ACIT, Circle-1(1), Cuttack, Cuttack V. Srimanta Kumar Tripathy, Jajpur

ITA 485/CTK/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5374 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 10-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Keywords: Unexplained cash credit; Rejection of books of accounts; Gift; Corroborative evidences; Deemed dividend; Commercial expediency
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 485 /CTK /20 15 ( / ASSESSMENT YEAR :2011 - 2012 ) JCIT, RANGE - 1, CUTTAC K VS. SRI SRIMANTA KUMAR TRIPATHY, AT - KANEHIPUR, PO - JAJPUR ROAD, DISTRICT - JAJPUR - 755019 ./ ./ PAN/GIR NO. : A BDPT 9622 M ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 438/CTK /20 14 ( / ASS ESSMENT YEAR :2010 - 2011 ) SRI SRIMANTA KUMAR TRIPATHY, AT - KANEHIPUR, PO - JAJPUR ROAD, DISTRICT - JAJPUR - 755019 VS. JCIT, RANGE - 1, CUTTACK ./ ./ PAN/GIR NO. : A BDPT 9622 M ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI DIGANTA DAS , AR /REVENUE BY : SHRI D.K.PRADHAN, DR / DATE OF HEARING : 21 / 09 /201 7 / DATE OF PRONOUNCEMENT 12/10 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E SE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE FOR THE ASSESSMENT YEAR 2010 - 2011 AGAINST THE ORDER OF CIT (A) , CUTTACK , IN I.T. APPEAL NO. 0107 /201 3 - 1 4 , DATED 29.09.2014 , PASSED U/S. 143(3) & 250 OF THE INCOME TAX ACT, 1961 . 2. SINCE THE ISSUE INVOLVED IN BOTH THE APPEALS ARE COMMON AND INTERRELATED , HENCE, BOTH THE APPEALS ARE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, WE SHALL TAKE THE FACTS MENTIONED IN APPEAL OF REVENUE IN ITA NO.485/CTK/2014 . ITA NO. 438 & 485 /CTK/201 4 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF HOTELING, PETROL PUMP, STORAGE AGENCY, TYRES, LIAISON WORKS AND FILED THE RETURN OF INCOME ELECTRONICALLY FOR THE ASSESSMENT YEAR 2010 - 2011 ON 24.09.2010 WITH TOTAL INCOME OF R S.2,29,14,600/ - AND THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) & 142(1) ALONG WITH QUESTIONNAIRE WAS ISSUED. IN COMPLIANCE TO THE SAME, LD. AR OF THE ASSESS EE APPEARED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE AO ON PERUSAL OF THE FINANCIAL STATEMENTS FOUND THAT THE ASSESSEE RECEIVED SALARY FROM MAA TARINI TRANSPORT (P) LTD., WHERE HE IS A DIRECTOR HAVING 93% SHAREHOLDING AS ON 31.03.2010 AND THE ASS ESSEE IS ALSO A PROPRIETOR OF MAA TARINI AGENCY, MAA TARINI FILLING CENTRE, MAA TARINI HOTEL AND STORAGE AGENCY. THE AO FOUND IN BUSINESS OF M/S MAA TARINI AGENCY THE ASSESSEE COULD NOT PRODUCE BILLS/VOUCHERS FOR VERIFICATION OF EXPENSES IN RESPECT OF STAF F SALARY OF RS.4,35,668/ - , BONUS AND INCENTIVE OF RS.1,68,681/ - , SALES PROMOTION EXPENSES OF RS.1,64,300/ - , TRAVELLING EXPENSES OF RS.1,36,936/ - , CARRYING AND FORWARDING EXPENSES OF RS.5,35,794/ - . FINALLY IN THE ABSENCE OF BILLS AND VOUCHERS AVAILABLE FOR EXAMINATION THE AO HAD DISALLOWED A SUM OF RS.2,00,000/ - OUT OF THE SAID EXPENSES. SIMILARLY, AO VERIFIED THE PROFIT AND LOSS ACCOUNT OF M/S MAA TARINI FILLING CENTRE, AND FOUND THAT THE ASSESSEE HAD DISALLOWED NET PROFIT @0.158% OF THE GROSS TURNOVER AND CLAIMED HEAVY EXPENSES IN THE PROFIT AND LOSS ACCOUNT UNDER DIFFERENT ITA NO. 438 & 485 /CTK/201 4 3 HEADS. THE AO OBSERVED THAT NO PROPER BOOKS OF ACCOUNTS AND BILLS/VOUCHERS OF EXPENSES WERE AVAILABLE FOR EXAMINATION AND THEREFORE HE REJECTED THE BOOKS OF ACCOUNTS U/S.145(3) OF THE AC T AND ESTIMATED THE NET PROFIT @0.5% OF THE GROSS TURNOVER RS.3,75,503/ - AND IN THE BUSINESS OF M/S MAA TARINI HOTEL & RESTAURANTS THE AO FOUND THAT THE ASSESSEE HAD SHOWN NET PROFIT OF 4.97% OF THE GROSS TURNOVER AND NO PROPER BILLS AND VOUCHERS WERE PRO DUCED AND NOT PROPER COMPLIANCE OF PRODUCTION OF BOOKS OF ACCOUNTS . THE AO HAS REJECTED THE BOOKS OF ACCOUNTS RESULTS U/S.145(3) OF THE ACT AND ESTIMATED THE NET PROFIT AT 15% OF THE GROSS TURNOVER WHICH WORKED OUT TO RS.4,76,405/ - . 4. FURTHER LD. AO IN S CRUTINY PROCEEDINGS FOUND THAT THE ASSESSEE HAD DISCLOSED THE GIFTS RECEIVED FROM SRI MAHESWAR TRIPATHY(FATHER OF ASSESSEE) AMOUNTING TO RS.4,50,000/ - AND SMT. ANUSAYA TRIPATHY (WIFE) AMOUNTING TO RS.28,79,446/ - DURING THE FINANCIAL YEAR. IN RESPECT OF GIF T S FROM THE FATHER OF THE ASSESSEE IS CONCERNED, THE AO FOUND THAT SRI M AHESHWAR TRIPATHY HAD GIVEN CASH GIFTS TO THE ASSESSEE ON VARIOUS DATES STARTING FROM 14.4.2009 TO 23.03.2010 AMOUNT BEING LESS THAN RS.20, 000/ - AND ON 25.03.2010 RS.1,48,500/ - IN CASH . THE AO FURTHER FOUND SIMILAR CASH GIFTS RECEIVED BY THE ASSESSEE FROM HIS WIFE SMT. ANUSAYA TRIPATHY RS.28,79,446/ - . T HE ASSESSEE PRODUCED COPIES OF AFFIDAVIT AND BALANCE SHEET AND INCOME TAX PARTICULARS OF BOTH THE DONORS. THE AO AFTER DETAILED VERIFICA TION OF THE DATES OF GIFTS AND PATTERNS OF GIFTS RECEIVED BY THE ASSESSEE FROM THE ABOVE TWO PERSON S ISSUED SUMMONS U/S.131 OF THE ACT TO THE DONORS TO EXAMINE THE CREDITWORTHINESS AND THE ITA NO. 438 & 485 /CTK/201 4 4 GENUINENESS OF SUCH TRANSACTION AND THERE IS NO COMPLIANCE, FURTHER THE ASSESSEE SUBMITTED THAT THE DONORS ARE UNWELL AND SUBMITTED MEDICAL CERTIFICATES AND REQUESTED FOR ADJOUNRMENT . THE AO AS PER THE REQUEST OF THE ASSESSEE ADJOURN THE HEARING TO THE TO ANOTHER DATE BUT ON THE SAID DAY ALSO THERE IS NO COMPLIANCE. THE A O OBSERVED DUE TO NON - COMPLIANCE OF SUMMONS AND STATEMENTS, THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTION S COULD NOT BE VERIFIED AND ASCERTAINED AND FINALLY AO TREATED THE SAID AMOUNTS AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT AND ADDED TO THE TOT AL INCOME OF THE ASSESSEE AND OBSERVED AT PAGE 10 OF THE ORDER WHICH READS AS UNDER : - FURTHER MORE THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE DONORS FOR EXAMINATION SO THAT THE GENUINENESS OF THE TRANSACTIONS COULD BE VERIFIED. THERE IS NO OCCASION TOLD BY THE ASSESSEE FOR MAKING THE GIFTS. THE. AMOUNTS CLAIMED TO BE GIFTS ARE IN FACT PETTY AMOUNTS AND MORE OF A NATURE OF LOAN TRANSACTIONS AS APPEARS FROM CIRCUMSTANTIAL EVIDENCE. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOU S YEAR IT MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE FOR THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IT HAS BEEN HELD SO IN THE CASE OF SUMATI DAYAT VS. CIT 214 ITR 801 (SC). THEREFORE, THE SUM OF RS.33,29,446/ - IS ADDED U/S.68 OF THE I.T. ACT, 1961 AS UNEXPLAINED GIFTS. 5. REGARDING DEEMED DIVIDEND INCOME, THE AO FOUND THAT THE ASSESSEE IS A DIRECTOR OF M/S MAA TARINI TRANSPORT (P) LTD. HAVING 93% OF SHAREHOLDING. THE COMPANY HAS GIVEN AN ADVANCE OF RS.92,98,352/ - TO THE ASSESSEE DURING THE YEAR. THE AO DEALT ON THE EXPLANATIONS AT PAGE 11 & 12 OF THE ORDER, WHEREIN THE AO HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE WAS NOT SA TISFIED WITH THE EXPLANATION AND TREATED AS DEEMED DIVIDEND AND OBSERVED AT PAGE 12 AS UNDER : - ITA NO. 438 & 485 /CTK/201 4 5 THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED. IT APPEARS TO BE AN AFTER THOUGHT AND DOES NOT MERIT CONSIDERATION FOR THE REASON THAT IN THE PROPRIETORS CAPITAL ACCOUNT AS ON 31 - 03 - 2010 IN THE COLUMN CURRENT LIABILITIES & PROVISIONS THE SUM OF RS.92,98,358.85 HAS BEEN SHOWN AS ADVANCE FROM MAA TARINI TRANSPORT PVT. LTD. THE ADVANCE IS NOT THE BUSINESS PURPOSE OF THE COMPANY, ,BUT IT IS AN ACCOMMODATION FOR THE PR OPRIETARY BUSINESS OF THE DIRECTOR (ASSESSEE). THE ASSESSEE IS A REGISTERED AS WELL AS BENEFICIAL SHARE HOLDER IN MAA TARINI TRANSPORT PVT. LTD. HAVING A SHARE HOLDING OF 93% AND THE ACCUMULATED PROFITS (RESERVES & SURPLUS) OF THE COMPANY ARE AT RS.3,19,71 ,792/ - AS ON 31 - 03 - 2010. ALSO THE ASSESSEES CONTENTION THAT THE ADVANCE HAS BEEN ADJUSTED OUT OF DIRECTORS REMUNERATION RECEIVABLE AT RS.26,23,464/ - FROM THE COMPANY AS ON 31 - 03 - 2010 IS MISCONCEIVED BECAUSE THEN HE ADVANCE FROM THE COMPANY AS ON 31 - 03 - 201 0 WOULD HAVE BEEN SHOWN AT A LESSER SUM AND NOT RS.92,98,352.85. THE RATIO OF THE SPECIAL BENCH DECISION IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 33, MUMBAI VS BHAUMIK COLOUR (P) LTD. WHEREIN IT HAS BEEN HELD THAT .. DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF LENDER COMPANY REPORTED 118 ITD 1 (MUM)(SB) IS SQUARELY APPLICABLE IN THIS CASE. THEREFORE, THE ADVANCE OF RS.92,98,352.85 FROM MAA TARINI TRANSPORT PVT. LTD. IS TREATED AS DEEMED DIVIDE ND UNDER SECTION 2(22)(E). 6. THE AO MADE ADDITION U/S.69 OF THE ACT IN RESPECT OF LIC INSURANCE PAYMENTS TO HDFC/LIC/SBI AGGREGATING TO RS.18,46,644/ - AS THEY ARE NOT REFLECTED IN THE CAPITAL ACCOUNT OF THE ASSESSEE AND ASSESSED TOTAL INCOME AT RS.3,80,2 0,610/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 04.03.2013 7. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED AN APPEAL WITH THE CIT(A). ON THE FIRST DISPUTED ISSUE OF GIFT FROM MR. MAHESWSAR TRIPATHY(FATHER) AND SMT. ANUSUYA TRIPTAHY(WIFE), THE CIT (A) DEALT AT PAGE 3 OF THE ORDER AND CONSIDERED THE ASSESSEES SUBMISSIONS. THE CONTENTIONS OF LD. AR ARE THAT BOTH THE DONORS ARE ASSESSED TO INCOME TAX AND THEY HAVE SUBSTANTIAL CREDITWORTHINESS AND ALSO DIRECTORS OF THE COMPANY. THE ASSESSEE EMPHASIZED THAT THE ASSESSEES FATHER IS HAVING DIFFERENT BUSINESSES AND HE IS ALSO PARTNER IS IN SUB CONTRACT BUSINESS. ITA NO. 438 & 485 /CTK/201 4 6 THE LD. CIT(A) IS OF THE OPINION THAT THE ASSESSEES FATHER HAVING LESSER INCOME FROM BUSINESS CAN GIVE SUCH CASH GIFTS AND THE EXPLANATIONS ARE N OT SATISFACTORY AND CONFIRMED THE ACTION OF AO AND IN RESPECT OF GIFT FROM WIFE SMT. ANUSUYA TRIPTAHY, THE LD. CIT(A) OBSERVED AT PAGE 4 OF THE ORDER AND CONFIRMED THE ADDITION U/S.68 OF THE ACT. THE LD. CIT(A) IN CASE OF DEEMED DIVIDEND INCOME U/S.2(22)( E) OF THE ACT OBSERVED THAT THE ASSESSEE IS A MANAGING DIRECTOR OF THE COMPANY M/S MAA TARINI TRANSPORT (P) LTD. AND RECEIVED AN ADVANCE OF RS.92,98,352.85 DURING THE FINANCIAL YEAR AND REFLECTED IN THE BALANCE SHEET OF M/S MAA TARINI TRANSPORT (P) LTD. TH E ASSESSEE EXPLAINED THAT THE DIRECTORS REMUNERATION OF RS.26,23,460/ - IS RECEIVABLE FROM M/S MAA TARINI TRANSPORT (P) LTD. AND FINALLY THE LD. CIT(A) DIRECTED THE AO TO TREAT THE ADVANCE AFTER ADJUSTMENT OF REMUNERATION AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT AND OBSERVED AT PAGE 5 OF THE ORDER WHICH READS AS UNDER : - I HAVE PERUSED THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. THE APPELLANT WHO IS THE MANAGING DIRECTOR OF THE COMPANY M/S MAA TARINI TRANSPORT (P) LTD. RECEIVED AN ADVANCE OF RS.92,98,352.85 DURING THE YEAR WHICH WAS ALSO REFLECTED IN THE BALANCE SHEET OF M/S MAA TARINI TRANSPORT (P) LTD. THE APPELLANT HAD ALSO SHOWN DIRECTORS REMUNERATION RECEIVABLE FROM M/S MAA TARINI TRANSPORT (P) LTD. AMOUNTING TO RS.26,23,464/ - AND ACCOR DINGLY THE CIT(A) HAD DIRECTED TO THE AO TREAT THE BALANCE OF ADVANCE AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. THE AO IS DIRECTED TO DO SO. 8. THE LD. CIT(A) DEALT ON THE ADDITION OF PAYMENT OF LIC INSURANCE AMOUNT AND FOUND THE INVESTMENT ARE REFLECT ED IN THE BALANCE SHEET AND THERE IS NO AMBIGUITY OF DISALLOWANCE AND ACCORDINGLY DIRECTED THE AO TO DELETE THE ADDITION AND PARTLY ALLOWED THE APPEAL. ITA NO. 438 & 485 /CTK/201 4 7 9. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL, WHEREIN THE R EVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : - 01.IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY IS NO: JUSTIFIED IN GIVING DIRECTION TO ESTIMATE NET PROFIT 0.25% FROM THE BUSINESS OF THE ASSESSEE FROM M/S. MAA TARINI F ILING CENTRE AND OF 9.5% FROM THE BUSINESS FIN M/S. MAA TARINI HOTEL & RESTAURANTS AS AGAINST THE N.P. 0.5% AND @15% MADE BY THE A.O. RESPECTIVELY FOR THE DETERMINATION OF ESTIMATED PROFIT OF THE ASSESSEE FROM THOSE TWO CONCERNS WITHOUT ASSIGNING ANY REL IABLE SPECIFIC REASONS TO ESTIMATE THE N.P AT LESSER RATE. 02. IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ID. CIT(A) IS NOT JUSTIFIED TO HOLD THAT NET PAYABLE TO THE COMPANY WAS RS.66,74,888.85 TO BE CONSIDERED AS DEEMED DIVIDEND U/S.2(22)(E) OF TH E I.T.ACT IN THE HANDS OF THE ASSESSEE - WHEN THE AO HAD CORRECTLY ADDED THE WHOLE OF THE ADVANCE GIVEN BY THE ALLEGED COMPANY I.E. M/S. MAA TARINI TRANSPORT PVT LTD TO THE ASSESSEE TO THE TUNE OF RS.92,98,352 DURING THE PREVIOUS YEAR:2009 - 10. 03. WHETHE R IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ID.CIT(A) IS JUSTIFIED TO DELETE THE ADDITION OF RS.18,46,644 MADE ON ACCOUNT OF UNDISCLOSED PAYMENTS TOWARD LIC POLICIES CONSIDERING THAT THOSE INVESTMENTS HAVE BEEN ONLY REFLECTED IN THE BALANCE SHEETS OF THE ASSESSEE AS ON 31.03.2010 WHEN THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF INVESTMENT AND MODE OF PAYMENTS TOWARDS INVESTMENTS MADE DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO. 10 . IN RESPECT OF FIRST GROUND OF APPEAL, THE CONTENTION OF LD. D R THAT THE CIT(A) HAS GRANTED RELIEF BY REDUCING NET PROFIT AND LD. DR EMPHASISED THAT THE CIT(A) WITHOUT CALLING ANY COMMENTS FROM THE AO TOOK THE DECISION, THEREFORE, THE ORDER OF AO BE RESTORED. LD. AR ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 1 1 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE THE CONTENTION OF LD. DR THAT CIT(A) HAS ERRED IN REDUCING THE PERCENTAGE OF ESTIMATING THE NET PROFIT AT 0.25% OF THE BUSINESS OF ASSESSEE FROM M/S MAA TARINI FILLING CENTRE AND OF 9.5% FROM THE ITA NO. 438 & 485 /CTK/201 4 8 BUSINESS OF M/S. MAA TARINI HOTEL & RESTAURANTS AS AGAINST THE NET PROFIT @15% ESTIMATED BY THE A.O. WE FIND THAT THE CIT(A) HAS CONSIDERED THE FACTS AND THAT THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS THEREF ORE, THE AO HAS REJECTED THE BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT AND ESTIMATED THE INCOME, THEREFORE, THE CIT(A) CONSIDERING THE NATURE OF BUSINESS HAS TAKEN A REASONED DECISION AND GRANTED PARTIAL RELIEF TO THE ASSESSEE. ACCORDINGLY, WE ARE NOT INCLIN ED TO INTERFERE WITH THE ORDER OF CIT(A) AND ACCORDINGLY, WE UPHELD THE ORDER OF CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 12 . ON THE SECOND DISPUTED ISSUE, WHERE ADDITION MADE BY AO IN RESPECT OF DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT , THE LD. CIT(A) HAS SUSTAINED THE ADDITION TO RS.66,74,888.85/ - AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. 13. THE CONTENTION OF LD. DR THAT THE CIT(A) HAS ERRED IN GRANTING PARTIAL RELIEF TO THE ASSESSEE AS NET PAYABLE AMOUNT TO THE COMPANY SHOULD BE CONSI DERED AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT IN THE HANDS OF ASSESSEE. AS PER THE LD. DR THE ADVANCE IS NOT FOR BUSINESS PURPOSE OF THE COMPANY BUT IT IS AN ACCOMMODATION FOR THE PROPRIETARY BUSINESS OF THE DIRECTOR (ASSESSEE). FURTHER LD. DR SUBMITTE D THAT THE AO HAS RIGHTLY ADDED THE WHOLE OF THE ADVANCE GIVEN BY THE COMPANY I.E. M/S. MAA TARINI TRANSPORT PVT LTD TO THE ASSESSEE DURING THE PREVIOUS YEAR 2009 - 10 AND PRAYED FOR ALLOW ING THE APPEAL OF REVENUE. CONTRA, LD. AR OPPOSED TO THE GROUNDS OF AP PEAL OF REVENUE. ITA NO. 438 & 485 /CTK/201 4 9 14 . WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE OBSERVATIONS MADE BY THE CIT(A) ON THE DISPUTED ISSUE. WE FOUND THE CIT(A) HAS GRANTED PARTIAL RELIEF TO THE ASSESSEE WITHOUT CALLIN G ANY REMAND REPORT FROM THE AO. NO DETAILS HAVE BEEN FILED BEFORE THE CIT(A) NOR BEFORE THE AO. THE CIT(A) HAS CONSIDERED THE SUBMISSION OF LD. AR THAT THE REMUNERATION RECEIVABLE AS DIRECTOR FROM THE COMPANY IS RS.26,23,464/ - , HOWEVER, AS PER THE AO S OB SERVATION THE ADVANCE FROM THE COMPANY AS ON 31.10.2010 WOULD HAVE BEEN SHOWN AT A LESSER SUM AND NOT RS.92,98,352/ - . IN OUR CONSIDERED OPINION THIS ISSUE REQUIRES VERIFICATION AND EXAMINATION AT THE END OF AO. ACCORDINGLY, WE REMIT THE DISPUTED ISSUE TO THE FILE OF AO TO VERIFY AND EXAMINE AS TO WHETHER THE ADVANCE FROM THE COMPANY AS REFLECTED IN THE ACCOUNTS OF ASSESSEE PARTAKES THE CHARACTER OF DEEMED DIVIDEND UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND THIS GROUND OF APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 15 . THE LAST GROUND RAISED BY THE REVENUE WITH RESPECT TO DELETING THE ADDITION OF RS.18,46,644/ - ON ACCOUNT OF UNDISCLOSED PAYMENTS TOWARDS LIC POLICIES. LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITIO N IRRESPECTIVE OF FACT THAT THE ASSESSEE HAS FAILED TO SUBMIT THE SOURCE OF INVESTMENT AND MODE OF PAYMENT BEFORE THE AO. WHEREAS LD. AR ON THE OTHER HAND, SUPPORTED THE ORDER OF CIT(A). 16 . WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PR IMA FACIE THE CONTENTION OF LD. DR THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF INVESTMENT AND MODE OF PAYMENT IN THE ASSESSMENT ITA NO. 438 & 485 /CTK/201 4 10 PROCEEDINGS BEFORE THE AO . WE FIND THAT THE CIT(A) GAVE FINDINGS THAT THE ASSESSEE HAS DISCLOSED THE FACTS IN THE BALANCE SHE ET AND, WHEREIN THE CIT(A) HAS OBSERVED AS UNDER : - I HAVE PERUSED THE BALANCE SHEET OF THE APPELLANT AND FOUND THAT THE INVESTMENTS ALONG WITH FEW OTHER INVESTMENTS WERE REFLECTED IN THE BALANCE SHEET OF THE APPELLANT. I THEREFORE DO NOT FIND ANY ANOMALY IN THE SAME. THE AO IS DIRECTED TO DELETE THE ADDITION. 17 . WE FOUND THAT THE CIT(A) BASED ON THE FACTS OF DISCLOSURE IN THE BALANCE SHEET HAS TAKEN REASONED DECISION AND IS ACCEPTABLE, IN OUR OPINION THE CIT(A) IS CORRECT IN DIRECTING THE AO TO DELETE TH E ADDITION ON ACCOUNT OF PAYMENTS TOWARDS LIC POLICIES. ACCORDINGLY, THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. THUS, APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 18 . NOW, WE SHALL TAKE UP ASSESSEES APPEAL I.E. ITA NO. 438 /CTK/201 4 AND THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT, THE ORDER PASSED BY THE LEARNED CIT(A), CUTTACK IS HIGHLY ARBITRARY, WITHOUT ANY BASIS, WITHOUT PROPER APPLICATION OF MIND, CONTRARY TO WEIGHT OF EVIDENCE, BEYOND JURISDICTION AND OUGHT TO BE QUASHED AT ONCE. 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 3329446/ - WITHOUT TAKING INTO CONSIDERATION THE STATEMENT OF FACTS BEING QUITE CONTRARY TO WEIGHT OF EVIDENCE, BEYOND JURISDICTION AND OUGH T TO BE DELETED. 3. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN TREATING RS.6674888.85 BEING DEEMED DIVIDEND UNDER SECTION 2(22) WITHOUT CONSIDERATION OF THE FACTS IS HIGHLY ILLEGAL, ARBITRARY, EXCESSIVE, CONTRARY TO WEIGHT OF EVIDENCE AND THEREFORE IS LIABLE TO BE DELETED. 4. THAT OTHER GROUNDS OF APPEAL, IF ANY, SHALL BE PRESSED FOR HAVING AT THE TIME OF THE APPEAL. 19 . BEFO RE US, LD. A R SUBMITTED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION U/S.68 OF THE ACT AND THE DONORS ARE BLOOD RELATIONSHIP AND ITA NO. 438 & 485 /CTK/201 4 11 ARE ASSESSED TO INCOME TAX AND ALSO SUBMITTED VOLUMINOUS INFORMATION IN PAPER BOOK ALONG WITH SUPPORTING EVIDENCE AND J UDICIAL DECISIONS AND PRAYED FOR THE RELIEF . CONTRA, LD. DR RELIED ON THE ORDER OF CIT(A). 20 . WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. ARS CONTENTION THAT THE ASSESSEE HAS RECEIVED GIFTS FROM FATHER AND WIFE WHO ARE ASSESSE D TO INCOME TAX AND HAVE SUFFICIENT INCOME WITH CREDITWORTHINESS . L D. AR ALSO DREW ATTENTION TO THE INCOME TAX RETURNS, BALANCE SHEET AT PAGE 82 TO 85 OF THE PAPER BOOK AND EXPLAINED THAT THE ASSESSEES FATHER OUT OF HIS CAPITAL ACCOUNT HAS TRANSFERRED FU NDS TO SON AS GIFTS AND ALSO PROVIDED ACCOUNT COPY AND NOTARISED AFFIDAVIT ALONG WITH DATE S OF SCHEDULE OF GIFT S MADE IN PIECEMEAL MANNER IN THE FINANCIAL YEAR RS.4,50,000/ - . FURTHER ON THE QUERY FROM THE BENCH TO LD. AR TO PRODUCE THE BALANCE SHEET OF EAR LIER YEARS AS ON 31.03.2009, THE ASSESSEE COULD NOT PRODUCE AND PRAYED FOR AN OPPORTUNITY WHEREAS L D. DR OBJECTED TO THE DOCUMENTS FILED BY THE ASSESSEE AND EVIDENCE TO BE VERIFIED . S IMILARLY IN THE CASE OF SMT. ANUSUYA TRIPATHY (WIFE) , THE AR RELIED ON THE INCOME TAX RETURNS AND FURTHER SUBMITTED THAT BOOKS OF ACCOUNTS HAVE BEEN AUDITED . THE LD. AR DREW OUR ATTENTION TO THE COMPUTATION OF INCOME WHERE SHE RECEIVED SALARY AS DIRECTOR FROM MAA TARINI TRANSPORT PVT. LTD. LD. AR EMPHASISED THAT BOTH FATHER AND WIFE OF THE ASSESSEE HAVE CREDITWORTHINESS AND TRANSACTION S ARE GENUINE . 21 . P RIMA FACIE , WE FIND ON PERUSAL OF THE ASSESSMENT ORDER THERE IS NO COMPLIANCE BY THE ASSESSEE IN RESPECT OF SUBMISSION OF DONORS AS THE SUMMONS U/S.131 OF THE ACT UNSERVED AND THE ASSESSEE FILED ITA NO. 438 & 485 /CTK/201 4 1 2 EXPLANATIONS THAT DUE T O HEALTH GROUND OF SSESSEE S MOTHER THE DONORS COULD NOT BE PRODUCE D . FINALLY HE AO OBSERVED THAT THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN/SUBMIT THE IDENTITY AND CREDITWORTHINESS OF THE TRANSACTIONS, HENCE, MADE ADDITION. WE FIND AS PER THE VOLUMINOUS INFORMATION AND SUBMISSION S MADE BEFORE US THE ASSESSEE HAS ADEQUATE MATERIAL TO SUBSTANTIATE ITS GROUNDS AND THE LD. AR PRAYED BEFORE US AN OPPORTUNITY TO THE ASSESSEE TO SATISFY THE CONDITIONS OF IDENTITY, CRE DITWORTHINESS AND GENUINENESS OF TRANSACTION. WE ARE OF THE SUBSTANTIATE OPINION THE AO HAD NEVER DEALT ON THIS DISPUTED ISSUE BECAUSE OF NON - AVAILABILITY OF MATERIAL AND PLACEMENT OF DOCUMENTS. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE TO REPRESENT ITS CASE BEFORE THE AO AND SUBSTANTIATE THE GIFTS . ACCORDINGLY, GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 22 . IN SECOND GROUND OF APPEAL OF ASSESSEE, THE CIT(A) GRANTED PARTIAL RELIEF IN DEEM ED DIVIDEND. THE LD. AR SUBMITTED THAT THE AO HAD MADE ADDITION OF RS.92,98,352/ - AS DEEMED DIVIDEND U/S 2(2 2 ) OF THE ACT WHEREAS THE AMOUNT WAS PURELY FOR BUSINESS CONSIDERATION WHICH HAS BEEN CLEARLY ELABORATED IN THE WRITTEN SUBMISSION S AND PART OF THE ASSESSMENT ORDER . THE LD. AR EMPHASISED THAT T HE LETTER OF INTENT DATED 10 TH NOVEMBER 2008 WAS RECEIVED FROM TATA MOTORS LTD. I N FAVOUR OF SRI SRIMANTA KUMAR TRIPATHY AND THE AMOUNT OF RS.92,98,352.85 PAYABLE TO MAA TARINI TRANSPORT PVT. LTD. D ISCLOSED UNDER THE HEAD 'CURRENT LIABILITIES & PROVISIONS' AND AFTER GIVING EFFECT TO DIRECTOR'S REMUNERATION OF ITA NO. 438 & 485 /CTK/201 4 13 RS.26,23 ,464/ - RECEIVABLE FROM MAA TARINI TRANSPORT PVT. LTD. DISCLOSED UNDER THE HEAD 'DEPOSITS AND ADVANCES , THE LD. CIT(A) OBSERVED THAT RS.66,74,888.85 IS THE NET AMOUNT PAYABLE TO THE COMPANY AS ON 31ST MARCH 2010 , FURTHER THE COMPANY HAS REPAID THE AMOUNT ON 6TH OCTOBER 2010 AND 2ND NOVEMBER 2010 OUT OF THE SANCTIONED BANK LOAN OF STATE BANK OF INDIA, JODA BRANCH, JODA. FURTHER, THE ASSESSEE CATEGORICALLY STATED THAT THE BALANCE AMOUNT OF RS. 66,74,888.85 CANNOT BE TREATED AS DEEMED DIVIDEND U/S.2(22)(E) OF T HE ACT AS THE ARRANGEMENT BETWEEN THE ASSESSEE AND THE COMPANY ARISING OUT OF BUSINESS EXPEDIENCY . FURTHER ALL THE ASSETS OF THE ASSESSEE WERE PLEDGED FOR THE COMPANY AS COLLATERAL SECURITIES AND THE LOAN ADVANCED TO THE COMPANY WAS SOLELY ON THE PERSONAL GUARANTEE OF THE MANAGING DIRECTOR AND THE ADVANCE GIVEN TO THE MANAGING DIRECTOR CANNOT BE TREATED AS GRATUITOUS LOAN OR ADVANCE AND PRAYED FOR DELETING THE ADDITION. CONTRA, LD. DR OPPOSED TO THE GROUNDS OF APPEAL OF ASSESSEE. 23 . WE HEARD RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD . LD. ARS CONTENTION THAT THE ADVANCE CANNOT BE BROUGHT UNDER THE PURVIEW OF DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT AND THERE EXISTS A COMMERCIAL EXPEDIENCY IN GRANTING ADVANCE. WE HAVE DEALT THIS DISPUTED ISSUE IN R EVENUES APPEAL AND AFTER HEARING THE ELABORATE SUBMISSIONS AND MATERIAL ON RECORD, WE HAVE REMITTED THIS ISSUE TO THE FILE OF AO FOR VERIFICATION AND EXAMINATION. THEREFORE, WE CONSIDER IT APPROPRIATE ALSO TO REMIT THIS DISPUTED ISSUE TO THE FILE OF AO AN D ALLOW THE GROUNDS OF APPEAL OF ASSESSEE FOR STATISTICAL PURPOSES. ITA NO. 438 & 485 /CTK/201 4 14 24 . THUS, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 25 . IN THE RESULT, APPEAL OF REVENUE IN ITA NO. 485 /CTK/201 4 IS ALLOWED PARTLY FOR STATISTICAL PURPOSES, WHEREAS APPEAL OF THE ASSESSEE IN ITA NO.438/CTK/2014 IS ALLOWED FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 12/10 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 12/10 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : W / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//