SUMIT MOHANSINGH GANDHI, MUMBAI V. ASSTT. CIT -25(1), MUMBAI

ITA 115/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5917 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 09-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARESH DODHIYA
• Keywords: Deemed dividend; TDS; FORM 26AS
• Section: 143(3); 2(22)(e); 143(2)

Judgement Text

ITA No.115/Mum/2021 A.Y.2013-14 Sumit Mohansingh Gandhi Vs. ACIT-25(1) 1 IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.115/Mum/2021 (A.Y 2013-014) Sumit Mohansingh Gandhi, 44/43, Movie Tower, Oshiwara Near Yamuna Nagar, Andheri (W) Mumbai – 400053 Vs. Assistant Commissioner of Income Tax-25(1) Room No. 202, 2 nd Floor, Kautilya Bhavan, C-41 to C-43, G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 लेख सं./ज आइआर सं./PAN/GIR No. : ATZPS3217K Appellant .. Respondent Appellant by : Shri Paresh Dodhiya Respondent by : Shri B.K. Bagchi Date of Hearing 02.02.2022 Date of Pronouncement 28.03.2022 आदेश / O R D E R PER AMARJIT SINGH, AM: The present appeal filed by the assessee is directed against the order passed by the ld. CIT(A)-37, Mumbai, which in turn arises from the assessment order passed by the A.O u/s 143(3) of the Income Tax Act, 1961, dated 31.12.2015 for A.Y. 2013-14. The assessee has assailed the impugned order on the following grounds before us: ITA No.115/Mum/2021 A.Y.2013-14 Sumit Mohansingh Gandhi Vs. ACIT-25(1) 2 “1. On the facts and in the circumstances of the case an in law, the ld. CIT(A) erred in confirming the addition of Rs.6,90,000/- made by the A.O u/s 2(22)(e) as alleged deemed dividend. The appellant prays that the A.O be directed to delete the additions made. 2. The appellant craves leaves to add to, alter and/or amend all or any of the above grounds of appeal at the time of the hearing.” 2. The solitary ground of appeal of the assessee is directed against the order of the ld. CIT(A) in confirming the addition of Rs.6,90,000/- made by the assessing officer u/s 2(22)(e) as deemed dividend. There was a delay in filing this appeal by 103 days and the assessee has filed affidavit for condonation of delay in filing the instant appeal. In the affidavit assessee explained that he received the order of CIT(A) on 31.08.2020 and due to Covid pandemic Government of India had extended due date to file appeal before the ITAT up to 31 st March, 2021. It is also stated that as per the taxation and other laws (Relaxation of Certain Provisions) Bill, 2020 where time limit for filing appeal on 60 days from the receipt of order of CIT(A) is expired between 20 th March, 2020 to 31 st December, 2020, the appeal can be filed before the ITAT till 31 st March, 2021. The assessee has filed this appeal on 10.02.2021. Heard both the side and perused the submission of the assessee regarding condonation of the delay in filing the appeal. The Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. MST. Katigir Ors- Civil Appeal No. 460 of 1987 dated 19.02.1987 held that sufficient cause for the purpose of condonation of delay should be interpreted with a view to do even handed justice on merit in preference to the approach which scuttles a decision on merit. We observe that there is a bonafide reason for making delay in filing this appeal because of the prevailing Covid Pandemic, therefore, we condone the delay of 103 days in filing this appeal. ITA No.115/Mum/2021 A.Y.2013-14 Sumit Mohansingh Gandhi Vs. ACIT-25(1) 3 3. The fact in brief is that the return of income declaring total income of Rs.73,93,200/- was filed on 10.08.2013. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 02.09.2014. During the course of assessment proceedings the A.O noticed that there was difference in the total TDS as per Form 26AS and as shown by the assessee in the return of income for the year under consideration. On perusal of Form 26AS it was found that mismatch/ difference was occurred due to payment of Rs.6,90,000/- as advance rent to the assessee by Asian Business Corporation Limited, the company in which the assessee was director having more than 10% of shareholding. The assessing officer has treated the aforesaid advance rent as deemed dividend u/s 2(22)(e) of the Act and added to the total income of the assessee. 4. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal. 5. During the course of appellate proceedings before us the ld. Counsel contended that assessee has received advance rent of 3 months on let-out his office premises to Asian Business Corporation Limited. The ld. Counsel during the course of appellate proceedings has filed a paper book comprising copies of document and written submission filed before the lower authorities. The ld. Counsel referred CBDT Circular No. 19/2017 regarding not to treat commercial transaction between company and shareholder because of business expediency as deemed dividend u/s 2(22)(e) of the Act. The ld. Counsel also referred the judicial pronouncement in the case of Bagmane Construction Pvt. Ltd. Vs. CIT (2014) (Karnataka) ITA No. 473/2013; CIT Vs. Rajkumar (2009) 318 ITR 462 (Delhi); Pradeep Kumar Vs. ITO (2011) 338 ITR 538 (Kolkata. On the other hand the ld. D.R has relied on the order of the lower authorities. ITA No.115/Mum/2021 A.Y.2013-14 Sumit Mohansingh Gandhi Vs. ACIT-25(1) 4 6. Heard both the side and perused the material on record. During the year the assessee has received advance rent amounting to Rs.6,90,000/- on let-out of his office premises to Asian Business Corporation Limited, the company in which the assessee being director was having more than 10% of the shareholding. The Asian Business Corporation Limited had given advance rent for next 3 months to its licensors from whom offices were taken on rent and the assessee had dully offered the advance rent received for tax in the subsequent financial year 2013-14. The assessee explained during the course of assessment and appellate proceedings that advance rent for 3 months was commercial transaction and same was offered for tax in the subsequent year. We have perused the judicial pronouncements relied upon by the assessee. In the case of CIT Vs. Rajkumar as supra, the Hon’ble Delhi High Court held that a trade advance which is in nature of money transacted to give effect to a commercial transactions cannot be treated as deemed dividend. In the case of Smt. Jamuna Vernekar (2021) 129 taxman.com 380 (Karnataka) Hon’ble High Court of Karnataka held that where the assessee, director of the company, received advance from company for construction of building of plot owned by him and such advance was letter adjusted towards security deposit and rent payable to assessee, it would be a commercial transaction and would be outside purview of Section 2(22)(e) of the Act. It is undisputed fact that assessee has received advance rent for 3 months on providing office premises on lease to the aforesaid company where the assessee was having shareholding of more than 10%. The assessee had explained with relevant material along with judicial pronouncements before the lower authorities that same was purely a commercial transaction and there was no tax evasion made on the basis of this transaction. We find that assessee has already paid due tax on the ITA No.115/Mum/2021 A.Y.2013-14 Sumit Mohansingh Gandhi Vs. ACIT-25(1) 5 advance rent in the subsequent year and the lower authority has not proved contrary to the claim of the assessee, therefore, we find that decision of ld. CIT(A) in sustaining the impugned addition is not justified. Accordingly, the appeal of the assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 28.03.2022 Sd/- Sd/- (Rahul Chaudhary) (Amarjit Singh) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 28.03.2022 PS: Rohit Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Private Secretary) ITAT, Mumbai