M/s. Suneel Galgotia, New Delhi V. DCIT, Noida

ITA 1240/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2753 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 02-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RESPE
• Assessee Lawyers: AGAINST D ATED; PASSED
• Keywords: Search and seizure; Salary income; Deemed dividend
• Section: 143(3); 153A; 2(22)(e); 143(2)

Judgement Text

1 ITA NOS. 1237 & 1240/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND DR. B. R. R. KUMAR, ACC OUNTANT MEMBER I.T.A. NO. 1237/DEL/20 17 (A.Y 2007-08) (THROUGH VIDEO CON FERENCING) SUNEEL GALGOTIA 4405/6, PRAKASH APARTMENTS-II 5, ANSARI ROAD, DARYAGANJ, NEW DELHI AEQPG5100F (APPELLANT) VS ACIT CENTRAL CIRCLE NEW DELHI (RESPONDENT) I.T.A. NO. 1240/DEL/2 017 (A.Y 2012-13) SUNEEL GALGOTIA 4405/6, PRAKASH APARTMENTS-II 5, ANSARI ROAD, DARYAGANJ, NEW DELHI AEQPG5100F (APPELLANT) VS DCIT CENTRAL CIRCLE NOIDA (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T ORDER DATED 25/01/2017 & 28/12/2016 PASSED BY CIT(A)-III, KANPU R FOR ASSESSMENT YEAR 2007-08 & 2012-13 RESPECTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A. NO. 1237/DEL/2017 APPELLANT BY NONE RESPONDENT BY SH. PRAKESH DUBEY, SR. DR DATE OF HEARING 18.02.2021 DATE OF PRONOUNCEMENT 05.03.2021 2 ITA NOS. 1237 & 1240/DEL/2017 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X (APPEALS) IS BAD IN LAW AS WELL AS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THAT THE LD. CIT (A) HAS ERRED IN REJECTING THE GR OUND TAKEN BY THE APPELLANT BEFORE HIM AGAINST THE ISSUANCE OF NO TICE UNDER SECTION 153A BY RELYING ON THE PROVISIONS OF SECTIO N 124(3) OF THE ACT WHICH ARE NOT APPLICABLE ON THE FACTS OF THE CA SE OF THE APPELLANT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 1 , 19, 99, 4507- IN PROCEEDINGS U/S 153A WITHOUT THERE BEING ANY INC RIMINATING MATERIAL FOUND/SEIZED DURING THE COURSE OF SEARCH I N THE CASE OF THE APPELLANT AND THUS IN NOT APPLYING THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAB UL CHAWLA (2016) 380 ITR 573 (DELHI) PARTICULARLY WHEN ORIGIN AL ASSESSMENT HAD BEEN FRAMED UNDER SECTION 143(3) PRI OR TO THE SEARCH IN THE CASE OF THE APPELLANT. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE IN SUSTAINING THE INVOCATION OF PROVISIONS OF SECTION 2(22) (E) OF THE INCOME TAX ACT, 1961 AND CONSEQUEN TLY SUSTAINING ADDITION OF RS.1,19,99,450/- MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASE OF FLAT BY GALGOTIA PUBLICATION PVT. LTD. IN THE NAME OF THE APPELLANT. 5. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 3 ITA NOS. 1237 & 1240/DEL/2017 I.T.A. NO. 1240/DEL/2017 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X (APPEALS) IS BAD IN LAW AS WELL AS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE IN SUSTAINING THE INVOCATION OF PROVISI ONS OF SECTION 2(22) (E) OF THE INCOME TAX ACT, 1961 AND CONSEQUENTLY SUSTAINING ADDITION OF RS.19,67,201/- MADE BY THE ASSESSING OFFICER. 3. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 3. THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALARY FROM COMPANY AND PARTNERSHIP FIRM AS WELL AS RENTAL INCO ME AND INTEREST INCOME ETC. THE RETURN OF INCOME FOR ASSESSMENT YE AR 2007-08 WAS FILED ON 31/03/2007 AT TOTAL INCOME OF RS. 5,19,559 /-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLE TED U/S 143(3) AT THE RETURN INCOME. THE SEARCH AND SEIZURE OPERA TION WAS CONDUCTED ON 17/09/2010. IN RESPONSE TO NOTICE U/S 153A , RETURN OF INCOME WAS FILED UNDER PROTEST DECLARING TOTAL INCOME OF RS. 5,19,559/- WHICH WAS DECLARED IN THE ORIGINAL RETUR N AND ASSESSED U/S 143(3). THE ASSESSMENT WAS COMPLETED AT TOTAL INCOME OF RS. 1,25,19,409/-, AFTER MAKING ADDITION OF RS. 1,19,99 ,450/- ON ACCOUNT OF PURCHASE OF FLAT U/S 2(22) (E) OF THE IN COME TAX ACT. 4 ITA NOS. 1237 & 1240/DEL/2017 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE DESPITE GIVING NOTICES. THEREFORE, WE ARE TAKING S UBMISSIONS BEFORE THE CIT(A) AS THE CONTENTIONS BEFORE US. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD LD. DR AND PERUSED ALL THE RELEVAN T MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE CIT(A )S ORDER IT CAN BE SEEN THAT THE CHALLENGE WHICH WAS MENTIONED IN THE BALANCE-SHEET OF GALGOTIA PUBLICATIONS PVT. LTD. AGAINST WHICH LO AN OF RS. 82.50 LAKHS WAS RAISED FROM CITY FINANCIAL CONSUMER FINAN CE INDIA LTD. AND THE SAID LOAN WAS NOT RAISED AS CONTEMPLATED U/ S 2(22)(E) WHICH SHOULD BE TREATED AS DEEMED DIVIDEND. IN A SSESSMENT YEAR 2008-09 AS WELL THE SAME PREMISES WAS GIVEN ON RENT TO METAFLEX DOORS PVT. LTD. FOR 5 MONTHS FOR WHICH RENT WAS ACC OUNTED FOR BY THE COMPANY ONLY. THUS, IT IS NOT A CASE OF DEEMED DIVIDEND INCOME. FURTHER, FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT CAN BE SEEN THAT NO INCRIMINATING MATERIAL HAS BEEN FOU ND DURING THE SEARCH AND SEIZURE OPERATION AND THE ASSESSING OFFI CER HAS NOT MADE ANY ADDITIONS IN RESPECT OF SEARCH AND SEIZURE OPERATION. THIS ASSESSMENT IS NON-ABATED ASSESSMENT. THERE IS NO LOAN OR ADVANCE AS ENVISAGED U/S 2(22)(E) WHICH SHOULD BE T REATED AS DEEMED DIVIDEND IN PRESENT ASSESSEES CASE. THE IS SUE IS, THEREFORE, 5 ITA NOS. 1237 & 1240/DEL/2017 SQUARELY COVERED BY THE DECISION OF THE HONBLE DEL HI HIGH COURT IN CASE OF CIT(A) VS. KABUL CHAWLA (2016) 380 ITR 573 (DELHI) PARTICULARLY WHEN ORIGINAL ASSESSMENT HAD BEEN FRAM ED U/S 143(3) PRIOR TO THE SEARCH IN THE CASE OF THE ASSESSEE. H ENCE, APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 IS ALLOWED. 8. AS RELATES TO ASSESSMENT YEAR 2012-13, THE RETUR N OF INCOME WAS FILED ON 5/1/2013 AT TOTAL INCOME OF RS.7,39,92 3/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) WAS ISSUED. THE ASSESSMENT WAS COMPLETED AT TOTAL INCOME OF RS. 27, 07,120/- AFTER MAKING DISALLOWANCE OF INTEREST OF RS.19,67,201/-. 9. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 10. AS THE ASSESSEE OR THE REPRESENTATIVE FOR THE A SSESSEE HAS NOT APPEARED BEFORE US, IT WILL BE APPROPRIATE TO TAKE THE SUBMISSIONS BEFORE THE CIT(A) ON BEHALF OF THE ASSESSEE AS SUBM ISSIONS BEFORE US. 11. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 12. WE HAVE HEARD LD. DR AND PERUSED ALL THE RELEVA NT MATERIAL AVAILABLE ON RECORD. IN THE PRESENT ASSESSMENT Y EAR, THE ASSESSEE HAD OUTSTANDING ADVANCE FROM GALGOTIA PUBLICATIONS PVT. LTD. 6 ITA NOS. 1237 & 1240/DEL/2017 AMOUNTING PVT. LTD. AMOUNTING TO RS. 9,21,582/- WHI CH IS RUNNING CURRENT ACCOUNT WITH THE COMPANY IN WHICH SALARY AN D RENT WERE SHOWN AND THE DETAILS WERE FILED BEFORE THE ASSESSI NG OFFICER AS WELL AS BEFORE THE CIT(A). THE CLOSING BALANCE AS ON 31/3/2012 WAS RS. 9,21,582/- AS AGAINST OPENING BALANCE OF RS. 32 ,70,774/- WHICH CATEGORICALLY STATES THAT DURING THE YEAR, TH E ASSESSEE HAS REPAID THE ADVANCE TAKEN IN EARLIER YEARS. FROM P ERUSAL OF THE ASSESSMENT ORDER, HE ASSESSING OFFICER HAS OVER LOO KED THESE ASPECTS AND ALSO TAKEN INTO ACCOUNT THE EARLIER AS SESSMENT YEAR AMOUNTING WITHOUT GIVING ANY DETAILED REASONING WHI LE THE SAME IS ADDED TO THE INCOME OF THE ASSESSEE. FROM THE PERU SAL OF THE SUBMISSIONS BEFORE THE CIT(A) WE CAN SEE THAT THE A MOUNT RAISED BY THE ASSESSEE IS CREDITED TO THE ACCOUNT WITH THE C OMPANY AND ITS REPAYMENT IS REGULARLY DEBITED TO THE SAID ACCOUNT. THUS, PROVISIONS OF SECTION 2(22)(E) RELATING TO LOAN OR ADVANCE CAN BE DEEMED AS DIVIDEND ONLY TO THE EXTENT OF ACCUMULATE D PROFIT OR SO FAR AS THE LOAN IS NOT REFLECTED IN THE ACCOUNTS, B UT IN INSTANCE CASE THE ADDITION WAS MADE ON THE BASIS OF THE PRIOR YEA R AMOUNTS WHICH WAS NOT AT ALL DISCUSSED BY THE ASSESSING OFFICER AS WELL AS CIT(A) AS TO HOW THE SAID AMOUNT WAS TAKEN IN RESPECT OF T HE CURRENT YEAR ACCOUNT FOR MAKING ADDITION. HENCE, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2012-13 IS ALLOWED. 7 ITA NOS. 1237 & 1240/DEL/2017 13. IN RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05 TH DAY OF MARCH, 2021 SD/- SD/- (B. R. R. KUMAR) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 05/03/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI