Sanjay Chanan Patel, Dhule V. Deputy Commissioner of Income-tax,

ITA 1926/PUN/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5460 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-03-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 31-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Deemed dividend; Set aside
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 1926/PUN/2016 / ASSESSMENT YEAR : 2012-13 SHRI SANJAY CHANDAN PATEL, PLOT NO.48, NEHRU HOUSING SOCIETY, DEOPUR, DHULE 424 002 PAN : AFCPP5351C VS. DCIT, CIRCLE, DHULE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-1, NASHIK ON 01-07-2016 IN RELATION TO THE ASSESSMENT YEAR 2012-13. 2. THE LD. AR DID NOT PRESS GROUND NOS. 1 AND 3 OF THE APPEAL, WHICH ARE HEREBY DISMISSED AS NOT PRESSED. GROUND NO .4 IS GENERAL AND HENCE, REQUIRES NO ADJUDICATION. 3. THE ONLY GROUND WHICH SURVIVES FOR CONSIDERATION IS CONFIRMATION OF ADDITION OF RS.65,36,678/- ON ACCOUNT OF D EEMED DIVIDEND U/S. 2(22)(E) OF THE INCOME-TAX ACT, 1961 (HER EINAFTER ALSO CALLED THE ACT). ASSESSEE BY SHRI SUNIL GANOO REVENUE BY SHRI S.P. WALIMBE DATE OF HEARING 06-10-2020 DATE OF PRONOUNCEMENT 07-10-2020 ITA NO.1926/PUN/2016 SANJAY CHANDAN PATEL 2 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E HAS BEEN A DIRECTOR OF A COMPANY, NAMELY, SOUVENIR DEVELOPER S (INDIA) PVT. LTD., HOLDING MORE THAN 20% OF SHARES. THE A SSESSEE RAISED CERTAIN ADVANCES FROM THE COMPANY. THE ASSESSIN G OFFICER (AO) OPINED THAT THE AMOUNT OF LOANS ADVANCED BY THE COMP ANY TO THE ASSESSEE TO THE TUNE OF RS.2.72 CRORE WAS LIABLE TO BE CONSIDERED AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT SU BJECT TO THE AVAILABILITY OF ACCUMULATED FUNDS IN THE HANDS OF THE COMP ANY. WHEN CONFRONTED, THE ASSESSEE SUBMITTED THAT HE, ALONG WITH A PARTNERSHIP FIRM, NAMELY, SOUVENIR DEVELOPERS, OFFERED HIS PERSONAL PROPERTIES AS COLLATERAL SECURITY TO THE BANK FOR AV AILING CREDIT FACILITIES BY SOUVENIR DEVELOPERS (INDIA) PVT. LTD. WITH T HE UNDERSTANDING THAT IF IN FUTURE, THE ASSESSEE NEEDS FUNDS, THE COMPANY WILL ADVANCE LOANS TO THE ASSESSEE AT THE INTEREST RATE OF 13%, WHICH WAS CLOSE TO THE INTEREST RATE ON WHICH THE BANK HAD FINANCED THE COMPANY. THE ASSESSEE ALSO RELIED ON THE JU DGMENT OF THE HONBLE CALCUTTA HIGH COURT IN PRADIP KUMAR MALHOTRA VS. CIT (2012) 246 CTR (CAL) 493 IN SUPPORT OF HIS CONTENTION THAT THE AMOUNT OF ADVANCES RECEIVED BY THE ASSESSEE WAS NOT LIAB LE TO BE CONSIDERED AS DEEMED DIVIDEND. NOT CONVINCED, THE AO COM PUTED THE AMOUNT OF ACCUMULATED PROFITS IN THE HANDS OF COMPANY A T ITA NO.1926/PUN/2016 SANJAY CHANDAN PATEL 3 RS.65,36,678/- AND MADE THE ADDITION BY TREATING LOAN ADVA NCED TO THE ASSESSEE AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. THE LD. CIT(A) DID NOT CHANGE THE FORTUNE OF THE ASSESSEE, WHICH LED TO THE FILING OF THE INSTANT APPEAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. FROM THE COMPUTATION OF ACCUMULATED PROFITS, MADE BY THE AO ON PAGES 17- 19 OF THE ASSESSMENT ORDER, OF SOUVENIR DEVELOPERS (IND IA) PVT. LTD., IT IS SEEN THAT THE AO REDUCED A SUM OF RS.60,87, 413/-, BEING, THE AMOUNT TAXED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE FOR THE A.Y. 2009-10 IN ADDITION TO ANOTHER SUM TA XED IN THE HANDS OF KAMLAKAR SAHEBRAO PATIL AS DEEMED DIVIDEND FO R THE A.Y. 2011-12. THE MATTER PERTAINING TO THE ASSESSEE FOR TH E A.Y. 2009-10 CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL. V IDE ORDER DATED 30-05-2017 IN ITA NO.1894/PUN/2014, THE TRIBUNAL, AF TER CONSIDERING THE ENTIRE EVIDENCE, REMITTED THE MATTER TO THE FILE OF AO FOR A FRESH CONSIDERATION IN TERMS OF DIRECTIONS GIVEN IN PARA 5 OF THE ORDER. SINCE THE FACTS AND CIRCUMSTANCES OF THE ISSU E IN THE EXTANT APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE A.Y. 2009-10 IN ASSESSEES OWN CASE, RESPECTFULLY FOLLOWING THE PRECEDENT, WE SET ASIDE THE IMPUGNED ORDER AND SEND THE MATTER ITA NO.1926/PUN/2016 SANJAY CHANDAN PATEL 4 BACK TO THE FILE OF THE AO FOR TAKING A FRESH DECISION IN THE LIGHT OF OBSERVATIONS MADE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2009-10. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH OCTOBER, 2020. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 07 TH OCTOBER, 2020 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, NASHIK 4. 5. THE PR.CIT-1, NASHIK , , / DR A, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.1926/PUN/2016 SANJAY CHANDAN PATEL 5 DATE 1. DRAFT DICTATED ON 06-10-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 07-10-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *