Sh. Bhupinder Singh, Amritsar. V. The Dy. Commissioner of Income Tax, Amritsar.

ITA 164/ASR/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9188 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 17-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIVANI BANSAL LD
• Assessee Lawyers: VINAMAR GUPTA LD
• Keywords: Deemed dividend; Set aside
• Section: 143(3); 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL AMRITSAR BENCH, A MRITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.164(ASR)/2016 ASSESSMENT YEAR:201 2-13 SH. BHUPINDER SINGH 23-GOKAL KA BAGH 100-FT. ROAD, AMRITSAR. [PAN:ASOPS 0553L] VS. DY. CIT, CIRCLE-III, AMRITSAR. (RESPONDENT) APPELLANT BY: SH. VINAMAR GUPTA (LD. CA) RESPONDENT BY: SH. SIVANI BANSAL (LD. DR) DATE OF HEARING: 21.02.2019 DATE OF PRONOUNCEMENT: 27.03.201 9 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/ AGAINST THE ORDER DATED 08.01.2015 IMPUGNED HEREIN, PASSED BY THE LD. CIT(A)-1, AMRITSAR U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFTE R CALLED AS THE ACT), WHERBY THE LD CIT(A) AFFIRMED THE ASSESSMENT ORDER PASSE D U/S 143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THAT THE ASSESSMENT ORDER PASSED BY LD. ASSESSING OFFICER U/S. 143(3) DATED 29/12/2014 OF THE INCOME-TAX ACT, 1961, IS ILLEGAL, ARBITRARY AND CONTRARY TO THE FACTS ON RECORDS AND THIS ILLEGALITY PERVADES OVER ALL OTHER GROUNDS OF APPEAL, THAT THE WORTHY C IT(A) HAS FURTHER ERRED IN CONFIRMING THE SAME. 2. THAT ADDITION OF RS.2,50,000/- MADE BY THE ASSES SMENT OFFICER ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E ) OF THE INCOME TAX ACT, 1961 IS ERRONEOUS AND IS NOT SUSTAINABLE AND T HE WORTHY ITA NO.164 /ASR/2016 (A.Y.2012-13) SH. BHUPINDER SINGH VS. DCIT 2 CIT(APPEALS) HAS FURTHER ERRED IN CONFIRMING THE DE CISION OF LD. AO. THUS, IN ALL THE FAIRNESS THE ADDITIONS NEED TO BE DELETE D. 3. THAT A SUM OF RS.2,50,000/- RECEIVED BY TH E ASSESSEE FROM M/S BHUPINDRA MACHINE P. LTD. DURING THAT THE YEAR WAS CAPITAL ADVANCE AGAINST SALE OF LAND WHICH HAS BEEN WRONGLY TREATED AS DEEMED DIVIDED WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT. THAT THE WORTHY CIT (APPEALS) WITHOUT APPRECIATING COMPLETE FACTS, SUBM ISSIONS AND LEGAL POSITION HAS FURTHER ERRED IN CONFIRMING THE DECISI ON OF LD. AO. THAT THE GENUINE BUSINESS TRANSACTION CAN NOT TO BE TREATED AS DEEMED DIVIDEND AS DONE BY THE ASSESSING OFFICER. 3. THE ASSESSE HAS CHALLENGED THE SUSTAINING OF THE ADDITION OF RS.2,50,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF D EEMED DIVIDEND UNDER SEC.2(22)(E) OF THE INCOME TAX ACT , BY THE LD. C IT(A). THE RELEVANT OPERATIVE PART OF THE IMPUGNED ORDER IS REPRODUCED HE REIN BELOW FOR READY REFERENCE AND BREVITY. 6. I HAVE GONE THROUGH GROUNDS OF APPEAL, SUBMISSI ONS FILED BY THE CA OF THE ASSESEEE AND THE ASSESSMENT ORDER. I HAVE CONSIDERED THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE CAREFULLY. THE HAS CONTENDED THAT THE ADVA NCE OF RS.250,000/- RECEIVED BY HIM FROM M/S BHUPINDRA MACHINE TOOLS P. LTD., WHICH HAS BEEN TREATED AS ADVANCE WITHIN THE MEANING OF SECTI ON 2(22)(E) OF THE INCOME TAX ACT BY THE AO, IS A GENUINE BUSINESS ADV ANCE AND WAS RECEIVED BY HIM AGAINST THE PROPOSED SALE OF HIS IN DUSTRIAL ' PLOT TO THE COMPANY. THE HAS FURTHER CONTENDED THAT THE SAID T RANSFER OF INDUSTRIAL PLOT COULD NOT MATURE BECAUSE OF STIPULATION FROM P UNJAB STATE INDUSTRIES AND EXPORT CORPORATION (PSIEC) THAT TRANSFER OF PLO T BY DIRECTOR OF THE COMPANY, TO THE COMPANY CAN BE MADE ONLY IF THE SHA REHOLDER OWNING THE INDUSTRIAL PLOT HOLDS MORE THAN 51% OF SHARES I N THE COMPANY AND THAT AS THE WAS HOLDING 30% SHARE OF THE PAID UP C APITAL OF THE COMPANY AS SUCH THE DEAL STOOD CANCELLED AND RS.7,50,000/- WAS REFUNDED BACK BY HIM AT THE REQUEST OF THE COMPANY. THE HAS SUBM ITTED COPIES OF MINUTES OF MEETINGS BOARD OF DIRECTORS OF COMPANY H ELD ON 12.02.2010, 5.06.2012 & 20.12.2013 AND A SPECIMEN COPY OF LETTE R OF PSIEC DATED 08.07.2011 ISSUED TO ONE SH. AMAIJIT SINGH. THESE D OCUMENTS HAVE BEEN ITA NO.164 /ASR/2016 (A.Y.2012-13) SH. BHUPINDER SINGH VS. DCIT 3 CAREFULLY PERUSED BUT THE SAME DOESNT SUPPORT THE CASE OF AS THE MINUTES OF MEETINGS OF BOD WHICH WERE NEVER FURNISH ED BEFORE THE AO- CANNOT BE ACCEPTED DURING APPELLATE PROCEEDINGS. FU RTHER, THE SPECIMEN COPY OF PSIEC LETTER FURNISHED NOW PERTAINS TO SOME OTHER PERSON AND OTHER PLOT NOT THE HIMSELF WHEREAS IT HAS BEEN CON TENDED THAT HE WAS OWNER OF THE SAID PLOT EVEN BEFORE 01.04.2010 I.E. WHEN THE PLOT WAS TAKEN ON LEASE BY THE COMPANY. IF IT WAS REALLY A C ASE, THEN SUCH A LETTER MUST HAVE BEEN ALREADY ISSUED BY PSIEC TO HIM AND H E AS WELL AS HIS COMPANY WAS FULLY AWARE ABOUT THE STIPULATION OF PS IEC REGARDING TRANSFER OF PLOT EVEN AT THE TIME OF GIVING FIRST A DVANCE TO THE . FURTHERMORE, THE HAS FAILED TO BRING ON RECORD THE LETTER ISSUED BY PSIEC TO HIM DURING ASSESSMENT AS WELL AS APPELLATE PROCE EDINGS BEFORE ME THEREFORE, HIS MAIN ARGUMENT IS NOT SUPPORTED ANY D OCUMENTARY EVIDENCE. THE HAS RELIED UPON THE CASE LAWS DY. COMMISSIONE R OF INCOME TAX V N. RAJAGOPAL (1015) 152 ITD 884 (COCHIN), COM MISSIONER OF INCOME TAX V OM PARKASH SURI (2014) 225 TAXMAN 121(MP), BA GMANE CONSTRUCTIONS P LTD V COMMISSIONER OF INCOME TAX, B ANGALORE (2015) 231 TAXMANN.COM 120 (KARNATAKA), COMMISSIONER OF INCOME TAX V. AMBASSADOR TRAVELS P. LTD (2009) 318 ITR 736(DELHI) , COMMISSIONER OF INCOME TAX V RAJ KUMAR (2009) 318 ITR 462 (DELHI), COMMISSIONER OF INCOME TAX V. CREATIVE DYEING AND PRINTING P, LTD.( 2009)318 ITR 476 (DELHI) AND (2010) 328 ITR (STATUTE) 10. ALL THE AB OVE JUDICIAL PRONOUNCEMENTS ARE CAREFULLY CONSIDERED BY ME BUT W ITH DUE RESPECT THESE JUDGMENTS DO NOT APPLY TO FACTS OF THE PRESEN T CASE AS IN THIS CASE ALLEGED TRANSACTION OF PROPOSED TRANSFER OF INDUSTR IAL PLOT IS NEITHER SUPPORTED BY AN AGREEMENT TO SELL AS WAS IN THE CAS E OF COMMISSIONER OF INCOME TAX V OM PARKASH SURI (SUPRA) NOR THE COULD PROVE THE SAME TO A GENUINE BUSINESS TRANSACTION BY BRINGING ON RECORD ANY CONCRETE EVIDENCE DURING ASSESSMENT OR APPELLATE PROCEEDINGS BEFORE ME. RATHER, THE DOCUMENTS/ EXPLANATION FURNISHED IS NOTHING BUT AN AFTERTHOUGHT STORY AND HE HAS JUST TRIED TO PRESENT A PURE LOAN/ ADVANCE TRANSACTION ITA NO.164 /ASR/2016 (A.Y.2012-13) SH. BHUPINDER SINGH VS. DCIT 4 AS GENUINE BUSINESS TRANSACTION, AS HAS BEEN HELD B Y THE AO IN HER ORDER. THE AO HAS ALSO PLACED RELIANCE UPON THE DECISION IN THE CASE OF CIT V P.K. ABUBUCKER (2004) 259 ITR 507, (MADRAS) A ND M.D.JINDAL V. CIT (1986) 164 ITR 28 ( CALCUTTA) WHILE HOLDING THA T THE ADVANCE RECEIVED BY THE IS COVERED THE PROVISIONS OF 2(22)(E). IN THE PRESENT CASE, THERE IS NO DISPUTE REGARDING THE FACT THAT THE IS DIRECTOR AND HAVING 30% SHAREHOLDING IN A CLOSEL Y HELD PRIVATE LIMITED COMPANY, M/S BHUPINDRA MACHINE TOOLS PVT. LTD. WHER E RESERVE AND SURPLUS OF THIS COMPANY FOR THE YEAR ENDING 31.03.2 012 ARE TO THE TUNE OF RS. 82.54 LAKH. AFTER CONSIDERING RIVAL SUBMISSI ONS, I AM OF THE OPINION THAT THE AO IS RIGHT IN HOLDING THAT THE AMOUNT OF RS. 250,000/- RECEIVED BY THE ASSESSEE FROM M/S BHUPINDRA MACHINE TOOLS P LTD DURING THE YEAR WAS AN 'ADVANCE' WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT AND THEREFORE, IT HAS BEEN CORRECTLY ASSESSED AS DE EMED DIVIDEND IN THE HANDS OF THE AND ACCORDINGLY, THE ORDER OF AO IS U PHELD. ABOUT MINUTES OF BOD MEETINGS FURNISHED IN APPELLAT E PROCEEDING MINUTES OF PROCEEDINGS OF BOD AND OTHER MEETINGS O F COMPANIES IN INDIA WERE GOVERNED BY SECTION 193(1A) OF THE CO MPANIES ACT 1956 (I.E THE LEGISLATION WHICH WAS IN FORCE DURING THE YEAR UNDER CONSIDERATION), WHICH REQUIRES THAT EVERY PAGE OF MINUTE BOOK SHALL BE SIGNED AND THE LAST PAGE OF RECORDS OF PROCEEDINGS SHALL BE DATED AND SIGNED BY THE CHAIRMAN OF SAID MEETING. FURTHER, THE COPY OF RESO LUTION IS ALSO FILED ONLINE WITH ROC. IN THE INSTANT CASE, MINUTES OF BO D MEETINGS WERE NEVER FURNISHED BY ASSESSEE DURING ASSESSMENT PROCE EDINGS, AS MENTIONED BY THE AO IN HER ORDER. FURTHER, THE COPI ES OF THE SO CALLED MINUTES OF BOD MEETINGS SUBMITTED BY THE ASSESSEE D URING APPELLATE PROCEEDINGS ARE NOTHING BUT A CONCOCTED EVIDENCE TO SUPPORT HIS CONTENTION AFTER THE ADDITION HAS BEEN MADE BY THE AO. ITA NO.164 /ASR/2016 (A.Y.2012-13) SH. BHUPINDER SINGH VS. DCIT 5 7. I HAVE CONSIDERED THE ASSESSMENT ORDER AND TH E WRITTEN SUBMISSIONS OF THE , AND THE GROUNDS OF APPEAL ARE DISPOSED OFF AS UNDER: I) THE GROUND OF APPEAL AT S.NO. 2 IS DISMISSED. II) THE GROUND OF APPEAL AT S.NO. 1,3,4 ARE GENER AL IN NATURE AND REQUIRE NO ADJUDICATION. IN THE RESULT THE APPEAL IS DISMISSED. 4. IN THIS APPEAL, THE ASSESSEE HAS CLAIMED THAT ADVANCE OF R S.2,50,000/- WAS RECEIVED AGAINST THE PROPOSED SALE OF INDUSTRIAL PLOT BY THE ASSESSEE FROM M/S. BHUPINDRA MACHINE TOOLS PVT. LTD. AND IS REQU IRED TO BE TREATED AS ADVANCE AS PER SEC.2(22)(E) OF THE ACT AS A GENUINE BUSINE SS ADVANCE. THE LD. AR ALSO SUBMITTED THAT TRANSACTION COULD NOT BE COMPL ETED BECAUSE OF THE TECHNICAL STIPULATIONS IN THE TERMS AND CONDITIONS O F PUNJAB STATE INDUSTRIES AND EXPORT CORPORATION (PSIEC). ON THE CONT RARY, THE LD. DR RELIED UPON THE ORDERS PASSED BY THE AUTHORITIES BELOW. 5. HAVING HEARD THE PARTIES AND PERUSED THE MATERIAL AVA ILABLE ON RECORD. WE REALIZED THAT THE ASSESSEE WHILE SUBMITTING THE TERMS AND CONDITIONS OF THE PSIEC RELIED UPON A SPECIMEN OF COPY OF PSIEC WHI CH BELONGED TO SOME OTHER PERSONS AND THEREFORE, THE LD. CIT(A) DID NOT G IVE ANY WEIGHTAGE. FURTHER THE LD. CIT(A) ALSO PERUSED THE COPY OF MINUTE S OF MEETING OF THE BOARD OF DIRECTORS OF THE COMPANY HELD ON VARIOUS DATES I.E. 12.02.2010, 05.06.2012 & 20.12.2013 AND HELD THAT THE SAID DOCUME NTS DOES NOT SUPPORT THE CASE OF THE ASSESSEE AS THE MINUTES OF MEETINGS O F BOD WERE NEVER FURNISHED BEFORE THE AO THEREFORE CANNOT BE ACCEP TED DURING APPELLATE PROCEEDINGS. IT WAS FURTHER OBSERVED THAT THE ASSESSEE HAS FAILED TO BRING ON RECORD THE LETTER ISSUED BY (PSIEC) TO THE ASSESSEE DIRECTL Y DURING THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS. IT WAS FURTHER OBSERVED BY THE LD. CIT(A) THE ASSESSEE HAS FAILED TO BRING ON RECORD ANY CONCRETE EVIDENCE TO PROVE GENUINE BUSINESS TRANSACTION. FURTHER THE MINU TES OF BOD MEETING IS REQUIRED TO BE SIGNED ON EACH AND EVERY PAGE AND LA ST PAGE OF THE RECORDS ITA NO.164 /ASR/2016 (A.Y.2012-13) SH. BHUPINDER SINGH VS. DCIT 6 OF PROCEEDINGS IS REQUIRES TO BE DATED AND SIGNED BY TH E CHAIRMAN OF THE SAID MEETING WHICH THE ASSESSEE HAS FAILED TO FILE. 5.1 FROM THE DOCUMENTS IT REFLECTS THAT THE PROCEEDINGS OF THE BOARD OF DIRECTORS HAVE DULY BEEN SIGNED AND THE ASSESSEE HAS FILED COPY OF FINAL NOTES FORMING PART OF ANNUAL ACCOUNTS OF COMPANY I.E., M/S BHUPINDRA MACHINE TOOLS PVT. LTD. FOR THE YEAR ENDING 31 ST MARCH, 2011, 31 ST MARCH, 2012 AND 31 ST MARCH, 2013. THE ASSESSEE HAS ALSO FILED THE COPY OF MEET INGS OF BOARD OF DIRECTORS MEETING FOR 2009-10, 2010-11, 2 011-12 & 2012-13. FURTHER, ALSO FILED THE COPY OF ACCOUNTS OF THE ASSESSEE IN BHUPINDER MACHINE TOOLS PVT. LTD. FOR THE FINANCIAL YEAR 2010-11, 2011 -12, 2012-13 & 2013-14. FURTHER THE LD. AR HAS ALSO DRAWN OUR ATTENTION TO TH E REPLY DATED 24.12.2014 ADDRESSED TO THE ASSESSING OFFICER IN REPLY TO THE SHOW CAUSE. FROM THE PAPER BOOK IT ALSO REFLECTS THAT THE ASSESSEE HAS ALSO PLACED ON RECORD, A COPY OF THE ALLOTMENT LETTER DATED 12.11.20 07 IN FAVOUR OF THE ASSESSEE BY (PSIEC). FROM THE PAPER BOOK CERTIFICATE OF T HE ASSESSEE, IT REFLECTS THAT THE ASSESSEE HAS PROVIDED ALL THE RELEVANT MATERIAL INCLUDING THE ALLOTMENT LETTER, MINUTES OF BOARD OF DIRECTORS MEETIN GS, COPY OF FINANCIAL NOTES FORMING PARTS OF ANNUAL ACCOUNTS OF COMPANY BHUPI NDRA MACHINES PVT. LTD. AND THE ALLOTMENT LETTER OF PSIEC IN FAVOUR OF THE ASSESSEE WHICH GOES TO SHOW THAT OBSERVATION OF THE AUTHORITIES BELOW ARE CONTRARY TO THE DOCUMENTS ON RECORD THEREFORE, FOR THE SUBSTANTIAL JUSTIC E WE SET ASIDE THE ORDERS PASSED BY THE AUTHORITIES BELOW AND REMAND THIS CASE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AFRESH AFTER TAKING INTO CONSIDERATION THE DOCUMENTS SUBMITTED BY THE ASSESSEE. IT IS SUFFICE TO SAY THAT THE ASSESSEE SHALL CO-OPERATE WITH THE ASSESSMENT PROCEEDINGS AND WOULD BE REQUIRED TO PRODUCE THE RELEVANT DOCUMENTS AS PER THE DESIRE OF THE ASSESSING OFFICER FOR PROPER ADJUDICATION OF THE ISSUES. ITA NO.164 /ASR/2016 (A.Y.2012-13) SH. BHUPINDER SINGH VS. DCIT 7 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27.03.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:27.03.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. BHUPINDER SINGH 23-GOKAL KA BAGH 100- FT. ROAD, AMRITSAR. (2) THE DY. CIT, CIRCLE-III, AMRITSAR. (3) THE CIT(A)-1, AMRITSAR. (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER