Narayan B Bhartiya, Jalna V. Income-tax Officer, Ward - 1, Jalna

ITA 1244/PUN/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9421 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 20-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 143(3); 2(22)(e); 201; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI , JUDICIAL MEMBER I TA NO. 1 244 /PUN/201 8 / ASSESSMENT YEAR : 20 1 0 - 1 1 SHRI NARAYAN B BHARTIYA S ANKALP SEEDS COMPANY PRIVATE LIMITED, BHARTIYA NIWAS, DR. R.P. ROAD, JALNA. PAN : A AHPL2882Q VS. ITO, WARD - 1 , JALNA APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 04 - 0 4 - 201 8 PASSED BY THE CIT(A) - 1 , AURANGABAD IN RELATION TO THE ASSESSMENT YEAR 20 1 0 - 1 1 . 2. THE FIRST ISSUE RAISED IN THE APPEAL IS AGAINST CONFIRMATION O F ADDITION OF RS.10,00,000 AS DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). A SSESSEE BY NONE RE VENUE BY SMT. SHABANA PARVEEN DATE OF HEARING 18 - 0 8 - 2020 DATE OF PRONOUNCEMENT 18 - 0 8 - 2 020 ITA NO . 1 244 /PUN/ 201 8 NARAYAN B BHARTIYA 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) OBTAINED INFORMATION ABOUT THE ASSESSEE HAVING RECEI VED A SUM OF RS.10,00,000 FROM A COMPANY IN WHICH HE WAS A D IRECTOR, WHICH , IN HIS OPINION , WAS VIOLATION OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT . HE ISSUED NOTICE U/S 148 OF THE ACT REQUIRING THE ASSESSEE TO FILE RETURN WITHIN 30 DAYS. NO RETURN WAS FILED IN RESPONSE TO THE NOTICE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED, ON THE BASIS OF PROCEEDINGS BEFORE THE ASST. DIRECTOR OF INCOME - TAX (INVESTIGATION), AURANGABAD, WHERE THE STATEMENT OF ASSESSEE WAS RECORDED ON OATH ON 11 .01.2011 , THAT THE ASSESSEE BORROWED A SUM OF RS.10,00,000 FROM SANKALP SEEDS PRIVATE LIMITED, WHERE HE WAS A D IRECTOR. SUCH COMPANY HAD ACCUM ULATED PROFITS OF RS.14,00,753 AS ON 31.03.2010 WITH THE OPENING ACCUMULA TED PROFITS AT RS.11,04,582. O N BEING CA LLED AS TO WHY HE DID NOT INCLUDE SUCH AMOUNT AS HIS INCOME U/S 2(22)(E) OF THE ACT, THE ASSESSEE SUBMITTED THAT THE MONEY RECEIVED FROM THE COMPANY WAS ON ACCOUNT OF IMPREST OR ADVANCE OF SALARY, WHICH WAS REPAID SUBSEQUENTLY. THE AO DID NOT ACCEPT THE A SSESSEES CONTENTION BY OBSERVING THAT THIS AMOUNT OF RS.10,00,000 RECEIVED BY THE ASSESSEE WAS ACTUALLY REPAID IN THE ITA NO . 1 244 /PUN/ 201 8 NARAYAN B BHARTIYA 3 SUBSEQUENT YEAR. HE THEREFORE, MADE AN ADDITION OF RS.10,00,000 IN THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 148 OF THE ACT. THE LD. C IT(A) ECHOED THE ASSESSMENT ORDER ON THIS POINT. 4. WE HAVE HEARD THE LD. DR THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE. IN FACT, THE APPEAL WAS FIRST FIXED FOR HEARING BY THE TRIBUNAL ON 17 - 01 - 2019 . ON FINDING THE ASSESSEE UNREPRESENTED, THE MATTER WAS ADJOURNED FOR 25 - 02 - 2019. THE POSITION WENT ON LIKE THIS ON SEVERAL OCCASIONS THEREAFTER. TODAY, AGAIN THERE IS NO CHANGE INASMUCH AS NEITHER THE ASSESSEE HAS APPEARED NOR ANY ADJOURNMENT APPLICATION HAS BEEN FILED . AS SUCH, THE APPEAL IS BEING DISPOSED OFF ON MERITS EX - PARTE QUA THE ASSESSEE. 5. IT IS SEEN FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THE ASSESSEE IS A D IRECTOR OF SANKALP SEEDS PRIVATE LIMITED. HE WAS SUMMONED BY ADIT (INVESTIGATION), AURANGABAD FOR VERIFICATION OF CASH DEPOSIT S IN HIS BANK ACCOUNT. DURING THE COURSE OF HIS STATEMENT ON OATH BEFORE THE ADIT (INV.) , THE ASSESSEE ADMITTED TO HAVE BORROWED A SUM O F RS.10,00,000 AS LOAN FROM SANKALP SEEDS PRIVATE LIMITED, WHICH WAS SUBSEQUENTLY REPAID. THE AO FOUND ITA NO . 1 244 /PUN/ 201 8 NARAYAN B BHARTIYA 4 ACCUMULATED PROFITS OF THE COMPANY TO BE MUCH IN EXCESS OF RS.10,00,000, BEING THE AMOUNT OF LOAN GIVEN BY THE COMPANY TO THE ASSESSEE. THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, IN SUCH C IRCUMSTANCES, ARE OBVIOUSLY ATTRACTED. THE ASSESSEE HAD TRIED TO MAKE OUT A CASE BEFORE THE AUTHORITIES THAT THE SAID AMOUNT OF RS.10,00,000 WAS RECEIVED AS ADVANCE O R AN IMPREST . THE LD. CIT(A) HAS ELABORATELY DEALT WITH SUCH CONTENTIONS BY GIVING DATES ON WHICH SMALL AMOUNT S OF IMPREST W ERE RECEIVED BY THE ASSESSEE. FURTHER, THE SALARY RECEIVED BY THE ASSESSEE FROM THE COMPANY IS DIFFERENT FROM SUCH AMOUNT OF RS.10,00,000 RECEIVED BY THE ASSESSEE. IN FACT, THE ASSESSEE CATEGORICALLY ADMITTED BEFORE TH E ADIT (INV.) THAT THE AMOUNT OF RS.10,00,000 RECEIVED BY HIM WAS SUBSEQUENTLY REPAID. IF, THAT BE THE SITUATION, WE FAIL TO APPRECIATE AS TO HOW THE RIGOUR OF SECTION 2(22)(E) OF THE ACT CAN BE AVOIDED. THE HONBLE SUPREME COURT IN THE CASE OF P.SARADA VS. CIT (1998) 229 ITR 444 (SC) HA S HELD THAT SECTION 2(22)(E) OF THE ACT IS MAGNETIZED ON A SHAREHOLDER RECEIVING LOAN O R ADVANCE FROM A COMPANY EVEN THOUGH ULTIMATELY THE AMOUNT STANDS ADJUSTED AT THE END OF THE YEAR. IN VIEW OF THE ABOVE FACTUAL SCENAR IO, WE ARE SATISFIED THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE ITA NO . 1 244 /PUN/ 201 8 NARAYAN B BHARTIYA 5 ATTRACTED IN THE INSTANT CASE. THUS, THE ADDITION OF RS.10,00,000 SUSTAINED IN THE FIRST APPEAL IS HEREBY AFFIRMED. 6 . GROUND NO.2 IS AGAINST T HE AO NOT PROVIDING A COPY OF REAS ONS TO BELIEVE TO THE ASSESSEE . IN THIS REGARD, IT IS OBSERVED FROM PAGE 1 PARA 1 OF THE ASSESSMENT ORDER THAT NOTICE U/S 148 OF THE ACT WAS ISSUED ON 10 - 03 - 2014, WHICH WAS SERVED UPON THE ASSESSEE. SINCE NO RETURN IN RESPONSE TO NOTICE U/S 148 OF THE AC T WAS FILED, THE AO DID NOT FURNISH ANY SUCH REASONS . IN FACT, THE ASSESSEE ACCEPTED THIS ISSUE AND DID NOT ASSAIL THIS POINT IN APPEAL BEFORE THE CIT(A), WHO HAS REPRODUCED AT PARA 3 OF THE IMPUGNED ORDER THE GROUNDS ESPOUSED BEFORE HIM IN FORM NO.35. I N THE INSTANT APPEAL BEFORE THE TRIBUNAL , THE ASSESSEE HAS ONCE AGAIN RA KED UP THIS ISSUE CHALLENGING THE NON - SUPPLY OF REASONS RECORDED , WHICH WAS ABANDONED IN THE FIRST APPEAL . ALBEIT, THERE IS NO LEGAL BAR ON THE ASSESSEE TAKING UP SUCH A LEGAL GROUND BEFORE THE TRIBUNAL DESPITE HAVING DESISTED IN THE FIRST APPEAL, THERE SHOULD BE SOME MATERIAL TO FORTIFY THE STAND. FROM THE MATERIAL AVAILABLE ON RECORD, IT IS OBSERVED THAT THE ASSESSEE DID NOT FILE ANY RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 259 ITA NO . 1 244 /PUN/ 201 8 NARAYAN B BHARTIYA 6 ITR 19 (SC) HAS LAID DOWN THE PROCEDURE F OR SUPPLYING THE REASONS RECORDED BY THE AO TO THE ASSESSEE ONLY AFTER THE ASSESSEE HAS FILED RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. IF THE ASSESSEE FAILS TO FURNISH SUCH RETURN, OBVIOUSLY, THERE IS NO OBLIGATION ON THE PART OF AO TO FURNISH A COPY OF REASONS TO ASSESSEE. IN THE EXTANT CASE, THE ASSESSEE DID NOT FURNISH RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THAT BEING THE POSITION, WE HOLD THAT THE AO WAS JUSTIFIED IN NOT SUPPLYING THE REASONS BEFORE TAKING UP THE ASSESSMENT U/S 147 OF THE ACT. THIS GROUND, ERGO, FAILS. 7 . O THER GROUNDS ARE EITHER GENERAL OR CONSEQUENTIAL. 8 . IN THE RESULT, THE APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE O PEN COURT ON 18 TH AUGUST , 2020 . SD/ - SD/ - (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT PUNE ; DATED : 18 TH AUGUST , 2020 GCVSR ITA NO . 1 244 /PUN/ 201 8 NARAYAN B BHARTIYA 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A) - 1 , AURANGABAD 4. 5. 6 . THE PR.CIT - 1 , AURANGABAD , , DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER, / / TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 18 - 0 8 - 2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 18 - 0 8 - 2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DAT E OF DISPATCH OF ORDER. *