The Asstt. Commissioner of Income tax, Jalandhar V. M/s. Vishal Tools Inds, Jalandhar

ITA 73/ASR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63507 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: SANDEEP VIJ
• Keywords: Peak credit; Additional evidence; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 73(ASR)/2011 ASSESSMENT YEAR:2007-08 PAN :AABFV0563G ASSTT. COMMR. OF INCOME-TAX, VS. M/S. VISHAL TOOLS INDUSTRIES, RANGE-1, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. R.L. CHHANALIA, DR RESPONDENT BY:SH. SANDEEP VIJ, CA DATE OF HEARING:10/10/2012 DATE OF PRONOUNCEMENT:12/10/2012S ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A)-II, LUDHIANA, DATED 16.12.2010 RELATING TO ASSESSMENT Y EAR 2007-08. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.28,23,941/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/S2(22)(E) OF THE INCOME-TAX ACT, 1961. 2. THAT, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE A.O. RESTORED. ITA NO.73(ASR)/2011 2 3. THE BRIEF FACTS IN THE APPEAL OF THE REVENUE ARE THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH EVID ENCE OF SHAREHOLDING IN THE SISTER CONCERNS AND WHETHER TRANSACTIONS WERE C OVERED U/S 2(22)(E) OF THE ACT. IN RESPONSE, THE ASSESSEE REPLIED THAT SALES W ERE MADE TO SISTER CONCERNS AND ALL THE DEBITS WERE ONLY IN RESPECT OF SALES MA DE. THE MONEY RECEIVED WAS TOWARDS PAYMENT FOR THE GOOD SUPPLIED/TO BE SUP PLIED AND PROVISIONS OF SECTION 2(22)(E) WERE NOT APPLICABLE IN THIS CASE. THE ASSESSEE ALSO PLACED RELIANCE UPON THE DECISION OF HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. RAJ KUMAR REPORTED AT 181 TAXMAN 155. HE PERUS ED ACCOUNT RECORDS AND FOUND THAT THE ACCOUNT OF THE ASSESSEE IN BOOK S OF M/S. VISHAL TOOLS AND FORGINGS P. LTD. HAD SHOWN A PEAK DEBIT BALANC E OF RS.28,23,941/-. FURTHER, THE ASSESSEE WAS ALSO FAILED TO SUBSTANTIA TE THAT EXTENDED FUNDS TO SISTER CONCERN WAS ITS PART OF BUSINESS ACTIVITIES. THE A.O. ALSO OBSERVED THAT THERE WAS NOT EVEN A SINGLE ENTRY OF OTHER TWO DEBTORS. FURTHER, THE ASSESSEE ALSO FAILED TO SUBSTANTIATE HIS EXPLANATIO N OF NON APPLICATION OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE AO A LSO REFERRED TO THE LANGUAGE OF THE SECTION 2(22)(E) OF THE ACT. THEREF ORE, THE A.O. TREATED DEBIT PEAK BALANCE OF RS.28,23,941/- AS DEEMED DIVIDEND I N THE HANDS OF THE ASSESSEE AND ACCORDINGLY MADE AN ADDITION OF THE SA ME AMOUNT. ITA NO.73(ASR)/2011 3 4. THE LD. CIT(A) VIDE PARAS 6, 6.1, 6.2 & 6.3. OF HIS ORDER DELETED THE ADDITION MADE BY THE AO FOR THE REASONS THAT ALL TH E ENTRIES ON THE DEBIT SIDE REPRESENT GOODS SUPPLIED AND IT IS NOT A CASE OF LENDING OF MONEY. THE TRANSACTIONS ARE PURELY OF COMMERCIAL/BUSINESS IN N ATURE. THE EXPLANATION OF THE ASSESSEE THAT THE FOREIGN BUYER OF M/S. VISHAL TOOLS & FORGINGS PVT. LTD. HAS ASKED FOR DELAY IN THE SUPPLY OF GOODS AND UND ER THE CIRCUMSTANCES, THIS CUSTOMER HAD DELAYED LIFTING THE GOODS OF THE ASSE SSEE AND CONSEQUENTLY THE SALE BILL WHICH WOULD HAVE BEEN DEBITED TO THE ACCO UNT OF THE CUSTOMER WAS NOT PREPARED., WAS ACCEPTED BY THE LD. CIT(A) AND A CCORDINGLY ADDITION MADE BY THE AO WAS DELETED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE AO DID NOT MAKE ANY ENQUIRY FROM THE ASSESSEE REGARDING ADVANCE BEING G IVEN BY M/S. VISHAL TOOLS & FORGINGS PVT. LTD. TO OTHER SUPPLIERS. THE ASSESSEE SUBMITTED THE EXPLANATION AS AN ADDITIONAL EVIDENCE WHICH WAS SUB MITTED TO THE AO FOR REPORT. THE AO, IN FACT, HAS NEITHER OBJECTED TO AD MISSION OF ADDITIONAL EVIDENCE NOR SUBMITTED ANY REPORT. THEREFORE, THE F INDINGS OF THE LD. CIT(A) ARE FOUND TO BE WITHOUT ANY ERROR ON THE BASIS OF M ATERIAL AVAILABLE ON RECORD THAT M/S. VISHAL TOOLS & FORGINGS PVT. LTD. HAD ASK ED FOR DELAY IN SUPPLY OF GOODS AND BILL ACCORDINGLY PREPARED LATE BY THE ASS ESSEE. ALL THE TRANSACTIONS ITA NO.73(ASR)/2011 4 ARE COMMERCIAL/BUSINESS TRANSACTIONS AND THEREFORE, ARE OUTSIDE THE PURVIEW OF SECTION 2(22)(E) OF THE ACT. THE LD. CIT(A), THE REFORE, IS JUSTIFIED IN DELETING THE ADDITION OF RS.28,23,941/- AND WE FIND NO INFIRMITY IN HIS ORDER. THUS, ALL THE GROUNDS OF THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.73(ASR)/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH OCTOBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12TH OCTOBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. VISHAL TOOL INDUSTRIES, JALANDHAR . 2. THE ACIT, RANGE-I, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.