Cherukuru Jayadev Naidu , Bangalore V. The Income Tax Officer Ward-3(1)(1), Bangalore

ITA 2066/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2349 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 26-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Opportunity of being heard; Deemed dividend
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 2066 /BANG/201 7 ASSESSMENT YEAR : 20 1 4 - 1 5 SHRI CHERUKURU JAYADEV NAIDU, NO. B-3, ANUGRAHA, 9 TH MAIN ROAD, SADASHIVANAGAR, RMV EXTENSION, BANGALORE 560 080. PAN: ABEPJ7071R VS. THE INCOME TAX OFFICER, WARD 3 (1) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 2 6 . 0 7 .2018 DATE OF PRONOUNCEMENT : 31 . 0 8 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A)-3, BANGALORE DATED 11.09.2017 FOR ASS ESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN DISMISSING THE SAME. THE IMPUGNED ORDER AS CONFIRMED BEING BAD IN LAW IS REQUIRED TO BE QUA SHED. 2.1 WITHOUT PREJUDICE, THE AUTHORITIES BELOW HAVE E RRED IN APPLYING THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T. ACT, IN THE MANNER DONE. THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T. ACT, 1961 ARE NOT AT ALL ATTRACTED ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. 2.2 THE LEARNED ASSESSING OFFICER HAS ERRED IN ADDI NG A SUM OF RS. 1,16,80,000/- AS DEEMED DIVIDEND IN THE HANDS OF TH E APPELLANT BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME. ON PROPER APPRECIATION OF FACTS OF THE CASE AND THE LAW APPLICABLE, THE ADDIT ION AS MADE/CONFIRMED BEING TOTALLY ERRONEOUS IS TO BE DEL ETED. ITA NO. 2066/BANG/2017 PAGE 2 OF 3 3. THE APPELLANT ALSO DENIES THE LIABILITY TO PAY I NTEREST U/S. 234A AND 234B OF I.T. ACT, 1961. THE INTEREST HAVING BEEN LE VIED ERRONEOUSLY IS TO BE DELETED. 4. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER PASSED B E QUASHED OR AT LEAST THE AMOUNT TREATED AS DEEMED DIVIDEND BE DELETED AN D THE INTEREST LEVIED BE ALSO DELETED. 3. THIS APPEAL WAS EARLIER FIXED FOR HEARING ON 05. 06.2018. ON THIS DATE, THE LD. AR OF ASSESSEE SHRI SATHISH K., ADVOCATE APPEARED A ND REQUESTED FOR ADJOURNMENT AND ON HIS REQUEST, HEARING WAS ADJOURN ED TO 26.07.2018 AND THIS DATE OF HEARING WAS PRONOUNCED IN THE OPEN COURT AN D THE SAID LD. AR OF ASSESSEE HAS SIGNED IN THE ORDER SHEET AS EVIDENCE OF NOTING DOWN THE NEXT DATE OF HEARING. ON 26.07.2018, NONE APPEARED ON B EHALF OF THE ASSESSEE AND THERE IS NO REQUEST FOR ADJOURNMENT AND THEREFORE, THE APPEAL OF THE ASSESSEE WAS HEARD EX-PARTE QUA THE ASSESSEE. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR OF REVENUE AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT ONLY ONE ISSUE IS INVOLVED IN THIS APPEAL I.E. REGARDING ADDITION MADE BY THE AO OF RS . 116.80 LAKHS AS DEEMED DIVIDEND BY INVOKING THE PROVISIONS OF SECTION 2(22 )(E) OF IT ACT. THIS ISSUE HAS BEEN DECIDED BY CIT(A) AS PER PARA 4.2 OF HIS ORDER WHICH IS REPRODUCED HEREINBELOW FOR READY REFERENCE. THIS PARA READS A S UNDER. 4.2 AS REGARDS GROUND OF APPEAL 2 TO 4, THE SAME AR E RELATED TO THE COMMON ISSUE OF TREATMENT OF LOAN OF RS 1,16,80,000 /- AS DEEMED DIVIDEND. AS DISCUSSED IN PARA 3.0, DESPITE OF BEIN G GIVEN OPPORTUNITY OF BEING HEARD, THE APPELLANT HAS CHOSEN NOT TO FIL E ANY WRITTEN SUBMISSIONS OR TO ATTEND THE APPELLATE PROCEEDINGS PERSONALLY OR THROUGH AUTHORIZED REPRESENTATIVE. ON THE BASIS OF MATERIAL AVAILABLE ON RECORD IT IS EVIDENT THAT THE CONDITIONS LAID DO WN IN SECTION 2(22)(E) OF THE ACT, TO TREAT THE AMOUNT OF LOAN GIVEN BY M/ S FAVORICH MARK PVT LTD. TO THE APPELLANT AS DEEMED DIVIDEND, ARE SATIS FIED. THE AO HAS DISCUSSED THE ISSUE IN DETAIL IN HIS ORDER AND THER E IS MERIT IN THE REASONING GIVEN BY THE AO FOR TREATING THE AMOUNT O F LOAN AS DEEMED DIVIDEND. THE ARGUMENT OF THE APPELLANT, AS MADE BE FORE THE AO, THAT THE AMOUNT WAS GIVEN AS A LOAN DUE TO BUSINESS EXIG ENCY DOES NOT MAKE ANY DIFFERENCE AS THE LENDING OF MONEY IS NOT THE BUSINESS OF THE COMPANY AND THE INCOME FROM SAME DOES NOT FORM SUBS TANTIAL PART OF ITA NO. 2066/BANG/2017 PAGE 3 OF 3 THE BUSINESS OF THIS COMPANY. AS REGARDS THE ARGUME NT OF THE APPELLANT, AS MADE BEFORE THE AO, THAT THE COMPANY HAD TAKEN LOAN FROM OTHERS TO GIVE SUCH LOAN TO HIM, IS ALSO OF NO CONSEQUENCE AS THE ONLY REQUIREMENT OF THE SECTION 2(22) (E) IS THAT T HE LOAN 'GIVEN WOULD BE TREATED AS DEEMED DIVIDEND ONLY TO THE EXTENT OF THE ACCUMULATED PROFITS. SO AS SUCH THE ACTUAL SOURCE OF LOAN IS IR RELEVANT IF THE ACCUMULATED PROFITS EXIST IN THE BALANCE SHEET OF T HE COMPANY, THE ONLY RESTRICTION BEING THAT THE DEEMED DIVIDEND CANNOT E XCEED SUCH ACCUMULATED PROFITS. CONSIDERING ABOVE FACTS, THERE IS NO REASON TO DIFFER WITH THE AO. THE ACTION OF THE AO IS CONFIRM ED AND THE GROUNDS OF APPEAL 2 TO 4 OF THE APPELLANT ARE DISMISSED. 5. AS PER ABOVE PARA REPRODUCED FROM THE ORDER OF C IT(A), IT IS SEEN THAT A CATEGORICAL FINDING HAS BEEN GIVEN BY CIT(A) THAT T HE CONDITIONS LAID DOWN IN SECTION 2(22)(E) OF IT ACT TO TREAT THE AMOUNT OF L OAN GIVEN BY A COMPANY M/S. FAVORICH MARK PVT. LTD. TO THE ASSESSEE AS DEEMED D IVIDEND ARE SATISFIED. IN VIEW OF THIS FACTUAL POSITION, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE, DATED, THE 31 ST AUGUST, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.