M/s. Mantri Tea Company Pvt. Ltd., , Kolkata V. Principal CIT, Central - 2, Kolkata , Kolkata

ITA 542/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6861 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Opportunity of being heard; Deemed dividend; Set aside
• Section: 2(22)(e); 263

Judgement Text

I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NOS. 542 & 543/KOL/2018 ASSESSMENT YEARS: 2008-2009 & 2011-2012 M/S. MANTRI TEA COMPANY PVT. LIMITED,.............. ....................APPELLANT CONTINENTAL CHAMBERS, 4 TH FLOOR, 15A, HEMANTA BASU SARANI, KOLKATA-700 001 [PAN: AACCD 4001 B] -VS.- PRINCIPAL COMMISSIONER OF INCOME TAX,.............. ..........................RESPONDENT CENTRAL, KOLKATA-2, AAYAKAR BHAWAN POORVA, 5 TH FLOOR, ROOM NO. 501, 110, SHANTI PALLY, KOLKATA-700 107 APPEARANCES BY: SHRI MIRAJ D. SHAH, FCA, FOR THE APPELLANT SHRI A.K. NAYAK, CIT, D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : MARCH 19, 2019 DATE OF PRONOUNCING THE ORDER : MAY 03, 2019 O R D E R PER BENCH:- THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST TWO SEPARATE ORDERS DATED 23.02.2018 AND 12.02.2018 OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL, KOLKATA-2 PASS ED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEARS 20 08-09 AND 2011-12 RESPECTIVELY. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF GROWING/MANUFACTURING OF TEA. IN TH E ASSESSMENTS COMPLETED UNDER SECTION 153A/143(3) OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION VIDE ORDERS DATED 30.03.2016, THE TOT AL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS. NIL AND AT A LOSS I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 2 OF RS.43,05,260/- FOR A.YS. 2008-09 AND 2011-12 RES PECTIVELY. THE RECORD OF THE SAID ASSESSMENTS CAME TO BE EXAMINED BY THE LD. PRINCIPAL CIT. ON SUCH EXAMINATION, HE FOUND THAT THE ASSESSEE-COMPAN Y HAD RECEIVED UNSECURED LOAN OF RS.2,11,95,024/- FROM ANOTHER GRO UP COMPANY NAMELY M/S. VIJAYSHREE INDUSTRIES PVT. LIMITED FOR THE PR EVIOUS YEAR RELEVANT TO A.Y. 2008-09 AND RS.1,66,00,000/- FROM M/S. GOVIND PROMOTERS PVT. LIMITED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2 011-12. HE ALSO FOUND THAT SHRI DEVENDRA KUMAR MANTRI WAS A COMMON SHAREH OLDER IN THE ASSESSEE-COMPANY AS WELL AS IN M/S. VIJAYSHREE INDU STRIES PVT. LIMITED AND M/S. GOVIND PROMOTERS PVT. LIMITED HAVING SUBST ANTIAL SHAREHOLDING. HE FURTHER FOUND THAT M/S. VIJAYSHREE INDUSTRIES PV T. LIMITED AS WELL AS M/S. GOVIND PROMOTERS PVT. LIMITED WERE HAVING SUBS TANTIAL ACCUMULATED PROFIT DURING THE YEARS UNDER CONSIDERATION. ACCORD ING TO THE LD. PRINCIPAL CIT, THE LOAN AMOUNTS RECEIVED BY THE ASSESSEE-COMP ANY DURING THE YEARS UNDER CONSIDERATION THUS WERE LIABLE TO BE ASSESSED IN THE HANDS OF THE ASSESSEE-COMPANY AS DEEMED DIVIDEND UNDER SECTION 2 (22)(E) OF THE ACT AND THERE WAS AN ERROR IN THE ORDERS OF THE ASSESSI NG OFFICER PASSED UNDER SECTION 153A/143(3) IN NOT MAKING ANY ENQUIRI ES/VERIFICATION IN RESPECT OF THE SAID LOANS SO AS TO CONSIDER THE APP LICABILITY OF SECTION 2(22)(E). HE ACCORDINGLY ISSUED NOTICES UNDER SECTI ON 263 REQUIRING THE ASSESSEE TO SHOW-CAUSE AS TO WHY REMEDIAL ACTION SH OULD NOT BE TAKEN BY EXERCISING THE POWERS UNDER SECTION 263 TO REVISE T HE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 153A/143(3) FOR BOTH THE YEARS UNDER CONSIDERATION. 3. IN REPLY TO THE SHOW-CAUSE NOTICES ISSUED BY THE LD. PRINCIPAL CIT UNDER SECTION 263, WRITTEN SUBMISSIONS WERE FILED B Y THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION VIDE LETTERS DATED 24.11. 2017 STATING, INTER ALIA, AS UNDER:- FOR ASSESSMENT YEAR: 2008-09 :- WITH RESPECT TO YOUR QUERY REGARDING IMPLICATION O F SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 WITH RESPECT T O LOAN TRANSACTIONS ENTERED INTO WITH M/S VIJAYSHREE INDUS TRIES PVT. LTD. WE WOULD LIKE TO STATE THAT M/S VIJAYSHREE IND USTRIES PVT. I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 3 LTD. HAS ADVANCED LOAN TO THE ASSESSEE COMPANY IN I TS ORDINARY COURSE OF BUSINESS AND LOAN ADVANCED BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS IS OUT OF PU RVIEW OF SECTION 2(22)(E) OF THE I. T. ACT, 1961. WE WOULD LIKE TO FURTHER SUBMIT THAT THE SAID COMPA NY HAD DULY CHARGED INTEREST ON THE LOAN GIVEN AND THUS SU CH TRANSACTION SHOULD BE TREATED AS BEING ENTERED DURI NG THE NORMAL COURSE OF BUSINESS. COPY OF LOAN CONFIRMATIO N AS WELL AS COPY OF AUDITED FINANCIAL STATEMENTS OF VIJAYSHR EE INDUSTRIES PVT. LTD. FOR THE A.Y. 2012-13 ARE ENCLO SED HEREWITH FOR YOUR KIND PERUSAL. HENCE, THE SAID LOAN TRANSAC TION SHOULD NOT BE CONSIDERED AS DEEMED DIVIDEND AND CHARGEABLE IN THE HANDS OF THE ASSESSEE-COMPANY. IN SUPPORT OF OUR CO NTENTION WE WOULD LIKE TO SUBMIT THAT THE HON' BLE KOLKATA H IGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA V CIT (2011) 3 38 ITR 538 HELD THAT FOR GRATUITOUS LOAN OR ADVANCES GIVEN BY A COMPANY TO THOSE CLASSES OF SHAREHOLDERS WOULD COME WITHIN THE PURVIEW OF SECTION 2(22)(E) BUT NOT TO THE CLAU SES WHERE LOAN OR ADVANCES IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY BY SUCH SHAREHOLDERS. IN OUR CASE ALSO THE INTEREST PAID BY THE ASSESSEE COMPANY WAS A RETURN ON LOAN GIVEN BY M/S VIJAYSHREE INDUSTRIES PVT. LTD. THE AM OUNT BEING NON- GRATUITOUS IS NOT COVERED U/S 2(22)(E). FOR ASSESSMENT YEAR: 2011-12 :- WITH RESPECT TO YOUR QUERY REGARDING IMPLICATION O F SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 WITH RESPECT T O LOAN TRANSACTIONS ENTERED INTO WITH M/S GOVIND PROMOTERS PVT. LTD. WE WOULD LIKE TO STOLE THAT M/S GOVIND PROMOTERS PV T. LTD. BEING NON-BANKING FINANCIAL COMPANY IS OUT OF THE P URVIEW OF THE ABOVE MENTIONED SECTION SINCE THE COMPANY ADVAN CES LOAN IN ITS ORDINARY COURSE OF BUSINESS AND LENDING OF M ONEY IS SUBSTANTIAL PART OF ITS BUSINESS. A COPY OF NBFC CE RTIFICATE IN CASE OF GOVIND PROMOTERS PVT. LTD HAS BEEN ENCLOSED HEREWITH. SIR, WE ARE REPRODUCING AN EXTRACT OF SECTION 2(22) (E) BELOW FOR YOUR KIND PERUSAL- '(E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) MADE AFTER THE 31ST DAY OF MAY, 1987, BY WAY OF ADV ANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BE NEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIX ED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICI PATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A ME MBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID CONCERN)) OR AN Y PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL B ENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE CO MPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS; BUT 'DIVIDEND' DOES NOT INCLUDE- I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 4 (I) DISTRIBUTION MADE IN ACCORDANCE WITH SUB-CLAUSE (C) OR SUB- CLAUSE (D) IN RESPECT OF ANY SHARE ISSUED FOR FULL CASH CONSIDERATION, WHERE THE HOLDER OF THE SHORE IS NOT ENTITLED IN THE EVENT OF LIQUIDATION TO PARTICIPATE IN THE SURP LUS ASSETS; (IA) A DISTRIBUTION MADE IN ACCORDANCE WITH SUB-CLA USE (C) OR SUB-CLAUSE (D) IN SO FAR AS SUCH DISTRIBUTION IS AT TRIBUTABLE TO THE CAPITALISED PROFITS OF THE COMPANY REPRESENTING BONUS SHARES ALLO1TED TO ITS EQUITY SHAREHOLDERS AFTER TH E 31 ST DAY OF MARCH, 1964, AND BEFORE THE 1 ST DAY OF APRIL, 1965; (II) ANY ADVANCE OR LOAN MADE TO A SHAREHOLDER FOR THE SAID CONCERN BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS, WHERE THE LENDING OF MONEY IS A SUBSTANTIAL PART OF THE BUSINESS OF THE COMPANY;' FROM THE SECTION 2(22) (E), IT TRANSPIRES THAT A CO MPANY WHICH IS CARRYING ON BUSINESS OF GRANTING OF LOANS AND AD VANCE IS OUT OF PURVIEW OF SECTION 2(22)(E). SINCE, M/S GOVIND P ROMOTERS PVT. LTD. IS AN NBFC AND ITS PRINCIPAL BUSINESS IS OF GRANTING OF LOANS AND ADVANCES, SECTION 2(22)(E) IS NOT APPLICA BLE IN THIS CASE. COPY OF AUDITED FINANCIAL STATEMENTS OF GOVIN D PROMOTERS PVT. LTD. FOR THE A.Y. 2011-12 IS ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. IN SUPPORT OF OUR CONTENTION WE WOULD LIKE TO PLACE RELIANCE ON A RECENT CASE OF DCIT VS. SINDHU HOLDIN GS LTD. ITA NO.2766 (DELHI) OF 2012) (A.Y. 2008-09) (29.01.2016 ) WHERE IT HAS BEEN HELD BY THE HON'BLE DELHI ITAT THAT - 'MOREOVER, THE FENDER COMPANIES ARE NBFC WHICH ARE ALSO EXCLUDED FROM THE SAID DEEMING PROVISION, THEREFORE , WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL AND WE UPHO LD THE LD. CIT (A)'S ORDER AND DISMISS THIS GROUND.' WE WOULD LIKE TO FURTHER SUBMIT THAT THE SAID COMPA NY HAD DULY CHARGED INTEREST ON THE LOAN GIVEN AND THUS SUCH TR ANSACTION SHOULD BE TREATED AS BEING ENTERED DURING THE NORMA L COURSE OF BUSINESS. COPY OF LOAN CONFIRMATION IS ENCLOSED HER EWITH FOR YOUR KIND PERUSAL. HENCE, THE SAID LOAN TRANSACTION SHOULD NOT BE CONSIDERED AS DEEMED DIVIDEND AND CHARGEABLE IN THE HANDS OF THE ASSESSEE COMPANY. IN SUPPORT OF OUR CONTENTI ON WE WOULD LIKE TO SUBMIT THAT THE HON'BLE KOLKATA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA V CIT (2011) 338 ITR 538 H ELD THAT FOR GRATUITOUS LOAN OR ADVANCES GIVEN BY A COMPANY TO THOSE CLASSES OF SHAREHOLDERS WOULD COME WITHIN THE PURVI EW OF SECTION 2(22) (E) BUT NOT TO THE CLAUSES WHERE LOAN OR ADVANCES IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON T HE COMPANY BY SUCH SHAREHOLDERS. IN OUR CASE ALSO THE INTEREST PAID BY THE ASSESSEE COMPANY WAS A RETURN ON LOAN GIVEN BY M/S GOVIND PROMOTERS PVT. LTD. THE AMOUNT BEING NON-GRATUITOUS IS NOT COVERED U/S 2(22)(E). I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 5 THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE BY THE LD. PRINCIPAL CIT. HAVING REGARD TO THE FACTS OF TH E CASE AND KEEPING IN VIEW CERTAIN JUDICIAL PRONOUNCEMENTS DISCUSSED BY H IM IN HIS IMPUGNED ORDER, HE HELD THAT THE ASSESSMENTS MADE BY THE ASS ESSING OFFICER UNDER SECTION 153A/143(3) FOR BOTH THE YEARS UNDER CONSID ERATION WERE PASSED WITHOUT MAKING ANY ENQUIRY OR VERIFICATION REGARDIN G THE APPLICABILITY OF SECTION 2(22)(E) TO THE LOANS IN QUESTION RECEIVED BY THE ASSESSEE- COMPANY FROM THE OTHER GROUP COMPANIES, WHICH WERE NECESSARY IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUCH LACK O F ENQUIRY OR VERIFICATION MADE THE SAID ORDERS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. HE ACCORDINGLY SET ASIDE THE O RDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 153A/143(3) FOR BOT H THE YEARS UNDER CONSIDERATION VIDE ORDERS PASSED UNDER SECTION 263 WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE THE ASSESSMENTS AFRES H AFTER MAKING PROPER ENQUIRY AND VERIFICATION ON THE ISSUE AND AFTER AFF ORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGGRIEV ED BY THE ORDERS OF THE LD. PRINCIPAL CIT PASSED UNDER SECTION 263 FOR BOTH THE YEARS UNDER CONSIDERATION, THE ASSESSEE HAS PREFERRED THESE APP EALS BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. PRINCIPAL CIT VIDE HIS IMPUGNED ORDERS PASSED UNDER SECTION 263 H AS SET ASIDE THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTIO N 153A/143(3) OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION ON THE G ROUND THAT THE NECESSARY ENQUIRY OR VERIFICATION REGARDING APPLICA BILITY OF THE PROVISION OF SECTION 2(22)(E) TO THE LOANS IN QUESTION TAKEN BY THE ASSESSEE- COMPANY FROM OTHER GROUP COMPANIES WAS NOT MADE BY THE ASSESSING OFFICER. IN THIS REGARD, HE INVITED OUR ATTENTION T O THE COPIES OF NOTICES ISSUED BY THE ASSESSING OFFICER UNDER SECTION 142(1 ) PLACED IN HIS PAPER BOOK TO POINT OUT THAT THE DETAILS OF ALL THE LOANS AND ADVANCES WERE CALLED FOR BY THE ASSESSING OFFICER DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AND THE SAME WERE DULY FURNISHED BY THE ASSESSEE. HE ALSO I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 6 INVITED OUR ATTENTION TO THE RELEVANT ANNEXURE OF T HE TAX AUDIT REPORT SUBMITTED BY THE ASSESSEE ALONGWITH ITS RETURNS OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION TO POINT OUT THAT THE LOA N AMOUNTS IN QUESTION TAKEN BY THE ASSESSEE FROM OTHER GROUP CONCERNS DUR ING THE YEARS UNDER CONSIDERATION AND SQUARED OFF DURING THE SAID YEARS ITSELF WERE DULY REFLECTED THEREIN. HE ALSO POINTED OUT THAT THE FUL L PARTICULARS OF PERSONS WHO WERE BENEFICIAL OWNERS OF EQUITY SHARES OF THE ASSESSEE-COMPANY HOLDING MORE THAN 10% SHARES WERE CALLED FOR BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME WERE DULY FURNISHED BY THE ASSESSEE. HE SUBMITTED THAT THE AS SESSEE-COMPANY DURING THE YEARS UNDER CONSIDERATION HAD PAID INTER EST ON THE LOANS IN QUESTION TAKEN FROM THE OTHER GROUP COMPMANIES AND THE SAME WAS DULY SHOWN IN THE RELEVANT ANNEXURE OF THE TAX AUDIT REP ORT SHOWING PAYMENTS TO RELATED PERSONS SPECIFIED IN SECTION 40 A(2)(B) OF THE ACT. HE CONTENDED THAT ALL THE RELEVANT DETAILS THUS WERE F URNISHED BY THE ASSESSEE IN THE TAX AUDIT REPORTS FILED ALONGWITH T HE RETURNS OF INCOME AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDI NGS AS PER THE REQUIREMENTS OF THE ASSESSING OFFICER. HE CONTENDED THAT SINCE THE ASSESSEE-COMPANY HAD PAID INTEREST ON THE LOAN AMOU NTS IN QUESTION TAKEN FROM OTHER GROUP COMPANIES, THE PROVISIONS OF SECTION 2(22)(E) WERE NOT APPLICABLE AS HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA (338 ITR 538). HE ALSO CON TENDED THAT THE ASSESSEE-COMPANY WAS NOT THE SHAREHOLDER IN SUCH GR OUP COMPANIES AND, THEREFORE, THE LOAN AMOUNTS RECEIVED FROM THE SAID COMPANIES COULD NOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE A SSESSEE UNDER SECTION 2(22)(E) OF THE ACT. HE CONTENDED THAT PROPER ENQUI RY AND VERIFICATION THUS WAS MADE BY THE ASSESSING OFFICER DURING THE C OURSE OF ASSESSMENT PROCEEDINGS AS REGARDS THE APPLICABILITY OF SECTION 2(22)(E) TO THE LOAN AMOUNTS IN QUESTION RECEIVED BY THE ASSESSEE-COMPAN Y FROM THE OTHER GROUP COMPANIES AND AFTER HAVING CONSIDERED ALL THE FACTS OF THE CASE AS WELL AS THE LEGAL POSITION, A CONSCIOUS DECISION WA S TAKEN BY HIM THAT THE PROVISIONS OF SECTION 2(22)(E) WERE NOT APPLICABLE. HE CONTENDED THAT THERE WAS THUS NO ERROR IN THE ORDERS OF THE ASSESS ING OFFICER PASSED I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 7 UNDER SECTION 153A/143(3) FOR BOTH THE YEARS UNDER CONSIDERATION AS ALLEGED BY THE LD. PRINCIPAL CIT AND THE LD. PRINCI PAL CIT WAS NOT JUSTIFIED IN REVISING THE SAME BY EXERCISING THE POWERS CONFE RRED UPON HIM UNDER SECTION 263. HE URGED THAT THE IMPUGNED ORDERS PASS ED BY THE LD. PRINCIPAL CIT UNDER SECTION 263 MAY, THEREFORE, BE SET ASIDE AND THAT OF THE ASSESSING OFFICER PASSED UNDER SECTION 153A/143 (3) BE RESTORED BACK. 5. THE LD. D.R., ON THE OTHER HAND, STRONGLY SUPPOR TED THE IMPUGNED ORDERS PASSED BY THE LD. PRINCIPAL CIT UNDER SECTIO N 263. HE CONTENDED THAT EVEN THOUGH THE RELEVANT DETAILS WERE AVAILABL E ON RECORD, THE ASSESSING OFFICER OUGHT TO HAVE MADE THE NECESSARY ENQUIRY TO ASCERTAIN THE APPLICABILITY OF SECTION 2(22)(E) TO THE LOAN A MOUNTS IN QUESTION RECEIVED BY THE ASSESSEE-COMPANY FROM THE OTHER GRO UP COMPANIES. HE SUBMITTED THAT THE QUERY RAISED BY THE ASSESSING OF FICER AND DETAILS FURNISHED BY THE ASSESSEE AS HIGHLIGHTED BY THE LD. COUNSEL FOR THE ASSESSEE WERE GENERAL IN NATURE AND THERE WAS NO SP ECIFIC ENQUIRY OR VERIFICATION MADE BY THE ASSESSING OFFICER REGARDIN G THE APPLICABILITY OF SECTION 2(22)(E) TO THE LOAN AMOUNTS IN QUESTION TA KEN BY THE ASSESSEE FROM THE OTHER GROUP COMPANIES. AS REGARDS THE LEGA L POSITION POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE BY RELYING, INTER ALIA, ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA), THE LD. D.R. CONTENDED THAT THERE IS NOTHING TO SHOW THAT THE ASSESSING OFFICER HAS TAKEN INTO CONSIDERA TION THIS LEGAL POSITION WHILE PASSING THE ORDER UNDER SECTION 153A/143(3). HE CONTENDED THAT THE ENQUIRY OR VERIFICATION ON THE ISSUE OF APPLICA BILITY OF SECTION 2(22)(E) AS REQUIRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE THUS WAS NOT MADE BY THE ASSESSING OFFICER WHILE PASSING THE ORDERS UNDER SECTION 153A/143(3) AND SUCH LACK OF ENQUIRY OR VERIFICATIO N MADE THE SAID ORDERS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTE REST OF REVENUE WARRANTING REVISION UNDER SECTION 263 AS RIGHTLY DO NE BY THE LD. PRINCIPAL CIT. I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 8 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS DEMONSTRA TED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE BASIS OF RELEVANT DOCUMENTA RY EVIDENCE PLACED IN THE PAPER BOOK, THE DETAILS OF UNSECURED LOANS TAKE N DURING THE YEARS UNDER CONSIDERATION BY THE ASSESSEE-COMPANY FROM TH E OTHER GROUP COMPANIES WERE CALLED FOR BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME WERE DULY FURNI SHED BY THE ASSESSEE. EVEN THE DETAILS OF SHAREHOLDERS HOLDING MORE THAN 10% SHARES IN THE ASSESSEE-COMPANY WERE CALLED FOR BY THE ASSE SSING OFFICER AND THE SAME WERE DULY FURNISHED BY THE ASSESSEE. IN THE TA X AUDIT REPORTS FILED BY THE ASSESSEE-COMPANY ALONG WITH ITS RETURNS OF I NCOME, THE UNSECURED LOANS RECEIVED BY THE ASSESSEE-COMPANY DURING THE Y EARS UNDER CONSIDERATION FROM THE OTHER GROUP COMPANIES AND SQ UARED OFF IN THE SAME YEARS WERE DULY REFLECTED AND EVEN INTEREST PA ID THEREON WAS DULY SHOWN IN THE SAID TAX AUDIT REPORTS IN THE DETAILS OF PAYMENTS MADE TO RELATED PERSONS AS SPECIFIED IN SECTION 40A(2)(B). AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, ALL THE RELEVANT DETAILS TO ASCERTAIN THE APPLICABILITY OF SECTION 2(22)(E) TO THE LOAN AMOUN TS IN QUESTION TAKEN BY THE ASSESSEE-COMPANY DURING THE YEARS UNDER CONSIDE RATION FROM THE OTHER GROUP COMPANIES THUS WERE EITHER AVAILABLE ON THE RECORD BEFORE THE ASSESSING OFFICER OR THE SAME WERE CALLED FOR B Y HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY RAISING SPECIF IC QUERIES AND AFTER APPLYING HIS MIND TO THE SAID DETAILS, A CONSCIOUS DECISION WAS TAKEN BY HIM AS REGARDS THE NON-APPLICABILITY OF SECTION 2(2 2)(E) TO THE LOAN AMOUNTS IN QUESTION WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A/143(3) OF THE ACT. IN OUR OPINION, IT, THEREFO RE, CANNOT BE SAID THAT THERE WAS AN ERROR IN THE ORDERS OF THE ASSESSING O FFICER IN NOT MAKING ANY ENQUIRY OR VERIFICATION ON THE ISSUE OF APPLICA BILITY OF SECTION 2(22)(E) TO THE LOAN AMOUNTS IN QUESTION AS ALLEGED BY THE LD. PRINCIPAL CIT AND THE REVISION UNDER SECTION 263 BY THE LD. P RINCIPAL WAS NOT CALLED FOR. I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 9 7. IT IS ALSO OBSERVED THAT INTEREST WAS PAID BY T HE ASSESSEE ON THE LOAN AMOUNTS IN QUESTION TAKEN FROM THE OTHER GROUP COMPANIES AND AS HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA), THE SAID LOANS GIVEN TO THE ASSES SEE-COMPANY BY THE OTHER GROUP COMPANIES AS A CONSEQUENCE OF FURTHER C ONSIDERATION, WHICH WERE BENEFICIAL TO THE SAID COMPANIES, CANNOT BE TR EATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E). IT IS ALSO RELEVAN T TO NOTE HERE THAT THE ASSESSEE-COMPANY WAS NOT THE SHAREHOLDER IN THE OTH ER GROUP COMPANIES DURING THE YEAR UNDER CONSIDERATION AND THE AMOUNTS OF LOAN IN QUESTION THUS COULD NOT BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) EVEN ON THIS GROUND AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE. AT THE TIME OF HEARING BEFORE THE TRIBUNA L, THE LD. D.R. HAS NOT DISPUTED THIS LEGAL POSITION CITED BY THE LD. COUNS EL FOR THE ASSESSEE IN SUPPORT OF THE ASSESSEES CASE THAT SECTION 2(22)(E ) WAS NOT APPLICABLE TO THE LOAN AMOUNTS IN QUESTION RECEIVED BY THE ASSESS EE-COMPANY FROM THE OTHER GROUP COMPANIES. HE, HOWEVER, HAS CONTENDED T HAT THERE IS NOTHING ON RECORD TO SHOW THAT THIS LEGAL POSITION WAS SPEC IFICALLY CONSIDERED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NTS UNDER SECTION 153A/143(3) OF THE ACT. WE ARE UNABLE TO ACCEPT THI S CONTENTION OF THE LD. D.R. IN OUR OPINION, THE ASSESSING OFFICER IS NOT O NLY EXPECTED TO BE AWARE OF SUCH LEGAL POSITION BUT IS ALSO DUTY-BOUND TO AP PLY THE SAME WHILE COMPLETING THE ASSESSMENTS, ESPECIALLY WHEN IT IS P ROPOUNDED BY THE HONBLE JURISDICTIONAL HIGH COURT. IN THE PRESENT C ASE, THE ASSESSING OFFICER THUS HAD NOT ONLY MADE THE ENQUIRY OR VERIF ICATION AS REQUIRED IN THE FACTS OF THE CASE TO ASCERTAIN THE APPLICABILIT Y OF SECTION 2(22)(E) TO THE LOAN AMOUNTS RECEIVED BY THE ASSESSEE FROM THE OTHER GROUP COMPANIES, BUT A CONSCIOUS DECISION WAS ALSO TAKEN BY HIM KEEPING IN VIEW THE LEGAL POSITION THAT SECTION 2(22)(E) WAS N OT APPLICABLE TO THE LOAN AMOUNTS IN QUESTION RECEIVED BY THE ASSESSEE D URING THE YEARS UNDER CONSIDERATION FROM THE OTHER GROUP COMPANIES. IN OU R OPINION, THERE WAS THUS NO ERROR IN THE ORDERS OF THE ASSESSING OFFICE R FOR THE YEARS UNDER CONSIDERATION PASSED UNDER SECTION 153A/143(3) OF T HE ACT AS ALLEGED BY THE LD. PRINCIPAL CIT AND THE REVISION OF THE SAME UNDER SECTION 263 BY I.T.A. NO S. 542 & 543/KOL/2018 (ASSESSMENT YEARS: 2008-2009 & 2011-2012) M/S. MANTR I TEA COMPANY PVT. LIMITED 10 THE LD. PRINCIPAL CIT WAS NOT CALLED FOR. IN THAT V IEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDERS PASSED BY THE LD. PRINCIP AL CIT UNDER SECTION 263 AND RESTORE THAT OF THE ASSESSING OFFICER PASSE D UNDER SECTION 153A/143(3) OF THE ACT. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 03, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 3 RD DAY OF MAY, 2019 COPIES TO : (1) M/S. MANTRI TEA COMPANY PVT. LIMITED, CONTINENTAL CHAMBERS, 4 TH FLOOR, 15A, HEMANTA BASU SARANI, KOLKATA-700 001 (2) PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL, KOLKATA-2, AAYAKAR BHAWAN POORVA, 5 TH FLOOR, ROOM NO. 501, 110, SHANTI PALLY, KOLKATA-700 107 (3) COMMISSIONER OF INCOME TAX- , (4) THE DEPARTMENTAL REPRESENTATIVE (5) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.