Income Tax Appellate Tribunal - Lucknow
Randhir Dev Sharma, Lucknow vs Dy. Commissioner Of Income Tax, Lucknow on 28 September, 2018
I.T.A. No.101/Lkw/2017
1
Assessment Year:2012-13
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH 'SMC', LUCKNOW
BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER
ITA No.101/Lkw/2017
Assessment Year:2012-13
Shri Randhir Dev Sharma, Vs. Dy.C.I.T.,
M/s Vicky Roadways, Range-1,
Dewa Road, Chinhut, Lucknow.
Lucknow.
PAN:AOWPS 2705 J
(Appellant) (Respondent)
Appellant by Shri Dharmendra Kumar, C.A.
Respondent by Shri Jai Nath Verma, D. R.
Date of hearing 24/09/2018
Date of pronouncement 28/09/2018
ORDER
This appeal has been filed by the assessee against the order of learned CIT(A)-I, Lucknow dated 05/09/2016 pertaining to assessment year 2012-13. In this appeal the assessee has raised the following grounds:
"1. That Ld. Commissioner (Appeals) failed to consider the fact and submission of appellant correctly and in right perspective.
2. That since Ld. Lower Authorities compared the financial results of immediate previous year and previous year before immediate previous in place of year under assessment and immediate previous, hence, the whole exercise of comparison become futile, accordingly, addition of Rs.9,80,062/- on the basis of aforesaid wrong comparison is incorrect and without jurisdiction.
3. That 'Hiring Charges' has been decreased since last assessment year and even if 'Freight Expenses' be added to I.T.A. No.101/Lkw/2017 2 Assessment Year:2012-13 'Hiring Charges', then too, the aforesaid expenses was less than previous year expenses as compared to turnover in respective assessment year, hence, addition of Rs.9,80,062/- is incorrect, unjustified and without jurisdiction.
4. That 'Imprest Account' was maintained by appellant with M/s Vicky Roadways (P) Ltd, consistently since its incorporation for meeting day to day expenses of company, hence addition of Rs.14,50,000/- made in the total income under section 2(22)(e) of Income Tax Act, 1961 is against the facts, illegal and without jurisdiction.
5. That no addition was made in assessment proceedings of a.y. 2008-09 and a.y. 2010-11 in respect of transactions in 'Imprest Account' under section 2(22)(e) of the Act, hence addition made under aforesaid provision of the Act in respect of transactions in 'Imprest Account' is illegal, against the facts and unjustified.
6. That since accumulated profits of M/s Vicky Roadways (P) Ltd was less than additions made under section 2(22)(e) of the Act, hence, same is illegal and without jurisdiction."
2. The above appeal was dismissed by Hon'ble Tribunal vide order dated 08/12/2017 for non prosecution. However, the said order of Hon'ble Tribunal has been recalled for hearing on merits vide order dated 02/05/2018.
3. At the outset, Learned A. R. submitted that the assessee is a transport contractor and is running his proprietorship business in the name of Vicky Roadways. It was submitted that during assessment proceedings the assessee was asked about the nature of expenditure of freight expenses amounting to Rs.9,80,062/- and assessee was asked as to why such expenditure has been incurred when assessee already had debited all kind of expenses as hiring charges, driver salary & diesel expenses etc. Learned A. R. submitted that assessee had submitted that freight expenses debited to profit & loss account was expense on account of advance payment for I.T.A. No.101/Lkw/2017 3 Assessment Year:2012-13 vehicles taken on hire and rest of the expenses were debited to hire charges. Freight expenses and copy of ledger account was also submitted to the Assessing Officer and in this respect our attention was invited to pages 93 to 96 of the paper book where the copy of such ledger account was placed. It was submitted that these expenses along with hiring expenses were less than the immediate previous year as percentage to turnover and the only fault of the assessee was that it recorded part payment under the head hiring charges and part payment under the head freight expenses. Learned A. R. submitted that none of the payments debited in freight expenses was doubted by the authorities below therefore, the addition was not warranted.
5. Arguing upon the second addition of deemed dividend, Learned A. R. submitted that assessee was having imprest account with Vicky Roadways in which he was director and our attention was invited to pages 114 to 134 of the paper book where copy of account of assessee, as reflected in the books of Vicky Roadways, was placed. Learned A. R. submitted that as on 01/04/2010 the assessee was to receive Rs.49,07,652/- from the company which turned out to be Rs.11,09,265/- at the close of the year and it was payable to the company. It was submitted that the debit balance receivable from the company was converted into credit balance by virtue of two entries of Rs.10,00,000/- and Rs.14,50,000/- which the assessee had received from the company. Inviting our attention to the copy of account of company in earlier year, Learned A. R. submitted that in earlier year the opening as well as closing balance was receivable from the company and it was submitted that the account with the company was in the nature of imprest account which fact is verifiable from the number of entries with the company. Therefore, it was argued that the same cannot be regarded as deemed dividend as held by Hon'ble Calcutta High Court in the case of CIT I.T.A. No.101/Lkw/2017 4 Assessment Year:2012-13 vs. Gayatri Chakraborty [2018] 256 Taxman 156 (Calcutta) where Hon'ble court vide order dated 3rd May, 2018 has held that where the transactions between shareholder and company were in nature of current account, provisions of section 2(22)(e) would not be applicable.
6. Learned D. R. heavily placed reliance on the orders of the authorities below.
7. I have heard the rival parties and have gone through the material placed on record. As regards the first issue of freight expenses, I find that the assessee had duly filed the copy of account of freight expenses where the freight expenses in the form of cash paid to various persons on various dates has been booked. Learned A. R. has argued that these were part of advance payment which was paid to the drivers and the final payment of which was booked in the hiring charges account. This needs factual verification therefore, I remit this issue back to the file of the Assessing Officer who should correlate the entries in the freight expenses and hiring charges and should arrive at correct conclusion as to whether freight expenses were part of hiring charges or not. Before making the addition, the Assessing Officer should also make a finding that these expenses were not incurred for the purpose of business.
8. Regarding the issue of deemed dividend, I find that the assessee has relied on a case law of Hon'ble Calcutta High Court which says that where the transactions between shareholder and company were in nature of current account, provisions of section 2(22)(e) would not be applicable and cannot be treated as deemed dividend. I find that the assessee has filed copy of account of the company Vicky Roadways from 2010-11 to 2012-13, the copies of which are placed at pages 97 to 134 of the paper book. The Assessing Officer has only identified one entry amounting to Rs.14,50,000/-
I.T.A. No.101/Lkw/2017 5 Assessment Year:2012-13 which was given by the company to assessee on 28/03/2012 whereas he has ignored the other entries appearing in the same account. I also observe that before receiving this amount of Rs.14,50,000/- from the company, the assessee was to receive about same amount from the company therefore, the action of the Assessing Officer in treating and holding single transaction for the purpose of deemed dividend is not correct. However, this fact also needs factual verification. Therefore, this is also remitted back to the file of the Assessing Officer who should pass a fresh assessment order on this issue after verifying the statement of company in the books of the assessee and should decide the issue after taking into account the case law of Hon'ble Calcutta High Court relied on by the assessee.
9. In the result, the appeal of the assessee stands allowed for statistical purposes.
(Order pronounced in the open court on 28/09/2018) Sd/.
( T. S. KAPOOR ) Accountant Member Dated:28/09/2018 *Singh Copy of the order forwarded to :
1. The Appellant
2. The Respondent.
3. Concerned CIT
4. The CIT(A)
5. D.R., I.T.A.T., Lucknow