ACIT, Patiala V. Sh. Vipan Kumar Verma, Rajpura

ITA 790/CHANDI/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8533 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Bonafide belief; Deemed dividend; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.790/CHD/2012 (ASSESSMENT YEAR : 2008-09) THE A.C.I.T. , VS. SH.VIPAN KUMAR VERMA CENTRAL CIRCLE, PROP.M/S VERMA ELECTRONICS, PATIALA. RAJPURA. PAN: AAMPV4219J AND C.O.NO.36/CHANDI/2012 IN ITA NO.790/CHD/2012 (ASSESSMENT YEAR : 2008-09) SH.VIPAN KUMAR VERMA VS. THE A.C.I.T. , PROP.M/S VERMA ELECTRONICS, CENTRAL CIRCLE, RAJPURA. PATIALA. PAN: AAMPV4219J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL DEPARTMENT BY : SHRI JITENDER KUMAR, DR DATE OF HEARING : 29.01.2016 DATE OF PRONOUNCEMENT : 03.02.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX 2 (APPEALS)-I, LUDHIANA DATED 30.5.2012 FOR ASSESSMEN T YEAR 2008-09. THE ASSESSEE HAS FILED CROSS OBJECTI ONS AGAINST THE SAME. 2. IT IS STATED THAT IN THE PRESENT APPEAL THE TAX EFFECT IS LESS THAN THE PRESCRIBED LIMIT PROVIDED BY THE R ECENT CBDT CIRCULAR. 3. ACCORDING TO CIRCULAR NO.21/2015 DATED 10.12.2015, THE CBDT IN SUPERCESSION OF EARLIER INS TRUCTIONS HAS DIRECTED THAT DEPARTMENTS APPEALS BEFORE ITAT SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXC EED THE MONETARY LIMIT OF RS.10 LACS. THE TAX WILL NOT INC LUDE ANY INTEREST THEREON. IT IS FURTHER CLARIFIED THAT IF IN THE CASE OF AN ASSESSEE, DISPUTED ISSUES ARISE IN MORE THAN ONE AS SESSMENT YEAR, APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESS MENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF DISPUTE D ISSUES EXCEEDS THE MONETARY LIMIT SO SPECIFIED. THIS INST RUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEAL S TO BE FILED HENCEFORTH BEFORE THE TRIBUNAL. THE PENDING A PPEALS BELOW THE SPECIFIED TAX LIMIT MAY BE WITHDRAWN/NOT PRESSED. 4. ADMITTEDLY, IN THE DEPARTMENTAL APPEAL, THE TAX EFFECT IS LESS THAN RS.10 LACS, THEREFORE, DEPARTME NTAL APPEAL IS NOT MAINTAINABLE. THE LEARNED CIT (APPEALS) DEC IDED THE ISSUE IN DEPARTMENTAL APPEAL ON FACTS AND THE CASE OF THE REVENUE WOULD NOT FALL IN THE EXCEPTIONS PROVIDED I N THE ABOVE CIRCULAR. 3 5. IN VIEW OF THE ABOVE, LEARNED D.R. STATED THAT SINCE DEPARTMENTAL APPEAL IS FILED AGAINST THE CBDT INSTR UCTIONS, THEREFORE, HE WOULD NOT BE PRESSING DEPARTMENTAL AP PEAL. THEREFORE, THE ABOVE DEPARTMENTAL APPEAL IS DISMISS ED BEING NOT PRESSED. 6. THE APPEAL OF THE REVENUE IS DISMISSED. C.O.NO.36/CHD/2012 : 6. THERE IS A DELAY OF 34 DAYS IN FILING THE CROSS OBJECTION BEFORE THE TRIBUNAL. THE REASON FOR DELA Y EXPLAINED BY THE ASSESSEE WAS THAT HE WAS UNDER THE BONAFIDE BELIEF THAT HE HAS FILED THE CROSS OBJECTION AGAINST THE APPEAL FOR ASSESSMENT YEAR 2008-09 AND PRAYED THAT THE DELAY M AY BE CONDONED. 7. AFTER GOING THROUGH THE REASON EXPLAINED BY THE ASSESSEE FOR DELAY IN FILING THE CROSS OBJECTION AG AINST THE APPEAL FOR ASSESSMENT YEAR 2008-09, WE CONDONE THE DELAY IN FILING THE CROSS OBJECTION. 8. THE GROUND NO.1 RAISED BY THE ASSESSEE IN THE C ROSS OBJECTION READS AS UNDER : 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 36,000/- OF DEEMED RENTAL INCOME IN RESPECT OF SHOP MEASURING 40X12 LOCATED AT RAIPURA AS PER PARA-8, PAGE 16 &17 OF THE ORDER. 4 7. IT WAS STATED AT BAR THAT THIS GROUND IS COVERE D BY THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN ASSE SSEES OWN CASE IN CROSS APPEALS IN ITA NO.343/CHD/2012 & ITA NO.376/CHD/2012 FOR ASSESSMENT YEAR 2003-04 DATED 22.8.2012. THE ISSUE HAS BEEN DECIDED BY THE I.T.A .T., CHANDIGARH BENCH IN ASSESSEES FAVOUR AT PAGE 4, PA RAS 7 AND 8 OF THE ORDER, WHICH READ AS UNDER : 7. IN GROUND NO.3, THE ASSESSEE CONTENDED THAT CIT(A) ERRED IN HOLDING DEEMED RENTAL VALUE OF SHOP NO.2, RAILWAY ROAD, RAJPURA @ 36,000/- PER MONTH, AS PER PARA 8(A) OF THE ORDER, BY NOT CONSIDERING T HE FACTS THAT SHOP IS BEING USED AS GODOWN, FOR THE PURPOSE OF BUSINESS FOR KEEPING WOODEN PACKING AND MISCELLANEOUS ITEMS. 8. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND RELEVANT RECORDS . THE ASSESSEE FILED SUBMISSIONS BEFORE THE CIT(A) AS WELL AS BEFORE THE AO, INDICATING THAT THE SAID SHO P NO.2, RAILWAY ROAD, RAJPURA WAS USED AS A GODOWN. IN VIEW OF SUCH AN ASSERTION OF USING THE PREMISES FOR BUSINESS PURPOSE, RENTAL INCOME CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE FINDINGS OF THE CIT(A), IN SUCH A F ACT- SITUATION CANNOT BE UPHELD. THIS GROUND OF THE ASSESSEE IS ALLOWED. 8. RESPECTFULLY FOLLOWING THE ORDER OF THE I.T.A.T ., CHANDIGARH BENCH SINCE NO DISTINGUISHING FACTS HAVE BEEN BROUGHT TO OUR NOTICE, WE ALLOW THE APPEAL OF THE A SSESSEE ON THIS GROUND. 5 9. THE GROUND NO.2 RAISED BY THE ASSESSEE READS AS UNDER : 2. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.30,000/- OF DEEMED RENTAL INCOME IN RESPECT OF HOUSE AT VILLAGE ISLAMPUR RAJPURA AS PER PARA-8, PAGE 16 & 17 OF THE ORDER. 10. IT WAS STATED AT BAR THAT THIS GROUND IS COVER ED BY THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN ASSE SSEES OWN CASE IN CROSS APPEALS IN ITA NO.343/CHD/2012 & ITA NO.376/CHD/2012 FOR ASSESSMENT YEAR 2003-04 DATED 22.8.2012. THE ISSUE HAS BEEN DECIDED BY THE I.T.A .T., CHANDIGARH BENCH IN ASSESSEES FAVOUR AT PAGE 5, PA RAS 9 AND 10 OF THE ORDER, WHICH READ AS UNDER : 9. IN GROUND NO.4, ASSESSEE CONTENDED THAT CIT(A) ERRED IN UPHOLDING THE DEEMED RENTAL VALUE OF THE RESIDENTIAL HOUSE AT ISLAMPURA, NEAR RAJPURA, IGNORING THE FACT THAT HOUSE IS IN A DILAPIDATED CONDITION AND IS NOT FIT FOR USE AS RESIDENCE. THE APPELLANT PLACED RELIANCE ON CERTAIN DECISIONS BEFO RE THE CIT(A), SUCH AS; SHYAM SUNDER BEHL V ADDL. CIT (2006) 99 TTJ 1147 (ASR-TRIB), MANDEEP JAIN V DCIT )2011) 43 SOT 288 (CHD-TRIB) AND ACIT V DR. AMRIT LAL ADLAKHA (2006) 105 TTJ (ASR-TRIB) 271. HAVING REGARD TO THE FINDINGS OF THE AO AS WELL AS THAT OF CIT(A), IN THE LIGHT OF SUBMISSIONS FILED BY THE APPELLANT, RENTAL INCOME CANNOT BE ASSESSED IN RESPECT OF SUCH A HOUSE WHICH IS NOT FIT FOR LIVING FOR HUMAN BEINGS, AS THE HOUSE WAS IN A DILAPIDATED CONDITION AND NO ELECTRICITY AND WATER CONDITIONS WERE AVAILABLE IN THAT HOUSE. 6 10. IN VIEW OF THE ABOVE IDENTICAL FACT-SITUATION, IN RESPECT OF GROUND NO.6, THE SAME IS ALLOWED, AS THA T HOUSE IS NOT IN A CONDITION TO BE USED FOR HUMAN BEINGS. 11. RESPECTFULLY FOLLOWING THE ORDER OF THE I.T.A. T., CHANDIGARH BENCH SINCE NO DISTINGUISHING FACTS HAVE BEEN BROUGHT TO OUR NOTICE, WE ALLOW THE APPEAL OF THE A SSESSEE ON THIS GROUND. 12. THE GROUND NO.3 RAISED BY THE ASSESSEE READS A S UNDER : 3. THAT THE WORTHY COMMISSIONER OF INCOME LAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.48,000/- OF DEEMED RENTAL INCOME IN RESPECT OF SHOP MEASURING '25X12' LOCATED AT MOHINDERGANJ AS PER PARA-8, PAGE 16 & 17 OF THE ORDER. 13. IT WAS STATED AT BAR THAT THIS GROUND IS COVER ED BY THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN ASSE SSEES OWN CASE IN CROSS APPEALS IN ITA NO.343/CHD/2012 & ITA NO.376/CHD/2012 FOR ASSESSMENT YEAR 2003-04 DATED 22.8.2012. THE ISSUE HAS BEEN DECIDED BY THE I.T.A .T., CHANDIGARH BENCH IN ASSESSEES FAVOUR AT PARAS 11 A ND 12 OF THE ORDER, WHICH READ AS UNDER : 11. IN GROUND NO.5, THE ASSESSEE CONTENDED THAT CIT(A) ERRED IN UPHOLDING THE DEEMED RENTAL VALUE O F SHOP AT MAIN BAZAR, MOHINDER GANJ, RAJPURA, AS PER PARA 8(F) OF THE ASSESSMENT ORDER, BY NOT CONSIDERI NG THE FACT THAT THE SHOP IS BEING USED AS WORKSHOP FO R REPAIRING CERTAIN ELECTRONIC ITEMS. THE FINDINGS O F THE CIT(A), ARE CONTAINED IN PARA 8 OF THE APPELLAT E 7 ORDER, WHEREBY THE ADDITION MADE BY THE AO, WAS UPHELD, ON THE GROUND THAT NO EVIDENCE WAS FILED BY THE ASSESSEE REGARDING USE OF THE PROPERTY FOR BUSINESS PURPOSE. HOWEVER, IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS FILED SUCH EVIDENCE AND THE CIT(A) SOUGHT REMAND REPORT FROM THE AO. LD. CIT(A) OBSERVED THAT PHOTOGRAPHS TAKEN DURING THE CURRENT PERIOD, CANNOT BE SAID TO BE EVIDENCE FOR BUSINESS USE IN THE PAST. SUCH OBSERVATION OF THE CIT(A) REMAINED UNCORROBORATED B Y ANY EVIDENCE BROUGHT ON RECORD. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF THE SPECIAL BENC H IN THE CASE OF M/S ALL CARGO GLOBAL LOGISTICS LTD. V DCIT IN ITA NO. 5018 TO 5022 & 5059/M/2010 ASSESSMENT YEAR 2004-05 TO 2009-10 DATED 6.7.2012, TO SUPPORT HIS CONTENTION THAT SAID ADDITION CANNOT BE MADE WITHOUT THERE BEING ANY MATERIAL BROUGHT ON RECORD TO JUSTIFY SAID ADDITION . 12. HAVING REGARD TO THE FACT-SITUATION OF THE CASE , NON-AVAILABILITY OF ANY MATERIAL BEFORE THE AO OR CIT(A), TO IGNORE THE EVIDENCE FILED BY THE ASSESSE E IN THE MATTER, WE DO NOT CONSIDER IT A FIT CASE FOR UPHOLDING THE ADDITION. THEREFORE, THE ADDITION IS DELETED AND GROUND OF THE ASSESSEE IS ALLOWED. 11. RESPECTFULLY FOLLOWING THE ORDER OF THE I.T.A. T., CHANDIGARH BENCH SINCE NO DISTINGUISHING FACTS HAVE BEEN BROUGHT TO OUR NOTICE, WE ALLOW THE APPEAL OF THE A SSESSEE ON THIS GROUND. 12. THE GROUND NO.4 RAISED BY THE ASSESSEE READS A S UNDER : 8 4. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 69,835/- ON ACCOUNT OF HOUSEHOLD EXPENSES AS PER PARA 11 PAGE 18 OF THE ORDER. 13. BRIEFLY, THE FACTS OF THE CASE ARE THAT AN ADD ITION OF RS.1,41,835/- WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. 14. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMI TTED THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE W ITHDRAWALS MADE BY THE WIFE OF THE ASSESSEE TO THE TUNE OF RS. 72,000/- AND WHICH WITHDRAWALS WERE ALSO AVAILABLE FOR MEETI NG HOUSEHOLD EXPENSES. AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE THE LEARNED CIT (APPEALS) HELD THAT THE WI THDRAWALS MADE BY THE WIFE OF THE ASSESSEE AMOUNTING TO RS.72 ,000/- HAVE NOT BEEN CONSIDERED BY THE ASSESSING OFFICER A ND THIS FACT HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFF ICER DURING THE REMAND PROCEEDINGS. THOUGH THE ESTIMATION OF HOUSEHOLD EXPENSES BASED ON THE DETAILED OBSERVATIONS OF THE ASSESSING OFFICER IS QUITE LOGICAL, THE LEARNED CIT (APPEALS) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION TO THE EXT ENT OF RS.72,000/-. IN THIS WAY, AN ADDITION OF RS.69835/ - WAS CONFIRMED BY THE LEARNED CIT (APPEALS). 15. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSE E REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES AND THE LEARNED D.R. RELIED ON THE ORDER OF THE LEA RNED CIT (APPEALS). 9 16. ON PERUSAL OF THE ORDER OF THE LEARNED CIT (AP PEALS), WE SEE THAT THE LEARNED CIT (APPEALS) HAS GIVEN QUI TE A REASONABLE FINDING AS THE PRAYER OF THE ASSESSEE WA S CONFINED TO THE EXCLUSION OF RS.72,000/- AS WITHDRAWALS MADE BY THE WIFE OF THE ASSESSEE. THE BENEFIT TO THE ASSESSEE HAS BEEN DULY GIVEN BY THE LEARNED CIT (APPEALS) AND NO FURT HER ARGUMENTS WERE MADE BEFORE THE LEARNED CIT (APPEALS ) AND EVEN DURING THE COURSE OF HEARING BEFORE US NO OTHE R ARGUMENT WAS MADE IN THIS REGARD. IN VIEW OF THIS, THE GROU ND OF CROSS OBJECTION RAISED BY THE ASSESSEE IS DISMISSED. 17. THE GROUND NO.5 OF THE CROSS OBJECTION IS GENE RAL, THEREFORE, NEEDS NO ADJUDICATION. 18. THE GROUND NO.6 OF THE CROSS OBJECTION READS A S UNDER : 6. THAT THE WORTHY CIT(A) HAS ALSO ERRED IN CONFIR MING THE ADDITION OF RS.50,168/- AS PER FINDING GIVEN IN PARA-1 8 AT PAGES 24 TO 25 OF THE ORDER. 19. THE ASSESSING OFFICER DISALLOWED EXPENSES UNDE R THE HEAD CAR & TELEPHONE TO THE EXTENT OF 25% I.E. RS .62,710/-. 20. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMI TTED THAT IN RESPECT OF CAR RUNNING EXPENSES, THERE ARE CERTAIN EXPENSES OF SCOOTER RUNNING BY THE SALESMEN AND AS REGARDS 25% OF THE EXPENSES, IT WAS SUBMITTED THAT DISALLOW ANCE IS EXCESSIVE AND A PRAYER WAS MADE TO RESTRICT THE SAM E TO THE EXTENT OF 1/10 TH OF THE EXPENSES CLAIMED. THE LEARNED CIT (APPEALS) AFTER CONSIDERING THE SUBMISSION OF THE A SSESSEE 10 HELD THAT THE ASSESSING OFFICER HAS MADE THE DISALL OWANCE PURELY ON ESTIMATE AND GUESS WORK. IT IS APPARENT THAT THERE COULD BE CERTAIN PERSONAL USE OF THE VEHICLE FOR WH ICH 1/5 TH OF THE EXPENSES WOULD MEET THE ENDS OF JUSTICE. IN TH IS WAY, THE LEARNED CIT (APPEALS) RESTRICTED THE DISALLOWANCE T O 1/5 TH OF THE ACTUAL EXPENSES. 21. THE LEARNED COUNSEL FOR THE ASSESSEE MADE A PR AYER BEFORE US TO RESTRICT THE DISALLOWANCE TO THE EXTEN T TO 1/10 TH OF THE EXPENSES. 22. THE LEARNED D.R. RELIED ON THE ORDER OF THE LE ARNED CIT (APPEALS). 23. AFTER HEARING BOTH THE PARTIES AND LOOKING TO THE VOLUME OF DISALLOWANCE SUSTAINED BY THE LEARNED CIT (APPEALS) I.E. RS.50,168/- BEING A VERY SMALL AMOUNT, WE ARE NOT INCLINED TO INTERFERE IN THE ORDER OF THE LEARNED C IT (APPEALS). THIS GROUND OF THE ASSESSEE IS DISMISSED. 24. THE GROUND NO.7 OF THE CROSS OBJECTION READS A S UNDER : 7. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN CONFI RMING THE ADDITION OF RS.1,60,000/- ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT ON DIFFERENT DATES AS PER PARA 21, PAG E 25 OF THE ORDER. 25. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AS SESSEE HAD DEPOSITED CASH AMOUNTING TO RS.50,000/- AND 11 RS.1,10,000/- ON 7.3.2008 AND 24.3.2008 BUT THE SAM E WERE NOT RECORDED IN THE CASH BOOK. 26. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMI TTED THAT THERE WAS A SLIGHT VARIATION IN THE DATES OF M AKING THE ENTRIES IN THE CASH BOOK OF CASH WITHDRAWN, WHICH W AS DONE ON A LATER DATE I.E. RS.50,000/- DEPOSITED IN THE B ANK ON 7.3.2008 WAS RECORDED IN ASSESSEES CASH BOOK ON 10 .3.2008. SIMILARLY, THE AMOUNT OF RS.1,10,000/- DEPOSITED IN BANK ON 24.3.2008 WAS RECORDED IN THE BOOKS OF THE ASSESSEE ON 25.3.2008. THE LEARNED CIT (APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE STATING THAT THE CASH DEPOSITED ON TWO DIFFERENT DATES DOES NOT STAND RECORDED IN THE CASH BOOK ON THE GIVEN DATES. THE ASSESSEE CLAIMED THAT SIMILAR AMOUNT HAD BEEN ACCOUNTED FOR IN THE FORM OF ENTRY IN THE CASH BOOK ON OTHER DATE IS NOT ACCEPTABLE AS THE EVENT OF DEP OSIT OF CASH IN THE BANK ACCOUNT IS ON LATER DATE IN COMPARISON TO THE ENTRY IN THE CASH BOOK. 27. THE LEARNED COUNSEL FOR THE ASSESSEE STATED BE FORE US THAT THE CONFUSION WAS DUE TO WRONG QUERY RAISED BY THE ASSESSING OFFICER IN THE QUESTIONNAIRE DATED 12.11. 2009 AND 22.12.2009, WHICH REFLECTS THAT THE ASSESSING OFFIC ER WAS NOT CLEAR WHETHER THE ENTRIES WERE REGARDING DEPOSIT OR WITHDRAWAL IN THE BANK. THE ASSESSING OFFICER KEPT ON RAISING THE QUERY REGARDING WITHDRAWALS FROM BANK OF WHICH ASSESSEE G AVE CORRECT REPLY AND WHILE MAKING ORDER THE ASSESSING OFFICER MADE ADDITIONS ON THE BASIS OF DEPOSITS IN THE BANK . FURTHER IT WAS STATED THAT THE ASSESSEE HAD WRONGLY ACCOUNT ED THE 12 CASH WITHDRAWAL TRANSACTION OF CASH FROM THE CASH B OOK BECAUSE OF THE BONAFIDE REASON THAT THE ACCOUNTANT OF THE ASSESSEE BY MISTAKE ENTERED THE TRANSACTION ON LATE R DATE. SINCE THE CASH WAS NOT UTILIZED DURING THOSE DATES AND WAS AVAILABLE IN THE BOOKS OF ACCOUNT, NO ADDITION ON A CCOUNT OF SAME WAS CALLED FOR. 28. THE LEARNED D.R. RELIED ON THE ORDER OF THE LE ARNED CIT (APPEALS). 29. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE VIEW THAT THERE WAS SOME CONFUSION BETWEEN THE ASSESSING OFFICER AND THE ASSESSEE AS THE ASSESSING OFFICER RAISED QU ERIES REGARDING THE WITHDRAWALS FROM THE BANK, WHICH WERE DULY REPLIED BY THE ASSESSEE. HOWEVER, WHAT WE UNDERSTA ND FROM THE PERUSAL OF THE CASH BOOK, THE ASSESSING OFFICER WAS ACTUALLY RAISING QUERIES WITH REGARD TO THE DEPOSIT S IN THE BANK. IN VIEW OF THIS, WE FIND IT FIT TO SEND THI S ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER IT AF RESH AFTER GIVING THE ASSESSEE DUE OPPORTUNITY OF BEING HEARD. 30. THE GROUND NOS.8, 9, 11 AND 12 ARE NOT PRESSED AND, HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 31. THE GROUND NO.10 OF CROSS OBJECTION READS AS U NDER : 10. THAT THE CIT(A) HAS ALSO ERRED IN CONFIRMING THE ADDITION OF RS.244,464/- OF DEEMED DIVIDEND AS PER PARA 30 PAGE 27 & 28 OF THE ORDER. 13 32. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE WAS D EBITED BY A TOTAL AMOUNT OF RS.21,23,607/- BY THE COMPANY M/S VERMA ELECTRONICS (P) LTD. THE ASSESSEES EXPLANAT ION WAS THAT OUT OF THIS AMOUNT, THE SALE TO THE ASSESSEE W ERE AMOUNTING TO RS.3,26,995/- AND ADVANCE RENT OF RS.3 LACS. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAD GIVEN INTER EST-FREE LOAN TO THE COMPANY M/S VERMA ELECTRONICS (P) LTD. TO THE TUNE OF RS.12,52,148/-. 33. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMI TTED THAT THE ASSESSEE IS PROPRIETOR OF M/S VERMA ELECTR ONICS AND THERE IS ANOTHER CONCERN IN THE NAME OF M/S VERMA ELECTRONICS (P) LTD.. BOTH ARE DEALING IN ELECTRON IC ITEMS AND THERE ARE CERTAIN BUSINESS TRANSACTIONS CONCERNING THE TWO CONCERNS AND THERE IS COPY OF ACCOUNT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT SO HAPPENED THAT AT TIME ONE CONCERN ON BEHALF OF THE OTHER CONCERN AND VICE-VERSA AND AT T IME, THE SALES ARE MADE BY THE ONCE CONCERN ON BEHALF OF THE OTHER CONCERN AND ALSO THE ASSESSEE IS PAYING RENT TO THE COMPANY AND THESE ALL BEING BUSINESS TRANSACTIONS, NO ADDIT ION UNDER SECTION 2(22)(E) OF THE ACT CAN BE MADE. AFTER CON SIDERING THE SUBMISSION OF THE ASSESSEE, THE LEARNED CIT (APPEAL S) HELD THAT COPY OF ACCOUNT OF M/S VERMA ELECTRONICS (P) L TD. IN THE BOOKS OF M/S VERMA ELECTRONICS SHOWS THAT THERE HA S BEEN NUMEROUS TRANSACTIONS OF AMOUNTS RECEIVED BY THE AS SESSEE ON BEHALF OF THE COMPANY AND LATER ADJUSTMENT OF THE S AME IN THE FORM OF CASH PAYMENT OR CHEQUE PAYMENT. HE ALSO O BSERVED 14 THAT THE ASSESSEE HAS GIVEN INTEREST-FREE ADVANCE T O THE COMPANY TO THE TUNE OF RS.12,52,148/- AND IF ANY AM OUNT ADVANCED BY THE COMPANY TO THE ASSESSEE IS TREATED AS LOAN AND NOT FOR BUSINESS PURPOSES, ADJUSTMENTS TO THE T UNE OF RS.12,52,148/- WILL HAVE TO BE GIVEN BEFORE WORKING OUT AMOUNT OF DEEMED DIVIDEND. IN THIS WAY, THE ADDITI ON TO THE EXTENT OF RS.2,44,464/- WAS SUSTAINED BY THE LEARNE D CIT (APPEALS). 34. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSE E DREW OUR ATTENTION TO THE COPY OF ACCOUNT OF THE ASSESSE E IN THE BOOKS OF THE COMPANY AND THAT OF THE COMPANY IN THE BOOKS OF THE ASSESSEE, WHICH ARE PLACED AT PAPER BOOK PAGES 26 TO 39. DURING THE YEAR, THERE WERE TOTAL DEBITS OF RS.21,2 3,607/- IN THE COPY OF ACCOUNT OF ASSESSEE IN THE BOOKS OF M/S VERMA ELECTRONICS (P) LTD.. SINCE THE TRANSACTIONS ARE I N THE NATURE OF BUSINESS, THEY ARE OUTSIDE THE SCOPE OF SECTION 2(22)(E) OF THE ACT. RELIANCE WAS PLACED ON THE JUDGMENT OF LA KRA BROTHERS VS. DCIT (2007) 106 TTJ (CHD.) 250 AND HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMBASSADOR TRAVELS (P.) LTD. (DEL), 318 ITR 376. 35. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON PERUSAL OF THE COPY OF ACCOUNT OF THE COMPANY IN THE BOOKS OF THE ASSESSEE AND VICE-VERSA, WE HOLD THAT THESE ARE RUNNING ACCOUNTS AND BOTH THE DEBIT AND CREDIT ENTRIES ARE BEING MADE THROUGHOUT THE YEAR. ON PER USAL 15 OF THE SAME, THERE IS NO DOUBT IN OUR MIND THAT ALL THESE ENTRIES HAVE BEEN MADE DURING THE REGULAR COURSE OF BUSINESS OF THE ASSESSEE. THE INTENTION OF LEGISLA TURE ENACTING SECTION 2(22)(E) OF THE ACT IS THAT THE CL OSELY HELD COMPANIES WHICH ARE CONTROLLED BY A GROUP OF MEMBER S CANNOT TAKE ADVANTAGE BY INSTEAD OF DISTRIBUTING ACCUMULATED PROFITS AS DIVIDEND, DISTRIBUTE AS LOAN OR ADVANCES TO SHAREHOLDERS HAVING CONTROLLING POWER. HOWEVER, THIS INTENTION CANNOT BE EXTENDED TO GENUI NE TRANSACTIONS DONE DURING THE COURSE OF BUSINESS. R ELIANCE PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON T HE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF AMBASSADOR TRAVELS (P.) LTD. (SUPRA) IS NOT OUT OF PLACE. IN VIEW OF THIS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. 36. THE GROUND NO.12A IS GENERAL AND, HENCE NEEDS NOT ADJUDICATION. 37. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISM ISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF FEBRUARY, 2016. SD/- SD/- (H.L. KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 3 RD FEBRUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH