Sanjay Chandan Patel, Dhule V. Income-tax Officer,

ITA 1894/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9416 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK MALVIYA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . . . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 1894/PUN/2014 / ASSESSMENT YEAR : 2009-10 MR. SANJAY CHANDAN PATEL, PLOT NO.48, NEHRU HOUSING SOCIETY, DEOPUR, DHULE 424 002 PAN : AFCPP5351C . / APPELLANT V/S ITO, WARD - 3(2), DHULE . / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI ALOK MALVIYA / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, NASHIK, DAT ED 30-09-2014 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASESSEE HAS FILED REVISED GROUNDS VIDE APPLI CATION DATED 18-05- 2017 WHICH CONTAINS LEGAL ISSUES RELATING TO VALIDI TY OF THE REASSESSMENT AND AS WELL AS ON MERITS OF ADDITION INVOKING THE PROVI SIONS OF SECTION 2(22)(E) OF THE ACT. REFERRING TO THE SAID GROUNDS IN GENER AL AND THE GROUNDS RELATING / DATE OF HEARING :25.05.2017 / DATE OF PRONOUNCEMENT: 30.05.2017 2 ITA NO.1894/PUN/2014 TO THE MERITS OF INVOKING THE SAID SECTION, THE LD. COUNSEL FOR THE ASSESSEE NARRATED THE FACTS AS UNDER. 3. THE FACTS INCLUDE THAT THE ASSESSEE IS A DIRECT OR OF A COMPANY NAMED M/S. SOUVENIR DEVELOPERS (INDIA) PVT. LTD., AND HE HOLDS MORE THAN 20% OF THE SHARES IN THE SAID COMPANY. DURING THE YEAR, T HE ASSESSEE RECEIVED ADVANCES FROM THE PRIVATE LIMITED COMPANY. THE SOU RCE OF FUNDS FOR THE SAID ADVANCE IS THE LOANS RECEIVED BY THE SAID COMP ANY FROM THE BANK. THE ASSESSEE GAVE CERTAIN DOCUMENTS AS SECURITY TO THE BANK FOR GETTING THE SAID LOANS FROM THE BANK. CONSIDERING THE ADVANCES RECE IVED BY THE ASSESSEE FROM THE PRIVATE LIMITED COMPANY, THE ASSESSING OFF ICER INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND MADE ADDITION OF RS.60,87,413/- IN THE REASSESSMENT. ASSESSING OFFICER COMPLETED T HE REASSESSMENT ON THE ASSESSED INCOME OF RS.69,05,063/-. 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSE SSEE SUBMITTED THAT THE SAID PROVISIONS OF SECTION 2(22)(E) ARE NOT APP LICABLE TO THE PRESENT ADVANCES RECEIVED BY THE ASSESSEE FROM THE COMPANY. NARRATING THE FACTS, HE SUBMITTED THAT ASSESSEE TOOK ADVANCES FROM THE C OMPANY AGAINST PAYMENT OF INTEREST @ 13%. FURTHER, HE ALSO SUBMIT TED THAT THE LOANS TAKEN BY THE ASSESSEE WAS FULLY REPAID AS ON DATE. FURTH ER, HE MENTIONED THAT THE ASSESSEE RELIED ON THE JUDGMENT OF THE CALCUTTA HIG H COURT IN THE CASE OF PRADIP KUMAR MALHOTRA VS CIT 338 ITR 538 (CAL) AND THE SAME IS RELEVANT FOR THE FOLLOWING PROPOSITION : THAT FOR RETAINING THE BENEFIT OF LOAN AVAILED OF FROM THE BANK IF DECISION WAS TAKEN TO GIVE ADVANCE TO THE ASSESSEE SUCH DECISION WAS NOT TO GIVE GRATUITOUS ADVANCE TO ITS SHAREHOLDER B UT TO PROTECT THE BUSINESS INTEREST OF THE COMPANY. 3 ITA NO.1894/PUN/2014 5. DRAWING OUR ATTENTION TO THE ABOVE SAID CASE AND DRAWING PARALLEL TO THE FACTS OF THE CASE ON HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE RECEIVED THE SAID ADVANCES FROM T HE COMPANY AND THE SAME ARE NOT GRATUITOUS ADVANCES. OUT OF THE LOANS RECEIVED BY IT, A DECISION WAS TAKEN BY VIRTUE OF AN AGREEMENT WHICH WAS WITHI N THE KNOWLEDGE OF THE BANK AUTHORITIES TO GIVE ADVANCES TO THE SHAREHOLDE R. SAID DECISION IS NOT TO GRANT ANY GRATUITOUS ADVANCE TO A SHAREHOLDER BUT I T IS GIVEN AGAINST THE INTEREST AND TO PROTECT THE BUSINESS INTEREST OF TH E COMPANY AND THE ASSESSEE. FURTHER, WE FIND THAT THE WRITTEN SUBMIS SIONS MADE BY THE LD. AUTHORISED REPRESENTATIVE IS NOT ONLY CONTAINS THE REQUEST FOR GRANT OF RELIEF IN THE MATTER WITHOUT REMANDING TO THE FILE OF THE ASSESSING OFFICER BUT ALSO PROVIDE THE DETAILS OF VARIOUS RATIOS IN SUPPORT OF THE SAME. 6. ON HEARING BOTH THE SIDES, WHEN THE BENCH CALLED FOR THE FINDING OF FACT ON THE SO CALLED NON GRATUITOUS ADVANCE GIVEN TO THE ASSESSEE BY THE PRIVATE LIMITED COMPANY AS WELL AS THE PROTECTION O F THE BUSINESS INTEREST OF THE ASSESSEE/COMPANY, THE LD. COUNSEL FOR THE ASSES SEE AGREED TO THE PROPOSITION THAT THERE IS NO SUCH FINDING OF FACT B Y THE AUTHORITIES BELOW. HOWEVER, LD. AUTHORISED REPRESENTATIVE DEMONSTRATED THE FACT OF RELYING ON THE SAID CITATION (SUPRA). AFTER HEARING BOTH THE SIDES, WE FIND IT IS THE REQUIREMENT FOR ADJUDICATION OF THE ISSUE THAT THE FACT ON NON GRATUITOUS NATURE OF THE SAID ADVANCE ARE BROUGHT ON RECORDS. IF THE DECISION OF ASSESSING OFFICER IS SUCH THAT THE ADVANCE IN QUEST ION IS OF NON GRATUITOUS NATURE, AS IN CASE OF PRADIP KUMAR MALHOTRA (SUPRA) , THE ASSESSING OFFICER IS DIRECTED TO NOT TO INVOKE THE SAID PROVISIONS OF SE CTION 2(22)(E) OF THE ACT. THEREFORE, THE ASSESSING OFFICER IS REQUIRED TO EXA MINE THE SAME ALONG WITH BUSINESS INTEREST OF THE ASSESSEE/COMPANY AND APPLY THE SAID RATIO. THE ANOTHER ISSUE RAISED WITHOUT PREJUDICE RELATING TO EXCLUSION OF EXEMPT CAPITAL 4 ITA NO.1894/PUN/2014 GAINS FROM THE COMPUTATION OF ACCUMULATED RESERVES IS CONSEQUENTIAL AND THE ASSESSING OFFICER IS DIRECTED TO APPLY THE CORR ECT LAW ON THE ISSUE. CONSIDERING THE SAME, WITHOUT GOING TO THE MERITS O F THE LEGAL ISSUES AND OTHER ISSUES, WE ARE OF THE VIEW THAT THE ISSUE NEE DS TO BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N. AS SUCH, THERE IS NO DISCUSSION ON THE LEGAL ISSUE RELATING TO VALIDITY OF REASSESSMENT BEFORE US. THEREFORE, AS DISCUSSED, THE SAME IS DISMISSED AS N OT PRESSED. ASSESSING OFFICER IS DIRECTED TO AFFORD REASONABLE OPPORTUNIT Y OF BEARING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE PRINCIPLES OF NATUR AL JUSTICE. ACCORDINGLY, THE REVISED GROUNDS RAISED BY THE ASSESSEE ON MERIT S ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF MAY, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 30 TH MAY, 2017. / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // /ASSISTANT REGISTRAR , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - I, NAS HIK 4. CIT - I, NASHIK 5. , , B BENCH / DR, ITAT, B BENCH PUNE; 6. / GUARD FILE.