Deepak, Patiala V. ACIT, Patiala

ITA 424/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5146 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 02-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Keywords: Reasonable cause; Deemed dividend
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA,ACCOUNTANT MEMBER ITA NO. 424/CHD/2016 ASSESSMENT YEAR: 2010-11 SHRI DEEPAK, VS THE ACIT, # 151, SANT NAGAR, CIRCLE, GALI NO. 3, PATIALA. PATIALA. PAN: AHWPD4098G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPAK AGGARWAL RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 30.05.2017 DATE OF PRONOUNCEMENT : 31.05.2017 O R D E R PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST ORDER OF LD. CIT(APPEALS),PATIALA (HEREINAF TER REFERRED TO AS CIT(A) DATED 15.03.2016 RELATING TO ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS : 1 . (A) THAT THE ID. CLT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.L 0,00,000/- ON ACCOUNT OF UNEXPLAINED DEPOSIT RECEIVED BY THE A SSESSEE FROM SMT. SAVITA SAMBHI ON THE GROUND THAT THE ASSESSEE FAILE D TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION , WHEREAS, AS PER THE ASSESSEE ALL THE DOCUMENTS PERTAINING TO THE DEPOSI TS WERE SUPPLIED TO DIE AUTHORITIES BELOW IN THE FORM OF BANK STATEMENTS AN D OTHER NECESSARY DETAILS THEREFORE, THE ADDITION CONFIRMED IS PRAYED TO BE D ELETED. B).THAT ALTERNATIVELY AND WITHOUT PREJUDICE TO T HE ABOVE DIE ASSESSEE ALSO DISPUTES THE QUANTUM OF DIE ADDITION CONFIRMED BY T HE LD. CIT(A). 2. THAT THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ARBITRARY ADDITION OF RS.3,00,000/- UNDER SECTION 2(22)(E) ON THE GROU ND THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE CLAIM THAT THE AMOUNT WAS ADVAN CED FOR CARRYING OUT ACTIVITIES ON BEHALF OF THE COMPANY, WHEREAS AS PER THE ASSESSEE THE AMOUNT WAS USED FOR CARRYING OUT THE DAY TO DAY ACTIVITIES OF THE COMPANY. 2 3. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 32,400/- UNDER SECTION 40A(3) ON THE GROUND THAT THE ASSESSEE FAIL ED TO SUBSTANTIATE HIS CLAIM WITH REASONABLE CAUSE WHEREAS, AS PER THE ASSESSEE THE CASE IS SQUARELY FALLS UNDER THE EXCEPTIONS PROVIDED UNDER RULE 6DD, THEREFORE IT IS PRAYED THAT THE ADDITION CONFIRMED MAY KINDLY BE DELETED. GROUND NO. 1 2. GROUND NO. 1 IS RELATING TO THE ADDITION OF RS. 10 LACS ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE ACCOUNT O F THE ASSESSEE. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT THE SAID AMOUNT WAS RECEIVED AS A LOAN FROM HIS SISTER SMT. SAVITA SAMBHI. THE LD. AO, HOWEVER, DID NOT AGREE WITH THE ABOVE SUBMISSIONS OF THE ASSESSEE OBSERVING THAT TH E ASSESSEE HAD FAILED TO PROVE CREDIT WORTHINESS OF T HE CREDITOR AND GENUINENESS OF THE TRANSACTION. IN FIRST APPEA L, THE LD. CIT(A) CONFIRMED THE FINDINGS OF THE AO ON THIS ISS UE. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS INVITE D OUR ATTENTION TO COPIES OF THE BANK ACCOUNT STATEMENT T O SHOW THAT THE AMOUNT WAS TRANSFERRED TO THE ACCOUNT OF T HE ASSESSEE BY SMT. SAVITA SAMBHI THROUGH BANKING CHAN NEL. HE HAS FURTHER INVITED OUR ATTENTION TO PARA 9.3 OF TH E IMPUGNED ORDER WHEREIN THE LD. CIT(A) HAS OBSERVED THAT ON P ERUSAL OF THE BANK ACCOUNT OF SMT. SAVITA SAMBHI, IT REVEALED THAT THERE WAS A CUMULATIVE BROUGHT FORWARD BALANCE OF R S. 12,06,427/- IN HER BANK ACCOUNT AS ON 01.04.2009. THE ALLEGED LOAN OF RS. 10 LACS HAS BEEN ADMITTEDLY GIV EN BY SMT. SAVITA SAMBHI TO THE ASSESSEE THROUGH BANKING CHANN EL ON 03.04.2009. THE LD. CIT(A) HAS ALSO OBSERVED THAT THE CREDIT ENTRIES IN THE BANK ACCOUNT OF SMT. SAVITA SAMBHI I NDICATED THAT SHE HAD REGULAR MONTHLY RECEIPTS OF ABOUT RS. 25,000/- 3 FROM ONE NEFT-II POWER VISION . THE LD. AR HAS F URTHER INVITED OUR ATTENTION TO COPIES OF INCOME TAX RETUR N/ ACKNOWLEDGEMENTS OF SMT. SAVITA SAMBHI FOR DIFFEREN T ASSESSMENT YEARS WHEREIN SHE HAS SHOWN A REGULAR IN COME FROM HOUSE PROPERTY. THE LD. AR, THEREFORE, HAS SU BMITTED THAT THE MONTHLY DEPOSITS OF ABOUT RS. 25,000/- PER MONTH IN THE ACCOUNT OF SMT. SAVITA SAMBHI WERE ON ACCOUNT O F RENTAL INCOME WHICH WERE REGULARLY SHOWN IN THE RETURN OF INCOME AND DUE TAX PAID THEREUPON. 4. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE. ADMITTEDLY, AT THE OPENING OF THE YEAR, THERE WAS A CREDIT BALANCE OF MORE THAN RS. 12 LACS INTO THE ACCOUNT OF SMT. SAVITA SAMBHI. THE SOURCE OF SAID DEPOSITS HAS ALSO BEEN EXPLAINED WHICH HAS ACCUMULATED OVER THE YEARS FROM THE MONTHLY RENTAL INCOME. OUT OF THE S AID ACCUMULATED DEPOSITS, SMT. SAVITA SAMBHI HAS PAID R S. 10 LACS TO THE ASSESSEE THROUGH BANKING CHANNEL. UNDE R THE CIRCUMSTANCES, NOT ONLY THE CREDIT WORTHINESS OF TH E CREDITOR BUT THE GENUINENESS OF THE TRANSACTION HAS BEEN DUL Y ESTABLISHED. WE DO NOT FIND ANY JUSTIFICATION ON T HE PART OF THE LOWER AUTHORITIES IN MAKING THE ABOVE ADDITION. THE ABOVE ADDITION IS, THEREFORE, ORDERED TO BE DELETED . GROUND NO. 2 5. IN GROUND NO. 2, THE ASSESSEE HAS AGITATED CONFI RMATION OF THE ADDITION OF RS. 3 LACS U/S 2(22)(E) OF THE A CT. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE AO NOTED T HAT THE ASSESSEE WAS THE BENEFICIAL HOLDER OF THE SHARES OF THE 4 COMPANY NAMED TICS PROJECTS CONSULTANCY PVT. LTD. THE ASSESSEE HAD RECEIVED AN ADVANCE OF RS. 23 LACS FRO M THE SAID COMPANY IN WHICH THE ASSESSEE WAS A SUBSTANTIAL SHA REHOLDER AND DIRECTOR. THE ASSESSEE CONTENDED BEFORE THE AO THAT THE SAID AMOUNT WAS TRANSFERRED TO THE ASSESSEE BY THE COMPANY FOR ITS BUSINESS PURPOSE FOR THE FACILITATION OF PU RCHASE OF PLOT BY THE COMPANY. HOWEVER, THE SAID CONTENTION WAS REJECTED BY THE AO. HE, THEREFORE, ADDED THE AMOUN T OF RS. 23 LACS INTO THE INCOME OF THE ASSESSEE U/S 2(22)(E ) OF THE ACT AS DEEMED DIVIDEND. IN APPEAL, THE LD. CIT(A), AFTER CONSIDERING TH E EVIDENCES ON FILE AND THE REMAND REPORT THEREUPON OF THE AO, OBSERVED THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THAT OUT O F RS. 23 LACS, RS. 20 LACS WERE PAID BY THE COMPANY TO THE A SSESSEE FOR BUSINESS PURPOSES OF THE COMPANY FOR PURCHASE O F PLOT AND THE ASSESSEE HAD NOT DERIVED ANY BENEFIT FROM T HE SAID TRANSFER. THIS FACT WAS ALSO ENDORSED BY THE PERSO N WHO HAD ENTERED INTO AN AGREEMENT TO SELL THE PROPERTY WITH THE COMPANY. THE LD. CIT(A), THEREFORE, HELD THAT OUT OF ADVANCE OF RS. 23 LACS, THE ASSESSEE HAS BEEN ABLE TO PROVE THAT RS. 20 LACS WAS PAID BY THE COMPANY TO THE ASSESSEE FOR FACILITATION OF THE TRANSACTION RELATING TO THE PUR CHASE OF PLOT AND THAT THE SAID AMOUNT COULD NOT BE CONSIDERED AS LOAN TO THE ASSESSEE. HE, THEREFORE, DELETED THE ADDITION OF RS. 20 LACS OUT OF THE TOTAL ADDITION MADE BY THE AO OF RS . 23 LACS. IN RESPECT OF REMAINING RS. 3 LACS, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE CL AIM OF 5 PAYMENT TO HIM BY THE COMPANY FOR BUSINESS PURPOSES . HE, THEREFORE, UPHELD THE ADDITION OF RS. 3 LACS. 6. BEFORE US, LD. AR OF THE ASSESSEE COULD NOT BRIN G OUT ANY EVIDENCE TO SHOW THAT THE SAID AMOUNT OF RS. 3 LACS WAS ALSO ADVANCED BY THE COMPANY TO THE ASSESSEE FOR ITS BUS INESS PURPOSES. HENCE, WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE CIT(A) ON THIS ISSUE AND THE SAME IS UPHELD. GROUND NO. 3 7. THE LD. AR OF THE ASSESSEE HAS STATED AT BAR THA T HE DOES NOT PRESS GROUND NO. 3 GROUND NO. 3 OF THE ASSESSE ES APPEAL IS, THEREFORE, REJECTED BEING NOT PRESSED. 8. GROUND NOS. 4 AND 5 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 9. IN VIEW OF OUR FINDINGS GIVEN ABOVE, THE APPEAL IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.05.2017. SD/- SD/- (ANNAPURNA GUPTA) ( SANJAY GARG) (ACCOUNTANT MEMBER) JUDICIAL MEMB ER DATED: 31 ST MAY, 2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD