Shri Babubhai Nanjibhai Patel, Ahmedabad V. The Income Tax Officer, Ward - 9(2), Ahmedabad

ITA 1182/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6242 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Deemed dividend
• Section: 143(3); 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 1182/AHD/2014 / ASSESSMENT YEAR: 2009-10 SHRI BABUBHAI NANJIBHAI PATEL, 2, SURYADEEP BUNGALOW, NR. TAKSHASHILA HOUSE, VASTRAPUR, AHMEDABAD-380054 PAN : ABXPP 1748 A VS. THE ITO, WARD 9 (2), AHMEDABAD [ / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL, AR REVENUE BY : SHRI PRASOON KABRA, SR DR / DATE OF HEARING : 04/04/2017 / DATE OF PRONOUNCEMENT: 04/04/2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2009-10 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XV, AHMEDABAD DATED 03.02.2 014 VIDE APPEAL NO.CAT(A)-XV/ITO/WARD-9(2)/179/12-13, ARISING OUT O F ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT), FRAMED ON 10.12.2012 BY THE ITO, WARD-9(2), AHMEDABAD. 2. ASSESSEE HAS RAISED THREE GROUNDS OF APPEAL, BUT THE ONLY ISSUE INVOLVED IS AGAINST THE CIT(A)S ORDER CONFIRMING ADDITION O F DEEMED DIVIDEND OF RS.9,58,421/- MADE BY THE LD. ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 3. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE REC ORD, ARE THAT ASSESSEE IS AN INDIVIDUAL. RETURN OF INCOME FOR AY 2009-10 WAS FI LED ON 22.09.2009 DECLARING NIL INCOME. CASE WAS PREVIOUSLY PROCESSED UNDER SE CTION 143(1) OF THE ACT AND ITA NO. 1182/AHD/2014 SHRI BABUBHAI NANJIBHAI PATEL VS. ITO AY : 2009-10 - 2 THEREAFTER, ON THE BASIS OF CERTAIN INFORMATION, IT WAS REOPENED UNDER SECTION 147 OF THE ACT BY ISSUING A NOTICE UNDER SECTION 14 8 OF THE ACT. IN RESPONSE THERETO, ASSESSEE FILED RETURN ON 02.03.2012 DECLAR ING TOTAL INCOME AT RS.62,140 /- . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED THAT ASSESSEE IS SHAREHOLDERS IN FIVE COMPANIES OUT OF WHICH IN CASE OF TWO COMPANIES NAMELY JAXA INFOTECH PVT LTD AND JAXA REALITY PVT LTD, WAS HOLDING 45.5% AND 45.41% OF EQUITY SHARES. IT WAS ALSO NOTICED THAT ASSESSEE TOOK LOANS FROM THESE COMPANIES DURING THE YEAR AND AFTER DULY VERIFYING THE NET RECEIPT FROM THESE TWO COMPANIES, IT WAS OBSERVED THAT ASSESSEE RECEIV ED RS.4,85,000/- AND RS.4,73,421/- FROM JAXA INFOTECH PVT LTD AND JAXA R EALITY PVT LTD RESPECTIVELY AND THESE TWO AMOUNTS TOTALING TO RS.9,58,421/- WAS HELD TO BE DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AND THE TOTAL INCOME OF THE ASSESSEE WAS ACCORDINGLY ASSESSED AT RS.10,20,560/-. 4. ASSESSEE WENT IN APPEAL BEFORE THE LD.CIT(A), BU T COULD NOT SUCCEED AS THE IMPUGNED ADDITION WAS CONFIRMED BY FOLLOWING TH E JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF MISS P. SARADA VS . CIT, REPORTED IN (1988) 229 ITR 444. 5. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED S UPPORTING THE SUBMISSIONS MADE BEFORE BOTH THE LOWER AUTHORITIES, BUT FAILED TO POINT OUT ANY ERROR IN THE FINDINGS OF THE LD. ASSESSING OFFICER AND LD. CIT(A) THAT THE ASSESSEE WAS A SHAREHOLDERS IN M/S. JAXA INFOTECH PVT LTD AN D JAXA REALITY PVT LTD AND THERE WAS A NET INFLOW OF RS.9,58,421/-. LD. COUNS EL WAS ALSO UNABLE TO CONTROVERT THE FACT THAT ALL THE CONDITIONS REQUIRE D FOR INVOKING THE PROVISIONS OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE AC T WERE APPLICABLE ON THE IMPUGNED TRANSACTIONS. ITA NO. 1182/AHD/2014 SHRI BABUBHAI NANJIBHAI PATEL VS. ITO AY : 2009-10 - 3 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS AGAINST THE LD. CIT(A)S ORDER CONFIRMING THE ADDITION OF DEEMED DIVIDEND UN DER SECTION 2(22)(E) OF THE ACT AT RS.9,58,421/- MADE BY THE LD. ASSESSING OFFI CER. FROM THE PERUSAL OF THE RECORD, WE OBSERVE THAT ASSESSEE IS HOLDING 45.50% AND 45.41% EQUITY SHARES IN JAXA INFOTECH PVT LTD AND JAXA REALITY PVT LTD RESP ECTIVELY. WE ALSO OBSERVE THAT BOTH THESE COMPANIES ARE HAVING RESERVE AND SU RPLUS IN THEIR BOOKS OF ACCOUNTS AND ASSESSEE HAVE RECEIVED ADVANCE/LOAN OF RS.4,85,000/- AND RS.4,73,421/- FROM JAXA INFOTECH PVT LTD AND JAXA R EALITY PVT LTD RESPECTIVELY. THESE FACTS HAVE NOT BEEN REBUTTED BY THE ASSESSEE. WE OBSERVE THAT IN THE GIVEN FACTS, LD. CIT(A) HAS CONFIRMED THE ADDITION IN THE RIGHT PERSPECTIVE FOLLOWING THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF MISS. P. SARADA (SUPRA) BY OBSERVING AS FOLLOWS:- 5.1 GROUND NO. 1 & 2 ARE INTERLINKED AND AGAINST T HE ADDITION OF RS.958421/- ON ACCOUNT OF DEEMED DIVIDEND. THE APPELLANT IN THE GROUNDS OF APPEAL MADE A TYPOGRAPHIC MISTAKE REFLECTING THE SAME AS RS. 9,58 ,52/-. THE A.O. AFTER CONSIDERING THE APPELLANTS SHARE HOLDING IN THE CAS E OF M/S. JAXA INFOTECH P LTD AND M/S. JAXA REALITY P.LTD TREATED THE SAME RECEIV ED AS ADVANCES TO THE EXTENT OF RESERVE AND SURPLUS OF THESE COMPANIES AS DEEMED DIVIDEND. THE A.O. REJECTED THE APPELLANTS ARGUMENTS FOR SUCH ADVANCES BEING EX TENDED BY THESE TWO COMPANIES FOR ACQUISITION OF LAND AND OFFICE PREMIS ES. I AM INCLINED WITH THE CONTENTION OF A.O THAT IN VIEW OF UNDISPUTED AMOUNT RECEIVED AS ADVANCES AND CORRESPONDING AVAILABILITY OF RESERVE & SURPLUS IN BOTH THE COMPANIES WITH CLEAR SHARE HOLDING OF AMOUNT 10% IN THESE TWO COMPANIES BY THE APPELLANT, THE PROVISIONS OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT ARE APPLICABLE. WITH THE DETAILS OF TRANSACTION AS DISCUSSED BY A.O. WITH RE FERENCE TO DATE AND SO CALLED BANAKHAT, I AM INCLINED WITH A.O THAT THESE ADVANCE S IS NOTHING TO DO THAT ACQUISITION OF SAID PROPERTY OR TO SAID BANAKHAT. T HE HON'BLE SUPREME COURT IN THE CASE OF MISS P. SARADA V.CIT (1988) 229 ITR 444 HELD THAT EVEN DEBIT BALANCE IN A RUNNING ACCOUNT, EVEN IF SUBSEQUENTLY SET RIGHT, WILL BE LIABLE TO BE TREATED AS DEEMED DIVIDEND IT IS, THEREFORE, THE A. O IS JUSTIFIED IN TREATING RS. 4,85,000/- IN THE CASE OF M/S. JAXA INFOTECH PVT LT D AND RS. 4,73,421/- IN THE ITA NO. 1182/AHD/2014 SHRI BABUBHAI NANJIBHAI PATEL VS. ITO AY : 2009-10 - 4 CASE OF M/S. JAXA REALITY PVT LTD AS DEEMED DIVIDEN D IN THE CASE OF APPELLANT SO MADE ARE THEREFORE UPHELD AND CONFIRMED. THESE GROU NDS ARE DISMISSED. 9. IN VIEW OF THE ABOVE DISCUSSION AND RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF MISS P. SARADA (SUPRA), WE ARE OF THE CONSIDERED OPINION THAT LD. ASSESSING OFFICER HAS R IGHTLY INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT BY TREATING RS.9,58, 421/- AS DEEMED DIVIDEND. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORD ER OF LD. CIT(A), WHICH IS UPHELD. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 4 TH APRIL, 2017 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 04/04/2017 **BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ & / CONCERNED CIT 4. & ) ( / THE CIT(A)- 5. $ , $ , /DR,ITAT, AHMEDABAD, 6. 0 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) $ ITAT, AHMEDABAD