Sh. Sukhbir Singh Badal, Distt. Muktsar. V. The Dy. Commissioner of Income-tax., Bathinda

ITA 421/ASR/2013

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6086 (ITAT-AMRITSAR)
• Duration Of Justice: 11 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 01-05-2024
• Assessment Year: 2002-2003
• Appeal Filed On: 16-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MS ORBIT
• Keywords: Deemed dividend; Commercial expediency
• Section: 148; 2(22)(e); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.421/Asr/2013 Assessment Year: 2002-03 Sh. Sukhbir Singh Badal, Village Badal Distt. Muktsar, Punjab. [PAN:ABSPB1568P] (Appellant) Vs. Dy. Commissioner of Income Tax, Circle-II, Bathinda. (Respondent) Appellant by Sh. Ashwani Kumar & Mrs. Muskan Garg, CAs Respondent by Sh. Rajiv Wadhera, Sr. DR Date of Hearing 02.05.2024 Date of Pronouncement 03.07.2024 ORDER Per: Udayan Das Gupta, JM This appeal is preferred by the assessee against the order of the CIT(A) Bathinda, order passed u/s 250 (6) of the Act 61, dated 07/03/2013, which has arisen out of the order of the AO, by the DCIT, Circle –II, Bathinda, order dated 31/12/2009, passed u/s 143(3)/147 of the Act 1961. 2. The grounds of appeal taken by the assessee are as follows: I.T.A. No.421/Asr/2013 Assessment Year: 2002-03 2 “1. That the order dated 07.03.2013 passed under section 250(6) of the I.T.Act, 1961 by Commissioner of Income Tax, Bathinda in Appeal No. 263-IT/CIT (A)/BTI/09-10 is contrary to law and facts of the case. 2. That in the facts and circumstances of the case Id. Commissioner of Income Tax (Appeals), gravelly erred in upholding the initiation of re-assessment proceedings by Id. Assessing Officer under section 148 of the LT. Act, 1961 as valid, which are illegal, void ab initio and deserves to be quashed. 3. That in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals), gravelly erred in upholding the addition of Rs. 800000/- made by the Id. Assessing Officer under section 2(22)(e) although it was imprest account to make certain trade payments/expenses. The addition sustained is contrary to the facts on record. 4. (a) That in the facts and circumstances of the case the Id. Commissioner of Income Tax (Appeals) gravelly erred in sustaining addition of Rs. 79,2*55/- out of total addition of Rs. 4,26,510/- made by the id. Assessing Officer on account of disallowance of agricultural expenses and treating the sale of bye products as income from other sources. (b) Without prejudice to the above, the addition sustained is highly excessive. 5. That the appellant craves to add, amend or alter any ground of appeal before or at the time of hearing of appeal, I.T.A. No.421/Asr/2013 Assessment Year: 2002-03 3 with the permission of the Hon’ble Income Tax Appellate Tribunal, Chandigarh.” 3. Ground No. 1, is general in nature. 4. Ground No. 2, is regarding initiation of reassessment of proceedings u/s 148. This matter has been elaborately discussed by the ld. CIT(A) in his appellate order in ground no. 2, page nos. 2 to 4 of the appellate order. The ld. AR in course of hearing before us, has not been able to controvert the findings of the ld. CIT(A), nor has he come up with any new arguments or submissions in this regard. As such, we are fully in agreement with the decision of ld. CIT(A) on this particular ground and we upheld the order of the ld. CIT(A) on this issue. 5. At the very outset of hearing, the ld. AR by the assessee made an application for permission to submit the additional evidences. He stated that the additional evidence in the form of trading profit and loss account, balance sheet, fully comparatively financial statement of M/s Orbit Resorts Ltd., as on 31.03.2003 has never been filed before the AO or before the first appellate authority due to unforeseen circumstances. Now, the appellant wants to file and produce the additional evidences alongwith audited financial statement before the Hon’ble Bench to be considered for the purposes of adjudication. 5.1 Regarding Ground No. 3, which relates to addition on account of deemed dividend u/s 2(22)(e) of the Act, the issue of deemed dividend u/s 2(22)(e) of the I.T.A. No.421/Asr/2013 Assessment Year: 2002-03 4 Act has been considered and discussed by the first appellate authority in page no. 14 of the appeal order. 6. An amount of Rs.8,00,000/- has been advanced to the assessee by M/s Orbit Resorts Limited which according to the ld. AO was given for the purpose of meeting personal expenses. 7. During appeal proceedings before the ld. CIT(A), it has been explained that the amount of Rs.8,00,000/- was given to the assessee for purchase of furniture for the Hotel suits. The argument of the ld. AR was that the amount was given for the purposes of commercial expediency and as such, it did not fall within the ambit of section 2(22)(e) of the Act. 8. Before the Tribunal, it has been argued that there are no accumulated profit in the company Orbit Resorts Ltd. and the amount of Rs.8,00,000/- has been paid out of security premium amount and as such the provision of section 2(22)(e) is not applicable in this case. 9. In support of his contention, he has filed the financial statement and accounts and audited balance sheet of the company Orbit Resorts Ltd. 10. The ld. DR relied on the order of the ld. CIT(A). 11. We are of the opinion, that these are fresh documents and evidences which has been filed before the bench for the first time and as admitted by the ld. AR of the assessee, they were never filed before the lower authorities as any stage. As I.T.A. No.421/Asr/2013 Assessment Year: 2002-03 5 such, we deem it fit and proper in the interest of justice, to remit the matter back to the file of ld. CIT(A) to consider the fresh evidence and thereafter to decide the issue on merits as provision of law after obtaining necessary report from the jurisdictional AO on the issue of fresh evidences. This ground is remanded to ld. CIT(A) for the limited purpose as indicated above. 12. Regarding, Ground No. 4, relating to the addition of Rs.79,255/- on account of disallowance of agricultural expenses and treating the sale of bye products as income from other sources. 12.1 This issue has been elaborately dealt by the first appellate authority in page no. 16 and 17 of the appeal order. The conclusion of the ld. CIT(A) on this issue is being reproduced as under: “Further, the disallowance of Rs.3,00,000/- made by the AO for the reason -at the expenses of agriculture were not subject to verification and that there as possibility of exaggerating agricultural income, being tax free, has been carefully considered. The Ld. Counsel for the appellant has also admitted that expenses were on estimate basis. However, it is felt that the disallowance/addition made by the AO is unreasonably high. Accordingly, the addition/disallowance is restricted to 1/3 of the disallowance made by the AO which comes to Rs. 1,00,000/- in respect of all the members of Badal family and on the basis of their respective shares in the agricultural income, the disallowance in the hands of the appellant @ 52.3% works out I.T.A. No.421/Asr/2013 Assessment Year: 2002-03 6 at Rs. 52,300/-. In this way, the disallowance is upheld at Rs. 79,255/- (Rs.26,955/- + Rs.52,300/-) and the appellant gets a relief of Rs.3,47,255/-.” 13. We are fully in agreement with the observation of the ld. CIT(A) on this issue and the disallowance of Rs. 79,255/- is sustained. This ground of the assessee is dismissed. 14. In the result, the appeal of the assessee bearing ITA No. 421/Asr/2013 is partly allowed for statistical purposes. Order pronounced in the open court on 03.07.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order