M/s Sai Concrete Pavers Pvt. Ltd., Visakhapatnam V. THE DCIT, CIRCLE - 4(1), Visakhapatnam

ITA 572/VIZ/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0300 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: K J D SRINIVAS
• Keywords: Deemed dividend; Agreed addition; Revised return; Set aside
• Section: 2(22)(e); 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 5 72 /VIZ/201 3 ( / A SSESSMENT Y EAR : 20 0 8 - 0 9 ) M/S SAI CONCRETE PAVERS PVT. LTD. D.NO.49 - 58 - 2, GREEN PARK ROAD AKKAYYAPALEM VISAKHAPATNAM [PAN : AAGCS 4329F] VS. DY.COMMISSIONER OF INCOME TAX CIRCLE - 4(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S HRI KJD SRINIVAS, AR / RESPONDENT BY : S MT SUMAN MALIK, DR / DATE OF HEARING : 2 9 . 0 8 . 201 9 / DATE OF PRONOUNCEMENT : 27 .09. 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : DELAY : THERE IS A DELAY OF DELAY OF 11 DAYS IN FILING THE APPEAL BY THE ASSESSEE . THE ASSESSEE FILED CONDONATION PETITION AND SUBMITTED THAT THE REASON FOR DELAY IN FILING THE APPEAL WAS DUE TO PUBLIC HOLIDAYS AND CIVIL DISTURBANCES DUE TO SAMAIKYANDHRA AGITAT ION AT VISAKHAPATNAM AND REQUESTED TO CONDONE THE DELAY. AFTER HEARING THE LD.AR, WE OBSERVE THAT 2 I.T.A. NO . 5 72 /VIZ/201 3 , A.Y.20 0 8 - 0 9 M/S SAI CONCRETE PAVERS PVT. LTD. , VISAKHAPATNAM THERE IS SUFFICIENT CAUSE FOR THE DELAY IN FILING THE APPEAL, HENCE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. THIS APPEAL IS FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] , VISAKHAPATNAM VIDE ITA NO. 328/10 - 11/DCIT, C - 4(1)/VSP/2013 - 14 DATED 31 .0 5 .201 3 FOR THE ASSESSMENT YEAR (A.Y.) 20 08 - 09 . 2. ALL THE GROUNDS OF APPEAL IN THIS CASE ARE RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER (AO) U/S 2(22)(E) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). IN THE INSTANT CASE, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,39,176/ - ON 30.09.2008. SUBSEQUENTLY FILED REVISED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.23,91,760/ - ON 27.10.2008. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD GIVEN THE LOAN OF RS.20,39,767/ - TO THE DIRECTOR, SHRI S.SRINIVAS WHO IS HAVIN G SUBSTANTIAL INTEREST IN THE COMPANY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. IN RESPONSE TO WHICH, THE LD.AR HAD AGREED FOR THE ADDITION IN THE HANDS OF THE ASSESSEE COMPAN Y, THEREFORE, THE AO MADE THE ADDITION OF RS.15,03,400/ - U/S 2(22)(E) OF THE ACT. 3 I.T.A. NO . 5 72 /VIZ/201 3 , A.Y.20 0 8 - 0 9 M/S SAI CONCRETE PAVERS PVT. LTD. , VISAKHAPATNAM 3. AGAINST THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO OBSERVING THAT THE LD.AR HAD ACCEPTED THE ADDITION IN THE HANDS OF THE COMPANY. 4. AGAINST THE ORDER OF THE LD.CIT(A), THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD. AR ARGUED THAT THE DEEMED DIVIDEND IS REQUIRED TO BE ASSESSED IN THE HANDS OF THE BENEFICIARY , BUT NOT IN THE HANDS OF THE ASSESSEE COMPANY. THEREFORE, ARGUED THAT THE LOWER AUTHORITIES HAVE COMMITTED THE ERROR AND REQUESTED TO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDITION MADE BY THE AO. 5. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER SPECIAL BENCH DECISION IN THE CASE OF BHAUMIC COLOURS (P) LTD., 313 ITR (AT) 146 THE DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLDER. 4 I.T.A. NO . 5 72 /VIZ/201 3 , A.Y.20 0 8 - 0 9 M/S SAI CONCRETE PAVERS PVT. LTD. , VISAKHAPATNAM 6.1. THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. ANKITECH P. LTD. (SUPRA) WHILE CONSIDERING IDENTICAL ISSUE APPROVED THE DECISION OF THE ITAT, MUMBAI SPECIAL BENCH IN CASE OF BHAUMIC COLOURS (P) LTD., 313 ITR (AT) 146. IN THE INSTANT CASE THERE IS NO DISPUTE THAT THE AUTHORIZED REPRESENTATIVE WHO REPRESENTED THE CASE BEFORE THE AO HA D ACCEPTED THE ADDITION. THE SAME A R HAS REPRESENTED BEFORE THE CIT(A) AND THE ITAT. HE IS A SENIOR CHARTERED ACCOUNTANT AND WELL AWARE OF THE LEGAL POSITION REGARDING THE TAXABILITY OF THE DEEMED DIVIDEND IN THE HANDS OF COMPANY BUT NOT IN THE HANDS OF THE BENEFICIARY DIRECTOR. FOR A Q UERY FROM THE BENCH AS TO WHY THE LD.AR HAS EXPRESSED NO OBJECTION FOR MAKING ADDITION IN THE HANDS OF THE COMPANY, THE LD.AR COULD NOT GIVE SATISFACTORY EXPLANATION. THE LD.CIT(A) DECIDED THE ISSUE ON THE PREMISE THAT THE ADDITION WAS AGREED ADDITION. T HEREFORE, THERE WAS NO OCCASION TO THE ASSESSING OFFICER / CIT(A) TO EXAMINE THE ISSUE IN DETAIL. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE REQUIRED TO BE EXAMINED BY THE AO AS TO WHY THE ASSESSEE HAD ACCEPTED THE ADDITION AND AGAIN FILED APPEAL AND THE TAXABILITY OF THE DEEMED DIVIDEND IN CORRECT HANDS. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE MATTER BACK TO THE FILE OF THE AO FOR REDOING 5 I.T.A. NO . 5 72 /VIZ/201 3 , A.Y.20 0 8 - 0 9 M/S SAI CONCRETE PAVERS PVT. LTD. , VISAKHAPATNAM THE ASSESSMENT DENOVO AFTER GIVING OPPO RTUNITY TO THE ASSESSEE . ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2019 S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 27 .09.2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S SAI CONCRETE PAVERS PVT. LTD., D.NO.49 - 58 - 2, GREEN PARK ROAD, AKKAYYAPALEM, VISAKHAPATNAM 2 . / THE REVENUE - DY.COMMISSIONER OF INCOME TAX , CIRCLE - 4(1), VISAKHAPATNAM 3. THE COMMISSIONER OF INCOME TAX - 2, VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM 5. , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM