DCIT 9(1), MUMBAI V. KINTU BAJAJ, MUMBAI

ITA 7151/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83999 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-10-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 18-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: MRS RUPAL D JHAVERI
• Keywords: Difference of opinion; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A.NO. 7151/M/2010 ( AY: 2004 - 2005) DCIT - 9(1), R.NO.223, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S. KINTU K. BAJAJ, 2, KEWAL KAMAL, 28 TH ROAD, TPS III, BANDRA (W), MUMBAI 400 050. PAN:AACPB6639A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASGHAR ZAIN RESPONDENT BY : MRS. RUPAL D.JHAVERI DATE OF HEARING: 1.10.2014 DATE OF ORDER: 29 .10.2014 O R D E R PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE REVENUE ON 18.10.2010 AGAINST THE ORDER OF THE CIT (A) - 19, MUMBAI DATED 6.8.2010 FOR THE ASSESSMENT YEAR 2004 - 2005. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE PENALTY OF RS. 13,25,211/ - IMPOSED U/S 271(1)(C) OF THE ACT DES PITE MATERIAL AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE HAD OMITTED TO DISCLOSE THE AMOUNT TAXABLE AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN FOLLOWING THE DECISI ON OF RELIANCE PETRO PRODUCTS PVT LTD [322 ITR 158 (SC)] WHEREIN THE FACTS ARE DISTINGUISHABLE FROM THOSE OF THE ASSESSEE. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE CLOTH TRADING AND FINANCE BUSINESS. ASSESSEE IS A SHAREHOLDER IN M/S. BADA SAAB PROPERTIES PVT LTD. ON FINDING THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE ATTRACTED TO THE PAYMENTS TRANSACTED BETWEEN THE ASSESSE E AND SAID COMPANY (M/S. BADA SAAB PROPERTIES PVT LTD), AO MADE ADDITIONS BY TREATING THE SAID PAYMENT AS DEEMED DIVIDEND. IN THIS REGARD, ASSESSEE SUBMITTED THAT THE SAID PAYMENTS ARE MADE IN THE NORMAL COURSE OF MONEY LENDING ACTIVITIES OF THE ASSESSEE. HOWEVER, ON FINDING THE ASSESSEES FAILURE TO PROVE THE SAME , AO MADE ADDITION U/S 2(22)(E) OF 2 THE ACT AND THE PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT. DURING THE PENALTY PROCEEDINGS, ASSESSEE SUBMITTED THAT THE ADDITION WAS MADE BY THE AO BASED ON THE INFORMATION IN THE RETURN OF INCOME AVAILABLE ON THE RECORDS / RETURNS OF INCOME. THERE FORE, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN MATTERS OF DISCLOSURE OF INFORMATION AND THERE IS NO CONCEALMENT OF INCOME TO THAT EXTENT. IT IS THE CLAIM OF THE ASSESSEE THAT T HE EXPLANATION OF THE ASSESSEE WAS NOT FOUND FALSE. IN SUCH CIRCUMSTANCES, THE ASSESSEE DEMONSTRATED T HE POSSIBILITY OF THE EXISTENCE OF THE TWO VIEWS IN THE MATTER. WHEN THE ISSUES ARE DEBATABLE, AS PER THE ASSESS EE, THE PENALTY SHOULD NOT BE LEVIED U/S 271(1)(C) OF THE ACT. AO REJECTED THE SAM E AND LEVIED PENALTY OF RS. 13,35,211/ - VIDE THE PENALTY ORDER DATED 31.3.2009. AGGRIEVED WITH THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 4. DURING T HE PROCEE DINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE SUBMITTED THAT THE ADDITION OF RS. 49.8 LAKHS MADE ON ACCOUNT OF DEEMED DIVIDEND , WAS CONFIRMED IN PRINCIPLE BY THE TRIBUNAL ON 6.1.2010 VIDE ITA NO.2343/MUM/2008 AND HOWEVER, TRIBUNAL RESTRICTED THE ADDITION TO RS. 40,53,423/ - ONLY I.E., TO THE EXTENT OF AVAILABILITY OF THE ACCUMULATED PROFITS OF THE COM PANY. ON THE ISSUE OF PENALTY , ASSESSEE SUBMITTED THAT THERE IS A DIFFERENCE OF OPINION, WHETHER THE DEEMED DIVIDEND IS VALIDLY ADDED OR NOT CON SIDERING THE ARGUMENT RELATING TO NORMAL COURSE OF THE MONEY LENDING BUSINESS OF THE ASSESSEE. CIT (A) ANALYZED THE SUBMISSIONS MADE BY THE ASSESSEE AND FOUND MERIT IN THE ARGUMENTS OF THE ASSESSEE I.E., TWO VIEWS ARE POSSIBLE ON THE ISSUE OF INVOKING OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. EVENTUALLY, CIT (A) GRANTED RELIEF IN FAVOUR OF THE ASSESSEE. AGGRIEVED WITH THE SAME, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. BEFORE US, LD DR MENTIONED THAT INV OKING OF THE PROVISIONS OF SECTION 2(22)(E) AS WELL AS THE ADDITION TO THE EXTENT OF RS. 40,53,423/ - OUT OF THE TOTAL ADDITION OF RS. 49.8 LAKHS WAS CONFIRMED IN QUANTUM APPEAL. ASSESSEE ALSO FAILED TO DEMONSTRATE THAT THE TRANSACTIONS OF PAYMENTS WERE DO NE IN THE NORMAL COURSE OF THE BUSINESS ACTIVITIES. IN THESE CIRCUMSTANCES, THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE HAS FURNISHED RELEVANT INFORMATION IN THE RETURN OF INCOME CANNOT BE ACCEPTED AND THEREFORE, THE ORDER O F THE CIT (A) ON THIS ISSUE NEEDS TO BE REVERSED. 3 6. ON THE OTHER HAND, MRS. RUPAL D.JHAVERI , LD COUNSEL FOR THE ASSESSEE RELIED ON THE SPEAKING ORDER OF THE CIT (A) AND MENTIONED THAT THE AO MERELY READ INTO THE INFORMATION FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME AND OTHE R DOCUMENTS FILED DURING THE ASSESSMENT. AS PER THE LD COUNSEL, THERE IS NO FAILURE OF DISCLOSURE OF INFORMATION IN THE RETURN OF INCOME . THE CONCLUSIONS DRAWN BY THE AO MERELY SHOWS EXISTENCE OF A NOTHER VIEW ON THE MATTER AND THEREFORE , THIS IS NOT A FIT CASE FOR INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. AO HAS NOT BROUGHT ANY INFORMATION TO DEMONSTRATE THAT THE IMPUGNED TRANSACTIONS ATTRACT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND THEY ARE NOT DONE IN THE COURSE OF THE NORMAL COURSE OF BUSINESS ACTIVITIES. HE ALSO MENTIONED THE FACT THAT THE AO MADE ADDITION OF RS. 49.8 LAKHS WITHOUT APPLICATION OF HIS MIND WHEN THE ACCUMULATED PROFITS ARE ONLY RS. 40,53,423/ - . LD COUNSEL ALSO RELIED ON THE CONTENTS OF PARA 6 O F THE IMPUGNED ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT PAPERS AVAILABLE ON RECORD. THERE IS NO DISPUTE ON THE FACT THAT THE ADDITION S MADE BY THE AO INVOKING THE PROVISIONS OF SECT ION 2(22)(E) ARE PARTLY CONFIRMED TO THE EXTENT OF RS. 40,53,423/ - AGAINST THE TOTAL ADDITION OF RS. 49.8 LAKHS. THE SOURCE OF INFORMATION FOR MAKING THE SAID ADDITIONS IS UNDISPUTEDLY THE RETURN OF INCOME AND THE PAPERS FILED DURING THE ASSESSMENT PROCEE DINGS. NO INCRIMINATING MATERIAL WAS GATHERED BY THE AO IN THIS REGARD. THERE IS NO INACCURACY OF PARTICULARS AND THERE IS NO CONCEALMENT OF INCOME IN THIS CASE FURNISHED IN THE RETURN . IN OUR OPINION, THE FOLLOWING DISCUSSION GIVEN IN PARA 6 OF THE CIT (A) IS RELEVANT HERE THEREFORE, THE SAME IS EXTRACTED WHICH READS AS UNDER: 6 . THERE IS NO CASE THAT , THE DISCLOSURES AS MADE IN THE RETURN WERE INACCURATE OR INC O RRECT . IN FACT, IT IS BASED ON THE PARTICULARS FO U ND I N THE RETURN THAT A VI EW H A S BE EN TAK E N IN A S SE SS MENT WHICH H AS GON E A G AI NS T THE APP E LLA N T . A S ST A T E D EARLIER, A D I FF ERE NT V I EW AS TAKEN B Y THE APP E LLANT AS R E G A RDS TH E D EE M I N G P RO VIS I ONS OF S . 2(22)(E) , W HICH VIE W HA S NOT FOUND A CCEPT A NC E . HO W EV E R , TH OU G H THE VIEW AS TAKEN BY THE A PPELLANT H A S NOT B E E N ACCEPT E D , T H ERE IS NO CASE THA T HAS BEEN FOUND TO BE FALSE OR HAS NOT B E EN SUBSTANTIATED . THE BO NA FIDES OF THE EXPLANATION OF THE APPELLANT HAVE NOT BEEN QUESTIONED OR DO U BT E D . ALL PARTICULARS RELATING TO DEEMING PROVISIONS OF S . 2(2 2) (E ) HAV E BE E N DISCLOS E IN THE RETURN ITSELF . MERELY BECAUSE A DIFFERENT V IEW H A S BEEN TAKEN IT CANNOT BE SAID THAT THE APPELLANT HAS FILED AN INACCURAT E PA RTICULAR S OF INCOME . WH EN ALL FACTS STAND DISCLOSED, TAKING A STAND WHICH 4 IS CONTRARY TO THAT HELD BY THE A.O . WOULD NOT BY ITSELF TANTAMOUNT TO FURNISHING OF I NACCU R ATE PA R TICULARS OF INCOME . HENCE, IT IS HELD THAT THIS IS NOT A FIT CAS E F O R IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. 8. CONSIDERING THE ABOVE FACTS AND THE SETTLED LEGAL PROPOSITION OF THE MATTER, WE ARE OF THE OPINION THAT DIFFERENT VIEWS ARE POSSIBLE ON THIS ISSUE AND THEREFORE, NO DEBATABLE ISSUE SHOULD ATTRACT PENALTY PROVISIONS U / S 271(1)(C) OF THE ACT. THEREFORE, THE CONCLUSIONS DRAWN BY THE CIT (A ) ARE FAIR AND REASONABLE AND THEY DO NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT O N 2 9 T H OCTOBER, 2014. S D / - S D / - (H.L. KARWA) (D. KARUNAKARA RAO) PRESIDENT ACCOUNTANT MEMBER DATE: 2 9 .10.2014. AT :MUMBAI OKK COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR A, BENCH, ITAT , MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI