Utkal Coal Ltd., New Delhi V. ITO, Ward-27(2), New Delhi

ITA 6958/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3766 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHERJEE
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.6958/DEL/2017 ASSESSMENT YEAR : 2011-12 UTKAL COAL LTD., B- 4/147, SAFDARJUNG ENCLAVE, NEW DELHI. VS. ITO, WARD - 27(2), NEW DELHI. PAN : AAACU2811L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAMEER JAIN, CA DEPARTMENT BY : MS. RANU MUKHERJEE, SR.DR DATE OF HEARING : 15-01-2018 DATE OF PRONOUNCEMENT : 07-02-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 22.09.2017 OF CIT(A)- 23, NEW DELHI RELATING TO ASS ESSMENT YEAR 2011-12 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF COAL MINING. IT FILED ITS RETURN O F INCOME ON 26.09.2011 DECLARING NIL INCOME. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RE DUCED DIVIDEND INCOME OF RS.15,02,407/- FROM THE PRELIMINARILY EXPENSES. HE , THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE DIVIDEND INCOME H AS BEEN REDUCED FROM THE PRELIMINARILY EXPENSES. IN ABSENCE OF ANY EXPLANAT ION OFFERED BY THE ASSESSEE 2 ITA NO.6958/DEL/2017 COMPANY THE ASSESSING OFFICER MADE ADDITION OF RS.1 5,02,407/- TO THE TOTAL INCOME OF THE ASSESSEE, WHICH IS SUBJECT-MATTER OF THE APPEAL. 3. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT THERE WAS NO SALE OR ANY COMMERCIAL RECEIPT DURING THE RELEVANT PREVIOUS YEAR. HOWEVER, THE ASSESSEE EARNED DIVIDEND INCOME FROM BIRLA SUN LIFE MUTUAL FUND AMOUNTING TO RS.15,02,407/- WHICH IS EXEMPT U/S 10(35) OF THE I.T. ACT. HOWEVER, SINCE THIS INCOME HAS RESULTED DUE TO TEMPORARY INVESTMEN T OF SURPLUS FUND, THIS INCOME WAS NETTED OFF FROM THE PRE-OPERATIVE EXPENS ES. IT WAS SUBMITTED THAT THIS TREATMENT BY THE ASSESSEE IS FULLY JUSTIFIED A S PER THE ACCOUNTING STANDARD 26. IT WAS ACCORDINGLY REQUESTED TO DELETE THE ADD ITION OF RS.15,02,407/-. 4. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE FUR THER ARGUED THAT IF THIS DIVIDEND INCOME OF RS.15,02,407/- IS TREATED AS INC OME, IT WILL BE EXEMPTED U/S 10(35) AND THUS NOT LIABLE TO TAX. THE ASSESSEE EN CLOSED COPY OF THE MUTUAL FUND STATEMENT ALONG WITH DETAILS OF DIVIDEND INCOM E. 5. HOWEVER, LD. CIT(A) WAS NOT SATISFIED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 6.2 DURING THE APPELLATE PROCEEDINGS APPELLANT TOO K THE CONTENTION THAT THE DIVIDEND INCOME IS EXEMPT U/S 10(34) OF I.T. ACT, 1 961 AND THE APPELLANT HAS REDUCED THE SAME FROM PREOPERATIVE EXPENSES. 6.3 IT IS A SETTLED POSITION THAT DIVIDEND INCOME I S EXEMPT FROM THE TAX. HOWEVER, SUCH DIVIDEND INCOME WOULD ONLY BE EXEMPT IF THE AP PELLANT DISCHARGES THE ONUS OF PROVIDING THAT IT IS INDEED DIVIDEND INCOME. AS IS EVIDENT FROM THE ASSESSMENT ORDER, NO MATERIAL WAS FILED BEFORE THE AO TO DISCHARGE TH IS ONUS. NOR ANY MATERIAL WAS PRODUCED BEFORE THE UNDERSIGNED WHICH COULD DISCHAR GE THIS ONUS. DURING THE 3 ITA NO.6958/DEL/2017 APPELLATE PROCEEDINGS, THE APPELLANT FILED WRITTEN SUBMISSIONS WHICH CLAIMED THAT IT WAS FROM BIRLA SUN LIFE MUTUAL FUND (BSLMF). HOWEV ER, I HAVE FOUND THAT THERE IS NO SUCH INVESTMENT IN THE BALANCE SHEET. THE (MAIN ) BALANCE SHEET IS ENCLOSED AS ANNEXURE-1 TO THIS ORDER. IT CAN BE SEEN THAT ONLY HEAD UNDER WHICH THIS INVESTMENT COULD BE INCLUDED IS CURRENT ASSETS & LOANS AND AD VANCES WHICH IS AS PER SCHEDULE E. THE PAGE HAVING SCHEDULE E IS ENCLOSED AS A NNEXURE-2 TO THIS ORDER. IT MAY BE SEEN THAT THERE IS NO SUCH INVESTMENT EITHER ON 31.03.2011 OR ON 31.03.2010. OUT OF ENTIRE AMOUNT FIGURING UNDER THIS HEAD CURRENT ASSETS & LOANS AND ADVANCES; I.E. RS.4,48,55,922/- (AS ON 31.03.2011) AND RS.88, 59,860/- (AS ON 31.03.2010), THE MAJOR AMOUNT IS UNDER THE SUB-HEAD CASH AT BANK W HICH IS RS4,40,69,617/- (AS ON 31.03.2011) AND RS.88,22,973/- (AS ON 31.03.2010). THEREFORE, THE STATEMENT OF THE APPELLANT THAT IT HAS INVESTED IN BIRLA SUN LIFE MU TUAL FUND AND THE FIGURE IN A QUESTION IS DIVIDEND FROM BSLMF IS FOUND TO BE INCO RRECT AND HENCE, THIS GROUND OF APPEAL IS DISMISSED AND THE ACTION OF THE AO IN MAK ING THE ADDITION IS CONFIRMED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL :- 1. THE LEARNED CIT(A) HAS ERRED IN LAW BY TREATING EXEMPT DIVIDEND AMOUNTING TO RS.15,02,407/- AS TAXABLE. 2. THE LEARNED CIT(A) HAS ERRED ON FACTS IN OBSERVI NG THAT NO MATERIAL WAS FILED BEFORE HIM TO PROVE THE EXISTENCE OF DIVIDEND INCOM E, IN TOTAL DISREGARD OF MUTUAL FUND STATEMENTS SUBMITTED AT S.NO.79-85 AS A PART O F ASSESSEES WRITTEN SUBMISSIONS DATED 8 TH OCTOBER, 2015. 3. THAT LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W BY OBSERVING THAT NO MATERIAL WAS FILED BEFORE A.O. TO PROVE THE EXISTEN CE OF DIVIDEND INCOME. HE HAS MADE THIS OBSERVATION WITHOUT ASKING FOR ANY REPORT FROM A.O. IN THIS REGARDS AND THEREFORE IT IS BAD IN LAW. 4. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW BY REACHING TO THE CONCLUSION THAT IF ANY INVESTMENT IS NOT SHOWN IN B ALANCE SHEET, IT NEVER EXISTED DURING THE YEAR. IN SPITE OF THE DOCUMENTS CLEARLY SHOWING THE FACT THAT INVESTMENT WAS MADE DURING THE YEAR AND IT WAS REDEEMING DURIN G THE YEAR ITSELF. 5. THE ASSESSEE CRAVES LEAVE TO AMEND, ALTER OR ADD THE GROUNDS OF APPEAL. 7. I HAVE HEARD THE RIVAL CONTENTIONS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. I FIND IN ABSENCE OF ANY DETAILS FURNISHED BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE AS TO WHETHER OR NOT THE DIVIDEND INCOME OF RS.15,02,407/- CAN BE REDUCED OR NOT FROM THE PR ELIMINARILY EXPENSES, THE 4 ITA NO.6958/DEL/2017 ASSESSING OFFICER MADE ADDITION OF RS.15,02,407/-. I FIND ALTHOUGH FULL DETAILS WERE GIVEN BEFORE THE LD. CIT(A), HOWEVER, HE HELD THAT NO MATERIAL WAS PRODUCED BEFORE HIM TO DISCHARGE THE ONUS CAST ON T HE ASSESSEE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FULL DETAILS WERE GIVEN BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 16.09.2013 STATING THAT THE COMPANY HAS RECEIVED DIVIDEND INCOME OF RS.15,02,407/- AND THE SAID AMOUNT HAS BEEN ADJUSTED AGAINST THE PRE-OPERATIVE EXPENSES. IT IS ALSO HIS SUBMISSION THAT THE FORM NO.26AS, COPY OF WHICH IS PLACED AT PAGE 55-56 OF THE PAPER BOOK SHOWING DIVIDEND INCOME FROM BIRLA SUN LIFE MUTUAL FUND WAS FILED BEFORE THE LOWER AUTHORITIES. IT IS ALSO THE SUBMISSION OF TH E LD. COUNSEL FOR THE ASSESSEE THAT AS PER THE PROVISIONS SECTION 10(35) ANY INCOM E IN RESPECT OF UNITS OF MUTUAL FUND SPECIFIED UNDER CLAUSE 23D IS NOT TO BE INCLUDED IN TOTAL INCOME. IT IS THE SUBMISSION OF THE LD. DR SINCE THE ASSESSEE HAD NOT GIVEN FULL DETAILS BEFORE THE LD. CIT(A), THEREFORE, MATTER MAY BE RES TORED TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION OF THE ISSUE. I FIND MERIT IN THE ARGUMENT OF THE LD. DR THAT THE ASSESSEE HAS TO SATISFY THE AUTHORI TIES BELOW REGARDING THE NATURE OF DIVIDEND INCOME AND HOW IT IS REFLECTED IN THE B ALANCE SHEET. THIS ONUS ON THE PART OF THE ASSESSEE APPARENTLY HAS NOT BEEN DI SCHARGED. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTERE ST OF JUSTICE, I AM OF THE OPINION THAT THE MATTER REQUIRES A REVISIT TO THE FILE OF T HE LD. CIT(A) WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO EXPLAI N ITS CASE. LD. CIT(A) SHALL 5 ITA NO.6958/DEL/2017 DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07 TH FEBRUARY, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 07-02-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI