Sh. Adishwar Jain, Ludhiana V. ACIT, Ludhiana

ITA 1305/CHANDI/2010

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2518 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 16-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S K MUKHI
• Keywords: Opportunity of being heard; Additional evidence; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NO. 1305/CHD/2010 ASSESSMENT YEAR: 2005-06 SHRI ADISHWAR JAIN, VS THE ACIT, B-XX-3127, CIRCLE 1, GURDEV NAGAR, LUDHIANA LUDHIANA. PAN: ABLPJ0441L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 17.12.2015 DATE OF PRONOUNCEMENT : 05.01.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 22.09.20 10 FOR ASSESSMENT YEAR 2005-06. 2. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS G ROUND NOS. 1 TO 3 OF THE APPEAL OF THE ASSESSEE. GROUND NOS. 6, 7 & 8 ARE GENERAL. THESE GROUNDS ARE ACCORDINGLY, DISMISSED AS NOT PRESSED. 3. ON GROUND NO. 4 AND 5, ASSESSEE CHALLENGED THE ADDITION OF RS. 35,04,871/- AS DEEMED DIVIDEND UNDE R SECTION 2(22)(E) OF THE IT ACT AND ALSO CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN NOT ADMITTING ADDITION AL 2 EVIDENCE FILED BEFORE HIM UNDER RULE 46A OF THE INC OME TAX RULES. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER NOTED THAT PROVISIONS OF SECTION 2(22)(E) O F THE ACT APPLIES IN THE CASE OF ASSESSEE. THE ASSESSING OFF ICER, ON GOING THROUGH THE ACCOUNT OF THE ASSESSEE NOTICED T HAT AS ON THE LAST DATE OF THE ACCOUNTING PERIOD, ASSESSEE HAD BEEN ADVANCED PAYMENTS FROM THE COMPANY M/S SUNDESH SSPRINGS P.LTD. HAVING DEBIT BALANCE IN THE NAME OF ASSESSEE OF RS. 1,76,17,877/- ENDING 31.03.2005 IN THE NAME OF M/S SIRI AMAR EXPORTS, PROPRIETOR SHRI ADIS HWAR JAIN ( ASSESSEE). THE ASSESSING OFFICER ON GOING T HROUGH THE BALANCE SHEET OF THE COMPANY FOUND THAT AS ON 31.03.2005, THE ABOVE COMPANY PROCESSED ACCUMULATED PROFITS/SURPLUS AMOUNTS TO THE TUNE OF RS. 61,69,41 8/- AND ASSESSEE HAD VOTING POWERS OF MORE THAN 10% AND ACCORDINGLY PROVISIONS OF SECTION 2(22)(E) OF THE A CT WERE FOUND TO BE ATTRACTED. THE ASSESSEE EXPLAINED THAT AMOUNT WAS RECEIVED AS BUSINESS TRANSACTION BUT ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION OF THE ASSESSEE AND MADE THE ADDITION OF RS. 35,04,877 /-. 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE IS INCORPORATED IN THE APPELLATE ORDER IN WHICH THE AS SESSEE BRIEFLY EXPLAINED THAT ASSESSING OFFICER MADE THE A DDITION SINCE ASSESSEE IS A DIRECTOR IN M/S SUNDESH SPRINGS P.LTD. AND ALSO PROPRIETOR OF M/S SIRI AMAR EXPORTS. IT W AS 3 SUBMITTED THAT THIS WAS A BUSINESS TRANSACTION WITH M/S AMAR EXPORTS, THEREFORE, ABOVE PROVISION WILL NOT A PPLY. IT WAS FURTHER SUBMITTED THAT DURING FINANCIAL YEAR 20 03-04, M/S SIRI AMAR EXPORTS HAD PURCHASED SUBSTANTIAL GOO DS FROM M/S SUNDESH SPRINGS P.LTD. AND FOR WHICH, THER E IS NO DISPUTE. HOWEVER, DURING THE FINANCIAL YEAR 200 4-05, CERTAIN SUMS HAVE BEEN ADVANCED BY M/S SUNDESH SPRI NGS P. LTD. TO THE ASSESSEE FOR PURCHASE OF FLATS AT MA LL ROAD, LUDHIANA