Sh. Deepak Duggal, New Delhi V. ACIT, New Delhi

ITA 6583/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4098 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 10-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Keywords: Audit objection
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.NO.6583/DEL./2015 ASSESSMENT YEAR 2009-2010 SHRI DEEPAK DUGGAL, A-31, MAYAPURI INDUSTRIAL AREA, PHASE-I, NEW DELHI. PAN AAHPD1992K VS. THE ACIT, CIRCLE-49(1), NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI TEJ MOHAN SINGH, ADVOCATE FOR REVENUE : SHRI S.R. SENAPATI, SR. D.R. DATE OF HEARING : 18.01.2018 DATE OF PRONOUNCEMENT : 22.01.2018 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-17, NEW DELHI, DATED 10 TH SEPTEMBER, 2015, FOR THE A.Y. 2009-2010. 2. IN THE PRESENT APPEAL, THE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF TH E I.T. ACT, ON THE GROUND THAT REOPENING IS DONE ON MERE CHANGE OF OPI NION AND DUE TO AUDIT OBJECTIONS, THEREFORE, IT MAY BE DECLARED AS NULL AND VOID. 2 ITA.NO.6583/DEL./2015 SHRI DEEPAK DUGGAL NEW DELHI. FURTHER, THE ASSESSEE PLEADED FOR DELETION OF ADDIT ION OF RS.8,36,511 UNDER SECTION 2(22)(E) OF THE I.T. ACT AND INTEREST UNDER SECTIONS 234B/234C OF THE I.T. ACT. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSE E FILED RETURN OF INCOME ORIGINALLY ON 29 TH SEPTEMBER, 2009 DECLARING TOTAL INCOME OF RS.33,76,910 FROM BUSINESS AND PROFESSION AND IN COME FROM OTHER SOURCES. THE CASE OF THE ASSESSEE WAS ASSESSED UNDE R SECTION 143(3) DATED 12.12.2011 AT AN INCOME OF RS.35,20,170. SUBS EQUENTLY, IT WAS FOUND THAT ASSESSEE HOLDING 20.64% OF SHARES IN M/S. KAP PRESS (P) LTD., AND RECEIVED LOAN OF RS.8,36,511 DURING T HE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, PROVISIONS OF SECTION 2(22 )(E) OF THE I.T. ACT ARE ATTRACTED. THE A.O. REOPENED THE ASSESSMENT UND ER SECTION 147 OF THE I.T. ACT. THE ASSESSEE EXPLAINED THAT SECTIO N 2(22)(E) OF THE I.T. ACT IS NOT APPLICABLE TO THE ASSESSEE AND THERE IS NO LOAN OR ADVANCE PAYMENT HAD BEEN MADE BY M/S. KAP PRESS (P) LTD., T O THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL. THE A.O. DID NOT A CCEPT THE CONTENTION OF ASSESSEE AND MADE ADDITION OF RS.8,36 ,511. 4. THE ASSESSEE CHALLENGED THE REOPENING OF THE AS SESSMENT AND ADDITION BEFORE LD. CIT(A). IT WAS SUBMITTED TH AT ASSESSEE 3 ITA.NO.6583/DEL./2015 SHRI DEEPAK DUGGAL NEW DELHI. PURCHASED MACHINERY IN THE PAST FROM M/S. KAP PRESS (P) LTD., IN WHICH HE IS A DIRECTOR AND AMOUNTS OUTSTANDING RS.1 2,60,000 WAS TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE, AFTER A DJUSTING REMUNERATION OF RS.4,23,488 DURING THE PERIOD UNDER QUESTION AND BALANCE AMOUNT OF RS.8,36,511 WAS OUTSTANDING IN TH E NAME OF THE ASSESSEE. THE CREDIT BALANCE APPEARING IN THE NAME OF THE ASSESSEE OF THIS AMOUNT BEING CREDIT BALANCE IS THE RESULT O F BUSINESS TRANSACTION AND BOOK ENTRY ONLY CANNOT BE TERMED AS LOAN. THE ASSESSEE RELIED UPON THE DECISION OF THE TELANGANA AND A.P. HIGH COURT IN THE CASE OF M/S. GURURAJ MINI ROLLER FLOUR MILLS VS. ADDL. CIT (2015) 370 ITR 50 (T&AP) IN SUPPORT OF THE ABOV E CONTENTION AND SUBMITTED THAT ALTHOUGH THE DECISION WAS RENDERED I N THE CONTEXT OF SECTION 269SS AND 269T BUT IT WAS HELD THAT THIS TY PE OF TRANSACTION UNDER QUESTION IS NOT A LOAN. HENCE, THIS AMOUNT CA NNOT BE TREATED AS INCOME UNDER SECTION 2(22)(E) OF THE I.T. ACT. 5. THE LD. CIT(A) CONSIDERING THE MATERIAL ON RECO RD NOTED THAT THE FACTS OF THE CASE ARE THAT M/S. KAP CONES IS A PROPRIETARY CONCERN OF THE ASSESSEE. IT GAVE LOAN TO M/S. KAP P RESS (P) LTD., IN EARLIER YEARS. M/S. KAP CONES HAD AN OPENING BALANC E OF 4 ITA.NO.6583/DEL./2015 SHRI DEEPAK DUGGAL NEW DELHI. RS.1,05,33,279 AS ON 01.04.2008, OUT OF WHICH, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, ADJUSTED AN AMOUNT OF RS.12,60,000 IN HIS INDIVIDUAL NAME AND OUT OF RS.12,60,000 M/S. KAP PRESS (P) LTD., HAD ADJUSTED RS.4,23,488 ON ACCOUNT OF REMUNE RATION TO DIRECTOR AND THE BALANCE AMOUNT OF RS.8,36,511 WAS SHOWN AS CLOSING BALANCE IN THE NAME OF ASSESSEE IN LOAN ACC OUNT. THE SAME WORDING IS APPEARING IN THE CONFIRMATION OF THE AMO UNTS FILED FROM M/S. KAP PRESS (P) LTD., THE LD. CIT(A), THEREFORE, NOTED THAT IT IS NOTHING BUT A LOAN GIVEN TO THE ASSESSEE. THEREFORE , THE APPEAL OF ASSESSEE WERE DISMISSED. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT ADDITION IS NOT CALLED FOR IN THE MATTER. THE CBDT VIDE CIRCULAR NO.19 OF 2017 DATED 12 TH JUNE, 2017 CLARIFIED IN PARA-3 IN VIEW OF THE ABOVE, IT IS SETTLED POSITION THAT TRADE ADVANC E WHICH ARE IN THE NATURE OF COMMERCIAL TRANSACTION, WOULD NOT FALL WI THIN THE AMBIT OF THE WORD ADVANCE IN SECTION 2(22)(E) OF THE I.T. ACT. ACCORDINGLY, HENCEFORTH, APPEALS MAY NOT BE FILED ON THIS ACCOUN T BY OFFICER OF THE DEPARTMENT AND THOSE ALREADY FILED IN COURTS/TRIBUN ALS, MAY BE WITHDRAWN/NOT PRESSED UPON. 5 ITA.NO.6583/DEL./2015 SHRI DEEPAK DUGGAL NEW DELHI. 6.1. THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT HE HAS PURCHASED MACHINERY IN PAST FROM M/S. KAP PRESS (P) LTD., IN WHICH HE WAS A DIRECTOR AND AMOUNTS ARE OUTSTANDING AT RS .12,60,000 WAS TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE AFTER AD JUSTMENT OF REMUNERATION RS.8,36,511 WAS OUTSTANDING IN THE NAM E OF THE ASSESSEE. THE LD. CIT(A) ALSO NOTED IN HIS FINDINGS THAT PROPRIETARY CONCERN OF THE ASSESSEE HAD GIVEN LOAN TO M/S. KAP PRESS (P) LTD., IN EARLIER YEARS AND WAS HAVING AN OPENING BALANCE OUT OF WHICH RS.12,60,000 WAS ADJUSTED AND OUT OF THE SAME M/S. KAP PRESS (P) LTD., HAD ADJUSTED REMUNERATION AND THE AMOUNT IN Q UESTION OF RS.8,36,511 WAS A CLOSING BALANCE IN THE NAME OF AS SESSEE. THE LD. CIT(A) ON THE BASIS OF CONFIRMATION OF THE COMPANY, INFERRED THAT IT IS A LOAN. HOWEVER, THE FACTS AND CIRCUMSTANCES NOTED ABOVE CLEARLY PROVE THAT IT WAS A COMMERCIAL TRANSACTION TO SHOW THAT ASSESSEE PURCHASED MACHINERY IN PAST FROM THE COMPANY AND CE RTAIN ADVANCE HAVE BEEN GIVEN TO THE COMPANY IN EARLIER YEARS AND AFTER ADJUSTMENT THE AMOUNT IN QUESTION WAS A CLOSING BALANCE. THE C ONTENTION OF ASSESSEE HAS NOT BEEN DISPUTED BY THE AUTHORITIES B ELOW. THEREFORE, COMMERCIAL TRANSACTION, IF HAS LEFT SOME AMOUNT IN THE ACCOUNT OF 6 ITA.NO.6583/DEL./2015 SHRI DEEPAK DUGGAL NEW DELHI. THE ASSESSEE, WOULD NOT BE TREATED AS LOAN AND ADVA NCE SO AS TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E) OF THE I .T. ACT. THE ADDITION IS, THEREFORE, WHOLLY UNJUSTIFIED. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.8,36,511. GROUND NO.4 OF APPEAL OF ASSESSEE IS ALLOWED. 7. CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE . SINCE THE ADDITION HAVE BEEN DELETED ON MERIT, THEREFORE, THE RE IS NO NEED TO DECIDE THE ISSUE OF REOPENING OF THE ASSESSMENT BEC AUSE IT IS LEFT WITH ACADEMIC DISCUSSION ONLY. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 22 ND JANUARY, 2018 VBP/- 7 ITA.NO.6583/DEL./2015 SHRI DEEPAK DUGGAL NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASST. REGISTRAR : ITAT DELHI BENCHES : DELHI.