PRAVEEN BAJAJ, NEW DELHI V. ACIT, CIRCLE- 51(1), NEW DELHI

ITA 5066/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1136 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 23-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Additional evidence; Deemed dividend; Set aside
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.5066/DEL./2018 ASSESSMENT YEAR 2014-2015 SHRI PRAVEEN BAJAJ, 1001, SEWAK CHAMBER-1, 2099/38, NAIWALA, KAROL BAGH, NEW DELHI 110005. PAN AAHPB7785N VS. THE ACIT, CIRCLE-51(1), NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI RAJIV SAXENA, ADVOCATE & SHRI SHYAM SUNDER, A.R. FOR REVENUE : SHRI S.L. ANURAGI, SR. D.R. DATE OF HEARING : 28.02.2019 DATE OF PRONOUNCEMENT : 15.03.2019 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-17, NEW DELHI DATED 27TH APRIL 2018, FOR THE ASSESSMENT YEAR 2014-2015, CHALLENGING THE ADDITION OF RS.25 LACS UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED RETURN OF INCOME OF RS.24,44,783/- 2 ITA.NO.5066/DEL./2018 SHRI PRAVEEN BAJAJ, NEW DELHI. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS RECEIVED LOAN OF RS.35 LACS FROM M/S. SUPERFINE TRANSLOGISTICS PVT. LTD. THE ASSESSEE WAS ASKED TO FILE DETAILS OF THE SAME. ASSESSEE FILED CONFIRMATION TO EXPLAIN THAT LOAN FROM M/S. SUPERFINE TRANSLOGISTICS PVT. LTD., WAS TAKEN ON 22ND AUGUST 2013 THROUGH BANKING CHANNEL. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS 40% SHARE IN THIS COMPANY AND HAS ACCUMULATED PROFITS AS WELL. THEREFORE PROVISIONS OF SECTION 2(22)(E) ARE APPLICABLE IN THIS CASE. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF ASSESSEE ABOUT THE AMOUNT TAKEN FOR BUSINESS EXPEDIENCY. THE ASSESSING OFFICER FURTHER FOUND THAT RS.35 LACS INCLUDES THE AMOUNT OF RS.10 LACS GIVEN BY THE ASSESSEE TO THE AFORESAID COMPANY. THEREFORE, ADDITION OF RS.25 LACS WAS MADE UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT 1961. 2.1. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT(A). THE ASSESSEE FILED ADDITIONAL EVIDENCES TO SHOW THAT AMOUNT IN FACT WAS PAID TO M/S. CENTUARY CRANE ENGINEERS PVT. LTD., BY M/S. SUPERFINE TRANSLOGISTICS PVT. LTD., THROUGH THE ASSESSEE AGAINST THE SUPPLY OF THE GOODS. THE AMOUNT IN 3 ITA.NO.5066/DEL./2018 SHRI PRAVEEN BAJAJ, NEW DELHI. QUESTION WAS PAID IMMEDIATELY ON THE SAME DAY TO M/S. CENTUARY CRANE ENGINEERS PVT. LTD., AFTER RECEIVING THE AMOUNT FROM M/S. SUPERFINE TRANSLOGISTICS PVT. LTD. SUBSEQUENTLY, THE GOODS WERE SOLD TO M/S. SUPERFINE BY M/S. CENTURY IN 2 LOTS I.E., BILL NO.151 OF RS.14,81,219/- AND OF RS.15,82,425/- ENTERED AS BILL NO.243 ON DATED 19 TH DECEMBER, 2015. THE ASSESSEE SUBMITTED COPY OF THE INVOICE ISSUED BY M/S. CENTURY IN THE NAME OF M/S. SUPERFINE ALONG WITH FORM-LS-9 I.E., LOCAL SALES-9, SHOWING THE SALE OF GOODS TO M/S. SUPERFINE, VAT RETURN AND BANK STATEMENT ARE FILED. THE LEARNED CIT(A) OBTAINED REMAND REPORT ON THE ADDITIONAL EVIDENCES, WHICH HE HAS ADMITTED. THE LEARNED CIT(A), HOWEVER, NOTED THAT THE GOODS HAVE BEEN SUPPLIED TO M/S. SUPERFINE AFTER TWO YEARS. THEREFORE, IT IS AN AFTERTHOUGHT TO GIVE A COLOUR OF ADVANCE FOR BUSINESS PURPOSES. THE ADDITION WAS CONFIRMED AND APPEAL OF ASSESSEE HAS BEEN DISMISSED. 3. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 4 ITA.NO.5066/DEL./2018 SHRI PRAVEEN BAJAJ, NEW DELHI. 4. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT ON 31ST MARCH 2013 THE COMPANY M/S. SUPERFINE HAS RECEIVED RS.10 LACS FROM THE ASSESSEE DURING THE PERIOD ON 30TH MARCH 2013 PB 71, WHICH CONTINUED AS LOAN IN ASSESSMENT YEAR UNDER APPEAL, IN WHICH, ASSESSEE IS DIRECTOR AND SUBSTANTIAL SHAREHOLDER. ON 22ND AUGUST 2013 M/S. SUPERFINE WANTED TO PLACE ORDER TO M/S. CENTURY FOR DEVELOPMENT OF ENGINEERING PRODUCTS TO BE SUPPLIED TO THE EXECUTIVE ENGINEER, ROORKEE AND ALSO FOR ITS BUSINESS I.E., RADIO REMOTE CONTROL PANEL HYDRAULIC TURBINE AND GEAR BOX FOR TURBINE WHICH NEEDED R & D BY M/S. CENTURY. IT HAS TO RETURN LOAN OF THE ASSESSEE AND SO INSTEAD OF ISSUING SEPARATE CHEQUES, ONE CHEQUE WAS ISSUED FOR RS.35 LACS INCLUDING RS.25 LACS FOR DEVELOPMENT OF THE PRODUCT. COPIES OF ALL THE LEDGER ACCOUNTS AND BANK STATEMENTS ARE FILED IN THE PAPER BOOK. ON 22 ND AUGUST 2013 ITSELF, ASSESSEE IMMEDIATELY PAID RS.35 LAKHS TO M/S. CENTURY AND FURTHER PAID RS.10 LACS [PB-124]. ON 25TH FEBRUARY 2014 ASSESSEE AGAIN PAID RS.50 LACS TO M/S. CENTURY IN WHICH HE HAS ALSO 5 ITA.NO.5066/DEL./2018 SHRI PRAVEEN BAJAJ, NEW DELHI. MAJOR SHARES [PB 124]. ON 15TH NOVEMBER 2014 M/S. CENTURY SUPPLIED MATERIAL TO M/S. SUPERFINE, BUT, DID NOT ASK FOR PAYMENT AS IT HAS ALREADY RECEIVED ADVANCE. BUT DUE TO ACCOUNTANTS ERROR, IT WAS SHOWN AS LOAN. ON 09 TH APRIL 2015 AND 24TH JUNE 2015. M/S. SUPERFINE AGAIN PURCHASED RAW MATERIAL [PB 123]. ON 17TH JULY 2015 AND 2ND NOVEMBER 2015 M/S. SUPERFINE PAID RS.2,54,864/- AND RS 4 LACS AS ADVANCE, OTHER THAN RS.25 LACS PAID [PB 123]. ON 30TH NOVEMBER 2015 AND 19TH DECEMBER 2015, M/S. SUPERFINE RECEIVED ITS ORDER FOR DEVELOPING ENGINEERING PRODUCT FROM M/S. CENTURY. BILLS OF THE SAME ARE FILED IN THE PAPER BOOK. M/S. SUPERFINE AGAIN MADE PAYMENT TO M/S. CENTURY AND ADJUSTED RS.25 LACS AGAINST M/S. CENTURY AFTER FINDING ERROR BY THE ACCOUNTANT [PB 123]. SIMILARLY, M/S. CENTURY ALSO RECTIFIED THE ERROR AND ADJUSTED RS.25 LACS AND SHOWN IN THE ACCOUNT OF M/S. SUPERFINE [PB 120 AND 121]. LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT AMOUNT IN QUESTION WAS GIVEN TO ASSESSEE FOR MAKING FURTHER PAYMENT TO M/S. CENTURY FOR BUSINESS PURPOSES. IT IS SUPPORTED BY VAT RETURN AND ALL OTHER STATUTORY RECORDS. 6 ITA.NO.5066/DEL./2018 SHRI PRAVEEN BAJAJ, NEW DELHI. THEREFORE, IT IS NOT A CASE OF DEEMED DIVIDEND. HE HAS RELIED UPON JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS., CREATIVE DYEING & PRINTING (P.) LTD., (2009) 318 ITR 476 (DEL.) IN WHICH IT WAS HELD THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT AMOUNT ADVANCED FOR BUSINESS TRANSACTION BETWEEN THE ASSESSEE COMPANY AND THE COMPANY P WAS NOT SUCH TO FALL WITHIN THE DEFINITION OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT CONSIDERING THE ENTIRE BACKGROUND, IT IS CLEAR THAT IT IS NOT A CASE OF DEEMED DIVIDEND. 5. ON THE OTHER HAND, LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSEE HAS PLACED SUFFICIENT MATERIAL ON RECORD TO PROVE THAT INITIALLY ASSESSEE HAS GIVEN ADVANCE TO THE COMPANY M/S. SUPER FINE IN A SUM OF RS.10 LACS. THE ASSESSEE IS HAVING SUBSTANTIAL SHAREHOLDING IN THIS COMPANY. M/S. SUPER FINE, LATER ON, IT GAVE RS.35 LACS TO THE ASSESSEE, WHICH INCLUDES RETURN OF RS.10 LACS ADVANCED BY ASSESSEE TO 7 ITA.NO.5066/DEL./2018 SHRI PRAVEEN BAJAJ, NEW DELHI. THE SAID COMPANY. RS.25 LACS WAS MEANT FOR TRANSMITTING TO M/S. CENTURY FOR PURCHASE OF ENGINEERING PRODUCTS. THE ASSESSEE EXPLAINED THAT M/S. SUPER FINE WANTED TO PLACE ORDER TO M/S. CENTURY FOR DEVELOPMENT OF ENGINEERING PRODUCTS TO BE SUPPLIED TO THE EXECUTIVE ENGINEER, ROORKEE AND FOR ITS BUSINESS WHICH NEEDED RESEARCH AND DEVELOPMENT BY M/S. CENTURY. THEREFORE, THERE WERE NO JUSTIFICATION FOR THE LEARNED CIT(A) TO HOLD THAT MATERIAL SUPPLIED WAS AN AFTERTHOUGHT. SINCE THE ENGINEERING PRODUCTS WAS TO BE SUPPLIED AFTER RESEARCH AND DEVELOPMENT BY M/S. CENTURY, THEREFORE, IMMEDIATE SUPPLY OF MATERIAL WOULD NOT BE POSSIBLE. THIS WAS THE SOLE REASON GIVEN BY THE LEARNED CIT(A) FOR REJECTING THE CLAIM OF ASSESSEE. THESE FACTS, THEREFORE, SHOW THAT IT WAS A BONAFIDE BUSINESS TRANSACTION BETWEEN M/S. SUPER FINE AND M/S. CENTURY THROUGH THE ASSESSEE. THE EXPLANATION OF ASSESSEE IS SUPPORTED BY DOCUMENTARY EVIDENCES LIKE BANK STATEMENT, LEDGER ACCOUNT, VAT RETURNS AND BILLS/INVOICES ETC. THEREFORE, IT WAS CLEARLY A BUSINESS TRANSACTION THROUGH THE ASSESSEE AND AS SUCH IT COULD NOT BE TREATED AS LOAN OR 8 ITA.NO.5066/DEL./2018 SHRI PRAVEEN BAJAJ, NEW DELHI. ADVANCE SO AS TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. I, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. 7. IN THE RESULT, APPEAL OF ASSESSEE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 15 TH MARCH, 2019 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.