TARAK D. DESAI, MUMBAI V. ITO 24(2)(4), MUMBAI

ITA 1401/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93252 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 02-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2014
• Court: TRIBUNAL
• Department Lawyers: NEELIMA V NADKARNI
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 1401/M/2014 (AY:2009 - 2010 ) SHRI TARAK D DESAI, 202, BLOSSOM C.M.S. ADARSH LANE, MARVE ROAD, MALAD (W), MUMBAI 400 064. / VS. INCOME TAX OFFICER - 24(2)(4), MUMBAI. ./ PAN : ADPPD2486B ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : MS. NEELIMA V. NADKARNI, DR / DATE OF HEARING : 02.07.2015 / DATE OF PRONOUNCEMENT :2 2.07.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS A PPEAL FILED BY THE ASSESSEE ON 28.2.2014 IS AGAINST THE ORDER OF THE CIT (A) - 34, MUMBAI DATED 9.12.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 3,37,501/ - AS DEEMED DIVIDED U/S 2(22) (E) OF THE ACT. (II) THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE AMOUNTS GIVEN TO THE APPELLANT WERE FOR THE PURPOSE OF COMPANYS BUSINESS AND WERE IN FACT UTILISED AS SUCH THEREFORE, WERE NEITHER IN THE NATURE OF A LOAN OR ADVANCE AS ENVISAGED U/S 2(22)(E). (III) THE ADDITION OF RS. 3,37,501/ - MAY THEREFORE BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD CIT (A ) ERRED IN CONFIRMING THE ADDITION OF RS. 1,45,351/ - MADE BY THE AO. THIS MAY PLEASE BE DELETED. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE, WHO IS AN INDIVIDUAL, FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 4,86, 520/ - . IN THE SCRUTINY ASSESSMENT, AO MADE COUPLE OF ADDITIONS NAMELY; (I) ADDITION OF RS. 3,37,501/ - BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND (II) ADDITION OF RS. 1,14,351/ - FOR WANT OF DETAILS. AGGRIEVED, ASSESSEE CARRIED THE MATTER TO THE FIRST APPELLATE AUTHORITY. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE 2 ASSESSEE, CIT (A) CONFIRMED THE ADDITIONS MADE BY THE AO. AGAIN AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 3. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, NONE APPEARED TO REPRESENT THE CASE OF THE ASSESSEE. HOWEVER, CONSIDERING THE SMALLNESS OF THE AMOUNTS ADDED AND THE ISSUES INVOLVED, I FIND THAT THE APPEAL CAN BE ADJUDICATED WITH THE HELP OF THE LD DR FOR THE REVENUE . 4. ON THE FIRST ISSUE RELATING TO THE INVOKING OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, LD DR SUBMITTED THAT THE ASSESSEE INCURRED EXPENDITURE USING HIS CREDIT CARD AND THE SAID AMOUNTS WERE REIMBURSED BY HIS COMPANY NAMED M/S. YR HOST SOLUTIONS PVT LTD., WHEREIN THE ASSESSEE HAS 50% OF THE SHARES IN THE SAID COMPANY. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES THAT THEY MAINTAINED A C URRENT ACCOUNT AND THE ADVANCES MADE ARE PART OF THE SAID CURRENT ACCOUNT. ON PERUSAL OF TH E ORDER OF THE CIT (A) ON THIS ISSUE, I FIND FROM PARA 3.2 OF THE IMPUGNED ORDER THAT THE CIT (A) HAS NOT APPLIED THE PROVISIONS PROPERLY AND BROUGHT IN THE RELEVANT FACTS TO ASCERTAIN IF THE ACCOUNT IN QUESTION IS REGULAR CURRENT ACCOUNT, WHICH INCLUDE TR ANSACTIONS IN QUESTION. IT IS THE EXPRESS PROVISION OF LAW, CLAUSE (II) TO SECTION 2(22)(E) OF THE ACT, THAT ANY ADVANCE OR LOAN MADE TO A SHAREHOLDER BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS........... ARE NOT TO BE TREATED AS DIVIDEND WITHI N THE MEANING OF SECTION 2(22)(E) OF THE ACT. THESE ASPECTS WERE NOT EXAMINED BY THE CIT (A). IN MY OPINION, THIS ISSUE SHOULD BE REMANDED TO THE FILE OF THE CIT (A) FOR EXAMINATION OF THE FACTS AND CURRENT ACCOUNT OF THE ASSESSEE AND THE BOOKS OF ACCOUN T OF THE ASSESSEE VICE VERSA AND GIVE A FINDING BEFORE ADJUDICATING THIS ISSUE BY PASSING A SPEAKING ORDER. ACCORDINGLY, THIS PART OF THE GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 5. THE SECOND ISSUE RELATES TO THE ADDITION OF RS. 1,45,351/ - , WHICH INCL UDE CONTRACTUAL PAYMENTS OF RS. 62,691/ - RECEIVED FROM ANUSANDHAN TRUST AND RS. 82,700/ - RECEIVED FROM BURGMANN INDIA PVT LTD ON WHICH TDS WAS DEDUCTED. THIS INFORMATION WAS RECEIVED BY THE AO THROUGH AIR DATA. WITHOUT PROPERLY EXAMINING THIS ISSUE, AO MA DE THE ADDITION REFERRING TO THE FAILURE OF THE ASSESSEE IN DISCHARGING OF ONUS. AO HELD THAT DESPITE THE REPEATED OPPORTUNITIES, ASSESSEE COULD NOT EXPLAIN AND THEREFORE, CONSIDERING THE ASSESSEES FAILURE TO SUBSTANTIATE HIS CLAIM, THE ADDITION WAS MADE . IN THE FIRST APPELLATE PROCEEDINGS, RELYING ON THE PRINCIPLE OF 3 ADVERSE PRESUMPTION, CIT (A) ALSO CONFIRMED THE ADDITIONS AND TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSSSEE. PARA 5 OF THE IMPUGNED ORDER IS RELEVANT IN THIS REGARD. AFTER HEARI NG THE LD DR ON THIS ISSUE, I AM OF THE OPINION THAT ONE MORE OPPORTUNITY SHOULD BE GRANTED TO THE ASSESSEE CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THIS ISSUE IS SET ASIDE AND THE CIT (A) IS REQUIRED TO BRING RELEVANT FACTS AND DECIDE THE ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THIS PART OF THE GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOU N CED IN THE OPEN COURT ON 22 ND JULY, 2015. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 22 .7 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI