ANIL AGARWAL, MUMBAI V. ITO 6(3)(4), MUMBAI

ITA 3911/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4184 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALIK SINGH
• Assessee Lawyers: VIJAY C KOTHARI
• Keywords: Reopening of assessment; Deemed dividend
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 3911/MUM/2012 ASSESSMENT YEAR : 2005-06 SHRI ANIL AGARWAL 601-602, SANGIT SARITA BHULABHAI DESAI RD. BREACH CANDY MUMBAI-400 026. PAN NO.AACPA 5469 K VS. INCOME TAX OFFICER - 6(3)(4) MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY C. KOTHARI REVENUE BY : SHRI KALIK SINGH DATE OF HEARING : 01.07.2013 DATE OF PRONOUNCEMENT : 05.07.2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF C IT(A)-12, MUMBAI DATED 30.4.2012. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DETER MINATION OF TOTAL INCOME OF RS.77,45,671/- AS AGAINST THE RETURNED IN COME OF RS.34,54,321/-. 2. THE LD. CIT (A) ERRED IN NOT ACCEPTING CONTENTIO N OF APPELLANT THAT, RE-OPENING OF ASSESSMENT U/S. 147, MERELY ON THE BA SIS OF CIT(A)S ORDER NO. CIT (A) XVIII / ITO 18 (2) (2)/17-258 / 0 7-08, OF LAXMI ITA NO.3911/M/12 A.Y.05-06 SHRI ANIL AGARWAL 2 CENTRE, A PARTNERSHIP FIRM, WHEREIN THE APPELLANT I S A PARTNER, IS INVALID AND BAD IN LAW. 3. THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION S MADE BY A.0. IN TERMS OF THE PROVISION OF SECTION 2(22)(E) OF INCOM E-TAX ACT, ON THE BASIS OF OBSERVATIONS BY THE CIT(A), VIDE HIS ORDER OF M/S. LAXMI CENTRE, PARTNERSHIP FIRM, WHEREIN THE APPELLANT IS A PARTNER. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 42,19,350/- AS DEEMED DIVIDEND, BY DRAWING INFERENCE THAT, APP ELLANT WAS SQUARELY COVERED BY THE PROVISIONS OF SECTION 2(22 )(E) OF INCOME-TAX ACT AS HE HAS ACCEPTED THE FUNDS FROM LAXMI VENTUR ES (I) LTD, AS OPPOSED TO THE FACT THAT, THE APPELLANT HAS RECEIVE D THE AMOUNT OF RS. 42,19,350/-, FROM LAXMI VENTURES INDIA LTD ON BEHAL F OF LAXMI CENTER. 5. WITHOUT PREJUDICE, THE CIT (A) ERRED IN CONFIRMI NG THE ADDITIONS MADE BY THE AO. OF RS. 42,19,350/- AS DIVIDEND INCO ME IN THE HANDS OF THE APPELLANT, MR. ANIL AGARWAL AND DIS-REGARDIN G PROVISIONS OF SECTION 115-0 OF ACT, 1961. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OR MOD IFY THE GROUNDS OF APPEAL, AS STATED ABOVE, AT ANY TIME ON OR BEFORE T HE HEARING OF APPEAL. 2. BRIEFLY STATED, ASSESSEE HAS FILED RETURN OF INC OME DECLARING TOTAL INCOME OF RS.34,54,321/-. THE AO RECEIVED COMMUNICA TION FROM ANPTHER OFFICER THAT AN AMOUNT OF RS.42,91,000/- WAS ADVANC ED TO M/S. LAXMI CENTRE, WHERE THE ASSESSEE IS A PARTNER BY M/S. LAX MI VENTURE (I) LTD. WHERE THE ASSESSEE IS A DIRECTOR. IT WAS OPINED THA T THE AMOUNT WHICH WAS TAXED IN THE HANDS OF THE FIRM WAS ACTUALLY TAX ABLE IN THE HANDS OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 2(22)( E) OF THE ACT. THE AO INITIATED PROCEEDINGS UNDER SECTION 147 AND BROUGHT THE ABOVE AMOUNT TO TAX. THE ASSESSEE CONTESTED BEFORE AO ABOUT THE FACTUAL ASPECT ON THE BASIS OF THE INFORMATION RECEIVED AND ABOUT JURISDI CTION TO ASSESS IN REOPENED PROCEEDINGS. BEFORE CIT(A) ASSESSEE TOOK O BJECTION TO INITIATION OF PROCEEDINGS UNDER SECTION 147 AND ALSO INVOKING PROVISIONS OF SECTION 2(22)(E). LD. CIT(A) REJECTED THE CONTENTIONS. ITA NO.3911/M/12 A.Y.05-06 SHRI ANIL AGARWAL 3 3. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE CIT(A) HAS NOT EXAMINED THE FACTS EVEN THOUGH NECES SARY LEDGER ACCOUNT COPIES WERE PLACED BEFORE THE LD. CIT(A). IT WAS SU BMITTED THAT THE ASSESSEE HAS TO PAY THE AMOUNTS TO THE SAID COMPANY AND SO THE QUESTION OF INVOKING PROVISIONS OF SECTION 2(22)(E) DOES NOT ARISE. REFERRING TO THE PAPER BOOK PLACED ON RECORD, PARTI CULARLY LEDGER ACCOUNT OF M/S. LAXMI CENTRE AND ANIL AGARWAL COMBINED ACCO UNT IN THE BOOKS OF M/S. LAXMI VENTURE (I) LTD., LD. COUNSEL FOR THE A SSESSEE POINTED OUT THAT THROUGHOUT THE YEAR, ASSESSEE HAS ADVANCED FUN DS TO THE SAID COMPANY AND NOT RECEIVED THEM AS CONTENDED, THEREFO RE, INVOKING THE PROVISIONS OF SECTION 2(22)(E) DOES NOT ARISE. IT W AS HIS PLEA THAT THE MATTER MAY BE REFERRED TO THE AO FOR EXAMINATION OF THE ISSUE ON FACTS. THE LD. DR HAS NO OBJECTION. 4. WE HAVE CONSIDERED THE ISSUE. WE NOTICED THAT TH E ASSESSEE HAS CONTENDED BEFORE THE LD. CIT(A) THAT HE HAS NOT REC EIVED LOAN BUT INFACT ADVANCED MONEY OUT OF HIS OWN FUNDS TO THE COMPANY AND THIS WAS RECEIVED AS REPAYMENT OF THE MONEY ADVANCED. ON THE REASON THAT NO PROOF OF THE SAME HAS BEEN SUBMITTED, LD. CIT(A) RE JECTED THE CONTENTIONS. AS SEEN FROM THE PAPER BOOK PLACED ON RECORD, NOT ONLY THE LEDGER COPIES BUT ALSO BANK STATEMENTS IN SUPPORT O F THE TRANSACTIONS WERE PLACED BEFORE THE LD. CIT(A). SINCE FINDINGS T O THE LD. CIT(A) ARE NOT BASED ON EXAMINATION OF THE LEDGER ACCOUNTS, WE ARE UNABLE TO APPROVE THE SAME. HOWEVER, THE CONTENTIONS ARE REQUIRED TO BE VERIFIED, MAINLY THE SUBMISSION THAT IT WAS ASSESSEE WHO ADVANCED FU NDS AND THROUGHOUT THE YEAR, COMPANY OWES THE MONEY TO ASSESSEE. WE DE EM IT PROPER TO SET ASIDE THE ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO TO EXAMINE IT AFRESH BOTH ON FACT AND LAW, AFTER GIVING DUE OPPOR TUNITY TO THE ASSESSEE AND DECIDE WHETHER THE PROVISIONS OF SECTION 2(22)( E) ARE APPLICABLE OR NOT, IF SO TO THE EXTENT OF AMOUNT THAT CAN BE CONS IDERED AS DEEMED ITA NO.3911/M/12 A.Y.05-06 SHRI ANIL AGARWAL 4 DIVIDEND UNDER THE SAID PROVISIONS. THE OTHER CONTE NTIONS RAISED WITH REFERENCE TO THE JURISDICTION ARE NOT ADJUDICATED. THE ASSESSEE IS FREE TO RAISE THE SAID CONTENTIONS, IF REQUIRED AT A LATER POINT OF TIME. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05.07.2013. SD/- SD/- (VIVEK VARMA ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 05.07. 2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.