Mithilesh Kumar Tripathi, New Delhi V. ACIT, Circle-35(1), New Delhi

ITA 3288/DEL/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9016 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. N.K. SAINI, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 3287/DEL/2018 : ASSTT. YE AR : 2013-14 ITA NO. 3288/DEL/2018 : ASSTT. YEAR : 2014-15 SH. MITHILESH KUMAR TRIPATHI, D-9, OBEROI APARTMENTS, CIVIL LINES, DELHI-110054 PAN : ABUPT3610Q VS A CIT CIRCLE-35(1) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ROHIT TIWARI, ADV. REVENUE BY : SMT. ASHIMA NEB, SR. DR DATE OF HEARING : 15/10/2018 DATE OF PRONOUNCEMENT : 17/10/2018 ORDER PER BENCH: PRESENT APPEALS HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 15/01/18 PASSED BY LD. CIT (A)-12, FOR ASSESSMENT Y EAR 2013-14 AND 2014-15, ON FOLLOWING GROUNDS OF APPEAL: ITA NO. 3287/DEL/2018 : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEA RNED CIT(A) HAS ERRED :- ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) (CIT(A)) IS BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER (LD. AO) IN MAKING AN ADHOC ADD ITION OF RS. 11,00,000/- AS A LUMP SUM DISALLOWANCE OUT OF T HE CASH SALES OF AGRICULTURAL PRODUCE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER (LD. AO) IN MAKING AN ADDITION OF RS. 1,03,64,424/- UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 3.1 THE LD. AO AND THE LD. CIT(A) ERRED IN IGNORING THE FACTS AND CIRCUMSTANCES IN WHICH SUCH ADVANCES WERE MADE IN THE ORDINARY COURSE OF THE BUSINESSES OF THE COMPANIES FOR THE LIMITED PURPOSE OF ONLINE PAYMENT OF TAXES ON ITS B EHALF, PAYMENT OF TAXES HAD BEEN MADE BY THE APPELLANT AND IN ONE CASE THE COMPANY BEING AN NBFC. 3.2 THE LD. AO AS WELL AS THE LD. CIT(A) FAILED TO APPR ECIATE THAT SUCH ADVANCES DO NOT PARTAKE THE BASIC CHARACTERIST ICS OF A LOAN OR ADVANCE AS REFERRED IN SECTION 2(22)(E) OF THE INCOME TAX ACT AS THERE IS NO INTENTION TO GO GIVE THE MON EY BACK TO COMPANY. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER (LD. AO) OF MAKING AN ADDITION OF RS. 6,36,180/- AS NOTIONAL ALV OF CERTAIN HOUSE PROPERT IES HELD BY THE APPELLANT IGNORING THE FACT THAT SUCH PROPER TIES COULD NOT BE LET OUT BY THE APPELLANT DURING THE YEAR ON ACCOUNT OF ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 3 THE LOCATION/CONDITION AND/OR THE PREVAILING MARKET CONDITIONS. 5. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT FOLLOWING THE JUDICIAL PREC EDENTS AVAILABLE IN THIS REGARD. 4. IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WH O WAS TOTALLY UNJUSTIFIED IN ADJUSTING CAPITAL GAINS AGAI NST BUSINESS LOSSES WHERE ASSESSEE HAS AVAILED OPTION OF NOT ADJ USTING BUSINESS LOSSES AGAINST CAPITAL GAINS AND PAYING PR OPER TAXES ON CAPITAL GAINS AND CARRYING BUSINESS LOSSES. ITA NO. 3288/DEL/2018 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEA RNED CIT(A) HAS ERRED :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) (CIT(A)) IS BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER (LD. AO) IN MAKING AN ADDITION OF RS. 1,15,51,205/- UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 2.1 THE LD. AO AND THE LD. CIT(A) ERRED IN IGNORING THE FACTS AND CIRCUMSTANCES IN WHICH SUCH ADVANCES WERE MADE IN THE ORDINARY COURSE OF THE BUSINESSES OF THE COMPAN IES FOR THE LIMITED PURPOSE OF ONLINE PAYMENT OF TAXES ON ITS B EHALF, PAYMENT OF TAXES HAD BEEN MADE BY THE APPELLANT AND IN ONE CASE THE COMPANY BEING AN NBFC. 2.2 THE LD. AO AS WELL AS THE LD. CIT(A) FAILED TO APPR ECIATE THAT SUCH ADVANCES DO NOT PARTAKE THE BASIC CHARACTERIST ICS OF A ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 4 LOAN OR ADVANCE AS REFERRED IN SECTION 2(22)(E) OF THE INCOME TAX ACT AS THERE IS NO INTENTION TO GO GIVE THE MON EY BACK TO COMPANY. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER (LD. AO) OF MAKING AN ADDITION OF RS. 3,97,915/- AS NOTIONAL ALV OF CERTAIN HOUSE PROPERT IES HELD BY THE APPELLANT IGNORING THE FACT THAT SUCH PROPERTIE S COULD NOT BE LET OUT BY THE APPELLANT DURING THE YEAR ON ACCOUNT OF THE LOCATION/CONDITION AND/OR THE PREVAILING MARKET CON DITIONS. 4. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT FOLLOWING THE JUDICIAL PRECEDEN TS AVAILABLE IN THIS REGARD. 1. LD. COUNSEL SUBMITTED THAT GROUNDS RAISED IN BOT H ASSESSMENT YEARS RELATES TO IDENTICAL FACTS. IT HAS BEEN SUBMITTED THAT DISALLOWANCE MADE BY LD. AO ARE ALSO IDENTICAL . 2. ACCORDINGLY, AS ASSESSMENT YEARS UNDER CONSIDERA TION HAS BEEN ARGUED BY BOTH SIDES, TOGETHER, WE ARE INCLINE D TO DECIDE THE COMMON ISSUES BY WAY OF COMMON ORDER. BRIEF FACTS OF THE CASE ARE AS UNDER: 3. ASSESSEE IS AN INDIVIDUAL, DERIVING INCOME FROM HOUSE PROPERTY, INCOME FROM OTHER SOURCES AND AGRICULTURA L INCOME. DURING YEARS UNDER CONSIDERATION, ASSESSEE FILED IT S RETURN OF INCOME ON 20/03/14 AND 30/03/15, DECLARING TOTAL IN COME OF RS.14,98,330/-AND RS.29,72,770/-, FOR ASSESSMENT YE ARS 2013-14 AND 2014-15 RESPECTIVELY. THE CASE WAS SELECTED FOR SCRUTINY. ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 5 4. FOR ASSESSMENT YEAR 2013-14 LD. AO OBSERVED THAT ASSESSEE DECLARED TOTAL AGRICULTURAL INCOME OF RS.84,45,496/ -, OUT OF WHICH A SUM OF RS. 22, 74, 800 WERE CASH SALES OF OTHER CRO PS LIKE ORANGE, BANANA AND JACKFRUIT. LD.AO OBSERVED THAT ASSESSEE WAS UNABLE TO PRODUCE BILLS IN RESPECT OF CASH SALES AND IN ABSEN CE OF BILLS/VOUCHERS, GENUINENESS OF CASH SALES COULD NOT BE VERIFIED. ACCORDINGLY, LD.AO PROPORTIONATELY MADE DISALLOWANC E OF RS.11,00,000/- OF CASH SALES. 5. IT HAS BEEN SUBMITTED THAT FOR ASSESSMENT YEAR 2 014-15 THERE WAS NO AGRICULTURAL INCOME DECLARED BY ASSESSEE. 6. THE NEXT ISSUE THAT WAS FOR CONSIDERATION BY LD. AO FOR BOTH ASSESSMENT YEARS, IS IN RESPECT OF MONEY RECEIVED B Y ASSESSEE FROM VARIOUS COMPANIES, AMOUNTING TO RS.1,03,64,424/- FO R ASSESSMENT YEAR 2013-14 AND RS.1,15,51,205/- FOR ASSESSMENT YE AR 2014-15. LD. AO OBSERVED THAT ASSESSEE RECEIVED LOANS/ADVANC ES FROM CERTAIN COMPANIES, IN WHICH ASSESSEE HAD SUBSTANTIA L SHAREHOLDING. THE DETAILS OF MONEY RECEIVED FROM COMPANIES ARE AS UNDER: SR. NO. COMPANY % SHARE- HOLDING AMOUNT (AY 2013-14) AMOUNT (AY 2014-15) 1. ANUPAM CHEM PHARMA PVT. LTD. 79.80% 24,73,861/- 12,30,925 2. TAXILA GURUKUL PVT. LTD. 47.50% NIL 103,17,280 3. TAXILA KNOWLEDGE INFRASTRUCTURE PVT. 47.50% 24,000 3,000 ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 6 LTD. 4. TAXILA KNOWLEDGE DEVELOPMENT PVT. LTD. 36.88% 13,95,927 NIL 5. YASHITA FINANCE PVT. LTD. (NON BANKING FINANCE COMPANY) 14.20% 64,71,236 NIL 1,03,64,424 1,15,51,205 7. ON ISSUANCE OF SHOW CAUSE NOTICE TO ASSESSEE IN RESPECT OF THE SAME, IT WAS SUBMITTED THAT AMOUNT WAS GIVEN TO ASS ESSEE BY THESE COMPANIES TO MEET BUSINESS OBLIGATION OF PAYMENT OR STATUTORY DUES. IT WAS SUBMITTED THAT THESE PAYMENTS WERE NOT IN THE NATURE OF LOANS AND/OR ADVANCES AS REFERRED TO IN SECTION 2 (22) (E) OF THE ACT. IT WAS ALSO SUBMITTED THAT THESE PAYMENTS WERE MADE IN ORDINARY COURSE OF BUSINESS. 8. LD.AO HOWEVER OBSERVED THAT ASSESSEE BEING A DIR ECTOR, WAS NOT RESPONSIBLE FOR MEETING OUT STATUTORY LIABILITI ES OF COMPANIES. HE THUS MADE ADDITION IN THE HANDS OF ASSESSEE, TO THE EXTENT OF AMOUNT RECEIVED FROM THESE COMPANIES BY HIM FOR ASS ESSMENT YEARS UNDER CONSIDERATION. APART FROM ABOVE ADDITIONS, LD.AO COMPUTED ALV OF P ROPERTIES OF ASSESSEE FOR YEARS UNDER CONSIDERATION. 9. AGGRIEVED BY ADDITIONS MADE BY LD.AO, ASSESSEE P REFERRED APPEAL BEFORE LD.CIT (A). LD.CIT (A) CONFIRMED THE ADDITIONS MADE BY LD.AO IN ABSENCE OF PROPER EVIDENCES TO ESTABLIS H HIS CLAIM. ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 7 10. AGGRIEVED BY THE ORDER OF LD.CIT (A), ASSESSEE IS IN APPEAL BEFORE US. 11. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT GROUND NO. 4 RAISED IN A.Y. 2013-14 AND GROUND NO. 3 IN A.Y. 2014-15 STANDS NOT PRESSED. ACCORDINGLY WE DISMISS THESE GROUNDS FOR ASSESSMENT YEARS 2013-14 AND 2014-15, AS NOT PRESSED. ASSESSMENT YEAR 2013-14 GROUND NO. 1 IS GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. GROUND NO. 2 IS IN RESPECT OF THE ADDITION MADE BY LD.AO TOWARD S CASH SALES OF AGRICULTURAL PRODUCE. 12. LD. COUNSEL SUBMITTED THAT, ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNTS, WITH RESPECT TO AGRICULTURAL PRO DUCE AND ALLEGATION MADE BY LD.AO/CIT (A), REGARDING NON-PRO DUCTION OF BILLS/VOUCHERS IN RESPECT OF CASH SALES, IS UNTENAB LE. HE SUBMITTED THAT ASSESSEE PROVIDED ALL RELEVANT BOOKS OF ACCOUN TS AND SAMPLE INVOICES/BILLS PLACED AT PAGES 43-55 OF PAPER BOOK, WITH RESPECT TO AGRICULTURAL BUSINESS BEFORE AUTHORITIES BELOW AND ADDITION MADE BY LD.AO IS ON BASIS OF SURMISES AND CONJUNCTURES. 13. ON THE CONTRARY, LD. SR. DR SUBMITTED THAT CATE GORICAL OBSERVATIONS BY LD.CIT (A) REGARDING FAILURE ON BEH ALF OF ASSESSEE TO PRODUCE ALL BILLS AND VOUCHERS IN RESPECT OF CASH S ALES, CANNOT BE IGNORED. SHE SUBMITTED THAT ASSESSEE FAILED TO ESTA BLISH ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 8 GENUINENESS OF CASH SALES AND EVIDENCES RELIED UPON BY LD. COUNSEL BEFORE THIS TRIBUNAL AMOUNTS TO FRESH EVIDENCE. 14. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH TH E SIDES AND THE LIGHT OF THE RECORDS PLACED BEFORE US. 15. ADMITTEDLY THERE IS NO ACKNOWLEDGEMENT THAT HAS BEEN PRODUCED BY ASSESSEE IN PAPER BOOK REGARDING SUBMIS SION OF THESE DOCUMENTS BEFORE AUTHORITIES BELOW. 16. WE DIRECT LD. AO TO VERIFY SAME. ASSESSEE IS DI RECTED TO PROVIDE ALL NECESSARY INFORMATIONS AS CALLED FOR BY LD.AO, IN ORDER TO ESTABLISH GENUINENESS OF CASH SALES. LD.AO SHALL TH EN CONSIDER THE CLAIM OF ASSESSEE AS PER LAW. 17. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STAN DS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 3 IS IN RESPECT OF ALLEGED ADVANCES RECEIVED BY ASSE SSEE FROM COMPANIES, IN WHICH ASSESSEE HAD SUBSTANTIAL I NTEREST, WHICH IS TREATED AS DEEMED DIVIDEND UNDER SECTION 2 (22) (E) OF THE ACT BY LD.AO. LD. COUNSEL SUBMITTED THAT ASSESSEE IS A DIRECTOR I N FOLLOWING COMPANIES: ANUPAM CHEM PHARMA PVT. LTD., TAXILA GURUKUL PVT. LTD., TAXILA KNOWLEDGE INFRASTRUCTURE PVT. LTD., YASHITA FINANCE PVT. LTD. ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 9 18. HE SUBMITTED THAT DURING THE YEAR UNDER CONSIDE RATION, GOVERNMENT DUES FOR EXAMPLE INCOME TAX, SERVICE TAX OF THESE COMPANIES WERE PAID BY ASSESSEE THROUGH HIS BANK AC COUNT USING HIS PERSONAL ONLINE BANKING FACILITIES. HE SUBMITTE D THAT THE ARRANGEMENT WAS DONE ENTIRELY FOR BANK ACCOUNT OF A SSESSEE, IN ORDER TO KEEP ONLINE BANKING PASSWORD SECURED. LD. COUNSEL SUBMITTED THAT THESE DUES THAT WERE PAID BY ASSESSE E WERE EITHER PAID IN ADVANCE BY THESE COMPANIES OR LATER ON REIM BURSED ACCORDINGLY. 19. LD. COUNSEL IN RESPECT OF YASHITA FINANCE PVT. LTD., SUBMITTED THAT THIS COMPANY IS NBFC AND THEREFORE PROVISIONS OF SECTION 2 (22) (E) OF THE ACT CANNOT BE APPLIED. HE SUBMITTED THAT CONFIRMATION OF ACCOUNT SHOWING PAYMENT DETAILS OF TAXES ALONG W ITH CHALLAN NUMBERS, BANK ACCOUNTS OF RESPECTIVE COMPANIES, PAY MENT VOUCHERS AND TAX PAYMENT CHALLAN HAS BEEN PLACED IN PAPER BOOK AT PAGES 64-92. RELYING UPON THESE DOCUMENTS, LD. C OUNSEL SUBMITTED THAT ALL PAYMENTS STANDS EXPLAINED AS HAV ING BEEN MADE ON BEHALF OF THESE COMPANIES BY ASSESSEE. 20. ON THE CONTRARY LD. SR. DR SUBMITTED THAT AS PE R CATEGORICAL OBSERVATIONS BY LD.CIT (A) IN PARAGRAPH 14.3 OF HIS ORDER, NO EVIDENCES WERE FILED BEFORE AUTHORITIES BELOW. AND THESE DOCUMENTS NOW RELIED UPON BY LD. COUNSEL HAVE NOT BEEN VERIFI ED BY LD.AO. SHE SUBMITTED THAT AT THIS STAGE THESE AMOUNTS TO A DDITIONAL EVIDENCES. PLACING RELIANCE UPON OBSERVATIONS OF LD .AO LD.SR.DR SUBMITTED THAT ASSESSEE IS NOT UNDER ANY OBLIGATION TO MAKE ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 10 PAYMENTS ON BEHALF OF THESE COMPANIES IN ORDER TO K EEP HIS ACCOUNT PASSWORD ACTIVE. SHE FURTHER SUBMITTED THAT ASSESSE E AND THESE COMPANIES ARE SEPARATE ENTITIES HAVING INDEPENDENT IDENTITIES. 21. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH TH E SIDES AND THE LIGHT OF THE RECORDS PLACED BEFORE US. 22. ADMITTEDLY THERE IS NO ACKNOWLEDGEMENT THAT HAS BEEN PRODUCED BY ASSESSEE IN PAPER BOOK REGARDING SUBMIS SION OF DOCUMENTS, PLACED IN PAPER BOOK AT PAGES 64-92, BEF ORE AUTHORITIES BELOW. WE THEREFORE DIRECT LD.AO TO VERIFY THE SAME . LD.AO SHALL VERIFY EACH AND EVERY CHALLAN TO ASCERTAIN TRUE POS ITION. ASSESSEE IS DIRECTED TO PROVIDE ALL NECESSARY INFORMATION/DETAI LS CALLED FOR BY LD.AO, IN ORDER TO DISCHARGE ASSESSEES ONUS OF EST ABLISHING PAYMENTS OF GOVERNMENT STATUTORY DUES, ON BEHALF OF THESE COMPANIES. LD.AO SHALL THEN CONSIDER THE CLAIM OF A SSESSEE AS PER LAW. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STA NDS ALLOWED FOR STATISTICAL PURPOSES. 22. IN THE RESULT APPEALS FILED BY ASSESSEE FOR BOTH T HE ASSESSMENT YEARS I.E. 2013-14 & 2014-15 STAND ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 17/10/2018. SD/- SD/- (N.K. SAINI) (BEENA A PILLAI) VICE PRESIDENT JUDICIAL MEMBER DATED: 17/10/2018 SH ITA NO.3287 /DEL/2018 ITA NO. 3288/DEL/2018 (MITHILESH KUMAR TRIPATHI) 11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR