Naresh Kumar Sekher, Hyderabd, Hyderabad V. ITO, Ward-2(1), Hyderabad, Hyderabad

ITA 364/HYD/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2134 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 15-04-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PROHIT MUJUMDAR
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment; Tangible material; Deemed dividend; Reason to believe
• Section: 143(3); 2(22)(e); 143(1); 251; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI LAXMI PRASAD SAHU , ACCOUNTANT MEMBER AND SHRI DUVVURU R.L. REDDY , JUDICIAL MEMBER ITA NO. 364/ H YD /20 17 ASSESSMENT YEAR: 20 1 0 - 11 NARESH KUMAR SEKHAR, HYDERABAD. PAN ABAPT 0359G VS. INCOME - TAX OFFICER, WARD 2(1), HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 365/ H YD /20 17 ASSESSMENT YEAR: 20 10 - 11 KIRAN DWARAKANATH SEKHAR, HYDERABAD. PAN AFVPS 5346D VS. INCOME - TAX OFFICER, WARD 2(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. RAMA RAO REVENUE BY: SHRI PROHIT MUJUMDAR DATE OF HEARING: 15 /0 4 /2021 DATE OF PRONOUNCEMENT: /06/2021 O R D E R PER L.P. SAHU, A.M. : TH E S E TWO APPEA L S FILED BY THE TWO ASSESSEES ARE DIRECTED AGAINST CIT(A) 1 0 , HYDERABADS SEPARATE ORDER S FOR AY 20 1 0 - 11 INVOLVING PROCEEDINGS U/S 143(3) RWS 147 I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 2 - : OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT. AS THE FACTS AND GROUNDS ARE IDENTICAL IN THESE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER AND THEREFORE A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. THE REFORE, THE DECISION TAKEN IN ITA NO. 364/HYD/2017 SHALL MUTATIS - MUTANDIS APPLY TO OTHER APPEAL IN ITA NO. 365/HYD/2017. 2. BRIEFLY THE FACTS AS CULLED OUT FROM ITA NO. 364/HYD/2017 ARE THAT THE ASSESSEE DR. SRI NARESH KUMAR SEKHAR ENGAGED IN PROVIDING INFERTILITY SERVICES, FILED HIS RETURN OF INCOME FOR THE AY 2010 - 11 ON 28/03/2011 DECLARING INCOME OF RS. 6,37,330/ - , WHICH WAS PROCESSED U/S 143(1) OF THE ACT. A SURVEY WAS CONDUCTED IN THE PREMISES OF M/S KIRAN INFERTILITY CE NTRE PVT. LTD., ON 22/10/2013 AND DURING THE SURVEY PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE BEING A SHAREHOLDER HOLDING 53% SHARES ALONG WITH HIS SPOUSE HOLDING 42% SHARES IN M/S KIRAN INFERTILITY CENTRE PVT. LTD. WAS IN RECEIPT OF AN ADVANCE OF RS. 27,50,000/ - FROM THE SAID COMPANY. THE ACCUMULATED PROFITS OF THE SAID COMPANY STOOD AT RS. 90,80,229/ - AS ON 31/03/2010. THE AO, THEREFORE, TREATED THE SAID AMOUNT OF RS. 27,50,000/ - AS DEEMED DIVIDEND U/S 2(22 )(E) OF THE ACT. 2.1 ACCORDINGLY, THE CASE WAS REOPENED BY ISSUING A NOTICE U/S 148 OF THE ACT ON 01/11/2013, AGAINST WHICH, THE ASSESSEE FILED HIS RETURN OF INCOME ON 03/12/2013. I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 3 - : ACCORDINGLY, THE AO ISSUED OTHER STATUTORY NOTICES TO THE ASSESSEE. 2.2 DURING THE COURSE OF RE ASSESSMENT PROCEEDINGS, THE ASSESSEE VIDE HIS LETTER DATED 17/02/2014 SUBMITTED A DETAILED EXPLANATION STATING THAT AS PER THE M O A OF CLAUSE 8, THERE IS OBJECT CLAUSE REGARDING LOANS OR ADVANCES AND THAT THE ADVANCE RECEIVED FROM THE SAID COMPANY WAS FO R COMMERCIAL ADVANTAGE OF THE COMPANY AND NOT THE BENEFIT OF THE DIRECTORS AND THE DIRECTORS WERE CHARGED INTEREST ON THE ADVANCE WHICH ARE DULY REFLECTED IN THE P&L ACCOUNT OF THE ASSESSEE. FURTHER, IT WAS STATED THAT THERE WAS NO SUFFICIENT ACCUMULATED P ROFITS WITH THE COMPANY TO PROVIDE ADVANCES FROM THE ACCUMULATED PROFITS. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND TREATED THE ADVANCE AMOUNT OF RS. 27,50,000/ - RECEIVED FROM THE SAID COMPANY AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT AND TAXED THE SAME IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE DETAILED WRITTEN SUBMISSIONS MADE BEFORE HIM REJECTE D THE LEGAL GROUNDS RAISED BY THE ASSESSEE. 3.1 FURTHER, AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE, THE CIT(A) NOTICED THAT THE ASSESSEE HAS RECEIVED I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 4 - : SOME OTHER ADVANCES IN ADDITION TO THE ADVANCE RECEIVED OF RS. 27,50,000/ - AND THEREFORE, ISSUED A NOTICE U/S 251 TO THE ASSESSEE ON 12/08/2016 TO FILE THE OBJECTIONS IF ANY . SINCE THE ASSESSEE DID NOT COMPLY TO THE SAID NOTICE, THE CIT(A) INFERRED THAT THE ASSESSEE HAD NO OBJECTION TO ENHANCE THE DEEMED DIVIDEND U/S 2(22)(E) AND ACCORDINGLY ENHANCED THE SAME BY AN AMOUNT OF RS. 12,67,295.50 (RS. 8,31,234.50 + RS. 4,36,061) INCLUDING THE OPENING BALANCE OF RS. 8063.25/ - BY OBSERVING AS UNDER: FROM THE LEDGER EXTRACT S OF THE ASSES SEE IN THE BOOKS OF KIRAN INFE RTILITY CENTRE PVT. LTD., FOR THE F.Y. 2009 - 10 (IN WHICH THE ASSESSEE IS A DIRECTOR}, THERE IS AN OPENING BALANCE OF RS.8,063.25(DR.) AND THERE WERE PAYMENTS FROM 01.04.2009 TO 15.03.2010 (RELEVANT TO THE ASST. YEAR 201011) WHICH IS IN APPEAL FOR AN AMOUNT OF RS.28,31,234.50 AND THERE IS A CREDIT OF RS.20 LAKHS ON 01.04.2009 TOWARDS ADVANCE FOR HOSPITAL BUILDING. AFTER GIVING CREDIT FOR THIS ADVANCE, THE TOTAL DEBIT TILL 15.03.2010 ARE MORE BY RS.8,31,234.50. SIMILARLY, AN AMOUNT OF RS. 4,36,061 I - WAS DEB ITED ON 31.03.2010 TOWARDS CONSTRUCTION AND FINALLY THERE IS A DEBIT BALANCE OF RS.3,13,358/ - . THESE AMOUNTS WERE ADVANCED IN ADDITION TO RS.27,50,000 / - TO THE ASSESSEE AND CONSIDERED BY THE ASSESSING OFFICER FOR ASSESSMENT IS] S. 2(22)(E) OF THE LT. ACT. AFTER CONSIDERING THE REMUNERATION PAID TO THE DIRECTORS AND HOSPITAL RENT, STILL THERE IS AN EXCESS PAYMENT OF RS.3,05,295.50. AS THESE AMOUNTS WERE NOT TOWARDS ANY DUES TO THE ASSESSEE IE., BY WAY OF HOSPITAL RENT, REMUNERATION ETC., THEY ARE CLEARLY IN THE NATURE OF ADVANCE AND LIABLE TO BE INCLUDED AS DEEMED DIVIDEND AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE I. T. ACT. I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 5 - : 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE LEARNED CIT (A) ERRED IN ENHANCING THE INCOME DETERMINED BY THE ASSESSING OFFICER WITHOUT PROVIDING PROPER OPPORTUNITY. 3) THE LEARNED CIT (A) ERRED IN CONFIRMING THE INITI ATION OF PROCEEDINGS ULS 147 OF THE I. T. ACT. 4) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.27,50,000 U/S 2(22)(E) OF THE I. T. ACT. THE LEARNED CIT (A) OUGHT TO HAVE ACCEPTED THE VARIOUS CONTENT IONS OF THE APPELLANT AND HELD THAT THE PROVISIONS OF SEC.2(22)(E) HAVE NO APPLICATION TO THE FACTS OF THE CASE. 5) THE LEARNED CIT (A) ERRED IN ENHANCING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 2(22)(E) BY AN AMOUNT OF RS.12,67,295.50 WITHOUT CON SIDERING THE DETAILED EXPLANATION FILED BY THE APPELLANT. 6) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 5. BEFORE US, THE LD. AR OF THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW AND FILED A PAPER BOOK CONTAINING 1 TO 156 PAGES IN SUPPORT OF ASSESSEES CASE. HE SUBMITTED THAT THERE WAS A COMMERCIAL ADVANTAGE IN GIVING THE LOAN /AD VANCE BY THE COMPANY AS THE ASSESSEE DID NOT HAVE ANY PERSONAL BENEFIT FROM THE ADVANCES TAKEN FROM THE COMPANY. I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 6 - : 6. THE LD. DR ON THE OTHER HAND BESIDES RELYING ON THE ORDERS OF REVENUE AUTHORITIES, SUBMITTED THAT THE SAID COMPANY IS GIVING LOANS AND ADV ANCES TO THE DIRECTORS WITHOUT COMPLYING THE CONDITIONS LAID DOWN IN MONEY LENDING BUSINESS AS PER THE AP MONEY LENDERS ACT, FASLI, 1349. HE FURTHER SUBMITTED THAT AS ON YEAR ENDING 31/03/2011, THERE WAS SUFFICIENT SURPLUS FIND WITH THE COMPANY AND, THERE FORE, SECTION 2(22)(E) IS DIRECTLY APPLICABLE TO THE CASE OF THE ASSESSEE. AS THE ASSESSEE IS HOLDING MORE THAN 52% SHAREHOLDING IN THE SAID COMPANY, THE LD. DR REQUESTED THAT THE ORDER OF THE CIT(A) BE CONFIRMED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES. DURING THE SURVEY PROCEEDINGS U/S 133A, THE AO NOTICED THAT THE ASSESSEE RECEIVED AN ADVANCE OF RS. 27,50,000/ - FORM M/S KIRAN INFERTILITY CENTRE PVT. LTD. AN D THE SAME WAS TREATED AS DEEMED DIVIDEND U/S 2(22)(E), WHICH WAS ENHANCED BY THE CIT(A) AS CITED SUPRA. 7.1. BEFORE US, THE ASSESSEE HAS RAISED A LEGAL GROUND FOR REOPENING OF ASSESSMENT U/S 147/148 OF THE ACT AS GROUND NO. 3, WHICH WAS ALSO RAISED BEFO RE THE CIT(A) AND CIT(A) I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 7 - : DISMISSED THE SAME AS NOT PRESSED BY OBSERVING AS UNDER AT PARA 7 OF HIS ORDER: I. GROUND NO. 2 IS WITH REGARD TO THE INITIATION OF PROCEEDINGS U/S 147 OF THE I .T. ACT, 1961. IN THE WRITTEN SUBMISSIONS FILED ON 23.11.2015, N OTHING IS MENTIONED ABOUT THIS GROUND OF APPEAL: EVEN IN THE STATEMENT OF F ACTS NOTHING IS MENTIONED ABOUT THE ISSUE OF NOTICE U / S. 148. EVEN DURING THE COURSE OF HEARING ON 23.11.2015 NO SU BMISSION WAS MADE. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED AS NOT P RESSED. 7.2 WE HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSIONS OF THE ASSESSEE PLACED BEFORE US AT PAGES 142 TO 156 OF THE PAPER BOOK. THERE IS NO IOTA OF ANY DISCUSSION WITH REGAR D TO CHALLENGING OF REOPENING OF ASSESSMENT. THE CHALLENGING OF REOPENING IS ALSO NOT TENABLE BECAUSE THE ASSESSING OFFICER HAD TANGIBLE MATERIALS BEFORE REOPENING THE CASE WHICH WAS FOUND DURING THE COURSE OF SURVEY OPERATION U/S 133 (A) OF THE INCOME T AX ACT. 1961. IN THE OPINION OF THE ASSESSING OFFICER THERE WAS A REASON TO BELIEVE THAT THE ASSESSEE HAD ESCAPE D ITS INCOME AND, THEREFORE, THE LEGAL GROUND NO. 3 RAISED BY THE ASSESSEE IS DISMISSED. 8. WITH REGARD TO GROUND NO. 4 REGARDING CHALLENGI NG THE ADDITION MADE U/S 2(22)(E) OF RS. 27,5,0,000/ - OF THE ACT, WE HAVE GONE THROUGH THE DOCUMENTS SUBMITTED BY THE ASSESSEE IN THE PAPER BOOK. IN THE FINANCIAL STATEMENT OF THE ASSESSEE, WHICH IS PLACED AT PAGE NO. 58 OF PAPER BOOK, ASSESSEE HAS SHOWN UNDER THE GROSS RECEIPTS INTEREST ON LOANS TO DIRECTORS OF RS. 1,87,405/ - AND IT HAS ALSO SHOWN IN I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 8 - : ANNEXURE - II LOANS AND ADVANCES UNDER INTEREST RECEIVABLE FROM BOTH THE DIRECTORS , WHICH IS PLACED AT PAGE 62 OF THE PAPER BOOK. THEREFORE, IT CLEA RLY SHOWS THAT THE COMPANY IS COMPENSATED ON THE LOANS AND ADVANCES TO THE DIRECTORS BY RECEIVING INTEREST FROM THE DIRECTORS. 8.1 THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF ITAT, KOLKATA IN THE CASE OF SMT. SANGITA JAN VS. ITO IN ITA NO. 1817/KOL/2009 FOR AY 2006 - 07 VIDE ORDER DATED 11 TH MARCH, 2016. THE RELEVANT PART OF THE ORDER IS REPRODUCED BELOW FOR THE SAKE OF CLARITY: 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ONE OF THE MAIN CONTENTIONS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US IS THAT THE LOAN IN QUESTION TREATED AS DEE MED DIVIDEND UNDER SECTION 2(22)(E) BY THE AUTHORITIES BELOW WAS TAKEN BY THE ASSESSEE FROM M/S. SURYA BUSINESS PVT. LIMITED ON INTEREST AND SINCE THE SAID COMPANY WAS COMPENSATED BY WAY OF INTEREST PAID BY THE ASSESSEE ON LOAN, THE ASSESSEE IN REAL SENSE DID NOT DERIVE ANY BENEFIT FROM THE FUNDS OF THE COMPANY SO AS TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E). ALTHOUGH THE LD. D.R. HAS VEHEMENTLY OPPOSED THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE BY SUBMITTING THAT THE PAYMENT OF INTEREST ALONE CANNOT BE CONSIDERED FROM THE BENEFIT ANGLE AS ENVISAGED UNDER SECTION 2(22)(E), IT IS OBSERVED THAT THE JUDICIAL PRONOUNCEMENTS CITED BY THE LD. COUNSEL FOR THE ASSESSEE CLEARLY SUPPORT THE CASE OF THE ASSESSEE. 6. IN THE CASE OF PRADIP KUMAR MALHOTRA REPORTED IN 338 ITR 538 CITED BY THE LD. COUNSEL FOR THE ASSESESE, IT I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 9 - : WAS HELD BY THE HONBLE CALCUTTA HIGH COURT THAT THE PHRASE BY WAY OF ADVANCE OR LOAN APPEARING IN SECTION 2(22)(E) MUST BE CONSTRUED TO MEAN TH OSE ADVANCES OR LOANS, WHICH A SHAREHOLDER ENJOYS FOR SIMPLY ON ACCOUNT OF BEING A PARTNER, WHO IS THE BENEFICIAL OWNER OF SHARES, BUT IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION, WHICH IS BENEFICIAL T O THE COMPANY, RECEIVED FROM SUCH SHAREHOLDER, IN SUCH CASE, SUCH ADVANCE OR LOAN CANNOT BE SAID TO BE DEEMED DIVIDEND WITHIN THE MEANING OF THE ACT. IT WAS HELD THAT GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO THOSE CLASSES OF SHAREHOLDERS THUS WOULD COME WITHIN THE PURVIEW OF SECTION 2(22)(E) BUT NOT THE CASES WHERE THE LOAN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY BY SUCH SHAREHOLDER. IN THE CASE OF ACIT VS. - M/S. ZENON (INDIA) PVT. LIMITED, A LOAN TAKEN BY THE ASSES SEE WAS TREATED BY THE ASSESSING OFFICER AS DEEMED DIVIDEND UNDER SECTION 2(22)(E), BUT THE LD. CIT(APPEALS) DID NOT APPROVE THE ACTION OF THE ASSESSING OFFICER AFTER HAVING NOTICED THAT INTEREST AT THE RATE OF 9% PER ANNUM WAS PAID BY THE ASSESSEE ON SUCH LOAN, WHICH, ACCORDING TO HIM, WAS A CONSIDERATION RECEIVED FROM HER SHAREHOLDERS, WHICH WAS BENEFICIAL TO THE COMPANY AND THE ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE WAS UPHELD BY THE TRIBUNAL VIDE ITS ORDER DATED 29.06.2015 PASSED IN ITA NO. 1124/KOL/2012 BY RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA). KEEPING IN VIEW THE SAID DECISION OF THE HONBLE CALCUTTA HIGH COURT WHICH HAS BEEN FOLLOWED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. ZENON (INDIA) PVT. LIMITED , WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) UNDER SECTION 2(22)(E) ON ACCOUNT OF LOAN RECEIVED BY THE ASSESSEE FROM M/S. SURYA BUSINESS PVT. LIMITED ON WHICH CONSIDERATION IN THE FORM OF INTEREST WAS PAID BY THE ASSESSEE TO THE BENEFIT OF THE COMPANY IS NOT SUSTAINABLE. WE, I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 10 - : THEREFORE, DELETE THE SAME AND ALLOW GROUNDS NO. 1 & 2 OF THE ASSESSEES APPEA L. 8.2 AS THE ISSUE UNDER CONSIDERATION IS MATERIAL LY IDENTICAL TO THE ISSUE IN THE SAID DECISION, RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO DELETE THE ADDITION OF RS. 27,50,000/ - MADE BY HIM U/S 2(22)(E) ON ACCOUNT OF LOAN RECEIVED BY THE ASSESSEE FROM M/S KIRAN INFERTILITY CENTRE PVT. LTD. ON WHICH CONSIDERATION IN THE FORM OF INTEREST WAS PAID BY THE ASSESSEE TO THE BENEFIT OF THE COMPANY IS NOT SUSTAINABLE. ACCORDINGLY, GROUND NO. 4 IS ALLOWED. 9. AS REGARDS GROUND NO. 5 AGAINST THE ACTION OF CIT(A) IN ENHANCING THE ADDITION MADE BY THE AO U/S 2(22)(E) BY AN AMOUNT OF RS. 12,67,295/ - , WE OBSERVE THAT IN THE IMPUGNED ADDITION , THE SAID COMPANY IS NOT CHARGING ANY INTEREST ON THE DEBIT BALANCE IN THE HANDS OF THE DIRECTOR. WE ALSO OBSERVE THAT THE ACCOUNTS MAINTAINED IN THE NAME OF THE DIRECTO R IS NOT A CURRENT ACCOUNT AND NOTICED FROM THE LEDGER ACCOUNT OF THE DIRECTOR IN M/S KIRA N INFERTILITY CENTRE PVT. LTD., THE RENT AND DIRECTORS REMUNERATION PAID TO THE ASSESSEE HAS BEEN CREDITED AT THE YEAR END, WHICH IS PLACED AT PAGE NO. 3 TO 6 OF PA PER BOOK. WE OBSERVE THAT LD . CIT(A) HAS ADDED THE ENTIRE DEBIT BALANCE, BUT, THERE IS OPENING BALANCE OF RS. 8,063.25/ - WHICH RELATES TO THE PREVIOUS YEAR AND THE SAME CANNOT BE TAXED IN THIS IMPUGNED ASSESSMENT YEAR AND THE BALANCE AMOUNT IS I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 11 - : SATISFIED TO THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE CIT(A) BEFORE ENHANCING THE INCOME OF THE ASSESSEE, ISSUED A NOTICE U/S 251 DATED 12/08/2016, TO FILE THE OBJECTIONS, IF ANY, BUT, THE ASSESSEE DID NOT COMPLY TO THE SAID NOTICE. THEREFORE, ALLEGING THAT THE CIT(A) HAS NOT PROVIDED OPPORTUNITY IN ENHANCING THE INCOME AS RAISED IN GROUND NO. 2 IS WRONG. ACCORDINGLY, THE ASSESSEE GETS A RELIEF OF RS. 8,063.25/ - AND THE REMAINING AMOUNT OF RS. 12,59,231.75 (12,67,295/ - - 8,063.25/ - ) IS SUSTAINED. THUS, GROUND NO. 5 IS PARTLY ALLOWED AND GROUND NO. 2 IS DISMISSED. 10. GROUND NOS. 1, & 6 ARE GENERAL IN NATURE, HENCE NEED NO ADJUDICATION. 1 1 . IN THE RESULT, APPEAL OF TH E ASSESSEE IS PARTLY ALLOWED IN ABOVE TERMS. 12. AS REGARDS THE ITA NO. 365/HYD/2017, THE FACTS AND GROUNDS RAISED IN THIS APPEAL ARE IDENTICAL TO THE ITA NO. 364/HYD/2017, FOLLOWING THE CONCLUSIONS DRAWN IN ITA NO. 364/HYD/2017 (SUPRA), GROUND NO S . 2 & 3 ARE DISMISSED , GROUND NO. 4 IS ALLOWED AND GROUND NO. 5 IS PARTLY ALLOWED IN ABOVE TERMS. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. I TA NO S . 364 & 365 /HYD /20 17 NARESH KUMAR SEKHAR AND ANOTHER, HYD . : - 12 - : 13. IN THE RESULT, BOTH THE APPEALS UNDER CONSIDERATION ARE PARTLY ALLOWED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE FILES. PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE , 2021 . SD/ - SD / - ( DUVVURU R .L. REDDY ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 25 TH JUNE , 20 2 1 . K V C OPY TO : 1 2 SHRI NARESH KUMAR SEKHAR SHRI KIRAN DWARAKANATH SEKHAR 6 - 2 - 966/4, BESIDES NIRMALA HIGH SCHOOL, STREET NO. 10, KHAIRATABAD, HYDERABAD 500 004. 2 ITO, WARD 2(1), SIGNATURE TOWERS, KONDAPUR, HYDERABAD. 5 C I T(A) 1 0 , HYDERABAD. 6 PR. CIT - 2 , HYDERABAD 7 ITAT, DR, HYDERABAD. 8 GUARD FILE.