Surbhi Jain, Gurgaon V. ITO, Gurgaon

ITA 3993/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1718 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES SINGSON SR DR
• Assessee Lawyers: SAURABH ROHTGI
• Keywords: Deemed dividend; TDS
• Section: 2(22)(e); 201; 48; 54; 154; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI , ! ' $%&'()*+,-+! BEFORE MS. SUSHMA CHOWLA, V.P & SHRI PRASHANT MAHAR ISHI, AM . / ITA NO.3993/DEL/2015 / ) ) / ASSESSMENT YEAR 2011-12 SURBHI JAIN, 2A, MIANWALI COLONY, GURGAON-122001. PAN-AAMPJ2288B .......... 01 /APPELLANT VS THE ITO, WARD-1(2), GURGAON. . $201 / RESPONDENT 0134+ / APPELLANT BY : SH. SAURABH ROHTGI, CA $20134+ / RESPONDENT BY : SH. JAMES SINGSON, SR.DR 3&, / DATE OF HEARING : 19.03.2020 56 3&, / DATE OF PRONOUNCEMENT: 14.05.2020 +% / ORDER PER SUSHMA CHOWLA,VP THE PRESENT APPEAL FILED BY ASSESSEE IS AGAINST OR DER OF CIT(A)-1, GURGAON DATED 14.05.2015 RELATING TO ASSESSMENT YEA R 2011-12 AGAINST ORDER PASSED UNDER SECTION 154 OF THE INCOME-TAX ACT, 19 61 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THAT THE IMPUGNED ORDER IS BAD IN LAW AS WELL A S ON MERITS. 2. THAT THE IMPUGNED ORDER AND PROCEEDINGS IS WITH OUT JURISDICTION. 3. THAT THE LD. AO EXCEEDED HIS JURISDICTION IN AS SESSING DEEMED DIVIDEND U/S. 2 (22)(E) FOR RS. 10,14,893/- IN ORDE R FRAMED U/S. 154. ITA NO.3993/DEL/2015 ASSESSMENT YEAR 2011-12 2 4. THAT WITHOUT PREJUDICE, THE ORDER FRAMED U/S. 1 54 IS BAD IN LAW FOR NON-SERVICE OF PROPER NOTICE U/S. 154. 5. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN VIEW OF DOCUMENTS AND EXPLANATIONS FILED, THE ADDITION MADE BY AO FOR DEEMED DIVIDEND U/S. 2 (22)(E) FOR RS. 10,14,893/- AND SUS TAINED BY LD. CIT (A) DESERVES TO BE DELETED IN LAW AS WELL AS ON MERITS. 6. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CREDIT FOR TAX OF RS. 1,01,489/ SHOULD BE ALLOWED FOR TDS DEMA ND CREATED BY THE ITO, TDS WARD IN CASE OF VARDHMAN AUTOMOBILES (P) L TD. 7. THAT NO INTEREST 234 B, 234C SHOULD HAVE BEEN L EVIED. WITHOUT PREJUDICE, THE INTEREST CHARGED IS EXCESSIVE. 3. AT THE OUTSET, THE LD.AR FOR THE ASSESSEE POINTE D OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL STANDS SQUARELY COVERE D IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL IN THE CASE OF RELATE D PERSON I.E. SEEMA DEVI BANSAL IN ITA NO.6462/DEL/2014 ORDER DATED 18.07.20 18 RELATING TO ASSESSMENT YEAR 2010-11 AND SH. HARISH KANWAR IN I TA NO.529/DEL/2017 ORDER DATED 18.10.2017 RELATING TO ASSESSMENT YEAR 2011-12. 4. THE LD.DR FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE WAS HELD TO BE I N DEFAULT U/S 2(22)(E) OF THE ACT. THE ASSESSING OFFICER IN HIS ORDER PASSED U/S 154 OF THE ACT DATED 26.12.2013 OBSERVED THAT THE ASSESSEE WAS ONE OF TH E TWO DIRECTORS IN M/S. VARDHMAN AUTOMOBILES PVT. LTD., GURGAON PAN-AACCV61 16D DURING ASSESSMENT YEAR 2011-12 HAVING SUBSTANTIAL INTEREST IN THE PROFIT OF THE COMPANY AND HOLDING BENEFICIAL OWNERSHIP OF SHARES. THE AFORESAID COMPANY HAD GIVEN HEAVY LOANS DURING THE FINANCIAL YEAR 201 0-11 TO ITS ASSOCIATED ITA NO.3993/DEL/2015 ASSESSMENT YEAR 2011-12 3 CONCERN M/S. ARIHANT AGENCIES, GURGAON OF WHICH THE ASSESSEE WAS THE SOLE PROPRIETOR. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID ADVANCES WERE TO BE TAXED IN THE HANDS OF THE ASSESSEE AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THE DETAILS OF THE PAYMENT ARE AS UNDER:- SL.NO. DATE OF PAYMENT AMOUNT PAID (RS.) MAXIMUM AMOUNT OU TSTANDING ON THE DATE (RS.) 1. 30.04.2010 50,00,000 50,00,000 2. 30.04.2010 20,00,000 70,00,000 (OUTSTANDING NIL ON 25.02.2011) 3. 15.03.2011 50,00,000 50,00,000 6. THE ASSESSEE WAS HELD TO BE IN DEFAULT AND ADDIT ION OF RS.10,14,893/- TO THE EXTENT OF ACCUMULATED PROFITS ON THE DATE OF AD VANCING THE LOAN WAS RS.9,65,100/- (UPTO PREVIOUS YEAR) + RS.49,793/- (P ROFIT DURING THE YEAR AS PER ASSESSEES WORKING = RS.10,14,893/-) AND THE SAME W ERE ADDED IN THE HANDS OF THE ASSESSEE. 7. THE CIT(A) UPHELD THE ADDITION IN THE HANDS OF T HE ASSESSEE AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SIMILAR ISSUES AROSE BEFORE THE TRIBUNAL WITH REGARD TO RE LATED CONCERNS, WHEREIN IT WAS NOTED THAT THOUGH ADVANCES WERE MADE BUT ON THE SAME DATE, THERE WERE TRANSACTION OF RECEIPT AND PAYMENTS ITSELF BY BOTH THE PARTIES. THE TRIBUNAL THUS ADDRESSED ITSELF AS TO WHETHER SUCH TRANSACTI ON IS COVERED IN THE DEFINITION OF DEEMED DIVIDEND IN THE HANDS OF THE A SSESSEE U/S 2(22)(E) OF THE ACT OR NOT. THE TRIBUNAL HELD THE ISSUE TO BE COVER ED BY THE DECISION OF PRAVEEN BHIMSI CHHEDA SHIVSADAN VS DCIT REPORTED IN 141 TTJ 58 AGAINST WHICH THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS PRA VIN BHIMSI CHHEDA IN 48 ITA NO.3993/DEL/2015 ASSESSMENT YEAR 2011-12 4 TAXMANN.COM 151 (BOMBAY) HAS DISMISSED THE APPEAL O F THE REVENUE HOLDING THAT WHEN THE COMPANY GOT BACK ITS FUNDS ON THE SAM E DAY, IT CANNOT FALL INTO THE DEFINITION OF THE DEEMED DIVIDEND. 9. FOLLOWING THE SAME PARITY OF REASONING AND DECIS ION OF HONBLE BOMBAY HIGH COURT, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE HOLDING THAT WHERE THE TRANSACTION ENTERED INTO BY TWO COMPANIES WERE BUSINESS TRANSACTIONS; WHERE BOTH THE PARTIES WERE ENGAGED IN SIMILAR TRAD E AND ACTIVITIES; THEN IT WAS NOT HIT BY THE PROVISIONS OF SECTION 2(22)(E) OF TH E ACT. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE ISSUE IS SIM ILAR WHEREIN THE BUSINESS TRANSACTION WAS BETWEEN TWO PARTIES AND THE ASSESSE E HAD PRODUCED THE BANK STATEMENTS DURING THE COURSE OF HEARING BEFORE US E VIDENCING THE AMOUNT BEING ADVANCED AND RECEIVED BACK ON THE SAME DATE. IN SU CH SCENARIO, THE ISSUE STANDS SQUARELY COVERED BY THE ORDER OF HONBLE BOM BAY HIGH COURT IN CIT VS PRAVIN BHIMSI CHHEDA (SUPRA). ACCORDINGLY, WE FIND NO MERIT IN THE ADDITION IN THE HANDS OF THE ASSESSEE U/S 2(22)(E) OF THE ACT A ND THE SAME IS DELETED. THUS, GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED.. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH MAY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUSHMA CHOWLA) +, - / ACCOUNTANT MEMBER ! / VICE PRESIDENT / DATED : 14 TH MAY, 2020 * AMIT KUMAR * ITA NO.3993/DEL/2015 ASSESSMENT YEAR 2011-12 5 +%3$/&7(8+(&9 COPY OF THE ORDER IS FORWARDED TO : 1. 01 / THE APPELLANT 2. $201 / THE RESPONDENT 3. :& ; < / THE CIT(A) 4. = :& / THE PR. CIT 5. 6. (>?$/&/ * * / DR, ITAT, DELHI ?)@9 GUARD FILE. +% / BY ORDER , 2(&$/& // TRUE COPY // ' AB-C , * ASSISTANT REGISTRAR, ITAT, DELHI