Sh. Dinesh Pandey, Noida V. DCIT, New Delhi

CO 325/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3769 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPTI SENIOR
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3358/DEL./2015 (ASSESSMENT YEAR : 2011-12) DCIT, CENTRAL CIRCLE 19, VS. SHRI PRAMOD PANDEY, NEW DELHI. B 67, SARITA VIHAR, NEW DELHI 110 076. (PAN : AALPP2708H) CO NO.324/DEL/2015 (IN ITA NO.3358/DEL./2015) (ASSESSMENT YEAR : 2011-12) SHRI PRAMOD PANDEY, VS. DCIT, CENTRAL CIRCLE 19, B 67, SARITA VIHAR, NEW DELHI. NEW DELHI 110 076. (PAN : AALPP2708H) ITA NO.3359/DEL./2015 (ASSESSMENT YEAR : 2011-12) DCIT, CENTRAL CIRCLE 19, VS. SHRI DINESH PANDEY, NEW DELHI. B 67, SARITA VIHAR, NEW DELHI 110 076. (PAN : AALPP2708H) CO NO.325/DEL/2015 (IN ITA NO.3359/DEL./2015) (ASSESSMENT YEAR : 2011-12) SHRI DINESH PANDEY, VS. DCIT, CENTRAL CIRCLE 19, B 67, SARITA VIHAR, NEW DELHI. NEW DELHI 110 076. (PAN : AALPP2708H) (APPELLANT) (RESPONDENT) ITA NOS.3358 & 3359/DEL./2015 CO NOS.324 & 325/DEL/2015 2 ASSESSEE BY : NONE REVENUE BY : SHRI S.R. SENAPTI, SENIOR DR DATE OF HEARING : 15.05.2018 DATE OF ORDER : 18.05.2018 O R D E R PER BENCH : THE AFORESAID APPEALS FILED BY THE REVENUE AND CROS S OBJECTIONS FILED BY THE ASSESSEE ARE BEING DISPOSED OF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. 2. THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX , CENTRAL CIRCLE 19, NEW DELHI (HEREINAFTER REFERRED TO AS T HE REVENUE) BY FILING THE PRESENT APPEALS, SOUGHT TO SET ASIDE THE IMPUGNED ORDERS BOTH DATED 12.02.2015 PASSED BY LD. CIT (APPEALS)-X XVII, NEW DELHI QUA THE ASSESSMENT YEAR 2011-12 ON THE IDENTI CAL GROUNDS INTER ALIA THAT :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THA T THE ASSESSEE'S CASE DOESN'T COME UNDER THE PURVIEW OF SECTION 2(22)(E) OF THE INCOME TAX ACT. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THA T THE ASSESSEE COULD NOT BE CONSIDERED AS THE BENEFICIARI ES OF THE LOANS AND ADVANCES MADE AMONG THE GROUP OF COMPANY. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING TH E ADDITION (RS.72,39,615 IN CASE OF PRAMOND PANDEY AN D RS.70,000/- & RS.1,69,62,754/- IN CASE OF DINESH ITA NOS.3358 & 3359/DEL./2015 CO NOS.324 & 325/DEL/2015 3 PANDEY) MADE BY THE AO AGAINST THE RETURNED INCOME (AT RS.29,12,000/- OF PRAMOND PANDEY AND RS.11,68,824/- OF DINESH PANDEY) . 4. (A) THE ORDER OF THE LD. CIT (APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY I ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 3. THE OBJECTORS, SHRI PRAMOD PANDEY AND SHRI DINES H PANDEY, BY FILING THE PRESENT CROSS OBJECTIONS SUPP ORTING THE ORDERS BOTH DATED 12.02.2015 PASSED BY THE LD. CIT (APPEAL S)-XXVII, NEW DELHI QUA THE ASSESSMENT YEAR 2011-12 ON THE ID ENTICAL GROUNDS INTER ALIA THAT :- 1) IT IS CONTENDED THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT APPLICABLE TO THE SUM (RS.72,39,618/- IN CASE OF PRAMOD PANDEY AND RS.1,69,62,754/- IN CASE OF DINESH PANDEY). 2) THE SUM (RS.72,39,618/- IN CASE OF PRAMOD PANDEY AND RS.1,69,62,754/- IN CASE OF DINESH PANDE Y) REPRESENTING TRANSACTIONS BETWEEN THE GROUP COMPANIES, UNDERTAKEN IN THE COURSE OF BUSINESS JOI NTLY CARRIED OUT BY ALL SUCH GROUP COMPANIES, BEING IN T HE NATURE OF BUSINESS ADVANCES, THE PROVISIONS OF SECT ION 2(22)(E) OF THE ACT ARE NOT APPLICABLE AT ALL. 3) THAT THE ABOVE GROUNDS OF CROSS OBJECTIONS ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : DURING THE ASSESSMENT PRO CEEDINGS, ASSESSING OFFICER NOTICED THAT THE ASSESSEE, SHRI P RAMOD PANDEY IS ITA NOS.3358 & 3359/DEL./2015 CO NOS.324 & 325/DEL/2015 4 A SUBSTANTIAL SHAREHOLDER IN SAGA DEVELOPERS PVT. L TD., SAAMAG DEVELOPERS PVT. LTD. AND SAAMAG INFRASTRUCTURE LTD. HAVING SHAREHOLDING OF 35%, 35% AND 29.92% RESPECTIVELY. ASSESSEE, SHRI DINESH PANDEY IS A SUBSTANTIAL SHAREHOLDER IN SAGA DEVELOPERS PVT. LTD., SAAMAG DEVELOPERS PVT. LTD., SAAMAG CONS TRUCTION LTD. AND SAAMAG INFRASTRUCTURE LTD. HAVING SHAREHOLDING OF 35%, 35%, 98.55% AND 50% RESPECTIVELY. THE ASSESSEES WERE CA LLED UPON TO EXPLAIN AS TO WHY AN AMOUNT OF RS.72,39,618/- AND AN AMOUNT OF RS.70,000/- AND RS.1,69,62,754/- IS NOT TAXED IN TH E HANDS OF PRAMOD PANDEY AND DINESH PANDEY RESPECTIVELY ON SUB STANTIVE BASIS ON ACCOUNT OF PROPORTIONATE DEEMED DIVIDEND. AO ALSO NOTICED THAT IN AY 2011-12, PROTECTIVE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEES. DISAGREEING WITH THE SUBMI SSIONS MADE BY THE ASSESSEES, AO MADE ADDITION OF RS.72,39,618/- I N CASE OF PRAMOD PANDEY AND ADDITION OF RS.70,000/- AND RS.1, 69,62,754/- IN CASE OF DINESH PANDEY BY TREATING THE AFORESAID LOAN AND ADVANCES AS DEEMED DIVIDEND IN THE HANDS OF ASSESSE ES ON SUBSTANTIVE BASIS. 5. ASSESSEE CARRIED THE MATTER BY WAY OF APPEALS BE FORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY ALLOWING TH E APPEALS. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. THE ASSESSEE S, PRAMOD ITA NOS.3358 & 3359/DEL./2015 CO NOS.324 & 325/DEL/2015 5 PANDEY AND DINESH PANDEY FILED CROSS OBJECTIONS SUP PORTING THE ORDERS PASSED BY THE LD. CIT (A). 6. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE OF 15.05.2017 AND CONSEQUENTLY, WE PR OCEEDED TO DECIDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. D R AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 6B. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATI VE FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. UNDISPUTEDLY, THE ASSESSEES, PRAMOD PANDEY AND D INESH PANDEY, ARE SUBSTANTIAL SHAREHOLDER IN THE COMPANIE S DETAILED IN THE PRECEDING PARAS. IT IS ALSO NOT IN DISPUTE THAT TH E AO HAS MERELY MADE THE ADDITION ON THE GROUND THAT THE ASSESSEES HAVING SUBSTANTIAL INTEREST IN ALL THE AFORESAID COMPANIES AND HAVE BORROWED MONEY FROM OTHER COMPANIES OF SAAMAG GROUP AND TREATED THE SAID AMOUNT AS LOANS AND ADVANCES BY IN VOKING THE PROVISIONS CONTAINED U/S 2(22)(E) OF THE ACT FOR TA XING THE SAME AS DEEMED DIVIDEND. 8. LD. CIT (A) IN THE LIGHT OF THE JUDGMENTS RENDER ED BY HONBLE APEX COURT IN CIT VS. URMILA RAMESH 230 I TR 433 (SC), HONBLE DELHI HIGH COURT IN CASES CITED AS CUT VS, RAJ KUMAR 318 ITR 462 (DELHI), CREATIVE DYEING AND PRINTING PVT. LTD. 318 ITR 476 (DEL.), CIT VS. AMBASSADOR TRAVELS PVT. LTD. 318 ITR 376 (DELHI) ITA NOS.3358 & 3359/DEL./2015 CO NOS.324 & 325/DEL/2015 6 AND HONBLE HIGH COURT IN CIT VS. NAGIN DAS M. KAPA DIA 177 ITR 393 (BOM.) EXAMINED THE CONSORTIUM AGREEMENT DATED 20.01.2006 ENTERED INTO BETWEEN THE COMPANIES OF SAAMAG GROUP OF WHICH ASSESSEES WIFE, SMT. KUSUM PANDEY AND HIS YOUNGER B ROTHER, SHRI PRAMOD PANDEY WERE THE FOUNDER/ PROMOTER MEMBERS OF THE COMPANIES KNOWN AS SAAMAG GROUP WHICH WERE INTO THE ACTIVITIES OF ACQUISITION OF LAND AND OTHER BUSINESS PURPOSE A ND THE SAAMAG GROUP OF COMPANIES HAVE GIVEN/ TAKEN LOANS AND ADVA NCES FROM EACH OTHER. 9. THERE IS NOT AN IOTA OF EVIDENCE ON THE FILE IF ANY LOANS AND ADVANCES HAVE BEEN TAKEN BY THE ASSESSEES FROM THE SAID COMPANIES OR THEY WERE BENEFICIARY OF LOANS AND ADV ANCES MADE AMONGST THE GROUP COMPANIES. WHEN THE ENTIRE ARRAN GEMENT OF LOANS AND ADVANCES WAS AS PER CONSORTIUM AGREEMENT DATED 20.01.2006 ENTERED INTO BETWEEN THE SAAMAG GROUP OF COMPANIES INTER-SE DRAGGING THE ASSESSEES INTO THE SAID LOANS AND ADVANCES MADE BY THE SAID SAAMAG GROUP OF COMPANIES AMONG TH EMSELVES HAS NO RATIONALE. 10. THE LD. CIT (A) DELETED THE ADDITION MADE BY TH E AO IN BOTH THE APPEALS AFTER THRASHING THE ISSUE AT LENGTH IN THE LIGHT OF THE CASE LAWS AND FACTS AND CIRCUMSTANCES OF THE CASE. MORE OVER, AO HAS NOT BROUGHT ON RECORD IOTA OF EVIDENCE TO PROVE IF THE ALLEGED TRANSACTIONS OF LOANS AND ADVANCES AMONGST THE SAAM AG GROUP OF COMPANIES WENT INTO THE ACCOUNT OF ASSESSEES. SO, FINDING NO ITA NOS.3358 & 3359/DEL./2015 CO NOS.324 & 325/DEL/2015 7 ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASS ED BY THE LD. CIT (A) SUPPORTED BY THE ASSESSEES BY FILING CROSS OBJE CTIONS, THE PRESENT APPEALS, ITA NOS.3358/DEL/20115 & 3359/DEL/ 20115 FILED BY THE REVENUE ARE DISMISSED AND CROSS OBJECTIONS F ILED BY THE ASSESSEES SUPPORTING THE ORDER PASSED BY LD. CIT (A ) ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF MAY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH ) PRESIDENT JUDICIAL MEMBER DATED THE 18 TH DAY OF MAY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.