Shri Punit Jadavji Shah, Ahmedabad V. The Income Tax Officer, Ward-1(1), Ahmedabad

ITA 3001/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8554 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 13-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Share purchase agreement; Period of limitation; Deemed dividend
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 3001/AHD/2014 (ASSESSMENT YEAR: 2006-07) SHRI PUNIT JADAVJI SHAH ABHISHEK HOUSE, 5, SHRIMALI SOCIETY, NR. JAIN DERASAR, NAVRANGPURA, AHMEDABAD-380009 V/S INCOME TAX OFFICER, WARD- 1 (1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AELPS4801G APPELLANT BY : SHRI SUNIL TALATI, C.A. RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. ( )/ ORDER DATE OF HEARING : 11 -09-201 7 DATE OF PRONOUNCEMENT : 15-09-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-XX, AHMEDABAD DATED 15.09.2014 PERTA INING TO A.Y. 2006-07. ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 2 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1. THE LEARNED CIT(APPEALS) ERRED BOTH IN LAW AND ON F ACTS IN CONFIRMING THE REOPENING THE ASSESSMENT U/S. 147 OF THE INCOME TAX ACT. IT IS SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS NOT APPRECIATED THE OBJECT IONS RAISED BY YOUR APPELLANT DURING ASSESSMENT PROCEEDINGS ON THE BASIS & REASON S RECORDED FOR REOPENING. IT IS SUBMITTED THAT THE PROVISIONS OF SEC. 147 R.W.S. 148 ARE NOT AT ALL APPLICABLE AND THEREFORE, THE REOPENING IS BAD IN LAW AND THE SAME BE HELD ACCORDINGLY. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING AN ADDITIONS MADE BY A.O. OF RS. 19,83,426/- BY TREATING THE DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT . IT IS SUBMITTED THAT, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT AT ALL APPLICABLE IN THE APPELLANT'S CASE, AS THE AMOUNT A DVANCED BY M/S. ABHISHEK ENGINEERS PVT. LTD TO M/S. ABHISHEK INVESTMENTS PVT LTD. IN ORDINARY COURSE -OF BUSINESS. IT IS SUBMITTED THAT, THE LEARNED ASSESSI NG OFFICER HAS EARED IN INVOKING THE PROVISIONS OF 2(22)(E) OF THE ACT & MAKING AN A DDITION ON ACCOUNT OF DEEMED DIVIDEND MERELY BECAUSE OF YOUR APPELLANT WAS SUBST ANTIAL SHAREHOLDER IN BOTH THE COMPANIES WHICH WAS ERRED BY CIT(APPEALS) IN CO NFIRMING THE ADDITION , IT IS SUBMITTED THAT, THE ADDITION SO MADE IS TOTALLY INC ORRECT, ILLEGAL & THE SAME BE DELETED. 3. REPRESENTATIVES OF BOTH SIDES WERE AT LENGTH. HAVIN G HEARD THE RIVAL SUBMISSIONS, WE HAVE CAREFULLY PERUSED THE ORDERS O F THE AUTHORITIES BELOW. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSING OFFICER HAVING FOUND THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME IS SUED A NOTICE U/S. 148 ON 14.03.2013. IN RESPONSE TO THE SAID NOTICE, THE A SSESSEE FILED RETURN OF INCOME ON 30.03.2013 SHOWING TOTAL INCOME AT RS. 3,06,441/ -. SUBSEQUENTLY, STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. C OPY OF REASONS RECORDED U/S. 147 OF THE ACT WAS ALSO PROVIDED TO THE ASSESS EE. THE A.O. OBSERVED THAT ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 3 THE ASSESSEE IS A DIRECTOR OF ABHISHEK INVESTMENT P VT. LTD. AND IS A BENEFICIAL OWNER OF EQUITY SHARE HOLDING/VOTING POWER OF 20% I N THE SAID COMPANY DURING THE YEAR UNDER CONSIDERATION. THE A.O. FURTH ER OBSERVED THAT THE ASSESSEE IS ALSO A BENEFICIAL OWNER OF EQUITY SHARE IN ABHISHEK ENGINEERS PVT. LTD. HOLDING 30% OF THE VOTING POWER. THE A.O. FOUN D THAT M/S. ABHISHEK INVESTMENT PVT. LTD HAS ADVANCED LOAN OF RS. 19,83, 426/- TO M/S. ABHISHEK ENGINEERS PVT. LTD. IN WHICH THE ASSESSEE IS HOLDIN G 30% OF THE VOTING POWER. INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, THE A.O. TREATED RS. 19,83,426/- AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE AND MADE THE ADDITION TO THE RETURNED INCOME OF THE ASSESSEE. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT THE RE- OPENING OF THE ASSESSMENT IS BAD IN LAW AS THE A.O. HAS TAKEN NO ACTION FOR THE RETURN OF INCOME FILED VOLUNTARILY. IT IS THE SAY O F THE LD. COUNSEL THAT THE OBSERVATION OF THE A.O. THAT ASSESSEE HAD NOT FILED SUO MOTU VOLUNTARY RETURN OF INCOME IS AGAINST THE FACTS OF THE CASE. THE LD. COUNSEL DREW OUR ATTENTION TO EXHIBIT 5 OF THE PAPER BOOK AND POINTED OUT THAT SE LF ASSESSMENT TAX WAS PAID ON 08.08.2012. THE LD. COUNSEL FURTHER DREW OUR AT TENTION TO EXHIBIT 3 WHICH IS A LETTER DATED 14.08.2012 AND POINTED OUT THAT THE ASSESSEE HAD MADE IT CLEAR TO THE A.O. THAT THE ORIGINAL RETURN OF INCOME HAS ALR EADY BEEN FILED IN TIME. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE ORDER OF THE LD. CIT(A)-VI, AHMEDABAD DATED 22.02.2011 IN THE CASE OF ABHISHE K INVESTMENT PVT. LTD. AND POINTED OUT THAT THE FIRST APPELLATE AUTHORITY HAS EXCEEDED HIS JURISDICTION BY DIRECTING THE A.O. TO MAKE ADDITION ON ACCOUNT O F DEEMED DIVIDEND IN THE HANDS OF SHRI PUNIT J. SHAH ( APPELLANT IN THE CASE IN HAND). THE LD. COUNSEL ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 4 CONCLUDED BY SAYING THAT THE REOPENING OF THE ASSES SMENT ON SUCH FINDINGS OF THE LD. CIT(A) GIVEN IN SOME OTHER CASE HAS BEEN CO NSIDERED TO BE IN APPROPRIATE AND UNLAWFUL BY THE TRIBUNAL IN THE CAS E OF CIMS HOSPITAL PVT. LTD. AND DR. KEYUR HARSADRAI PARIKH IN IT(SS)A NOS. 233/AHD/2012 AND ITA NO. 1912/AHD/2015. THE LD. COUNSEL CONCLUDED BY SAY ING THAT THE RE- ASSESSMENT IS BAD IN LAW AND THE ORDER DESERVES TO BE QUASHED. IN ALTERNATIVE, THE LD. COUNSEL STATED THAT THE AMOUNT ADVANCED BY M/S. ABHISHEK ENGINEERS PVT. LTD. TO ABHISHEK INVESTMENT PVT. LTD. IS IN OR DINARY COURSE OF BUSINESS AND THEREFORE CANNOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. FURTHER, IN HIS WRITTEN SUBMISSIONS, THE APPELLANT HAS QUESTIONED THE ADDITION ON THE GROUND THAT THE ASSESSEE IS NOT A B ENEFICIAL SHAREHOLDER OF ABHISHEK INVESTMENT PVT. LTD. AND THEREFORE NO ADDI TION CAN BE MADE IN THE HANDS OF THE ASSESSEE. 7. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE LD. CIT(A) AND RELIED UPON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF GOPAL AND SONS (HUF) 391 ITR 1. 8. THE ASSESSMENT YEAR BEFORE US IS A.Y. 2006-07. THE DUE DATE FOR FILING OF THE RETURN OF INCOME IS 31.07.2006. THE SELF ASSESSMENT TAX PAID BY THE ASSESSEE IS ON 08.08.2012 AND THE LETTER FILED BY THE ASSESSEE IS DATED 14.08.2012. ASSUMING THAT THE ASSESSEE DID FILE RETURN OF INCOME (THOUGH THERE IS NO EVIDENCE OF FILING OF THE RETURN OF INCOME) BUT THEN ANY RETURN FILED FOR A.Y. 2006-07 IN AUGUST 2012 WOULD BE A NON-EST. 9. COMING TO THE FINDINGS OF THE LD. CIT(A)-VI, AHMEDA BAD IN THE CASE OF ABHISHEK INVESTMENT PVT. LTD. WHICH READS AS UNDER: - ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 5 ACCORDINGLY, ASSESSING OFFICER IS DIRECTED TO REMO VE THE ADDITION IN RESPECT OF DEEMED DIVIDEND IN THE HANDS OF THE APPELLANT AND M AKE THE SAID ADDITION IN HANDS OF SHAREHOLDER SHRI PUNIT J. SHAH OR ANY OTHE R MAJOR SHAREHOLDER IN ABHISEK ENGINEERING PVT. LTD. IN VIEW OF THE DECISIONS OF I TAT SPECIAL BENCH AND RAJASTHAN HIGH COURT. 10. SUCH FINDINGS OF THE APPELLATE AUTHORITY HAS TO BE READ IN CONJUNCTION WITH THE PROVISIONS OF SECTION 153(3) OF THE ACT AS IT STOOD AT THAT POINT OF TIME AND THE SAME READS AS UNDER:- (3) THE PROVISIONS OF SUB-SECTIONS (1), (1A), (IB) AND (2) SHALL NOT APPLY TO THE FOLLOWING CLASSES OF ASSESSMENTS, REASSESSMENTS AND RECOMPUTATIONS WHICH MAY, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2A), BE C OMPLETED AT ANY TIME (I) [***] (II) WHERE THE ASSESSMENT, REASSESSMENT OR RECOMPUT ATION IS MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER UNDER SECTION 250, 254, 260, 262, 263, OR 264 OR IN AN ORDER OF ANY COURT IN A PROCEEDING OTHERWISE THAN BY WAY OF APPEAL OR REFERENCE UNDER THIS ACT; (III) WHERE, IN THE CASE OF A FIRM, AN ASSESSMENT I S MADE ON A PARTNER OF THE FIRM IN CONSEQUENCE OF AN ASSESSMENT MADE ON THE FIRM UN DER SECTION 147. 11. IN THE LIGHT OF THE ABOVE, THE FINDINGS OF THE LD. CIT(A) HAS TO BE CONSTRUED AS A HEDGE FOR THE ASSESSING OFFICER TO KEEP HIM AWAY FR OM THE CLUTCHES OF THE PERIOD OF LIMITATION. THOUGH THE DECISION RELIED UP ON BY THE LD. COUNSEL IN THE CASE OF CIMS HOSPITAL PVT. LTD. AND DR. KEYUR HARSA DRAI PARIKH (SUPRA) MAY BE ON THE POWERS OF THE FIRST APPELLATE AUTHORITY B UT THEN A PERUSAL OF THE ORDER OF THE CO-ORDINATE BENCH SHOWS THAT THE BENCH HAS NOT CONSIDERED THE ISSUE QUA THE PROVISIONS OF SECTION 153(3) MENTIONE D HEREINABOVE. MOREOVER, ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 6 SUCH OBJECTION CAN ONLY BE TAKEN IN THE CASE OF ABH ISHEK INVESTMENT (PVT.) LTD. 12. HAVING SAID ALL THAT, THE FINDINGS OF THE FIRST APP ELLATE AUTHORITY IN THE CASE OF ABHISHEK INVESTMENT PVT. LTD. ARE DEFINITELY INFORM ATION IN THE HANDS OF THE ASSESSING OFFICER TO TRIGGER THE PROVISIONS OF SECT ION 147 OF THE ACT. AS MENTIONED ELSEWHERE, SINCE THE ASSESSEE DID NOT FIL E ANY VOLUNTARY RETURN AND ASSUMING THAT SOME RETURN WAS FILED THEN ALSO THE S AME WAS NON-EST. 13. BASED UPON THE INFORMATION GATHERED FROM THE APPELL ATE ORDER IN THE CASE OF ABHISHEK INVESTMENT PVT. LTD., THE REOPENING OF THE ASSESSMENT IS LAWFUL AND IS IN ACCORDANCE WITH THE PROVISIONS OF THE LAW. THERE FORE, THERE IS NO ERROR OR INFIRMITY IN THE ORDER PASSED U/S. 143(3) R.W.S. 14 7 OF THE ACT. THE REOPENING OF THE ASSESSMENT IS UPHELD. 14. IT HAS ALSO BEEN CONTENDED THAT THE ASSESSEE IS NOT A BENEFICIAL SHAREHOLDER OF ABHISHEK INVESTMENT PVT. LTD. BUT ABHISHEK ENGINEER S PVT. LTD. IS THE SHAREHOLDER IN ABHISHEK INVESTMENT PVT. LTD. AND TH E ASSESSEE IS ONLY A BENEFICIAL SHAREHOLDER IN ABHISHEK ENGINEERS PVT. L TD. THEREFORE, THE LOAN CANNOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS O F THE ASSESSEE. LET US CONSIDER THE RELEVANT PROVISIONS OF SECTION 2(22)(E ) OF THE ACT AND THE SAME READ AS UNDER:- SECTION 2 (22) 'DIVIDEND' INCLUDES ' (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER AS RE PRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) [MADE AFTER THE 31ST D AY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WH O IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE O F DIVIDEND WHETHER WITH OR ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 7 WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A ME MBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULA TED PROFITS; EXPLANATION 3.FOR THE PURPOSES OF THIS CLAUSE, (A) 'CONCERN' MEANS A HINDU UNDIVIDED FAMILY, OR A FIRM O R AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS OR A COMPANY; (B) A PERSON SHALL BE DEEMED TO HAVE A SUBSTANTIAL INTE REST IN A CONCERN, OTHER THAN A COMPANY, IF HE IS, AT ANY TIME DURING THE PREVIOUS YEAR, BENEFICIALLY ENTITLED TO NOT LESS THAN TWENTY PER CENT OF THE IN COME OF SUCH CONCERN;] ' 15. THE CONTENTION OF THE ASSESSEE HAS TO BE CONSIDERED IN THE LIGHT OF EXPLANATION 3 WHEREIN IT HAS BEEN SPECIFICALLY PROVIDED THAT A CONCERN MEANS A COMPANY. THIS PART HAS TO BE READ IN CONJUNCTION WITH THE PROVISIONS OF SECTION 