DCIT, Chandigarh V. M/s Ess Ess Exim Pvt. Ltd., Chandigarh

ITA 480/CHANDI/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5213 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption; Condonation of delay
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACOCUNTANT MEMBER ITA NO. 480/CHD/2015 ASSESSMENT YEAR: 2011-12 THE DCIT, VS. M/S ESS ESS EXIM PVT. LTD., CENTRAL CIRCLE-1, CHANDIGARH CHANDIGARH PAN NO. AABCE1490J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ALOK KRISHAN RESPONDENT BY : SH. SUSHIL KUMAR DATE OF HEARING : 07.02.2017 DATE OF PRONOUNCEMENT : 17.04.2017 ORDER PER ANNAPURNA GUPTA, AM THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LD. CIT(OSD), GURGAON DATED 27.2.2015 RELATING TO ASS ESSMENT YEAR 2011-12. 2. AT THE OUTSET, IT MAY BE STATED THAT THE APPEAL WAS TIME BARRED BY FOUR DAYS. IN THIS RESPECT, AN APPLICATION DATED 22.9.20 16 FOR CONDONATION OF DELAY WAS FILED BEFORE US STATING THE REASONS FOR DELAY I N FILING THE APPEAL AS SINCE THE OFFICE HAD TO CALL FOR FORM NO.35 FROM THE O/O LD. COMMISSIONER OF INCOME TAX (CENTRAL), GURGAON WHICH IS AT A DISTANCE, IT TOOK TIME TO ARRANGE FOR THE COPIES OF FORM NO.35 WHICH WERE TO BE ATTACHED WITH THE SA ID APPEALS. IT HAS ALSO BEEN STATED , IN THE APPLICATION BEFORE US, THAT SINCE P HOTOCOPIES OF VARIOUS DOCUMENTS INCLUDING THE ASSESSMENT ORDER AND CIT(A) ORDER HAD TO BE ATTACHED FOR THE PURPOSE OF FILING THE APPEAL, FROM THE OUTS IDE SOURCES AT SHORT NOTICE, 2 SINCE AT THAT TIME THE PHOTOCOPIER MACHINE WAS NOT FUNCTIONAL, IT RESULTED IN DELAY OF FOUR DAYS IN FILING THE APPEALS. LD. COUNS EL FOR THE ASSESSEE DID NOT OBJECT TO THE SAME. IN VIEW OF THE SAME WE CONDONE THE DELAY IN FILING THE APPEAL. 3. THE REVENUE IN THE PRESENT APPEAL HAS RAISED THE FOLLOWING GROUNDS BEFORE US : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO TH E EXTENT OF RS. 10,94,100/- AGAINST THE CLAIM OF THE ASSESSEE A S DIVIDEND INCOME DESPITE THE FACT THAT THE ASSESSEE HAD FAILE D TO SUBSTANTIATE THE CLAIM WITH THE NECESSARY EVIDENCE. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO THE EXTENT OF RS. 50 CRORE AGAINST THE ADDITION MADE BY THE ASSES SING OFFICER U/S 68 DESPITE THE FACT THAT THE ASSESSEE H AD FILED TO PRODUCE ANY EVIDENCE WITH REGARD TO THE CLAIM BEING LOAN AS SECURED. 4. THE FIRST GROUND RAISED BEFORE US IS AGAINST THE ACTION OF THE LD. CIT(A) IN GRANTING RELIEF ON ACCOUNT OF DIVIDEND INCOME RE CEIVED BY THE ASSESSEE AMOUNTING TO RS. 10,94,100/-. THE FACTS RELEVANT TO THE ISSUE ARE THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND FROM THE PERUSAL OF PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE THAT ASSESSE E HAD SHOWN DIVIDEND INCOME AMOUNTING TO RS. 10,94,100/-. THE ASSESSING OFFICER DENIED BENEFIT OF EXEMPTION OF THE SAME CLAIMED BY THE ASSESSEE SINCE NO EVIDENCES TO PROVE THE GENUINENESS OF THE SAID INCOME BEING ON ACCOUNT OF DIVIDEND INCOME WAS FILED BY THE ASSESSEE. IN APPEAL BEFORE THE LD. CIT(A) THE CLAIM OF THE AS SESSEE WAS ALLOWED BY THE LD. CIT(A) WHO REFERRING TO A LETTER DATED 23.3.201 3 RECEIVED IN THE OFFICE OF THE ASSESSING OFFICER ON 25.5.2013 STATED THAT THE SAME FURNISHED THE DETAILS OF DIVIDEND STATING THE SAME TO HAVE BEEN RECEIVED ON ACCOUNT OF SHARE OF SURYA 3 PHARMACEUTICAL LTD. FURTHER, LD. CIT(A) FOUND THAT A COPY OF THE DIVIDEND ACCOUNT WAS ALSO ENCLOSED WITH THE LETTER. CONSIDE RING THE SAME, THE LD. CIT(A) ALLOWED THE ASSESSEE TO CLAIM BENEFIT OF EXEMPTION OF THE SAME IN THE IMPUGNED YEAR. BEFORE US, LD. COUNSEL FOR THE ASSESSEE RELIED ON T HE FINDINGS OF THE LD. CIT(A) AND STATED THAT THE NATURE OF DIVIDEND INCOME HAD B EEN ADEQUATELY PROVED BEFORE THE ASSESSING OFFICER BY VIRTUE OF LETTER DATED 23. 3.2013 AS MENTIONED BY LD. CIT(A). 5. THE LD. DR ON THE OTHER HAND, RELIED ON THE ORDE RS OF THE ASSESSING OFFICER. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(AP PEAL). THE AO, WE FIND, HAD DENIED THE BENEFIT OF EXEMPTION TO THE DIVIDEND INC OME EARNED BY THE ASSESSEE FOR THE REASON THAT THE NATURE OF THE SAME HAD NOT BEEN PROVED BY THE ASSESSEE. LD. CIT(APPEAL) IN THIS REGARD HAS GIVEN A CATEGORI CAL FINDING THAT THE ASSESSEE ,VIDE ITS LETTER DATED 23/03/2013, FILED BEFORE THE AO HAD CATEGORICALLY EXPLAINED THE DETAIL OF THE DIVIDEND EARNED AS BEIN G ON ACCOUNT OF SHARES OF SURYA PHARMACEUTICALS LTD. LD. CIT(APPEAL) HAS ALSO MENTIONED THAT COPY OF THE DIVIDEND ACCOUNT WAS ALSO ENCLOSED. THESE FACTS HAV E NOT BEEN CONTROVERTED BY THE LD. DR BEFORE US. IN VIEW OF THE SAME WE FIND T HAT THE NATURE OF THE DIVIDEND INCOME HAVING BEEN DULY EXPLAINED TO THE A O AS BEING IN THE NATURE OF DIVIDEND EARNED ON SHARES HELD BY THE ASSESSEE COMP ANY ,IT WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(34) OF THE ACT. THE LD. CIT(APPEAL) WE HOLD HAS RIGHTLY ALLOWED THE BENEFIT OF EXEMPTION TO THE ASS ESSEE ON THIS ACCOUNT. IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF THE LD. CIT(APP EAL) ALLOWING THE ASSESSEE TO CLAIM BENEFIT OF EXEMPTION ON ACCOUNT OF THE DIV IDEND INCOME EARNED TO THE EXTENT OF RS. 10,94,100/-. 4 7. GROUND NO. 1 RAISED BY THE REVENUE IS THEREFO RE DISMISSED 8. IN GROUND NO. 2 RAISED BY THE REVENUE, THE ISSU E IS REGARDING THE GRANTING OF RELIEF TO THE EXTENT OF RS. 50 CRORES AGAINST THE ADDITION MADE BY THE AO UNDER SECTION 68 OF THE INCOME TAX ACT,1961. 9. BRIEF FACTS RELEVANT TO THE ISSUE ARE DURING ASS ESSMENT PROCEEDINGS THE AO FOUND THAT THE BALANCE SHEET OF THE ASSESSEE SHOW ED SECURED LOANS OF RS. 50 CRORES. HOWEVER THE AO FOUND THAT NO CONFIRMATORY/D OCUMENTARY EVIDENCE HAD BEEN GIVEN BY THE ASSESSEE DESPITE CATEGORICALLY ASKED FOR THE SAME.FURTHER THE AO FOUND THAT THE ASSESSEE COMPANY HAD NOT DISCLOS ED THE NAME OF THE LENDER FROM WHOM THE LOAN HAD BEEN TAKEN. IN VIEW OF THE S AME THE CREDIT BALANCE OF RS. 50 CRORES WAS ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT,AS BEING FROM UNEXPLAINED SO URCES. 10. LD. CIT(A) DELETED THE ADDITION MADE CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE WHEREIN HE HAD SUBMITTED THAT DOCUMENTARY EVIDENCE OF THE SECURED LOAN HAD BEEN FURNISHED TO THE AO VIDE LETTER DATED 23.03.2013 WHICH WAS RECEIVED BY THE AO ON 25. 03. 2013. IN THE SAID LET TER , THE LD. CIT(APPEAL) HAS STATED, THE ASSESSEE HAD STATED THAT THE SECURED LO AN OF RS. 50 CRORES HAD BEEN RECEIVED ON 30/03/2011. AS EVIDENCE OF THE SAME , LD. CIT(A) STATED , A COPY OF LETTER DATED 25. 01. 2011 OF IFCI LIMITED WAS FI LED BY THE ASSESSEE AND AS PER CLAUSE 6 OF APPENDIX ONE THE SECURITY FURNISHED IN THE SAID LOAN WAS BY WAY OF PLEDGING SHARES OF SURYA PHARMACEUTICALS LTD AND PE RSONAL GUARANTEE OF THE DIRECTOR OF MR RAJIV GOYAL. LD. CIT(A) ,ON THE BASI S OF THE SAME, THEREFORE HELD THAT THE LOAN WAS APPARENTLY FROM IFCI AND NO ADVER SE INTERFERENCE WAS CALLED FOR AND THEREFORE DIRECTED THE ADDITION TO BE DELET ED. 11. BEFORE US LD. COUNSEL FOR THE ASSESSEE RELIED U PON THE FINDINGS OF THE LD. CIT(APPEAL), WHILE THE LD. DR RELIED UPON THE ORDER OF THE AO. 5 12. HAVING HEARD BOTH THE PARTIES, WE FIND NO INFIR MITY IN THE ORDER OF THE LD. CIT(A). THE LD. CIT(A) HAS CATEGORICALLY STATED THA T THE ASSESSEE HAD PROVED WITH EVIDENCE THE NATURE OF THE LOAN TAKEN, THE PER SON FROM WHOM IT WAS TAKEN AND THE SECURITY GIVEN IN THE SAID CASE. ALL THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE LD. DR BEFORE US. IN VIEW OF TH E SAME WE SEE NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(APPEAL) DELET ING THE ADDITION MADE ON ACCOUNT OF UNSECURED LOAN AMOUNTING TO RS. 50 CRORE S. IN VIEW OF THE ABOVE THE ADDITION MADE UNDER SECTION 68 OF THE INCOME TAX AC T AMOUNTING TO RS. 50 CRORES IS DIRECTED TO BE DELETED. GROUND NO. 2 OF T HE REVENUES APPEAL IS THEREFORE DISMISSED. 13. IN EFFECT THE APPEAL OF THE REVENUE IS DISMISSE D ORDER PRONOUNCED IN THE OPEN COURT ON 17-04-2017. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 TH APRIL, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR