ACIT, CHENNAI v. Shri C.Subba Reddy (HUF),, CHENNAI

ITA 1665/CHNY/2007 | 2002-2003
Pronouncement Date: 21-01-2011 | Result: Allowed

Appeal Details

RSA Number 166521714 RSA 2007
Assessee PAN AACMC2523G
Bench Chennai
Appeal Number ITA 1665/CHNY/2007
Duration Of Justice 3 year(s) 7 month(s) 7 day(s)
Appellant ACIT, CHENNAI
Respondent Shri C.Subba Reddy (HUF),, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 21-01-2011
Assessment Year 2002-2003
Appeal Filed On 14-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI U.B.S. BEDI J.M. & SHRI SANJAY ARORA A.M. I.TA. NO.1665/MDS/2007 ASSESSMENT YEAR: 2002-03 THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE IV (3) CHENNAI. VS. SHRI C. SUBBA REDDY (HUF) SUKRITI 19/1 III CROSS ST. R.A. PURAM CHENNAI 600 028. [PAN:AACMC2523G] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHAJI P. JACOB ASSESSEE BY : SHRI T. VASUDEVAN FOR MR. S. SRIDHAR O R D E R PER U.B.S. BEDI J.M. THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) I CHENNAI DATED 27.03.2007 RELEVANT TO THE ASSESSMENT YEAR 2002-03 WHEREBY BESIDES CHALLENGING THE DELETION OF ADDITIO N OF ` .55 LAKHS MADE ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) THE DEPARTMENT HAS ALSO CHALLENGED THE DELETION OF ADDITION OF ` .41 12 475/- ON THE GROUND THAT THE ASSESSEE MAINTAINED CREDIT BALANCE FOR 349 DAYS IN THE YEAR. 2. FACTS INDICATE THAT THE ASSESSEE IS A 20% SHARE HOLDER IN A COMPANY BY NAME M/S. CEEBROS PROPERTY DEVELOPMENT (P) LTD. (CP DPL) AND CPDPL HAS ADVANCED A SUM OF ` .2 75 00 000 TO M/S. CEEBROS HOTELS (P) LTD. (CHPL) ON THE FOLLOWING DATES: DATE AMOUNT ` . 07.04.2001 2 00 00 000 03.05.2001 10 00 000 15.06.2001 15 00 000 22.06.2001 15 00 000 13.09.2001 15 00 000 17.11.2001 8 00 000 12.02.2002 12 00 000 TOTAL: 2 75 00 000 ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 2 SINCE THE ASSESSEE HAS 20% SHARE HOLDING IN CPDPL THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT 20% OF ` .2 75 00 000 I.E. ` .55 00 000 WAS GIVEN AS LOAN/ADVANCE TO THE ASSESSEE THROUGH CHPL AND THERE FORE IT HAS TO BE TREATED AS DEEMED DIVIDEND. 3. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND I T WAS SUBMITTED THAT SMT. C. RAJINI WIFE OF THE KARTHA OF THE ASSESSEE HUF I S 80% SHAREHOLDER IN CPDPL AND 80% OF ` .2 75 00 000 WHICH WORKS OUT TO ` .2 00 00 000/- WAS ASSESSED IN THE HANDS OF SMT. C. RAJINI AS DEEMED DIVIDEND AND SHE CAME ON APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE APPEAL AND THE DEPA RTMENT IS STATED TO HAVE PREFERRED AN APPEAL TO ITAT AND THE ITAT A BENCH CHENNAI VIDE ITS ORDER DATED 09.03.2007 IN I.T.A. NO.2705/MDS/05 HAS CONFIRMED T HE ORDER OF THE LD. CIT(A) SO IT WAS PLEADED IN THIS CIRCUMSTANCES THE IMPUGNE D ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 4. THE LD. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION AS PE R PARA 4 WHICH READS AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. I AGREE THAT MY ORDER DELETING A SIMILAR ADDITION HAS BEEN CONFIRME D BY THE APPELLATE TRIBUNAL AND THEREFORE I DELETE THIS ADDITION OF ` .55 00 000 ALSO. 5. REGARDING SECOND ADDITION THE ASSESSEE HUF AS STATED ABOVE IS 20% SHAREHOLDER IN CPDPL. THE ASSESSING OFFICER OBTAINE D THE ACCOUNT COPY OF THE ASSESSEE IN CPSPL AND FOUND THAT ON 26.12.2001 THE BALANCE OF THE ASSESSEE WITH CPDPL HAS BECOME A DEBIT BALANCE FOR A SUM OF ` .41 12 475. IN THESE ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 3 CIRCUMSTANCES THE ASSESSING OFFICER HAS ASSESSED T HIS SUM OF ` .41 12 475 AS DEEMED DIVIDEND. 5.1 THE ASSESSEE TOOK UP THE MATTER BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD AN OPENING CREDIT BALANCE OF ` .3 65 60 109 AS ON 01.04.2001 AND THE ASSESSEE WAS MAINTAINING CREDIT BALANCE FRO M 01.04.2001 TO 26.12.2001 AND ONLY FOR ABOUT 16 DAYS FROM 26.12.2001 TO 11.01 .2002 THE ASSESSEE HAD A DEBIT BALANCE OF ` .41 12 475 AND FROM 11.1.02 TO 31.3.02 THE BALANCE HAVE AGAIN BECOME CREDIT BALANCE AND IT IS ARGUED THAT THE ASS ESSING OFFICER WAS NOT FAIR IN ASSESSING ` .41 24 475 AS DEEMED DIVIDEND. IT WAS ALSO SUBMITTE D THAT THE OTHER SHAREHOLDER VIZ. SMT. RAJINI WIFE OF THE KARTHA OF THE ASSESSEE HUF HAS DEPOSITED A SUM OF ` .102 LAKHS WITH CPDPL ON 26.12.01 AND HAD ENTRIES B EEN MADE THAT THE ASSESSEE HAD DIRECTLY BORROWED A SUM OF ` .1 00 00 000/- FROM SMT. RAJINI NO DEEMED DIVIDEND WOULD HAVE BEEN ASS ESSED. IN THESE CIRCUMSTANCES IT WAS PLEADED THAT THE IMPUGNED ADD ITION MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 5.2 THE LD. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE AT PARA 7 AND 8 HAS CONCLUDED TO DELETE THE IMPUGN ED ADDITION AS PER PARA 9 AND RELEVANT PARAS 7 8 AND 9 ARE REPRODUCED HEREUN DER: 7. I HAVE CAREFULLY CONSIDERED THE ISSUE. TECHNIC ALLY THE COMPANYS FUNDS ARE WITH THE APPELLANT FOR A PERIOD OF 16 DAYS AND THEREFORE ONE CANNOT FIND FAULT WITH THE AO IN ASSE SSING THE SAME AS DEEMED DIVIDEND. PROVISION OF SEC.2(22)(E) HAS BEEN BROUGHT INTO STATUTE BOOK ONLY TO PREVENT THE MISUSE OF THE FUND S OF THE CLOSELY HELD COMPANIES BY ITS SHAREHOLDERS. THEREFORE UNLES S WE ESTABLISH THIS WE MAY NOT BE ABLE TO ASSESS THIS AS DEEMED D IVIDEND. ONE CAN ARGUE LIKE A POLICEMAN - THAT THE APPELLANT HAS VIO LATED A PROVISION AND THEREFORE IT HAS TO PAY THE PRICE FOR THE SAME. ONE CAN JUSTIFY PENALTIES FOR SMALL TIME VIOLATIONS LIKE TRAFFIC VI OLATIONS. BUT HERE IF THE ADDITION IS CONFIRMED THE APPELLANT HAS TO PAY A N ON-REFUNDABLE TAX ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 4 OF 30% OF ` .41 12 475 WHICH WORKS OUT TO ABOUT ` .12 LAKHS. SHOULD WE COLLECT ` .12 LAKHS FOR KEEPING COMPANYS FUNDS FOR 16 DAYS W HEN ON THE OTHER 349 DAYS APPELLANTS HUGE FUND WERE W ITH THE COMPANY WITHOUT ANY INTEREST ? 8. AN IMPORTANT FACTOR THAT HAS TO BE KEPT IN MIND WHILE INTERPRETING THIS PROVISION IS THAT A LOAN/ADVANCE IS GIVEN FOR CONSIDERABLE AMOUNT OF TIME. THOUGH TAKING AWAY CO MPANYS FUNDS FOR 16 DAYS CAN BE TECHNICALLY CALLED AS LOAN/ADVAN CE THE PURPOSE OF THIS LEGISLATION WILL NOT BE SERVED IF WE TAKE A VE RY NARROW VIEW OF THE TERM LOAN/ADVANCE. UNLESS THE FUNDS OF THE COMPANY ARE WITH THE SHAREHOLDER FOR A CONSIDERABLE AMOUNT OF TIME - SAY AT LEAST FOR AN YEAR - KEEPING THE COMPANYS FUNDS FOR A BRIEF PER IOD LIKE THIS SHOULD NOT BE TREATED AS DEEMED DIVIDEND. 9. FURTHER PRESUMING THAT ONE OF THEM WOULD PAY I NTEREST TO OTHER CPDPL WOULD HAVE PAID MORE INTEREST TO THE A PPELLANT THAN WHAT THE APPELLANT WOULD HAVE PAID TO THE COMPANY. ONE SHOULD ALSO NOT FORGET THAT IF THE APPELLANT HAD DIRECTLY BORRO WED FROM SMT. RAJINI THEN WE COULD NOT HAVE ASSESSED THIS SUM AS DEEMED DIVIDEND. AT THE TIME OF MAKING ENTRIES FOR THESE TRANSACTIONS PERHAPS THE ACCOUNTANT WOULD NOT HAVE THOUGHT THAT THE ENTRIES MAY CAUSE A DAMAGE OF MORE THAN ` .12 LAKHS TO THE APPELLANT SINCE IF THE ACCOUNTANT KNEW THE CONSEQUENCE HE WOULD HAVE WRIT TEN THE CHEQUE DIRECTLY FROM SMT. RAJINI TO THE APPELLANT H UF. THEREFORE WE SHOULD NOT COLLECT TAX FOR THE IGNORANCE OF THE ACC OUNTANT AS THE APPELLANT MAY NOT BE AWARE OF INTRICATE PROVISIONS OF INCOME TAX ACT. IN THESE CIRCUMSTANCES I AM OF THE VIEW THAT ASSES SING ` .41 12 475 AS DEEMED DIVIDEND IS NOT THE PURPOSE FOR WHICH THI S PIECE OF LEGISLATION HAS BEEN BROUGHT INTO THE STATUE BOOK. THEREFORE TAKING INTO ACCOUNT THE ENORMOUS CREDIT BALANCES OF THE AP PELLANT WITH THE COMPANY FOR 349 DAYS AND ALSO TAKING INTO ACCOUNT T HE PURPOSE OF THIS LEGISLATION I HOLD THAT ` .41 12 475 SHOULD NOT BE TREATED AS DEEMED DIVIDEND. IN THESE CIRCUMSTANCES I DELETE T HIS ADDITION OF ` .41 12 475 ALSO. 6. AGGRIEVED BY THIS ORDER OF THE LD. CIT(A) ON BO TH THE ISSUES THE DEPARTMENT TOOK UP THE MATTER IN APPEAL AND CHALLEN GED SUCH ACTION OF THE LD. CIT(A). THE LD. DR WHILE RELYING UPON THE GROUNDS O F APPEAL HAS FILED WRITTEN SUBMISSIONS AT THE TIME OF HEARING WHOSE COPY WAS GIVEN TO SHRI S. SRIDHAR LD. COUNSEL FOR THE ASSESSEE AND ARGUED THE CASE ON THE LINES AS STATED IN THE ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 5 WRITTEN SUBMISSION AND PLEADED FOR REVERSAL OF THE ORDER OF THE LD. CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER AND THE LD. DR HAS ALSO RELIED UPON VARIOUS LAW CITED. 6.1 THE LD. COUNSEL FOR THE ASSESSEE WHILE GETTING THE COPY OF WRITTEN SUBMISSION FROM THE LD. DR AT THE TIME OF HEARING H AS REQUESTED THAT HE SHOULD BE GIVEN TWO DAYS TIME TO GO THROUGH THE WRITTEN SU BMISSION AND IN CASE HE WANT TO FILE THE COUNTER SUBMISSIONS HE WOULD DO SO AND AS AGREED BY HIM THE CASE WAS MARKED AS PART-HEARD AND KEPT FOR HEARING AT 2. 30 PM ON 08.12.2010 ON HIS SPECIFIC REQUEST BUT WHEN THE CASE WAS CALLED UP FO R HEARING ON 08.12.2010 AT THE APPOINTED TIME THE LD. COUNSEL FOR THE ASSESSE E DID NOT APPEAR AND INSTEAD HE HAD FILED ONE APPLICATION FOR ADJOURNMENT AND AN OTHER COUNSEL FOR THE AR APPEARED TO REMIND THE BENCH ABOUT THE AR HAVING FI LED APPLICATION AS HE HAS HIS LIMITED ROLE TO PLAY AS HE IS NOT AUTHORIZED BY THE ASSESSEE OR THE AR AND THE APPLICATION OF THE LD. AR WAS CONSIDERED BUT SINCE THE REASON STATED IN THE APPLICATION FOR ADJOURNMENT WAS FOUND TO BE INADEQU ATE TO GRANT THE ADJOURNMENT THE SAME CAME TO BE REJECTED AND THE A SSESSEE DID NOT APPEAR SO WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE L D. DR AND CONSIDERING THE MATERIAL ON RECORD. 6.3 THE LD. DR RELIED UPON THE WRITTEN SUBMISSION A S FILED ON EARLIER DATE OF HEARING WHEN COPY OF THE SAME HAS BEEN GIVEN TO THE LD. AR OF THE ASSESSEE AND PLEADED TO DECIDE THE APPEAL ON THE BASIS OF SUCH W RITTEN SUBMISSIONS AND ARGUMENTS ADVANCED ON EARLIER DATE. WE HAVE HEARD T HE LD. DR LOOKED INTO THE WRITTEN SUBMISSION OF THE LD. DR FILED ON 02.12.201 0 AND CASE LAW RELIED UPON. ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 6 THE LD. DR HAS FILED FOLLOWING WRITTEN SUBMISSIONS (COPY OF WHICH WERE GIVEN TO THE LD. AR ON EARLIER DATE WHICH REMAINED UNREPLIE D TO). ISSUE 1: DEEMED DIVIDEND ON ADVANCE MADE BY CPDPL TO CHPL FACTS ASSESSEE HAS 20% SHARE HOLDING IN CEEBROS PROPERTY DEVELOPMENT PVT. LTD. (CPDPL). IT HAS 41.67% SHARE HOLDING IN CEEBROS HOTELS PVT. LTD. (CHPL). CPDPL ADVANCED LOAN OF `.275 LAKHS TO CHPL DURING T HE YEAR I.E. DURING 07.04.01 TO 12.02.02. THIS IS THE POSITION A S PER THE AUDITED BOOKS OF ACCOUNTS OF BOTH THE COMPANIES VI. CPDPL A ND CHPL. HENCE AO ASSESSED DEEMED DIVIDEND IN THE HANDS OF A SSESSEE SHAREHOLDER WHICH IS IN ACCORDANCE WITH THE DECISION OF ITAT M UMBAI SPECIAL BENCH IN ACIT VS. BHAUMIK COLOUR PVT. LTD. (118 ITD 1). SINCE ASSESSEE IS ONLY 20% SHAREHOLDER IN CPDPL THE DEEMED DIVIDEND WAS RESTRICTED TO 20% OF `.275 LAKHS IE `. 55 LAKHS . ARGUMENTS MADE BEFORE THE AO CPDPL TRANSFERRED THE MONEY TO CHPL AT THE INSTRUCT ION OF ASSESSEE - CPDPL MIGHT HAVE TRANSFERRED MONEY TO CHPL AT THE I NSTRUCTION OF ASSESSEE SINCE ASSESSEE IS A DIRECTOR IN THAT CLOSE LY HELD COMPANY. BUT THE TRANSFER OF MONEY WAS NOT ON BEHALF OF ASSESSEE AS NO SUCH TRANSACTION IS RECORDED IN THE BOOKS OF THE COMPANY. THE COMPANY H AD AUDITED BOOKS OF ACCOUNTS AND BALANCE SHEET WHICH WERE PLACED BEFORE THE BOARD OF DIRECTORS AND APPROVED BY THEM. IN THESE ACCOUNTS CHPL IS DEBITED IN RELATION TO THESE TRANSACTIONS AND NOT THE ASSESSEE . THE ENTRIES MADE IN THE AUDITED BOOKS OF ACCOUNTS AND BALANCE SHEET FILED B EFORE THE REGISTRAR OF COMPANIES CANNOT BE IGNORED. I RELY ON THE DECISION OF ITAT CHENNAI BENCH IN HARBINDER SINGH VS ACIT (I.T.A. NO. 443/MD S/10 - ORDER DATED 06.08.2010). THE OTHER SHAREHOLDER MRS. RAJINI HAD SUFFICIENT CR EDIT BALANCE WITH CPDPL DURING THE YEAR AND HENCE THE ADVANCE MADE TO CHPL WAS ONLY REPAYMENT OF SUCH CREDIT OUTSTANDING TO RAJINI - TH IS ARGUMENT DOES NOT HOLD GOOD SINCE ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 7 IF IT WAS REPAYMENT OF CREDIT BALANCE HELD BY MRS. RAJINI IN CPDPL BOOKS OF ACCOUNTS OF CPDPL WOULD HAVE DISCLOSED THA T FACT WHEREAS THE AUDITED BOOKS SHOWS NO SUCH REPAYMENT M ADE DURING THE YEAR. BOTH MRS. RAJINI AND ASSESSEE ARE SEPARATE LEGAL EN TITIES. IF ONE ENTITY HAD CREDIT BALANCE IT CAN EXPLAIN THE REPAY MENT MADE TO IT AND NOT BY ANYBODY ELSE IE THE PRESENT ASSESSEE. ON MERITS ALSO THE CONTENTION OF ASSESSEE IS NOT CO RRECT AS THE ALLEGED AMOUNT OWNED BY CPDPL TO MRS. RAJINI TOWARD S CONSTRUCTION WORK UNDERTAKEN BY CPDPL FOR THE PROPR IETORY CONCERN OF MRS. RAJINI. ASSESSEE HAD SUFFICIENT CREDIT BALANCE WITH CPDPL D URING THE YEAR AND HENCE THE ADVANCE MADE TO CHPL WAS ONLY REPAYMENT O F SUCH SUM - THIS ARGUMENT DOES NOT HOLD GOOD SINCE IF IT WAS REPAYMENT OF CREDIT BALANCE HELD BY MRS. RAJINI IN CPDPL BOOKS OF ACCOUNTS OF CPDPL WOULD HAVE DISCLOSED THA T FACT WHEREAS THE AUDITED BOOKS SHOWS NO SUCH REPAYMENT M ADE DURING THE YEAR. CIT(A) DELETED THE ADDITION ON THE REASONING THAT I T WAS A BUSINESS TRANSACTION. CIT(A) OUGHT TO HAVE SEEN THAT ASSESSE E NEVER CLAIMED IT AS COMMERCIAL TRANSACTION EITHER BEFORE AO/CIT(A) AND DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF SUCH CONTENTION. THERE WAS NO BUSINESS TRANSACTION BETWEEN CPDPL AND CHPL DURING THE YEAR SO AS TO MAKE SUCH ADVANCES AS THE CONTRACT BE TWEEN CPDPL & CHPL FOR THE PROJECT WAS COMPLETED IN F.Y. 1999-00 (GR.2.1) CIT(A) FURTHER ERRED IN NOT CONSIDERING THE FOLLOWI NG BINDING DECISION: P. SARADA VS. CIT (SC) 229 ITR 144 TARULATA SHYAM & ORS VS. CIT (108 ITR 345) WALCHAND & CO. LTD. VS. CIT (BOM) 199 ITR 598 CIT VS. P.K. ABUBUCKER (MAD) 259 ITR 507 CIT VS. P.K. BADADI (BOM) 76 ITR 369 DECISION OF ITAT RELIED ON BY THE ASSESSEE IS DISTI NGUISHABLE AS IT IS PURELY A QUESTION OF FACT. IF OTHER SHAREHOLDERS/ASSESSEE IN EARLIER YEARS HAVE PROVED COMMERCIAL EXPEDIENCY IS IRRELEVANT. IN THI S YEAR IN RELATION TO THE ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 8 IMPUGNED TRANSACTIONS ASSESSEE HAS TO PROVE COMMER CIAL EXPEDIENCY BEFORE THE FACT FINDING AUTHORITY. ISSUE 2: DEEMED DIVIDEND ON ADVANCE MADE BY CPDPL T O ASSESSEE FACTS ASSESSEE HAS 20% SHARE HOLDING IN CEEBROS PROPERTY DEVELOPMENT PVT. LTD. (CPDPL). CPDPL ADVANCED LOAN OF `.100 LAKHS TO ASSESSEE ON 2 6.12.2001 AND AFTER ADJUSTING AGAINST CREDIT BALANCE OF ASSESSEE THE NET FIGURE WAS DEBIT OF `.41 12 476. THIS IS THE POSITION AS PER T HE AUDITED BOOKS OF ACCOUNTS OF BOTH THE COMPANIES VI. CPDPL AND CHPL. HENCE AO ASSESSED DEEMED DIVIDEND OF `.41 12 476 IN THE HANDS OF ASSESSEE SHAREHOLDER WHICH IS IN ACCORDANCE WITH TH E DECISION OF ITAT MUMBAI SPECIAL BENCH IN ACIT VS. BHAUMIK COLOUR PVT . LTD. (118 ITD 1). ARGUMENTS MADE BEFORE THE AO THE OTHER SHAREHOLDER MRS. RAJINI HAD ADVANCED LOAN TO CPDPL FROM WHICH THE ADVANCE WAS MADE TO ASSESSEE - THIS ARGUM ENT DOES NOT HOLD GOOD SINCE IF IT WAS PAYMENT BY MRS. RAJINI TO ASSESSEE IT WI LL NOT APPEAR IN THE BOOKS OF CPDPL. IF IT WAS PAYMENT MADE BY CPDPL ON BEHALF OF MRS. R AJINI BOOKS OF ACCOUNTS OF CPDPL WOULD HAVE DISCLOSED THAT FACT W HEREAS THE AUDITED BOOKS SHOWS OTHERWISE. BOTH MRS. RAJINI AND ASSESSEE ARE SEPARATE LEGAL EN TITIES. IF ONE ENTITY HAD CREDIT BALANCE IT CAN EXPLAIN THE REPAY MENT MADE TO IT AND NOT BY ANYBODY ELSE IE THE PRESENT ASSESSEE. I RELY ON THE DECISION OF ITAT CHENNAI BENCH IN HARBINDER SINGH V S ACIT (I.T.A. NO. 443/MDS/10 - ORDER DATED 06.08.2010). CIT(A) DELETED THE ADDITION ON THE REASONING THAT S UCH AN ENTRY WAS THE MISTAKE OF THE ACCOUNTANT AND THE DEBIT BALANCE WAS SUBSEQUENTLY CLEARED BY THE ASSESSEE. CIT(A) ERRED IN HOLDING THAT IT WAS A MISTAKE OF TH E ACCOUNTANT WHEN THE COMPANY HAD AUDITED BOOKS OF ACCOUNTS AND BALANCE S HEET WHICH WERE PLACED BEFORE THE BOARD OF DIRECTORS AND APPROVED B Y THEM LONG BACK WITHOUT MAKING ANY SUCH COMMENTS. ITA NO. ITA NO. ITA NO. ITA NO. 1665 1665 1665 1665/MDS/10 /MDS/10 /MDS/10 /MDS/10 9 CIT(A) ERRED IN DELETING THE ADDITION ON THE REASON THAT SUCH ADVANCE WAS ONLY FOR 16 DAYS AND HENCE NOT DEEMED DIVIDEND U/S 2(22)(E). HE OUGHT TO HAVE CONSIDERED THE FOLLOWING BINDING DECISIONS: P. SARADA VS. CIT (SC) 229 ITR 144 TARULATA SHYAM & ORS VS. CIT (108 ITR 345) WALCHAND & CO. LTD. VS. CIT (BOM) 199 ITR 598 CIT VS. P.K. ABUBUCKER (MAD) 259 ITR 507 CIT VS. P.K. BADADI (BOM) 76 ITR 369 7. FROM THE ABOVE WRITTEN SUBMISSIONS SOME FRESH FACTS CAME TO LIGHT WHICH REQUIRES CONSIDERATION BUT THE LD. AR OF THE ASSES SEE DESPITE TAKING TIME SPECIFICALLY FOR REPLYING THE SAME HAS NOT TURNED U P AND THE LD. CIT(A)S ORDER IS ALSO NOT THROWING ANY LIGHT ON THOSE ASPECTS POINTE D OUT AND CASE LAW CITED. THEREFORE KEEPING IN VIEW THE FACTS CIRCUMSTANCES MATERIAL ON RECORD AND IN THE INTEREST OF JUSTICE WE FIND IT JUST AND APPROP RIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK ON HIS FILE WITH THE DIRECTION TO RE-DECIDE THE APPEAL AFRESH AFTER CONSIDERING ALL THE ASPECTS AND POINTS RAISED IN THE WRITTEN SUBMISSIONS OF THE LD. DR AS REPRODUCED ABOVE AFTER GIVING OPPORTUNITY TO THE ASSESSEE AS WELL AS TO THE ASSESSING OFFICER WE HOL D AND DIRECT ACCORDINGLY. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 21.01.2011 SD/- SD/- (SANJAY ARORA) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI DATED THE 21.01.2011 VM/- COPY TO : APPELLANT/RESPONDENT/CIT(A)- /CIT /DR