The DCIT, 1(1), Bhopal V. Shri Keshav Chand Jain, Bhopal

ITA 4/IND/2014

• Counselvise Citation: 422714 RSA 2014
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: YASHWANT SHARMA
• Keywords: Question of law; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER ITA NO.04/IND/2014 A.Y.2006-07 DCIT-1(1), BHOPAL. VS. SHRI KESHAV CHAND JAIN, 235, Z-1, M.P. NAGAR, BHOPAL. PAN: ABEPJ 8275H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.A. VERMA, SR.D.R. ASSESSEE(S) BY : SHRI YASHWANT SHARMA, A.R. /DATE OF HEARING : 08/09/2014 /DATE OF PRONOUNCEMENT: 12/09/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE EMANATING FR OM THE ORDER OF LEARNED CIT(A)-I BHOPAL DATED 30 TH OCTOBER, 2013 AGAINST THE DELETION OF PENALTY OF RS.4 LAC LEVIED U/S.271(1)(C) OF IT A CT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.271(1)(C) DATED 31.03.2011 WERE THAT AN ADDITION OF RS.12,97,138/- WAS MADE BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF IT ACT. DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSEE WAS ASKED TO FURNISH SHARE HOLDING PATTERN OF M/S. NIRMAN SHARE BROKERS PVT. LTD. AND DIRECTED TO EXPLAIN THAT WHY THE LOAN FROM THE SAID COMPANY SHOULD NOT BE CONSIDERED AS DEEMED DIVIDEND U/S. 2(22)(E ) OF IT ACT. THE ITA NO.04/IND/2014 DCIT-1(1) BHOPAL VS. SHRI KESHAV CHAND JAIN A.Y.2006-07 - 2 - A.O. HAD HELD THAT THE ASSESSEE WAS HOLDING MORE TH AN 29% OF SHARES OF THE SAID COMPANY AS A BENEFICIARY SHARE HOLDER. IT WAS CONCLUDED THAT THE INTEREST FREE LOAN GIVEN BY M/S. NIRMAN SHARE BROKE RS PVT. LTD. WAS TAXABLE AS DEEMED DIVIDEND IN THE HANDS OF THE AS SESSEE. WHEN THE MATTER REACHED BEFORE LEARNED CIT(A), VIDE AN ORDER DATED 06.01.2010 THE ACTION OF THE A.O. WAS CONFIRMED. FURTHER, WE H AVE BEEN INFORMED THAT THE SAID ADDITION WAS CONFIRMED BY ITAT INDORE BENCH IN ITA NO.22/IND/2011 (A.Y. 2006-07) ORDER DATED 30 TH OF JANUARY, 2012. THEREAFTER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE HONBLE MADHYA PRADESH HIGH COURT (PRINCIPAL SEAT AT JABALPUR) IN ITA NO.63 OF 2012 AND VIDE AN ORDER DATED 15.02.2013 THE QUESTION OF LAW HAS BEEN ADMITTED AS UNDER: WHETHER THE TRIBUNAL HAS COMMITTED AN ERROR IN SUSTAINING ADDITION OF RETURNED INCOME BY TREATING THE SAME AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 WHILE THE AFORESAID AMOUNT WAS ADVANCED BY THE COMPANY FOR SPECIFIC BUSINESS OR COMMERCIAL PURPOSES AND SAME COULD NOT HAVE BEEN TREATED AS ADVANCE OR LOAN? 2.1 THEREFORE, TWO FOLD ARGUMENT HAS BEEN RAISED BE FORE US. THE FIRST ARGUMENT IS THAT THE PROVISIONS OF SECTION 2(22)(E) ARE THE DEEMING PROVISIONS; THEREFORE, NO PENALTY FOR CONCEALMENT S HOULD HAVE BEEN LEVIED. IN THIS REGARD, A DECISION OF ITAT INDORE B ENCH, INDORE IN THE CASE OF SADANA BROTHERS SALES LTD., 10 TAXMANN.COM 122 (INDORE) HAS BEEN CITED, WHEREIN IT IS HELD THAT THE FACTS OF DE EMED DIVIDEND WERE ALREADY DISCLOSED AND PARTICULARS OF TRANSACTIONS W ERE FILED IN THE RETURN; HENCE, THE IMPOSITION OF PENALTY U/S.271(1)(C) WAS INCORRECT. 3. THE SECOND PLANK OF ARGUMENT OF THE ASSESSEE IS THAT IN A SITUATION WHEN A QUESTION OF LAW HAS BEEN ADMITTED BY THE HON BLE HIGH COURT AND BEING A SUBSTANTIAL QUESTION OF LAW; THEREFORE, THE ISSUE BEING DEBATABLE; ITA NO.04/IND/2014 DCIT-1(1) BHOPAL VS. SHRI KESHAV CHAND JAIN A.Y.2006-07 - 3 - HENCE, NO PENALTY SHOULD BE LEVIED. FOR THIS LEGAL PROPOSITION, RELIANCE IS PLACED UPON A DECISION OF HONBLE DELHI HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. LIQUID INVESTMENT LTD. (ITA NO.240/ 209 ORDER DATED 05.10.2010). THE ASSESSEE HAS ALSO FURNISHED AN ORD ER OF HONBLE BOMBAY HIGH COURT IN TAX APPEAL NO.415 OF 2012 IN T HE CASE OF CIT- VII VS. M/S. NAYAN BUILDERS AND DEVELOPERS, ORDER D ATED 8 TH JULY, 2014 WHEREIN IT IS HELD AS UNDER: 1. HAVING HEARD MR. AHUJA, LEARNED COUNSEL APPEARING ON BEHALF OF THE APPELLANT, WE FIND THAT THIS APPEAL CANNOT BE ENTERTAINED AS IT DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. THE IMPOSITION OF PENALTY WAS FOUND NOT TO BE JUSTIFIED AND THE APPEAL WAS ALLOWED. AS A PROOF THAT THE PENALTY WAS DEBATABLE AND ARGUABLE ISSUE, THE TRIBUNAL REFERRED TO THE ORDER ON ASSESSEES APPEAL IN QUANTUM PROCEEDINGS AND THE SUBSTANTIAL QUESTIONS OF LAW WHICH HAVE BEEN FRAMED THEREIN. WE HAVE ALSO PERUSED THAT ORDER DATED 27 TH SEPTEMBER, 2010 ADMITTING INCOME TAX APPEAL NO.2368 OF 2009. IN OUR VIEW, THERE WAS NO CASE MADE OUT FOR IMPOSITION OF PENALTY AND THE SAME WAS RIGHTLY SET ASIDE. THE APPEAL RAISES NO SUBSTANTIAL QUESTION OF LAW, IT IS DISMISSED. NO COSTS. 3.1 AN ANOTHER ORDER HAS ALSO BEEN CITED, NAMELY, L ATE MOHD. ANWAR KHAN (ITA NO.343/IND/2011, A.Y. 1996-97) BY ITAT IN DORE, BENCH INDORE; WHEREIN REFERRED A DECISION OF SURENDRA SIN GH THAKAR (ITA NO.329/IND/2012 ORDER DATED 29 TH JANUARY, 2013. THERE IS ONE REFERENCE OF REVPAM MERCANTILE, 91 ITD 1273 (AD.) ON THIS ISS UE IN FAVOUR OF THE ASSESSEE THAT IF A QUESTION OF LAW GIVE RISE TO AN OCCASION TO ADMIT BY A HIGH COURT THEN THE PENALTY PROCEEDINGS DO NOT SURV IVE DUE TO THE REASON THAT THE IMPUGNED ADDITION ON THE BASIS OF WHICH TH E PENALTY IN QUESTION HAD BEEN IMPOSED IS DEBATABLE AND SO DO NOT ATTRACT PENALTY. 3.2 AFTER HEARING BOTH THE SIDES, WE ARE OF THE CON SCIENTIOUS VIEW THAT ON ACCOUNT OF BOTH THE REASONS AS DISCUSSED ABOVE; THIS IS NOT A FIT CASE TO IMPOSE THE PENALTY U/S.271(1)(C), THEREFORE, WE HER EBY CONFIRM THE ITA NO.04/IND/2014 DCIT-1(1) BHOPAL VS. SHRI KESHAV CHAND JAIN A.Y.2006-07 - 4 - DELETION OF PENALTY BY LEARNED CIT(A). RESULTANTLY, THE GROUND OF THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- (P.K. BANSAL) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED 12/09/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $%$&' # # ( / CONCERNED CIT 4. # # ( ( ) / THE CIT(A), INDORE 5. +,# &' , # # &' , ./ % / DR, ITAT, INDORE 6. ,01 2 / GUARD FILE. / BY ORDER, 3 33 3/ // /.# $4 .# $4 .# $4 .# $4 ( DY./ASSTT.REGISTRAR) ITAT, INDORE