DCIT 6(4), MUMBAI V. NIRAL C. THUMAR, NAVI MUMBAI

ITA 5624/MUM/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 5938 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 16-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJASWAROOP LD SR DR
• Assessee Lawyers: HIRAL SEJPAL LD
• Keywords: Deemed dividend; Tax effect; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

NIRMALA C.THUMAR ASSESSMENT YEARS : 2008-09 & 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.5624/MUM/2016 & (CROSS OBJECTION NO.149/MUM/2018 ( ASSESSMENT YEAR: 2008-09) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(4) ROOM NO.1925, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT, MUMBAI 400 021 VS. NIRMALA C. THUMAR PLOT NO.72, PTHIK BUNGLOW, RING ROAD NO.3, SECTOR-21 NAVI MUMBAI-400 706 ! ' PAN/GIR NO. ACUPT-0407-A ( !# APPELLANT ) : ( $%!# RESPONDENT ) & I.T.A. NO. 5625/MUM/2016 & CROSS OBJECTION NO.150/MUM/2018 ( ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(4) ROOM NO.1925, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT, MUMBAI 400 021 VS. NIRMALA C. THUMAR PLOT NO.72, PTHIK BUNGLOW, RING ROAD NO.3, SECTOR-21 NAVI MUMBAI-400 706 ! ' PAN/GIR NO. ACUPT-0407-A ( !# APPELLANT ) : ( $%!# RESPONDENT ) ASSESSEE BY : HIRAL SEJPAL, LD. AR REVENUE BY : POOJA SWAROOP, LD. SR. DR & DATE OF HEARING : 23/07/2018 '() / DATE OF PRONOUNCEMENT : 03/10/2018 NIRMALA C.THUMAR ASSESSMENT YEARS : 2008-09 & 2009-10 2 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S [AY] 2008-09 & 2009-10 CONTEST SEPARATE ORDERS OF LD. FIRST APPE LLATE AUTHORITY. THE ASSESSEE HAS FILED CROSS-OBJECTIONS AGAINST THE SAM E. SINCE COMMON ISSUES ARE INVOLVED, THE SAME ARE BEING DISPOSED-OF F BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVIT Y. FIRST, WE TAKE UP CROSS-APPEALS FOR AY 2009-10. CROSS APPEALS FOR AY 2009-10 2.1 THE REVENUE HAS CONTESTED THE ORDER OF LD. COMM ISSIONER OF INCOME TAX (APPEALS)-52, MUMBAI [CIT(A)], APPEAL NO.CIT(A)-52/IT/AC- CC-6(4)/190/2015-16 DATED 22/06/2016 BY RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - (I) WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,00,4 3,383/- U/S. 2(22) (E) OF THE I.T. ACT,1961 WITHOUT APPRECIATING THE FACTS THAT S MT. NIRMALA THUMAR HAS HELD 10% OF SHARES OF M/S. KALPANA STRUCT. CON (P) LTD. AND SHE WAS ALSO HAVING SUBSTANTIAL INTEREST IN M/S. PATHIK CONSTRUC TION AS SHE WAS ENTITLED TO 23% OF THE INCOME OF THE FIRM. (II) WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,00,4 3,383/- U/S. 2(22)(E) OF THE I.T ACT, 1961 WITHOUT APPRECIATING THAT THE LOAN/ A DVANCE GIVEN BY M/S. KALPANA STRUCT CON (P) LTD TO THE M/S PATHIK CONSTR UCTION IS NOT IN THE ORDINARY COURSE OF BUSINESS OF THE COMPANY BECAUSE LENDING WAS NOT AT ALL THE BUSINESS OF M/S. KALPANA STRUCT. CON (P) LTD.? 2.2 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED AS REAL ESTATE BROKER WAS ASSESSED U/S 143(3) READ WITH SECTION 147 ON 28/03/2014 AT RS.104.84 LACS AFTER SOLE ADDITION OF RS.100.43 LACS U/S 