2(22)(E) NAMELY ANY PAYMENT BY A COMPANY BY WAY OF ADVANCE OR LOAN---- TO ANY CONCERN IN WHICH SUCH SHAREHOLDER I S A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST. THERE IS N O DISPUTE THAT THE ASSESSEE HAS A SUBSTANTIAL INTEREST IN ABHISHEK ENGINEERS PVT. L TD. (A CONCERN) WHICH RECEIVED LOAN FROM ABHISHEK INVESTMENT PVT. LTD. (A COMPANY). THEREFORE, IN THE LIGHT OF EXPLANATION 3 TO SECTION 2(22)(E) OF T HE ACT, THE IMPUGNED LOAN HAS BEEN RIGHTLY TAXED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF GOPAL AND SONS (HUF) 391 ITR 1. THE RELEVANT FINDINGS OF THE HONBLE SUPREME COURT READS AS UNDER:- ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 8 12. SECTION 2(22)(E) OF THE ACT CREATES A FICTION, THEREBY BRINGING ANY AMOUNT PAID OTHERWISE THAN AS A DIVIDEND INTO THE NET OF DIVIDE ND UNDER CERTAIN CIRCUMSTANCES. IT GIVES AN ARTIFICIAL DEFINITION OF 'DIVIDEND'. IT DOES NOT TAKE INTO ACCOUNT THAT DIVIDEND WHICH IS ACTUALLY DECLARED OR RECEIVED. THE DIVIDEND TAKEN NOTE OF BY THIS PROVISION IS A DEEMED DIVIDEND AND NOT A REAL DIVIDEND. LOAN OR PAYMENT MADE BY THE COMPANY TO ITS SHAREHOLDER IS A CTUALLY NOT A DIVIDEND. IN FACT, SUCH A LOAN TO A SHAREHOLDER HAS TO BE RETURN ED BY THE SHAREHOLDER TO THE COMPANY. IT DOES NOT BECOME INCOME OF THE SHAREHOLD ER. NOTWITHSTANDING THE SAME, FOR CERTAIN PURPOSES, THE LEGISLATURE HAS DEE MED SUCH A LOAN OR PAYMENT AS 'DIVIDEND' AND MADE IT TAXABLE AT THE HANDS OF T HE SAID SHAREHOLDER. IT IS, THEREFORE, NOT IN DISPUTE THAT SUCH A PROVISION WHI CH IS A DEEMED PROVISION AND FICTIONALLY CREATES CERTAIN KINDS OF RECEIPTS AS DI VIDENDS, IS TO BE GIVEN STRICT INTERPRETATION. IT FOLLOWS THAT UNLESS ALL THE COND ITIONS CONTAINED IN THE SAID PROVISION ARE FULFILLED, THE RECEIPT CANNOT BE DEEM ED AS DIVIDENDS. FURTHER, IN CASE OF DOUBT OR WHERE TWO VIEWS ARE POSSIBLE, BENEFIT S HALL ACCRUE IN FAVOUR OF THE ASSESSEE. 13. A READING OF CLAUSE (E) OF SECTION 2(22) OF THE ACT MAKES IT CLEAR THAT THREE TYPES OF PAYMENTS CAN BE BROUGHT TO TAX AS DIVIDEND S IN THE HANDS OF THE SHARE HOLDERS. THESE ARE AS FOLLOWS: (A) ANY PAYMENT OF ANY SUM (WHETHER AS REPRESENTI NG A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER. (B) ANY PAYMENT ON BEHALF OF A SHAREHOLDER, AND (C) ANY PAYMENT FOR THE INDIVIDUAL BENEFIT OF A S HAREHOLDER. [SEE: ALAGUSUNDARAN V. CIT [2001] 252 ITR 893/T2002 ] 121 TAX/NAN 587 (SC) 14. CERTAIN CONDITIONS NEED TO BE FULFILLED IN ORDE R TO ATTRACT TAX UNDER THIS CLAUSE. IT IS NOT NECESSARY TO STIPULATE OTHER CONDITIONS. FOR OUR PURPOSES, FOLLOWING CONDITIONS NEED TO BE FULFILLED: (A) PAYMENT IS TO BE MADE BY WAY OF ADVANCE OR LO AN TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 9 (B) IN THE SAID CONCERN, SUCH SHAREHOLDER HAS A S UBSTANTIAL INTEREST. (C) SUCH ADVANCE OR LOAN SHOULD HAVE BEEN MADE AF TER THE 31ST DAY OF MAY, 1987. 15. EXPLANATION 3(A) DEFINES 'CONCERN' TO MEAN HUF OR A FIRM OR AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS OR A COMPANY. AS P ER EXPLANATION 3(B), A PERSON SHALL BE DEEMED TO HAVE A SUBSTANTIAL INTEREST IN A HUF IF HE IS, AT ANY TIME DURING THE PREVIOUS YEAR, BENEFICIALLY ENTITLED TO NOT LESS THAN 20% OF THE INCOME OF SUCH HUF. 16. IN THE INSTANT CASE, THE PAYMENT IN QUESTION IS MADE TO THE ASSESSEE WHICH IS A HUF. SHARES ARE HELD BY SHRI. GOPAL KUMAR SANEI, WHO IS KARTA OF THIS HUF. THE SAID KARTA IS, UNDOUBTEDLY, THE MEMBER OF HUF. HE A LSO HAS SUBSTANTIAL INTEREST IN THE ASSESSEE/HUF, BEING ITS KARTA. IT WAS NOT DI SPUTED THAT HE WAS ENTITLED TO NOT LESS THAN 20% OF THE INCOME OF HUF. IN VIEW OF THE AFORESAID POSITION, PROVISIONS OF SECTION 2(22)(E) OF THE ACT GET ATTRA CTED AND IT IS NOT EVEN NECESSARY TO DETERMINE AS TO WHETHER HUF CAN, IN LAW, BE BENE FICIAL SHAREHOLDER OR REGISTERED SHAREHOLDER IN A COMPANY. 17. IT IS ALSO FOUND AS A FACT, FROM THE AUDITED AN NUAL RETURN OF THE COMPANY FILED WITH ROC THAT THE MONEY TOWARDS SHARE HOLDING IN TH E COMPANY WAS GIVEN BY THE ASSESSEE/HUF. THOUGH, THE SHARE CERTIFICATES WE RE ISSUED IN THE NAME OF THE KARTA, SHRI GOPAL KUMAR SANEI, BUT IN THE ANNUAL RE TURNS, IT IS THE HUF WHICH WAS SHOWN AS REGISTERED AND BENEFICIAL SHAREHOLDER. IN ANY CASE, IT CANNOT BE DOUBTED THAT IT IS THE BENEFICIAL SHAREHOLDER. EVEN IF WE P RESUME THAT IT IS NOT A REGISTERED SHAREHOLDER, AS PER THE PROVISIONS OF SECTION 2(22) (E) OF THE ACT, ONCE THE PAYMENT IS RECEIVED BY THE HUF AND SHAREHOLDER (MR. SANEI, KARTA, IN THIS CASE) IS A MEMBER OF THE SAID HUF AND HE HAS SUBSTANTIAL INT EREST IN THE HUF, THE PAYMENT MADE TO THE HUF SHALL CONSTITUTE DEEMED DIV IDEND WITHIN THE MEANING OF CLAUSE (E) OF SECTION 2(22) OF THE ACT. THIS IS THE EFFECT OF EXPLANATION 3 TO THE SAID SECTION, AS NOTICED ABOVE. THEREFORE, IT IS NO GAINSAYING THAT SINCE HUF ITSELF IS NOT THE REGISTERED SHAREHOLDER, THE PROVISIONS O F DEEMED DIVIDEND ARE NOT ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 10 ATTRACTED. FOR THIS REASON, JUDGMENT IN C.P. SARATH Y MUDALIAR (SUPRA) RELIED UPON BY THE LEARNED COUNSEL FOR THE APPELLANT, WILL HAVE NO APPLICATION. THAT WAS A JUDGMENT RENDERED IN THE CONTEXT OF SECTION 2(6-A)( E) OF THE INCOME TAX ACT, 1922 WHEREIN THERE WAS NO PROVISION LIKE EXPLANATIO N 3. 18. WE, THUS, DO NOT FIND ANY MERIT IN THIS APPEAL, WHICH IS ACCORDINGLY DISMISSED. 16. THE OTHER CONTENTION OF THE ASSESSEE IS THAT THE SA ID TRANSACTION IS A BUSINESS TRANSACTION AND ABHISHEK ENGINEERS PVT. LTD IS HAVI NG A CURRENT ACCOUNT WITH ABHISHEK INVESTMENT PVT. LTD. THE TRANSACTIONS CAN BE UNDERSTOOD FROM THE FOLLOWING EXTRACT OF THE LEDGER ACCOUNT:- COMPANY ABHISHEK ENGINEERS PRIVATE LIMITED LEDGER FOR ABHISHEK INVESTMEN TS PRIVATE LIMITED FINANCIAL YEAR 2005 - 2006 DATE VOUCHER NO. DEBIT CREDIT BALANCE OPENING BALANCE 7,58,302.00 11 - 04 - 2005 JV - D - 11 - A 10,000.00 7,68,302.00 17 - 04 - 2005 JV - D - 17 - A 25,000.00 7,43,302.00 09 - 05 - 2005 JV - E - 9 - A 15,0 00.00 7,58,302.00 19 - 05 - 2005 JV - E - 18 - A 14,000.00 7,72,302.00 10 - 06 - 2005 JV - F - 10 - A 10,000.00 7,82,302.00 13 - 06 - 2005 JV - F - 13 - A 1,90,000.00 9,72,302.00 18 - 06 - 2005 JV - F - 18 - A 22,600.00 9,49,702.00 21 - 07 - 2005 JV - G - 21 - A 3,65,000 .00 13,14,702.00 12 - 08 - 2005 JV - H - 12 - A 64,800.00 12,49,902.00 10 - 09 - 2005 JV - I - 10 - A 20,000.00 12,69,902.00 ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 11 18 - 09 - 2005 JV - I - 17 - A 1,47,000.00 14,16,902.00 10 - 10 - 2005 JV - J - 10 - A 20,000.00 14,36,902.00 18 - 10 - 2005 JV - J - 18 - A 75, 000.00 13,61,902.00 10 - 11 - 2005 JV - L - 10 - A 20,000.00 13,81,902.00 22 - 11 - 2005 JV - L - 22 - A 85,000.00 14,66,902.00 09 - 12 - 2005 JV - L - 9 - A 3,70,000.00 18,36,902.00 16 - 12 - 2005 JV - L - 16 - A 7,200.00 18,29,702.00 10 - 01 - 2006 JV - A - 10 - A 15,000 .00 18,44,702.00 27 - 01 - 2006 JV - A - 27 - A 6,30,000.00 24,74,702.00 28 - 01 - 2006 JV - A - 28 - A 5,700.00 24,69,002.00 01 - 02 - 2006 JV - B - L - A 5,000.00 24,74,002.00 04 - 02 - 2006 JV - B - 4 - A 39,300.00 25,13,302.00 10 - 02 - 2006 JV - B - 10 - A 25,000.00 25,38,302.00 09 - 03 - 2006 JV - C - 9 - A 25,000.00 25,63,302.00 31 - 03 - 2006 JV - C - 31 - A 727.00 25,62,575.00 31 - 03 - 2006 JV - C - 9 - D 1,78,425.00 27,41,000.00 31 - 03 - 2006 JV - C - 9 - E 1,000.00 27,40,000.00 CLOSING BALANCE 27,40,000.00 17. A PERUSAL OF THE ABOVE CLEARLY SHOWS THAT THERE I S NO MOVEMENT OF FUNDS BOTH WAYS. IT CAN BE SEEN THAT THIS IS NOT A MUTUAL OPEN AND CURRENT ACCOMMODATION ADJUSTMENT ACCOUNT DEVOID OF MOVEMENT OF FUNDS BOTH WAYS. THE ABOVE EXTRACT CANNOT BE CONSIDERED AS IN THE NATURE OF CU RRENT ACCOUNT. THEREFORE, THIS CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED AND FOR THE FACTS MENTIONED HEREINABOVE, THE FACTS OF THE CASE IN HAND ARE CLEA RLY DISTINGUISHABLE FROM THE FACTS OF MEHULBHAI D. ZHAVERI IN ITA NO. 102/AHD/20 12 (RELIED UPON BY THE ITA NO . 300 1/AHD/2014 . A.Y. 2006-07 12 LD. COUNSEL). IN THE LIGHT OF THE ABOVE DISCUSSION, THE ALTERNATIVE CLAIM OF THE ASSESSEE IS ALSO DISMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 15- 09- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 15/09/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD