ACIT, New Delhi v. M/s. Elegance Dot Com Embroidery, New Delhi

ITA 909/DEL/2010 | 2005-2006
Pronouncement Date: 14-01-2011 | Result: Dismissed

Appeal Details

RSA Number 90920114 RSA 2010
Bench Delhi
Appeal Number ITA 909/DEL/2010
Duration Of Justice 10 month(s) 11 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Elegance Dot Com Embroidery, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 14-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 14-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2005-2006
Appeal Filed On 04-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI DELHI BENCH A : NEW DELHI DELHI BENCH A : NEW DELHI DELHI BENCH A : NEW DELHI BEFORE SHRI G.E.VEERABHADRAPPA VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA VICE PRESIDENT AND SHRI I.P.BANSAL JUDICIAL MEMBER SHRI I.P.BANSAL JUDICIAL MEMBER SHRI I.P.BANSAL JUDICIAL MEMBER SHRI I.P.BANSAL JUDICIAL MEMBER ITA NO.909/DEL/2010 ITA NO.909/DEL/2010 ITA NO.909/DEL/2010 ITA NO.909/DEL/2010 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005 - -- - 06 0606 06 ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF INCOME TAX INCOME TAX INCOME TAX INCOME TAX CIRCLE CIRCLE CIRCLE CIRCLE- -- -22(1) 22(1) 22(1) 22(1) NEW DEL NEW DEL NEW DEL NEW DELHI. HI.HI. HI. VS. VS. VS. VS. M/S ELEGANCE DOT COM EMBROIDERY M/S ELEGANCE DOT COM EMBROIDERY M/S ELEGANCE DOT COM EMBROIDERY M/S ELEGANCE DOT COM EMBROIDERY D DD D- -- -19 OKHLA INDUSTRIAL AREA 19 OKHLA INDUSTRIAL AREA 19 OKHLA INDUSTRIAL AREA 19 OKHLA INDUSTRIAL AREA PHASE PHASE PHASE PHASE- -- -I I I I NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.P.SINGH SR.DR. RESPONDENT BY : NONE. ORDER ORDER ORDER ORDER PER I.P.BANSAL JM : PER I.P.BANSAL JM : PER I.P.BANSAL JM : PER I.P.BANSAL JM : THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF CIT(A) DATED 18.12.2009 FOR THE AY 2005-06 . GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CA SE THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND AMOUNTING TO RS.23 53 717/- U/S 2(22)(E) OF THE I.T .ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT IN THE CASE OF BENEFICIAL SHARE HOLDER PROVISIONS OF SECTI ON 2(22)(E) OF THE I.T.ACT IS NOT APPLICABLE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPR ECIATING THE FACT THAT THERE IS NO DISTINCTION BETWEEN REGIS TERED SHAREHOLDER AND BENEFICIAL SHAREHOLDER IN THE I.T.A CT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.17 00 000/- MADE ON ACCOUNT OF UNEXP LAINED LOANS AS THE ASSESSEE FAILED TO AUTHENTICATE OR CON FIRM THE GENUINENESS CREDITWORTHINESS AND IDENTITY OF THE P ARTIES. ITA-909/DEL/2010 2 5. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEN D ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE C OURSE OF HEARING OF THE APPEAL. 2. THIS APPEAL WAS FIXED ON 6.1.2011 AND IT WAS OBS ERVED THAT BOTH THE ISSUES RAISED BY THE REVENUE WERE COVERED IN FA VOUR OF THE ASSESSEE. HOWEVER LEARNED DR WANTED ONE DAYS TIM E TO GO THROUGH THE ORDER OF THE AO AND CIT(A) THEREFORE THE PRESE NT APPEAL WAS ADJOURNED TO 7.1.2011. 3. THE ASSESSEE WAS NOT PRESENT. HENCE WE PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE QUA THE ASSESSEE ON MERITS AFTER HEARING THE LEARNED DR. 4. LEARNED DR RELIED ON THE ASSESSMENT ORDER. SO A S IT RELATES TO GROUND NO.1 2 & 3 IT WAS NOTICED BY THE AO THAT A SSESSEE HAD OBTAINED LOAN FROM THE FOLLOWING GROUP COMPANIES:- NAME OF THE COMPANY LOAN AT THE BEGINNING OF THE YEAR FRESH LOAN RECEIVED DURING THE YEAR M/S ESSELS COMPUTER EMBROIDERY P.LTD. 12 80 140.95 16 910.00 M/S ELEGANCE MULTICOLOUR EMB.P.LTD. ( - ) 941.62 10 57 607.7 0 5. THE AO WAS OF THE VIEW THAT PROVISIONS OF SECTIO N 2(22)(E) WERE APPLICABLE ON SUCH LOANS RECEIVED BY THE ASSESSEE. HE INVOKED THE PROVISIONS OF SECTION 2(22)(E) AND ADDED THE SAID A MOUNT TO THE INCOME OF THE ASSESSEE. THE CIT(A) HAS GIVEN THE R ELIEF TO THE ASSESSEE ON THE GROUND THAT ASSESSEE BEING NOT REGI STERED SHAREHOLDER IN THE AFOREMENTIONED COMPANIES COULD NOT BE SADDLE D WITH THE LIABILITY OF ASSESSABLE INCOME BEING DEEMED DIVIDEN D U/S 2(22)(E) IN THE VIEW OF THE SPECIAL BENCH DECISION OF ITAT IN T HE CASE OF ACIT VS. BHAUMIK COLOUR PVT.LTD. 313 ITR (AT) 146 IN WHICH IT WAS HELD THAT FOR ITA-909/DEL/2010 3 INVOCATION OF SECTION 2(22)(E) THE RECIPIENT SHOUL D BE REGISTERED SHAREHOLDER OF THE SHARES AS WELL AS THE BENEFICIAL SHAREHOLDER OF THE SHARES. AS ASSESSEE WAS NOT REGISTERED SHAREHOLDER THEREFORE PROVISIONS OF SECTION 2(22)(E) COULD NOT BE APPLIED . THE REVENUE IS AGGRIEVED HENCE IN APPEAL. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR AND GONE THROUGH THE ASSESSMENT ORDER AS WELL AS ORDER OF CI T(A). THE FACT THAT ASSESSEE COMPANY IS NOT REGISTERED SHAREHOLDER OF T HE AFOREMENTIONED TWO COMPANIES HAS NOT BEEN CONTROVERTED BY THE REVE NUE BY BRINGING ANY MATERIAL ON RECORD. THEREFORE WE ARE OF THE O PINION THAT THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) VIDE WHICH SUCH ADDITION HAS BEEN DELETED AS ACCORDING TO AFOREMENTIONED DECISION OF SPECIAL BENCH FOR INVOCATION OF SECTION 2(22)(E) THE RECIPIENT ASSES SEE SHOULD BE REGISTERED SHAREHOLDER AS WELL AS BENEFICIAL SHAREH OLDER. THE RELEVANT PORTION OF THE AFOREMENTIONED ORDER OF SPECIAL BENC H HAS BEEN REPRODUCED BY THE CIT(A) IN PARA 8 OF HIS ORDER. T HEREFORE WE DECLINE TO INTERFERE IN SUCH DELETION AND GROUND NOS.1 2 & 3 RAISED BY THE REVENUE ARE DISMISSED. 7. NOW COMING TO GROUND NO.4 THIS ISSUE HAS BEEN DISCUSSED AT PAGE 9 OF THE ASSESSMENT ORDER. IT HAS BEEN MENTIO NED BY THE AO THAT ASSESSEE AT THE BEGINNING OF THE YEAR HAS SHOWN LOA N REPAYABLE TO M/S AMIT INTERNATIONAL OF ` 5 LAKHS AND TO SHRI JAGMOHA N MALIK OF ` 12 LAKHS. THE AO FURTHER OBSERVED THAT THE SAID AMOUN T WAS NOT RETURNED DURING THE YEAR AND INTEREST WAS ALSO NOT PAID. TH E AUDITOR THOUGH WAS REQUIRED TO GIVE THE NAME ADDRESS AND PAN OF THE L ENDERS BUT DID NOT MENTION ADDRESS AND PAN OF THOSE PARTIES. THE ASSE SSEE WAS REQUIRED TO GIVE CONFIRMED COPY OF ACCOUNT WHICH WAS NOT FUR NISHED. THEREFORE THE AO OBSERVED THAT THOSE LOANS WERE BOGUS AND A C ONSOLIDATED AMOUNT OF ` 17 LAKHS WAS ADDED TO THE INCOME OF THE ASSESSEE. LEARNED CIT(A) HAS DELETED THE SAID ADDITION ON THE GROUND THAT THESE ITA-909/DEL/2010 4 AMOUNTS WERE NOT CREDITED DURING THE YEAR UNDER CON SIDERATION. HENCE ADDITION COULD NOT BE MADE U/S 68 IN THE YEA R UNDER CONSIDERATION. HE ALSO CONSIDERED THE APPLICABILIT Y OF SECTION 41 AND OBSERVED THAT EVEN IF SECTION 41 WAS TO BE APPLIED THEN THE ONUS WAS ON THE REVENUE TO PROVE THAT THERE HAS BEEN CESSATI ON OF LIABILITY AND THUS HE DELETED THE ADDITION. BEFORE US THE FACT THAT THESE LOANS WERE NOT CREDITED DURING THE YEAR UNDER CONSIDERATION HA S NOT BEEN CONTROVERTED. MOREOVER THE AO HIMSELF HAS RECORDE D A FINDING THAT THESE LOANS HAVE BEEN SHOWN BY THE ASSESSEE RIGHT F ROM THE BEGINNING OF THE YEAR. THEREFORE WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) VIDE WHICH IT HAS BEEN HELD THAT SECTION 68 COULD NOT BE APPLIED IN THE YEAR UNDER CONSIDERATION. THOUGH IT IS NOT THE CASE OF THE AO THAT SECTION 41 WAS APPLICABLE BUT EVEN THEN IT HAS NOT BEEN SHO WN THAT THERE WAS A CESSATION OF LIABILITY. THEREFORE WE SEE NO INF IRMITY IN THE ORDER OF CIT(A) VIDE WHICH IMPUGNED ADDITION HAS BEEN DELETE D IN THE YEAR UNDER CONSIDERATION. WE DECLINE TO INTERFERE. GRO UND NO.4 RAISED BY THE REVENUE IS DISMISSED. 8. GROUND NO.5 IS GENERAL IN NATURE WHICH NEEDS NO SEPARATE ADJUDICATION. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY 2011. SD/- SD/- (G.E.VEERABHADRAPPA) (G.E.VEERABHADRAPPA) (G.E.VEERABHADRAPPA) (G.E.VEERABHADRAPPA) (I.P.BANSAL) (I.P.BANSAL) (I.P.BANSAL) (I.P.BANSAL) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 14.01.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT ASSISTANT REGISTRAR ITA-909/DEL/2010 5