Nanak Ram Jaisinghani Prop., New Delhi V. ITO, New Delhi

ITA 2059/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5048 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN SR D R D O H D O O
• Assessee Lawyers: SUMIT GOE L
• Keywords: Opportunity of being heard; Deemed dividend

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC BENCH, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO.2059/DEL/17 A.Y. 2012 - 13 SH. NANAK RAM JAISINGHANI VS. ITO C.O . RAJ KUMAR & ASSOCIATES, CAS WARD 17(4) L 7 A (LGF), SOUTH EX PART 2 NEW DELHI NEW DELHI 110 049 PAN: AAFPJ 7461 F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJ KUMAR GUPTA AND SH. SUMIT GOEL , ADV RESPONDENT BY : SH. T.VASANTHAN, SR.D.R. D.O.H : 17.08.2017 D.O.O.: 2 3 . 08.2017 ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A) - 39, NEW DELHI DATED 11.01.2017 PERTAINING TO THE ASSESSMENT YEAR (AY) 2012 - 13, CHALLENGING THE ADDITION OF RS.75,000/ - U/S 2(22)(E) OF THE INCOME TAX ACT, 1961 (THE ACT). 2 2. THE AS SESSING OFFICER (AO) NOTED THAT THE ASSESSEE IS A SHAREHOLDER IN NANAK BUILDERS AND INVESTORS P.LTD. HAVING 48.9% SHARE HOLDING. THE AO ALSO NOTED THAT IN THIS YEAR RS.75,000/ - HAS BEEN GIVEN BY THE COMPANY TO THE ASSESSEE. THE COMPANY WAS HAVING SUBSTAN TIAL ACCUMULATED PROFITS OF MORE THAN RS.75,000/ - , THEREFORE, THE AO ADDED RS.75,000/ - U/S 2(22)(E) OF THE ACT. 3. I T WAS SUBMITTED BEFORE THE LD. CIT (A) THAT THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE COMPANY IS FILED WHICH SHOWS D EBIT BALANC E IN THE NAME OF THE ASSESSEE OF A SUM OF RS. 4.43 CRORE WHICH IS COMING ACCUMULAT ING FROM EARLIER AYS 2009 - 10 TILL THE ASSESSMENT YEAR 2011 - . ALL ASSESSMENTS HAVE BEEN COMPLETED UNDER SECTION 143 (3). THE OPENING BALANCE ALREADY ST ANDS ADDED UNDER SECTION 2 (22)(E) IN THE RESPECTIVE YEAR S. IN FACT THE AMOUNT RECEIVED IN EARL IER YEARS WAS MORE THAN THE OPENING BALANCE OF RS. 4.43 CRORES . H OWEVER , THIS OPENING BALANCE REM AINED AFTER REDUCING THE REPAYMENT MADE UP TO 31ST MARCH , 201 1 BY THE ASSESSEE TO THE COMPANY. THE ADDITION S MADE COVERING WHOLE OPENING BALANCE OF RS.4.43 CRORES IN VARIOUS YEARS HAS BEEN EXPLAINED AS IN A.Y. 2009 - 3 10 RS.4.97 CRORES, A.Y. 2010 - 11 RS.47.20 LAKHS AND ASSESSMENT YEAR 2011 - 12 RS.80.36 LAKHS. IN AL L THE YEARS THE APPEALS ARE PENDING BEFORE THE LD.CIT(A)/ITAT. THEREFORE, NO COGNIZANCE OF OPENING BALANCE OF RS.4.43 CRORES HAS TO BE TAKEN FOR THE PURPOSE OF S.2(22)(E) OF THE ACT FOR WHICH ADDITION HAS ALREADY BEEN MADE. IT WAS FURTHER SUBMITTED THAT IN THE ASSESSMENT YEAR UNDER APPEAL RS.35 LAKHS GIVEN TO THE COMPANY PRIOR TO RECEIVING OF RS.75,000/ - FROM THE COMPANY (PA P ER BOOK PAGE 5). THUS RS.75,000/ - PAYMENT BY THE COMPANY TO THE ASSESSEE SHOULD BE UNDERSTOOD AS FOR THE PAYMENT OUT OF RS.35 LAKHS RECEIVED BY THE COMPANY FROM THE ASSESSEE. THEREFORE NO ADDITION SHOULD BE MADE . 4. THE LD.CIT(A) REFERRED TO THE ASSESSMENT ORDER IN WHICH IT WAS RECORDED TH AT PERUSAL OF THE BALANCE SHEET DURING THE ASSESSMENT PROCEEDINGS SHOW TH AT LIABILITY IN THE FORM OF UNSECURED LOANS BEEN DECLARED AT RS. 10 , 000 / - V IDE LETTER DATED 23RD FEBRUARY , 2015 DETAILS OF SUCH UN SECURED LOAN WAS FURNISHED. IT WAS OBSERVED THAT A LOAN OF RS. 75 , 000 / - HAS BEEN RECEIVED FROM THE COMPANY . THE ASSESSEE WAS ASKED TO FURNISH DETAILS INCLUDING 4 SHAREHOLDING OF THE ASSESSEE IN THE COMPANY . IT WAS OBSERVED THAT THE ASSESSEE IS A SHAREHOLDER AND DIRECTOR OF THE COMPANY HAVING 48.9% SHAREHOLDING . ON PERUSAL OF THE BALANCE SHEET OF THE COMPANY IT WAS OBSERVED T HAT THE ASSESSEE IS HAVING DEBIT BALANCE OF RS. 3.75 CRORES AND HAS RECEIVED RS.75,000/ - DURING THE YEAR. THE COMPANY HAS ACCUMULATED PROFITS OF RS.5.58 CRORES IN THE BALANCE SHEET . IT WAS THEREFORE NOTED THAT THE ASSESSEE HAS RECEIVED LOAN FROM THE C OMPANY . THE LD.CIT(A) IN VIEW OF THE ABOVE FACTS OBSERVED THAT ASSESSEE HA D D EBIT BALANCE IN THE BOOKS OF THE COMPANY AT THE BEGINNING OF THE RELEVANT ASSESSMENT YEAR AND ASSESSEE HAS RECEIVED RS. 75 , 000 / - FROM THE COMPANY AND RETURN ED RS. 35 LAKHS. THE ASSESSEE CLAIMED THAT OPENING BALANCE HAVE ALREADY BEEN TAXED IN THE EARLIER YEARS. THE AO HOWEVER CONSIDERING THE FACTS OF THE CASE HAVE DEEMED IT AS DIVIDEND U/S 2(22)(E). ON THE BASIS OF ADDITION MADE IN THE EARL IER YEARS ASSESSEE S COUNS EL ARGUED BEFORE THE LD.CIT(A) THAT ONLY NET AMOUNT HAS TO BE CONSIDERED AS OPENING BALANCE OF EARLIER YEARS WHICH HAS BEEN TAXED IN RESPECTIVE YEARS. THE LD.CIT(A) HOWEVER NOT 5 ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSES SEE. 5. A FTER CONSIDERING THE RIVAL SUBMISSIONS , I AM OF THE VIEW THAT THE MATTER REQUIRE S RECONSIDERATION AT THE LEVEL OF THE LD.CIT(A) FOR L IMITED PURPOSES . LD.C OUN SE L FOR THE ASSESSEE REITERATED SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW . H E SUBMITTED THAT FOR OPENING BALANCE ADDITIONS HAVE ALREADY BEEN MADE IN THE EARLIER YEARS . H OWEVER , IT IS A FACT THAT ASSESSEE S APPEALS ARE PENDING BEFORE THE TRIBUNAL IN ALL THESE YEARS . LD.D.R. THEREFORE RIGHTLY CONTENDED THAT SINCE THE ADDITIONS ON ACCOUNT OF DEEMED DIVIDEND IN EARL IER YEARS ARE IN DISPUTE THEREFORE NO BENEFIT C OULD BE GIVEN TO THE ASSESSEE AT THIS STAGE . THE CLAIM OF ASSESSEE IS THEREFORE REJECTED IN THIS REGARD. H OWEVER IT IS A FACT THAT PRIOR TO RECEIVING OF RS.75,000/ - , ASSE SSEE HAS PAID RS. 35 LA KHS TO THE COMPANY , THE NATURE OF SUCH A TRANSACTION HAS NOT BEEN VERIFIED BY THE AUTHORITIES BELOW . THE ASSESSEE CLAIMED BEFORE THE LD. CIT (A) THAT RS,75,000/ - I N QUESTION SHOULD BE UNDERSTOOD FOR REPAYMENT OUT OF RS. 35 LA KHS R ECEIVED FROM THE COMPANY BY THE ASSESSEE . T HEREFORE 6 THESE FACTS SHOULD BE VERIFIED BY THE AUTHORITIES . TO THAT LIMITED POINT O NLY , I SET ASIDE THE ORDER OF LD.CIT(A) AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION TO REDECIDE THE ADDITION UND ER SECTION 2 (22)(E) OF THE ACT BY VERIFYING THE NATURE OF AMOUNT GIVEN BY THE ASSESSEE TO THE COMPANY IN A SUM OF RS.35 LAKHS IN THE A.Y. AND THERE AFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE LD.CIT(A) SHALL GIVE REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. I N THE RESULT THE APPEAL IS A LLOWED FOR STATISTICAL PURPOSES TO THE EXTENT ABOVE. ORDER PRONOUNCED IN THE OPEN COURT . S D / - (BHAVNESH SAINI) JUDICIAL MEMBER DATED : THE 2 3 R D AUGUST, 2017 *GMV 7 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE.