Shri Prasanna Narayan Paranjape, Pune V. Asstt. CIT, Cir. 10, Pune, Pune

ITA 1414/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49853 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 02-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 02-12-2010
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Opportunity of being heard
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, B BENCH PUNE BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.1414/PN/2010 ASST.YEAR: 2004-05 SHRI PRASANNA NARAYAN PARANJAPE, T-141 BHOSARI, INDUSTRIAL ESTATE, MIDC, PUNE. (PAN AAZPP3780F) .. APPELLANT VERSUS ASST.COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE. .. RESPONDENT ITA NO.1415/PN/2010 ASST.YEAR: 2004-05 MRS. SUSHILA NARAYAN PARANJAPE, T-141 BHOSARI, INDUSTRIAL ESTATE, MIDC, PUNE. (PAN AFBPP0719B) .. APPELLANT VERSUS DY.COMMISSIONER OF INCOME TAX, CIRCLE-10, PUNE. .. RESPONDENT APPELLANT BY: SHRI SUN IL GANOO RESPONDENT BY: SMT.ANN KA PTHUAMA O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER : THESE ARE TWO APPEALS UNDER CONSIDERATION AND BOTH OF THEM RELATE TO ASSESSMENT YEAR 2004-05. THESE APPEALS A RE FILED AGAINST DIFFERENT ORDERS OF THE CIT(A) COMMONLY DT. 17-8-20 10 RAISING THE COMMON GROUNDS, WHICH AREA REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) ERRED IN UPHOLDING THE ACTION ON THE PART OF THE ASSESSING OFFICER IN ASSUMING JURISDICTION U/S 147 /148, WHICH WAS CLEARLY NOT IN CONFORMITY WITH THE LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION ON THE PAR T OF THE 2 ASSESSING OFFICER IN INVOKING AND APPLYING THE PROVISIONS OF SEC. 2(22(E) OF THE INCOME TAX ACT, 1961, IN THE CASE OF THE APPELLANT. CONSIDERING THE COMMONALITY OF THE ISSUE, GROUNDS A ND REPRESENTATIVES, WE PROCEED TO ADJUDICATE THE SAME BY THIS COMPOSITE ORDER. 2. THIS IS THE SECOND ROUND OF PROCEEDINGS AND IN T HE FIRST ROUND, THE TRIBUNAL HAS SET ASIDE THE APPEAL IN CONNECTIONS WITH REASONS FOR REOPENING U/S 147 OF THE ACT. 3. AT THE VERY OUTSET, THE LD.COUNSEL FOR THE ASSES SEE MENTIONED THAT BOTH THESE APPELLANTS UNDISPUTEDLY HELD ADEQUA TE SHAREHOLDING IN THE TWO COMPANIES VIZ., M/S PARANJAPE METAL SHAPERS PVT.LTD.(PMSPL) AND M/S PARANJAPE AUTOCAST PVTLTD. (PAPL). AS PER T HE AO, THE PMSPL GAVE AN AMOUNT OF LOAN TO PAPL WHERE BOTH THE ASSES SEES UNDER CONSIDERATION HAVE BENEFICIAL INTEREST EXCEEDING TH E THRESHOLD LIMITS PRESCRIBED IN THE ACT VIDE PROVISIONS OF SEC. 2(22) (E) OF THE ACT. ASSESSING OFFICER INVOKED THE SAID PROVISIONS OF SE C 2(22)(E) AND MADE AN ADDITION OF RS.42,23,611 IN THE CASE OF MRS. SUSHILA N. PARANJAPE AND RS.57,96,389 IN THE CASE OF PRASANNA N.PARANJAE. IN BOTH THE CASES, THE MATTERS TRAVELLED TO THE CIT(A), WHO CON FIRMED THE ADDITIONS, VIDE THE IMPUGNED ORDERS REFERRED TO ABO VE. 4. DURING THE PROCEEDINGS BEFORE US, LD.COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE CERTAIN FACTS AND SOME OF THE M ARE: A) THE LEDGER EXTRACT OF PMSPL REFERS NOT ONLY TO E XPRESSION LOAN BUT ALSO DEPOSIT. B) THE LEDGER EXTRACT OF PAPL ALSO REFERS TO THE EX PRESSION DEPOSIT. C) THE CIT(A) ERRED IN MERELY GOING BY THE LANGUAGE USED IN THE LEDGER COPIES INSTEAD OF EXAMINING THE ACTUAL TRAN SACTIONS. D) THE CIT(A) DID NOT DISTINGUISH LOAN FROM THE DE POSIT IGNORING THE SUPREME COURTS DECISION ON THIS I SSUE. 3 LD.COUNSEL FOR THE ASSESSEE ARGUED STATING THAT THE SE ARE INTER CORPORATE DEPOSITS AND THEREFORE, THEY ARE OUTSIDE THE PURVIEW OF SEC. 2(22)(E) OF THE ACT. 5. PER CONTRA, THE LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. DURING THE TIME OF REBUTTAL LD COUNSE L FOR THE ASSESSEE FAIRLY MENTIONED THAT THERE IS NO DISCUSSION ON THE EXPRESSIONS LOAN OR DEPOSIT WHICH A CORE AREA REQUIREMENT FOR DECI DING THE ISSUE UNDER CONSIDERATION. THE SAID EXPRESSIONS ARE DIST INCTLY DIFFERENT AND THERE IS NO FINDING IN THIS REGARD IN THE ORDERS OF THE REVENUE. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE PAPER BOOKS FILE D BEFORE US. AFTER A DEEPER DELVING INTO THE CONTENTS OF THE PARAGRAPHS 12 TO 17 OF THE ORDER OF THE CIT(A), WE FIND THAT THE CIT(A) HAS ME RELY TRAVELLED ALONG THE FRINGES OF THE ISSUE AND INSTEAD OF ANALYSING T HE CHARACTERISTIC FEATURES OF A LOAN TRANSACTION VIS-A-VIS THE DEPOSI T TRANSACTION AND ANALYSE THE NATURE OF THE IMPUGNED TRANSACTIONS OF THE ASSESSEE. INSTEAD, HE KEPT HEAVY RELIANCE ON THE DISCREPANCIE S AVAILABLE ON THE LEDGER EXTRACTS OR LEDGER ENTRIES AND THE LANGUAGE USED BY THE ACCOUNTANT OF THE ASSESSEE IN THE BOOKS. UNDOUBTEDL Y, IT IS TRUE THAT THE LANGUAGE USED IN THE BOOKS DOES INDICATE THE NA TURE AND HOWEVER, IT IS NOT CONCLUSIVE AND DETERMINANT. THEREFORE, IN OUR OPINION, DESCRIPTIONS IN THE BOOKS OF ACCOUNT DO NOT REVEAL THE REAL NATURE OF THE TRANSACTIONS, MORE SO WHEN THE TRANSACTIONS OF LOAN AND DEPOSIT ARE OFTEN CAMOUFLAGED AND MORE SO WHEN SUCH DISTING UISHING FEATURES DECIDE THE FATE OF THE ADDITIONS. THEREFORE, THERE IS NEED FOR CLOSELY DEFINING THE IMPUGNED TRANSACTIONS OF THE ASSESSEE TO DEFINE WHETHER THEY CONSTITUTES LOAN OR DEPOSIT OR ADVANCE AFTER A NALYSING THE IMPUGNED TRANSACTIONS AND DETERMINING THEIR TRUE NA TURE. 7. THEREFORE, WE ARE OF THE OPINION, WITH WHICH THE ASSESSEES COUNSEL AGREES, THAT THE ISSUE MUST BE SET ASIDE TO THE FILE OF THE CONCERNED ASSESSING OFFICERS FOR DELVING INTO THE D EPTH OF THE TRANSACTIONS AS DETAILED ABOVE FOR FRESH DECISION O N IF THE TRANSACTIONS 4 IN BOTH THE CASES ARE LOANS, ADVANCES OR DEPOSITS. FOR THIS, IN OUR OPINION, THE REVENUE AUTHORITIES HAVE TO TRAVEL DEE PLY BEYOND THE DESCRIPTIONS MENTIONED IN THE BOOKS OF ACCOUNT. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. CONSEQUENTLY, ALL THE GROUNDS RAISED BY THE ASSESSEES IN BOTH THE CASES ARE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING T HE ISSUE AFRESH. 8. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 08-7-2011. SD/- SD/- ( I.C.SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 08-7-2011 *VNR C.C.TO: 1. ASSESSEE. 2. ASSESSING OFFICER. 3. CIT(A) V, PUNE 4. CIT, PUNE 5. DR, ITAT, PUNE