Income Tax Appellate Tribunal - Delhi
Shri Jitendra Singh Bajwa, Meerut vs Acit, Meerut on 25 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'C' BENCH,
NEW DELHI
BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND
SHRI KULDIP SINGH, JUDICIAL MEMBER.
ITA Nos. 357/DEL/2016 [A.Y. 2006-07]
ITA Nos. 358/DEL/2016 [A.Y. 2010-11]
ITA Nos. 359/DEL/2016 [A.Y. 2011-12]
ITA Nos. 3224/DEL/2015 [A.Y. 2008-09]
ITA Nos. 3225/DEL/2015 [A.Y. 2009-10]
Shri Jitendra Singh Bajwa Vs. The ACIT
A-151, Defence Colony Central Circle
Meerut Meerut
PAN : AFLPB 0774 Q
[Appellant] [Respondent]
Date of Hearing : 23.08.2017
Date of Pronouncement : 25.08.2017
Assessee by : Shri Sandeep Sapra, Adv
Revenue by : Shri Naveen Chandra, CIT-DR
ORDER
PER B.P. JAIN, ACCOUNTANT MEMBER:
The above five appeals filed by the assessee arise from different orders of the ld. CIT(A) as per details given below:
ITA No. A.Y. CIT(A) order
Dated
357/DEL/2016 2006-07 18.11.2015
358/DEL/2016 2010-11 18.11.2015
359/DEL/2016 2011-12 18.11.2015
3224/DEL/2015 2008-09 30.03.2015
3225/DEL/2015 2009-10 30.03.2015
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2. Since the appeals pertain to same assessee and were heard together involving identical issues, these are being disposed of by this consolidated order for the sake of convenience and brevity.
3. The assessee has sought permission to raise the following additional ground of appeal in all the assessment years under consideration:
"That the addition made on account of deemed dividend made u/s 2(22)(e) of I.T. Act in respect of loans received from M/s Godwin Construction (P) Ltd. for the above mentioned assessment years under appeal deserves to be deleted as the appellant had not been confronted by the AO during the course of assessment proceedings before making such addition thereby violating the principles of natural justice."
4. The assessee has also filed an application u/r 10 and u/r 29 of the ITAT Rules alongwith an affidavit. The said application and affidavit are reproduced hereinbelow:
"Application Under Rule 10 and Rule 29 of ITAT Rules May it Please Your Honours, It is respectfully submitted as under:-3-
1. That the Id. AO and the Ld. CIT(A) have made certain observations in their respective orders for the assessment years 2006-07, 2008-09, 2009-10, 2010-11 and 2011-12 which are factually incorrect and therefore permission is hereby sought to file Affidavit (as enclosed) of the Appellant under Rule 10 of ITAT Rules which is self explanatory.
2. That addition made on account of deemed dividend u/s 2(22)(e) of I. T. Act in respect of loans received from M/s Godwin Construction (P) Ltd. for the assessment years 2006-07, 2008-09, 2009-10, 2010-11 and 2011-12 is illegal as my shareholding in M/s Godwin Construction (P) Ltd. was below 10% in all the years as deposed in the above Affidavit.
3. That during the course of assessment proceedings, AO did not confront me with regard to the addition sought to be made u/s 2(22)(e) of I T. Act i.e. deemed dividend in respect of loan received from M/s Godwin Construction (P) Ltd. in the assessment years as above as also deposed in the above Affidavit. In other words, principles of natural justice had been violated by the AO.
4. Details of shareholding of the Appellant in M/s Godwin Construction Pvt. Ltd. for the aforesaid assessment years were filed before the Ld. CIT(A) to prove that the shareholding of the Appellant was less than 10% in such Co. and therefore, the addition made on account of deemed dividend was legally untenable. However, the Ld. CIT(A) refused to admit such additional evidence.-4-
5. In view of the above, my Affidavit alongwith details of shareholding which go to the root of the matter deserve to be admitted under Rule 29 of ITAT Rules as additional evidence for which reliance is placed on the following case laws:
351 ITR 57, CIT vs. Text Hundred India P. Ltd. (Delhi H.C.), which relied on the Hon'ble Supreme Court judgment in the case of Venkataramaiah vs. A. Seetharama Reddy AIR 1963 SC 1526 and held at page 67-68 as under:
''The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the -5- Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect".
At page 69, it was held as under:
"It is, thus, clear that the Tribunal found the requirement of the said evidence for proper adjudication of the matter and in the interest of substantial cause. Rule 29 of the Income Tax (Appellate Tribunal) Rules categorically permits the Tribunal to allow such documents to be produced for any substantial cause. Once the Tribunal has predicated its decision on that basis, we do not find any reason to interfere with the same. As a result, the questions of law are answered in favour of the assessee and against the Revenue resulting into dismissal of these appeals".
217 ITR 510, Deva Singh Guru Bux Singh Vs. CIT (Jurisdictional Allahabad H.C.), in which it was held as under:
"Rules 29, 30 and 31 of the Income -tax (Appellate Tribunal) Rules, 1963, provide for the production of fresh evidence before the Tribunal. The Tribunal has the power to hold an enquiry and admit fresh evidence in an appeal against an ex parte assessment under section 144 of the Income -tax Act, 1961".
Affidavit I Jitendra Singh Bajwa, S/o Late Shri Gurbachan Singh aged about 51 years, R/o A-151, pefence Colony, Meerut do hereby solemnly affirm and state on oath as under:
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1. That the following observations of the AO in the impugned assessment orders in my case passed u/s 153A/143(3) of the Income Tax Act for the assessment years 2006- 07, 2008-09, 2009-
10, 2010-11 and 2011-12 are factually incorrect:
"The assessee is the Director of M/s Godwin Construction (P) Ltd, also a beneficial holder of 50% of shares of the company".
That similarly the following observations of the Ld. CIT(A) in the appellate orders in case for the assessment years 2006-07, 2008- 09, 2009-10, 2010-11 and 2011-12 are factually incorrect:
During the appeal proceedings, AR of the appellant had submitted a paper which described to be the details of shareholders of M/s Godwin Construction (P) Ltd. Since this detail was not produced during the course of assessment proceedings inspite of the facts that the same was asked to be produced, there is no reason why this detail should be admitted at the appellate stage. This detail is clearly an additional evidence, the submission of which, is not covered under any exception to rule 46A. It is thus held that the AO has rightly understood the appellant to be holding more than 10% of equity shares of M/s Godwin Construction (P) Ltd."
3. That my shareholding in M/s Godwin Construction (P) Ltd. was 9% in Assessment Years 2006-07, 2008-09, 2009-10, 2010-11 and 2011-12 and not 50% as alleged by | the AO and CIT(A).
4. That during the course of assessment proceedings, AO did not confront me with regard to the addition sought to be made u/s 2(22)(e) of I.T. Act i.e. deemed dividend in respect of lean -7- received from M/s Godwin Construction."
"1. That the learned CIT(A) erred both on facts and in law in sustaining disallowance to the extent of 10% as against 25% by the Assessing Officer out of the total expenditure of Rs.81,50,92,376/- incurred bonafidely by the appellant towards lease rent, management fees and other expenses for running the hospital.
2. Without prejudice to the aforesaid ground, the CIT(A) after allowing the main ground of appeal of the appellant pertaining to the grant of exemption u/s 11 of the I.T. Act, 1961 was not required to go into the alternative ground raised aforesaid. This would unnecessarily create precedence for subsequent assessment years although no such disallowance was made in past assessments."
5. The ld. counsel for the assessee vehemently argued that the said ground raises a question of law which goes to the root of the matter and does not entail any verification of facts or brining on record any fresh material or additional evidence. He relied upon the decisions of various courts of law in this regard.
6. On the other hand, the ld. DR opposed the admission of additional ground.
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7. We have considered the rival arguments made by both the sides, perused the orders of the A.O and the ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied upon by both the sides. We find that said ground raises a question of law which goes to the root of the matter and does not entail any verification of facts or bringing on record any fresh material or additional evidence. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Corporation Ltd. vs CIT (1998) 229 ITR 383(SC). In view of the above judicial pronouncements, we admit the additional ground of appeal.
8. Briefly stated the facts of the case are that he appellant is a proprietor of M/s Godwin Oil and Services and director of M/s Godwin Constructions Pvt. Ltd. He had earned income from various sources and filed his return of income at Rs.2,25,429/- during the year under reference. A search and survey was conducted upon the premises of the appellant on 09.09.2010, thereafter notice u/s 153A of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] was issued to the assessee on 23.02.2012. The proceedings u/s 153A/143(3) of the Act, were completed vide order dated 28.03.2013. In the said order the Id. A.O. made total addition of Rs.4,89,740/- to the returned income of the appellant u/s 2(22)(e) of the Act, -9- allegedly holding that the appellant was a beneficial holder of 50% shares of M/s Godwin Construction (P) Ltd and therefore the provisions of section 2(22)(e) of the Act were applicable. The same were confirmed by the ld. CIT(A).
9. We have considered the rival arguments made by both the sides, perused the orders of the A.O and the ld. CIT(A) and the paper book filed on behalf of the assessee. It was argued by the ld. counsel for the assessee that the Assessing Officer holding that the appellant held 50% beneficial holding in the company namely M/s Godwin Construction Pvt. Ltd. assessed an amount of Rs.4,89,740/- as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961. The amount of Rs.4,89,740/- has been stated by the A.O. as having been received as loans & advances by the appellant during the year from the said company. On the above facts, it was prayed that the shareholding of the appellant was only 9% i.e. it was less than 10% of the total shareholding of the company and therefore no deemed dividend is assessable in the hands of the appellant in terms of that section because to make assessment of deemed dividend in the hands of shareholder, it is a condition precedent that he should hold 10% of the voting power in the company. A list containing the details of shareholding of the company during the year under reference as -10- certified by practicing company secretary was placed on record in the paper book in support of the fact that the shareholding of the appellant in the said company was only 9% during the year under appeal. It was argued that for that reason alone no addition u/s 2(22)(e) towards deemed dividend can be made in the hands of the appellant and, therefore, the addition so made deserves to be deleted.
10. Per contra, the ld. DR relied on the orders of the authorities below.
11. We have perused the list containing details of share holding of the company duly certified by the Company Secretary which is on record. As per the same, the share holding of the appellant is only 9% but this fact has to be verified by the authorities below. The assessee has submitted the additional evidence before the ld. CIT(A) which was accepted. We find sufficient cause for not submitting documents before the Assessing Officer in this regard and the ld. CIT(A) should have admitted the additional evidence and should have examined the same by taking remand report from the Assessing Officer. Therefore, in the circumstances and facts of the case and in the interest of justice, the ld. CIT(A) is directed to admit the additional evidence furnished by the ld. counsel for the assessee with regard to share -11- holding of the company which is claimed to be 9% instead of 50% in all the years and decide the case de novo by affording adequate opportunity of being heard to the assessee. Accordingly the appeal of the assessee for assessment year 2006-07 is allowed for statistical purposes.
12. Since the facts and circumstances of all the other remaining assessment years are identical to assessment year 2006-07, our view taken hereinabove will apply to these assessment years mutatis mutandis. Accordingly, the appeals are remanded back to the ld. CIT(A) for deciding the issues de novo, of course, after affording adequate opportunity of being heard to the assessee.
13. In the result, all the five appeals of the assessee are allowed for statistical purposes.
The order is pronounced in the open court on 25.08.2017.
Sd/- Sd/-
[KULDIP SINGH] [B.P. JAIN]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 25th AUGUST, 2017
VL/
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Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi