TRIMURTY COLONIZERS & BUILDING P LTD., Jaipur V. DCIT, Jaipur

ITA 476/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5185 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 25-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK JCIT DHK
• Keywords: Deemed dividend; Commercial expediency
• Section: 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R. P.TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.476 & 477/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2002-03 & 2003-04 TRIMURTY COLONIZERS & BUILDERS (P) LTD. 601, GEETA ENCLAVE, VONOBA MARG, C-SCHME, JAIPUR CUKE VS. THE DY.CIT, CENTRAL CIRCLE-3, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACT6613 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) & SHRI ROHAN SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI G.R. PAREEK (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24.05.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 29/06/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF LD. CIT(A)- CENTRAL JAIPUR DATED 21.04.2014 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A), CENTRAL, JAIPUR HAS GROSSLY ERRED I N LAW AND ON FACTS IN CONFIRMING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT , IN RESPECT OF IMPUGNED ADDITION OF RS. 9,61,421/- AND RS 35176/- MADE ON ACCOUNT OF ALLEGED DEEMED DIVIDEND MADE BY THE AO IN THE RESPE CTIVE YEARS. ITA NOS. 476 & 477/JP/2014 TRIMURTY COLONISERS & BUILDERS VS. DCIT CENTRAL CIR CLE-3, JAIPUR 2 2. THE LD. CIT(A) CENTRAL, JAIPUR HAS ERRED IN LAW AND FACTS OF THE CASE IN REJECTING THE BONAFIDE EXPLANATION OF THE APPELLANT WHILST CONFIRMING THE PENALTY INTER ALIA FOR THE FOLLOWING: (I) THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING TH E BONA FIDE EXPLANATION AND EVIDENCES ON RECORDS WHICH BRINGS O UT THE PURPOSE AND UTILIZATION OF THESE FUNDS FOR PROPOSED TOWNSHIP PROJECT AND THEREFORE IS NOT JUSTIFIED IN STATING T HAT THE APPELLANT HAS NOT PROVIDED ANY DETAILS. (II) THE LD. CIT(A) HAS FURTHER ERRED IN NOT APPREC IATING THE VITAL ASPECT THAT THE GROUP WAS ENVISAGING A PROJECT AND THEREFO RE THE LANDS AT PHAGI HAVE BEEN ACQUIRED BY ALL THE MEMBERS AND THE SE FACTS IN ITSELF JUSTIFIES THE BONAFIDENESS OF THE APPELLANT AND HENCE, THE FINDING OF THE LD. CIT(A) THAT INTER CORPORATE FUND S TRANSFER IS NOTING BUT DEVISE TO EVADE TAX IS ABSOLUTELY INCORR ECT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND IS PA RT OF THE UDAIKANT MISHRA GROUP, WHICH WERE SEARCHED ON 03.05.2007. SUBSEQUE NT TO SEARCH, ASSESSMENTS U/S 153A/143(3) OF THE IT ACT, 1961 WER E COMPLETED. DURING THESE YEARS THE ASSESSEE RAISED LOAN FROM ITS SISTE R CONCERNS , ABHISHEK ESTATE (P) LTD AND ABHISHEK FINLEASE (P) LTD. THESE LOA NS RECEIVED WERE OFFERED FOR TAX AS DEEMED DIVIDEND DURING THE COURSE OF ASSESS MENT PROCEEDINGS AND WERE ACCORDINGLY TAXED AND NO APPEALS WERE FILED. THE PRESENT APPEALS ARE AGAINST THE PENALTY IMPOSED U/S 271(1)(C) ON SUCH D EEMED DIVIDEND WHICH WAS CONFIRMED BY THE LD. CIT(A). THE ADDITION AND THE PENALTIES IMPOSED IN DIFFERENT ASSESSMENT YEAR ARE AS UNDER: A.Y. LOAN TAKEN FROM AMOUNT OF LOAN (RS.) DEEMED DIVIDEND (RS.) PENALTY U/S 271(1)(C) 2002-03 ABHISHEK ESTATE(P) LTD 16,41,500/- 8,00,000/- 3,43,226/- 2002-03 ABHISHEK ESTATE(P) LTD 10,00,000/- 1,61,421/- 2003-04 ABHISHEK ESTATE(P) LTD 3,00,000/- 35,176/- 12,927/- TOTAL 9,96,597/- 3,56,153/- ITA NOS. 476 & 477/JP/2014 TRIMURTY COLONISERS & BUILDERS VS. DCIT CENTRAL CIR CLE-3, JAIPUR 3 2. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE HON BLE ITAT, JAIPUR BENCH, JAIPUR VIDE ITS RECENT ORDER DATED 12.02.2016 IN TH E UNDER NOTED CASES CONCERNING THE OTHER GROUP COMPANIES, IN THE IDENTI CAL SET OF FACTS, IN EXACTLY THE SAME ISSUE OF PENALTY ON DEEMED DIVIDEND U/S 2( 22)(E), DELETED THE PENALTY BY ALLOWING THE APPEALS. NAME OF ASSESSEE ITA NO. A.Y TRIMURTY BUILDCON(P) LTD. 661/JP/2011 662/JP/2011 663/JP/2011 664/JP/2011 665/JP/2011 468/JP/2011 2002-03 2003-04` 2004-05 2006-07 2007-08 2008-09 GEETA MISHRA 667/JP/2011 2007-08 ABHISHEK ESTATE (P) LTD. 668/JP/2011 2005-06 TRIMURTY FARMS & RETREATS VS. DCIT 666/JP/2011 200 5-06 FURTHER THE LD. AR SUBMITTED THAT THE ADVANCES HAVE NOT BEEN DISPUTED TO BE BUSINESS ADVANCES. BUSINESS ADVANCES DO NOT A TTRACT PROVISION OF SECTION 2(22)(E) IS SUPPORTED BY VARIOUS JUDICIAL PRONOUNCE MENTS. THUS IT IS A POSSIBLE VIES AND A DEBATABLE ONE. WHERE TWO VIEWS ARE POSS IBLE, NO PENALTY CAN BE IMPOSED. THE TRANSACTION IN REALITY WAS A LOAN REP AYABLE CONTRACTUALLY AND THE LENDER BY FORCE OF LAW COULD RECOVER IT BACK AND TH E SAME HAVE BEEN REPAID BANK. IT IS ONLY A DEEMING FICTION WHICH HAS MADE A LOAN TO BE AN INCOME. LAPSE ON DEEMING FICTION CANNOT LEAD TO PENALTY. T HE OFFERING FOR TAX IS VOLUNTARY AND THEREFORE PENALTY MAY NOT BE IMPOSED. ALL THE FACTS WERE ON RECORD AND THERE WAS NO GUILTY MIND AND THEREFORE P ENALTY CANNOT BE IMPOSED. NO PENALTY CAN BE IMPOSED WHERE ADDITION IS BASED O N DEEMING PROVISION. FURTHER, IT WAS SUBMITTED THAT COMPLEX TAX LAWS REL ATED TO DEEMING FICTION CAN GET SKIPPED BY ASSESSEE AND THE SAME SHOULD NOT FOR M THE BASIS FOR LEVY OF PENALTY. ITA NOS. 476 & 477/JP/2014 TRIMURTY COLONISERS & BUILDERS VS. DCIT CENTRAL CIR CLE-3, JAIPUR 4 2.1 THE LD. DR IS ALSO HEARD WHO HAS RELIED UPON TH E ORDER OF THE LOWER AUTHORITIES. 2.2 THE CO-ORDINATE BENCH IN CASES REFERRED SUPRA VIDE ITS CONSOLIDATED ORDER DATED 12.02.2016 HAS HELD AS UNDER: WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MA TERIAL ON RECORD. THE ASSESSEE FILED THE RETURN U/S 139 FOR ALL THE Y EARS AND DISCLOSED THE PARTICULARS OF SHAREHOLDING PATTERN, ADVANCES TAKE N AND GIVEN BY THE ASSESSEE COMPANY/INDIVIDUAL IN RETURN ITSELF. THE ACCUMULATED PROFIT ALSO HAS BEEN DISCLOSED. THEREAFTER ASSESSEE FILED RETURN U/S 153AOF THE IT ACT WHEREIN ALSO ALL THE DETAILED FACTS AND FIGU RES WERE DISCLOSED IN THE RETURN. THE ASSESSEES CASE IS AUDITABLE. THE A SSESSEE AT THE TIME OF QUANTUM ADDITION AS WELL AS AT THE TIME OF PENALTY PROCEEDINGS HAS REITERATED THAT THESE ADVANCES ARE IN THE COURSE OF REGULAR BUSINESS. IT IS A RUNNING ACCOUNT, SAID ADVANCES LATER ON REPAID. THIS ISSUE IS DEBATABLE AND VARIOUS COURTS PARTICULARLY IN THE C ASE OF CREATIVE DYEING &PRINTING (P) LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT BUSINESS TRANSACTION IS NOT COVERED U/S 2(22)(E) OF THE ACT. VARIOUS OTHER CASE LAWS CITED BY THE ASSESSEE HAS ALSO BEEN MADE THIS ISSUE DEBATABLE. THE CASE RELIED ON BY THE AO I.E MAK DATA P. LTD. IS NOT APP LICABLE AS ASSESSEE AT EVERY STAGE HAD FILED THE EXPLANATION BEFORE THE A O AS WELL AS CIT(A) I.E. THESE TRANSACTIONS WERE MADE FOR THE PURPOSE OF BU SINESS AND COMMERCIAL EXPEDIENCY IS BONAFIDE. PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE CIT(A) ARE NOT JUSTIFIED. ACCORDI NGLY WE DELETE THE PENALTY IN ALL THE CASES. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY THE FACTS PATTERN IN THE IMPUGNED MATTERS ARE SIMILAR TO THE FACTS BEFORE CO-ORDINATE BENCH IN RESPECT OF ASSESSEES GROUP COMPANIES WHEREIN THE PENALTY ON ADDITION ON ACCOUN T OF DEEMED DIVIDEND U/S 2(22)(E) WAS DELETED. HENCE RESPECTFULLY FOLLO WING DECISION OF THE CO- ORDINATE BENCH REFERRED (SUPRA), WE HEREBY DELETE THE PENALTY IN THE HANDS OF THE ASSESSEE FOR BOTH THE YEARS UNDER CONSIDERATION . IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED. ITA NOS. 476 & 477/JP/2014 TRIMURTY COLONISERS & BUILDERS VS. DCIT CENTRAL CIR CLE-3, JAIPUR 5 ORDER PRONOUNCED IN THE OPEN COURT ON 29/06 /2016. SD/- SD/- ( R. P.TOLANI ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 29/ 06/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- TRIMURTY COLONIZERS & BUILDERS P.LTD . JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE-3, JAIPUR 3. VK;DJ VK;QDR@ CIT CENTRAL, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-CENTRAL, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 476 & 477/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR