PRASUN KUMAR ROY, Hooghly V. D.C.I.T. C.C - XXIV,Kol, Kolkata

ITA 1736/KOL/2012

• Counselvise Citation: 173623514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 27-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

I.T.A. NOS.: 1736-1737-KOL-2012 ASSESSMENT YEAR : 2006-07 TO 2007-08 PAGE 1 TO 4 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) I.T.A. NOS.: 1736 & 1737/KOL./ 2012 ASSESSMENT YEAR: 2006-2007 & 2007-2008 PRASUN KUMAR ROY,.................................. ........................ .APPELLANT PALLISHRI, ARAMBAGH, HOOGHLY-712 601 [PAN : ADBPR 1475 N] -VS._ DEPUTY COMMISSIONER OF INCOME TAX,.............. . RESPONDENT CENTRAL CIRCLE-XXIV, KOLKATA, AAYAKR BHAVAN PURVA, 110, SHANTI PALLY, E.M. BYE PASS, KOLKATA-700 107 APPEARANCES BY: SHRI A.K. TIBREWAL, A.R., FOR THE ASSESSEE SHRI MAKHANLAL SARDAR, JCIT, SR. D.R., FOR THE DEPA RTMENT DATE OF CONCLUDING THE HEARING : APRIL 03, 2014 DATE OF PRONOUNCING THE ORDER : APRIL 03, 2014 O R D E R PER SHAMIM YAHYA : 1. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST COMMON ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 7 TH SEPTEMBER, 2012 FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. 2. THE COMMON ISSUE RAISED IS THAT LD. CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT. 3. IN THIS CASE, THE FACTS LEADING TO THE IMPUGNED ADDITION ARE THAT THE APPELLANT IS A FULL TIME DIRECTOR OF M/S. ARAMBAGH HATCHERIES PVT. LTD. WITH BENEFICIAL OWNERSHIP OF 39.32% OF THE EQUITY S HARES OF THAT I.T.A. NOS.: 1736-1737-KOL-2012 ASSESSMENT YEAR : 2006-07 TO 2007-08 PAGE 1 TO 4 2 COMPANY. FROM THE BALANCE SHEET OF THAT COMPANY THE ASSESSING OFFICER OBSERVED THAT THE COMPANY HAD RESERVES AND SURPLUS OF RS.39,29,62,199/- AS ON 31.03.2006 AND OF RS.41,49,77,379/- AS ON 31. 03.2007. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERV ED THAT THE APPELLANT HAD RECEIVED AN ADVANCE OF RS.22,48,911/- DURING TH E PERIOD RELEVANT TO ASSESSMENT YEAR 2006-07 AND OF RS.20,77,000/- DURIN G THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2007-08 FROM M/S. A RAMBAGH HATCHERIES PVT. LTD. WHEN THE ASSESSING OFFICER CONFRONTED THA T THE PROVISION OF SECTION 2(22)(E) OF THE ACT WERE APPLICABLE TO THE FACTS OF THE CASES, THE APPELLANT REPLIED THAT THE COMPANY, M/S. ARAMBAGH H ATCHERIES PVT. LTD. WAS FACING DIFFICULTY TO PROCURE FUNDS FROM BANKS, THEREFORE, HE PROCURED PERSONAL LOAN IN HIS INDIVIDUAL NAME AND THAT SUCH LOAN WAS INTRODUCED, FREE OF INTEREST, IN THAT COMPANY TO MEET ITS WORKI NG CAPITAL REQUIREMENTS. THE APPELLANT FURTHER SUBMITTED THAT THE INTEREST ON SUCH LOAN WAS DEBITED TO HIS ACCOUNT AND THE FUNDS FOR R EPAYMENT OF SUCH LOAN WERE PASSED TAKEN FROM THE COMPANY THROUGH HIS INDI VIDUAL LOAN ACCOUNT. THE APPELLANT CONTENDED THAT THE FUNDS WERE USED FO R THE PURPOSES OF THE COMPANY ONLY, THEREFORE, PROVISION OF SECTION 2(22) (E) WERE NOT ATTRACTED IN THIS CASE. THE ABOVE SUBMISSIONS WERE NOT ACCEPTED BY THE ASS ESSING OFFICER. HE PROCEEDED TO MAKE ADDITION UNDER SECTION 2(22)(E ) OF THE INCOME TAX ACT IN THE HANDS OF THE ASSESSEE. 4. UPON ASSESSEES APPEAL, LD. CIT(APPEALS) HELD TH AT IT IS UNDISPUTED FACT THAT ASSESSEE WAS BENEFICIAL OWNER OF 39.32% O F THE EQUITY SHARE HOLDING OF M/S. ARAMBAGH HATCHERIES PVT. LTD. FROM WHOM IT HAD RECEIVED THE IMPUGNED AMOUNT OF ADVANCES, THEREFORE, THE ASS ESSING OFFICER HAD RIGHTLY TREATED THE AMOUNT OF SUCH ADVANCES AS DEEM ED DIVIDEND IN THE HANDS OF THE ASSESSEE. 5. AGAINST THE ABOVE ORDER OF LD. CIT(APPEALS), ASS ESSEE IS IN APPEALS BEFORE THE TRIBUNAL. I.T.A. NOS.: 1736-1737-KOL-2012 ASSESSMENT YEAR : 2006-07 TO 2007-08 PAGE 1 TO 4 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. COUNSEL OF THE ASSESSEE SU BMITTED THAT ASSESSEE HAD GIVEN PERSONAL GUARANTEE FOR LOAN OBTAINED BY M /S. ARAMBAGH HATCHERIES PVT. LTD. IN LIEU OF PERSONAL GUARANTEE GIVEN, ASSESSEE HAS OBTAINED ADVANCES FROM THE SAID COMPANY. HENCE, HE PLEADED THAT THE ADVANCES OBTAINED BY THE ASSESSEE WERE FOR BUSINESS CONSIDERATION. IN THIS REGARD, HE REFERRED TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA VS.- CI T [2011] 338 ITR 538. LD. COUNSEL FURTHER PLEADED THAT THE ABOVE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IS VERY IMPORTANT FOR ADJ UDICATION OF THIS CASE. HE CLAIMED THAT THIS DECISION CAME SUBSEQUENT TO PA SSING OF ORDERS BY THE AUTHORITIES BELOW. HE PLEADED THAT THE MATTER BE SE T ASIDE TO THE FILE OF ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH IN T HE LIGHT OF THIS CITATION. 7. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HA ND, STRONGLY RELIED UPON THE ORDERS OF AUTHORITIES BELOW. HE PLEADED TH AT THERE WAS NO BUSINESS JUSTIFICATION FOR THE ASSESSEE OBTAINING A DVANCES FROM THE SAID COMPANY. HENCE, HE PLEADED THAT THE ASSESSMENT AS D EEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT MAY BE UPHELD. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE RECORD, WE F IND THAT THERE IS A VARIATION IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS NOTED BY THE ASSESSING OFFICER AND AS DESCRIBED BY THE LD. COUNS EL OF THE ASSESSEE BEFORE US. WHILE BEFORE THE ASSESSING OFFICER, ASSE SSEE HAD SUBMITTED THAT HE HAD OBTAINED LOAN IN HIS INDIVIDUAL CAPACITY AND INTRODUCED THE SAME INTO THE COMPANY M/S. ARAMBAGH HATCHERIES PVT. LTD. AND THEREAFTER ASSESSEE HAS OBTAINED FUNDS FROM THE COMPANY THROUG H HIS INDIVIDUAL ACCOUNT TO REPAY THE SAME. HOWEVER, LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE, A DIRECTOR O F THE SAID COMPANY, HAS GIVEN PERSONAL GUARANTEE FOR LOANS OBTAINED BY THE SAID COMPANY. I.T.A. NOS.: 1736-1737-KOL-2012 ASSESSMENT YEAR : 2006-07 TO 2007-08 PAGE 1 TO 4 4 HENCE IN RETURN OF THIS PERSONAL GUARANTEE, ASSESSE E HAS OBTAINED ADVANCES FROM M/S. ARAMBAGH HATCHERIES PVT. LTD. HE NCE, WE FIND THAT THERE IS A VARIATION IN THE FACTS OF THE CASE. FURT HERMORE, THE HONBLE JURISDICTIONAL HIGH COURTS DECISION CITED BY THE L D. COUNSEL OF THE ASSESSEE HAS COME AFTER THE ADJUDICATION OF THE ISS UE BY THE AUTHORITIES BELOW. IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCE S, WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE I SSUE AFRESH. ASSESSING OFFICER SHALL ALSO TAKE INTO ACCOUNT THE DECISION O F THE JURISDICTIONAL HIGH COURT CITED ABOVE AND ITS APPLICABILITY ON THE FACT S OF THE CASE. NEEDLESS TO ADD, ASSESSEE SHOULD BE GRANTED A REASONABLE OPP ORTUNITY OF BEING HEARD. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DAY OF APRIL, 2014. SD/- SD/- MAHAVIR SINGH SHAMIM YAHYA (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 3 RD DAY OF APRIL, 2014 COPIES TO : (1) PRASUN KUMAR ROY, PALLISHRI, ARAMBAGH, HOOGHLY-712 601 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXIV, KOLKATA, AAYAKR BHAVAN PURVA, 110, SHANTI PALLY, E.M. BYE PASS, KOLKATA-700 107 (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.