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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
Date of Hearing: 10.10.2019 Date of Pronouncement: 17.10.2019 आदेश / O R D E R PER KUL BHARAT, J.M:
Appeal No.ITA 484/Ind/2013 pertaining to the A.Y.
2009-10 & pertaining to the A.Y. 2013-14. These two appeals, one by the revenue another by the assessee are directed against two different orders of the Ld. CIT(A)-7, Mumbai concurrent jurisdiction CIT(A)-1, Indore dated 21.2.2013 and CIT(A)-1, Indore dated 12.2.2018. Both the appeals were taken up together and disposed of by way of this consolidated order. First we take up assessee’s appeal in ITA No.283/Ind/2018 for the A.Y. 2013-14. The assessee has raised following grounds of appeal:
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
The facts giving rise to the present appeal are that the Ld. CIT(A) dismissed the appeal of the assessee on the short ground that the appeal is not maintainable as the assessee has not paid the interest component on the tax.
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] Aggrieved against this, the assessee is in present appeal.
Ld. Counsel for the assessee at the outset, submitted that the expression ‘Tax’ as contemplated u/s 249(4)(a) read with clause 43 of section 2 of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) is different from the expression of ‘Interest’. Ld. Counsel vehemently argued that even interest component has already been recovered by the revenue. Ld. Counsel therefore, submitted that the appeal may be restored to the file of the Ld. CIT(A) for decision on merit.
On the contrary, Ld. D.R. supported the order of the Ld. CIT(A).
We have heard the rival submissions, perused the materials available on records and gone through the orders of the authorities below. The Ld. CIT(A) dismissed the appeal by observing as under:
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
“4. On careful consideration of the points in issue as brought out in the assessment order, the grounds of appeal and the submission of appellant the various grounds raised by the appellant are decided hereunder:- 4.1 The return of declaring income of Rs.3,52,85,449/- has been filed on 25.9.2013. The appellant has filed return of income without paying the Self assessment tax. The appellant filed the return of income on 25.9.2013 and while filing the return of income the appellant was required to pay the whole Self Assessment Tax on the day of filing the return of income. The appellant paid the tax of Rs.1,16,71,160/- on 17.12.2013. Whereas, he was required to pay a sum of Rs.1,26,89,970/-. The appellant submitted that he has not paid the interest u/s 234B of the Act and treated that interest is not a part of Self Assessment Tax as per section 249(4)(a) of the Act. The appellant was required to pay due tax on returned income. The relevant part of the Act is reproduced as under:- “(4) No appeal- under this Chapter shall be admitted unless at the time of filing of the appeal. (a) Where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him.” 4.1.1 From the above, it is clear that, the appellant have to pay not only tax but interest also because it is a part of Self Assessment Tax. The appellant has not paid the required self assessment tax which is a mandatory condition for admission of appeal. Therefore, the appeal of the appellant is Dismissed.”
5. The short question is whether the assessee is required to pay only tax as per the provisions of section 249(4)(a) of the Act? As per the above provision, no appeal would be admitted unless at the time of filing where a return has been filed by the assessee. The assessee has paid the tax due on the income returned by him. Now short question is whether due tax contemplated would include the interest chargeable hereon? The Hon'ble Bombay High Court has [ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] answered this question by relying on the judgement of the Hon'ble Supreme Court rendered in the case of Harshad Shantilal Mehta Vs. Custodian & Ors (1998) 231 ITR 871 (SC) that tax for the purpose of section 249(4)(a) of the Act would not include interest thereon. Further reliance is placed on the decision of the coordinate bench rendered in the case of Subbiah Nadar & Sons Vs. ACIT in ITA No.1710/Mad/1995. Ld. Coordinate bench of this Tribunal examined this aspect and held as under:
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
We do not see any reason to take a different view as taken by the coordinate bench of this Tribunal in the case of Subbiah Nadar & Sons Vs. ACIT (supra). We therefore set aside the impugned order and restore the appeal to the file of the Ld. CIT(A) to decide the appeal on merit. 7
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] However, Ld. CIT(A) would also verify how much tax and interest thereon on the return of income has already been recovered. In case it is found that the entire tax in respect of the returned income has already been paid, he would admit the appeal for deciding on merit. The grounds raised in this appeal are allowed for statistical purposes.
Now coming to the revenue’s appeal in ITA No.484/Ind/2013. The revenue has raised following grounds of appeal:
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
The first ground raised in the appeal is against deletion of addition of Rs.3,13,34,121/- treated as deemed dividend u/s 2(22)(e) of the Act. The facts giving rise to the present appeal are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Act was framed vide order dated 30.12.2011. While framing the assessment, the A.O. noticed that the assessee had taken advances during the year under consideration from M/s. Anand Real Estate Pvt. Ltd. The assessee is having 35% shareholding in the said company. Shri Anand Chhabra, son of the assessee is having another 30% shareholding and assessee’s daughter Swadesh Chhabra is having another 35% shareholding. The A.O. after considering the advances treated the same as deemed dividend and made addition of Rs.3,13,34,121/- by observing as under:
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
Aggrieved against this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions deleted this addition.
Ld. CIT(DR) Ms. Ashima Gupta vehemently argued that the Ld. CIT(A) was not justified in deleting the addition as he failed to appreciate the fact that the assessee has manipulated its records. It was categorically stated by the [ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] A.O. that the requisite evidences were not produced before him. It was further pointed out that entire exercise is post initiation of scrutiny assessment. It was further pointed out that the annual return filed by the company at the time of AGM held on 30.9.2008 and on 30.9.2008 the assessee was the shareholder of the company. It was only on 30.8.2008 and 30.9.2009, the assessee revised annual return on receipt of the very letter from the A.O.
Ld. Counsel for the assessee opposed these submissions and submitted that merely a mistake in not changing the status in the accounts of the company should not be basis to treat the transaction as deemed dividend as the shares were already transferred. In support of this all requisite evidences were supplied. The revenue has not rebutted these evidences by placing any contrary material on record. Moreover, the A.O. failed to appreciate the fact
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] that the addition even if it was to be made, it would restrict to the opening balance of the accumulated profit as on 31.3.2008 of Rs.29,552/-. In support of this contention, he has relied upon various decisions of the coordinate benches in the following case laws:
P. Satya Prasad Vs. ITO in dated 16.11.2012 2. Shri Abhishek Lath Vs. ITO, Burhanpur in ITA No.261/Ind/2013 dated 21.10.2013 3. CIT Vs. V. Damodaran (1980) 121 ITR 0572 (SC) 12. In rejoinder, Ld. CIT(DR) opposed these submissions.
We have heard the rival submissions, perused the materials available on records and gone through the orders of the authorities below. So far submission of the Ld. CIT(DR) that the entire exercise of transfer of shares is shrouded with suspicion has some merit. As from the records, it is transpired that the annual return of the company was revised subsequently, which goes to 12
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] demonstrate that it was a time to dress the transaction in such a fashion to evade the tax liability. We are of the considered view had the transfer been under the ordinary circumstances, it would not have been duly incorporated in the annual returns. The Ld. Counsel for the assessee has placed great stress on the production of the share transfer form register. This register is kept in the custody of the company itself. It is not a register of any authority, although such register is to be maintained under the provision of law. The assessee could not satisfactorily explain as to what were the circumstances, which prevented it from disclosing this transaction in the original annual return filed for the relevant year. However, we are of the view that the addition made by the A.O. taking the accumulated profit on the day to day basis as on 31.3.2009 is contrary to the judicial pronouncements. The Ld.
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] Counsel for the assessee has relied upon the decision of the coordinate bench of this Tribunal rendered in the case of P. Satya Prasad Vs. ITO in (supra). Further reliance is placed upon the judgement of the Hon'ble Supreme Court rendered in the case of CIT Vs. V. Damodaran 121 ITR 572, wherein the Hon'ble apex court has held as under:
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
The reliance is also placed on the decision of this Tribunal rendered in the case of Shri Abhishek Lath Vs. ITO (2013) 12 TMI 903, wherein the Tribunal has held that addition u/s 2(22)(e) of the Act cannot be more than accumulated profits of the company as at the beginning of the relevant financial year under consideration. The revenue has not brought to our notice any other contrary binding precedent. Therefore, respectfully following the same, we hereby confirm the addition to the extent of accumulated profit i.e. Rs.29,552/-. This ground of the revenue’s appeal is partly allowed.
Ground No.2 is against addition of Rs.49,04,296/- made u/s 69A of the Act. The facts related to this ground are that during the course of assessment proceedings, the A.O. noticed that there were cash deposits in various bank accounts of the assessee. The A.O. in the absence of cash
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] book made addition of these deposits as unexplained income u/s 69A of the Act.
Against this, assessee preferred an appeal before Ld. CIT(A), who deleted the addition treating the same as business receipts.
Ld. CIT(DR) vehemently argued that Ld. CIT(A) failed to appreciate the fact that before A.O., the assessee has not furnished any evidence to support his claim and explained the deposits made in the bank accounts.
On the contrary, Ld. Counsel for the assessee supported the order of the Ld. CIT(A) and submitted that before A.O. as well all the relevant evidences were placed.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. We find that the Ld. CIT(A) has given a finding of the fact by observing as under:
“8.3 Thus having considered the A.O’s as well as the appellant’s submission, it is observed that the A.O. even made addition of sum of [ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
[ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore]
The above finding of fact of the Ld. CIT(A) is not rebutted by the revenue. Therefore, we do not see any reason to interfere in the finding of the Ld. CIT(A) and the same is hereby affirmed. The ground raised by the revenue is dismissed. The appeal of the revenue is partly allowed.
In the result, the appeal filed by the assessee in for the A.Y. 2013-14 is allowed for statistical purposes and the appeal filed by the revenue in [ITA No.283/Ind/2018 & Varjinder Singh, Chhabra, Indore] A.Y. 2009-10 is partly allowed.
Order was pronounced in the open court on 17 .10.2019.