N.S.Nagarajan, CHENNAI V. ACIT, CHENNAI

ITA 154/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4114 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 27-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SREENIVASAN JICIT D R
• Assessee Lawyers: S SRIDHAR
• Keywords: Deemed dividend
• Section: 2

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.154 /MDS./2016 ( ASSESSMENT YEAR : 2012-13) SHRI N.S.NAGARAJAN, PLOT NO.54,TNHB (HIG) PHASE II SCHEME, 3 RD MAIN ROAD, NOLAMBUR, CHENNAI 600 095. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-7(1), CHENNAI. PAN ADNPN 8144 J ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.S.SRIDHAR, ADVOCATE / RESPONDENT BY : MR.V.SREENIVASAN, JICIT, D.R ! ' / DATE OF HEARING : 22.06.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 11.07.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-9, CHENNA I DATED 30.11.2015 PERTAINING TO ASSESSMENT YEAR 2012-13. 2. ASSESSEE IN THIS APPEAL IS AGGRIEVED WITH REGAR D TO PARTLY CONFIRMING THE ASSESSMENT OF AN AMOUNT OF 23,10,900/- AS DEEMED ITA NO.154/MDS/2016 2 DIVIDEND U/S. 2(22)(E) OF THE ACT BY THE LD.CIT(A), OUT OF TOTAL AMOUNT OF 28,80,999/- MADE BY THE AO. 3. THE FACTS OF THE CASE ARE THAT THE IS AN INDIVID UAL, ENGAGED IN THE BUSINESS OF DEALING IN SURGICAL/HELATH CARE PRODUCTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND FRO M THE BALANCE SHEET FROM THE YEAR ENDED 31.03.2011, THE ASSESSEE HAD SHOWN A SUM OF 31.73 LAKHS AS LOAN RECEIVED FROM ONE M/S.IMPEL HEA LTHCARE P LTD., WHEREIN THE ASSESSEE IS HOLDING SUBSTANTIAL INTEREST TO THE EXTENT OF 20% AS ON 31.03.2012 ALONG WITH OTHER TWO SHAREHOLDERS. ON PERUSAL OF THE LEDGER OF M/S.IMPEL HEALTHCARE P LTD., IT IS SEEN THAT THE ASSESSEE HAD DRAWN THE ABOVE MONEY ON VARI OUS DATES AND THE OUTSTANDING AS ON 31.03.2012 WAS SHOWN AT 28,80,999/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE PURPOSE FOR WHICH THE ABOVE SAID AMOUNTS WERE DRAWN FROM THE SAID COMPANY. IN RESPO NSE, THE ASSESSEE COULD NOT FURNISH ANY CONCRETE EVIDENCES O N RECORD TO SUBSTANTIATE THE PURPOSE FOR WHICH THE AMOUNTS WERE DRAWN. HENCE, THE AO BROUGHT TO TAX AN AMOUNT OF 28,80,999/- AS DEEMED DIVIDEND UNDER SEC.2(22)(E) OF THE ACT IN VIEW OF THE LOAN R ECEIVED FROM ITA NO.154/MDS/2016 3 M/S.IMPEL HEALTHCARE P LTD. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 3.1 BEFORE THE LD.CIT(A), THE ASSESSEE TOOK A PLEA THAT IT IS ONLY AN AMOUNT OF TRADING TRANSACTION. THERE WAS A N OUTSTANDING LIABILITY PAYABLE TO M/S.IMPEL HEALTHCARE P LTD., A ND IT CANNOT BE CONSIDERED AS DEEMED DIVIDEND. THE LD.CIT(A) ACCEP TED THE PLEA OF THE ASSESSEE TO THE TUNE OF 5,70,098/- AND SUSTAINED THE ADDITION OF 23,10,900/- AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. AGAINST THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFOR E US. 4. BEFORE US, LD.A.R MADE A PLEA THAT LD.CIT(A) IS NOT JUSTIFIED IN CONSIDERING ONLY AN AMOUNT OF 5,70,098/- WHICH IS ON ACCOUNT OF TRADING LIABILITY AND BALANCE IS TREATED AS DEEMED DIVIDEND IN TERMS OF SEC.2(22)(E) OF THE ACT AND PLEADED THAT ENTIRE AMOUNT IS OUTSTANDING AS PAYABLE TO M/S.IMPEL HEALTHCARE P LT D., ONLY ON ACCOUNT OF TRADING TRANSACTIONS BETWEEN THE ASSESSE E AND THE PARTY. ON THAT REASON THAT ENTIRE AMOUNT CANNOT BE CONSIDE RED AS DEEMED DIVIDEND IN THE HANDS OF ASSESSEE. THE LD.A.R PLE ADED THAT THE ENTIRE AMOUNT TO BE DELETED. ITA NO.154/MDS/2016 4 5. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER O F LOWER AUTHORITIES. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE CONTENTION OF THE LD.A.R IS THAT THE A MOUNT ADVANCED TO THE ASSESSEE BY M/S.IMPEL HEALTHCARE P LTD., BEING A DIRECTOR OF THE COMPANY, NOT BEING A LOAN BUT AN ADVANCE IN THE COU RSE OF ORDINARY BUSINESS TRANSACTIONS, WHICH IS TO BE ADJUSTED AGAI NST MONEYS PAYABLE BY THE LATTER TO THE ASSESSEE. THE SAME DI D NOT FALL WITHIN THE DEFINITION OF THE DEEMED DIVIDEND UNDER SEC.2(2 2)(E) OF THE ACT AS HELD BY VARIOUS COURTS; EXAMPLE CIT VS. RAJKUMAR 318 ITR 462 (DELHI HIGH COURT), CIT VS. CREATIVE DYEING & PRINTING 318 ITR 476. HOWEVER, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE TRA NSACTION RELATING TO THE LOAN RECEIVED FROM M/S.IMPEL HEALTHCARE P LTD., IS ON ACCOUNT OF BUSINESS TRANSACTION IS TO BE ESTABLISHED BY THE AS SESSEE BY PRODUCING COGENT EVIDENCE. IN THE PRESENT CASE, THO UGH THE ASSESSEE MADE A PLEA BEFORE US THAT IT IS ON ACCOUNT OF BUSI NESS TRANSACTION BETWEEN THE PARTIES, THE ASSESSEE COULD NOT PLACE N ECESSARY EVIDENCE AND MADE A BALD PLEA THAT IT HAS ALREADY P RODUCED ALL THE DETAILS BEFORE THE LD.CIT(A). IN MY OPINION, THE LD .CIT(A) EXTRACTED ITA NO.154/MDS/2016 5 THE LEDGER ACCOUNT RELATING TO DEEMED DIVIDEND AT P AGE 10-12 OF HIS ORDER, THE EACH TRANSACTION IS NOT EXPLAINED BY THE ASSESSEE TO THE SATISFACTION OF THE AUTHORITIES. HENCE, I HAVE NO H ESITATION IN CONFIRMING THE ORDER OF LOWER AUTHORITIES ON THIS I SSUE. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IN HIS APPEAL IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 11 TH JULY, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF