Dy.CIT, Circle-1(3), Hyderabad V. Sri B. Dhanunjaya Rao,., Hyderabad

CO 98/HYD/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8119 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 28-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G SRINIVASA RAO
• Assessee Lawyers: P V RAMACHANDRA RAO
• Keywords: Reopening of assessment; Additional evidence; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO./ CROSS OBJECTION NO. THEREIN ASSESS- MENT YEAR APPELLANT RESPONDENT/ CROSS-OBJECTOR ITA 443/HYD/2012 CO 101/HYD/2012 2002-03 DY. COMMISSIONER OF INCOME-TAX CIRCLE 1(3), HYDERABAD SHRI B. DHANUNJAYA RAO, HYDERABAD (PAN ADHPB 1821 A) ITA 444/HYD/2012 CO 98/HYD/2012 2006-07 DY. COMMISSIONER OF INCOME-TAX CIRCLE 1(3), HYDERABAD SHRI B.DHANUNJAYA RAO, HYDERABAD (PAN ADHPB 1821 A) ITA 445/HYD/2012 CO 99/HYD/2012 2003-04 DY. COMMISSIONER OF INCOME-TAX CIRCLE 1(3), HYDERABAD SMT.B.SEETA RATNAM, HYDERABAD (PAN AGKPB 9150 E) ITA 446/HYD/2012 CO 100/HYD/2012 2006-07 DY. COMMISSIONER OF INCOME-TAX CIRCLE 1(3), HYDERABAD SMT. SEETA RATNAM, HYDERABAD (PAN AGKPB 9150 E) ASSESSEES BY : SHRI P.V.RAMACHANDRA RAO DEPARTMENT BY : SHRI G.SRINIVASA RAO DATE OF HEARING 19.10.2012 DATE OF PRONOUNCEMENT 14.12.2012 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THESE APPEALS BY THE REVENUE AND CROSS-OBJECTIONS BY TH E ASSESSEES THEREIN ARE DIRECTED AGAINST SIMILAR BUT SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, HYDERABAD. SINCE FACTUAL ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 2 BACKGROUND AS WELL AS THE ISSUES INVOLVED IN THE PRESENT APPEALS BY THE REVENUE AND CROSS-OBJECTIONS BY THE ASSESSEES ARE COMMON, THE SE APPEALS AND CROSS OBJECTIONS ARE BEING DISPOSED OFF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY ISSUE INVOLVED IN THE APPEALS OF THE REV ENUE RELATES TO THE ADDITIONS MADE BY THE ASSESSING OFFICER IN TERMS OF S. 2(22)(E) OF THE ACT, TREATING THE ADVANCES TAKEN BY THE ASSESSEES FROM A COMPAN Y IN WHICH THEY WERE HAVING SUBSTANTIAL STAKE, AS DEEMED DIVIDEND. THE GRIEVANCE OF THE REVENUE IN ITS APPEAL IS AGAINST THE ACTION OF THE CIT (A) IN DELETING SUCH ADDITIONS MADE BY THE ASSESSING OFFICER. THE CROSS OBJECTION S OF THE ASSESSEES MERELY SUPPORT THE ORDER OF THE CIT(A), IN THE LIGHT OF THE APPEAL OF THE REVENUE. 3. BRIEF FACTS OF THE CASE, AS TAKEN FROM THE APPEAL OF THE REVENUE, ITA NO.445/HYD/2012, CONCERNING SMT.B.SEETARATNAM, FOR THE ASSESSMENT YEAR 2003-04, ARE THAT THE ASSESSEE FILED RETURN OF IN COME FOR THE ASSESSMENT YEAR 2003-04 ON 30.9.2003 DECLARING A TOTAL I NCOME OF RS.1,00,900, BESIDES AGRICULTURAL INCOME OF RS.1,50,000. THE SAID RETURN WAS INITIALLY PROCESSED UNDER S.143(1) OF THE ACT ON 22.1.2 004. SUBSEQUENTLY, IT WAS NOTICED THAT THE ASSESSEE HAD TAKEN ADVANCES OF AN AMOU NT OF RS.30,00,000 FROM M/S. BDR PROJECTS PVT. LTD., WHEREIN THE ASSESSEE WAS HOLDING 18.69% OF SHARES. THE SAID ADVANCES WERE TREATED AS DEEMED DIVIDEND WITHIN THE MEANING OF S.2(22)(E) OF THE ACT . AS THE ASSESSEE HAD FAILED TO DISCLOSE THE SAID INCOME, BEING DEEMED DIVIDEN D, A NOTICE UNDER S.148 OF THE ACT DATED 16.7.2007 WAS ISSUED. IN THE RE -ASSESSMENT PROCEEDINGS THAT ENSUED, THE ASSESSING OFFICER NOTICED FROM THE ANNUAL REPORT OF BDR PROJECTS PVT. LTD. FOR THE YEAR ENDING 31.3.20 03 THAT THE ACCUMULATED PROFITS OF THE COMPANY AS ON 31.3.2002 AND 31.3.2003 ARE TO THE EXTENT OF RS.2,49,53,925 AND RS.2,57,37,170 AND AS PER THE ACCOUNT EXTRACT FURNISHED BY THE ASSESSEE, THE SAID COMPANY MADE PAYMENTS AGGREGATI NG TO ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 3 RS.30,00,000 BY WAY OF ADVANCES DURING THE YEAR UNDER APPEAL. SINCE THE ASSESSEE WAS HOLDING MORE THAN 10% SHARES, THE ASSESSING OFFICE R, TREATING THE ADVANCE RECEIVED BY THE ASSESSEE FROM THE SAID COMPANY AS DEEMED DIVIDEND UNDER S.2(22)(E) OF THE ACT, AND ACCORDINGLY MAKING AN ADDITION OF RS.30,00,000, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.32,50,090, VIDE ORDER OF ASSESSMENT DATED 1 5.12.2008 PASSED UNDER S.143(3) READ WITH S.147 OF THE ACT. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CI T(A), CONTESTING THE VALIDITY OF ISSUE OF NOTICE UNDER S.148 AND ALSO THE ACTION OF THE ASSESSING OFFICER IN TREATING THE AMOUNTS WITHDRAWN T OWARDS CONSTRUCTION OF HOUSE PROPERTY BY THE DIRECTOR OF THE COMPANY AS DEE MED DIVIDEND UNDER S.2(22)(E). THE CIT(A), WHILE UPHOLDING THE LEGALIT Y AND VALIDITY OF THE REOPENING OF THE ASSESSMENT UNDER S.147, DELETED THE A DDITION MADE ON ACCOUNT OF DEEMED DIVIDEND BY FOLLOWING INTER ALIA TH E DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOT RA V/S. CIT(338 ITR 538). 5. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. FACTS OF THE CASE ARE SIMILAR IN THE REMAINING THREE APPEALS, EXCEPTING FOR THE DIFFERENCES IN THE AMOUNTS OF DEEMED DIVIDEND BROUGHT TO TAX IN EACH OF THESE MATTES, AND THE FACT THAT THE ISSUE OF REOPENING OF ASSESSMENT IS NOT THERE IN THE APPEAL FOR ASSESSMENT YEAR 20 06-07 CONCERNING SHRI B. DHANUNJAYA RAO, ALL OTHER APPEALS. THE AMOUNTS OF DEEMED DIVIDEND BROUGHT TO TAX IN THE CASE OF SMT. B. SEETARATNAM FOR THE ASSESSMENT YEAR 2006-07 IS RS.20,00,000. SUCH AMOUNTS OF D EEMED DIVIDEND BROUGHT TO TAX IN THE CASE OF SHRI B.DHANUNJ AYA RAO, WHOSE SHARE- HOLDING IN M/S. BDR PROJECTS PVT. LTD., AS EVIDENT FROM THE ORDER OF THE ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 4 CIT(A) FOR ASSESSMENT YEAR 2002-03 WAS 33.33% AND AS SUCH M ORE THAN 10%, WERE RS.8,59,130 FOR THE ASSESSMENT YEAR 2002-03 AND RS.20,00,000 FOR THE ASSESSMENT YEAR 2006-07. AGGRIEVED BY THE ACTIO N OF THE CIT(A) IN DELETING THESE ADDITIONS MADE BY THE ASSESSING OFFICER TO BRING TO TAX THE DEEMED DIVIDENDS IN THE HANDS OF THESE TWO ASSESSEES, THE PRESENT APPEALS ARE FILED BY THE REVENUE, WHEREIN SUPPORTING THE ORD ERS OF THE CIT(A) ASSESSEES FILED THE CROSS-OBJECTIONS. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D BEFORE US, COMMONLY FOR THESE APPEALS THAT THE CIT(A) WAS TOTALLY MISCONCEIVED IN GRANTING RELIEF TO THE ASSESSEE BY PL ACING RELIANCE ON T HE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF PRADIPKUMAR MALHOTR A (SUPRA). THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT TH E FACTS IN THE CASE OF PRADIP KUMAR MALHTORA (SUPRA) ARE CLEARLY DISTINGUISHAB LE FROM THE FACTS INVOLVED IN THE PRESENT APPEALS. THE LEARNED DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT IN CASE OF PRADIP KUMAR MALHOTRA (SUPRA ), THE PROPERTY WAS MORTGAGED BY THE SHARE=HOLDERS FOR ENABLING THE COMPA NY TO AVAIL LOANS FOR ITS BUSINESS PURPOSES. SUBSEQUENTLY, WHEN THE SHAREHOLDER S REQUESTED FOR RELEASE OF THE MORTGAGED PROPERTY, THE BANK REFUSED T O RELEASE IT UNLESS PROPERTY OF SIMILAR NATURE IS MORTGAGED. SINCE THE COM PANY WAS UNABLE TO RELEASE THE MORTGAGED PROPERTY, IT ADVANCED THE MONEY TO THE SHAREHOLDERS AS REQUIRED BY THEM. HOWEVER, IN THE CASE OF THE ASSESSEE S BEFORE US, NEITHER THE PROPERTIES OF THE ASSESSEES WERE MORTGAGED WI TH THE BANK, FOR THE PURPOSE OF AVAILING OF THE LOAN BY THE COMPANY, N OR WAS THERE ANY EVIDENCE PRODUCED BY THE ASSESSEES THAT THEY HAVE MADE A R EQUEST FOR THE RELEASE OF THEIR PROPERTIES FROM THE BANK, IF AT ALL, THE SAME HAVE BEEN MORTGAGED. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE BEING DIRECTOR OF THE CONCERNED COMPANY, HAVE ONL Y GIVEN THEIR PERSONAL GUARANTEE BASED ON THEIR NET WORTH MENTIONED , WHICH INCLUDES THE VALUE OF THE PROPERTIES. THE LEARNED DEPARTMENTAL R EPRESENTATIVE FURTHER ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 5 SUBMITTED THAT THE RATIO DECIDINDI OF THE HONLE CALCUT TA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA) CANNOT BE CONSIDERE D TO BE A GOOD LAW, AS IT HAS NOT TAKEN INTO ACCOUNT, THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF SMT. TARULATHA SHYAM V/C. CIT(10 8 ITR 348). THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN THE AFORESAID CASE, THE HONBLE SUPREME COURT HAS LAID DOWN THE LAW THAT EVEN IN A CASE THE LOAN OR ADVANCE TO THE SHARE-HOLDERS CEASE TO BE OUTSTANDING A T THE END OF THE PREVIOUS YEAR, IT CAN STILL BE DEEMED AS DIVIDEND, IF THE OTHER CONDITIONS FACTUALLY EXIST TO THE EXTENT OF THE ACCUMULATED PROFIT S POSSESSED BY THE COMPANY. LEARNED DEPARTMENTAL REPRESENTATIVE ALSO RE LIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS ABOVE CONTENTIONS. (1) CIT V/S. ABUBUCKER (259 ITR 507)-MAD. (2) M.D.JINDAL V/S. CIT(164 ITR 28)-CAL (3) SHARDA V/S. CIT (229 ITR 444)-SC (4) RAVINDRA D. AMIN V/S. CIT (208 ITR 815)-GUJ. (5) CIT V/S. KANTAWALA (100 ITR 598)-BOM. 8. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE A SSESSEE, ON THE OTHER HAND, STRONGLY SUPPORTING THE IMPUGNED ORDERS O F THE CIT(A), SUBMITTED THAT DIRECTORS PERSONAL PROPERTIES WERE IN FA CT MORTGAGED AS SECURITY WITH THE BANK TO ENABLE THE COMPANY TO AVAIL THE LOANS. WHEN THE ASSESSEES WERE IN NEED OF MONEY FOR CONSTRUCTION OF HOUSE PR OPERTY AND WANTED TO AVAIL LOAN BY MORTGAGING THE SELF-SAME PROP ERTY, THEY COULD NOT AVAIL LOAN BY MORTGAGING THE SELF SAME PROPERTY, AS IT WAS ALREADY MORTGAGED WITH THE BANK AS SECURITY TOWARDS LOAN AVAILED BY THE CO MPANY. TO HELP THE DIRECTORS OUT OF THE TIGHT SITUATION THEY WERE FACING, THE COMPANY CAME FORWARD AND ADVANCED THE AMOUNTS TO THE ASSESSEES DURING THE YEARS UNDER APPEAL, AS THE COMPANY WAS BENEFITTED DUE TO THE PROPE RTIES BEING KEPT AS SECURITY FOR THE LOANS AVAILED BY IT. THE LEARNED AUT HORISED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT AFTER CONSTRUCTION OF THE BUILDING, THE ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 6 VALUE OF THE PROPERTY WOULD FURTHER SHOOT UP, AND TH E COMPANY WOULD ALSO GET BENEFITTED AS IT WOULD BE ABLE TO GET FURTHER F INANCE FACILITY FROM THE BANK. THE LEARNED AUTHORISED REPRESENTATIVE FOR TH E ASSESSEE RELYING UPON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CA SE OF PRADIP KUMAR MALHOTRA (SUPRA), SUBMITTED THAT THERE BEING NO IN DIVIDUAL BENEFIT PASSED ON TO THE ASSESSEES BY VIRTUE OF THE MONIES ADVANCED BY THE CO MPANY, IT CANNOT BE TREATED AS DEEMED DIVIDEND, COMING WITHIN THE AMBI T OF S.2(22)(E) OF THE ACT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIALS ON RECORD. WE HAVE ALSO GONE THROUGH THE CASE-LAW RELIE D UPON BY THE PARTIES. AFTER GOING THROUGH THE ORDERS OF THE LOWER AUTHORITIES, IT IS EVIDENT THAT WHILE THE ASSESSING OFFICER HAS HELD THAT THE AMOUNT S ADVANCED HAVE TO BE CONSIDERED AS DEEMED DIVIDEND UNDER S.2(22)(E) OF T HE ACT, THE CIT(A) BY RELYING UPON THE DECISION OF THE HONBLE CALCUTTA HIGH C OURT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA), HAS HELD THAT SINCE THE ASSESSEES HAVE PLACED THEIR PROPERTIES AS PERSONAL SECURITIES TOWARDS LOAN S AVAILED BY THE COMPANY, THERE IS NO PERSONAL BENEFIT TO THE ASSESSEES ON ACCOUNT OF THE ADVANCES GIVEN BY THE COMPANY TO THE ASSESSEES. THE CIT(A) HELD THAT THE ADVANCES GIVEN BY THE COMPANY TO THE ASSESSEES CANNOT BE CONSI DERED TO BE A GRATUITOUS LOANS OR ADVANCES, ATTRACTING THE PROVISIONS OF S.2(22)(E) OF THE ACT, AS THE ADVANCES GIVEN BY THE COMPANY WERE IN RETUR N OF AN ADVANTAGE AVAILED BY THE COMPANY ON ACCOUNT OF MORTGAGING OF THE PERSONAL PROPERTIES OF THE DIRECTORS. 10. AT THIS STAGE, IT WILL BE WORTHWHILE TO LOOK T O THE PROVISIONS AS CONTAINED IN S.2(22)(E) OF THE ACT, WHICH, TO THE EXT ENT RELEVANT FOR OUR PURPOSE, IS EXTRACTED BELOW- (2) .. (22) DIVIDEND INCLUDES.. ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 7 (A) ..(D). (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WH ETHER AS REPRESENTING A PART OF THE ASSET OF THE COMPANY OR OTHERWISE), MADE AFTER THE 31 ST DAY OF MAY 1987, BY WAY OF ADVANCE OR LOAN TO A SHARE-HOLDER, BEING A PERSON, WHO IS THE BENEF ICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE O F DIVIDEND, WHETHER WITH OR WITHOUT RIGHT TO PARTICIPATE IN PRO FIT), HOLDING NOT LESS THAN 10% OF THE VOTING POWER OR TO ANY CON CERN IN WHICH THAT SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST(HEREAFTER IN THIS CLA USE REFERRED TO AS THE SAID CONCERN), OR ANY PAYMENT BY ANY SUCH CO MPANY ON BEHALF OF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SU CH SHARE-HOLDER TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE P OSSESSES ACCUMULATED PROFITS.. BUT DIVIDEND DOES NOT INCLUDE- (I).. (II) ANY ADVANCE OR LOAN MADE TO A SHARE-HOLDER OR THE S AID CONCERN BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS, WHERE THE LENDING OF MONEY IS A SUBSTANTIAL PART OF THE BUSINESS OF THE COMPANY. TO COME WITHIN THE AMBIT OF THE AFORESAID PROVISIONS, THE FOLLOWING CODNTIONS MUST EXIST- (A) IT MUST BE A COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALL Y INTERESTED; (B) THE COMPANY MUST HAVE MADE PAYMENTS BY WAY OF ADVANCE O R LOAN TO A SHARE-HOLDER, HOLDING MORE THAN 10% OF THE SHARES OF THE COMPANY; (C) THE COMPANY MUST HAVE ACCUMULATED PROFITS DURING THE RE LEVANT YEAR; SUB-CLAUSE (II) OF S.2(22)(E) CARVES OUT AN EXCEPTION B Y PROVIDING THAT ANY LOAN OR ADVANCE TO A SHARE-HOLDER BY A COMPANY, WHICH I S ENGAGED IN MONEY LENDING BUSINESS, IN THE ORDINARY COURSE OF ITS BUSINESS, SHALL NOT BE TREATED AS DIVIDEND. ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 8 11. IN THE FACTS OF THE PRESENT CASE, IT IS NOT DISPUTE D THAT ALL THE CONDITIONS ATTRACTING THE PROVISIONS OF S.2(22)(E) EXIS T. IT IS THE CASE OF THE ASSESSEE THAT SINCE IT HAS MORTGAGED ITS PROPERTY WITH TH E BANK TO ENABLE THE COMPANY TO AVAIL FINANCE FACILITIES FROM THE BANK, THE ADVANCE BY THE COMPANY IS NOT A GRATUITOUS LOAN OR ADVANCE, BUT IN RE TURN FOR AN ADVANTAGE WHICH THE COMPANY HAS ALREADY AVAILED ON ACCOUNT OF MORT GAGING OF PROPERTIES DONE BY THE ASSESSEES. HOWEVER, IT IS A FACT O N RECORD THAT THE ASSESSEES HAVE NOT PRODUCED ANY DOCUMENTS TO PROVE THE FACT THAT THE PERSONAL PROPERTIES OF THE ASSESSEES WERE ACTUALLY MORTGAGE D WITH THE BANK FOR THE SAKE OF AVAILING LOANS BY THE COMPANY. THE L ETTER DATED 31.5.2008 OF THE ANDHRA BANK, SUBMITTED IN THE PAPER-BOOK DOES NOT ESTABLISH THE FACT THAT THE PROPERTIES WERE MORTGAGED WITH THE BANK. T HE ASSESSEES HAVE ALSO NOT PRODUCED ANY CORRESPONDENCE MADE EITHER WITH THE BA NK OR WITH THE COMPANY TOWARDS RELEASE OF THE PROPERTIES MORTGAGED, AS WAS THE FACT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA) BEFORE THE HONBL E CALCUTTA HIGH COURT. IN THE ABSENCE OF CONCLUSIVE EVIDENCE TO PROVE THE FACT OF MORTGAGE AND ALSO THE FACT THAT THE ASSESSEE HAS NOT REQUESTED THE BANK FOR RELEASE OF THE MORTGAGE, THE RATIO OF THE DECISION IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA) WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE. 12. IT WILL BE PERTINENT TO MENTION HERE THAT LON G AFTER THE HEARING OF THE APPEAL WAS CLOSED, THE ASSESSEES, ON 5.11.2002, HAS SUBM ITTED A COPY OF THE LETTER OF THE ANDHRA BANK DATED 27.9.2012, INDI CATING THAT A PROPERTY OF THE DIRECTOR, SMT. B.SEETARATNAM, WAS GIVEN AS A SECURIT Y TOWARDS CREDIT FACILITY AVAILED BY THE COMPANY. HOWEVER, IN THE AB SENCE OF ANY PETITION BY THE ASSESSEE SEEKING ACCEPTANCE OF THE ADDITIONAL EVIDENCE, NO COGNIZANCE CAN BE TAKEN BY US, WHILE ADJUDICATING UPON THE ISSUE I N DISPUTE. EVEN ACCEPTING THAT LETTER ALSO DOES NOT LEAD US TO ANY CONCLUS ION SO FAR AS ASSESSEES CLAIM OF MORTGAGING THE PROPERTY IS CONCERNED, AS THE SAID LETTER ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 9 DOES NOT ESTABLISH THE FACT THAT THE PROPERTY IN QUESTI ON WAS ACTUALLY MORTGAGED WITH THE BANK. THAT APART, THE LANGUAGE OF S.2(22)(E) IS CLEAR AND UNAMBIGUOUS AND DOES NOT LEAVE ANY SCOPE FOR INTERP RETING IT IN A DIFFERENT MANNER. THE SAID PROVISION BEING A DEEMING PROVISION, IT HAS TO BE INTERPRETED STRICTLY IN ACCORDANCE WITH THE SPIRIT OF THE LANGUAGE CONTAINED THEREIN. AS WE HAVE ALREADY REITERATED HEREINABOV E, THE PAYMENTS MADE BY THE COMPANY TOWARDS ADVANCES TO THE ASSESSEE FULFILS ALL THE CHARACTERISTICS OF DIVIDEND AS ENVISAGED IN S.2(22)(E) OF THE ACT. IN THE AFORESAID CIRCUMSTANCES, THERE ACNN0T BE ANY OTHER CONCLUSION EXCEPTIN G TO CONSIDER THE ADVANCES GIVEN BY THE COMPANY TO THE ASSESSEES AS DEEMED DIVIDEND AT THE HANDS OF THE ASSESSEE. THE CASE-LAW RELIED UPON BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE ALSO SUPPORTS THIS VIEW. 13. IN THE LIGHT OF THE ABOVE DISCUSSION, THE CIT(A) IN OUR CONSIDERED VIEW WAS NOT JUSTIFIED IN GRANTING RELIEF TO THE ASSESSEE S. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE CIT(A) IMPUGNED IN THESE APPEA LS, AND RESTORE THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEEM ED DIVIDEND IN TERMS OF S.2(22)(E) OF THE ACT. CONSEQUENTLY, GROUNDS OF THE DEPARTMENT IN THESE APPEALS ARE ALLOWED. 14. IN THE ABSENCE OF ANY SPECIFIC GROUND RAISED BY THE ASSESSEES IN THEIR CROSS-OBJECTIONS, WHICH WARRANTS INDEPENDENT ADJUD ICATION, SINCE AS NOTED ABOVE, THE GROUNDS OF THE ASSESSEES IN THE CROSS-OBJE CTIONS MERELY SUPPORT THE ORDERS OF THE CIT(A), IN THE LIGHT OF THE APPEALS OF THE REVENUE, THE CROSS-OBJECTIONS OF THE ASSESSEES ARE INFRUCTUOUS. AS SUCH, THEY ARE DISMISSED. 15. IN THE RESULT, ALL THE FOUR APPEALS OF THE REVE NUE ARE ALLOWED AND THE CROSS-OBJECTIONS OF THE ASSESSEES, BEING INFRUCTUOUS, ARE DISMISSED. ITA NO.443 TO 446/HYD/2012 & COS THEREIN SHRI B.DHANUNJAYA RAO AND ANR., HYDERABAD. 10 ORDER PRONOUNCED IN THE COURT ON 14.12.2012 SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED/- 14 TH DECEMBER, 2012 COPY FORWARDED TO: 1. SHRI B.DHANUNJAYA RAO, SHRI ANJANEYULU & CO., CHART ERED ACCOUNTANTS, 30, BHAGYALAKSHMI NAGAR, GANDHINAGAR, HYDERABAD 2. SMT.B.SEETA RATNAM, SHRI ANJANEYULU & CO., CHARTER ED ACCOUNTANTS, 30, BHAGYALAKSHMI NAGAR, GANDHINAGAR, HYDERABAD 3 DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(3), HYDERABA D COMMISSIONER OF INCOME-TAX(APPEALS) II, HYDERABAD COMMISSIONER OF INCOME-TAX I, HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.