2(22)(E) AS AGAINST FINAL ASSESSED INCOME OF RS.4.4 0 LACS U/S 143(3). THE ADDITION MADE U/S 2(22)(E) IS THE SOLE SUBJECT MATTER OF THIS APPEAL. NIRMALA C.THUMAR ASSESSMENT YEARS : 2008-09 & 2009-10 3 2.3 DURING ASSESSMENT PROCEEDINGS IT WAS NOTED THAT THE ASSESSEE WAS HOLDING MORE THAN 10% SHAREHOLDING IN AN ENTITY NAMELY KALPANA STRUC. CON PVT. LTD. [IN SHORT COMPANY] AND WAS ALSO HAVING 23% SHARE IN A PARTNERSHIP CONCERN NAMELY PATHIK CONSTRUCTION [IN SHORT FIRM]. IT WAS NOTED THAT THE FIRM RECEIVED UNSECURED LOAN OF RS.206.66 LACS FROM THE FIRM OUT OF WHICH FRESH LOAN RECEIVED DURING TH E YEAR WAS RS.100.43 LACS. IN VIEW OF ASSESSEES COMMON SHARE IN BOTH TH E CONCERNS, THE PROVISIONS OF DEEMED DIVIDEND AS CONTAINED IN SECTION 2(22)(E) WERE APPLICABLE TO THE FACTS OF THE CASE. THE ASSESSEE D EFENDED THE SAME BY SUBMITTING THAT THE STATED ADVANCES WERE MERE TRADE ADVANCES IN NATURE TOWARDS PURCHASE OF LAND. HOWEVER, AFTER PERUSAL OF AGREEMENT BETWEEN TWO ENTITIES, THE LD. AO, NOT CONVINCED, ADDED THE SAME TO THE INCOME OF THE ASSESSEE SINCE OTHER CONDITIONS AS ENVISAGED BY SECTION 2(22)(E) WERE FULFILLED. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 22/06/2016 WHE REIN THE ASSESSEE REITERATED THE CONTENTIONS AS RAISED BEFORE LD. AO. THE LD. CIT(A) NOTED THAT SIMILAR ADDITIONS WERE MADE U/S 2(22)(2) IN TH E HANDS OF THE FIRM BUT THE SAME WERE DELETED BY FIRST APPELLATE AUTHORITY SINCE THE TRANSACTIONS WERE FOUND TO BE PURELY COMMERCIAL TRANSACTIONS IN NATURE AND THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) WERE NOT APPLICA BLE TO SUCH TRANSACTIONS. IT WAS FURTHER NOTED THAT THE REVENUE CONTESTED THE AFORESAID STAND BEFORE THIS TRIBUNAL VIDE ITA NOS.1 498 & 1499/MUM/2012 DATED 13/02/2015 WHEREIN THE STAND OF FIRST APPELLATE AUTHORITY GOT CONFIRMED. ACCORDINGLY, THE IMPUGNED ADDITIONS WERE DELETED AGAINST WHICH THE REVENUE IS IN FURTHER APP EAL BEFORE US. NIRMALA C.THUMAR ASSESSMENT YEARS : 2008-09 & 2009-10 4 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR], MS.POOJA SWAROOP SUBMITTED THAT THE PROVISIONS OF SECTION 2(22)(E), BEING DEEMING FICTION, WERE APPLICABLE TO THE FACTS OF THE CASE NOTWITHSTA NDING THE FACT THAT THE TRANSACTIONS WERE BUSINESS TRANSACTIONS IN NATURE. THE LD. AUHTORIZED REPRESENTATIVE FOR ASSESSEE [AR], MS. HIRAL SEJPAL SUBMITTED THAT THE MATTER STAND SQUARELY COVERED IN ASSESSEES FAVOR B Y THE ORDER OF THE TRIBUNAL IN THE CASE OF THE FIRM, A COPY OF WHICH H AS BEEN PLACED ON RECORD. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING THE CITED DEC ISION OF THE TRIBUNAL IN THE CASE OF THE FIRM PATHIK CONSTRUCTION. WE FIND THAT SIMILAR ADDITIONS U/S 2(22)(E) WERE MADE IN THE HANDS OF THE FIRM WHI CH WERE DELETED BY FIRST APPELLATE AUTHORITY, FINDING THE SAME TO BE P URELY COMMERCIAL TRANSACTIONS. THE STAND OF LD. FIRST APPELLATE AUTH ORITY HAS BEEN CONFIRMED BY THE TRIBUNAL VIDE CITED ORDER. THEREFO RE, SINCE A VIEW HAS ALREADY BEEN TAKEN, WE FIND NO REASON TO TAKE A DIF FERENT VIEW, THE FACTUAL MATRIX BEING IDENTICAL. ANOTHER REASON TO C ONCUR WITH THE STAND OF THE ASSESSEE IS THAT THE ASSESSEE HERSELF HAS NOT R ECEIVED ANY AMOUNT FROM THE COMPANY RATHER THE AMOUNT HAS BEEN RECEIVE D BY THE FIRM, IN WHICH THE ASSESSEE WAS A PARTNER TO THE EXTENT OF 2 3%. THEREFORE, THE BASIC CONDITION OF SECTION 2(22)(E) I.E. THE ASSESS EE HAS RECEIVED THE AMOUNT FROM THE CONCERN, IS MISSING IN THE CASE. ON BOTH COUNTS, WE CONFIRM THE STAND OF LD. FIRST APPELLATE AUTHORITY. THE REVENUES APPEAL STAND DISMISSED. THE ASSESSEE, IN THE CROSS OBJECTI ON, HAS CONTESTED THE VALIDITY OF REASSESSMENT PROCEEDINGS. THE SAME BECOME MERELY NIRMALA C.THUMAR ASSESSMENT YEARS : 2008-09 & 2009-10 5 ACADEMIC IN NATURE SINCE WE HAVE ALREADY DISMISSED REVENUES APPEAL AND THEREFORE DISMISSED AS INFRUCTUOUS. CROSS APPEALS FOR AY 2008-2009 6. THE ASSESSEE, ON IDENTICAL FACTUAL MATRIX, HAS S UFFERED ADDITION U/S 2(22)(E) FOR RS.57.60 LACS IN QUANTUM ASSESSMENT, W HICH HAS BEEN DELETED BY LD. CIT(A) ON SIMILAR REASONING. AGGRIEV ED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. APART FROM OUR DECISION I N AY 2009-10, WE HAVE ANOTHER REASON TO DISMISS THE APPEAL OF THE RE VENUE. 7. AT THE OUTSET, IT IS NOTED THAT TAX EFFECT OF TH E QUANTUM ADDITIONS AS CONTESTED BY THE REVENUE IS LESS THAN PRESCRIBED LI MIT OF RS.20 LACS AND THE SAME IS COVERED BY RECENTLY ISSUED LOW TAX EFFECT CIRCULAR NO.03/2018 DATED 11/07/2018 ISSUED BY CENTRAL BOARD OF DIRECT TAXES [CBDT]. THE LD. DR, MS. POOJA SWAROOP, HAS CONTROVERTED THE SAME BY SUBMITTING THAT NECESSARY INSTRUCTIONS / CERTIFICAT E, IN THIS REGARD, WOULD BE REQUIRED FROM HIGHER AUTHORITIES. 8. WE HAVE GONE THROUGH THE CIRCULAR AND FIND THAT THE TAX EFFECT OF QUANTUM IN DISPUTE IS BELOW PRESCRIBED LIMIT OF RS. 20 LACS AND THE ASSESSEE STOOD BENEFITTED BY THE ABOVE CIRCULAR ISS UED BY CBDT WHEREIN THE MINIMUM MONETARY LIMIT FOR FILING THE A PPEALS BEFORE VARIOUS APPELLATE AUTHORITIES HAVE BEEN FIXED AS UNDER:- S. NO. APPEALS/ SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (RS.) 1 BEFORE APPELLATE TRIBUNAL 20.00,000 2 BEFORE HIGH COURT 50.00,000 3 BEFORE SUPREME COURT 1,00.00,000 NIRMALA C.THUMAR ASSESSMENT YEARS : 2008-09 & 2009-10 6 THE AFORESAID LIMITS, AS PER PARA 13 OF THE CIRCULAR APPLIES TO PENDING APPEALS ALSO. IN VIEW OF THE ADMITTED POSITION, WE DISMISS THE REVENUES APPEAL. 9. THEREFORE, ON MERITS AS WELL AS ON TECHNICAL GRO UND AS STATED ABOVE, THE REVENUES APPEAL STAND DISMISSED. THE AS SESSEES CROSS- OBJECTIONS STAND DISMISSED, BEING INFRUCTUOUS. CONCLUSION 10. THE APPEALS AS WELL AS CROSS-OBJECTIONS STAND D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD OCTOBER, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER *& MUMBAI; DATED : 03.10.2018 SR.PS:-THIRUMALESH ! COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. / THE CIT(A) 4. / CIT CONCERNED 5. + ,$ - -) *& / DR, ITAT, MUMBAI 6. , ./0 & GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) *& / ITAT, MUMBAI