Mrs. Pushpa Jain, New Delhi V. ITO, New Delhi

ITA 3249/DEL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7383 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAMEER SHARMA
• Keywords: Reopening of assessment; Tangible material; Deemed dividend; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

ITA NO. 3249 / DEL/ 201 1 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A. N O. 3249 /DEL/201 1 A.Y . : 200 6 - 0 7 MRS. PUSHPA JAIN, 86, DAYANAND VIHAR, IP EXTENSION, NEW DELHI (PAN: AAAPJ2981R) VS. INCOME TAX OFFICER, WARD - 15(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAPIL GOEL, ADV. DEPARTMENT BY : SH. SHAMEER SHARMA, SR. DR DATE OF HEARING : 22 - 10 - 2014 DATE OF ORDER : 29 - 10 - 2014 ORDER PER H.S. SIDHU : J M ASSESSEE HAS FILED THIS A PPEAL AGAINST THE IMPUGNED ORDER DATED 19 . 4 .201 1 PASSED BY THE LD. CIT(A) - XVIII , NEW DELHI RELEVANT TO ASSESSMENT YEAR 200 6 - 0 7 . 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED : - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT QUASHING THE INSTANT INVALID REOPENING U/S. 148 OF THE ACT SAME BEING AGAINST THE LEGAL PRINCIPLES AS SETTLED BY COURTS. ITA NO. 3249 / DEL/ 201 1 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT DELETING THE ADDITION MADE BY THE LD. AO U/S. 2(22)(E) OF THE ACT, AMOUNTING TO RS. 5, 80,000/ - IGNORING THE REPLY AND CONTENTIONS OF ASSESSEE. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO, AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. BRIEFLY STATED FACTS ARE THAT THE SSESSEE IS A SHAREHOLDER OF M/S VIKAS INDIA PACKERS P LTD. HAVING 27% OF THE SHARES OF THE ABOVE COMPANY. AS PER THE BALANCE SHEET OF M/S VIKAS INDIA PACKERS P LTDE. FOR AY 2006 - 07, THE ASSESSEE HAD RECEIVED A SUM OF RS. 5,80,0 00/ - AS UNSECURED LOAN FROM THE ABOVE COMPANY. IT IS OBSERVED BY THE AO THAT THE SAID COMPANY HAD RESERVES AND SURPLUS AMOUNTING TO RS, 5,97,041/ - . THE AO, ACCORDINGLY, SHOW CAUSED THE ASSESSEE AS TO WHY SAID AMOUNT SHOULD NOT BE HELD AS DIVIDEND U/S. 2(22)(E) OF THE ACT. IT WAS ARGUED THAT THE APPELLANT BEFORE THE AO THAT THE ABOVE AMOUNT TAKEN BY HER FROM M/S VIKAS INDIA WAS NOT A LOAN AS THE SAID AMOUNT WAS ADVANCED BY HER TO ANOTHER COMPANY, VIZ., M/S MURPHY POLYMERS P LTD. WHICH WAS UTILIZED BY M/ S MURPHY POLYMERS P LTD. FOR GIVING ADVANCE FOR BOOKING SPACE TO START ANOTHER UNIT OF M/S MURPHY POLYMERS P LTD. IN HARIDWAR. HOWEVER, THE AO HAS REJECTED THE ABOVE CONTENTION OF THE ASSESSE ON THE GROUND THAT BOTH THE BALANCE SHEET OF M/S VIKAS INDIA AND THE ASSESSEE S RETURN OF INCOME SHOW THE ABOVE AMOUNT AS UNSECURED LOAN . THE AO VIDE HIS ORDER DATED 22.11.2010 PASSED UNDER SECTION 147/143(3) OF THE I.T. ACT HAS, ITA NO. 3249 / DEL/ 201 1 3 ACCORDINGLY, ADDED THE ABOVE AMOUNT OF RS. 5,80,000/ - AS DEEMED DIVIDEND U/S. 2(22 )(E) OF THE ACT. 4. AGAINST THE ABOVE ORDER DATED 22 . 11 .201 0 , THE ASSESSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 19 . 4 .201 1 HAS DISMISSED THE APPEAL OF THE ASSESSEE . 5. AGAINST THE AFORESAID ORDER DATED 22 . 11.2 010 PASSED BY THE LD. FIRST APPELLATE AUTHORITY THE ASSESSEE IS IN APPEAL BEFORE US. 6. LD. COUNSEL OF THE ASSESSEE FILED A PHOTOCOPY OF THE ORDER SHEET DATED 10.8.2009 OF THE ITO, WARD 15(2), NEW DELHI CONTAIN ING THE REASONS FOR REOPENING OF ASSESSMENT I N THE CASE OF THE ASSES SEE FOR THE ASSTT. YEAR 2006 - 07 WHICH IS REPRODUCED AS UNDER: - 1. SMT. PUSHPA JAIN IS ASSESSED TO TAX IN THIS WARD VIDE PAN AAPJ2981R. THE ASSESSEE FILED HER RETURN OF INCOME FOR THE AY 2006 - 07 ON 30.10.2006 DECLARING INCOME OF RS. 85,470/ - AND THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 15.1.2007 AT DECLARED INCOME. 2. MRS. PUSHPA JKAIN IS A DIRECTOR IN M/S RANI SATI CHIT FUND CO. (P) LTD. AND M/S RANI SATI APPARELS PVT. LTD. AS PER COMPUATION OF INCOME FILED BY WITH THE R ETURN. AS PER SCHEDULE H (LOANS AND ADVANCES) OF BALANCE SHEET FOR THE AY 2006 - 07 OF M/S VIKAS INDIA PACKERS PVT. LTD. IT IS SEEN THAT THE SAID COMPANY HAS GIVEN A LOAN OF RS. 5,80,000/ - TO MRS. PUSHPA JAIN WHO IS ONE OF THE DIRECTORS OF SAID COMPANY A ND IS HOLDING 10% OF THE SHARE HOLDING IN THAT COMPANY. ITA NO. 3249 / DEL/ 201 1 4 3. THE BALANCE SHEET FILED BY THE ASSESSEE MRS. PUSHPA JAIN SHOWS THAT SHE HAS TAKEN UNSECURED LOANS FROM M/S VIKAS INDIA PACKERS PVT. LTD. OF RS. 5,80,000/ - BUT IT HAS NOT BEEN MENTIONED THAT SH E IS DIRECTOR OF THE SAID COMPANY. THE UNSECURED LOAN TAKEN BY THE ASSESE FROM THE SAID COMPANY IS COVERED U/S. 2(22)(E) OF THE I.T. ACT, 1961 AND IS LIABLE FOR TAXATION. THUS, I HAVE REASONS TO BELIEVE THAT INCOME OF RS. 5,80,000/ - HAS ESCAPED ASSESMEN T AND THE SAME IS TO BE BROUGHT TO TAX UNDER SECTION 147 OF THE I.T. ACT, 1961. 4. ISSUE NOTICE UNDER SECTION 147/148 OF THE INCOME TAX ACT, 1961. 6.1 AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE STATED THAT THE ASSESSEE IN APPEAL BEFORE THE LD. CIT(A) HAS RAISED THE LEGAL GROUND VIZ. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. AO ERRED IN FRAMING THE ASSESSMENT U/S. 147 AND 143(3) OF THE INCOME TAX ACT, 1961. ON WHICH THE LD. CIT(A) HAS NOT GIVEN ANY FINDING. LD. CO UNSEL OF THE ASSESSEE FURTHER STATED THAT THE LEGAL ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE BY THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ORIENT CRAFT LTD. (3 54 ITR 536 ) . 6 . 2 ON THE CONTRARY, LD. DR RELIED UPON THE ORDER S OF THE LOWER AUTHORITIES. 7 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RELEVANT RECORDS, PHOTOCOPY OF THE ORDER SHEET REGARDING REASONS FOR REOPENING ASSESSMENT AND S PECIALLY THE ORDERS PASSED BY TH E REVENUE AUTHORITIES ALONGWITH THE JURISDICTIONAL HIGH COURT S ORDER IN THE CASE OF CIT VS. ORIENT CRAFT LTD. ITA NO. 3249 / DEL/ 201 1 5 (3 54 ITR 536) (SUPRA). WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASE HAS HELD AS UNDER: - HELD, DISMISSING THE APPEAL, THAT THE REASONS DISCLOSED THAT THE ASSESSING OFFICER REACHED THE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME ON GOING THROUGH THE RETURN OF INCOME FILED BY THE ASSESSEE AFTER HE ACCEPTED THE RETURN UNDER SECTION 143(1) WITHOUT SCRUTINY, AND NOTH ING MORE. THIS WAS NOTHING BUT A REVIEW OF THE EARLIER PROCEEDINGS AND AN ABUSE OF POWER BY THE ASSESSING OFFICER. THE REASONS RECORDED BY THE ASSESSING OFFICER DID NOT CONFIRM THE APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS REASON TO BELIEVE VIS - - VIS AN INTIMATION ISSUED UNDER SECTION 143(1) COULD CAUSE TO THE TAX REGIME. THERE WAS NOTHING IN THE REASONS RECORDED TO SHOW THAT ANY TANGIBLE MATERIAL HAD COME INTO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE IS SUE OF THE INTIMATION. THE NOTICE REFLECTED AN ARBITRARY EXERCISE OF POWER CONFERRED UNDER SECTION 147. 7. 1 WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE THAT THE LEGAL ISSUE AS AFORESAID HAS NOT BEEN ADJUDICATED B Y THE LD. CIT(A) IN HIS ORDER, WHICH IN OUR OPINION NEEDS TO BE ADJUDICATED. IN THE INTERSET OF JUSTICE, WE SET ASIDE THE LEGAL ISSUE AS WELL AS OTHER ISSUES TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LA W . ITA NO. 3249 / DEL/ 201 1 6 THEREFORE, WE CANCEL THE IMPUGNED ORDER DATED 19.4.2011 PASSED BY THE LD. CIT(A) ACCORDINGLY. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE O PEN C OURT ON 29 / 10 /20 1 4 . SD/ - SD/ - [ J.S. REDDY] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 29 / 10 /201 4 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 3249 / DEL/ 201 1 7