ARUNKUMAR J, MUCHHALA, MUMBAI V. DCIT 8(2), MUMBAI

ITA 1530/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7990 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: D C JAIN
• Keywords: Opportunity of being heard; Corroborative evidences; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.1530/M/2013 ASSESSMENT YEAR: 2008-09 SHRI ARUNKUMAR J. MUCHHALA, C/O. D.C. JAIN & CO., 75, BOMBAY MUTUAL BLDG., 293, D.R. D.N. ROAD, FORT, MUMBAI 400 001 PAN: AAHPM5369F VS. DY. COMMISSIONER OF INCOME TAX, 8(2), ROOM NO.209, AAYAKAR BHAVAN, 2 ND FLOOR, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI D.C. JAIN, A.R. REVENUE BY : SHRI RAJESH KUMAR YADAV, D.R. DATE OF HEARING : 04.10.2017 DATE OF PRONOUNCEMENT : 20.12.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 07.12.2012 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE SHORT FACTS OF THE CASE ARE THAT ASSESSEE IS MANAGING DIRECTOR IN M/S. MUCHHALA MAGIC LAND PVT. LTD. AND ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) FOUND T HAT ASSESSEE HAS ITA NO.1530/M/2013 SHRI ARUNKUMAR J. MUCHHALA 2 GIVEN LOAN OF RS.42,38,189/- TO MR. ARUNKUMAR MUCHH ALA WHO IS HOLDING 32.83% EQUITY SHARES IN THE COMPANY. THE A SSESSEE COMPANY HAS ADVANCED THE LOAN OF RS.2,42,29,160/- W HICH IS COVERED UNDER SECTION 2(22)(E) OF THE ACT. THEREFORE, WHEN ASSESSEE IS HOLDING 32.83% EQUITY SHARES IN ASSESSEE COMPANY AN D ALSO HOLDING 34% SHARES IN THE PARTNERSHIP FIRM I.E. M/S. SAI SH IV DEVELOPERS. THEREFORE, AO HAS MADE THE ADDITION OF RS.54,24,248 /- BEING DEEMED DIVIDEND. 3. DURING THE COURSE OF HEARING, LD. A.R. SUBMITTED THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE ASSESSEES OWN CAS E IN A.Y. 2006- 07 & 2009-10 WHEREIN THE SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL AND THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE. 4. WE FIND THAT IN ASSESSEES OWN CASE THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE VIDE PARA 14 F OR A.Y. 2006-07 AND VIDE PARA 29 FOR THE A.Y. 2009-10 WHICH ARE REPRODU CED AS UNDER: 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. AS COULD BE SEEN, PAYMENT OF RS.22.50 LAKH APPEARING IN THE NAME OF SAI SHIV PROPERTY DEVELOPE RS PVT. LTD., HAS BEEN TREATED AS IN THE NATURE OF LOAN BY THE ASSESS ING OFFICER, SINCE SAI SHIV PROPERTY DEVELOPERS PVT. LTD., IS NOT A REGIST ERED SHAREHOLDER OF MUCHHALA MAGIC LAND PVT. LTD., THE ASSESSING OFFICE R HAS TREATED THE AMOUNT IN DISPUTE AS DEEMED DIVIDEND IN THE HANDS OF THE A SSESSEE SINCE THE ASSESSEE IS A SUBSTANTIAL SHAREHOLDER IN BOTH THE ENTITIES. THE DIVIDEND AT THE HANDS OF THE ASSESSEE. THEREFORE, CONSIDERING THE TOTALITY OF TH E FACTS AND CIRCUMSTANCES WE ARE INCLINED TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION KEEPIN G IN VIEW OUR OBSERVATIONS HEREIN ABOVE. IT IS OPEN FOR THE ASSES SEE TO FURNISH NECESSARY EVIDENCE BEFORE THE ASSESSING OFFICER TO JUSTIFY ITS CLAIM THAT THE AMOUNT OF Z 22.50 LAKH IS NEITHER A LOAN NOR AN ADVANCE AS ENVISAGED UNDER SECTION 2(22)(E) OF THE ACT. THE AS SESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE MATTER. THIS GROUND IS ALLOWED FOR STATISTICAL PURP OSE. ITA NO.1530/M/2013 SHRI ARUNKUMAR J. MUCHHALA 3 29. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE AMOUNT OF RS.56 LAKH STATED TO BE IN THE NATURE OF LOAN ADVANCED TO SAI SHIV DEVELOPERS PVT. LTD. IS CONCERNED, THE ASSESSEE HAS PLEADED THAT THE AMOUNT WAS GIVEN TOWARDS DEVELOPMENT OF A PROJECT UNDER CONSTRUCTION AT LONAVALA WHERE MUCHHALA MAGIC LAND PVT. LTD. HAD SUBSTANTIAL BUSIN ESS INTEREST. HOWEVER, THE ASSESSEE HAS TO SUBSTANTIATE SUCH CLAI M THROUGH PROPER SUPPORTING EVIDENCE. ASSESSEE'S CLAIM CANNOT BE ACC EPTED ON MERE FACE VALUE IN THE ABSENCE OF DOCUMENTARY EVIDENCE TO SHO W THAT THE AMOUNT WAS ADVANCED FOR BUSINESS PURPOSE TO BE INVESTED IN DEVELOPMENT OF THE PROJECT AT LONAVALA. WE HAVE NOTICED, THE AFORE SAID CONTENTION RAISED BY THE ASSESSEE IS NOT FORTHCOMING EITHER FR OM THE ASSESSMENT ORDER OR THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). IN FACT, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS BEREFT OF PROPER REASONING SINCE HE HAS SIMPLY FOLLOWED THE DECISION OF HIS PREDECESSOR -IN-OFFICE WITHOUT PROPERLY DISCUSSING THE FACTS OR SUBMISSIONS OF THE ASSESSEE. IN VIEW OF THE AFORESAID, WE ARE INCLINED TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR PROPER VERIFICATION OF ASSESS EE'S CLAIM AND FRESH ADJUDICATION OF THE ISSUE AFTER PROVIDING DUE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.3, IS ALLOWED FOR STATIS TICAL PURPOSES. 5. RESPECTFULLY FOLLOWING THE SAME, WE RESTORE THIS MATTER BACK TO THE FILE OF THE AO. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.2017. SD/- SD/- (N.K. PRADHAN) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 20.12.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.