Emcee Fabritech Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 3376/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4520 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 08-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 16-12-2016
• Court: TRIBUNAL
• Department Lawyers: M MATHIVANAN JT
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C/SMC, CHENNAI , ! BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER ./ITA NO.3376/MDS/2016 ' # $%# / ASSESSMENT YEAR : 2005-06 EMCEE FABRITECH PVT. LTD. NO.1347, GOLDEN COLONY, ANNA NAGAR WEST EXTENSION, CHENNAI. [PAN:AAACE 2021N] VS. ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-2(1), CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) &' ( ) / APPELLANT BY : NONE *+&' ( ) / RESPONDENT BY : SHRI M.MATHIVANAN, JT. CIT , $ ( - / DATE OF HEARING : 08.05.2017 .% ( - / DATE OF PRONOUNCEMENT : 17.05.2017 /O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI (C IT(A) FOR SHORT) DATED 24.06.2016, DISMISSING THE ASSESSEES APPEAL CONTES TING ITS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREI NAFTER) DATED 29.11.2007 FOR THE ASSESSMENT YEAR (AY) 2005-06. 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE COMPANY WHEN ITS APPEAL WAS CALLED OUT FOR HEARING NOR ANY ADJOURNMENT APPL ICATION STANDS MADE. THIS, DESPITE THE SERVICE OF NOTICE OF HEARING, PROOF OF WHICH IS ON RECORD. ON AN 2 ITA NO.3376 /MDS/2016 (AY 20 05-06) EMCEE FABRITECH PVT. LTD. V. ACIT EARLIER OCCASION TOO, I.E., 06.3.2017, THERE WAS NO REPRESENTATION NOR ANY ADJOURNMENT MOTION DESPITE SERVICE OF NOTICE OF HEA RING. A BROWSE OF THE IMPUGNED ORDER SHOWS THAT EVEN BEFORE THE FIRST APP ELLATE AUTHORITY THERE WAS NO REPRESENTATION BY THE ASSESSEE-APPELLANT DESPITE BE ING AFFORDED SEVERAL OPPORTUNITIES OF BEING HEARD, CONSTRAINING HIM TO D ECIDE THE APPEAL ON MERITS EX PARTE (REFER PARA 4 OF THE IMPUGNED ORDER). UNDER THE C IRCUMSTANCES, I PROCEED TO ADJUDICATE THE INSTANT APPEAL ON MERITS AFTER HE ARING THE PARTY BEFORE ME, TAKING INTO ACCOUNT THE MATERIAL ON RECORD. 3. THE APPEAL RAISES, IN PRINCIPAL, A SINGLE ISSUE, I.E., THE MAINTAINABILITY OR OTHERWISE IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OF AN ADDITION FOR . 3,59,040/-, EFFECTED U/S. 2(22)(E) OF THE ACT. TH E PRIMARY FACTS, WHICH ARE NOT DISPUTED, ARE THAT THE ASSESSEE RECEIVED LOANS FOR . 2,97,000/- DURING THE YEAR FROM PRECIMET PVT. LTD., COMPANY IN WHICH PUBL IC IS NOT SUBSTANTIALLY INTERESTED, AND IN WHICH THE ASSESSEE HAS 44.9 PER CENT SHARE HOLDING. THE BALANCE 55.10 PER CENT SHAREHOLDING IS HELD BY TWO OF ITS DIRECTORS, MR. MC SRIRAM AND MRS. SHARMILA SRIRAM, WHO ARE ALSO DIREC TORS IN THE PAYER (LENDER) COMPANY AND, FURTHER, HOLD 100 PER CENT (I.E., 50 P ER CENT EACH) SHARES IN THE ASSESSEE-COMPANY. FURTHER, PAYMENTS FOR ANOTHER . 62,040/- WERE MADE BY THE PAYER COMPANY (PRECIMET PVT. LTD.) ON BEHALF OF THE ASSESSEE-COMPANY; THE TOTAL, . 3,59,040/-, REFLECTING AS OUTSTANDING TO THE SAID COMPANY, THE TOTAL LIABILITY TO WHOM AS AT THE YEAR-END IS . 10,01,069/-. THE ACCUMULATED PROFIT OF THE SAID COMPANY AS AT 31.3.2004 AND 31.3.2005 BEIN G . 7,26,846/- & . 11,09,677/- RESPECTIVELY, THE PROVISION OF S. 2(22) (E), WHICH READS AS UNDER, WAS IN THE VIEW OF THE ASSESSING OFFICER (AO), ATTRACTE D: DEFINITIONS. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, ( 22 ) DIVIDEND INCLUDES 3 ITA NO.3376 /MDS/2016 (AY 20 05-06) EMCEE FABRITECH PVT. LTD. V. ACIT ( E ) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER A S REPRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) MADE AFT ER THE 31ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLD ER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT B EING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN P ER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID CONCERN) OR ANY PAYM ENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, O F ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS; BUT DIVIDEND DOES NOT INCLUDE IN FACT, IT MATTERED LITTLE IF THE ASSESSEE HAD RE PAID THE LOAN OR PAYMENT, IN WHOLE OR IN PART, DURING THE YEAR. THE SUM OF . 3,59,040/- WAS ACCORDINGLY ADDED TO THE ASSESSEES INCOME U/S. 2(22)(E) OF THE ACT, RELYING ON THE DECISIONS IN TARULATA SHYAM V. CIT [1971] 82 ITR 485 (CAL) (SINCE AFFIRMED IN [1977] 108 ITR 345 (SC)); CIT V. K.SRINIVASAN [1963] 50 ITR 788 (MAD); K.M.S. LAKSHMANA AIYAR V. ADDL. ITO [1960] 40 ITR 469 (MAD) AND SADHANA TEXTILE MILLS PVT. LTD. V. CIT [1991] 188 ITR 318 (BOM). THE ASSESSEE BEING UNABLE TO IMPROVE ITS CASE IN ANY MANNER, THE SAME STOOD CONFIRMED IN APPEAL; THE LD. CIT(A) HOLDING A S UNDER: 4.2 IN THE GROUNDS OF APPEAL, THE APPELLANT HAS ME RELY MENTIONED THAT THE TREATMENT OF THE ASSESSING OFFICE IS INCORRECT AND THAT THE PROVISIONS OF DEEMED DIVIDEND AS PER SECTION 2(22)(E) ARE NOT APP LICABLE TO ITS CASE. 4.3 THE MATTER IS CONSIDERED. IN THIS APPEAL, THE A PPELLANT HAS NOT PRODUCED JUSTIFICATION/MATERIAL/EVIDENCE ON RECORD TO PROVE ITS CONTENTION THAT THE PROVISIONS OF DEEMED DIVIDEND ARE NOT APPL ICABLE TO ITS CASE. ON THE CONTRARY, IN THE ASSESSMENT ORDER THE ASSESSING OFF ICER HAS COGENTLY BROUGHT OUT THE FACTS AND LEGAL PRECEDENCE ON THE I SSUE. ON REVIEW OF THE SAME, I AM OF THE OPINION THAT NO INTERFERENCE IN T HE FINDINGS OF THE ASSESSING OFFICER IS CALLED FOR. ACCORDINGLY, THE ADDITION OF RS. 3,59,040/- STANDS CONFIRMED. THE GROUNDS OF APPEAL FAIL. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4 ITA NO.3376 /MDS/2016 (AY 20 05-06) EMCEE FABRITECH PVT. LTD. V. ACIT 4. I HAVE HEARD THE PARTY BEFORE ME, AND PERUSED TH E MATERIAL ON RECORD. 4.1 THE PRIMARY FACTS ARE NOT IN DISPUTE, AND TOWAR D WHICH I HAVE ALSO REFERRED THE STATEMENT OF FACTS (BEFORE THE FIRST APPELLATE AUTHORITY) AS WELL AS THE GROUNDS OF APPEAL IN BOTH THE APPEALS BY THE ASSESSEE. THE ASSESSEE MERELY RAISES A PLEA THAT APPLICATION OF S. 2 (22)(E), WHICH IS CLEARLY AND PLAINLY ATTRACTED IN THE FACTS OF THE CASE, IS NOT PROPER AND THAT IT OBJECTS THER ETO, I.E., WITHOUT IN ANY MANNER SHOWING AS TO HOW IT IS NOT PROPER, WHAT ARE THE RE ASON/S THEREFOR OR THE BASIS OF THE UNSPECIFIED OBJECTION. THE ONUS TO SHOW THAT TH E APPARENT IS NOT REAL IS ON THE PERSON WHO SO ALLEGES ( CIT V. DAULAT RAM RAWATMULL [1973] 87 ITR 349 (SC)). IN FACT, NO ARGUMENT, MUCH LESS MATERIAL, HA S BEEN ADVANCED AT ANY STAGE TO SHOW AS TO WHAT THE ASSESSEES CASE IN SUBSTANCE IS. FURTHER, THE LAW IN THE MATTER IS WELL SETTLED, AND TOWARD WHICH REFERENCE MAY BE DRAWN TO DECISIONS STATED AT PARA 3 OF THIS ORDER, AND TO WHICH I MAY ADD THAT BY THE LARGER BENCHES OF THE HON'BLE APEX COURT, AS IN NAVNIT LAL JHAVERI V. AACIT [1965] 56 ITR 198 (SC), EXPOUNDING THE LAW IN THE MATTER. I THERE FORE, FIND NO REASON TO INTERFERE AND, ACCORDINGLY, UPHOLD THE ASSESSMENT O N THIS COUNT AND, CONSEQUENTLY, THE IMPUGNED ADDITION (REFER: CIT V. PILLIAH AND SONS [1967] 63 ITR 411 (SC)). 4.2 THE ASSESSEE HAS ALSO CHALLENGED THE CHARGE OF INTEREST U/SS. 234C & 234D. THE OBJECTION TO THE INTEREST LEVIED U/S. 234D IS A NON-SEQUITUR, BEING, IN FACT, CONSEQUENTIAL IN NATURE, FOR WHICH REFERENCE MAY AL SO BE MADE TO EXPLANATION 2 TO S. 234D. OBJECTION, WITHOUT STATING ANY BASIS TH ERE-FOR, IS WITHOUT MERIT AND, ACCORDINGLY, FAILS. INTEREST U/S. 234C, AGAIN COMPE NSATORY, IS ONLY ON THE BASIS OF THE RETURNED INCOME, SO THAT THE BASIS OF THE OB JECTION IS ITSELF NOT CLEAR, EVEN AS I DIRECT THE CHARGE OF INTEREST UNDER EITHER SEC TION IN TERMS OF THE RELEVANT PROVISION. 4.3 I DECIDE ACCORDINGLY. 5 ITA NO.3376 /MDS/2016 (AY 20 05-06) EMCEE FABRITECH PVT. LTD. V. ACIT 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED ON MAY 17, 2017 AT CHENNAI . SD/- ( ) (SANJAY ARORA) /ACCOUNTANT MEMBER /CHENNAI, / /DATED, MAY 17, 2017. EDN 0 ( *'-12 32%- /COPY TO: 1. &' /APPELLANT 2. *+&' /RESPONDENT 3. , 4- ( )/CIT(A) 4. , 4- /CIT 5. 2$56 *'-' /DR 6. 67# 8 /GF