M/s. Ritambara Associates, CHENNAI V. DCIT, CHENNAI

ITA 14/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77230 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Deemed dividend
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ! '# $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER STAY PETITION NO.141 /MDS/2014 & ITA NO.14/MDS/2014 (IN ITA NO.14/MDS/2014) (ASSESSMENT YEAR: 2006-07) M/S. RITAMBARA ASSOCIATES, 34, POONAMALLEE HIGH ROAD, KOYAMBEDU, CHENNAI-600 107. VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III(2), 325, 3 RD FLOOR, M.G.ROAD, CHENNAI-34. PAN : AAIFR6551R ( PETITIONER /APPELLANT ) RESPONDENT) APPELLANT BY : DR. ANITA SUMANTH, ADVOCATE RESPONDENT BY : MR. GURU BHASHYAM, JCIT / DATE OF HEARING : 25 TH APRIL, 2014 / DATE OF PRONOUNCEMENT : 25 TH APRIL, 2014 ' / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-C-II, CHENNAI DATED 30.09.2013 FOR THE ASSESSMENT YEAR 2006-07. 2. THE GRIEVANCE OF THE ASSESSEE IN ITS APPEAL IS T HAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ORDER OF ASSESSMENT WITH RESPECT TO INVOCATION OF S.P.NO.141 /MDS/2014 & ITA NO.14/MDS/2014 2 PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE ASSE SSING OFFICER WHILE COMPLETING THE ASSESSMENT MADE ADDITI ON OF ` 82,09,755/- AS DEEMED DIVIDEND UNDER SECTION 2(22)( E) OF THE ACT ON THE GROUND THAT ASSESSEE HAS NO OBJECTIO N IN TREATING THE SAID SUM AS DEEMED DIVIDEND IN THE CAS E OF THE ASSESSEE FOR THE AMOUNTS ADVANCED BY M/S. LANSON MO TORS PVT. LTD. ON BEHALF OF THE ASSESSEE. BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS) ASSESSEE CONTENDED THAT ASS ESSEE IS NOT A SHAREHOLDER IN M/S. LANSON MOTORS PVT. LTD . AND THEREFORE PROVISIONS OF SECTION 2(22)(E) OF THE ACT HAVE NO APPLICATION WHICH FACT HAS BEEN COMPLETELY OMITTED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT. HOWEVER, COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ASSESSMENT AND THE ADDITION ON THE GROUND THAT ASSE SSEE HIMSELF HAS ADMITTED BEFORE THE ASSESSING OFFICER T HAT THERE IS A DEEMED DIVIDEND IN ITS CASE. 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT COMMISSION ER OF INCOME TAX (APPEALS) HAS NOT AT ALL JUSTIFIED IN CO NFIRMING ADDITION UNDER SECTION 2(22)(E) OF THE ACT DESPITE THE FACT THAT S.P.NO.141 /MDS/2014 & ITA NO.14/MDS/2014 3 ASSESSEE IS NOT A SHAREHOLDER OF M/S. LANSON MOTORS PVT. LTD. AND THE PROVISIONS OF SECTION 2(22)(E) ARE THUS REN DERED INAPPLICABLE IN ASSESSEES CASE. COUNSEL FOR THE AS SESSEE SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) G ROSSLY ERRED IN CONFIRMING THE ADDITION MERELY ON ASSURED BASIS AND THE ASSESSEE DID NOT OBJECT TO THE PROPOSAL FOR INV OCATION OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT AT THE TI ME OF ORIGINAL ASSESSMENT. COUNSEL SUBMITS THAT MERE CONSENT ON T HE PART OF THE ASSESSEE CANNOT BE A BASIS FOR ADDITION WHEN IN FACT PROVISIONS OF SECTION 2(22)(E) OF THE ACT HAVE NO APPLICATION AT ALL. COUNSEL FURTHER SUBMITS THAT COMMISSIONER O F INCOME TAX (APPEALS) FAILED TO NOTE THAT IT WAS A SPECIFIC SUBMISSION OF THE ASSESSEE AT THE TIME OF ASSESSMENT THAT AMOU NTS WERE REMITTED TOWARDS MEETING ROUTINE DAY-TO-DAY EXPENDI TURE AND FUNDING OPERATIONAL LOSSES AND THEREFORE THEY WERE NOT IN THE NATURE OF LOANS OR ADVANCES IN ORDER TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 4. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER OF THE LOWER AUTHORITIES IN SUSTAINING THE ADDITION. S.P.NO.141 /MDS/2014 & ITA NO.14/MDS/2014 4 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. ON A READING OF THE ASSESSMENT ORDER, WE FIND THAT THERE IS NO FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE IS A SHAREHOLDER OF M/S. LANSON MOTORS PVT. LTD. AND THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE ATTRA CTED TO THE ASSESSEE. IN THE ABSENCE OF ANY SUCH FINDING AND IN THE LIGHT OF THE SUBMISSIONS OF ASSESSEE THAT ASSESSEE IS NOT A SHAREHOLDER SO AS TO ATTRACT PROVISIONS OF SECTION 2(22)(E) OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THIS MA TTER HAS TO BE EXAMINED AFRESH BY THE ASSESSING OFFICER AFTER P ROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. THEREFORE, W E RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THIS ISSUE AFRESH IN ACCORDANCE WITH LAW. 6. SINCE WE HAVE RESTORED THE APPEAL ITSELF TO THE FILE OF ASSESSING OFFICER FOR DE NOVO CONSIDERATION, STAY P ETITION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS. S.P.NO.141 /MDS/2014 & ITA NO.14/MDS/2014 5 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE STAY PETITION IS DISMI SSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 25 TH DAY OF APRIL, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGEND RA PRASAD ) . !'#$ ( %&' '()* +, ) ACCOUNTANT MEMBER / '( ,-. JUDICIAL MEMBER/ )./. ,-. %() /CHENNAI, 0,# /DATED, 25 TH APRIL, 2014 SOMU 1,(2 +/3'45 !6(4 /COPY TO: 1. APPELLANT DR.ANITA SUMANTH, ADVOCATE 51/24, NUNG AMBAKKAM HIGH ROAD, CHENNAI-600 034. 2. +7.89 /RESPONDENT 3. 1. 1. : (!5$') /CIT(A) 4. 1. 1. : /CIT 5. 4='$. +//>? /DR 6. '@A B' /GF.