CONNECTION THERE WI TH. ITA 1623/DEL/11 ACIT VS. KAMLESH LAKHANI 6 10. IN VIEW THEREOF, REVENUES APPEAL IS ALLOWED FO R STATISTICAL PURPOSES WITH ABOVE OBSERVATIONS AND ASSESSEES CROSS-OBJECT IONS IS DISMISSED, BEING NOT PRESSED. ORDER PRONOUNCED IN OPEN COURT ON 10-10-2011. SD/- SD/- (SHAMIM YAHYA ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10-10-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR