ACIT, New Delhi V. Shri Atul Kumar Mittal, New Delhi

ITA 5619/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6709 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Source of fund; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.5619/DEL./2013 (ASSESSMENT YEAR : 2008-09) ACIT, CENTRAL CIRCLE 2, VS. SHRI ATUL KUMAR MITTA L, NEW DELHI. A 287, RAJOURI GARDEN, NEW DELHI. (PAN : AAAHA5422N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE REVENUE BY : SHRI ANIL JAIN, CIT DR O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (APPEALS)-XXXI, NEW DELHI DATED 12.07.2013 FOR THE ASSESSMENT YEAR 2008- 09. 2. THE SOLE GROUND OF APPEAL IS REGARDING DELETION OF ADDITION OF RS.21,20,75,000/- MADE BY THE AO ON ACCOUNT OF DEEM ED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961 (HEREI NAFTER THE ACT). 3. IN THIS CASE, ASSESSMENT WAS COMPLETED BY THE AO U/S 143 (3) OF THE ACT. THE AO NOTED THAT THE ASSESSEE HAD A SHAREHOL DING OF 95.39% IN M/S. A.K. SERVICES PRIVATE LIMITED. IT WAS NOTED BY THE AO THAT FROM THE BANK ITA NO.5619/DEL./2013 2 ACCOUNT NO.13488 OF THE ASSESSEE, HUGE FUNDS HAVE B EEN TRANSFERRED FROM THE BANK ACCOUNT OF HIS SON ABHINAV KUMAR MITTAL WHO, A CCORDING TO THE AO, HAD NO SHAREHOLDING AND HAS NO BUSINESS CONNECTION WITH THE ASSESSEE. AFTER EXAMINING THE TRANSACTIONS BETWEEN M/S. A.K. SERVIC ES PRIVATE LIMITED, THE ASSESSEE AND SHRI ABHINAV KUMAR MITTAL, THE AO CONC LUDED THAT SHRI ABHINAV KUMAR MITTAL WAS USED AS A CONDUIT. SO, HE HELD THAT THE MONEY ADVANCED BY HIS SON TO THE ASSESSEE ATTRACTED SECTI ON 2(22)(E) OF THE ACT AND MADE ADDITION OF RS.21,20,75,000/- AS DEEMED DIVIDE ND. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) WHO WAS PLEASED TO DELETE THE SAME WHICH WAS CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL. THE TRIBUNAL IN THE FIRST ROUND SET ASIDE THE ORDER OF THE CIT (A) AND REMANDED THE MATTER BACK TO THE CIT (A) TO DECIDE THE ISSUE AFTER HEARING THE AO. THEREAFTER, IN THE SECOND ROUND, T HE CIT (A), AFTER HEARING THE AO, TAKES NOTE THAT THE AO WAS NOT ABLE TO SHED ANY LIGHT OR FURNISH ANY NEW EVIDENCES OR FACTS WHICH COULD HAVE PERSUADED H IM TO TAKE A DIFFERENT VIEW THAN WHICH WAS TAKEN BY HIS PREDECESSOR CIT (A ) ON THE ISSUE, SO HE CONCURRED WITH THE VIEWS OF THE PREDECESSOR CIT (A) AND ORDERED DELETION OF ADDITION OF RS.21,20,75,000/-. 5. AGGRIEVED BY THE SAID ORDER, THE REVENUE IS IN A PPEAL BEFORE US. 6. LD. DR FOR THE REVENUE TOOK OUR ATTENTION TO PAG E 3 OF THE AOS ORDER TO SHOW THAT HOW MONEY HAS BEEN RECEIVED FROM M/S. A.K. SERVICES PRIVATE ITA NO.5619/DEL./2013 3 LIMITED TO ABHINAV KUMAR MITTAL AND THEN MONEY IS T RANSACTED FROM ABHINAV KUMAR MITTALS ACCOUNT TO THE ASSESSEES ACCOUNT. ACCORDING TO HIM, THOUGH ABHINAV KUMAR MITTAL WAS REPAYING THE LOANS BACK TO M/S. A.K. SERVICES PRIVATE LIMITED STILL IT IS OBVIOUS THAT ABHINAV KU MAR MITTAL WAS ADVANCING THE AMOUNTS TO THE ASSESSEE WHO HAD MORE THAN 95% S HAREHOLDING IN M/S. A.K. SERVICES PRIVATE LIMITED WHICH OBVIOUSLY ATTRA CTS SECTION 2(22)(E) OF THE ACT. HE STRESSED THAT ABHINAV KUMAR MITTAL WAS NOT HING BUT A CONDUIT TO AVOID SECTION 2(22)(E) OF THE ACT, THEREFORE, THE A O RIGHTLY MADE THE ADDITION AND THE LD. CIT (A) ERRED IN DELETING THE SAME. TH EREFORE, ACCORDING TO HIM, THE LD. CIT (A) ERRED IN DELETING THE ADDITION. TH EREFORE, HE WANTS US TO REVERSE THE ORDER OF THE CIT (A) AND UPHOLD THE ORD ER OF THE AO. 7. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT AO S ORDER HAS BEEN ADJUDICATED BY TWO SUPERIOR OFFICERS (CIT (A) IN TW O ROUNDS) AND ON THE FACTS OF THE CASE, HAVE CONCURRED THAT THE TRANSACTION BE TWEEN ABHINAV KUMAR MITTAL AND ASSESSEE CANNOT ATTRACT THE FICTION CREA TED BY SECTION 2(22)(E) OF THE ACT. HE FURTHER SUBMITTED THAT ABHINAV KUMAR MITTA L IS A DIRECTOR OF M/S. A.K. SERVICES PRIVATE LIMITED AND WONDERED AS TO HO W THE AO CAME TO THE CONCLUSION THAT HE HAS NO BUSINESS CONNECTION WITH M/S. A.K. SERVICES PRIVATE LIMITED. HE EMPHASIZED THAT M/S. A.K. SERVI CES PRIVATE LIMITED IS A MERCHANT BANKER AND THAT HAS BEEN ACKNOWLEDGED BY T HE AO IN PAGE 4 OF HIS ORDER. THE LD. AR POINTED OUT THAT ABHINAV KUMAR MI TTAL HAS RECEIVED ITA NO.5619/DEL./2013 4 ADVANCE FOR HIS OWN PURPOSE FROM M/S. A.K. SERVICES PRIVATE LIMITED FROM THAT COMPANY IN WHICH HE IS A DIRECTOR; APART FROM THIS, HE HAS ALSO RECEIVED SUBSTANTIAL AMOUNT OF MONEY IN THE SAME BANK ACCOUN T FROM OTHER SOURCES AND TOOK OUR ATTENTION TO THE CHART ENCLOSED WITH T HE WRITTEN SUBMISSIONS BEFORE THE CIT (A). THE LD. AR POINTED OUT THAT A PERUSAL OF THE CHART WILL CLEARLY SHOW THAT THE NET FUNDS ADVANCED BY ABHINAV KUMAR MITTLAL FROM M/S. A.K. SERVICES PRIVATE LIMITED ARE TO THE TUNE OF RS.15.72 CRORES AGAINST WHICH HE HAS MADE HIS OWN INVESTMENT AND OTHER PAYM ENTS ON HIS OWN ACCOUNTS AND OTHER THAN PAYMENTS ON HIS OWN ACCOUNT OTHER THAN THE PAYMENTS TO THE ASSESSEE TO THE TUNE OF NEARLY TO R S.21.62 CRORES WHICH PROVES THAT FUNDS RECEIVED BY HIM FROM M/S. A.K. SERVICES PRIVATE LIMITED HAVE BEEN USED BY HIM FOR HIS OWN PURPOSES AND IT CANNOT BE SAID THAT THESE FUNDS HAVE BEEN GIVEN BY HIM OR PASSED BY HIM TO THE ASSE SSEE. THE LD. AR ALSO POINTED OUT THAT ABHINAV KUMAR MITTAL HAS RECEIVED FURTHER FUNDS FROM OTHER SOURCES TO THE TUNE OF RS.14.20 CRORES APART FROM R ECEIVING FUNDS FROM THE ASSESSEE ALSO. AND HE TOOK OUR ATTENTION TO PAGES 40 & 41 OF THE PAPER BOOK WHERE THE CHART CLEARLY SHOWS THE TRANSFER OF FUNDS FROM ASSESSEE TO ABHINAV KUMAR MITTAL WAS TO THE TUNE OF MORE THAN RS.59 CRO RES. THUS, ACCORDING TO THE LD. AR, ALL THESE FUNDS IN HIS BANK ACCOUNT ARE MIXED AND BLENDED AND THE MONEY ADVANCED TO THE ASSESSEE IS OUT OF THIS BLEND ED FUNDS. THUS, THE LD. AR SUBMITS THAT THE AO ERRED IN ASSUMING THAT THE MONE Y PAID BY ABHINAV ITA NO.5619/DEL./2013 5 KUMAR MITTAL TO THE ASSESSEE WAS RECEIVED FROM M/S. A.K. SERVICES PRIVATE LIMITED. THE LD. AR FURTHER SUBMITTED THAT IT IS A SETTLED LAW THAT PRESUMPTION IN CASE OF A PERSON HAVING MIXED FUND I.E. INTEREST BEARING FUNDS AND NON- INTEREST BEARING OWN FUNDS AND IF HE IS LENDING MON EY TO SISTER CONCERN, IF HE HAS ENOUGH NON-INTEREST BEARING OWN FUNDS THEN THE PRESUMPTION IS THAT MONEY LENDED IS FROM OWN FUND AND NOT FROM BORROWED INTEREST BEARING FUND. HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE CALCU TTA HIGH COURT IN THE CASE OF CIT VS. BRITANNIA INDUSTRIES LTD. REPORTED IN 198 CTR 426 WHEREIN HONBLE HIGH COURT WHILE DEALING WITH THE QUESTION AS TO WHETHER THE INTEREST FREE ADVANCE GIVEN OUT OF BANK ACCOUNT WHEREIN BOTH THE OWN MONEY AS WELL AS THE MONEY BORROWED ON INTEREST ARE DEPOSITED, CO ULD BE SAID TO HAVE BEEN MADE ONLY OUT OF THE BORROWED FUNDS. HONBLE HIGH COURT IN THIS CASE HAS HELD THAT WHERE SUFFICIENT FUNDS ARE AVAILABLE IN S UCH MIXED ACCOUNT FOR MAKING FREE ADVANCE THEN IN THAT EVENT IT CANNOT BE SAID THAT THE AMOUNT BORROWED AS CAPITAL FROM THE BANK WAS GIVEN AS INTE REST FREE ADVANCE. THE HONBLE HIGH COURT HELD AS UNDER :- IF IT IS ESTABLISHED THAT PAYMENT WAS MADE FROM TH E MIXED ACCOUNT AND THE ASSESSEE HAD SUFFICIENT FUNDS THEN IT IS TO BE PRESUMED THAT THE PAYMENT WAS MADE OUT OF THE ASSESSEES OWN FUND AND THAT TH E BORROWED CAPITAL WAS NOT SIPHONED OUT. THE LD. AR THEREFORE SUBMITTED THAT THE AFORESAID P RINCIPLE HAS BEEN REITERATED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF TIN BOX COMPANY REPORTED IN 260 ITR 637 AS WELL AS HONBLE MADRAS H IGH COURT IN THE CASE OF ITA NO.5619/DEL./2013 6 HOTEL SAVERA REPORTED IN 239 ITR 795 AND HONBLE BO MBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWER LTD. 318 ITR 3 33 (BOM.). LD. AR REITERATED THAT IT IS NOT A CASE WHERE THE ASSESSEE HAS BORROWED MONEY FROM MR. ABHINAV KUMAR MITTAL WHO IN TURN HAS BORROWED M ONEY FROM MIS AK. SERVICES PVT. LTD. IT IS A CASE WHERE THE ASSESSEE HAS RECEIVED BACK THE AMOUNT. IT WAS FURTHER SUBMITTED THAT MR. ABHINAV K UMAR MITTAL HAS SUBSTANTIAL FUNDS WITH HIM. RELYING ON BOTH THE OR DERS OF THE CIT (A), ACCORDING TO THE LD. AR, THE LD. CIT (A) RIGHTLY DE LETED THE ADDITION MADE BY THE AO. THEREFORE, HE DOES NOT WANT US TO INTERFER E WITH THE REASONED ORDER PASSED BY THE LD. CIT (A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL. THIS IS THE SECOND ROUND BEFORE US. DURING THE FIRST ROUND BEF ORE US, THE TRIBUNAL HAD SET ASIDE THE ORDER OF THE CIT (A) DATED 31.03.2010 AND REMANDED BACK TO THE FILE OF THE CIT (A) TO GIVE PROPER HEARING TO THE AO BEF ORE PASSING THE FRESH ORDER ON THE APPEAL. WE FIND THAT THE CIT (A) HAD COMPLI ED WITH THE DIRECTION OF THE TRIBUNAL AND HAD GIVEN SUFFICIENT OPPORTUNITY T O THE AO TO ADDUCE ANY FACTS / EVIDENCE WHICH COULD HAVE PERSUADED HIM TO TAKE A DIFFERENT VIEW FROM THE VIEWS OF HIS PREDECESSOR CIT (A). WE FIND THAT DURING THE SECOND ROUND BEFORE THE CIT (A), THE AO COULD NOT POINT OUT ANY FACTUAL MATERIAL WHICH COULD HAVE PERSUADED THE CIT (A) TO COME TO A DIFF ERENT CONCLUSION FROM THAT OF THE PREDECESSOR CIT (A). WE FIND THAT THE CIT (A) HAS ALSO GONE THROUGH ITA NO.5619/DEL./2013 7 ALL THE RECORDS AND AFTER REAPPRAISAL OF THE EVIDEN CE HAS CONCURRED WITH THE VIEW THAT HAS BEEN TAKEN IN THE FIRST ROUND BY HIS PREDECESSOR CIT (A). WHEN TWO SUPERIOR AUTHORITIES OF THE AO HAVE EXERCISED T HEIR APPELLATE AUTHORITY AND ADJUDICATED THE ISSUE AFTER HEARING BOTH THE SI DES AND REAPPRAISED THE EVIDENCE BY GOING THROUGH THE MATERIAL ON RECORD TH EY CAME TO THE SAME CONCLUSION BASED ON EVIDENCE ADDUCED BY THE ASSESSE E. THE GENUINENESS OF THESE EVIDENCES / MATERIAL ON WHICH BOTH THE CIT (A ) HAVE REACHED THE CONCLUSION HAVE NOT BEEN CHALLENGED BY THE DEPARTME NT BEFORE US, SO BOTH CIT (A) ORDER ARE BASED ON FACTS / EVIDENCE TO SUPP ORT THEIR DECISIONS. WHEREAS WE NOTE THAT THE AO WHILE MAKING THE ADDITI ON HAD ASKED FOR EXPLANATION FROM THE ASSESSEE ON 31.12.2009 VIDE OR DER SHEET ENTRY ON THAT DATE AND BRUSHED ASIDE THE EXPLANATION OF THE ASSES SEE AND PASSED THE ORDER ON THAT DATE ITSELF I.E. ON 31.12.2009. SO THE IMPUGN ED ADDITION WAS MADE IN HURRY BY AO BECAUSE THAT WAS THE LAST DATE FOR PASS ING THE ORDER. NOW THAT TWO CIT (A)S HAVE GONE THROUGH THE RECORDS AND MAT ERIAL FURNISHED BY THE ASSESSEE AND AFTER HEARING THE AO, THEY HAVE PASSED THE ORDER DELETING THE ADDITION MADE IN HASTE BY THE AO ON THE BASIS OF MA TERIALS PLACED BEFORE THEM, THE GENUINITY OF THE SAME OR THE FIGURES REFL ECTED IN THE ACCOUNTS OF ABHINAV KUMAR MITTAL OR THE ASSESSEE OR THE CHART H AVE NOT BEEN ASSAILED BEFORE US. ITA NO.5619/DEL./2013 8 9. IN THIS BACK DROP WHEN WE LOOK INTO THE CASE WE TAKE NOTE THAT THE ENTIRE CONTROVERSY IS REVOLVING AROUND DEEMED DIVID END U/S 2(22)(E) OF THE ACT. THE AFORESAID PROVISION GETS ATTRACTED TO ANY PAYMENT BY WAY OF ADVANCE OR LOAN MADE BY A COMPANY IN WHICH PUBLIC I S NOT SUBSTANTIALLY INTERESTED TO (A) SHAREHOLDER BENEFICIARY HOLDING NOT LESS THAN 10% VOTING POWER IN THE COMPANY; OR (B) ANY CONCERN IN WHICH S UCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS SUBSTANTIAL INTEREST; OR (C) ANY PERSON ON BEHALF OF OR FOR THE BENEFIT OF SUCH SHAR EHOLDER; AND THE RESTRICTION OF THE DEEMED DIVIDEND WOULD BE RESTRICTED TO THE A CCUMULATED PROFIT WAS COMPANY FOR THE RELEVANT ASSESSMENT YEAR. HERE, IN THIS CASE, THE QUESTION IS WHETHER THE PAYMENT MADE BY THE COMPANY TO ABHINAV KUMAR MITTAL, A DIRECTOR IS MADE ON BEHALF OF SUBSTANTIAL SHAREHOLD ER ASSESSEE OR THE PAYMENT IS MADE ON BEHALF OR FOR THE INDIVIDUAL BENEFIT OF THE SUBSTANTIAL SHAREHOLDER ASSESSEE IN THIS CASE. THE LENDING OF LOAN/ADVANCE S TO ABHINAV KUMAR MITTAL BY M/S. A.K. SERVICES PRIVATE LIMITED IS NOT DISPUT ED AND THE FACT THAT THE ABHINAV KUMAR MITTAL IS MAKING THE REPAYMENT IS ADM ITTED BY THE AO BY OBSERVING AT PAGE 2 OF HIS ORDER, THE TRANSACTION BETWEEN M/S. A.K. SERVICES PRIVATE LIMITED, SHRI A.K. MITTAL AND ABHINAV WERE EXAMINED. OF COURSE, THERE ARE REPAYMENTS OF ADVANCES BY ABHINAV TO M/S. A.K. SERVICES PRIVATE LIMITED. . HOWEVER, THE ONLY ALLEGATION OF THE AO IS THAT THE LOAN/ ADVANCES GIVEN TO ABHINAV KUMAR MITTAL IS PASSED ON TO THE ASSESSEE AND HE ITA NO.5619/DEL./2013 9 IS MERELY USED AS A CONDUIT. SO, THE LENDING OF AD VANCES/LOAN BY M/S. A.K. SERVICES PRIVATE LIMITED TO ABHINAV KUMAR MITTAL AN D REPAYMENT OF THE LOAN BY ABHINAV KUMAR MITTAL TO M/S. A.K. SERVICES PRIVA TE LIMITED IS NOT DISPUTED. NOW, THE ONLY QUESTION THAT HAS TO BE CO NSIDERED IS WHETHER THE LENDING OF LOAN TO THE DIRECTOR, SHRI ABHINAV KUMAR MITTAL BY M/S. A.K. SERVICES PRIVATE LIMITED CAN BE TREATED AS ON BEHAL F OF OR FOR THE BENEFIT OF THE ASSESSEE SUBSTANTIAL SHAREHOLDER OF M/S. A.K. S ERVICES PRIVATE LIMITED. 10. WE TAKE NOTE THAT THE AO IN PAGE 4 OF HIS ORDER HAS MADE A FINDING THAT M/S. A.K. SERVICES PRIVATE LIMITED IS A MERCHANT BA NKER AND HAS PROCEEDED ON THE BASIS THAT SHRI ABHINA KUMAR MITTAL HAS NO B USINESS CONNECTION WITH M/S. A.K. SERVICES, WHICH IS FACTUALLY INCORRECT. THE FACT IS THAT SHRI ABHINAV KUMAR MITTAL IS A DIRECTOR OF M/S. A.K. SER VICES AND HAS DRAWN DIRECTORS REMUNERATION TO THE TUNE OF RS.46,33,838 /-. SHRI ABHINAV KUMAR MITTAL DOES NOT HAVE ANY SHARE IN M/S. A.K. SERVICE S IS NOT DISPUTED BY THE REVENUE. THE ASSESSEES CONTENTION IS THAT HE HAS ADVANCED LOAN IN THE RELEVANT ASSESSMENT YEAR TO SHRI ABHINAV KUMAR MITT AL TO THE TUNE OF RS.59,03,67,824/- AND SHRI ABHINAV KUMAR MITTAL WA S ONLY RETURNING THE AMOUNT FROM HIS OWN FUND AND OTHER SOURCES AND IS N OT FROM THE AMOUNT ADVANCED BY M/S. A.K. SERVICES PVT. LTD. FOR HIS OW N PURPOSE. IN SUCH A SCENARIO, WE HAVE TO PERUSE THE SOURCE OF FUNDS IN THE HANDS OF MR. ABHINAV KUMAR MITTAL. ON GOING THROUGH THE SAME, WE NOTE T HAT HE HAS RECEIVED ITA NO.5619/DEL./2013 10 RS.13,10,67,659/- FROM SALE OF SHARES, RS.46,33,838 /- ON ACCOUNT OF DIRECTORS REMUNERATION, RS.45,05,134/- AS RENTAL INCOME AND O THER INCOME TOTALING RS.15.72 CRORES. THUS, THERE ARE SUFFICIENT RECEIP TS IN THE HANDS OF MR. ABHINAV KUMAR MITTAL. FURTHER, THE ACCOUNT WITH THE ASSESSEE IS A RUNNING ACCOUNT WHERE PAYMENTS ARE BEING GIVEN BY THE ASSES SEE TO MR. ABHINAV KUMAR MITTAL AND AT THE SAME TIME IT IS PAID BACK. THE AO HAS MERELY MADE A LIST OF PAYMENT MADE BY MR. ABHINAV KUMAR MITTAL TO THE ASSESSEE, IGNORING THE OTHER IMPORTANT FACT THAT IS PAYMENT M ADE BY ASSESSEE TO MR. ABHINAV KUMAR MITTAL. IN ORDER TO EXAMINE THIS CLA IM OF ASSESSEE, WE HAVE GONE THROUGH THE PAPER BOOK PAGES 41 & 42 WHERE WE SEE THAT THE ASSESSEE HAS MADE PAYMENT OF THE FOLLOWING AMOUNTS TO MR. AB HINAV KUMAR MITTAL:- DATE PAYMENT BY ASSESSEE TO MR. ABHINAV KUMAR MITTAL 05.04.2007 4,00,000 09.07.2007 95,00,000 10.07.2007 10,00,000 10.07.2007 55,00,000 01.08.2007 5,50,000 03.08.2007 33,00,000 23.08.2007 50,00,000 27.08.2007 1,07,84,195 29.08.2007 75,60,000 07.09.2007 69,00,000 07.09.2007 1,00,00,000 10.09.2007 84,50,000 11.09.2007 8,00,000 17.09.2007 4,00,000 18.09.2007 1,00,00,000 ITA NO.5619/DEL./2013 11 19.09.2007 17,00,000 19.09.2007 15,00,000 20.09.2007 12,00,000 21.09.2007 70,00,000 24.09.2007 16,00,000 27.09.2007 52,50,000 28.09.2007 75,00,000 01.10.2007 50,00,000 03.10.2007 15,50,000 04.10.2007 76,11,179 05.10.2007 38,00,000 08.10.2007 34,50,000 10.10.2007 58,00,000 16.10.2007 91,00,000 18.10.2007 25,00,000 22.10.2007 13,00,000 01.11.2007 40,64,000 01.11.2007 15,00,000 19.11.2007 25,00,000 20.11.2007 57,00,000 22.11.2007 45,00,000 22.11.2007 25,00,000 29.11.2007 10,00,000 01.12.2007 20,00,000 04.12.2007 45,00,000 06.12.2007 27,50,000 07.12.2007 11,00,000 13.12.2007 1,60,00,000 02.01.2008 1,64,00,000 04.01.2008 53,00,000 05.01.2008 5,38,00,000 08.01.2008 5,00,000 14.01.2008 1,17,00,000 15.01.2008 50,00,000 21.01.2008 1,89,00,000 29.01.2008 2,25,00,000 30.01.2008 3,04,00,000 30.01.2008 1,75,00,000 31.01.2008 1,60,00,000 01.02.2008 80,00,000 04.02.1008 79,00,000 ITA NO.5619/DEL./2013 12 04.02.2008 48,450 05.02.2008 30,00,000 05.02.2008 50,00,000 06.02.2008 7,00,000 18.02.2008 60,00,000 21.02.2008 1,00,00,000 25.02.2008 1,63,00,000 27.02.2008 35,00,000 29.02.2008 2,03,00,000 03.03.2008 5,00,000 05.03.2008 1,35,00,000 06.03.2008 6,00,00,000 10.03.2008 10,00,000 11.03.2008 2,90,00,000 12.03.2008 8,00,000 13.03.2008 50,00,000 13.03.2008 5,00,000 19.03.2008 72,00,000 TOTAL 59,03,67,824 AS AGAINST THIS THE PAYMENTS WHICH HAVE BEEN MADE B Y MR. ABHINAV KUMAR MITTAL TO THE ASSESSEE AS STATED IN THE ASSESSMENT ORDER ARE AS UNDER :- DATE PAYMENT BY MR. ABHINAV KUMAR MITTAL TO ASSESSEE 08.06.2007 100,000 13.06.2007 625,000 03.07.2007 700,000 04.07.2007 2,400,000 09.07.2007 1,800,000 11.07.2007 550,000 13.07.2007 12,500,000 16.07.2007 2,500,000 17.07.2007 3,800,000 17.07.2007 2,900,000 18.07.2007 100,000 18.07.2007 11,000,000 ITA NO.5619/DEL./2013 13 20.07.2007 2,500,000 24.07.2007 500,000 06.08.2007 6,000,000 09.08.2007 750,000 10.08.2007 6,950,000 26.09.2007 100,000 28.09.2007 900,000 09.10.2007 900,000 11.10.2007 3,500,000 16.10.2007 2,500,000 17.10.2007 1,100,000 18.10.2007 850,000 3.11.2007 500,000 12.11.2007 2,000,000 19.11.2007 2,500,000 20.11.2007 300,000 26.12.2007 3,100,000 08.01.2008 60,900,000 09.01.2008 14,200,000 28.01.2008 45,600,000 27.02.2008 1,000,000 12.02.2008 6,900,000 12.02.2008 2,000,000 14.12.2008 6,100,000 19.02.2008 750,000 27.03.2008 700,000 TOTAL 212,075,000 ON GOING THROUGH THE ABOVE DETAILS, IT IS SEEN THAT THE FIRST TRANSACTION BETWEEN THE ASSESSEE AND ABHINAV KUMAR MITTAL IS ON 5.04.07 WHEN THE ASSESSEE HAS ADVANCED AN AMOUNT OF RS.4.00 LACS TO ABHINAV KUMAR MITTAL. AND THE FIRST DAY WHEN ABHINAV KUMAR MITTAL RECEIVE D THE LOAN FROM M/S. A.K. SERVICES WAS ON 08.06.2007 TO THE TUNE OF RS.2 LAKHS AND THEREAFTER ABHINAV KUMAR MITTAL HAS MADE THE PART REPAYMENT OF LOAN TO THE ASSESSEE BY ITA NO.5619/DEL./2013 14 DEBITING RS.1 LAKH FROM HIS MIXED FUND TO ASSESSEE S ACCOUNT RS.1 LAKH ON THE SAME DAY ITSELF CANNOT BE A GROUND TO PRESUME THAT ABHINAV KUMAR MITTAL HAS REPAID LOAN FROM THE BORROWED FUND WHEN ADMITTEDLY HE HAD OPENING BALANCE OF RS.2,70,133.70. IT IS APPARENT FROM A PERUSAL OF THE CHARTS ABOVE THAT SUBSTANTIAL PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO MR. ABHINAV KUMAR MITTAL. THE TOTAL AMOUNT OF THE PAYMENTS MADE BY TH E ASSESSEE TO MR. ABHINAV KUMAR MITTAL COMES TO RS.59,03,67,824. THUS IN OUR OPINION THE AO WAS NOT JUSTIFIED IN SIMPLY DRAWING ADVERSE INFE RENCE ON ACCOUNT OF THE PAYMENTS MADE BY MR. ABHINAV KUMAR MITTAL TO THE AS SESSEE IGNORING THE OTHER ASPECT OF PAYMENTS MADE BY THE ASSESSEE TO MR . ABHINAV KUMAR MITTAL. WE HAVE ALSO PERUSED THE UTILIZATION OF THE FUNDS O F MR. ABHINAV KUMAR MITTAL. 11. AFTER PERUSAL OF THE CHART KEPT IN PAGES 40 & 4 1 OF THE PAPER BOOK WHICH IS THE DATE-WISE SOURCE OF FUNDS OF ABHINAV K UMAR MITTAL, THE CIT (A) IN THE FIRST ROUND HAS GIVEN FACTUAL FINDINGS WHICH HAS BEEN CONCURRED BY THE IMPUGNED ORDER OF THE CIT (A) WHICH IS REPRODUCED : - 6.4 I HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE A.R. THAT THE AMOUNT OF RS.21,20,75,000/- HAS NOT BEEN ADVANCED BY ABHIN AV MITTAL TO THE ASSESSEE OUT OF FUNDS RECEIVED BY HIM FROM A.K. SER VICES PRIVATE LTD. BUT RATHER THE SAME HAS BEEN PAID BY ABHINAV MITTAL TO THE ASSESSEE EITHER OUT OF THE MONEY RECEIVED BY HIM FROM THE AS SESSEE OR OUT OF HIS OTHER INCOME OTHER THAN THE FUNDS RECEIVED FROM A.K . SERVICES PRIVATE LTD. THE CHARTS WHICH HAVE BEEN DRAWN BY THE ASSESS EE FROM THE BANK ACCOUNT OF ABHINAV MITTAL HAVE BEEN PERUSED AND IT IS SEEN THAT THERE IS ONLY ONE BANK ACCOUNT OF ABHINAV KUMAR MITTAL WHERE IN ALL THE FUNDS ARE MIXED INCLUDING THE FUNDS RECEIVED BY HIM FROM A.K. SERVICES PRIVATE LTD. AS ALSO THE FUNDS RECEIVED BY HIM REPR ESENTING HIS OTHER INCOME AS WELL AS THE FUNDS RECEIVED BY HIM FROM TH E ASSESSEE. FROM THE ITA NO.5619/DEL./2013 15 PERUSAL OF THE CHART SHOWING UTILIZATION OF FUNDS I N THE CASE OF ABHINAV KUMAR MITTAL IT IS SEEN THAT THE NET FUNDS BORROWED BY HIM A.K. SERVICES PRIVATE LTD. HAVE BEEN UTILIZED BY HIM FOR MAKING H IS OWN INVESTMENTS OR FOR MAKING OTHER PAYMENTS WHICH PERTAIN TO HIM AND CANNOT BE SAID TO BE PERTAINING TO THE ASSESSEE. IT IS FURTHER SEEN THAT APART FROM THE FUNDS RECEIVED FROM A.K. SERVICES PRIVATE LTD. SHRI ABHIN AV MITTAL HAS ALSO RECEIVED FUNDS AMOUNTING TO NEARLY RS.14.21 CRORES REPRESENTING HIS OTHER INCOME AND RECEIPTS AS ALSO THE AMOUNTS TO TH E TUNE OF NEARLY RS.59.00 CRORES RECEIVED BY HIM FROM THE ASSESSEE A ND ALL THESE FUNDS ARE MIXED IN THE BANK ACCOUNT OF ABHINAV MITTAL. IT IS OUT OF THIS MIXED FUNDS THAT ABHINAV MITTAL HAS PAID THE AMOUNT OF RS .21,20,75,000/- AS EXTRACTED BY THE A.O. IN THE IMPUGNED ORDER AND IN MY CONSIDERED OPINION THE PRESUMPTION DRAWN BY THE LEARNED A.O. T HAT SUCH AMOUNT IS ONLY OUT OF FUNDS RECEIVED BY ABHINAV MITTAL FROM A .K. SERVICES PRIVATE LTD. CANNOT BE SUSTAINED AS HELD BY THE HON'BLE KOL KATA HIGH COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD. REPORTED IN 1 98 CTR 426 WHEREIN IT HAS BEEN HELD THAT WHERE SUFFICIENT FUNDS WERE AVAI LABLE IN SUCH MIXED ACCOUNT FOR MAKING THE INTEREST FREE ADVANCE THEN I T IS TO BE PRESUMED THAT THE PAYMENT WAS MADE OUT OF ASSESSEE'S OWN FUN DS AND THAT THE BORROWED CAPITAL WAS NOT SIPHONED OFF. IT IS HOWEVE R, SEEN THAT THE PRESUMPTION RAISED BY THE LEARNED A.O. IN THIS CASE IS THAT THE ASSESSEE HAS RECEIVED THE FUNDS FROM ABHINAV MITTAL OUT OF B ORROWED FUNDS AND NOT OUT OF OWNED FUNDS. IN MY CONSIDERED OPINION SU CH PRESUMPTION IS WHOLLY WRONG AND ADDITION CANNOT BE SUSTAINED ON TH E BASIS OF SUCH A PRESUMPTION. I HAVE ALSO CONSIDERED THE CHART FILED BY THE ASSES SEE ON MY DIRECTIONS TO SHOW THE DATE WISE SOURCE OF FUNDS IN THE CASE OF ABHINAV MITTAL OUT OF WHICH THE PAYMENTS OF RS.21,20,75,000 /- HAVE BEEN MADE TO THE ASSESSEE. IT IS SEEN THAT THE FIRST TRANSACTIO N BETWEEN THE ASSESSEE AND ABHINAV MITTAL IS ON 5.04.07 WHEN THE ASSESSEE HAS ADVANCED AN AMOUNT OF RS.4.00 LACS TO ABHINAV KUMAR MITTAL. THEREAFTER THE ASSESSEE HAS MADE FURTHER PAYMENTS TO ABHINAV MITTAL AND THE TOT AL PAYMENT MADE BY THE ASSESSEE TO ABHINAV MITTAL DURING THE INSTANT Y EAR IS TO THE TUNE OF RS.59.03 CRORES. IT IS FURTHER SEEN THAT WHEN DATE WISE PAYMENTS MADE BY ABHINAV MITTAL TO THE ASSESSEE OF RS.21,20,75,000/ - AS EXTRACTED BY THE A.O. IN THE IMPUGNED ORDER ARE COMPARED TO THE PAYM ENTS MADE BY THE ASSESSEE TO ABHINAV MITTAL THEN IT IS EVIDENT THAT OUT OF RS.21,20,75,000/- AN AMOUNT OF RS.17,66,50,000/- IS IN FACT THE AMOUNT REPAID / REFUNDED BY ABHINAV KUMAR MITTAL TO THE AS SESSEE OUT OF FUNDS ADVANCED FIRST BY THE ASSESSEE TO ABHINAV KUMAR MIT TAL. THEREFORE THESE PAYMENTS CANNOT BE SAID TO BE DEEMED DIVIDEND IN TH E HANDS OF THE ASSESSEE AS THE SAME CANNOT BE SAID TO HAVE BEEN RE CEIVED FROM A.K. SERVICES PRIVATE LTD. BY ABHINAV KUMAR MITTAL. ON T HE CONTRARY THESE AMOUNTS OF RS.17,66,50,000/- HAVE BEEN PAID BY ABHI NAV KUMAR MITTAL OUT OF FUNDS RECEIVED BY HIM FROM THE ASSESSEE AND THEREFORE THE FINDING OF THE A.O. THAT THIS AMOUNT HAS BEEN RECEIVED BY A BHINAV KUMAR MITTAL FROM A.K. SERVICES PRIVATE LTD. IS FOUND TO BE FACT UALLY WRONG. THE BALANCE AMOUNT OF RS.3,54,25,000/- HAS ALSO BEEN PA ID BY ABHINAV ITA NO.5619/DEL./2013 16 KUMAR MITTAL TO THE ASSESSEE OUT OF HIS OTHER INCOM E AMOUNTING TO RS.14.21 CRORES WHICH IS ALSO CREDITED IN THE SAME BANK ACCOUNT AND THEREFORE THIS AMOUNT ALSO CANNOT BE SAID TO HAVE B EEN RECEIVED BY THE ASSESSEE FROM A.K. SERVICES PRIVATE LTD. THROUGH AB HINAV KUMAR MITTAL. IN MY CONSIDERED OPINION IF THE PROVISIONS OF SECTION 2(22)(E) ARE STRICTLY CONSTRUED AS THEY ARE REQUIRED TO BE SO CO NSTRUED THEN IT CANNOT BE SAID THAT THE AMOUNT OF RS.21,20,75,000/- IS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. THIS FACTUAL FINDING OF THE LD. CIT (A) IN THE FIR ST ROUND WAS WITH THE AO WHEN HE WAS ATTENDING THE PROCEEDING DURING THE SEC OND ROUND BEFORE THE CIT (A) AFTER THE TRIBUNALS REMAND. WE FIND THAT AO HAS NOT MADE ANY ADVERSE COMMENTS IN HIS WRITTEN SUBMISSION WHICH HA S BEEN INCORPORATED IN THE IMPUGNED CIT (A) ORDER. AND BEFORE US ALSO, TH E LD. DR COULD NOT CONTROVERT THE FACTUAL FINDING RECORDED AS ABOVE BY THE CIT (A). THE GRIEVANCE OF THE AO, THAT HOW THE CIT (A) IN FIRST ROUND COULD SAY THAT ABHINAV KUMAR MITTALS ACCOUNT HAS MIXED FUND. THE CIT (A) HAS CATEGORICALLY MADE A FINDING THAT ABHINAV KUMAR MIT TAL HAS ONLY ONE BANK ACCOUNT AND ALL THE FUNDS ARE COMING INTO THAT ACCO UNT ONLY. THIS FACTUAL FINDING OF THE CIT (A) IN THE FIRST ROUND WAS BEFOR E THE AO WHO COULD HAVE BROUGHT IN EVIDENCE TO SHOW THAT ABHINAV KUMAR MITT AL HAS MORE BANK ACCOUNTS BUT WE FIND THAT AO HAS NOT MADE ANY SUCH REVELATION NOR MADE ANY ADVERSE COMMENT IN RESPECT TO THE SAID FACT OF ONE ACCOUNT MAINTAINED BY ABHINAV KUMAR MITTAL. WHEN THE CHART SHOWING THE D ATE-WISE SOURCE FUNDING OF ABHINAV KUMAR MITTAL AND THE ASSESSEE WA S BEFORE THE AO WHEN HE WAS GIVEN OPPORTUNITY TO BE HEARD, THEN RATHER F INDING FAULT WITH THE FIRST ITA NO.5619/DEL./2013 17 CIT (A) ORDER IN ASKING THE ASSESSEE TO PREPARE THE CHART, HE SHOULD HAVE CHALLENGED IT, IF THERE IS ANY FACTUAL INACCURACIES , IF ANY. NEITHER WE COULD FIND ANY SUCH ALLEGATION OF THE AO NOR LD. DR RAISE D ANY SUCH ALLEGATION BEFORE US. 12. IT IS AN ADMITTED FACT THAT MR. ABHINAV KUMAR M ITTAL IS NOT A SHAREHOLDER OF M/S. A.K. SERVICES LTD. AND THERE IS NO DISPUTE ABOUT THIS FACT. THE ONLY ALLEGATION IS THAT THE PAYMENT BY M/S. A.K . SERVICES LTD. HAS BEEN MADE BY THE COMPANY ON BEHALF OR FOR THE INDIVIDUAL BENEFIT OF THE ASSESSEE. IN THE FACTS OF THE CASE, IT CANNOT BE ASSUMED THAT , THESE PAYMENTS HAVE BEEN MADE ON BEHALF OF THE ASSESSEE. THESE PAYMENTS HAV E BEEN ADVANCED BY M/S. A.K. SERVICES TO MR. ABHINAV KUMAR MITTAL WHO IS A DIRECTOR OF THE COMPANY FOR HIS OWN BUSINESS PURPOSE. FUNDS GIVEN T O ABHINAV BY THE COMPANY HAS BEEN UTILIZED BY HIM FOR HIS OWN PURPOS E FROM A PERUSAL OF PAGE 46 OF PB. FURTHER, THESE PAYMENTS CANNOT BE SAID TO BE FOR THE INDIVIDUAL BENEFIT OF THE ASSESSEE WITHOUT BRINGING ANY EVIDEN CE TO SUPPORT SUCH A CONTENTION. UNLESS SOME EVIDENCE IS BROUGHT ON REC ORD MERELY ON SURMISES AND CONJECTURES IT CANNOT BE SAID THAT THE ASSESSEE HAS GOT BENEFITED BY THESE PAYMENTS IN THE LIGHT OF FACTS OF THIS CASE WHEN TH E ASSESSEES CONTENTION THAT ABHINAV KUMAR MITTAL WAS REPAYING THE LOANS GIVEN T O HIM BY THE ASSESSEE AND ABHINAV KUMAR MITTAL HAD MIXED FUND WHICH CONSI STS OF OWN FUND OF RS.15.12 CRORES. THE AO HAS GONE WRONG IN DRAWING ADVERSE INFERENCE ITA NO.5619/DEL./2013 18 WITHOUT APPRECIATING THE FACTS IN THE RIGHT PERSPEC TIVE. ON GOING THROUGH THE DETAILS OF THE ACCOUNT, WE ARE OF THE VIEW THAT CIT (A) WAS RIGHT IN DELETING THE ADDITION. MOREOVER WHEN CURRENT ACCOUNT IS MAI NTAINED BY THE ASSESSEE AND SHRI ABHINAV KUMAR MITTAL, ASSESSEE IS GIVING M ONEY AND RECEIVING IT BACK FROM MR. ABHINAV KUMAR MITTAL, THEN IT CANNOT ATTRACT PROVISIONS OF DEEMED DIVIDEND. IN THE LIGHT OF THE ABOVE, WE FIND THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT (A) AND THE CONCLUSION IS BASE D ON MATERIAL ON RECORD WHICH COULD NOT BE CONTROVERTED BY THE REVENUE BEFO RE US. THEREFORE, WE CONCUR WITH THE FINDING OF THE LD. CIT (A) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LOAN GIVEN TO SHRI ABHINAV KUMAR M ITTAL DOES NOT ATTRACT SECTION 2(22)(E) OF THE ACT, SO THE CIT (A) HAS RIG HTLY DELETED THE ADDITION AND WE UPHOLD THE SAME. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 4 TH DAY OF MARCH, 2016. SD/- SD/- (J.S. REDDY) (A.T. VARKE Y) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 4 TH DAY OF MARCH, 2016/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXXI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.