ASST CIT 16(1), MUMBAI V. GHANSHAM SHEWAKRAMANI, MUMBAI

ITA 3262/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2135 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B V JHAVERI
• Keywords: Salary income; Deemed dividend
• Section: 143(3); 54; 154

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 3262 /MUM/2014 ( / ASSESSMENT YEAR : 2008-09) A.C.I.T. 16(1), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI 400 00 7 . / V. SHRI GHANSHAM SHEWAKRAMANI, 11-A, SETT-MINAR, PEDDAR ROAD, MUMBAI 400 0 06 . ./ PAN :AALPS0237Q ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI RAJESH OJHA ASSESSEE BY : SHRI B.V. JHAVERI / DATE OF HEARING : 02-11-2015 / DATE OF PRONOUNCEMENT : 30-11-2015 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 32 62/MUM/2014, IS DIRECTED AGAINST THE ORDER DATED 14-02-2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) - 27, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2008-09 WHEREBY T HE CIT(A) DELETED THE PENALTY LEVIED BY THE A.O. U/S 271(1)(C) OF THE INC OME TAX ACT, 1961. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL IN THE MEMO OF APPEAL FILED WHICH ARE AS UNDER: 2 1. WHETHER ON THE FACTS, CIRCUMSTANCES AND LAW, C IT(A) WAS JUSTIFIED IN HOLDING THAT NO PENALTY IS LEVIABLE IN THIS CASE SI NCE VERY BASIS OF LEVY OF PENALTY DOES NOT SURVIVE AS QUANTUM HAS BEEN DEL ETED , WHEREAS THE QUANTUM OF ADDITION HAS NOT ACTUALLY BEEN DELETED I N TOTAL AT THE TIME WHEN QUANTUM APPEAL WAS ADJUDICATED? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LA W, THE LD. CIT(A) ERRED IN RELYING ON THE DECISION IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) TAXMAN 322(SC) AS TH E FACTS IN THIS CASE IS DIFFERENT FROM THE CASE OF THE ASSESSEE? 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FROM SALARY, HOUSE PROPERTY AND INC OME FROM OTHER SOURCES . THE CASE WAS SELECTED FOR SCRUTINY U/S 143(3) READ WITH SECTION 143(2) OF THE INCOME TAX ACT,1961(HEREINAFTER CALLED THE ACT) AND IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER(HEREINAFTER CALLED THE A O) DURING SCRUTINY PROCEEDINGS THAT THE ASSESSEE HAS TAKEN LOAN AND AD VANCES FROM VARIOUS COMPANIES IN WHICH HIS SHARE HOLDING PERCENTAGE WAS MORE THAN 10%. THE ASSESSEE SUBMITTED THAT THE HOLDING IN NINE COMPANI ES IN WHICH THE ASSESSEE IS SHAREHOLDER IS LESS THAN 10% BUT ON VERIFICATION BY THE AO, IT WAS FOUND THAT THE ASSESSEE IS RELYING ON THE REVISED ANNUAL RETURNS FILED WITH ROC IN DECEMBER 2009 WHILE ORIGINAL ANNUAL RETURNS FILED W ITH ROC WAS NOT FURNISHED BY THE ASSESSEE . ON VERIFICATION FROM TH E AO OF THESE NINE COMPANIES , IT WAS REVEALED THAT THE SHAREHOLDING O F THE ASSESSEE IN THESE 3 NINE COMPANIES WERE MORE THAN 10% FOR THE ASSESSMEN T YEAR 2008-09. THE AO ADDED AN AMOUNT OF RS. 