Ashok Kumar Ahuja, Ludhiana V. ACIT, Ludhiana

ITA 224/CHANDI/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9854 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 224/CHD/2012 ASSESSMENT YEAR: 2008-09 SH. ASHOK KUMAR AHUJA, VS. THE ACIT, CIRCLE-II, PROP. GANGA FABRICS, LUDHIANA LUDHIANA PAN NO. ABAPA1588J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHWANI KUMAR RESPONDENT BY : SH. SUSHIL KUMAR DATE OF HEARING : 29.06.2016 DATE OF PRONOUNCEMENT : 30.06.2016 ORDER PER SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-1, LUDHIANA DATED 12.01.2012 AND PERTAINS TO ASSESSM ENT YEAR 2008-09. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME- TAX ACT, 1961 IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS THE LD. CIT(A) WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 25,03,904/- O N ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) WITHOUT APPRECIATING THE FACT THAT THE TRANSACTIONS WERE PURELY BUSINESS IN NATURE. 2 2. THAT HE WAS FURTHER NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OF RS. 16,150/- OUT OF INTEREST ACCOUNT. 3. BRIEF FACTS OF THE CASE ARE AS UNDER:- THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE IS A DIRECTOR IN A COMPANY NAMELY GANGA KNIT (P) LTD., I N WHICH HE HAD SUBSTANTIAL SHARE HOLDING AS STIPULATE D IN THE PROVISIONS OF 2(22)(E) OF INCOME-TAX ACT, 1961. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT AN AMOUN T OF RS. 25 LACS HAD BEEN GIVEN BY THE COMPANY TO THE ASSESSEE ON 29.10.2007 AND DURING THE ENTIRE YEAR T HERE WAS A DEBIT BALANCE WITH THE PEAK OF RS. 81,36,442/ -. THE ASSESSING OFFICER CONFRONTED THE PROPOSED TREATMENT OF SAID ADVANCE AS DEEMED DIVIDEND U/S 2(22)(E) AND TH E ASSESSEE EXPLAINED THE ADVANCE AS BUSINESS TRANSACT ION. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE AMOUNT WAS GIVEN TO SHRI ASHOK KUMAR AHUJA BY THE COMPANY FOR SOME BUSINESS PURPOSE WHICH WAS NOT MATURE AT THAT TIME AND THE AMOUNT HAD BEEN RECEIVE D BACK WITHIN 3-4 DAYS. THE ASSESSING OFFICER REJECTE D THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT ADVANCED BY GANGA KNIT (P) LTD WAS ON ACCOUNT OF BUSINESS EXIGE NCY AS NO EVIDENCE TO SUPPORT THE CLAIMED HAS BEEN FILE D. 4. UPON ASSESSEES APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION AGAINST THE ABOVE ORDER. THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. LD. COUNSEL FOR THE ASSESSEE SHRI ASHWANI KUMAR SUBMITTED THAT IN T HE PRESENT CASE, THE ASSESSEE WAS A DIRECTOR IN THE COMPANY AND HE WAS H AVING CURRENT ACCOUNT WITH THE COMPANY. HE SUBMITTED THAT SUCH A CURRENT ACCO UNT RUNNING WITH THE COMPANY CANNOT RESULT IN DEEMED DIVIDEND AS ENVISA GED U/S 2(22)(E) OF THE I.T. 3 ACT. FOR THIS PROPOSITION, THE LD. COUNSEL RELIED O N THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SURAJ DEV DADA (2014) 367 ITR 78(P&H). THE LD. COUNSEL SUBMITTED THAT THE ISSUE INVOLED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ABOVE DECISION. L D. COUNSEL FURTHER REFERRED TO PAGE 26 PLACED IN THE PAPER BOOK WHICH SHOWED TH E LEDGER ACCOUNT OF THE ASSESSEE IN THE COMPANY. THE SAID ACCOUNT WAS HAVIN G BOTH DEBIT AND CREDIT ENTIRIES. REFERRING TO THE ABOVE, LD. COUNSEL SUBM ITTED THAT THERE IS NO DOUBT THAT ASSESSEE WAS HAVING A RUNNING ACCOUNT WITH THE COMPANY AND, HENCE, PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT A TTRACTED. 6. PER CONTRA, THE LD. DR RELIED ON THE ORDERS OF T HE AUTHORITIES BELOW. 7. UPON CAREFUL CONSIDERATION, WE FIND THAT ASSESSE E IS A DIRECTOR IN GANGA FABRIC PVT. LTD. THE ASSESSEE HAS A RUNNING ACCOUN T WITH THE COMPANY AS IS CLEAR FROM PAGES NOS. 26 & 27 OF THE PAPER BOOK. TH E SAID ACCOUNT CONTAINS BOTH DEBIT AS WELL AS CREDIT ENTRIES. IN THESE CIRC UMSTANCES, THE RATIO FORM THE HON'BLE JURISDICTIONAL HIGH COURT CLEARLY COMES TO THE RESCUE OF THE ASSESSEE. IN THE SAID DECISION IT WAS HELD THAT WHEN THE ASSESSE E HAS A CURRENT / RUNNING ACCOUNT WITH THE COMPANY, PROVISIONS OF SECTION 2(2 2)(E) ARE NOT ATTRACTED. 8. WE FURTHER FIND THAT HON'BLE MADRAS HIGH COURT I N CIT VS. IDHAYAM PUBLICATIONS LTD. (2006) 285 ITR 221 (MAD.) ALSO HA D AN OCCASION TO CONSIDER THE NATURE OF RUNNING ACCOUNT OF A DIRECTOR OR A SH ARE HOLDER OF A COMPANY WITH THE COMPANY. IT WAS HELD THAT THE TRANSACTION BETW EEN THE ASSESSEE COMPANY AND THE DIRECTOR CUM SHARE HOLDER WAS ONLY OF A CURRENT ACCOUNT IN NATURE. THE SAME CANNOT BE EQUATED WITH LOAN OR DEPOSIT. 9. WE FIND THAT THE ABOVE DECISIONS ARE CLEARLY APP LICABLE ON THE FACTS OF THE CASE. THE NATURE OF TRANSACTIONS OF THE ASSESSEE WI TH M/S GANGA FABRIC PVT. LTD. WAS CLEARLY A RUNNING ACCOUNT OR A CURRENT ACCOUNT. THERE WERE BOTH DEBIT AND 4 CREDIT ENTRIES WITHIN THE YEAR. IN SUCH CIRCUMSTANC ES, RESPECTFULLY FOLLOWING THE DECISIONS INCLUDING THAT OF THE JURISDICTIONAL HIG H COURT REFERRED TO ABOVE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 10. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2016 SD/- SD/- (BHAVNESH SAINI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH JUNE, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR