POONA GALRANIZERS P.LTD, V. ASST CIT 8(2),

MA 366/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1294 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: B V JHAVERI
• Keywords: Rectification of order; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER M.A. NO.366/M/2013 ( ITA NO. 7626/M/2011) ASSESSMENT YEAR: 2008 - 09 M/S. POONA GALVANIZERS PVT. LTD., 705, MORYA LANDMARK, II, OSHIWARA LINK ROAD, ANDHERI (W) MUMBAI PAN: AADCP2111R VS. DY. CIT 8(2) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.V. J HAVERI REVENUE BY : SHRI PITAMBAR DAS, D.R. DAT E OF HEARING : 20.12. 2013 DATE OF PRONOUNCEMENT : 2 3 .12.2013 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN MOVED BY THE ASSESSEE /APPLICANT UNDER SECTION 254(2) OF THE INCOME TAX ACT , FOR RECALLING OF THE ORDER DATED 24.07.13 PASSED IN ITA NO.7626/M/11, WITH THE PLEADING THAT THERE IS A MISTAKE APPARENT FROM THE RECORD IN THE ABOVE SAID ORDER. 2. IT HAS BEEN CONTENDED THAT ON THE DATE OF HEARING OF THE ABOVE NOTED APPEAL , AN ADJOURNMENT APPLICATION WAS M OVED BY THE PARTNER ASSOCIATE OF CHOKSHI & CHOKSHI, CHARTERED ACCOUNTANTS I.E. REPRESENTATIVES OF THE ASSESSEE. VIDE SAID APPLICATION , SHRI RAJNIKANT CHOKSHI , CHARTERED ACCOUNTANT , THE LD. REPRESENTATIVE OF THE APPLICANT/ ASSESSEE HAD SOUGHT ADJOURNMENT ON THE GROUND THAT MR. M.R. CHOKSHI , ANOTHER PARNER OF CHOKSHI & CHOKSHI, CHARTERED ACCOUNTANTS WAS NOT ABLE TO REACH THE COURT DUE TO HEAVY RAIN S . HOWEVER, THE M.A. NO.366/M/2013 (ITA NO.7626/M/2013) M/S. POONA GALVANIZERS PVT. LTD. 2 TRIBUNAL IN THE COURSE OF HEARING INFORMED SHRI RAJNIKANT CHOKSHI - CHARTERED ACCOUNTANT OF THE A SSESSEE COMPANY , THAT THE ISSUE INVOLVED IN THE APPEAL WAS A COVERED ISSUE AND THEREFORE IT COULD BE DISPOSED OFF , HENCE THE APPLICATION FOR ADJOURNMENT WAS NOT CONSIDERED. IT HAS BEEN PLEADED THAT DURING THE COURSE OF HEARING THE LD. REPRESENTATIVE OF TH E ASSESSEE NAMELY SHRI RAJNIKANT CHOKSHI, CHARTERED ACCOUNTANT DREW ATTENTION OF THE MEMBERS OF THE TRIBUNAL THAT IN THE ABOVE NOTED APPEAL , THE CONTENTION OF THE APPLICANT/ASSESSEE COMPANY WAS THAT THE AMOUNT GIVEN IN THE COURSE OF BUSINESS HAD BEEN TREAT ED AS LOANS AND ADVANCES AND THEREFORE THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT HAD NO APPLICATION. IT HAS BEEN FURTHER PLEADED THAT THE MEMBERS OF THE TRIBUNAL HAD INFORMED THE REPRESENTATIVE OF THE APPLICANT THAT THE SAID CONTENTION OF THE APPLICANT WOULD BE CONSIDERED. THE APPEAL OF THE ASSESSEE COMPANY WAS DECIDED BY THE TRIBUNAL ON THE SAME DAY I.E. 24.07.13 ITSELF AND THE SAME WAS DISMISSED. IT HAS BEEN FURTHER CONTENDED THAT WHILE DISMISSING THE APPEAL OF THE ASSESSEE COMPANY , TH E TRIBUNAL OBSERVED THAT THE ASSESSEE HA D NOT PRODUCED ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM THAT THE TRANSACTION BETWEEN THE TWO COMPANIES WAS NOT IN THE NATURE OF THE LOAN BUT IN THE NATURE OF BUSINESS TRANSACTION. IT HAS BEEN FURTHER CONTENDED THAT ON THE SAID DATE OF HEARING THE LD. REPRESENTATIVE OF THE ASSESSEE COMPANY NAMELY SHRI RAJNIKANT CHOKSHI, CHARTERED ACCOUNTANT HAD SOUGHT THE ADJOURNMENT BEFORE THE TRIBUNAL, H OWEVER, THE SAID REQUEST WAS REJECTED BY THE TRIBUNAL AND THEREFORE THE APPLICANT COMPANY WAS NOT GIVEN AN OPPORTUNITY TO FILE NECESSARY PAPERS TO SUBSTANTIATE ITS CONTENTION THAT THE TRANSACTION WAS A BUSINESS TRANSACTION. IT HAS BEEN FURTHER PLEADED T HAT THIS CONTENTION WAS NOT ONLY RAISED BY THE ASSESSEE BEFORE TH E AO BUT ALSO BEFOR E THE CIT(A), B UT THE SAME WAS REJECTED BY THEM . I T HAS BEEN FURTHER PLEADED THAT AN ALTERNATE CONTENTION WAS ALSO RAISED BEFORE THE LD. CIT(A) RELYING UPON THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . UNIVERSAL M EDICARE PVT. LTD . (2010) 324 ITR M.A. NO.366/M/2013 (ITA NO.7626/M/2013) M/S. POONA GALVANIZERS PVT. LTD. 3 263 AND SPECIAL BENCH DECISION OF MUMBAI TRIBUNAL IN THE CASE OF BHAUMIK COLOUR PVT. LTD. 313 ITR(AT) 146 TO THE EFFECT THAT EVEN IF IT IS HELD THAT ADVANCE/LOAN ATTRACTED THE PROVISIONS OF SECTION 2(22)(E) , THE ADDITION HAS TO BE MADE IN T HE HANDS OF THE REGISTERED SHARE HOLDER I.E. SHRI H.M. SINGH AND NOT THE ASSESSEE COMPANY. IT HAS BEEN FURTHER CONTENDED THAT THE CIT(A) ACCEPTED THE ALTERNATE CONTENTION OF THE ASSESSEE/APPLICANT AND OBSERVED THAT THE ASSESSEE WAS NOT A SHARE HOLDER IN S ISTER CONCERN AND THE ADDITIONS MADE BY THE AO IN THE CASE OF THE ASSESSEE WERE ORDERED TO BE DELETED WITH FURTHER OBSERVATION THAT THE AO MAY CONSIDER MAKING ADDITION IN CASE OF SHARE HOLDER SHRI H.M. SINGH. AGGRIEVED FROM THE ORDER OF THE CIT(A) THE ASS ESSEE HAD COME IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS OF APPEAL: A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THAT THE TRANSACTION BETWEEN THE TWO COMPANIES IS IN THE NATURE OF A LOAN AND NOT IN THE NATUR E OF A BUSINESS TRANSACTION THEREBY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME BE DELETED. B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO FAI LED TO CONSIDER THE VARIOUS SUPPORTING PRODUCED BEFORE THE ASSESSING OFFICER AS WELL AS CIT(A) IN REGARD TO EXPLANATION THAT THE TRANSACTION BETWEEN THE TWO COMPANIES ARE IN THE NORMAL COURSE OF BUSINESS. THE SAME BE CONSIDERED AND ADDITION BE DELETED. 3. IT HAS BEEN FURTHER CONTENDED THAT SINCE THE APPLICANT/ASSESSEE HAD NOT BEEN GIVEN THE OPPORTUNITY BY THE TRIBUNAL TO SUBSTANTIATE THE FACT THAT THE TRANSACTION BETWEEN THE APPLICANT COMPANY AND M/S. KARAMTARA FASTENERS PVT. LTD. WAS OF BUSINESS IN NATU RE , BY WAY OF FILING THE NECESSARY PAPERS/ EVIDENCES , WHICH WERE ALSO FILED BEFORE THE AO AND THE COMMISSIONER. WITH THE ABOVE SAID AVERMENTS THE APPLICANT HAS SOUGHT THE RECALLING OF THE ORDER CITING THE REASON OF MISTAKE APPARENT ON THE RECORD OF THE ORD ER. M.A. NO.366/M/2013 (ITA NO.7626/M/2013) M/S. POONA GALVANIZERS PVT. LTD. 4 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND ALSO HAVE GONE THROUGH THE RECORDS. FROM THE AVERMENTS MADE IN THE APPLICATION , IT IS REVEALED THAT THE ALTERNATE GROUND OF THE ASSESSEE HAD BEEN ACCEPTED BY THE CIT(A) AND THE ADDITION S MADE BY THE AO WERE ORDERED TO BE DELETED. THE GRIEVANCE OF THE ASSESSEE WAS THAT ITS CONTENTION REGARDING THE TRANSACTION BETWEEN THE TWO COMPANIES BEING A BUSINESS TRANSACTION WAS NOT ACCEPTED BY THE LOWER AUTHORITIES. 5. IT HAS BEEN SPECIFICALLY C ONTENDED BY THE ASSESSEE IN PARA 7 OF THE APPLICATION THAT THE ADJOURNMENT REQUEST MADE BY SHRI RAJNIKANT CHOKSHI , CHARTERED ACCOUNTANT, LD. REPRESENTATIVE OF THE ASSESSEE WAS REJECTED BY THE TRIBUNAL AND THEREAFTER THE CASE WAS HEARD ON MERITS. IT IS NOT THE CASE OF THE ASSESSEE THAT SHRI RAJNIKANT CHOKSHI , CHARTERED ACCOUNTANT, WAS NOT THE REPRESENTATIVE OF THE ASSESSEE OR HE WAS NOT COMPETENT TO APPEAR, PLEAD OR ARGUE ON BEHALF OF THE ASSESSEE. A PERUSAL OF THE RECORD REVEALS THAT A POWER OF ATTORNEY W AS DULY EXECUTED BY THE ASSESSEE IN FAVOUR OF PARTNERS OF CHOKSHI & CHOKSHI, CHARTERED ACCOUNTANTS INCLUDING SHRI RAJNIKANT CHOKSHI, CHARTERED ACCOUNTANT. THE ALLEGED APPLICATION WAS ALSO MOVED BY SHRI RAJNIKANT CHOKSHI ON BEHALF OF CHOKSHI & CHOKSHI CHAR TERED ACCOUNTANTS. WHEN THE LD. REPRESENTATIVE/C.A. DULY AUTHORIZED BY THE ASSESSEE WAS PRESENT BEFORE THE TRIBUNAL AND TRIBUNAL ALSO HEARD HIM ON THE MATTER THEN UNDER SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THE CASE OF THE ASSESSEE HAS BEEN DECIDED UNHEARD BY THE TRIBUNAL. MERELY BECAUSE, THE OTHER PARTNER - CHARTERED ACCOUNTANT COULD NOT REACH BEFORE THE TRIBUNAL , ITSELF , COULD NOT BE A GROUND FOR WHICH THE TRIBUNAL SHOULD HAVE MANDATORILY ADJOURNED THE APPEAL FIXED FOR HEARING ON THE SAID DATE. SO FAR THE GROUND THAT THE ASSESSEE COULD NOT FILE THE RECORD PAPERS DUE TO HEARING OF THE MATTER ON THE SAID DATE IS ALSO NOT TENABLE. THE ASSESSEE WAS WELL AWARE THAT ITS CONTENTION THAT THE TRANSACTION M.A. NO.366/M/2013 (ITA NO.7626/M/2013) M/S. POONA GALVANIZERS PVT. LTD. 5 BETWEEN THE TWO COMPANIES WAS A BUSINESS TRANSACTION HAD BEEN REJECTED BY THE LOWER AUTHORITIES. AT THE TIME OF FILING THE APPEAL ITSELF, IT WAS THE DUTY OF THE ASSESSEE TO ATTACH THE NECESSARY DOCUMENTS WITH THE APPEAL FILE, UPON WHICH IT WANTED TO RELY UPON. THERE IS NO SPECIFIC PROVISION OR ANY RULE PR OVIDED EITHER UNDER THE INCOME TAX AC T OR UNDER INCOME TAX RULES OR T HE INCOME TAX APPELLATE TRIBUNAL RULES OR ANY OTHER RELATED STATUTE, GIVING ANY RIGHT TO THE APPELLANT FOR SEEKING RECALLING OF THE ORDER ON THE GROUND THAT ON THE DATE OF HEARING IT COUL D NOT PRODUCE THE DOCUMENTS WHICH WERE RELIED UPON BY IT BEFORE THE LOWER AUTHORITIES. WHATEVER DOCUMENTS THE APPELLANT WANTED TO PRODUCE , WERE IN THE VERY MUCH KNOWLEDGE AND POSSESSION OF THE APPELLANT AND THAT COULD HAVE BEEN ATTACHED WITH THE GROUNDS O F APPEAL ITSELF. MOREOVER, IN THE ALLEGED APPLICATION FOR ADJOURNMENT NO SUCH PLEA WAS RAISED THAT THE ASSESSEE WANT ED TO PRODUCE SOME OTHER DOCUMENTS. THE CONTENTIONS RAISED BY THE ASSESSEE AFTER HEARING THE LD. REPRESENTATIVE OF THE ASSESSEE WERE CONSI DERED BY THE TRIBUNAL AND THE CONTENTION OF THE ASSESSEE THAT THE TRANSACTION IN QUESTION WAS A BUSINESS TRANSACTION HAS BEEN REJECTED BY THE TRIBUNAL. THE SCOPE OF SECTION 254(2) IS VERY LIMITED UNDER WHICH AN ORDER CAN BE AMENDED OR RECTIFIED BY THE T RIBUNAL WHERE THERE IS A MISTAKE APPARENT ON THE RECORD OF THE ORDER. HOWEVER, FROM THE PERUSAL OF THE IMPUGNED ORDER , THERE APPEARS NO MISTAKE APPARENT ON THE RECORD. THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE THE RELEVANT DOCUMENTS RELIED UPON BY TH E ASSESSEE BEFORE THE LOWER AUTHORITIES IN OUR VIEW NOT A GROUND WHICH CAN BE CONSIDERED TO BE A MISTAKE APPARENT ON THE RECORD. EVEN IT WAS THE DISCRETION OF THE TRIBUNAL EITHER TO ACCEPT OR REJECT THE ADJOURNMENT APPLICATION AND WHEN IT IS THE CASE OF T HE ASSESSEE ITSELF THAT THE SAME WAS REJECTED AND EVEN THE LD. REPRESENTATIVE OF THE ASSESSEE WAS DULY HEARD ON MERITS, UNDER SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THERE WAS ANY MISTAKE COMMITTED BY THE TRIBUNAL WHICH IS APPARENT IN M.A. NO.366/M/2013 (ITA NO.7626/M/2013) M/S. POONA GALVANIZERS PVT. LTD. 6 THE ORDER DATED 24. 07.13. IF THE REPRESENTATIVE OF THE ASSESSEE HAD NOT FILED THE DOCUMENTS RELIED UPON BY IT BEFORE THE DATE OF HEARING ITSELF , THEN HE HIMSELF IS RESPONSIBLE FOR THE LAPSE OR LACK OF DUE DILIGENCE ON HIS PART BUT IT CANNOT BE SAID TO BE A CASE OF ANY MISTA KE APPARENT ON THE RECORD. 6. BEFORE PARTING WITH THE ORDER , WE MAY ALSO OBSERVE THAT THE ADDITIONS MADE BY THE AO IN THE CASE OF ASSESSEE HAVE ALREADY BEEN DELETED . IT MAY BE OBSERVED THAT T HE LD. CIT(A), WHILE ACCEPTING THE ALTERNATE ARGUMENT OF THE A SSESSEE, HAD OBSERVED THAT THE AO MAY CONSIDER THE ADDITIONS IN THE CASE OF SHARE HOLDER NAMELY SHRI H.M. SINGH. REGARDING THAT FINDING, THE ASSESSEE HAD ALSO RAISED A GROUND OF APPEAL BEFORE THE TRIBUNAL AS GROUND NO.1(C) WHICH HAS NOT BEEN REPRODUCED BY THE APPLICANT IN ITS APPLICATION WHILE REPRODUCING THE OTHER GROUNDS. THE SAID GROUND NO.1(C) OF THE GROUNDS OF APPEAL IS REPRODUCED AS UNDER: 1(C). WITHOUT PREJUDICE TO ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN STATING THAT THE ASSESSING OFFICER MAY CONSIDER BRINGING TO TAX THE DEEMED DIVIDEND IN THE HANDS OF MR. H. M. SINGH, THE SHAREHOLDER HAVING SUBSTANTIAL INTEREST IN BOTH THE COMPANIES WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME BE DELETED. 7 . THE ASSESSEE PERHAPS DELIBERATELY DID NOT REPRODUCE THE SAID GROUND WHILE MAKING THE PRESENT APPLICATION. THE GRIEVANCE OF THE ASSESSEE IS PERHAPS RELATING TO THE FINDING OF THE CIT(A) FURTHER CONFIRMED BY THE TRIBUNAL THAT THE AO MAY CONSIDER OF MAKI NG THE ADDITIONS IN THE HANDS OF SHAREHOLDER NAMELY SHRI H.M. SINGH. 8. W E MAY OBSERVE THAT T HE SAID SHRI H.M. SINGH WOULD HAVE INDEPENDENT RIGHT TO CONTEST SUCH ADDITIONS IF SO MADE BY THE AO BUT SO FAR THE ASSESSEE COMP ANY IS CONCERNED, IT HAS NO LOC US - STANDI TO CONTEST THE SAME. IT M.A. NO.366/M/2013 (ITA NO.7626/M/2013) M/S. POONA GALVANIZERS PVT. LTD. 7 WAS THE CONTENTION OF THE ASSESSEE COMPANY ONLY , THAT THE ADDITION IF COULD BE MADE , THAT WOULD BE IN THE HANDS OF SHRI H.M. SINGH, SHAREHOLDER , HAVING SUBSTANTIAL INTEREST IN BOTH COMPANIES AND NOT THE ASSESSEE COMPANY. THE SAID CONTENTION WAS ACCEPTED BY THE CIT(A). AS OBSERVED ABOVE, THEREAFTER T HE ASSESSEE COMPANY HAS CHALLENGED, VIDE GROUND NO.1(C), THE OBSERVATION OF THE LD. CIT(A) THAT ADDITION IF ANY CAN BE MADE IN THE HANDS OF SHRI H.M. SINGH. THE ASSESSEE COMP ANY IN FACT BY RAISING GROUND NO.1(C) IN THE GROUNDS OF APPEAL BEFORE THE TRIBUNAL HAS CHALLENGED/ CONTRADICTED ITS OWN STAND TAKEN BEFORE THE LD. CIT(A). IN THE PRESENT APPLICATION THE APPLICANT HAS DELIBERATELY CONCEALED THIS ASPECT OF THE MATTER WHICH S HOWS THAT THE APPLICANT HAS NOT COME TO THE COURT WITH CLEAN HANDS WHILE MOVING THE PRESENT APPLICATION AND HAS CONCEALED MATERIAL FACTS AND UNDER SUCH CIRCUMSTANCES ALSO THE CONTENTION OF THE APPLICANT CANNOT BE SUSTAINED. 9 . AT THIS STAGE, THE LD. D.R . HAS POINTED OUT THAT THE REVENUE HAS ALREADY FILED AN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT AGAINST THE DELETION MADE BY THE CIT(A) IN THE CASE OF THE ASSESSEE FURTHER CONFIRMED BY THE TRIBUNAL. SINCE THE HONBLE BOMBAY HIGH COURT HAS ALREADY BEEN SEIZED OFF THE MATTER AND THE ASSESSEE WILL ALSO HAVE OPPORTUNITY TO RAISE HIS GRIEVANCES , IF ANY , BY WAY OF CROSS APPEAL/CROSS OBJECTIONS BEFORE THE HONBLE HIGH COURT AND UNDER SUCH CIRCUMSTANCES IT WOULD OTHERWISE BE NOT PROPER FOR THIS TRIBUNAL TO RE C ALL THE IMPUGNED ORDER. MOREOVER, THE ASSESSEE HAS SOUGHT THE RECALLING OF THE ORDER BY WAY OF SEEKING THE REVIEW OF THE ORDER PASSED ON MERITS, BUT NOT FOR ANY RECTIFICATION OF MISTAKE APPARENT ON RECORD WHICH OTHERWISE IS BEYOND THE SCOPE OF PROVISIO NS OF SECTION 254(2) OF THE INCOME TAX ACT. M.A. NO.366/M/2013 (ITA NO.7626/M/2013) M/S. POONA GALVANIZERS PVT. LTD. 8 10. IN VIEW OF OUR ABOVE OBSERVATIONS, WE DO NOT FIND ANY MERIT IN THE APPLICATION OF THE ASSESSEE AND THE SAME IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 .12. 2013. SD/ - SD/ - ( P.M. JAGTAP ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 2 3 .12. 2013. * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.