SHRI GURMEET SINGH, FEROZEPUR V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, JALANDHAR

ITA 272/ASR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6323 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-11-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 23-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABHJO T KAUR LD
• Assessee Lawyers: ASHRAY SARNA LD
• Keywords: Search and seizure; Deemed dividend
• Section: 153A; 143(1); 192; 153; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N.K.CHOUDHRY, JUDICIAL MEMBER AND DR. A.L.SAINI, ACCOUNTANT MEMBER ITA NOS.272 & 273 /ASR/2019 ASSESSMENT YEARS: 2010-11&2011-12 SH. GURMEET SINGH H.NO.3, ROSE AVENUE, FEROZEPUR. VS. DY. CIT CENTRAL CIRCLE-1, JALANDHAR. [PAN:AKBPS 8876P] (APPELLANT) (RESPONDENT) ITA NOS.274 & 275 /ASR/2019 ASSESSMENT YEARS: 2010-11&2011-12 SH. KASHMIRA SINGH H.NO.3, ROSE AVENUE, FEROZEPUR. VS. DY. CIT CENTRAL CIRCLE-1, JALANDHAR. [PAN:AEWPS 9566D] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHRAY SAR NA (LD. CA) RESPONDENT BY: SMT. PRABHJOT KAUR (LD. CIT-DR) DATE OF HEARING: 29.11.2019 DATE OF PRONOUNCEMENT: 01.01.2020 ORDER PER N.K.CHOUDHRY, JM: ALL THESE APPEALS PREFERRED BY THE ASSESSEES ARE AGAINST THE SEPARATE ORDERS DATED 11/02/2019 PASSED BY THE LD. CIT( A)-5, LUDHIANA U/S. 250(6) OF THE ACT, 1961 (HEREINAFTER CAL LED AS THE ACT). ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 2 2. AS THE ISSUE AND FACTS OF ALL THE APPEALS UNDER CONSIDERA TION ARE SIMILAR AND IDENTICAL, THEREFORE, FOR THE SAKE OF BREV ITY HAVE BEEN TAKEN SIMULTANEOUSLY FOR ADJUDICATION BY THIS COMPOSITE ORDER AND FOR BREVITY THE FACTS OF ITA NO.274/ASR/2019 SHALL BE QUOTED AND RE SULT OF THE SAME SHALL APPLY MUTATIS MUTANDIS TO THE OTHER APPEALS. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAD FILED I TS RETURN OF INCOME ON DATED 31.3.3011 BY DECLARING THE INCOME O F RS.2,80,000/- WHICH WAS PROCESSED AND COMPLETED U/S 143(1) OF THE ACT VIDE ORDER DATED 17.04.2011. THEREAFTER, ON DATE D 11.02.2016 A SEARCH OPERATION U/S 132 OF THE ACT WAS CARRIED OUT AT TH E RESIDENTIAL PREMISES OF THE ASSESSEE AS WELL AS AT THE OTHER CONCERNS/ PE RSONS OF BHAGWATI GROUP OF FEROZEPUR. IN CONSEQUENCE TO WHICH NO TICE U/S 153A OF THE ACT WAS ISSUED ON 13.06.2017, IN RESPONSE TO WHICH THE ASSESSEE FILED HIS RETURN OF INCOME ON DATED 10.07.2017 DISCLOSING THE INCOME AT RS.280,000/-. AS PER REVENUE CASE , DURING THE COURSE OF SEARCH OPERATI ON AT THE RESIDENTIAL PREMISES OF SH. PREM SINGH ON DATED 11 .202.2016, HIS STATEMENT WAS RECORDED ON OATH IN WHICH HE STATED THAT SOME INVESTMENT IN PURCHASE OF LAND WAS MADE BY HIM OUT OF F UNDS PROVIDED BY M/S GURU NANAK MILK PRODUCTS, VILLAGE-MALLANWALA. ON VERIFYING THE TRAIL OF FUNDS, IT WAS NOTICED THAT M/S GURU NANAK MILK PRODUCTS HAD RAISED LOANS FROM M/S BHAGWATI LACTO VEGETARIAN EXPORTS PVT. LTD., FEROZEPUR. IT WAS FURTHER NOTICED THAT THE ASSESSE AND HI S SON SH. GURMEET SINGH WERE PARTNERS IN M/S GURU NANAK MILK PR ODUCTS WITH 50% SHARE EACH AND ALSO SUBSTANTIVE SHAREHOLDERS IN M/S BH AGWATI ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 3 LACTO VEGETARIAN EXPORTS PVT. LTD., FEREOZEPUR WITH SH AREHOLDING OF 22.38% AND 30.55% RESPECTIVELY. THEREFORE, THE FIRM I N WHICH THE ASSESSEE AND HIS SON HAD SUBSTANTIAL INTEREST SEPARATELY HAD RECEIVED LOAN FROM A PRIVATE LIMITED COMPANY IN WHICH THEY HAV E AGAIN SUBSTANTIVE INTEREST AS PER PROVISION OF SEC.2(22)(E) OF THE ACT. THE ASSESSING OFFICER HELD THAT THE TOTAL AMOUNT OF LOAN AS O N 01.04.2009 WAS RS.3,50,50,000/- AND AS ON 31.3.3010 THE SAME WAS RS.15,51,39,865/-. THUS, THE FIRM HAD RECEIVED LOAN OF RS.12,00,89,865/- DURING THE RELEVANT FINANCIAL YEAR. HOWEVER, THE ACCUMULATED PROFIT BY THE END OF THE FINANCIAL YEAR WA S RS.11,95,472/- . THE AO ULTIMATELY HELD THAT SINCE BOTH THE ASSESSEE AN D HIS SON ARE TO BE TAXED FOR THE DEEMED DIVIDEND RECEIVED, IT WOU LD BE LOGICAL TO ASSESS ONLY 50% OF THE AMOUNT IN THE HANDS OF THE ASSESSEE, THEREFORE, 50% OF THE ACCUMULATED PROFIT WHICH COMES TO RS.5,97,736/- IS WARRANTED AND THEREFORE ADDED IN THE INCOME OF THE ASSESSEE. 4. THE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE THE LD. CIT(A) WHO VIDE IMPUGNED ORDER DATED 11.02.2019 UPHELD THE ACTION OF THE AO FOR MAKING THE ADDITION UNDER CHALLENGE, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE ASSESSE WHILE RELYING UPON THE JUDGMENT OF DELHI HI GH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 61 TAXMANN.CO M 412, SUBMITTED THAT ASSESSEE'S ASSESSMENT HAS ALREADY BEEN COMPLETED AS ON THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL HA S BEEN FOUND DURING THE SEARCH OPERATION FROM THE POSSESSION OR PREMISE S OF THE ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 4 ASSESSEE THEREFORE, NO ADDITION COULD BE MADE IN PURSUANCE TO SECTION 153A OF THE ACT. 6. ON THE CONTRARY, THE LD. DR RELIED UPON THE VARIOUS JUDGMENTS AND SUBMITTED THAT THOUGH THE INCRIMINATING MATERIAL WAS RECOVERED DURING THE SEARCH OPERATION, HOWEVER IN LAW THERE IS N O NECESSITY OF ANY INCRIMINATING MATERIAL FOR INITIATING THE PROCEED INGS U/S 153 OF THE ACT AS HELD BY VARIOUS HIGH COURTS AND THE ADDITION CAN B E MADE WITHOUT ANY INCRIMINATING MATERIAL QUA THE YEARS COVER ED BY SEC.153A. THE LD. DR FINALLY ARGUED THAT THE CONCLUSIO N DRAWN BY DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWALA ( SUPRA) IS CONTRARY TO THE PRINCIPLES LAID BY THE SAME HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA ( 24 TAXMANN.COM 98) AND CHETAN DAS LACHMAN DAS ( 25 TAXMANN.COM 227) AND VARIOUS DECISION OF OTHER HIGH COURTS. FURTHER THE DECISION OF KABUL CHAWLA (SUPRA) IS NOT A G OOD LAW BECAUSE THE ISSUE RELATING TO MATERIAL NOT FOUND DURING THE SEARCH WAS CONSIDERED TO BE OPEN IN ANIL KUMAR BHATIA ( SUPRA) WHEREAS THE SAME WAS ALREADY DECIDED IN THAT CASE. CONSEQUENTLY, THE CASE DECIDED IN CHETAN DAS LACHMAN DAS ( SUPRA) WAS NOT DISTINGUISHABLE FROM THE CASE OF KABUL CHAWLA (SUPRA). 7. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS CLAIMED THAT FROM TH E ORDERS PASSED BY THE AUTHORITIES BELOW THERE IS NOTHING TO SUGG EST AS TO WHAT INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE SEARCH U/S 132(1) OF THE ACT FROM THE ASSESSEE POSSESSION OR HIS PREMISES, ON THE B ASIS OF WHICH THE ADDITIONS HAVE BEEN MADE AND IT IS ALSO A F ACT THAT THE INCOME TAX RETURN FILED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR: 2011-12 HAS BEEN PROCESSED AND COMPLETED ON 17-04- 2011 BY ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 5 THE REVENUE DEPARTMENT U/S 143(1) OF THE ACT. THEREFO RE, IT CANNOT BE SAID THAT ASSESSMENT PROCEEDINGS WERE PENDING AS ON THE DATE OF SEARCH OPERATION ON DATED 11-02-2016 AND WHILE INITIA TING THE PROCEEDINGS U/S 153A OF THE ACT. EVEN IT IS NOT THE CASE O F THE REVENUE DEPARTMENT THAT ASSESSMENT PROCEEDINGS WERE ALIV E AND PENDING AS ON THE DATE OF SEARCH. WHEREAS BOTH THE AUT HORITIES BELOW HELD THAT AS PER KERALA HIGH COURT JUDGMENT IN THE CASE OF KERALA HIGH COURT IN THE CASE OF E.N. GOPAL KUMAR VS. CIT(CENTRAL ) ( 390 ITR 131(KERELA HIGH COURT ), THERE IS NO CONDITION THAT THE DEPARTMENT HAS TO UNEARTH SOME INCRIMINATING MATERIAL TO CONCLUDE SOME METHOD AGAINST THE ASSESSEE IN EVENTS WHERE THE ASSESSMENT IS TRIGGE RED BY A NOTICE UNDER SECTION 153(1)(A) OF THE ACT. 8. THE QUESTION INVOLVED IN THE INSTANT CASE RELATES TO THE ISSUE , WHERE NO ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDE RATION ARE PENDING, IN THAT EVENTUALITY, IN THE ABSENCE OF A NY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE P ROCEEDINGS, WHETHER ADDITION CAN BE MADE QUA UNABATED ASSESSMENT FOR THE SAID YEAR. 9. THERE ARE MANY JUDGMENTS AGAINST THE ASSESSEES CONTENTION BUT WE ARE QUOTING FEW ON WHICH THE REVENUE DEPARTME NT RELIED:- (I) E.N. GOPAL KUMAR VS. CIT (CENTRAL) REPORTED 390 I TR 131(KERELA HIGH COURT) (II) CIT VS. RAJ KUMAR ARORA, 52 TAXMANN.COM.172 (III) CIT VS. K.P. UMMAER, PROP. STAR ROLLING MILL [2019] 413 ITR 0251 ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 6 (III) CANARA HOUSING DEVELOPMENT CO. VS. DCIT 49 TAXMANN.COM 98, (IV) CIT VS. ANIL KUMAR BHATIA 24 TAXMANN.COM 98 (V) CIT VS. CHETAN DAS LUCHMAN DAS 25 TAXMANN.COM 227. 10. THE JUDGMENTS OF VARIOUS HIGH COURTS IN FAVOUR OF THE ASSESSEES CONTENTION. FOR THE SAKE OF BREVITY, WE ARE MEN TIONING FEW. (1) CIT VS. KABUL CHAWALA 61 TAXMANN.COM 412 (2) PR. CIT VS. DHARAMPAL PREMCHAND LTD. [2018] 408 ITR 0170 (DELHI HIGH COURT) (3) PR. CIT VS. SUNRISE FINLEASE (PVT.T) LTD. [2018] 30 5 CTR (GUJ) 421 (GUJRAT HIGH COURT) (4) CIT VS. DEEPAK KUMAR AGARWAL & ORS [2017] 100 CCH 0011 (MUMBAI HIGH COURT) (5) PR. JOINT CIT VS. MEETA GUTGUTIA [2017] 395 ITR 526 (DELHI HIGH COURT) (6) PR. JOINT CIT VS. MEETA GUTGUTIA [2018] TAXMANN.COM 411 (SUPREME COURT) IN SLP (C) DAIRY NO. 18121/2018 DATED 2 ND JULY, 2018. 11. NO DOUBT THERE ARE JUDGMENTS ON BOTH SIDES TO THE ISSUE , HOWEVER, AS PER DECISION OF HON'BLE APEX COURT IN THE CA SE OF CIT VS. VEGETABLE PRODUCTS 88 ITR 192 , WHEREIN THE HON'BLE CO URT LAID DOWN THE PROPOSITION TO THE EFFECTS 'WHENEVER THERE ARE TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 7 POSSIBLE THAT CONSTRUCTION WHICH FAVOURS THE ASSESS EE MUST BE ADOPTED' MEANING THEREBY WHEN TWO DIFFERENT VIEWS OF COURT ARE AVAILABLE ON AN ISSUE THEN THE VIEW WHICH F AVORS THE ASSESSEE OR THE JUDGMENT WHICH FAVOURS THE ASSESSEE SHOULD BE FOLLOWED, WE DO NOT HAVE HESITATION TO FOLLOW THE JU DGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT(CENTRA L-3) VS. KABUL CHAWLA (SUPRA) WHEREIN CLEARLY HELD THAT IF ON THE DATE OF SEARCH, THE ASSESSMENT PROCEEDINGS ALREADY STOOD COMPLETED AND NO INCRIMINATING MATERIAL UNEARTHED DURING THE SEARCH, THEN NO ADDITION CAN BE MADE TO THE INCOME ALREADY ASSESSED . THE SAID DICTUM OF THE HONBLE HIGH COURT CONFIRMED BY THE HONBLE APEX COURT VIDE ORDER DATED 2 ND JULY, 2018 IN THE CASE OF PR. JOINT CIT VS. MEETA GUTGUTIA (SUPRA) BY DISMISSING THE SLP FILED AGAINST THE JUDGMENT OF DELHI HIGH COURT, WHEREIN THE SAME DICTUM HAS BEEN LAID DOWN BY THE HON'BLE COURT AS LAID DOWN IN THE CIT VS. KABUL CHAWLA (SUPRA) , HENCE IT CANNOT SAID THAT LAW LAID DOWN BY DELHI HIGH COURT IN KABUL CHAWLA CASE {SUPRA} IS NOT A GOOD LAW AS CLAIMED BY THE LD. CIT DR. EVEN OTHERWISE THE CASES RELI ED UPON DECIDED BY THE HIGH COURTS HAVE NOT BEEN CONFIRMED BY T HE HONBLE APEX COURT, HENCE, THE VIEW WHICH FAVORS THE ASSESSEE AND/ OR THE JUDGMENTS WHICH FAVOURS THE ASSESSEE ARE REQUIRED TO THE R ESPECTFULLY FOLLOWED . ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 8 12. WHILE COMING TO THE INSTANT CASE, THOUGH THE LD. C IT DR ALSO RELIED UPON THE JUDGMENT OF APEX COURT IN DY. CIT V S ZUARI ESTATE DEVELOPMENT AND INVESTMENT CO. LTD. [2015] 373 ITR 6 61 AND SUBMITTED THAT ANY INTIMATION ISSUED U/S 143(1) CANNOT BE CONSIDERED AS ASSESSMENT, HOWEVER IT IS A FACT THAT IN THIS CASE INCOME T AX RETURN FILED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YE AR: 2011- 12 HAS ALREADY BEEN PROCESSED AND COMPLETED ON DATED 17. 04.2011 BY THE REVENUE DEPARTMENT U/S 143(1) OF THE ACT AND I T IS NOT THE CASE OF THE REVENUE DEPARTMENT THAT THE ASSESSMENT PROCEED INGS WERE STILL ALIVE AS ON THE DATE OF SEARCH OPERATION, T HEREFORE THE CASE CITED BY THE LD. CIT DR IS DISTINGUISHABLE ON FACTS. EVEN FROM THE ORDERS PASSED BY THE AUTHORITIES BELOW TH ERE IS NOTHING TO SUGGEST AS TO WHAT INCRIMINATING MATERIAL H AS BEEN FOUND ON DATED 11.02.2016 DURING THE SEARCH U/S 132(1) OF TH E ACT FROM THE ASSESSEE POSSESSION OR HIS PREMISES, ON THE BASIS OF WHICH THE ADDITIONS HAVE BEEN MADE. AS THE ISSUE INVOLVED IN THE INSTANT CASE IS SQUARELY COVER ED BY THE DECISIONS OF DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) AND CIT VS. MEETA GUTGUTIA (SUPRA) AND BY THE CO-ORDINATE BENCH AT AMRITSAR {JALANDHAR CAMP} IN THE CASE OF SMT. SANJANA MITTAL VS. DCIT {ITA NO. 487/ASR/2018 DECIDED ON DATE D 11 TH MARCH, 2019} WHEREIN ALSO THE DICTUM LAID DOWN IN KABUL CHAWLA C ASE HAS BEEN FOLLOWED , HENCE RESPECTFULLY FOLLOWING THE SAME, WE ARE INCLINE D TO DELETE THE ADDITION MADE BY THE AO AND SUSTAINED B Y THE LD. CIT(A). CONSEQUENTLY, THE APPEAL I.E. ITA NO. 272/A SR/2019 IS LIABLE TO BE ALLOWED. ORDERED ACCORDINGLY. ITA NOS.272 & 273/ASR/2019 SH. GU RMEET SINGH VS. DCIT ITA NO S.274 & 275/ASR/2019 SH. KA SHMIRA SINGH VS. DCIT 9 13. IN THE RESULT OF ITA NO. 272/ASR/2019, ALL THE APPE ALS UNDER CONSIDERATION FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/0 1/2020. SD/- SD/- (DR. A.L.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01/01/2020. /PK/ PS. COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THEN CIT(APPEALS) 5. SR DR, I.T.A.T. AMRITSAR 6. GUARD FILE TRUE COPY BY ORDER