OF WHICH, ASSESSEE IS ABSOLUTE OWNER THROU GH REGISTERED DEED, COPIES OF WHICH WERE FILED. THUS, THE FLATS WERE AGREED TO BE SOLD TO THE COMPANY FOR TOT AL CONSIDERATION OF RS. 1,08,30,000/- AND AGREEMENT TO THAT EFFECT WAS DULY ENTERED INTO BETWEEN THE PARTIES. THE AGREEMENT WAS FILED BEFORE LD. CIT(APPEALS). IT WA S, THEREFORE, SUBMITTED THAT PAYMENTS WERE RECEIVED AG AINST THE AGREEMENT TO SELL OF THE FLATS AND NO AMOUNT HA S BEEN RECEIVED WITHOUT ANY CONSIDERATION. 5(I) IT WAS SUBMITTED THAT AGREEMENT DATED 16.02.20 04 COULD NOT BE SUBMITTED BEFORE ASSESSING OFFICER BEC AUSE THERE WAS A SEARCH & SEIZURE OPERATION ON 18.02.200 4 BY THE INCOME TAX DEPARTMENT AND THE AGREEMENT WAS MISPLACED. LATER ON, THE ASSESSEE HAD BEEN ENGAGED IN A SERIOUS LITIGATION WITH DRI AND HE REMAINED IN POLI CE CUSTODY FOR ABOUT A YEAR AND WAS INVOLVED IN LITIGA TION, THEREFORE, THIS AGREEMENT COULD NOT BE PRODUCED BEF ORE ASSESSING OFFICER. THE REQUEST WAS, THEREFORE, MAD E TO ADMIT THE SAME UNDER RULE 46A. THE ASSESSEE ALSO 4 CHALLENGED THE ADDITION ON MERIT. REMAND REPORT WA S FILED BY THE ASSESSING OFFICER IN WHICH ASSESSING O FFICER OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE BE CAUSE THE CONDITIONS OF RULE 46A HAVE NOT BEEN SATISFIED IN THIS CASE AND FURTHER NO JUSTIFICATION WAS EXPLAINED WHY THE SAME WAS NOT EXPLAINED OR FILED BEFORE ASSESSING OF FICER AT ASSESSMENT STAGE. THE ASSESSEE RELIED UPON VARIOUS DECISIONS OF DIFFERENT HIGH COURTS AND TRIBUNAL. 6. THE LD. CIT(APPEALS), CONSIDERING THE FACTS STAT ED IN THE ASSESSMENT ORDER, WAS OF THE VIEW THAT PROVISIO NS OF SECTION 2(22)(E) OF THE ACT CLEARLY ATTRACT IN THE CASE OF ASSESSEE. THE LD. CIT(APPEALS) FURTHER NOTED THAT CONDITIONS OF RULE 46A ARE NOT SATISFIED IN THIS CA SE. THE ASSESSEE HAD BEEN ATTENDING THE ASSESSMENT PROCEEDI NGS AND NEVER FURNISHED THE DETAILS OF THE AGREEMENT DA TED 16.02.2004 THEREFORE, ADDITIONAL EVIDENCE WAS NOT ADMITTED. THE LD. CIT(APPEALS) AFTER REFUSING TO A DMIT THE ADDITIONAL EVIDENCE, ALSO GONE THROUGH THE CONTENTI ON OF THE ASSESSEE AND OBSERVED THAT SUFFICIENT PERIOD HA S ELAPSED AND ASSESSEE MIGHT HAVE MADE UP THIS AGREEM ENT TO AVOID THE PROVISIONS OF LAW AND ACCORDINGLY EVEN ON MERIT, THIS GROUND WAS DISMISSED. 7. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINE D THAT DUE TO THE LITIGATION WITH DRI, ASSESSEE REMAINED I N POLICE/JUDICIAL CUSTODY FOR A LONGER PERIOD THEREFO RE, AGREEMENT IN QUESTION COULD NOT BE SUBMITTED TO THE 5 ASSESSING OFFICER. HE HAS, THEREFORE, SUBMITTED TH AT ADDITIONAL EVIDENCE MAY BE ADMITTED. HE HAS RELIED ON JUDGEMENT OF SUPREME COURT IN THE CASE OF TEK RAM 2 62 CTR 118. THE LD. DR, HOWEVER, OPPOSED THE REQUEST. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS. HON'BLE SUPREME COURT IN THE CASE OF TEK RAM VS CIT (SUPRA) HELD THAT IN OUR OPINION, THE DOCUMENT WHICH THE APPELL ANTS HAVE NOW FILED BEFORE THIS COURT ARE OF SOME RELEVA NCE AND THOSE DOCUMENTS SHOULD BE LOOKED INTO BY THE HIGH C OURT BEFORE IT COMES TO A CONCLUSION WHETHER THE APPEAL REQUIRES TO BE ALLOWED OR TO BE REJECTED. THE HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V MU KTA METAL WORKS 336 ITR 555 (P&H) HELD AS UNDER : (II) THAT THE REPORT OF THE FORENSIC SCIENCES LABO RATORY WAS A RELEVANT MATERIAL AND SO WAS THE AFFIDAVIT OF THE SEARCHED PERSON. THE ADDIT IONAL EVIDENCE WAS NECESSARY FOR JUST DECISION OF THE MAT TER. THE TRIBUNAL WAS NOT JUSTIFIED IN DECLINING TO CONSIDER THE ADDITIONAL E VIDENCE COMPRISING THE OPINION OF THE LABORATORY OF THE GOVERNMENT EXAMINE R AND ALSO THE AFFIDAVIT OF THE AUTHOR OF THE DIARY, THOUGH THE DOCUMENTS HAD A DIRECT BEARING ON THE ISSUE. 9. THE ASSESSEE HAS FILED COPY OF THE AGREEMENT DAT ED 16.02.2004 AT PAGE 36 OF THE PAPER BOOK THROUGH WHI CH CERTAIN AMOUNTS HAVE BEEN RECEIVED AS ADVANCE FOR PROPOSED SALE OF THE FLATS. PB-7 IS COPY OF THE AC COUNT OF M/S SUNDESH SPRINGS P.LTD. IN THE BOOKS OF M/S AMAR EXPORTS, LUDHIANA TO SHOW THAT CERTAIN ADVANCES HAV E BEEN RECEIVED BY ASSESSEE FROM THIS COMPANY. THE ASSESSEE PLEADED THAT THE ABOVE AMOUNTS HAVE BEEN 6 RECEIVED FOR PURCHASE OF THE FLATS THEREFORE, PROVI SIONS OF SECTION 2(22)(E) OF THE ACT MAY NOT APPLY. THUS, T HE AGREEMENT IN QUESTION GOES TO THE ROOT OF THE MATTE R AND IS RELEVANT FOR THE PURPOSE OF DISPOSAL OF THE APPEAL. THE ASSESSEE EXPLAINED BEFORE THE LD. CIT(APPEALS) THAT SINCE DUE TO SEARCH ON 18.02.2004, THE AGREEMENT DATED 16.02.2004 GOT MISPLACED AND LATER ON HE WAS INVOLV ED IN CRIMINAL LITIGATION WITH DRI AND REMAINED IN CUSTOD Y FOR ONE YEAR WOULD SHOW THAT ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE AGREEMENT TO SE LL BEFORE THE ASSESSING OFFICER. WHEN THE LD. CIT(APP EALS) CALLED FOR THE REMAND REPORT FROM ASSESSING OFFICER AND ALSO CONSIDERED THE EXISTENCE OF THE AGREEMENT IN Q UESTION AT THE APPELLATE STAGE, IT WOULD HAVE BEEN PROPER F OR HIM TO ADMIT THE ADDITIONAL EVIDENCE ABOVE AND DECIDE T HE APPEAL OF THE ASSESSEE ON MERITS. SINCE, THE DOCUM ENT IN QUESTION GOES TO THE ROOT OF THE MATTER AND IS RELE VANT MATERIAL EVIDENCE, THEREFORE, CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT LD. CIT(APPEALS ) SHOULD HAVE ADMITTED THE ADDITIONAL EVIDENCE FOR THE PURPO SE OF DISPOSAL OF THE MATTER. THEREFORE, WITHOUT COMMENT ING UPON THE MERITS OF THE CASE, WE ADMIT THE ADDITIONA L EVIDENCE I.E. AGREEMENT DATED 16.02.2004 (PB-36) FO R THE PURPOSE OF DECIDING THE MATTER IN ISSUE. SINCE ADD ITIONAL EVIDENCE ABOVE HAVE NOT BEEN FILED BEFORE A.O. AND HE HAS NO OCCASION TO EXAMINE THE MERITS OF CLAIM OF ASSES SEE, THEREFORE, SAME SHALL HAVE TO BE REMANDED TO A.O. F OR EXAMINATION ON MERITS. ACCORDINGLY, THE ORDERS OF 7 AUTHORITIES BELOW ARE SET ASIDE AND MATTER IN ISSUE IS RESTORED TO THE FILE OF ASSESSING OFFICER WITH DIRE CTION TO RE-DECIDE THIS ISSUE IN THE LIGHT OF THE AGREEMENT DATED 16.02.2004. THE ASSESSING OFFICER SHALL GIVE REASO NABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH JANUARY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD