DCIT 4, Kanpur V. Shri Praveen Manga, Kanpur

ITA 544/LKW/2011

• Counselvise Citation: 54423714 RSA 2011
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-07-2014
• Assessment Year: misc
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT NIGAM D R SHRI P K KAPOOR
• Keywords: Principle of natural justice; Additional evidence; Deemed dividend; Condonation of delay; Reason to believe
• Section: 143(3); 142(1); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.544/LKW/2011 ASSESSMENT YEAR:2004 - 05 DY.C.I.T. - 4, KANPUR. VS. SHRI PRAVEEN MANGA, FLAT NO. 19, 7/37, TILAK NAGAR, KANPUR. PAN:AMJPM7522R (APPELLANT) (RESPONDENT) ITA NO.647/LKW/2011 ASSESSMENT YEAR:2004 - 05 SHRI PRAVEEN MANGA, FLAT NO. 19, 7/37, TILAK NAGAR, KANPUR. PAN:AMJPM7522R VS. DY.C.I.T. - 4, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - I, KANPUR DATED 09/06/2011 FOR ASSESSMENT YEAR 2004 - 2005. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE I.E. I.T.A. NO.544/LKW/2011 FOR ASSESSMENT YEAR 2004 - 2005. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS: REVENUE BY SHRI AMIT NIGAM, D.R. ASSESSEE BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 23/07/2014 DATE OF PRONOUNCEMENT 0 5 /09/2014 2 1. THE LD. CIT(A) - I, KANPUR IS ERRONEOUS IN LAW AND ON FACTS AS HE HAS ACCEPTED THE ADDITIONAL EVIDENCES SUBMITTED BY THE APPELLANT IN CONTRAVENTION TO RULE 46A OF THE I.T. RULES WITHOUT GIVING PROPER OPPORTUNITY TO THE A.O. TO REBUT THE APPELL ANT'S CLAIM. 2. THE LEARNED CIT(A) - I, KANPUR ERRED IN LAW AND FACT IN ANNULLING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(2) OF THE I.T. ACT PURELY ON TECHNICAL GROUND WITHOUT GOING INTO THE MERITS OF THE CASE BY OBSERVING THAT NOTICE U/S 143(2) OF THE I.T. ACT WAS NOT SERVED IN THIS CASE ON THE ASSESSEE. 3. THE CIT(A) HAS ERRED IN LAW AND FACTS IN NOT FOLLOWING THE RATIO OF DECISION OF MADRAS HIGH COURT IN THE CASE OF V. RAJU VS. CIT 147 ITR 212 (MAD.) 4. THAT IS DOING SO LD. CIT(A) - I KANPUR HAS IGNO RED THE PROVISIONS OF SECTION 124(3) (A) OF THE I.T, ACT, 1961 WHICH DEBARS THE ASSESSES FROM CALLING IN QUESTION THE JURISDICTION OF THE A.O. AFTER THE EXPIRY OF TIME ALLOWED BY THE NOTICE U/S 142(1) OF THE I.T. ACT. 5. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A) - 1, KANPUR BEING ERRONEOUS IN LAW AND ON THE FACTS DESERVES TO BE VACATED AND THAT THE ORDER OF ASSESSING OFFICER IS RESTORED. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTE D THE ORDER OF CIT(A). HE ALSO SUBMITTED THAT THE WRITTEN SUBMISSIONS AVAILABLE IN THE PAPER BOOK ON PAGE 1 TO 14 SHOULD ALSO BE CONSIDERED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY CIT(A) AS PER PARA 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 5. ON PERUSAL OF THE CASE RECORDS, IT IS SEEN THAT THERE IS A NOTICE U/S 143(2) DATED 18/05/2005 BUT IT HAS NOT BEEN SERVED ON THE ASSESSEE OR ON ANY PERSON, WHO HAS BEEN 3 AUTHORIZED BY HIM TO RECEIVE SUCH NOTICE. THUS, IT IS A CLEAR CASE OF NO ISSUE OF NOTICE U/S 143(2). IN THIS VIEW OF THE MATTER, THE RETURN AS FILED BY THE APPELLANT ITSELF WOULD BECOME FINAL. THUS, THE ADDITION MADE CANNOT SURVIVE. HOWEVER, IN ORDER TO BRING TH E ESCAPED INCOME TO TAX, THE ASSESSING OFFICER IS DIRECTED TO TAKE RECOURSE TO THE PROVISION OF SECTION 147/148 OF THE ACT. HE WOULD RECORD PROPER REASONS AND ALSO SEEK APPROVAL OF HIS SUPERIORS (AS THE CASE MAY BE) BEFORE ISSUING SUCH NOTICE. THIS IS DI RECTION U/S 150 OF THE ACT. 4.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY CIT(A) THAT HE HAS EXAMINED THE CASE RECORDS AND HE FOUND THAT THERE IS A NOTICE U/S 143(2) DATED 18/05/2005 BUT IT HAS NOT BEEN SERVED ON THE ASSESSEE OR ON ANY PERSON, WHO HAS BEEN AUTHORIZED BY HIM TO RECEIVE SUCH NOTICE . IN SPITE OF THIS CLEAR FINDING GIVEN BY CIT(A), NOTHING HAS BEEN PRODUCED BY LEARNED D.R. OF THE REVENUE BEFORE US TO CONTROVERT THIS CLEAR FINDING OF CIT(A) GIVEN BY HIM AFTER EXAMINATION OF CASE RECORDS. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 6. NOW WE WILL TAKE UP THE APPEAL OF THE ASSESSEE I.E. I.T.A. NO.647/LKW/2011 FOR ASSESSMENT YEAR 2004 - 05. IN THIS APPEAL THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN INVOKING THE PROVISIONS OF SEC TION 150 OF THE 'ACT' AND IN DIRECTING THE ASSESSING OFFICER 'TO TAKE RECOURSE TO THE PROVISIONS OF SECTIONS 147/148 OF THE 'ACT'. HE WOULD RECORD PROPER REASONS AND ALSO SEEK APPROVAL OF HIS SUPERIORS (AS THE CASE MAY BE) BEFORE ISSUING SUCH NOTICE. 2. B ECAUSE THE DIRECTIONS GIVEN TO THE ASSESSING OFFICER FOR INITIATING PROCEEDINGS UNDER SECTION '147/148' AS 4 ALSO TEXT THEREOF ARE BEYOND THE AMBIT OF SECTION 150 OF THE ACT AND THE SAME DESERVES TO BE QUASHED. 3. BECAUSE THE 'CIT(A)' HIMSELF HAVING NOT FOU ND AND HELD THAT THE ADDITION OF RS.25,20,000/ - CONSTITUTED INCOME ASSESSABLE IN THE HANDS OF THE APPELLANT HE COULD NOT HAVE TREATED SUCH INCOME TO BE THE INCOME THAT HAS ESCAPED ASSESSMENT AND DIRECTIONS FOR TAKING COURSE TO SECTION '147/148' ARE WHOLLY ERRONEOUS AND ILLEGAL TOO. 4. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 7. IT IS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT WRITTEN SUBMISSIONS ARE AVAILABLE ON PAGE NOS. 1 TO 6 OF THE PAPER BOOK, WHICH SHOULD BE CONSIDERED TO DECIDE THE APPEAL OF THE ASSESSEE. 8. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WRITTEN SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE ON PAGE NOS. 1 TO 6 ARE REPRODUCED HEREIN BELOW: IN FILING THE AFORESAID APPEAL (BY THE ASSESSEE/APPELLANT), THERE IS A DELAY OF NEARLY 60 DAYS. PETITION FOR CONDONATION OF DELAY HAS BEEN FILED ALONG WITH MEMO OF APPEAL ITSELF. IN PARA 7 OF THE S AID PETITION THERE IS A TYPOGRAPHICAL ERROR IN AS MUCH AS THE DATE HAS BEEN MENTIONED INADVERTENTLY AS 20.11.2011 WHICH SHOULD BE 20.10.2011. WITH THE PERMISSION OF YOUR HONOURS THE ASSESSEE/APPELLANT BEGS TO MAKE NECESSARY CORRECTION AND SUBMITS THAT THE DATE OF 20.11.2011 MAY KINDLY BE READ AS 20.10.2011. 2. IN THE AFORESAID PETITION FOR CONDONATION OF DELAY , IT HAS BEEN SUBMITTED THAT THE ASSESSEE BEING NOT WELL VERSED WITH THE COMPLETE TAX LAWS, WAS SOLELY DEPENDENT UPON HIS LAWYER WHO HAD CONDUCTED T HE CASE EVEN AT THE STAGE OF FIRST 5 APPELLATE AUTHORITY, FOR HIS ADVICE IN THE MATTER OF FILING 2 ND APPEAL. THUS DELAY WAS ATTRIBUTABLE TO HIM. IN SUPPORT OF THIS CONTENTION/ AN AFFIDAVIT DULY SWORN - IN BY SRI ASHISH BANSAL, ADVOCATE AN ASSOCIATE OF M/S S.K. GARG & CO. (ADVOCATES) HAD ALREADY BEEN FILED. IT IS PRAYED THAT ON THE FACTS OF THE CASE AS HAVE BEEN NARRATED IN THE PETITION FOR CONDONATION OF DELAY, DULY SUPPORTED BY AN AFFIDAVIT OF SRI ASHISH BANSAL, ADVOCATE MAY KINDLY BE TREATED AS ''SUFFICIENT C AUSE'' FROM WHICH THE ASSESSEE/APPELLANT HAS BEEN PREVENTED IN FILING THE APPEAL IN TIME. 3. FURTHER IN THE SAID APPEAL (FILED BY THE ASSESSEE) A VERY SUBSTANTIAL 'ISSUE' IS INVOLVED AS TO WHETHER THE CIT(A), ON THE FACTS OF THE PRESENT CASE AND AFTER DELETING THE ADDITION (WHICH WAS SUBJECT MATTER OF APPEAL BEFORE HIM) ON LEGAL GROUND, COULD HAVE GIVEN DIRECTION TO THE ASSESSING OFFICE READING AS 'HOWEVER IN ORDER TO BRING THE ESCAPED INCOME TO TAX, THE ASSESSING OFFICER IS DIRECTED TO TAKE RECOURSE TH E PROVISION OF SECTION 147/148 OF THE ACT. HE WOULD RECORD PROPER REASON AND ALSO SEEK APPROVAL OF HIS SUPERIORS (AS THE CASE MAY BE) BEFORE ISSUING SUCH NOTICE. THIS IS DIRECTION U/S 150 OF THE IT. ACT'. 4. LOOKING TO THE SUBSTANCE OF THE ISSUE INVOLVED IN THE APPEAL, THE DELAY OF NEARLY 60 DAYS IN FILING THE APPEAL DESERVES TO BE CONDONED AS PER THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE FOLLOWING CASE LAWS: - (I) COLLECTOR LAND ACQUISITION VS. MST. KATIJI & ORS. REPORTED IN (1987); 1 67 ITR 471 (II) IMPROVEMENT TRUST LUDHIYANA VS. UJAGAR SINGH & ORS REPORTED IN (2010) 6 SCC 786 COPIES OF THE ABOVE REFERRED JUDGMENTS ARE ENCLOSED AT PAGES 8 TO 10 & 11 TO 15 HERETO. 5. IN VIEW OF THE FACTS OF THE PRESENT CASE AND LAW APPLICABLE THERETO , AS HAS BEEN SUBMITTED IN THE FOREGOING PARAGRAPH, IT IS RESPECTFULLY PRAYED THAT YOUR HONOU R S BE PLEASED TO CONDONE THE DELAY SO THAT SUBSTANTIAL ISSUE INVOLVED IN THE APPEAL BE HEARD ON MERITS THEREOF AND DECIDED ACCORDINGLY. 6 MERITS OF THE GROUNDS 6. AS STATED IN GROUNDS NO. 1 & 2 THE ASSESSEE/APPELLANT IS AGGRIEVED BY THE LATER PART OF PARA 5 READING AS 'HOWEVER IN ORDER TO BRING THE ESCAPED INCOME TO TAX, THE ASSESSING OFFICER IS DIRECTED TO TAKE RECOURSE THE PROVISION OF SECTION 147/148 OF THE ACT, HE WOULD RECORD PROPER REASON AND ALSO SEEK APPROVAL OF HIS SUPERIORS (AS THE CASE MAY BE) B EFORE ISSUING SUCH NOTICE. THIS IS DIRECTION U/S 150 OF THE I.T. ACT'. 7. AT THE VERY OUTSET IT IS SUBMITTED THAT SECTION 150 OF THE ACT, UNDER WHICH DIRECTIONS HAVE BEEN GIVEN WHICH READS AS UNDER: - '150. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTIO N 149, THE NOTICE UNDER SECTION 148 MAY BE ISSUED AT ANY TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN ANY PROC EEDING UNDER THIS ACT BY WAY OF APPEAL, REFERENCE OR REVISION OR BY A COURT IN ANY PROCEEDING UNDER ANY OTHER LAW. 2) THE PROVISIONS OF SUB - SECTION (1) SHALL NOT APPLY IN ANY CASE WHERE ANY SUCH ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS IS REFERRED TO IN THAT SUB - SECTION RELATES TO AN ASSESSMENT YEAR IN RESPECT OF WHICH AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER WHICH WAS THE SUBJECT - MATTER OF THE APPEAL, REFERENCE OR REVISION, AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY BE TAKEN.' DOES NOT GIVE ANY SUCH AUTHORITY TO THE CIT(A). ON THIS SCORE ITSELF, THE RELEVANT PORTION OF THE APPELLATE ORDER DESERVES TO BE QUASHED. 8. THIS IS A MACHINERY PROVISION, WHICH MERELY LIFTS THE BAR OF LIMITATION SO THAT ASSESSMENT/REASSESSMENT CAN BE MADE BY THE ASSESSING OFFICER, TO GIVE EFFECT TO THE 'DIRECTIONS' OR 'FINDINGS' THAT MAY BE GIVEN BY THE AUTHORITIES/ COURTS AS 7 MENTIONED IN SECTION 150(1) OF THE ACT. THUS, THIS SECTION ITSELF CANNOT BE INVOKED TO GIVE ANY DIRECTION. 9. IN ANY CASE, AS PER THE LEGAL PRONOUNCEMENTS AS ARE AVAILABLE ON THE ISSUE OF THE TERM 'DIRECTIONS' OR 'FINDINGS' AS HAVE BEEN EMPLOYED IN SECTION 150, THE DIRECTION OR FINDING SHOULD BE SUCH AS ARE NECESSARY FOR THE CONCERNED AUTHORITY/COURTS TO DECIDE THE MATTER BEFORE THEM. SOME SUCH CASE LAWS DEALING WITH THE MEANING OF THE TERMS 'FINDING' AND 'DIRECTION' ARE CITED HEREIN BELOW: - (I) RAJINDER NATH VS. CIT REPORTED IN (1979) 120 ITR 14 KIND ATTENTION IS INVITED TO PAGES 18 TOWARDS BOTTOM, 19 AND 20 THEREOF. (II) ITO VS. MURLIDHAR BHAGWAN DAS REPORTED IN (1964) 52 ITR 335 (SC), KIND ATTENTION IS INVITED TO PAGES 344 AND 345 (III) CIT VS. MODURI RAJAIAH GARI KISHTAIAH REPORTED IN (1980) 123 ITR 494 (AP), KIND ATTENTION IS INVITED TO PAGE 499 (IV) CONSOLIDATED COFFEE LTD. VS. ITO REPORTED IN (1985) 155 ITR 729, KIND ATTENTION IS INVITED TO PAGE 737. COPIES OF THE ABOVE REFERRED JUDGME NTS ARE ENCLOSED AT PAGES 16 TO 23, 24 TO 44, 45 TO 52 &53TO 62 HERETO. 10. IT IS FURTHER SUBMITTED THAT DURING THE COURSE OF HEARING OF APPEAL THE APPELLANT HAS MADE DETAILED SUBMISSIONS ON THE ISSUE OF ADDITION OF RS.25,50,000/ - AS HAD BEEN MADE IN THE ASSESSMENT ON ACCOUNT OF 'DEEMED DIVIDEND' UNDER SECTION 2(22)(E) OF THE ACT VIDE PARA 16 THEREOF READING AS UNDER: - 16. AS REGARDS MERITS OF THE ADDITION, THE ONLY ISSUE INVOLVED AS TO WHETHER AN ADDITION OF RS.25,50,000 AS HAD BEEN MADE TO THE RETURNED INCOME BY INVOKING THE PROVISIONS OF SECTION 2(22) (E), COULD HAVE BEEN LEGITIMATELY MADE. THE FACTS OF THE CASE ARE THAT UNDER A PRE - EXISTING 'BUY BACK ARRANGEMENT' WITH M/S PRACHI LEATHERS (P) LTD., THE APPELLANT HAD BEEN RECEIVING CONSIDERATION IN ADVANCE FROM THE SAID COMPANY, WHICH ITSELF WAS BUYER OF THE SHARES IN QUESTION (WHICH IS PERMISSIBLE ALSO UNDER THE COMPANIES ACT ALSO). SUCH A 'BUY BACK ARRANGEMENT' AFTER DUE COMPLIANCE WITH LEGAL FORMALITIES, AMOUNTS TO REDUCTION IN SHARE CAPITAL. AS 8 THE ARRANGEMENTS HAD DULY FRUCTIFIED, THE SAME IS REFLECTED ALSO IN THE BALANCE SHEET OF M/S. PRACHI LEATHERS (P) LTD. AS ON 31. 03.2004. IN OTHER WORDS, THE SUMS RECEIVED BY THE APPELLANT WERE NOT IN THE NATURE OF LOANS AND ADVANCES SIMPLICITOR AS ENVISAGED IN SECTION 2(22) (E) OF THE ACT BUT THE SAME WERE IN THE NATURE OF CONSIDERATION (FOR PURCHASE OF SHARES UNDER 'BY BACK ARRANG EMENTS') PAID IN ADVANCE BY M/S PRACHI LEATHERS (P) LTD. THIS IS EVIDENT FROM THIS FACT ALONE THAT AFTER NECESSARY FORMALITIES HAD BEEN COMPLIED WITH, THE CONSIDERATION RECEIVED FROM M/S PRACHI LEATHERS (P) LTD., FROM TIME TO TIME GOT ADJUSTED. SUCH ADVANC ES DO NOT FALL WITHIN THE PURVIEW OF SECTION 2(22)(E) OF THE ACT. IN SUPPORT OF THIS CONTENTION, THE APPELLANT BEGS TO REFER TO THE DECISION OF A HON'BLE LUCKNOW BENCH OF ITAT, IN ITA NO.76/LUC/2002 IN THE CASE OF VIKRAM KOTHARI VS. DCIT, (RELEVANT OBSERVA TIONS IN PARAS 32 & 33 THEREOF) WHICH ARE REPRODUCED HERE UNDER: - '32. FURTHER WE HAVE NOTED THAT THE LEARNED COUNSEL HAS VEHEMENTLY ARGUED THAT THE ID. CIT(A) WENT WHOLLY WRONG IN HOLDING THAT THE DEBITS (AGGREGATING RS. 10,50,040/ - ) WERE IN NATURE OF 'L OANS AND ADVANCES'. IN SUPPORT OF HIS CONTENTION, REFERENCE WAS MADE TO A LARGE NUMBER OF CASES. THERE IS NO DENIAL OF PROPOSITION THAT ONLY SUCH PAYMENTS APPEARING ON THE DEBIT SIDE OF AN ACCOUNT, WHICH ARE IN THE NATURE OF LOANS AND ADVANCES, ARE RELEVAN T FOR THE APPLICABILITY OF SECTION 2(22) (E). WHAT THE PHRASE 'LOANS AND ADVANCES' MEANS, ACCORDING TO BLACK'S LAW DICTIONARY, 5 TH EDITION PAGE 844, IS 'THE LENDING, DELIVERY BY ONE PARTY TO AND RECEIVED BY ANOTHER PARTY OF SUM OF MONEY UPON AGREEMENT, EXP RESS OR IMPLIED TO REPAY IT WITH OR WITHOUT INTEREST'. THE SAID MEANING HAS BEEN ADVANCED FURTHER BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF P.K. BADIANI (SUPRA) REPORTED IN 76 ITR PAGE 369, WHEREIN AT PAGE 381 THEIR LORDSHIPS HAVE OBSERVED AND HELD A S UNDER: 'NOW, THE ASSESSEE'S ACCOUNT FOR 1 ST APRIL, 1957, TO 31 ST MARCH, 1958, SHOWS THAT THERE ARE CREDITS 9 AS WELL AS DEBITS. WHAT HAS TO BE ASCERTAINED IS WHETHER THE DEBITS ARE 'LOANS', SO THAT THEY CAN BE DEEMED AS DIVIDENDS. THE ACCOUNT IS A MUTUAL, OPEN, AND CURRENT ACCOUNT. EVERY DEBIT, I.E. EVERY PAYMENT BY THE COMPANY TO THE ASSESSEE, MAY NOT BE A LOAN. TO BE TREATED AS A LOAN, EVERY AMOUNT PAID MUST MAKE THE COMPANY A CREDITOR OF THE ASSESSEE FOR THAT AMOUNT. IF, HOWEVER, AT THE TIME WHEN THE PA YMENT IS MADE THE COMPANY IS ALREADY A DEBTOR OF THE ASSESSEE, THE PAYMENT WOULD BE MERELY A REPAYMENT BY THE COMPANY TOWARDS ITS ALREADY EXISTING DEBT. IT WOULD BE A LOAN BY THE COMPANY ONLY IF THE PAYMENT EXCEEDS THE AMOUNT OF ITS ALREADY EXISTING DEBT A ND THAT TOO ONLY TO THE EXTENT OF THE EXCESS. THEREFORE, THE POSITION AS REGARDS EACH DEBIT WILL HAVE TO BE INDIVIDUALLY CONSIDERED, BECAUSE IT MAY OR MAY NOT BE A LOAN. THE TWO BASIC PRINCIPLES ARE, THAT ONLY A LOAN, WHICH WOULD INCLUDE THE OTHER PAYMENTS MENTION IN SECTION 2(6A)(E), CAN BE DEEMED TO BE DIVIDEND AND THAT TOO ONLY TO THE EXTENT THAT THE COMPANY HAS AT THE DATE OF THE PAYMENT 'ACCUMULATED PROFITS' AFTER DEDUCTING THEREFROM ALL ITEMS LEGITIMATELY DEDUCTIBLE THERE FROM.' IF THE SAID TEST IS APPLIED IN THE PRESENT CASE, IT WILL BECOME CLEAR THAT THE ID. CIT(A) WENT WHOLLY WRONG IN HOLDING THAT THE REMAINING SUM AGGREGATING RS.10,50,040/ - WERE IN THE NATURE OF 'LOANS AND ADVANCES'. FROM THE DISCUSSION APPEARING IN THE APPELLATE ORDER ITSELF, WE FIND THAT THE DEBIT OF RS.6,72,500/ - HAD APPEARED IN THE ACCOUNT OF THE ASSESSEE ON 17.4.1988 AGAINST A SPECIFIC CREDIT OF THE SAME FIGURE ON 7.4.1988. AS STATED EARLIER, THE CREDIT WAS ALLOWED IN THE ACCOUNT OF THE ASSESSEE FOR THE F D R ( BELONGING TO THE ASSESSEE) AS GOT ENCASHED FROM THE BANK ON 7.4.1988. SUBSEQUENTLY, THE SAID CREDIT WAS SQUARED UP BY ISSUING A CHEQUE FOR THE CORRESPONDING FIGURE ON 17.4.1988, TO ENABLE THE ASSESSEE TO TAKE A RENEWED FOR, IN LIEU OF EARLIER FDR. THE SAID DEBIT IS NOT REF UNDABLE/REPAYABLE 10 TO THE KPL. RATHER KPL ITSELF OWED A 'DEBT' TO THE ASSESSEE TO THIS EXTENT (BY VIRTUE OF COLLECTION OF FDR BELONGING TO THE ASSESSEE) AND BY MAKING PAYMENT TO THE ASSESSEE ON 17.4.1988. KPL HAD SIMPLY DISCHARGED ITS 'DEBTS' DUE TO THE ASS ESSEE. SIMILARLY, THERE ARE DEBITS AGAINST REMUNERATION AND DIVIDEND AS ALSO AGAINST VARIOUS OTHER CREDITS. NONE OF THE SAID SUMS CAN BE SAID TO BE THE SUMS IN RELATION TO WHICH THE KPL HAD BECOME THE CREDITOR OF THE ASSESSEE. KPL HAD MAINTAINED A CURRENT ACCOUNT OF THE ASSESSEE IN ITS BOOKS OF ACCOUNT TO KEEP A RECORD OF VARIOUS SUMS FALLING DUE TO THE ASSESSEE. PAYMENTS AGAINST THE SAME SUMS, EVEN IF THE CREDIT ENTRIES WERE PASSED AT A LATER DATE WOULD NOT BE IN THE NATURE OF 'LOANS AND ADVANCES'. IN ANY CASE, IN KEEPING WITH THE LEGAL MEANING OF THE TERM 'LOANS AND ADVANCES' AS CONTAINED IN BLACK'S DICTIONARY (AS BEEN QUOTED BY US ABOVE) AS ALSO THE DEFINITION GIVEN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF P.K. BADIANI VS. CIT REPORTED IN 105 ITR P AGE 642 IT HAS TO BE HELD THAT KPL HAD NOT GIVEN ANY MONEY TO THE ASSESSEE, BY WAY OF 'LOAN OR ADVANCE'. FOR THESE REASONS, WE HOLD THAT THE ID. CIT(A) HAS UNJUSTLY RESTRICTED THE RELIEF (OUT OF DEBITS AGGREGATING RS.11,10,797/ - ) TO RS.60,757/ - ONLY (REPRE SENTING TDS ) . AS NONE OF THE REMAINING DEBITS ALSO ARE IN THE NATURE OF 'DEBT' CREATED IN FAVOUR OF THE KPL, THEY DO NOT FALL WITHIN THE MEANING OF 'LOAN OR ADVANCE' AND ACCORDINGLY, THE SAME ARE NOT HIT BY THE PROVISION OF SECTION 2(22)(E). 33. IN VIEW OF THE DISCUSSIONS MADE IN THE FOREGOING PARAGRAPHS, WE HOLD THAT THE DEBITS AGGREGATING RS.11,10,797/ - AS APPEARING IN THE ASSESSEE'S ACCOUNT WITH KPL ARE NOT IN THE NATURE OF 'LOANS OR ADVANCES' AND NO PART OF THE SAME COULD HAVE BEEN TREATED AS ASSESSEE'S INCOME, BY WAY OF 'DEEMED DIVIDEND'. THIS IS THE BASIS, IN ADDITION TO THE VIEW EXPRESSED BY US IN THE EARLIER PART OF THIS ORDER TO THE EFFECT THAT THERE WERE NO 'ACCUMULATED PROFITS' WITH KPL IN REAL SENSE, FOR 11 COMING TO THE CONCLUSION THA T PROVISIONS OF SECTION 2 ( 22) (E) ARE NOT APPLICABLE AND THE ADDITION AS A WHOLE OF THE SUM AGGREGATING RS.11,10,797/ - WAS NOT CALLED FOR, EITHER ON FACTS IN LAW. THE ID. CIT(A) HAS ALREADY ALLOWED RELIEF TO THE EXTENT OF RS.60,757/ - (FOR WHICH THE DEPARTM ENT IS IN APPEAL WHICH SHALL BE TAKEN UP, INFRA) AND THE BALANCE SUM OF RS.10,50,040/ - IS DELETED BY US. THE APPEAL FILED BY THE ASSESSEE IS, THEREFORE, ALLOWED.' WHICH REMAIN UNADJUDICATED UPON. COPY OF WRITTEN SUBMISSIONS AS A WHOLE IS ENCLOSED AT PAGES 63 TO 78. 11. IT IS THE PLEA OF THE ASSESSEE THAT WITHOUT ADJUDICATING UPON THE MERITS OF THE SAID ADDITION (WHICH THE ID. FIRST APPELLATE AUTHORITY APPEARS TO HAVE NOT CONSIDERED NECESSARY, AS THE ADDITION IN QUESTION HAD BEEN DELETED ON LEGAL GROUNDS) THE SAID SUM OF RS.25,50,000/ - COULD NOT HAVE BEEN TERMED AS 'ESCAPED INCOME'. THUS , THE CIT(A) HAS CAUSED GRAVE PREJUDICE TO THE APPELLANT, WHICH HE WAS NOT EMPOWERED. 9.1 FROM THE ABOVE WRITTEN SUBMISSIONS OF THE ASSESSEE, WE FIND THAT THIS IS THE OBJECTION OF THE LEARNED A.R. OF THE ASSESSEE THAT THE PROVISION OF SECTION 15 0 ITSELF CANNOT BE INVOKED TO GIVEN ANY DIRECTION. IN OUR CONSIDERED OPINION, THERE IS NO FORCE IN THIS CONTENTION OF THE ASSESSEE BECAUSE THE DIRECTIONS ARE GIVEN BY CIT(A) AND THEREAFTER , IT IS STATED BY HIM THAT THIS DIRECTION IS U/S 150 OF THE ACT. SECTION 15 0 OF THE ACT IS REGARDING THE LIFTING THE SCOPE OF LIMITATION AND THE SAME WAS REFERRED TO BY CIT(A) TO MAKE IT CLEAR THAT THE ASSESSING OFFICER IS GETTING EXTENDED TIME FOR REOPENING AND MERELY REFERENCE TO SECTION 150 IN THE ORDER OF CIT(A) DOES NOT AFFECT THE VALIDITY OF THE DIRECTION OF CIT(A) IN HIS ORDER. 10. IN ADDITION TO ABOVE CONTENTION REGARDING REFERENCE TO SECTION 15 0 BY CIT(A) IN HIS ORDER, LEARNED A.R. OF THE ASSESSEE HAS PLACED RELIANCE ON 12 FOUR JUDICIAL PRONOUNCEMENTS AS CAN BE SEEN IN HIS WRITTEN SUBMISSIONS, REPRODUCED ABOVE. 10.1 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF RAJIN DER NATH (SUPRA). THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THIS CASE , IT WAS HELD BY HON'BLE APEX COURT THAT REASSESSMENT OF INDIVIDUAL PARTNERS CANNOT BE SAID TO BE IN CONSEQUENCE OF OR TO GIVE EFFECT TO TH E FINDING OF AAC IN THE CASE OF PARTNERSHIP FIRM. IN THE PRESENT CASE, THE DIRECTION IS NOT FOR REOPENING THE ASSESSMENT OF ANY OTHER ENTITY AND THEREFORE, THIS JUDGMENT OF HON'BLE APEX COURT IS NOT APPLICABLE IN THE PRESENT CASE. 10.2 THE SECOND JUDGMEN T CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF MURLIDHAR BHAGWAN DAS (SUPRA). IN THIS CASE , IT WAS HELD BY HON'BLE APEX COURT THAT THE ASSESSMENT IN CONSEQUENCE TO ANY FINDING OR DIRECTION IN AN APPEL LATE ORDER SHOULD BE FOR THE SAME ASSESSMENT YEAR AND NOT OF DIFFERENT ASSESSMENT YEAR. IN THE PRESENT CASE, THE DIRECTION IS FOR REASSESSMENT OF THE INCOME FOR THE SAME ASSESSMENT YEAR AND THEREFORE, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE FACTS OF T HE PRESENT CASE. 10.3 THE THIRD JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE ANDHRA PRADESH HIGH COURT RENDERED IN THE CASE OF MODURI RAJAIAH GARI KISHTAIAH (SUPRA). IN THIS CASE , IT WAS HELD BY HON'BLE ANDHRA PRADESH HIGH C OURT THAT WHEN AS PER THE APPELLATE ORDER, RELIEF WAS ALLOWED IN RESPECT OF CERTAIN INCOME FOR ASSESSMENT YEAR 1960 - 61 ON THE GROUND THAT IT RELATES TO THE PRECEDING ASSESSMENT YEAR, REASSESSMENT OF INCOME FOR ASSESSMENT YEAR 1959 - 60 U/S 150 SHOULD BE CONF INED TO THAT INCOME ONLY AND ASSESSMENT IN ENTIRETY IS NOT SET AT LARGE. THE INCOME 13 TAX OFFICER CANNOT MAKE OTHER ADDITION. IN THE PRESENT CASE, NO DIRECTION IS GIVEN BY CIT(A) TO MAKE OTHER ADDITIONS IN ADDITION TO THE ISSUE IN DISPUTE AND THEREFORE, TH IS JUDGMENT IS ALSO NOT RENDER ING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. 10.4 THE LAST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CONSOLIDATED COFFEE LTD. (SUPRA). IN THIS CASE, IT WAS HELD THAT THE DIRECTION OR FINDING BY APPELLATE AUTHORITY SHOULD PERTAIN TO ASSESSMENT YEAR UNDER REVIEW AND DIRECTION OR FINDING WITH REGARD TO DIFFERENT ASSESSMENT YEAR WILL NOT OPERATE TO EXCLUDE LIMITATION. IN THE PRESENT CASE ALSO, THE D IRECTION IS FOR THE PRESENT ASSESSMENT YEAR ONLY AND NOT FOR DIFFERENT ASSESSMENT YEAR AND THEREFORE, THIS JUDGMENT IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE. 11. THE OTHER ARGUMENTS OF THE ASSESSEE IN THE WRITTEN SUBMISSIONS ARE THAT WITHOUT ADJUDIC ATING UPON THE MERIT OF THE SAID ADDITION, THE CIT(A) COULD NOT HAVE TERMED THAT THIS AMOUNT OF RS.25.50 LAC IS AN ESCAPED INCOME. IN THIS REGARD, WE ARE OF THE CONSIDERED OPINION THAT FOR INVOKING THE PROVISIONS OF SECTION 147, IT IS SUFFICIENT THAT THE A SSESSING OFFICER HAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND AT THIS STAGE , NO CONCLUSIVE FINDING IS REQUIRED. SINCE THE ASSESSING OFFICER HAS MADE ADDITION IN THE ASSESSMENT COMPLETED BY HIM U/S 143(3) OF THE ACT, THIS IS AN ADMITTED POSITION THAT THE ASSESSING OFFICER IS OF THE VIEW THAT THIS INCOME IS TAXABLE IN THE HANDS OF THE ASSESSEE IN THE PRESENT YEAR AND THEREFORE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NO REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ONCE IT IS HELD THAT THE ASSESSMENT U/S 143(3) IS NOT VALID BECAUSE NOTICE U/S 14 3(2) OF THE ACT WAS NOT ISSUED AND SERVED IN TIME. NO FURTHER FINDING WAS REQUIRED TO BE GIVEN BY CIT(A) AND WHETHER THIS 14 INCOME IS ACTUALLY TAXABLE OR NOT WILL BE DETERMINED IN THE ASSESSMENT TO BE COMPLETED BY THE ASSESSING OFFICER U/S 147 AND THIS QUES TION IS PREMATURE AT THIS STAGE. 12. AS PER THE ABOVE DISCUSSION, WE FIND THAT NONE OF THE ARGUMENTS OF LEARNED A.R. OF THE ASSESSEE IN THE WRITTEN SUBMISSIONS IS RENDERING ANY HELP TO THE ASSESSEE. WE HAVE ALSO SEEN THAT NONE OF THE JUDGMENTS CITED BY H IM IS RENDERING ANY HELP TO THE ASSESSEE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 14. IN THE COMBINED RESULT, THE APPEAL OF THE REVENUE AND ASSESSEE ARE DISMI SSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 5 /09 /2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR