ACIT, New Delhi V. M/s Grand Link International, New Delhi

ITA 1298/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4083 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Deemed dividend
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.1298/DEL/2011 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE 33 (1), NEW DELHI. VS. M/S GRAND LINK INTERNATIONAL, 7696/777, DB GUPTA ROAD, KAROL BAGH, NEW DELHI. PAN : AAAGF2623H (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SMT. MONA MOHANTY, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 16 TH NOVEMBER, 2010 FOR ASSESSMENT YEARS 2007-08. GROUNDS OF APPEAL READ AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAD ERRED IN DELETING ADDITION OF RS.9,95,597/- MADE BY THE A.O. U/S 2 (22)(E) OF THE I T AT, 1961 BEING DEEMED DIVIDEND. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAD ERRED IN DELETING ADDITION OF RS.9,95,597/- MADE BY THE A.O. U/S 2 (22)(E) OF THE I T ACT IN HOLDING THAT IT SHOULD HAVE BEEN ASSESSED IN THE HANDS OF THE PARTNER AND NOT THE FIRM BY IGNORING TH E FACT THAT THE FIRM IS THE ACTUAL BENEFICIARY AS THE MONEY HAVE BEEN IMMEDIATELY PUT TO USE BY THE ASSESSEES FIRM AND NOT BY THE PARTNERS. ITA NO.1298/DEL/2011 2 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. THE ASSESSEE IN THE PRESENT CASE IS A FIRM. FROM THE P ERUSAL OF THE ASSESSEES ACCOUNT IN CENTURION BANK OF PUNJAB, THE ASSESSING OFFICER NOTICED THAT THE FOLLOWING AMOUNTS WERE RECE IVED BY THE ASSESSEE FROM M/S NAV SHAKTI INDUSTRIES PVT. LTD. DURING T HE FINANCIAL YEAR 2006-07:- DATE AMOUNT CHEQUE NO. 04.10.06 RS.5,00,000 060691 04.10.06 RS.4,50,000 164104 27.11.06 RS.8,00,000 3. HE FURTHER NOTICED THAT PARTNERS OF THE FIRM SHRI KISHAN CHAND GOEL (K.C. GOEL) AND SHRI PRAVEEN GOEL ARE DIRECTOR S IN M/S NAV SHAKTI INDUSTRIES PVT. LTD. ACCORDING TO THE ASSESSING OFFICER, THE AFOREMENTIONED AMOUNTS RECEIVED BY THE ASSESSEE FIRM CLE ARLY ATTRACTED THE PROVISIONS OF SECTION 2 (22)(E) OF THE INCOME-TAX ACT, 1961 (THE ACT) IN THE HANDS OF THE ASSESSEE AND THE ASSESSEE WAS REQUIRED TO FILE THE DETAILS OF TRANSACTIONS ENTERED I NTO BY IT WITH M/S NAV SHAKTI INDUSTRIES PVT. LTD. VIDE LETTER DATED 24 TH DECEMBER, 2009, IT WAS SUBMITTED THAT SHRI K.C. GOEL, PARTNER AND SHR I PRAVEEN GOEL, PARTNER, HAD ALSO TAKEN AMOUNTS FROM M/S NAV SHAKTI IN DUSTRIES PVT. LTD. FROM HIS DEPOSIT AND THE AMOUNTS HAD BEEN DEPOSITE D BY THE PARTNER IN HIS CAPITAL ACCOUNT OF M/S GRAND LINKS INTE RNATIONAL. COPY OF CAPITAL ACCOUNT OF SHRI K.C. GOEL AND SHRI PRAVEEN GOEL IN THE BOOKS OF M/S GRAND LINKS INTERNATIONAL AND COPY OF ACCOUNT OF SHRI K.C. GOEL AND SHRI PRAVEEN GOEL IN THE BOOKS OF M/S NAV SHAKTI INDUSTRIES PVT. LTD. WERE ALSO FILED AND IT WAS SUBMITTED THAT THERE I S NO TRANSACTION BETWEEN M/S GRAND LINKS INTERNATIONAL AND M/S NAV SHAK TI INDUSTRIES ITA NO.1298/DEL/2011 3 PVT. LTD.. THE ASSESSING OFFICER REJECTED THE SAID SUBMI SSIONS OF THE ASSESSEE ON THE GROUND THAT BOTH THE ABOVE MENTIONED PA RTNERS WERE HAVING LOAN ACCOUNTS WITH M/S NAV SHAKTI INDUSTRIES PVT . LTD. THEY WERE HAVING OPENING CREDIT BALANCE IN THE BOOKS OF M /S NAV SHAKTI INDUSTRIES PVT. LTD. AS ON 1 ST APRIL, 2006. THE AFOREMENTIONED THREE CHEQUES WERE ISSUED BY M/S NAV SHAKTI INDUSTRIES PVT. LTD . AND DEBITED TO PARTNERS LOAN ACCOUNT. THE VERY SAME CHEQUES WERE DEPOSITED INTO THE BANK ACCOUNT OF THE ASSESSEE FIRM AS CAPITAL ADDITIO NS BY THE PARTNERS. IN FACT, THE AFOREMENTIONED LOAN AMOUNTIN G TO ` 70,50,000/- WERE GIVEN BY M/S NAV SHAKTI INDUSTRIES PVT. LTD. TO T HE ASSESSEE VIA ITS SHAREHOLDERS AND, HENCE, THE PROVISIONS OF SECTION 2 (2 2)(E) OF THE ACT BECOMES APPLICABLE. HE HAS WORKED OUT A PEAK WHICH C OMES TO ` 9,95,597/- AND THE SAME HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE. 4. LD. CIT (A) HAS DELETED THE ADDITION ON THE GROUN D THAT THE PAYMENT IN FACT WAS MADE BY M/S NAV SHAKTI INDUSTRIES P VT. LTD. TO SHRI K.C. GOEL AND SHRI PRAVEEN GOEL AND NOT TO THE FIRM . LD. CIT (A) HAS ALSO REFERRED TO THE DECISION OF SPECIAL BENCH OF ITA T IN THE CASE OF ACIT VS. BHAUMIK COLOUR PVT. LTD. (2009) 118 ITD 1 I N WHICH IT WAS HELD THAT FOR AN ADDITION TO BE MADE U/S 2 (22)(E) THE RE CEIVER OF THE AMOUNT SHOULD BE REGISTERED SHAREHOLDER AS WELL AS BENEF ICIAL SHAREHOLDER. HE HELD THAT FIRM IS NOT A SHAREHOLDER A ND THE SHAREHOLDER WAS SHRI K.C. GOEL AND THE AMOUNT WAS ASSESSAB LE IN THEIR HANDS. IN THIS MANNER, THE ADDITION IN THE HANDS OF T HE FIRM HAS BEEN DELETED. 5. NOTICE OF HEARING WAS SENT TO THE ASSESSEE, HOWEVER, N ONE WAS PRESENT ON THE FIXED DATE OF HEARING. AS THE ISSUE IS C OVERED BY THE DECISION OF THE AFOREMENTIONED SPECIAL BENCH, WE PRO CEEDED TO DECIDE THE APPEAL FILED BY THE REVENUE AFTER HEARING LD. D R. ITA NO.1298/DEL/2011 4 6. LD. DR RELIED UPON THE ASSESSMENT ORDER. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF LD. D R. WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS TH E ORDER PASSED BY THE CIT (A). IT IS SEEN THAT A FINDING OF FA CT HAS BEEN RECORDED BY THE CIT (A) THAT THE ASSESSEE FIRM IS NEITHE R A REGISTERED SHAREHOLDER NOR BENEFICIAL SHAREHOLDER OF M/S NAV SHAK TI INDUSTRIES PVT. LTD. THEREFORE, ACCORDING TO THE AFOREMENTIONED DE CISION OF SPECIAL BENCH, THE ADDITION COULD NOT BE SUSTAINED IN THE HAN DS OF THE ASSESSEE FIRM. THEREFORE, WE HOLD THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION AND WE DECLINE TO INTERFERE. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.05.20 11. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 12.05.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES