Sh. Pawan Kumar Dubey, Jammu V. The Income-tax Officer, Jammu

CO 7/ASR/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9521 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-05-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 14-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K BANSAL
• Keywords: Opportunity of being heard; Additional evidence; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.30(ASR)/2013 ASSESSMENT YEAR:2005-06 PAN :AALPD1883B INCOME TAX OFFICER, VS. SH. PAWAN KUMAR DUBEY, WARD 1(2), JAMMU. JAMMU. (APPELLANT) (RESPONDENT) C.O.NO.7(ASR)/2013 (ARISING OUT OF I.T.A. NO.30(ASR)/2013 ASSESSMENT YEAR:2005-06 PAN :AALPD1883B SH. PAWAN KUMAR DUBEY, VS. INCOME TAX OFFICER, JAMMU. WARD 1(2), JAMMU. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH.TARSEM LAL, ASSESSEE BY: SH.S.K.BANSAL, ADVOCATE DATE OF HEARING: 13/05/2014 DATE OF PRONOUNCEMENT:19/05/2014 ORDER PER BENCH ; ITA NO.30(ASR)/2013 C.O.NO.7(ASR)/2013 2 THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER OF CIT(A), JAMMU DATED 06.11.2012 FOR THE ASSESSMEN T YEAR 2005-06 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE ON ACCOUNT OF D EEMED DIVIDEND WHEN THE ASSESSEE DURING ASSESSMENT PROCEE DINGS STATED THAT THE IMPREST IS ADVANCED FOR THE PURPOSE OF MEETING DAY TO DAY EXPENSES OF THE COMPANY AND DURING APPEL LATE PROCEEDINGS, THE ASSESSEE SHIFTED TO ANOTHER GROUND THAT THE AMOUNT WAS GIVEN TO HIM FOR NEGOTIATING A PROPERTY DEAL ON BEHALF OF THE COMPANY WHICH IS AN AFTER-THOUGHT. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN ADMITTING THE ADDITIONAL EVIDENCES IN THE SHAPE OF AGREEMENT TO SELL, FILED BY THE ASSESSEE DURING APP ELLATE PROCEEDINGS WHEN THE ASSESSEE HAD FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE DURING THE ASSESSMENT PROCEEDI NGS THAT THE ADVANCE RECEIVED FROM THE COMPANY WAS UTILIZED FOR THE BUSINESS ACTIVITIES OF THE COMPANY. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN ADMITTING THE ADDITIONAL EVIDENCES FILED B Y THE ASSESSEE DURING APPELLATE PROCEEDINGS WITHOUT AFFORDING OPPO RTUNITY TO THE A.O. UNDER RULE 46A OF THE INCOME TAX RULES, 19 62 WHEN THE ASSESSEE HAD FAILED TO OFFER ANY PLAUSIBLE REP LY BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS. 4. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. THE ASSESSEE HAS ALSO FILE C.O. NO.7(ASR)/2013 B Y TAKING FOLLOWING GROUNDS: 1. THAT THE FACTS WERE EXPLAINED TO THE A.O. DURIN G ASSESSMENT PROCEEDINGS ORALLY AS WELL AS IN WRITING. ITA NO.30(ASR)/2013 C.O.NO.7(ASR)/2013 3 2. THAT THE FACTS WERE REPEATED BEFORE THE CIT() OR ALLY AS WELL AS IN WRITING. 3. THAT THIS IS NOT A CASE OF ADMISSION OF ADDITION AL EVIDENCE BY CIT(A) AND NO APPLICATION UNDER RULE 46A WAS FILED. 3A. THAT THE DELETION OF ADDITION OF RS.15,93,000 I S CORRECT AND IS ACCORDING TO LAW AND APPRECIATION OF FACTS. 3B. THAT WHILE DELETING THE ADDITION OF RS.15,93,00 0/- NO ADDITIONAL MATERIAL WAS FILED BEFORE CIT(A) ONLY THE EXISTING MATERIAL WAS APPRECIATING BEFORE DELETION. 4. THAT CONFIRMATION OF ADDITION OF RS.3,85,000 BY THE CIT(A) IS NOT LEGAL IN NATURE AND WRONGLY CONFIRMED THE SAME WITHOUT APPRECIATION OF FACTS. IT IS BAD IN LAW. 3. AT THE TIME OF HEARING, THE LD. DR STATED THAT T HE LD. FIRST APPELLATE AUTHORITY HAS WRONGLY ADMITTED THE ADDITIONAL EVIDE NCE FILED BY THE ASSESSEE WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSING OFFICER, AS REQUIRED UNDER RULE 46A OF THE INCOME TAX RULES, 1962. 4. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESS EE HAS NOT ESTABLISHED THAT THE LD. FIRST APPELLATE AUTHORITY HAS GIVEN AN OPPORTUNITY TO THE A.O. BEFORE ADMITTING THE ADDITIONAL EVIDENCE FILED BY T HE ASSESSEE BEFORE THE LD. FIRST APPELLATE AUTHORITY. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, ESPECIALLY THE GROUNDS TAKEN BY THE REVENUE AUTHORITY AS WELL AS BY THE ASSESSEE IN THE C.O., WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PASSED ITA NO.30(ASR)/2013 C.O.NO.7(ASR)/2013 4 THE IMPUGNED ORDER IN PARAS 4, 4.1 & 4.2 AT PAGES 3 & 4 OF HIS ORDER AND THE RELEVANT PORTION IS REPRODUCED AS UNDER FOR THE SAK E OF CONVENIENCE: 4. DETERMINATION 4.1. I HAVE CONSIDERED THE ARGUMENTS OF THE AO IN THE ASSESSMENT ORDER AND SUBMISSIONS MADE BY THE APPELLANT BEFORE ME. THE ONLY EFFECTIVE GROUND OF APPEAL IS RELATING TO ADDITION OF RS.15,93,000/- AND RS.3,58,500/- TOWARDS DEEMED DIVIDEND UNDER SEC TION 2(22)(E) OF THE ACT. IN THE ASSESSMENT ORDER PAGE 3, THE AO HAS MENTIONED THE REPLY OF THE APPELLANT THAT THE MONEY ADVANCED BY T HE COMPANY M/S. SITA RAM INDUSTRIES PVT. LTD. TO ITS DIRECTOR SH. P AWAN KUMAR DUBEY WAS IN THE NATURE OF IMPREST ADVANCES FOR MEETING D AY TO DAY BUSINESS NEEDS AND IN THE INTEREST OF COMMERCIAL EXPEDIENCIE S. THE AO DID NOT GO INTO DETAILS OF PURPOSES OF THE ADVANCE AS THE I MPREST. BEFORE ME IT WAS STATED THAT THE AMOUNT WAS GIVEN TO SH. PAWAN K UMAR DUBEY FOR NEGOTIATING A PROPERTY DEAL ON BEHALF OF THE COMPAN Y WHICH FINALLY COULD NOT FRUCTIFY. THIS WAS DONE UNDER THE IMPRESS ION THAT COMPANY WAS NOT A STATE SUBJECT AND NOT EMPOWERED TO PURCHA SE ANY IMMOVABLE PROPERTY IN ITS NAME IN VIEW OF SPECIAL S TATUS CONFERRED UNDER ARTICLE 370 OF THE CONSTITUTION OF INDIA. AN AGREEMENT TO SELL RELATING TO A PROPERTY AT 61-C-C/D, GANDHI NAGAR, J AMMU, BETWEEN THE COMPANY AND THE SELLER ONE SH. N.R. SHARMA WAS FILED ALONG WITH THE SUBMISSIONS. WITHOUT LOOKING INTO THE DETAILS O F ADVANCES THE AO JUMPED TO THE FINDING THAT THE DIRECTOR HAS DERIVED UNDUE BENEFITS. IT IS TO MENTION THAT THE MONEY ADVANCED TO SH. DUBEY WAS ADJUSTED IN VARIOUS INSTALMENTS UP TO 09.11.2005 I.E. BEFORE DU E DATE OF FILING OF RETURN WHICH WAS 31.03.2006 FOR THE STATE OF JAMMU & KASHMIR AS PER F.NO.2201 2005-IT.A-11 UNDER SECTION 119 OF THE ACT. IN VIEW OF ABOVE FINDINGS IT CANNOT BE SAID THAT DIRECTOR WAS BENEFITING FROM THE SAID ADVANCE AND APPLICATION OF SECTION 2(22)(E) WA S JUSTIFIED. I, THUS, DELETE THE ADDITION OF RS.15,93,000/-. 4.2. SIMILARLY A SUM OF RS.3,58,500/- SHOWN AS DEBIT BAL ANCE IN THE BOOKS OF ABOVE COMPANY AS ON 31.03.2006 IN THE NAME OF FIRM M/S. SITA RAM CASTING. THE APPELLANT IS A PROPRIETOR OF THIS CONCERN AND IT HAD BEEN SHOWN AS ADVANCE FOR TRADING ACTIVITY. TH E APPELLANT IN ITS ITA NO.30(ASR)/2013 C.O.NO.7(ASR)/2013 5 SUBMISSION HAS STATED THAT THIS AMOUNT WAS ADVANCED FOR PURCHASE OF COPPER CLAMPS AND OTHER CASTINGS BUT DUE TO CERTAIN QUALITY ISSUES THE DEAL COULD NOT BE COMPLETED. THE APPELLANT HAS STAT ED THE SAME BEFORE THE AO THAT THIS AMOUNT WAS ADVANCED FOR TRADING A CTIVITY. NEITHER BEFORE THE A.O. NOR BEFORE ME ANY SUPPORTING EVIDE NCE WAS TENDERED TO SUBSTANTIATE THE CLAIM OF THE APPELLANT. THE APP ELLANT COULD NOT ESTABLISH THE PURPOSE AND BUSINESS EXPEDIENCY IN TH IS CASE. MOREOVER, UNLIKE THE PRECEDING CASE THE MONEY WAS NOT RETURNE D BACK BY THE APPELLANT TO THE SAID COMPANY BEFORE FILING OF RETU RN. THUS, THE BONAFIDE OF INTENTION IS NOT PROVED. HENCE, THE AD DITION OF RS.3,58,000/- IS CONFIRMED UNDER THE DEMINING PROVI SIONS OF SECTION2 (22)(E) OF I.T.ACT. 5.1. AFTER GOING THROUGH THE AFORESAID RELEVANT PO RTION OF THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE, WE ARE OF THE V IEW THAT THE LD. FIRST APPELLATE AUTHORITY HAS NOT GIVEN ANY OPPORTUNITY T O THE A.O. WHILE ADMITTING THE ADDITIONAL EVIDENCE FILED BEFORE HIM, WHICH IS CONTRARY TO RULE 46A OF I.T.RULES, 1962. THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE REMITTING THE ISSUE INVOLVED IN THE PRESENT APPEAL OF THE REV ENUE AS WELL AS IN THE C.O. OF THE ASSESSEE TO THE FILE OF THE LD. FIRST A PPELLATE AUTHORITY WITH THE DIRECTION TO COMPLY WITH THE PROVISIONS OF SECTION 46A OF I.T.RULES, 1962 AND AFFORD OPPORTUNITY TO THE A.O. BEFORE ADMITTING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND DECIDE THE ISSUE INVOLVED IN THE PRESENT APPEAL AS WELL AS IN THE C.O. AS PER LAW AFTER GIVING ADEQUA TE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, BOTH THE APPEAL OF THE REVENUE AND C.O. OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.30(ASR)/2013 C.O.NO.7(ASR)/2013 6 6. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AN D C.O. OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH MAY, 2014. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19TH MAY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.PAWSAN KUMAR DUBEY, JAMMU 2. THE ITO WARD 1(2), JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR