Smt. Urmila Jindal, Chandigarh V. DCIT, Chandigarh

ITA 1143/CHANDI/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7059 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 143(3); 142(1); 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS. 1137 TO 1143/CHD/2013 ASSESSMENT YEAR : 2003-04 TO 2009-10 SMT.URMILA JINDAL, VS THE DY. COMMISSIONER OF # 14, NAC, INCOME TAX, MANI MAJRA, CENTRAL CIRCLE-1, CHANDIGARH. CHANDIGARH. PAN : AAOPJ5293Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MAHAVIR SINGH DATE OF HEARING : 08.09.2014 DATE OF PRONOUNCEMENT : 15.09.2014 O R D E R PER SUSHMA CHOWLA, JM ALL THESE BUNCH OF SEVEN APPEALS HAVE BEEN FILED BY THE SAME ASSESSEE AGAINST THE SEPARATE CONSOLIDATED ORDERS O F THE COMMISSIONER OF INCOME TAX (APPEALS), GURGAON, DATED 26.09.2013 REL ATING TO ASSESSMENT YEARS 2003-04 TO 2009-10 AGAINST THE ORDER PASSED UNDER SECTION 153A(1)(B)/143(3) OF THE INCOME-TAX ACT, 1961 ( 'TH E ACT' FOR SHORT). 2. ALL THESE APPEALS RELATING TO THE SAME ASSESSEE AGAINST VARIOUS ASSESSMENT YEARS ON SIMILAR ISSUE WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APP EAL IN ALL THE APPEALS AND THE GROUNDS OF APPEAL AS RAISED IN ITA NO. 1137/CHD/2013 ARE REPRODUCED AS UNDER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (AP PEALS)(CENTRAL), GURGAON HAS ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN 2 ASSESSING THE INCOME AT RS.2,64,240/- AGAINST THE R ETURNED INCOME OF RS. 1,26,000/-. 2. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN DISMISSIN G THE GROUNDS OF APPEAL PERTAINING TO OBJECTION OF ASSESSEE WITH REG ARD TO REFERENCE TO THE SPECIAL AUDITOR IN TERMS OF SECTION 142 (2A). 3. THAT THE WORTHY CIT(A) HAS ERRED IN NOT CONSIDERING THAT THE CONDITIONS FOR REFERENCE TO THE SPECIAL AUDIT HAVE NOT BEEN FU LFILLED AND SINCE THE ASSESSEE HAD NOT BEEN MAINTAINING ANY PERSONAL BOOK S OF ACCOUNTS, NO COMPLEXITY WAS THERE FOR THE PURPOSE OF REFERRING T HE CASE TO THE SPECIAL AUDIT AND, AS SUCH, THE ASSESSMENT HAVING BEEN COMP LETED BEYOND THE LIMITATION TIME DESERVES TO BE QUASHED. 4. A). NOTWITHSTANDING THE ABOVE GROUNDS OF APPEAL, THE CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,38,243/- MADE B Y THE ASSESSING OFFICER U/S 2(22)(E) AS DEEMED DIVIDEND. 4. B). THAT THE CIT (A) HAS NOT CONSIDERED THAT TRA NSACTIONS SO MADE WERE NEITHER LOAN NOR ADVANCE BUT SAME WERE IN THE NATURE OF COM MERCIAL EXPEDIENCY FOR WHICH NO ADDITION AS DEEMED DIVIDEND U/S 2(22)(E ) CAN BE MA DE. 5. THAT ADDITION HAS BEEN CONFIRMED AGAINST THE FAC TS AND CIRCUMSTANCES OF THE CASE AND DETAILED SUBMISSIONS FILED DURING THE COURSE OF HEARING ALONG WITH VARIOUS CASE LAWS HAS NOT BEEN CONSIDERE D PROPERLY. 4. THE GROUND NO. 1 RAISED IN ALL THE APPEALS BEING GENERAL IS DISMISSED. 5. THE GROUND NOS. 2 & 3 WERE NOT PRESSED BY THE LD . AR FOR THE ASSESSEE IN ALL THE CAPTIONED APPEALS AND THE SAME ARE ALSO THUS, DISMISSED. 6. THE ISSUE IN GROUND NO. 4 RAISED BY THE ASSESSEE IS AGAINST THE ADDITION MADE UNDER SECTION 2(22)(E) OF THE ACT. T HE FACTS IN ALL THE APPEALS ARE IDENTICAL. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO. 1137/CHD/2013 TO ADJUDICATE THE ISSUE RA ISED BY THE ASSESSEE. 7. THE LD. AR FOR THE ASSESSEE FAIRLY POINTED OUT T HAT THE FACTS AND ISSUES RAISED IN THE PRESENT APPEAL ARE IDENTICAL T O THE FACTS AND ISSUES RAISED IN THE CASE OF SMT. SUNITA JINDAL VS DCIT IN ITA NOS. 1144 TO 1146/CHD/2013, ASSESSMENT YEARS 2004-05, 20 07-08 AND 2008-09, ORDER DATED 25.02.2014. 3 8. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION T O THE ADDITION MADE UNDER SECTION 2(22)(2) OF THE ACT. 10. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH & S EIZURE OPERATIONS UNDER SECTION 132(1) OF THE ACT WERE CARRIED OUT AT THE RESIDENTIAL/BUSINESS PREMISES OF JINDAL GROUP OF CA SES, PANCHKULA ON 15.07.2008. THE ASSESSEE WAS ONE OF THE PERSONS CO VERED UNDER SECTION 132 OF THE INCOME TAX ACT. NOTICE UNDER SE CTION 153A(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 16.02.2009 TO FURNISH RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05. THE ASSESS EE FAILED TO FURNISH ANY RETURN OF INCOME IN RESPONSE TO THE NOT ICE ISSUED UNDER SECTION 153A(1) OF THE ACT. THE ASSESSING OFFICER THUS, INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271F OF THE ACT A ND PENALTY WAS LEVIED VIDE ORDER DATED 29.03.2010. NOTICE UNDER S ECTION 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 07.09.2010 AL ONGWITH DETAILED QUESTIONNAIRE. THE CASE OF THE ASSESSEE WAS ALSO R EFERRED TO THE SPECIAL AUDITOR UNDER SECTION 142(2A) OF THE ACT AS PER THE PROCEDURE LAID DOWN UNDER THE ACT. THE GROUP CONCE RNS HAD SURRENDERED A SUM OF RS. 4 CRORE. THE SPECIAL AUDI TOR IN ITS REPORT HAD POINTED OUT THAT THE ASSESSEE WAS A SHAREHOLDER IN A NUMBER OF COMPANIES IN WHICH THE ASSESSEE HAD SUBSTANTIAL INT EREST. THE SAID COMPANY IN-TURN HAD GIVEN LOANS TO THE ASSESSEE OR THE CONCERNS IN WHICH ASSESSEE HAD SUBSTANTIAL INTEREST. THE DETAIL S OF THE SAID TRANSACTIONS ARE INCORPORATED AT PAGES 3 & 4 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY T HE AMOUNTS SO ADVANCED SHOULD NOT BE TREATED AS DEEMED DIVIDEND U NDER THE 4 PROVISIONS OF SECTION 2(22)(E) OF THE ACT. SHOW CA USE NOTICE IS REPRODUCED UNDER PARA 8.3 AT PAGES 5 TO 9 OF THE AS SESSMENT ORDER. THE REPLY OF THE ASSESSEE TO THE SAID SHOW CAUSE NO TICE WAS THAT THE AMOUNTS DEBITED TO THE FIRMS IN WHICH THE ASSESSEE WAS SUBSTANTIAL SHAREHOLDER WERE PROVIDED OUT OF COMMERCIAL/BUSINES S EXPEDIENCY AND NO LOAN OR ADVANCES WERE MADE BY THE ASSESSEE. 11. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT TH E AMOUNT PROVIDED TO THE FIRM IN WHICH THE ASSESSEE WAS PART NER, HAD NOT BEEN PERSONALLY WITHDRAWN BY THE ASSESSEE AND THUS, NO I NDIVIDUAL BENEFIT HAD BEEN OBTAINED BY THE ASSESSEE. IT WAS FURTHER PLEADED BY THE ASSESSEE THAT ENTRIES WERE MADE TO SETTLE THE ACCOU NTS OF DIFFERENT PERSONS. THE ASSESSING OFFICER NOTED THAT FOLLOWIN G TRANSACTIONS WERE MADE BETWEEN THE COMPANIES IN WHICH THE ASSESS EE HAD SUBSTANTIAL SHAREHOLDER AND THE CONCERNS IN WHICH T HE ASSESSEE WAS SUBSTANTIAL PARTNER : - THE FUNDS WERE TRANSFERRED FROM THE COMPANY TO TH E FIRM TO KEEP THE CASH CREDIT A/C WITHIN LIMIT. - THE FUNDS WERE TRANSFERRED BY THE WAY OF TRANSFER ENTRIES TRANSFER BECAUSE OF COMMON PARTIES IN BOOKS OF ACCOUNT OF BOTH THE PARTIES. - THE FUNDS WERE TRANSFERRED TO THE BANK ACCOUNT OF THE CONCERN BY THE WAY OF BANK TRANSFER OR THROUGH CHEQ UES. 12. THE ASSESSING OFFICER TREATED THE SAME AS DEEME D DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT AND MADE AN ADDIT ION OF RS. 1,38,243/- IN ASSESSMENT YEAR 2003-04. 13. WE FIND THAT THE IDENTICAL ISSUE AROSE BEFORE T HE TRIBUNAL IN THE CASE OF SMT. SUNITA JINDAL VS DCIT (SUPRA) WHEREIN THE TRIBUNAL VIDE CONSOLIDATED ORDER IN ITA NOS. 1144 TO 1146/CHD/201 3 RELATIN TO 5 ASSESSMENT YEARS 2004-05, 2007-08 AND 2008-09 IN TH E CASE OF SMT. SUNITA JINDAL VS DCIT AND IN ITA NOS. 1147 TO 1152/ CHD/2013 RELATING TO ASSESSMENT YEARS 2003-04, 2004-05 AND 2 006-07 TO 2009- 10 IN THE CASE OF SMT. GARGI JINDAL VS DCIT VIDE OR DER DATED 25.02.2014 HELD AS UNDER: 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PRESENT BUNCH OF APPEALS HAVE BEEN FIL ED BY DIFFERENT ASSESSEES AGAINST THE ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153A(1)(B) OF THE ACT. SE ARCH & SEIZURE OPERATIONS UNDER SECTION 132(1) OF THE ACT WERE CARRIED OUT AT THE BUSINESS/RESIDENTIAL PREMISES OF THE JIN DAL GROUND OF COMPANIES ON 15.07.2008. THE ASSESSEE WAS ISSUED N OTICE UNDER SECTION 153A(1) OF THE ACT BUT THE ASSESSEE F AILED TO FURNISH THE RETURN OF INCOME IN RESPONSE TO THE SAM E AND PENALTY UNDER SECTION 271FA OF THE ACT WAS LEVIED U PON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER NOTED CERTAIN COMPLEXITIES AND TH E CASE OF THE GROUP CONCERNS ALONGWITH THE ASSESSEE WERE REFERRED TO THE SPECIAL AUDITOR UNDER SECTION 142(2A) OF THE ACT. THE SPECIAL AUDITOR, THEREAFTER FURNISHED ITS REPORT UNDER WHIC H IT WAS NOTED BY HIM THAT THE ASSESSEE WAS SHAREHOLDER IN C ERTAIN COMPANIES WHEREIN THE ASSESSEE HAD SUBSTANTIAL INTE REST AND THE SAID COMPANIES HAD GIVEN LOANS TO THE CONCERNS IN W HICH THE ASSESSEE HAD SUBSTANTIAL INTEREST. CONSEQUENTLY, T HE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE INVOKED IN ORDE R TO WORK OUT THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND. THE ASS ESSEE IS IN APPEAL BEFORE US AGAINST THE SAID ADDITION MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 2(22)(E) OF THE ACT. TH E ASSESSEE IS IN APPEAL FOR THE FOLLOWING ASSESSMENT YEARS : SMT. SUNITA JINDAL ASSESSMENT YEAR ADDITION U/S 2(22)(E) I) 2004-05 RS. 82,109/- II) 2007-08 RS. 2,44,394/- III) 2008-09 RS. 1,48,000/- SMT. GARGI JINDAL ASSESSMENT YEAR ADDITION U/S 2(22)(E) I) 2003-04 RS. 8,34,225/- II) 2004-05 RS. 13,84,971/- III) 2006-07 RS. 1,39,685/- IV) 2007-08 RS. 14,37,163/- V) 2008-09 RS. 27,11,696/- VI) 2009-10 RS. 7,00,000/- 16. SECTION 2(22)(E) OF THE ACT READS AS UNDER : 6 (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WH ETHER AS REPRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) M ADE AFTER THE 31ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SH AREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT B EING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF T HE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER O R A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN T HIS CLAUSE REFERRED TO AS THE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH CO MPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER , TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULA TED PROFITS. 17. UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WHERE ANY PAYMENT IS MADE BY A COMPANY WHICH SHOULD NOT B E A PUBLIC LIMITED COMPANY, OF ANY SUM OF MONEY BY WAY OF ADVA NCE OR LOANS TO A SHAREHOLDER, WHO IS BENEFICIAL OWNER OF SHARES HOLDING NOT LESS THAN 10% OF THE VOTING POWER, OR T O ANY CONCERN IN WHICH THE SHAREHOLDER IS A MEMBER OR PAR TNER AND WHERE HE HAS SUBSTANTIAL INTEREST, AND TO THE EXTEN T WHERE THE COMPANY POSSESSES ACCUMULATED PROFITS, THEN, SUCH A DVANCES OR LOANS ARE TO BE TREATED AS DEEMED DIVIDEND IN THE H ANDS OF THE SHAREHOLDER. SECTION 2(22)(E) OF THE ACT CREATES A FICTION UNDER WHICH THE AMOUNTS WHICH ARE ADVANCED BY WAY OF LOAN OR ADVANCES ARE TO BE TREATED AS DIVIDEND AND INCLUDED AS RECEIPT IN THE HANDS OF THE BENEFICIAL OWNER. 18. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SA DHNA TEXTILE MILLS (P) LTD, VS. CIT (1991)188 ITR 318 (B OM) HELD THAT THE PROVISIONS OF S. 2(22)(E) ARE APPLICABLE ALSO T O THE ADVANCES OR LOANS MADE TO CORPORATE ENTITY. 19. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF R. DALMIA VS. CIT 133 ITR 169 (DEL) HELD THAT PAYMENTS MADE B Y WAY OF LOAN OR ADVANCE TO SHAREHOLDER OR ANY PAYMENT MADE ON BEHALF OR FOR THE BENEFIT OF SHAREHOLDERS ARE TO BE TREATE D AS DIVIDEND IN EITHER CASE TO THE EXTENT TO WHICH THE COMPANY P OSSESSES ACCUMULATED PROFIT, THE EMPHASIS IN THIS CONNECTION MUST BE ON THE WORD 'POSSESSES'. IF THE COMPANY DOES NOT POSSE SS THE AMOUNT, IT CANNOT PAY THE SAME. A COMPANY CAN BE SA ID TO HAVE PROFITS OR TO BE POSSESSED OF PROFIT WHEN IT ACTUAL LY POSSESSES THE AMOUNT OR IS IN ITS CONTROL. 20. THE HON'BLE APEX COURT IN THE CASE OF SMT. TARU LATA SHYAM & ORS. VS. CIT 108 ITR 345 (S.C.) HELD THAT THERE A RE FOUR CONDITIONS WHICH MUST BE SPECIFIED BEFORE THIS PROV ISION CAN BE INVOKED AGAINST THE SHAREHOLDER WHICH ARE AS UNDER : (I) THE FIRST CONDITION IS THAT THE COMPANY IN QUES TION MUST BE ONE IN WHICH THE PUBLIC ARE NOT SUBSTANTIAL LY INTERESTED. (II) THE SECOND CONDITION IS THAT THE LOAN WAS ADVA NCED TO A SHAREHOLDER AT THE DATE WHEN THE LOAN WAS ADVANCE D; 7 (III) THE THIRD CONDITION IS THAT THE LOAN ADVANCED TO A SHAREHOLDER BY SUCH A COMPANY CAN BE DEEMED TO BE DIVIDEND ONLY TO THE EXTENT TO WHICH IT IS SHOWN TH AT THE COMPANY POSSESSED ACCUMULATED PROFIT ON THE DATE OF THE LOAN; (IV) THE FOURTH CONDITION IS THAT THE LOAN MUST NOT HAVE BEEN ADVANCED BY THE COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS. 21. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF G. R. GOBINDARAJULU NAIDU & ORS. VS CIT 90 ITR 13 (MAD) H AVING REGARD TO WORD PAYMENT BY WAY OF LOAN OR ADVANCE HELD THAT THERE SHOULD BE AN OUTGOING OR FLOW OF MONEY FROM T HE COMPANY TO THE SHAREHOLDER SO AS TO ATTRACT THE SAID PROVIS ION AND A NOTIONAL PAYMENT BY WAY OF BOOK ENTRIES WILL NOT BE INCLUDED. 22. IN VIEW OF THE ABOVESAID JUDICIAL PRECEDENTS WH ERE THE COMPANY ADVANCING THE LOAN OR ADVANCE IS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED, THEN THE PROVI SIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT ATTRACTED, WHER E SUCH COMPANY MAKES ANY ADVANCE OR LOAN TO ITS SHAREHOLDE R. FURTHER IN CASES WHERE THE LOAN OR ADVANCE HAS BEEN MADE BY THE COMPANY IN THE ORDINARY COURSE OF CARRYING ON THE B USINESS THEN ALSO THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT ATTRACTED. HOWEVER, WHERE THE AMOUNT IS GIVEN BY W AY OF LOAN OR ADVANCE TO A SHAREHOLDER OR TO A CONCERN IN WHIC H SUCH SHAREHOLDER IS A MEMBER OR PARTNER, HAVING SUBSTANT IAL INTEREST IN THE SAID CONCERN, THEN ANY SUCH PAYMENT MADE BY THE COMPANY TO THE EXTENT OF ACCUMULATED PROFITS IN THE HANDS O F THE COMPANY, IS TO BE TREATED AS DIVIDEND IN THE HANDS OF SUCH S HAREHOLDER. 23. NOW COMING TO THE FACTS OF THE PRESENT CASE, TH E ASSESSEE IS ADMITTEDLY HOLDING SHARES MORE THAN 10% OF THE VOTI NG POWER AND IS AN ELIGIBLE PERSON, AS DEFINED UNDER SECTION 2(22)(E) OF THE ACT. THE ASSESSEE IS A DIRECTOR IN HIRAMOTI HE ALTHCARE PRODUCTS LTD. AND IS HOLDING MORE THAN 10% SHARES/V OTING POWER, WHICH IS AN ADMITTED POSITION. THE SAID COMP ANY HAD ADVANCED CERTAIN LOANS TO M/S HIRAMOTI AGRO INDUSTR IES AND HIRAMOTI AGRO PRODUCTS RESPECTIVELY AND BOTH THE SA ID CONCERNS ARE PARTNERSHIP FIRMS, IN WHICH THE ASSESSEE BEFORE US HAS SUBSTANTIAL INTEREST. THE LD. AR FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE ASSESSEE SATISFIES BOTH THE PRELIMINAR Y CONDITIONS LAID DOWN UNDER SECTION 2(22)(E) OF THE ACT. HOWEV ER, IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE PROVISIONS OF THE SAID SECTION WERE NOT APPLICABLE AS THE SAID LO AN OR ADVANCES WERE MADE IN THE ORDINARY COURSE OF BUSINE SS. THE PLEA OF THE LD. AR FOR THE ASSESSEE BEFORE US WAS T HAT IN ORDER TO BETTER MANAGE THE BUSINESS AFFAIRS OF THE DIFFERENT CONCERNS IN WHICH THE ASSESSEE WAS EITHER A SHAREHOLDER OR PART NER, THE BANK ACCOUNTS WERE OPENED ONLY IN TWO BANKS I.E. ORIENTA L BANK OF COMMERCE AND STATE BANK OF INDIA AND WHENEVER THERE WAS SHORTAGE OF FUNDS, THE AMOUNTS WERE TRANSFERRED FRO M ONE CONCERN TO THE OTHER OR VICE-VERSA. THE SAID ADVAN CES HAVING BEEN MADE IN ORDER TO MEET THE BUSINESS EXIGENCIES, WERE THUS ADVANCED DURING THE COURSE OF CARRYING ON OF THE BU SINESS AND 8 HENCE THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT ATTRACTED. 24. THE ASSESSEE, IN THE PAPER BOOK HAS FURNISHED T HE COPY OF ACCOUNTS OF M/S HIRAMOTI AGRO INDUSTRIES IN THE BOO KS OF M/S HIRAMOTI HEALTHCARE PRODUCT LTD. FOR THE FINANCIAL YEAR 2003- 04, 2006-07 AND 2007-08 AT PAGES 1, 3 & 5 OF THE PA PER BOOK. THE ASSESSEE HAS ALSO FURNISHED THE COPY OF ACCOUNT OF M/S HIRAMOTI AGRO PRODUCTS IN THE BOOKS OF M/S HIRAMOTI HEALTHCARE PRODUCTS LTD. FOR THE FINANCIAL YEAR 2003-04, 2006- 07 AND 2007- 08 AT PAGES 2, 4 AND 6 OF THE PAPER BOOK. THE SAID LEDGER ACCOUNTS ARE HEREBY ENCLOSED AS AS ANNEXURE A-1 TO A-6 TO THIS ORDER. 25. FURTHER IN THE CASE OF SMT. GARGI JINDAL, THE O THER ASSESSEE BEFORE US, THERE ARE TWO COMPANIES IN WHIC H ASSESSEE IS A SHAREHOLDER WHICH IN-TURN HAD ADVANCED LOANS T O DIFFERENT PARTNERSHIP FIRMS IN WHICH ASSESSEE HAD SUBSTANTIAL INTEREST AND THE ASSESSING OFFICER HAD ACCORDINGLY COMPUTED HER SHARE OF DEEMED DIVIDEND IN THE ADVANCES MADE BY THE SAID CO NCERN TO DIFFERENT REGISTERED FIRMS. THE ASSESSEE HAS FURNI SHED ON RECORD THE COPIES OF ACCOUNT IN THE PAPER BOOK, THE SAME ARE ENCLOSED AS ANNEXURE B-1 TO B-13 TO THIS ORDER. 26. THE PERUSAL OF THE COPIES OF LEDGER ACCOUNT FIL ED BY THE ASSESSEE IN THE CASE OF SARITA JINDAL REFLECT THAT FOR THE FINANCIAL YEAR 01.04.2003 TO 31.3.2004, THERE WAS A N OPENING CREDIT BALANCE OF RS. 19,07,775/- AND THEREAFTER, T HERE WERE BANK TRANSFERS ON DIFFERENT DATES FALLING WITHIN TH E YEAR AND AT THE CLOSE OF THE YEAR, THE DEBIT BALANCE WAS RS.1,8 2,225/-. ON 31.3.2004, THERE WAS AN ADJUSTMENT OF THE AMOUNT TR ANSFERRED TO M/S ANCHAL OFRS. 12,840/- AND THE CLOSING BALANCE W AS DR 169385/-. IN THE SUCCEEDING FINANCIAL YEAR I.E. 20 06-07, THE OPENING BALANCE WAS DEBIT BALANCE OF RS. 1,19,374/- AND THEREAFTER, THERE WERE BANK TRANSFERS OF ORIENTAL B ANK OF COMMERCE OF RS. 1,00,000/-, RS. 20,000/-, RS. 60,00 0/- AND CHEQUES OF RS. 85,000/- AND RS.90,000/- AND FURTHER THERE ARE DEPOSITS OF DEMAND DRAFTS OF RS. 20,000/- AND RS. 4 0,000/- AS AGAINST THE SAID DEBIT ENTRIES, ARISING IN THE ACCO UNT OF M/S HIRAMOTI AGRO INDUSTRIES IN THE BOOKS OF M/S HIRAMO TI HEALTHCARE PRODUCTS LTD. THERE WERE TWO CREDITS, ON E OF DD OF RS. 15,000/- OF SHRI RAMA, SHIMLA AND ANOTHER DD OF RS. 32,592/- OF SHRI BANARASI DASS. THE TOTAL DEBIT BA LANCE AT THE CLOSE OF THE YEAR WAS RS. 5,11,782/-. THE ASSESSEE HAS ALSO FILED THE LEDGER ACCOUNT FOR THE FINANCIAL YEAR 200 7-08 AND AS AGAINST THE OPENING BALANCE OF RS. 5,11,782/-, THER E IS CHEQUE DEPOSIT OF RS.10,000/-, AMOUNT TRANSFERRED FROM ORI ENTAL BANK OF COMMERCE OF RS. 1,60,000/- AND AMOUNT OF BANK TR ANSFER FROM STATE BANK OF INDIA OF RS.90,000/- AS AGAINST CREDIT OF RS. 9,672/-, RESULTING IN DEBIT BALANCE OF RS. 7,62,110 /-. SIMILAR IS THE POSITION IN RESPECT OF THE TRANSACTIONS OF THE CONCERN M/S HIRAMOTI HEALTHCARE PRODUCTS LTD. WITH ANOTHER PART NERSHIP FIRM M/S HIRAMOTI AGRO PRODUCTS. THE PERUSAL OF TH E LEDGER STATEMENTS FILED BY THE ASSESSEE REFLECT THAT CONTI NUOUSLY, THERE IS AN INCREASE IN THE DEBIT BALANCE IN THE LEDGER A CCOUNTS OF THE SAID CONCERNS I.E. THE COMPANY ADVANCED VARIOUS AMO UNTS TO THE REGISTERED FIRMS THROUGH CHEQUES OR BANK TRANSFERS AND THERE WERE NO CORRESPONDING RECEIPT OF MONEY FROM THE SAI D 9 PARTNERSHIP FIRMS IN THE HANDS OF THE COMPANY. THE AMOUNTS HAD BEEN ADVANCED FROM DAY-TO-DAY EITHER BY WAY OF BANK TRANSFER OR BY WAY OF CHEQUES OR OTHER ADJUSTMENTS IN THE ACCOUNT. 27. THE ASSESSEE, DURING THE COURSE OF HEARING WAS CONFRONTED WITH THE AFORESAID POSITION OF THE DEBIT BALANCES A RISING IN THE CASE OF THE DIFFERENT CONCERNS AND IT WAS VEHEMENTL Y POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE SAID ADVANC E HAVING BEEN MADE DURING THE COURSE OF CARRYING ON OF THE BUSINE SS, CANNOT BE TERMED AS DEEMED DIVIDEND UNDER THE PROVISIONS O F SECTION 2(22)(E) OF THE ACT. HOWEVER, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE. THE POSITION AS PROJECTED BY THE LD. AR FOR THE ASSESSEE THAT THERE WERE FREQUENT DEBITS AND CREDIT S OF THE AMOUNTS DUE BY THE SAID CONCERN TO ITS PARTNERSHIP FIRMS OR VICE-VERSA, AS PER THE DEMANDS OF THE BUSINESS, DOE S NOT STAND PROVED FROM THE PERUSAL OF THE ABOVESAID LEDGER ACC OUNTS. AT THE START OF THE FINANCIAL YEAR 2003-04, THERE WAS AN OPENING CREDIT BALANCE OF RS. 1,90,775/- WHICH GOT CONVERTE D INTO A DEBIT BALANCE BY WAY OF TRANSFER OF RS. 2,50,000/- ON 20.05.2003 ITSELF AND THEREAFTER THE DEBIT BALANCE HAS CONTINUOUSLY GONE UP AND AS ON 31.03.2008, THE SAME STANDS AT RS. 7,62,110/-. SIMILAR IS THE POSITION IN RESPECT OF THE ANOTHER PARTNERSHIP CONCERN M/S HIRAMOTI AGRO PRODUCTS IN R ELATION TO THE COMPANY M/S HIRAMOTI HEALTHCARE PRODUCTS LTD. THE OPENING BALANCE AS ON 01.04.2003 WAS A DEBIT BALANC E OF RS. 2,08,478/- WHICH HAS EVENTUALLY INCREASED TO DEBIT BALANCE OF RS. 6,19,008/- AS ON 31.03.2008 WITH CONTINUOUS OUT FLOW OF MONEY FROM THE COMPANY TO THE PARTNERSHIP CONCERN D OES NOT ESTABLISH THE CASE OF THE ASSESSEE THAT THERE WERE FREQUENT TRANSFERS I.E. INFLOW AND OUTFLOW OF THE AMOUNTS AS AND WHEN THERE WERE BUSINESS EXIGENCIES. THE MODUS-OPERANDI ADOPTED BY THE ASSESSEE COULD NOT BY ANY DIFFERENT STRETCH OF IMAGINATION TO BE TERMED AS A MEASURE OF COMMERCIAL EXIGENCY. 28. THE LD. AR FOR THE ASSESSEE, DURING THE COURSE OF HEARING PLACED RELIANCE ON VARIOUS CASE LAWS WHICH ARE DIST INGUISHABLE. IN THE CASE OF DCIT VS LAKRA BROTHERS (SUPRA), IT I S A FINDING OF FACT BY THE TRIBUNAL THAT THERE WAS A SINGLE ADVANC E MADE FOR MEETING THE BUSINESS EXIGENCY AND THERE WAS NO INTE NTION OF THE COMPANY TO GIVE A LOAN AND HENCE, IT WAS HELD THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT A TTRACTED. THE FACTS OF THE CASE BEFORE US ARE AT VARIANCE AS POIN TED OUT BY US IN THE PARAS HEREIN ABOVE AND HENCE, THE SAID RATIO LAID DOWN BY THE CHANDIGARH BENCH OF TRIBUNAL IN THE CASE OF DCIT VS LAKRA BROTHERS (SUPRA) SHALL NOT APPLY. 29. FURTHER, LD. AR FOR THE ASSESSEE RELIED UPON BO MBAY OIL INDUSTRIES LTD. VS DCIT (SUPRA) WHEREIN THERE WERE INTER- CORPORATE DEPOSITS BETWEEN THE TWO CONCERNS AND IT WAS HELD THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT ATTRACTED. THE FACTS OF THE SAID CASE BEING AT VAR IANCE TO THE FACTS BEFORE US AND HENCE THE SAID RATIO IS NOT APP LICABLE TO THE PRESENT CASE. 30. FURTHER RELIANCE WAS PLACED BY THE LD. AR FOR T HE ASSESSEE ON CIT VS SMT. SAVITHIRI SAM (SUPRA) WHEREIN THERE WAS A TRANSFER ENTRY IN THE ACCOUNTS OF THE CONCERN BECAU SE OF 10 OPERATION OF LAW ON WHICH THE CONCERNED ASSESSEE HA D NO CONTROL AND THE RATIO LAID DOWN IN THE SAID DECISIO N IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 31. NEXT RELIANCE PLACED BY THE LD. AR FOR THE ASSE SSEE WAS ON CIT VS RAJ KUMAR (SUPRA) WHICH IS A CASE OF TRADE A DVANCES AND HENCE, THE SAID RATIO IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 32. THE LD. AR FOR THE ASSESSEE FURTHER PLACED RELI ANCE ON THE RATIO LAID DOWN IN DCIT VS MADHUSUDAN INVESTMENT & TRADING CO. (P) LTD. (SUPRA) WHICH DEALS WITH THE BASIS OF AMENDMENT TO INTRODUCE SECTION 2(22)(E) OF THE ACT BY FINANCE AC T 1987 AND THE SAID RATIO IS AN ACCEPTED POSITION OF LAW AND D OES NOT HELP THE CASE OF THE ASSESSEE. 33. ANOTHER RELIANCE WAS PLACED BY THE LD. AR FOR T HE ASSESSEE ON CIT VS ANKITECH P.LTD. (SUPRA) WHEREIN IT HAS BEEN LAID DOWN THAT WHERE THE LOANS OR ADVANCES ARE MADE FOR BUSINESS PURPOSES, THESE ARE OUTSIDE THE SCOPE OF SECTION 2( 22)(E) OF THE ACT. WE ARE IN CONFORMITY WITH THE SAID RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT. HOWEVER, AS REFERRED TO B Y US IN THE PARAS HEREIN ABOVE, THE AMOUNTS ADVANCED BY THE COM PANY TO THE REGISTERED FIRMS IN THE FACTS OF THE PRESENT CA SE, ARE LOANS AND ADVANCES AND NOT FOR THE PURPOSE OF BUSINESS AN D CONSEQUENTLY, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE ATTRACTED IN THE FACTS OF THE PRESENT CASE. 34. IN THE TOTALITY OF THE ABOVESAID FACTS AND CIRC UMSTANCES , THE AMOUNTS ADVANCED BY THE COMPANY TO THE PARTNERS HIP CONCERN ARE IN THE NATURE OF LOAN AND ADVANCES AND THE ASSESSEE HAVING SHAREHOLDING SHIFT ABOVE 10% IN THE SAID COM PANY AND ALSO BEING A PARTNER WITH SUBSTANTIAL INTEREST IN T HE PARTNERSHIP CONCERN, TO WHICH THE SAID LOAN OR ADVANCES HAVE BE EN MADE BY THE COMPANY, WHICH IN-TURN ARE LOANS OR ADVANCES MA DE BY THE COMPANY TO THE PARTNERSHIP CONCERNS, WOULD ATTRACT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. ADMITTE DLY, M/S HIRAMOTI HEALTHCARE PRODUCTS LTD. HAD ACCUMULATED P ROFITS AND THEY HAVE, IN TURN GIVEN LOANS TO OTHER CONCERNS IN WHICH THE ASSESSEE HAD SUBSTANTIAL INTEREST AND IN-TURN ASSES SEE HOLDING MORE THAN 10% VOTING POWERS IN THE COMPANY. CONSEQU ENTLY, THE INCOME ARISING TO THE EXTENT OF THE SHARE OF THE AS SESSEE IN THE SAID PARTNERSHIP FIRM, BEING DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE IS TO BE INCLUDED AS INCOME OF THE ASS ESSEE UNDER SECTION 2(22)(E) OF THE ACT. UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), WE DISMISS TH E GROUND OF APPEAL RAISED BY THE ASSESSEE. 14. THE ISSUES RAISED IN THE PRESENT APPEAL ARE IDE NTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN THE CASE OF CONNECTED PARTIE S AND APPLYING THE SAME PRINCIPLE, WE HOLD THAT THERE IS NO MERIT IN T HE CLAIM OF THE ASSESSEE AND UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX 11 (APPEALS), WE DISMISS THE GROUND OF APPEAL NO.4 RAI SED BY THE ASSESSEE. 15. THE ASSESSEE IN ITA NOS.1138 TO 1140 & 1143/CH D/2013 HAS RAISED IDENTICAL ISSUES AS IN ITA NO.1137/CHD/2013. THE GROUND OF APPEAL NO.1 IS GENERAL AND GROUNDS OF APPEAL NOS.2 AND 3 ARE NOT PRESSED. HENCE THE SAME ARE DISMISSED. THE ISSUE IN GROUND NO.4 IS IDENTICAL TO THE ISSUE RAISED VIDE GROUND NO.4 IN I TA NO.1137/CHD/2013 AND OUR DECISION WOULD APPLY MUTAT IS MUTANDIS TO GROUND NO.4 RAISED BY THE ASSESSEE IN ITA NOS.1138 TO 1140 & 1143/CHD/2013. ITA NOS. 1141 & 1142/CHD/2013 :: A.Y. 2007-08 & 2008-08 16. THE GROUND OF APPEAL NO.1 IN BOTH THE APPEALS I S GENERAL AND GROUNDS OF APPEAL NOS.2 AND 3 ARE NOT PRESSED. HENC E ALL ARE DISMISSED. 17. IN RESPECT OF GROUND OF APPEAL NO. 4, IT WAS PO INTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE ISSUE IS IDENTICAL TO THE ISSUE RAISED IN THE EARLIER YEARS. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) CONSEQUENT TO PASSING OF THE ORDER UNDER SECTION 250(6) OF THE ACT HAD FURTHER PASSED ORDER UNDER SECTION 154 OF THE ACT UNDER WHICH THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND UN DER SECTION 2(22)(E) OF THE ACT WAS RESTRICTED TO RS. 155,662/- IN ITA NO. 1141/CHD/2013 AND RS. 774,598/- IN ITA NO. 1148/CHD /2013. COPY OF THE ORDER OF ASSESSING OFFICER GIVING EFFECT TO THE ORDER PASSED UNDER SECTION 154 OF THE ACT WAS PLACED ON RECORD. THE COMMISSIONER OF INCOME TAX (APPEALS), HOWEVER IN TH E FIRST ROUND OF APPELLATE PROCEEDINGS HAD MADE THE ADDITION UNDER S ECTION 2(22)(E) OF 12 THE ACT AT RS. 1,69,025/- IN ITA NO. 1141/CHD/2013 AND RS. 11,57,536/-IN ITA NO. 1142/CHD/2013. WE, UPHOLD TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN VIEW OF PAR ITY OF REASONING AS IN THE EARLIER YEARS. HOWEVER, WE RESTRICT THE ADDITION UNDER SECTION 2(22)(E) OF THE ACT IN THE HANDS OF THE ASS ESSEE TO THE EXTENT OF RS. 165,662/- IN ITA NO. 1141/CHD/2013 AND RS. 7 74,598/- IN ITA NO. 1142/CHD/2013. CONSEQUENTLY, GROUND OF APPEAL NO. 4 RAISED BY THE ASSESSEE IN BOTH THE APPEALS IS PARTLY ALLOWED. 18. IN THE RESULT APPEALS OF THE ASSESSEE IN ITA NO S. 1137 TO 1140/CHD/2013 AND ITA NO. 1143/CHD/2013 ARE DISMISS ED AND IN ITA NOS. 1141 AND 1142/CHD/2013 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMNER,2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: 15 TH SEPTEMBER,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.