TMI Blog1993 (2) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee companies had not distributed dividend as required under the Act. Therefore, he initiated proceedings under s. 104 of the IT Act against all the assessees. The reply of the assessees to the show cause notices was that the company had borrowed funds and the payments were made during the year itself which reduced the loan liability. Therefore, the companies could not declare higher dividend. The reply filed by the assessee did not find favour with the ITO. Therefore, he imposed additional tax under s. 104 of the Act observing that the assessees are investment companies and borrowing funds and repaying it is a business activity. The companies may raise loan to pay off another or increase or decrease its investments are purely busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication it was further mentioned that evidence which is crucial could not be placed before the ITO because it was not available on the date when the order under s. 104 of the Act was passed but it was certainly available when the CIT(A) disposed of appeals on17th Jan., 1989. However, it could not be produced before him due to inadvertence and lack of awareness as to the crucial nature of the aforesaid evidence. In the interest of justice and in the light of decision of Kerala High Court in the case of CIT vs. Amalgamated Tea Estate Co. Ltd. (1970) 77 ITR 454 (Ker) which in turn followed the decision of the Supreme Court in the case of Anglo-American Direct Tea Trading Co., Ltd. vs. Commr. of Agrl. IT (1968) 69 ITR 667 (SC), it was submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kshay Finance TradingCo. Ors. passed in Company Petitions No. 21 to 26 of 1986, dt.12th Aug., 1987. It was pointed out that preference shares redeemed was not the result of any concerted action but was brought about by internal quarrels between two groups of the family members running these companies viz. the D.K. Oswal group and the R.C. Oswal group. The dispute started very much earlier in the early eighties and it had to be finally settled by the judgment of the Hon'bleDelhiHigh Court vide order dt.12th Aug., 1987. The learned Single Member considered the redemption of shares as not being a legitimate reason for non-declaration of statutory dividend but this approach is not valid in view of the decision of the Delhi High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal unless the evidence produced is required by the Tribunal to enable it to pass order or for any other substantial cause. It was pointed out that the order of the Hon'ble Delhi High Court was available to the assessee when the matter was being agitated before the CIT(A). But no efforts were made by the assessees to produce the same. Therefore, mere inadvertances or lack of awareness will not be a sufficient reason to admit this evidence in view of clear provision of law. Our attention was invited to the Commentary of Chaturvedi Pithisaria, Fourth Edition Volume 5 at page 5316 that the assessees who are guilty of remissness and gross negligence are not entitled to indulgence being shown to adduce additional evidence in second appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain facts such as the matter of redemption of preference shares was whether within the same group of companies or otherwise and whether the redemption of preference share was a result of any concerted action but was brought about by internal conflict between the two groups of family. The repayment of loan was a regular activity of the investment company and whether the companies could raise loan for paying previous loans is part of their business activity. The learned counsel for the assessee Dr. S. Narayanan took us through various observations of the Hon'ble Delhi High Court in the order dt. 12th Aug., 1987 and it was pointed out that due to infighting among the various groups of assessees, they had entered into litigation and the prefere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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