ACIT, CHENNAI V. L K S Gold Haven, CHENNAI

ITA 1643/CHNY/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96682 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 24-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-08-2012
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Reasonable cause; Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , . ! ' , # '$ % [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.1643/MDS/2012 & C.O NO.174/MDS/2012 / ASSESSMENT YEAR : 2009-10 THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS CIRCLE XIII CHENNAI VS. M/S LKS GOL D HAVEN 343, G BLOCK, 10 TH MAIN ROAD ANNA NAGAR, CHENNAI -40 [PAN AADFL 0942 P ] (APPELLANT) ( R ESPONDENT /CROSS OBJECTOR ) DEPARTMENT BY : DR B NISCHAL, JCIT ASSESSEE BY : SHRI S SRIDHAR, ADVOCATE / DATE OF HEARING : 24 - 11 - 2 015 / DATE OF PRONOUNCEMENT : 31 - 1 2 - 2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE AND THE CROSS OBJECT ION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CO MMISSIONER OF INCOME-TAX (APPEALS)-XII, DATED 23.5.2012 FOR ASSES SMENT YEAR 2009- 10. ITA NO.1643/12 C.O 174/12 :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 2.1. THE ID. CIT(A) HAS ERRED IN DELETING THE ADD ITION OF DEEMED DIVIDEND U/S 2(22)(E) OF THE IT ACT OF RS. 3,38,45, 076/- ON THE LOANS AND ADVANCES RECEIVED FROM M/S LKS GOLD HOUSE P. L TD AND M/S LKS ENTERPRISES P. LTD 2.2 THE ID. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE PARTNERS OF THE ASSESSEE FIRM HAS SUBSTANTIAL INTEREST IN THE C OMPANIES FROM WHICH IT HAS RECEIVED LOANS AND ADVANCES. 2.3 THE CIT(A) OUGHT TO HAVE NOTED THAT THE LOAN S AND ADVANCES IN THE FORM OF CASH AND GOLD RECEIVED BY THE ASSESSEE FIRM WERE BEFORE ITS COMMENCEMENT OF BUSINESS. 2.4 HAVING REGARD TO THE FACT THAT THE AMOUNT TR ANSFERRED BY THE COMPANIES FROM ' RESERVE AND SURPLUS' IS MORE THAN THE LOAN RECEIVED BY THE ASSESSEE FIRM AND SINCE THE ASSESSE E FIRM DEALS ONLY IN SALE OF GOLD, SILVER AND BULLION AND SO IT IS NO T IN THE ORDINARY COURSE OF ITS BUSINESS AS PER SEC. 2(22)(E), THE ID CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. 2.5 IT IS SUBMITTED THAT THE EXPLANATION OF THE A SSESSEE FIRM THAT LOANS AND ADVACES RECEIVED ARE PURCHASE OF GOLD JEW ELLERY FOR RS. 1,93,68,206.26, CASH I CHEQUE RECEIVED RS. 1,00,00,000 FROM M/S LKS GOLD HOUSE P. LTD ON BEHALF OF M/S GEE ESS EMM JEWELLERS P. LTD TO WHOM M/S LKS GOLD HOUSE P. LTD OWED AND PAYM ENTS DIRECTLY MADE BY ML/S LKS ENTERPRISES P. LTD ON BEHALF OF TH E ASSESSEE OF RS. 36,00,0001-, DOES NOT STAND TO REASON. 3. AT THE OUTSET, IT WAS NOTICED THAT THERE WAS A DELA Y OF 41 DAYS IN FILING THE CROSS OBJECTION BY THE ASSESSEE . THE ASSESSEE FILED A CONDONATION PETITION STATING THAT THERE WAS A DEL AY IN RECEIVING THE GROUNDS OF APPEAL FILED BY THE REVENUE AS IT WAS NO T ACCOMPANIED WITH THE NOTICE DATED 24.8.2012. AS SUCH, AFTER OB TAINING THE COPY OF GROUNDS OF APPEAL, THE ASSESSEE WAS ABLE TO HAND OVER THE RELATED ITA NO.1643/12 C.O 174/12 :- 3 -: DOCUMENTS TO ITS COUNSEL ONLY ON 29.10.2012. THERE AFTER, THE ASSESSEES COUNSEL PREPARED THE CROSS OBJECTION AND FILED THE SAME BEFORE THIS TRIBUNAL ON 1.11.2012. THUS, THERE WAS A DELAY OF 41 DAYS IN FILING THE CROSS OBJECTION. WE HAVE GONE THROUG H THE REASONS FOR FILING THE CROSS OBJECTION BELATEDLY. IN OUR OPINI ON, THERE WAS REASONABLE CAUSE IN FILING THE CROSS OBJECTION BELA TEDLY BEFORE THIS TRIBUNAL. ACCORDINGLY, THE DELAY IS CONDONED AND T HE CROSS OBJECTION IS ADMITTED. 4. IN ITS CROSS OBJECTION, THE ASSESSEE HAS RAISED A GROUND THAT IT IS NOT A REGISTERED SHAREHOLDER IN M/S L K S GOLD HOUSE P LTD. AND M/S L K S ENTERPRISES LTD SO AS TO INVOKE THE P ROVISIONS OF SEC. 2(22)(E) OF THE ACT. 5. THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THERE WAS A RECEIPT OF ` 1,93,68,206.26 BY THE ASSESSEE FROM M/S L K S GOLD HOUSE P. LTD AND ` 36 LAKHS FROM M/S L K S ENTERPRISES P. LTD. WHEREIN THE ASSESSEE-FIRM IS NOT A REGISTERED SHAR EHOLDER SO AS TO INVOKE THE PROVISIONS OF 2(22)(E) OF THE ACT. 6. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THIS I SSUE IS SQUARELY COVERED BY THE JUDGMENT OF THE MADRAS HIGH COURT IN CIT VS PRINTWAVE SERVICES P. LTD. 373 ITR 665, WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE IS NOT BENEFICIAL OR REGISTERED OWNER OF THE SHAREHOLDINGS ITA NO.1643/12 C.O 174/12 :- 4 -: IN THE COMPANY FROM WHERE THE ASSESSEE RECEIVED TH E LOANS, THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT IS NOT APPLI CABLE. THERE IS ALSO A CONTRARY DECISION BY THE DELHI HIGH COURT IN THE CASE OF CIT VS NATIONAL TRAVEL SERVICES, 347 ITR 305, ON THIS ISSU E. FURTHER, THIS GROUND WAS RAISED BY THE ASSESSEE-FIRM BEFORE THIS TRIBUNAL FOR THE FIRST TIME AND THE LOWER AUTHORITIES HAVE NO OCCASI ON TO CONSIDER THIS ARGUMENT OF THE ASSESSEE. FURTHER, THE ASSESSEE HAS NOT PLACE BEFORE US THE DETAILS OF SHAREHOLDING PATTERNS IN M/S L K S GOLD HOUSE P. LTD AND M/S L K S ENTERPRISES P. LTD. BEING SO, AT THIS STAGE, WE ARE UNABLE TO EXPRESS ANY OPINION ON THE APPLICATION OF PROVISIONS OF SEC. 2(22)(E) OF THE ACT ON THE MONEY RECEIVED FROM THES E TWO COMPANIES BY THE ASSESSEE. CONSIDERING THE FACTS AND CIRCUM STANCES OF THE CASE, IN OUR OPINION, IT IS APPROPRIATE TO REMIT THE ISSU E BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO PLACE ALL THE NECESSARY DOCUMENTS TO PROVE ITS CLAIM BEFORE THE A SSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE J UDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF PRINTWAVE SERVICES P LTD (SUPRA) AND JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF NAT IONAL TRAVEL SERVICES (SUPRA) AND ALSO THE RELEVANT CASE LAWS ME NTIONED IN THAT JUDGMENTS AND DECIDE THE ISSUE AFRESH. ITA NO.1643/12 C.O 174/12 :- 5 -: 7. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. 8. SINCE WE HAVE DISPOSED OF THE CROSS OBJECTION FILED BY THE ASSESSEE WHICH GOES TO THE ROOT OF THE MATTER, AT T HIS STAGE, WE ARE NOT INCLINED TO EXPRESS ANY OPINION ON THE ISSUE RA ISED BY THE REVENUE IN ITS APPEAL ON MERIT. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 9. TO SUMMARIZE, THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ! ' ) (G. PAVAN KUMAR) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI / DATED: 31 ST DECEMBER, 2015 RD ' #$ %$ / COPY TO: 1 . &' / APPELLANT 4. ( / CIT 2. ')&' / RESPONDENT 5. $*+ ' , / DR 3. ( () / CIT(A) 6. +/ 0 / GF