M/s. HHS India Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2700/DEL/2012

• Counselvise Citation: 270020114 RSA 2012
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Principle of natural justice; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI I.C. SUDHIR , JM & SHRI A.N. PAHUJA, AM ITA NO.2700/DEL/2012 ASSESSMENT YEAR : 2008-09 HHS INDIA PVT. LTD., 284, SULTAN SADAN, L-3, WESTEND MARG, SAIDULAJAIB, NEW DELHI-110030 V/S . INCOME-TAX OFFICER, WARD-12(4), NEW DELHI [PAN : AAACH3681B] (APPELLANT) (RESPONDENT) ASSESSEE BY NONE REVENUE BY SHRI SATPAL SINGH, DR DATE OF HEARING 02-08-2012 DATE OF PRONOUNCEMENT 02-08-2012 O R D E R AN PAHUJA:- THIS APPEAL FILED ON 1-06-2012 BY THE ASSESSEE AGAI NST AN ORDER DATED 2-04-2012 OF THE LD. CIT(A)-XV, NEW DELHI, RA ISES THE FOLLOWING GROUNDS:- 1. THAT THE REVENUE HAS ERRED IN LAW AND ON FACTS IN T REATING THE AMOUNT PAID TO M/S JAMUNA ENTERPRISES BY THE WAY OF A BUSINESS TRANSACTION AS A LOAN. 2. THAT THE REVENUE HAS ERRED IN LAW AND ON FACTS I N DISALLOWING ` ` 80,083/- ON ACCOUNT OF TRAVEL EXPENSES. 3. THAT THE REVENUE HAS ERRED IN LAW AND ON FACTS I N DISALLOWING ELECTRICITY EXPENSES AMOUNTING TO ` ` 85,319/-. 4. THAT THE REVENUE HAS ERRED IN LAW AND ON FACTS I N ADDING THE AMOUNT OF ` ` 3,667/- WHICH PERTAINS TO THE DIFFERENCE IN CLOSING BALANCE OF AMOUNT RECEIVABLE FROM M/S HERITAGE RESO RTS PVT. LTD. AS PER THEIR BOOKS AND AS PER OUR BOOKS OF ACC OUNTS. 5. THAT THE REVENUE HAS ERRED IN PASSING THE ORDER WITHOUT GIVING AN ADEQUATE OPPORTUNITY TO THE ASSESSEE COMP ANY. THE ASSESSEE COMPANY CRAVES LEAVE TO ADD /ALTER/AMEND THE GROUNDS OF APPEAL AT THE TIME OF HEARING. I.T.A .NO.2700/DEL/2012 2 2. AT THE OUTSET, NONE-APPEARED ON BEHALF OF THE A SSESSEE NOR SUBMITTED ANY REQUEST FOR ADJOURNMENT. CONSIDERING THE NATUR E OF ISSUES AND FINDINGS OF THE LD. CIT(A), THE BENCH DECIDED TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. DR. 3. ADVERTING FIRST TO GROUND NO.5 IN THE APPEAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING NIL INCOME FILE D ON 29-09-2008 BY THE ASSESSEE, AFTER BEING PROCESSED U/S 143(1) OF THE I NCOME TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT), WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ISSUED ON 06-08-2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER [AO IN SHORT] NOTICED THAT THAT THE ASSESSEE ADVANCED A LOAN OF ` ` . 5 LACS TO M/S JAMUNA ENTERPRISES PVT. LTD. TO A QUERY BY THE AO, SEEKING SHARE HOLD ING PATTERN OF M/S JAMUNA ENTERPRISES PVT. LTD. AND THE ASSESSEE, THE LATTER REPLIED THAT SHRI. PREM PATNAIK HAD A SHARE HOLDING OF 23.37% AS ON 31-03-2007 & 22 .11 % AS ON 31-03-2008 IN THE ASSESSEE COMPANY WHILE HE HAD SHARE HOLDING OF 66.14% IN M/S JAMUNA ENTERPRISES PVT. LTD AS ON 31-03-2007 & 31-03-2008. TO A FURTHER QUERY BY THE AO, REGARDING DEEMED DIVIDEND, THE ASSESSEE REPLIED THAT IT HAS GIVEN ADVANCE OF ` ` 5 LACS FOR BUSINESS PURPOSES. HOWEVER, THE AO DID N OT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND TREATED THE AMOUNT AS LOAN FALLING WITHIN THE PROVISIONS OF SEC.2(22)(E) OF THE ACT AND REJECTED THE CLAIM OF THE ASSESSEE THAT THE TRANSACTION WAS IN THE NATURE OF BUSINESS TRANS ACTION. 4. FURTHER, ON PERUSAL OF AGREEMENT BETWEEN THE ASSESSEE AND M/S HERITAGE RESORTS P LTD., THE AO NOTICED THAT EXPENDITURE IN RELATION TO PROFESSIONAL SERVICES WERE TO BE BORNE BY M/S HERITAGE RESORTS P LTD.. HOWEVER, ON PERUSAL OF DETAILS OF EXPENSES, IT WAS FOUND THAT AN AMOUNT OF ` ` 80,083/- HAD BEEN CLAIMED BY THE ASSESSEE, BEING THE AMOUNT INCURRED BY MS. CRISTINA PATNAIK TO FIND OUT NEW PRODUCTS FOR THE BOUTIQUE OF M/S HERIT AGE RESORTS. SINCE THE AMOUNT HAD BEEN INCURRED IN RELATION TO EARNING OF PROFESS IONAL INCOME, WHICH HAD NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE, T HE AO DISALLOWED THE AMOUNT. I.T.A .NO.2700/DEL/2012 3 4.1. BESIDES, THE AO DISALLOWED ELECTRICITY EXPENSE S OF ` `85,319/- OUT OF TOTAL OF ` `1,89,598/- ATTRIBUTABLE TO PREMISES, SUBLET TO THR EE OTHER PARTIES AND ` ` 3,667/- ON ACCOUNT OF NON-RECONCILIATION OF CLOSING BALANCE IN THE CASE OF HERITAGE RESORT PVT. LTD. VIS-A-VIS- BOOKS OF THE S AID COMPANY. 5.. ON APPEAL, NONE-APPEARED ON BEHALF OF THE ASSES SEE DESPITE ISSUANCE OF NOTICE DATED 11-11-2011 AND 22-12-2011. ACCORDINGL Y, THE LD. CIT(A), UPHOLD THE FINDINGS OF THE AO AS UNDER :- AS IS EVIDENT FROM THE ABOVE CHART, THE APPELLANT WAS GIVEN THE OPPORTUNITY ON VARIOUS DATES BUT THERE HAS BEEN NO COMPLIANCE AS SUCH. IN THESE CIRCUMSTANCES, I HOLD THAT THE APPE LLANT HAD NO EVIDENCE TO SUBSTANTIATE THE CLAIMS RAISED IN THE G ROUNDS OF APPEAL. HENCE IN VIEW OF ABOVE, ON THE BASIS OF DETAILED FI NDINGS AND REASONS GIVEN BY THE ASSESSING OFFICER IN HIS ASSES SMENT ORDER, I UPHOLD THE ADDITION MADE TO THE EXTENT OF RS. 1,69, 069/-. 6. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR MERELY RELIED UPON THE IMPUGNED ORDER. 7. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID OBSERVATIONS IN THE IMP UGNED ORDER, THE LD. CIT(A) DISMISSED THE APPEAL WITHOUT EVEN ANALYZING THE ISS UES OR RECORDING HIS SPECIFIC FINDINGS ON THE SAID ISSUES RAISED IN THE GROUNDS OF APPEAL BEFORE HIM . A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JU DICIAL/QUASI-JUDICIAL BODY/AUTHORITY MUST PASS A REASONED ORDER, WHICH SH OULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO T HE ISSUES/POINTS RAISED BEFORE IT. THE APPLICATION OF MIND TO THE MA TERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF I.T.A .NO.2700/DEL/2012 4 THE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHIL E DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POIN TS FOR DETERMINATION, THE DECISION THEREON AND THE REASONS FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REASONS A ND COMMUNICATION THEREOF BY THE QUASI-JUDICIAL AUTHORI TIES HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PRO CEDURE AND IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RUL E OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTR ANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINE SS IN THE DECISION-MAKING PROCESS. HONBLE JURISDICTIONAL HIG H COURT IN THEIR DECISION IN VODAFONE ESSAR LTD. VS. DRP,196 TAXMAN423(DELHI) HELD THAT WHEN A QUASI JUDICIAL AUTHORITY DEALS WITH A LIS, IT IS OBLIGATORY ON IT S PART TO ASCRIBE COGENT AND GERMANE REASONS AS THE SAME IS THE HEART AND SOUL O F THE MATTER AND FURTHER, THE SAME ALSO FACILITATES APPRECIATION WHEN THE ORDER I S CALLED IN QUESTION BEFORE THE SUPERIOR FORUM. WE MAY POINT OUT THAT A DECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS . STATE OF PUNJAB,(1995)1SCC 760(SC)].AS ALREADY OBSERVED, THE IMPUGNED ORDER SUFFERS FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER ON ANY OF THE ISSUES FOR WHICH ADDITIONS WERE MADE BY THE AO. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. CIT(A) HA VE NOT PASSED A SPEAKING ORDER ON VARIOUS ISSUES RAISED IN THE APP EAL BEFORE HIM, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE TH E ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR DECID ING THE AFORESAID ISSUES, AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWI NG SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY TH AT WHILE REDECIDING THE APPEAL, THE LD. CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISI ONS OF SEC. 250(6) OF THE ACT. WITH THESE OBSERVATIONS, GROUND NO. 5 I N THE APPEAL IS DISPOSED OF. AS A COROLLARY, GROUND NOS. 1 TO 4 IN THE APPEAL DO NOT SURVIVE FOR OUR ADJUDICATION AT THIS STAGE I.T.A .NO.2700/DEL/2012 5 8. NO ADDITIONAL GROUND HAS BEEN BEFORE US, ACCORDI NGLY THIS GROUND IS DISMISSED. NO OTHER ARGUMENT OR SUBMISSION WAS MA DE BEFORE US. 9. IN RESULT, APPEAL IS ALLOWED BUT FOR STATISTIC AL PURPOSES. SD/- S D/- (I.C. SUDHIR) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) COPY OF THE ORDER FORWARDED TO :- 1 ASSESSEE 2. INCOME-TAX OFFICER, WARD-12(4),NEW DEL HI 3. CIT CONCERNED. 4. CIT(A)-XV, NEW DELHI 5. DR, ITAT,C BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT