UDAI KANT MISHRA, Jaipur V. DCIT, Jaipur

ITA 548/JPR/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1904 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P P MEENA
• Keywords: Search and seizure; Earning of tax free income; Deemed dividend
• Section: 143(3); 153A; 14A; 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 FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO.548/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI UDAY KANT MISHRA, JAIPUR CUKE VS. DCIT CENTRAL CIRCLE - 3, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: ACSPM8470A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJEEV SOGANI & SHRI ROHAN SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI P.P.MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/11/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 10/11/2017 VKNS'K@ ORDER PER:SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), JAIPUR DATED 03.06.2014 WHEREIN THE ASSESSEE HAS CH ALLENGED THE CONFIRMATION OF LEVY OF PENALTY U/S 271(1)(C) AMOUN TING TO RS. 7,41,060/- BY THE AO IN RESPECT OF ASSESSMENT UNDER SECTION U/S 1 53A R.W.S 143(3) COMPLETED FOR AY 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON 03.05.2007 AT THE BUSINESS AND RESID ENTIAL PREMISES OF THE ASSESSEE GROUP. THE ASSESSEE FILED HIS RETURN OF IN COME DECLARING INCOME AT RS. 1,05,32,110/- WHICH INCLUDES ADDITIONAL INCOME OF RS 50 LACS DECLARED DURING THE COURSE OF SEARCH. THE ASSESSMENT U/S 153 A R.W.S 143(3) WAS COMPLETED ON 24.12.2009 AT TOTAL INCOME OF RS. 1,26 ,32,909/- MAKING ITA NO. 548/JP/2014 SHRI UDAI KANT MISHRA, JAIPUR VS SH. DCIT, CENTRAL CIRCLE-3, JAIPUR 2 ADDITIONS UNDER SECTION 2(22)(E) TOWARDS DEEMED DIV IDEND, UNEXPLAINED JEWELLERY, INTEREST DISALLOWANCE UNDER SECTION 14A. SEPARATELY, PENALTY PROCEEDINGS WERE ALSO INITIATED U/S 271(1)(C). THER EAFTER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE AO PASSED AN O RDER U/S 271(1)(C) IMPOSING A PENALTY OF RS. 7,41,060/- ON WHOLE OF TH E ADDITIONS SO MADE DURING THE ASSESSMENT PROCEEDINGS. 3. AT THE OUTSET, LD. AR SUBMITTED THAT THE ADDITIO NS TOWARDS THE UNEXPLAINED JEWELLERY AND DISALLOWANCE OF INTEREST U/S 14A HAS BEEN DELETED IN THE QUANTUM PROCEEDINGS BY THE HONBLE BENCH OF THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 475/JP/2014 DATED 05.09.2017. IT W AS ACCORDINGLY SUBMITTED THAT NO PENALTY SHOULD BE LEVIED ON SUCH ADDITIONS WHICH HAVE BEEN DELETED IN QUANTUM PROCEEDINGS. REGARDING LEVY OF PENALTY ON D EEMED DIVIDEND OF RS. 2,00,000, THE LD. AR REITERATED THE SUBMISSIONS MAD E BEFORE THE LD. CIT(A). IT WAS FURTHER SUBMITTED THAT UNDER IDENTICAL SET OF F ACTS WHEREIN ADDITIONS U/S 2(22)(E) WERE MADE IN THE OTHER GROUP ENTITIES AND INDIVIDUALS, PENALTY LEVIED U/S 2(22)(E) WAS DELETED BY THE HONBLE JAIPUR BENC H OF THE TRIBUNAL IN FOLLOWING MATTERS. IT WAS ACCORDINGLY SUBMITTED THA T PENALTY LEVIED ON DEEMED DIVIDEND MAY BE DELETED. NAME OF THE ASSESSEE ITA NO. ASSESSMENT YEAR DATE OF ORDER TRIMURTY BUILDCON (P) LTD. 661/JP/2011 2002-03 12-02-2016 662/JP/2011 2003-04 663/JP/2011 2004-05 664/JP/2011 2006-07 665/JP/2011 2007-08 468/JP/2011 2008-09 GEETA MISHRA 667/JP/2011 2007-08 ABHISHEK ESTATE 668/JP/2011 2005-06 ITA NO. 548/JP/2014 SHRI UDAI KANT MISHRA, JAIPUR VS SH. DCIT, CENTRAL CIRCLE-3, JAIPUR 3 (P) LTD. TRIMURTY FARMS & RETREATS VS. DCIT 666/JP/2011 2005-06 TRIMURTY COLONIZERS & BUILDERS (P) LTD 476/JP/011 2002-03 29.06.2016 476/JP/2014 2003-04 4. REGARDING THE FIRST CONTENTION OF THE LD AR THAT IN THE QUANTUM PROCEEDINGS, THE COORDINATE BENCH HAS DELETED THE A DDITIONS TOWARDS UNEXPLAINED JEWELLERY AND INTEREST INCOME, WE FIND THE SAME TO BE CORRECT AS APPARENT FROM THE FOLLOWING FINDINGS OF THE COORDIN ATE BENCH IN ITA NO. 475/JP/2014 DATED 05/09/2017 WHICH ARE AS UNDER: 3.3 WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE LD. CIT(A) HAS NOT GIVEN ANY REASON FOR DENYING THE BEN EFIT/SET OFF TO THE EXTENT OF 250 GMS IN CASE OF ADITI MISHRA AND AANCH AL MISHRA (MINOR GRAND-DAUGHTERS) AND PARTLY ALLOWING THE BENEFIT TO THE EXTENT OF 250 GMS TO SMT. ROSHNI MISHRA. WE FIND THAT THE CASE OF THE ASSESSEE IS COVERED BY THE CBDT CIRCULAR NO. 1916 DATED 11.05.1 994 WHEREBY THE CBDT HAD ISSUED GUIDELINES STATING THAT IN THE CAS E OF A PERSON NOT ASSESSED TO WEALTH-TAX GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS PER MARRIED LADY, 250 GMS PER UNMARRIED LAD Y AND 100 GMS PER MALE MEMBER OF THE FAMILY NEED NOT BE SEIZED. THEREFORE, FOLLOWING THE ABOVE GUIDELINES AND ALSO JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SATYA NARA IN PATNI (2014) 46 TAXMANN.COM 440 (RAJ.), WE DIRECT THE AO TO ALLOW G OLD JEWELLERY WEIGHING 250 GMS [(500 GMS- 250 GMS ALLOWED BY CIT (A)] IN THE HANDS OF ROSHNI MISHRA (DAUGHTER-IN-LAW), 250 GMS. EACH IN THE HANDS ITA NO. 548/JP/2014 SHRI UDAI KANT MISHRA, JAIPUR VS SH. DCIT, CENTRAL CIRCLE-3, JAIPUR 4 OF ADITI MISHRA AND AANCHAL MISHRA (MINOR GRAND-DAU GHTER). THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 4.3 WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, WE FIND THAT THE A SSESSEE WAS HAVING SUFFICIENT OWN FUNDS AS REFLECTED IN THE CAPITAL AC COUNT OF THE ASSESSEE AS ON 31.03.2008 SO AS TO MAKE INVESTMENT FOR PURCH ASE OF SHARES OF OTHER COMPANIES AND GENERATE EXEMPT INCOME. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE VARIOUS PRONOUNCEME NTS OF VARIOUS HONBLE HIGH COURTS IN SUPPORT OF HIS CONTENTION. H E ALSO DREW OUR ATTENTION TO THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VIJAY SOLVEX LTD. (2015) 59 TAXMANN .COM 294 (RAJ. HC) WHEREIN IT HAS BEEN HELD AS UNDER:- ......IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT O F THE APEX COURT AND OTHER JUDGMENTS REFERRED SUPRA, IN OUR VI EW, THE ASSESSEE ADMITTEDLY HAD ITS OWN FUNDS, AS REFERRED TO EARLIER, AND ADMITTEDLY SUCH FUNDS/RESERVES BEING SUBSTANTIALLY HIGHER THAN, EVEN OTHERWISE, THE ADVANCES TO THE DEBTORS, NO NOT IONAL INTEREST OF HYPOTHETICAL INTEREST COULD HAVE BEEN DISALLOWED ON SUCH FACTS. THE REVENUE HAS FAILED TO PROVE NEXUS. IN OUR VIEW, THE TRIBUNAL HAS CORRECTLY APPRECIATED THE FACTS AND LAW. THE LD. D/R COULD NOT BRING ANY CONTRARY MATERIAL T O CONTROVERT THE SUBMISSIONS OF THE ASSESSEE. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND CASE LAWS, THE ORDER OF LD. CIT(A) IS QUASHED. THE AO IS DIRECTED TO ALLOW THE INTEREST EXPENSES. THE GROUNDS OF THE ASS ESSEE ARE ALLOWED. 5. IN LIGHT OF ABOVE, WHERE THE ADDITIONS WHICH WE RE THE SUBJECT MATTER FOR LEVY OF PENALTY HAS BEEN DELETED, THERE IS NO BASIS FOR LEVY OF PENALTY AND HENCE, THE SAME IS HEREBY DELETED. ITA NO. 548/JP/2014 SHRI UDAI KANT MISHRA, JAIPUR VS SH. DCIT, CENTRAL CIRCLE-3, JAIPUR 5 6. REGARDING THE LEVY OF PENALTY ON DEEMED DIVIDEN D, IT WAS HELD BY THE AO THAT M/S TRIMURTY BUILDERS PVT. LTD. IN WHICH TH E ASSESSEE WAS A SHARE HOLDER OF OVER 10% SHARES BOOKED ITS PROFIT ON THE LAST WORKING DAY OF THE F.Y 31.3.2007 IT HAS SHOWN PROFIT OF RS. 5,35,787/- OUT OF WHICH RS. 2 LAKH EACH WAS ADVANCED TO THE APPELLANT AND TO ANOTHER SISTER CONCERN. THUS THIS ADVANCE WAS TREATED AS INCOME BY WAY OF THE DEEMED DIVIDEND U/S 2(22)(E) WHICH WAS ACCEPTED BY THE ASSESSEE AND IN ABSENCE O F ANY FURTHER APPEAL, HAS ATTAINED FINALITY. IT IS NOTED THAT UNDER IDENT ICAL SET OF FACTS, THE COORDINATE BENCH IN ITA NO. 661/JP/2011 AND OTHERS DATED 12.02.2016 IN ASSESSEES GROUP CASES HAS DELETED THE PENALTY LEVI ED ON DEEMED DIVIDEND AND THE RELEVANT FINDINGS ARE AS UNDER: 4.3 WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. THE ASSESSEE FILED THE RETURN UNDER SECTION 139 FOR ALL THE YEARS AND DISCLOSED THE PARTICULARS OF SHAREHOLDING PATTE RN, ADVANCES TAKEN AND GIVEN BY THE ASSESSEE COMPANY/INDIVIDUAL IN RET URN ITSELF. THE ACCUMULATED PROFIT ALSO HAS BEEN DISCLOSED. THEREAF TER ASSESSEE FILED RETURN UNDER SECTION 153A OF THE IT ACT WHEREIN ALS O ALL THE DETAILED FACTS AND FIGURES WERE DISCLOSED IN THE RETURN. THE ASSESSEES CASE IS AUDITABLE. THE ASSESSEE AT THE TIME OF QUANTUM ADDI TION 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 VARIOU S COURTS PARTICULARLY IN THE CASE OF CREATIVE DYEING & PRINTING (P) LTD. (SU PRA) WHEREIN IT HAS BEEN HELD THAT BUSINESS TRANSACTION IS NOT COVERED UNDER SECTION 2(22)(E) OF THE ACT. VARIOUS OTHER CASE LAWS CITED BY THE ASSESSEE HAS ALSO MADE THIS ISSUE DEBATABLE. THE CASE RELIED ON BY THE AO I.E. MAK DATA P. LTD. IS NOT APPLICABLE AS ASSESSEE AT EVERY STAGE HAD FILED THE EXPLANATION BEFORE THE AO AS WELL AS CIT(A) I.E. TH ESE TRANSACTIONS WERE MADE FOR THE PURPOSE OF BUSINESS AND COMMERCIAL EXP EDIENCY, IS ITA NO. 548/JP/2014 SHRI UDAI KANT MISHRA, JAIPUR VS SH. DCIT, CENTRAL CIRCLE-3, JAIPUR 6 BONAFIDE. PENALTY IMPOSED BY THE AO AND CONFIRMED B Y LD. CIT(A) ARE NOT JUSTIFIED. ACCORDINGLY WE DELETE THE PENALTY IN ALL THE CASES. 7. IN ITA NO. 476 & 477/JP/14 VIDE ITS ORDER DATED 29.06.2016, THE COORDINATE BENCH UNDER IDENTICAL SET OF FACTS HAS F OLLOWED THE ABOVE DECISION AND HAS DELETED THE PENALTY ON ADDITION ON ACCOUNT OF DEEMED DIVIDEND AND THE RELEVANT FINDINGS ARE AS UNDER: 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 A DDITION ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) WAS DELETED. HENCE RESPECTFULLY FOLLOWING DECISION OF THE CO-ORDINATE BENCH REFERRE D (SUPRA), WE HEREBY DELETE THE PENALTY IN THE HANDS OF THE ASSESSEE FOR BOTH THE YEARS UNDER CONSIDERATION. 8. FOLLOWING THE CONSISTENT POSITION TAKEN BY THE C OORDINATE BENCHES IN ASSESSEES GROUP CASES WHERE THE PENALTY LEVIED UND ER SECTION 271(1)(C) HAS BEEN DELETED, THE PENALTY LEVIED IN THE INSTANT CASE IS HEREBY DELETED AS THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 10/11/2017 SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 548/JP/2014 SHRI UDAI KANT MISHRA, JAIPUR VS SH. DCIT, CENTRAL CIRCLE-3, JAIPUR 7 JAIPUR DATED:- 10/11/2017 *GANESH KR VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - SHRI UDAI KANT MISHRA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT - DCIT, CENTRAL CIRCLE-3, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 548/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.