M/s Elson Hosiery Mills, Ludhiana V. ACIT, Ludhiana

ITA 823/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8955 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 13-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: S C JAIN
• Keywords: Opportunity of being heard; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER ITA NO.823/CHD/2015 (ASSESSMENT YEAR : 2008-09) M/S ELSON HOSIERY MILLS, VS. THE A.C.I.T., LUDHIANA. CIRCLE-1, LUDHIANA. PAN: AAAAFE4106B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.C. JAIN RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 15.09.2016 DATE OF PRONOUNCEMENT : 28.11.2016 O R D E R PER DIVA SINGH, J.M. : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 28.09.2015 OF LEARNE D COMMISSIONER OF INCOME TAX (APPEALS)-1, LUDHIANA PERTAINING TO 2008 -09 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. THAT CIT(A)-I HAS NOT CONSIDERED THE CORRECT FA CTS OF THE CASE. THE DEEMED DIVIDEND CONSIDERED BY THE CIT(A)-I AT RS.21 ,19,154 U/S 2(22)(E) OF THE INCOME TAX ACT, 1961 MAY PLEASE BE DELETED. 2. THERE WAS OPENING BALANCE OF RS.12,64,154/- AS O N 01.04.2007 WHICH HAVE BEEN CONSIDERED IN THE ASSESSMENT YEAR 2007-08 AND AGAIN ADDITION OF THIS AMOUNT TENTAMOUNTS TO DOUBLE ADDITION. 3. THAT THE AMOUNT HAS BEEN RECEIVED BY THE FIRM FR OM M/S ELSON KNITWEARS (P) LTD. ON INTEREST AND ACCORDINGLY TDS HAS BEEN D EDUCTED. THE A.O. HAS ALLOWED THE EXPENDITURE DURING THE ASSESSMENT YEAR. 4. THAT THE A.O. HAS ACCEPTED THE CONTENTION DURING ASSESSMENT YEAR 2005- 06 TO 2007-08 HENCE SIMILARLY DURING ASSESSMENT YEA R 2009-10 TO 2012- 13 AND THIS FACT HAS NOT BEEN CONSIDERED BY THE CIT (A)-I. ITA NO.823/CHD/2015 2 5. THE CIT(A)-I HAS GIVEN THE JUDGMENT IN THE APPEA L ORDER FOR WHICH NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE FOR NATU RAL JUSTICE. 6. THAT THE ADDITION OF DEEMED DIVIDEND OF RS.21,19 ,154/- BE DELETED. 7. THAT THE ASSESSEE CRAVES TO LEAVE, AMEND, ALTER, TAKE ADDITIONAL GROUNDS OF APPEAL AT THE TIME OF HEARING OR BEFORE THE TIME OF HEARING. 2. HOWEVER, THE PARTIES WERE HEARD ONLY IN RESPECT OF GROUND NO.5. THE ISSUES RELATABLE TO THE OTHER GROUNDS WERE ADDRESSE D BY THE LD. AR TO DEMONSTRATE THAT A NON-SPEAKING ORDER HAS BEEN PASS ED. INVITING ATTENTION TO THE IMPUGNED ORDER LD. AR SUBMITTED THAT THE SUBMIS SIONS OF THE ASSESSEE HAVE BEEN RECORDED AND REPRODUCED IN THE IMPUGNED O RDER, HOWEVER WITHOUT DISCUSSING WHY THEY CANNOT BE ACCEPTED HE HAS INSTE AD RELYING UPON THE DECISIONS NOT RELEVANT TO THE ISSUE AND WITHOUT CON FRONTING THESE TO THE ASSESSEE AND IGNORING THE DECISIONS RELIED UPON BY THE ASSESSEE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. ON FACTS IT W AS SUBMITTED THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHARMAN WOOLEN MILLS LTD. (2012) 204 TAXMANN 0082 (P&H) IS FULLY A PPLICABLE AND HAS BEEN RELIED UPON AND NOT DISCUSSED IN THE IMPUGNED ORDER. THE REVENUES CONTENTION THAT SHAREHOLDERS OF THE LENDING COMPANY AND THAT OF THE ASSESSEE WERE THE SAME, IT WAS SUBMITTED TILL DATE HAS NOT B EEN ACCEPTED BY ANY FORUM AND THE APPEAL TILL DATE HAS NOT BEEN ADMITTED BY T HE JURISDICTIONAL HIGH COURT. IN THESE CIRCUMSTANCES, IT WAS HIS LIMITED PRAYER THAT THE ISSUES BE REMANDED TO THE CIT(A) FOR A DECISION DE NOVO . 3. THE LD. SR.DR THOUGH RELIED UPON THE IMPUGNED OR DER WAS UNABLE TO SHOW ANY DISCUSSION IN THE ORDER ON THE SUBMISSIONS OF THE LD. AR. ACCORDINGLY, IT WAS SUBMITTED THAT HE WOULD HAVE NO OBJECTION IF THE IMPUGNED ORDER IS RESTORED TO THE CIT(A). 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER CONSIDERING THE FACT THAT THOUGH THE ASSESSEE RECEI VED A LOAN OF ITA NO.823/CHD/2015 3 RS.21,19,154/- FROM M/S ELSON KNITWEARS PVT. LTD. A ND DEDUCTED TDS THEREON CLAIMED INTEREST EXPENDITURE THEREON. TREA TING THE SAME AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT THE CLAI M WAS CONSIDERED TO BE NOT ALLOWABLE AS ONE OF THE MAIN SHARE HOLDERS SHRI GURDIP SINGH HAD 720 SHARES OUT OF 2774 (26% SHARE HOLDING) AND SHRI GUR DIP SINGH WAS ALSO A PARTNER IN THE ASSESSEE FIRM WITH A PROFIT SHARING RATIO OF 50%. THE ASSESSEE WAS QUESTIONED BY THE ASSESSING OFFICER THAT SINCE SHRI GURDIP SINGH WAS A PARTNER WITH THE SUBSTANTIAL INTEREST IN THE FIRM A ND HE WAS ALSO A DIRECTOR WHO WAS THE BENEFICIAL OWNER OF THE SHARE HOLDINGS MORE 10% OF THE VOTING POWER WHY THE AMOUNT OF LOAN SHOULD NOT BE TREATED AS DIVIDEND IN THE HANDS OF THE ASSESSEE UNDER SECTION 2(22)(E) OF THE ACT. THE FOLLOWING FACTS WERE BROUGHT OUT BY THE ASSESSING OFFICER : 1. ONE OF THE MAIN SHARE HOLDERS IS SH. GURDIP SIN GH WHO HAS 720 SHARES OUT OF 2774 (26% SHARE HOLDING). 2. SH. GURDIP SINGH IS ALSO A PARTNER IN THE ASSESS EE FIRM M/S ELSON HOSIERY MILLS WITH A PROFIT SHARING RATIO OF 50%. 3. THE COMPANY M/S. ELSON KNITWEARS PVT. LTD. HAS S UFFICIENT ACCUMULATED PROFITS AS ON THE DATE OF GIVING OF THE LOANS. 4.1 IN VIEW THEREOF, ADDITION OF THE SAID AMOUNT BY WAY OF A DISALLOWANCE WAS MADE IN THE HANDS OF THE ASSESSEE COMPANY. AGG RIEVED, THE ASSESSEE CAME UP IN APPEAL BEFORE THE CIT (APPEALS), RELYING ON NOT ONLY THE PAST HISTORY ON THE SAID ISSUE BUT ALSO DECISIONS INDEPE NDENT OF THE PAST HISTORY IN SUPPORT OF ITS CLAIM. IT IS SEEN THAT THOUGH THE A RGUMENTS AND DECISIONS TO AN EXTENT HAVE BEEN EXTRACTED IN THE IMPUGNED ORDER HO WEVER, ON A PERUSAL OF THE FINDINGS RECORDED IN PARA 3.2 IT IS FOUND THAT THESE DECISIONS HAVE NOT BEEN REFERRED TO AND IS A MERE REPETITION AND JUSTI FICATION OF THE ASSESSING OFFICERS ACTION. THE LEARNED A.R. IN THE COURSE O F THE ARGUMENTS HAD ALSO REFERRED THAT REPEATEDLY, THE CASE HAS BEEN ADJOURN ED ON THE REQUEST OF THE REVENUE AND THE REVENUE HAS SOUGHT TIME TO GO THROU GH THE ASSESSMENT ITA NO.823/CHD/2015 4 RECORDS FROM 2006-07, 2007-08 AND 2009-10 ASSESSMEN T YEARS. A PERUSAL OF THE RECORD SHOWS THAT THE APPEAL CAME UP FOR HEARIN G ON 07.07.2016 TIME WAS SOUGHT BY THE ASSESSEE AND IT WAS GRANTED. ON 25.07.2016 AGAIN IT WAS ADJOURNED ON THE REQUEST OF THE REVENUE. THE LEAR NED SR.D.R. CONSIDERING THE CIRCUMSTANCES AGAIN STATED, THAT HE HAS NO OBJE CTION IF THE MATTER IS REMANDED TO THE FILE OF THE CIT (APPEALS). CONSIDE RING THE ARGUMENTS OF THE LEARNED A.R. WHO SUBMITTED THAT NON-SPEAKING OR DER HAS BEEN PASSED WITHOUT REFERRING TO EITHER THE JUDGMENTS RELIED UP ON OR THE SUBMISSION ON FACTS AVAILABLE ON RECORD AND THE SUBMISSION OF THE LD. SR. DR THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK T O THE FILE OF THE CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2016. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED : 28 TH NOVEMBER, 2016 *RATI(CHANDIGARH)*/ SUJEET (DELHI) COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR //TRUE COPY// ASSISTANT REGISTRAR, ITAT, CHANDIGARH