62,16,874/- AS DEEMED DI VIDEND U/S 2(22)(E) OF THE INCOME TAX ACT, 1961 TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE QUANTUM PROCEED INGS, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE CLAIM OF THE ASSES SEE HOLDING LESS THAN 10% SHAREHOLDING IN THE SAID COMPANIES WAS REJECTED BY THE CIT(A) VIDE ORDER DATED 11-08-2011 AND SUBSEQUENTLY PENALTY U/S 271( 1)(C) OF THE ACT AMOUNTING TO RS. 20,92,599/- WAS IMPOSED ON THE ASS ESSEE BY THE AO VIDE ORDERS DATED 28-03-2013 AS THE ASSESSEEE ACCEPTED B EFORE THE AO DURING PENALTY PROCEEDINGS THAT HE WAS HOLDING MORE THAN 1 0% BENEFICIAL SHARES IN THE COMPANIES FROM WHICH LOAN AND ADVANCES WERE TAK EN FOR BUSINESS PURPOSES ALTHOUGH THE ASSESSEE DENIED APPLICABILITY OF SECTION 2(22)(E) OF THE ACT DURING QUANTUM ASSESSMENT PROCEEDINGS BEFORE TH E AO. 4.THE MATTER WAS CARRIED BEFORE THE CIT(A) IN THE FIRST APPEAL AGAINST THE PENALTY ORDERS DATED 28-03-2013 U/S 271(1)(C) OF T HE ACT AND THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THERE IS NO AMOUNT CHARGEABLE AS DEEMED DIVIDEND FOR ASSESSMENT YEAR 2008-09 SINCE THE ASSE SSEE WAS ALREADY TAXED ON THIS ENTIRE AMOUNT IN THE ASSESSMENT YEAR 2005-0 6 AND ASSESSMENT YEAR 2007-08 AND ANY FURTHER TAXATION WILL AMOUNT TO DOU BLE TAXING THE SAME INCOME. THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS GRANTED RELIEF IN THE QUANTUM APPEAL ON THE GROUND OF DOUBLE TAXATION TO THE EXTENT OF DEEMED DIVIDENDS ARE TAXED IN THE ASSESSMENT YEAR 2005-06 AND 2007-08 FOR WHICH THE AO HAS TO GRANT RELIEF TO THE ASSESSEE TO THAT EXTENT WHICH HAS NOT YET BEEN GRANTED BY THE AO AND INSTEAD PENALTY OF RS.20 ,92,599/- WAS LEVIED BY THE AO DESPITE THE ASSESSEE MAKING SUBMISSIONS BEFO RE THE AO. THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE FOLLOWING CHAR T WILL SHOW THE DEEMED DIVIDEND TAXABLE IN ASSESSMENT YEAR 2008-09 WILL B E NIL:- PARTICULARS AMOUNT (IN RS) 4 MAXIMUM AMOUNT OF DEEMED DIVIDEND TO BE TAXABLE IN A.Y. 2008 - 09 62,16,874 LESS: DEEMED DIVIDEND TAXED IN EARLIER ASST. YEARS -DEEMED DIVIDEND ALREADY TAXED IN A.Y. 2005-06 (48,18,241) -DEEMED DIVIDEND ALREADY TAXED IN A.Y. 2007-08 (23,36,720) -DEEMED DIVIDEND TO BE TAXED IN A.Y. 2008-09 AS PER THE ORDER OF CIT(A) NIL FROM THE ABOVE TABLE, THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT IT IS CLEAR THAT THE DEEMED DIVIDEND HAS ALREADY BEEN BROUGHT T O TAX IN THE EARLIER ASSESSMENT YEARS AND ACCORDINGLY THERE IS NO DEEMED DIVIDEND ACCRUING TO THE ASSESSEE IN THIS ASSESSMENT YEAR 2008-09 AND HE NCE PENALTY IS NOT LEVIABLE ON THE ASSESSEE . THE ASSESSEE ALSO SUBMIT TED THAT HE IS LAW ABIDING CITIZEN AND IS IN THE BUSINESS OF RENTING OF PROPER TIES AND ALSO RUNNING OF HOTELS THROUGH COMPANIES AND THE TAX RELATED MATTER S WERE HANDLED BY THE PROFESSIONAL ADVICE FROM CHARTERED ACCOUNTANTS AND THE ASSESEE IS NOT AWARE OF THE INCOME TAX MATTERS. THE ACCOUNTS OF ALL THE ASSESSEE COMPANY ARE AUDITED BY QUALIFIED CHARTERED ACCOUNTANT ON REGULA R BASIS. THE ASSESSEE BORROWED MONEY FROM THE ASSOCIATED COMPANIES WHICH HAS ALREADY BEEN BROUGHT TO TAX U/S 2 (22)(E) OF THE ACT IN THE ASSE SSMENT YEAR 2005-06 AND 2007-08 AND THE ASSESSEE WAS NOT ADVISED ABOUT THE IMPLICATIONS OF SECTION2(22) (E) OF THE ACT . THE CIT(A) OBSERVED THAT HIS PREDECESSOR VIDE HIS ORDER DATED 11-08-2011 HAS DELETED THE ADDITION MAD E IN THE QUANTUM PROCEEDINGS FOR THE ASSESSMENT YEAR 2008-09 AND HEL D THAT THE SAME HAVE BEEN MADE TAXABLE IN THE EARLIER YEARS WHICH HAVE B EEN SUSTAINED IN THOSE YEARS I.E. ASSESSMENT YEAR 2005-06 AND 2007-08 . TH E CIT(A) ALSO OBSERVED THAT THE ASSESSEE HAS PAID TAXES AND HAS PREFERRED NO APPEAL AGAINST THE DECISION OF THE CIT(A) FOR ASSESSMENT YEARS 2005-0 6 AND 2007-08 AND HENCE THERE IS NO GROUND FOR LEVYING PENALTY IN THIS YEAR . THUS, THE CIT(A) VIDE 5 ORDERS DATED 14-02-2014 CANCELLED THE PENALTY OF RS .20,92,599/- LEVIED AGAINST THE ASSESSEE. 5. AGGRIEVED BY THE DECISION OF THE CIT(A) VIDE ORD ERS DATED 14-02-2014, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUN AL. 6. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O AN D SUBMITTED THAT THE CIT(A) ERRED IN CANCELLING THE PENALTY OF RS.20,92,599/- L EVIED AGAINST THE ASSESSEE. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE AMOUNTS HAVE ALREADY BEEN TAXED IN THE EARLIER YEAR S I.E. ASSESSMENT YEAR 2005-06 AND ASSESSMENT YEAR 2007-08, THE ADDITION M ADE U/S 2(22)(E) OF THE ACT WAS NOT WARRANTED AND APPEAL OF THE ASSESSEE WA S RIGHTLY ALLOWED BY THE CIT(A) IN QUANTUM PROCEEDINGS AND HENCE PENALTY CAN NOT BE SUSTAINED. THE LD. COUNSEL FOR THE ASSESEE ALSO SUBMITTED THAT THE MUMBAI TRIBUNAL IN THE CASE OF SHRI GHANSHAM J SHEWAKRAMANI V. ACIT IN ITA NO. 7507/MUM/2013 FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 30 -10-2015 HELD AND OBSERVED AS UNDER:- AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF I MPUGNED ORDER AND MATERIAL ON RECORD, WE FIND THAT AT THE ASSESSM ENT STAGE, THE ADDITION ON ACCOUNT OF DEEMED DIVIDED WAS MADE AT R S. 491,27,257/-. SUCH AN ADDITION WAS REDUCED TO RS. 7 1,54,961/- BY THE CIT(A) VIDE ORDER DATED 08.11.2010. SUBSEQUE NTLY, THE ASSESSEE FILED A RECTIFICATION APPLICATION U/S 154 POINTING OUT CERTAIN MISTAKES, IN RESPONSE TO WHICH, THE LD. CIT (A) VIDE ORDER DATED 4TH AUGUST, 2004 PASSED U/S 154, RESTRICTED T HE ADDITION ON ACCOUNT OF DEEMED DIVIDEND AT RS. 23,36,720/- SINCE BALANCE DIVIDEND INCOME HAS ALREADY BEEN TAXED IN THE HANDS OF THE ASSESSEE IN THE AY 2005-06. THE ASSESSEE'S EXPLANAT ION HAD BEEN THAT, IT HAS DISCLOSED ALL THE FACTS OF THE LOANS T AKEN FROM VARIOUS COMPANIES, HOWEVER MATERIAL FACT RELATING TO PERCEN TAGE OF HOLDING IN CERTAIN COMPANIES, WHICH HAS CHANGED FREQUENTLY FROM TIME TO 6 TIME COULD NOT BE PROPERLY REPORTED. SINCE ASSESSEE HAD DISCLOSED ALL THE LOANS AND ADVANCES, THEN EVEN IF THE ADDITI ON HAS BEEN CONFIRMED BY INVOKING THE DEEMING PROVISION, THAT T OO WHICH HAS VERIFIED FROM ASSESSMENT STAGE TO APPELLATE STAGE, WE ARE OF THE OPINION THAT IT DOES NOT AMOUNT TO FURNISHING OF IN ACCURATE PARTICULARS SO AS TO ATTRACT PENALTY U/S 271(1)(C). FURTHER, WHEN THE ADDITION ITSELF HAS BEEN MADE UNDER THE DEEMING PRO VISIONS AND THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH ALL THE PARTICULARS OF INCOME, THEN IN OUR OPINION, PENALTY CANNOT BE LEVIED U/S 271(1)(C). ACCORDINGLY, PENALTY ON ACCOUNT OF DEEMED DIVIDEND STANDS DELETED. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE RECORD AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE PEN ALTY SO LEVIED FOR ASSESSMENT YEAR 2007-08 ON THE QUANTUM ADDITIONS SU STAINED ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT HAS ALREADY BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 30-10-2015 IN ITA NO. 7507/MUM/2013 (SUPRA) FOR ASSESSMENT YEAR 2007-08 WHEREBY THE TRIBUNAL HA S HELD THAT SINCE THE ASSESSEE HAS DISCLOSED ALL THE FACTS OF THE LOANS T AKEN FROM VARIOUS COMPANIES, THEN EVEN IF THE ADDITION HAS BEEN CONFI RMED BY INVOKING THE DEEMING PROVISION, THAT TOO WHICH HAS VERIFIED FROM ASSESSMENT STAGE TO APPELLATE STAGE, IT DOES NOT AMOUNT TO FURNISHING O F INACCURATE PARTICULARS SO AS TO ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. WE HAVE OBSERVED THAT THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS AS IN THE APPEAL BEFORE THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 IN ITA NO. 750 7/MUM/2013 DECIDED ON 30-10-2015. WE HAVE ALSO NOTED THAT THE REVENUE HAS PASSED ORDERS DATED 20.12.2013 AND 23.04.2014 U/S 154 OF THE ACT GIVING APPEAL EFFECT WHEREBY THE ENTIRE DEEMED DIVIDEND AS ADDED TO THE INCOME O F THE ASSESSEE IN QUANTUM PROCEEDINGS FOR THE ASSESSMENT YEAR 2008-09 HAS STILL NOT BEEN COMPLETELY DELETED BY THE REVENUE AND THE ADDITION OF RS.54,85,383/- IS STILL SUSTAINED VIDE ORDERS DATED 23.04.2014 PASSED U/S 1 54 OF THE ACT. HOWEVER, RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN 7 THE CASE OF THE ASSESSEES OWN CASE IN THE PRECEDIN G ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2007-08 , WE CONFIRM DELETION OF TH E PENALTY OF RS.20,92,599/- LEVIED U/S 271(1)(C) OF THE ACT BY T HE A.O. VIDE ORDERS DATED 28.03.2013 . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. # $% &' 30-11-2015 ( ) SD/- SD/-- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 30-11-2015 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI