M/s Raghbir Cycles Pvt. Ltd., Ludhiana V. ITO, Ludhiana

ITA 608/CHANDI/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5356 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-06-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 29-05-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Depreciation; Deemed dividend; Reason to believe
• Section: 147; 148

Judgement Text

M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 IN THE INCOME TAX APPELLATE TRIBUNAL: B BENCH: CH ANDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITA NO. 608/CHANDI/2007 ASSESSMENT YEAR: 2000-01 M/S RAGHUBIR CYCLES PVT LTD V. I.T.O. V(2) LUDHIA NA GILL ROAD, LUDHIANA APPELLANT BY: NONE RESPONDENT BY: SHRI S.K. MITTAL, CIT-DR ORDER D K SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE LD. CIT(A) ON 28.3.2007 ON SEVERAL GR OUNDS. THE APPEAL RELATES TO AY 2000-01. 2. THE MATTER WAS LAST LISTED FOR HEARING ON 20.6.2 011. H OWEVER THE ASSESSEE FILED AN APPLICATION FOR ADJOURNMENT ON THE GROUND THAT S HRI JA GDISH LAL, AUTHORISED SIGNATORY HAS BEEN ADVISED BY THE D OCTOR TO HAVE COMPLETE REST. MEDICAL CERTIFICATE DATED 15.6.2011 HAS BEEN FILED IN SUPPORT OF THE CLAIM OF HIS ILLNESS. ACCORDING TO THE AFORESAID CERTIFICATE, SHRI JAGDISH LAL IS A PATIENT OF DIABETES AND HYPE RTENSION. PERUSAL OF RECORD SHOWS THAT THE ASSESSEE HAS ALMOST ALL TH E TIME BEEN SENDING APPLICATIONS FOR ADJOURNMENTS ON SOME GROUND OR THE OTHER AS AND WHE N THE MATTER WAS LISTED FOR HEARING BEFORE THIS TRIBUNAL. PERUSAL OF THE ORDER SHEET SHOWS THAT THE ASSESSEE HAD SOUGHT ADJOURNMENT ON 1.11.2007, 12.12.2007, 25.2.2 008, 21.4.2008, 29.5.2008, 10.7.2008, 13.8.2008, 11.11.2008, 2 2.1.2009, 13.4.2009, 4.5.2009, 23.7.2009, 14.9.2009, 19.11.2009, 23.12.2009, 22..6.2010, 28.6 .2010, 19.8.2010 AND 5.10.2010. TAKING NOTE OF SIMILAR GROUND TAKEN BY THE ASSESSEE IN THE PAST, A BENCH OF THIS TRIBUNAL, WHICH ADJOURNING THE APPEAL TO 5.10.2010, HAD OBSERVED ON 19.8.2010 AS UNDER: THE APPLICATION IS DIRECTED TO MAKE ALTERNATE ARRA NGEMENTS TO PURSUE THE MATTER BEFORE THE TRIBUNAL AS THE REASON GIVEN CANN OT BE ACCEDED FOR AN UNLIMITED PERIOD. THIS ORDER IS BEING MADE CONSIDE RING THE CIRCUMSTANC ES OF THE CASE. THEREFORE, THE MATTER IS KINDLY ADJOURNED TO 5.10.2010 FOR ARGUMENTS ON MERITS. ANNOUNCED IN COURT. 3. WE FIND THAT SIMILAR OBSERVATIONS WERE MADE BY THE BENCH WHILE GRANTING ADJOURNMENT ON 23.12.2009, 28.6.2010 AND 5.10.2010. INSTEAD O F MAKING SUITABLE M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 ARRANGEMENTS TO HAVE THE APPEAL HEARD, THE ASSESSEE KEPT ON SEEKING ADJOURNMENTS TIME AND AGAIN ON ONE GROUND OR THE OTHER. 4. PERUSAL OF ORDER PASSED BY THE LD. CIT(A) SHOWS THA T THE CASE OF THE ASSESSEE WAS REPRESENTED BY SHRI SATISH BANSAL, THE C.A AND NOT BY SHRI JAGDI SH LAL, AUTHORISED SIGNATORY BEFORE THE LD. CIT(A). PERUSAL OF ASSESSM ENT ORDER SHOWS THAT THE ASS ESSEE WAS REPRESENTED BY SHRI LC. GUPTA, LD. C OUNSEL FOR THE ASSESSEE BEFORE THE AO AND NOT BY SHRI JAGDISH LAL. IT IS ABS OLUTELY CLEAR THAT SHRI JAGDISH LAL HAD NEVER REPRE SENTED THE ASSESSEE EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A). POWER OF ATTORNEY HAS BEEN EXECUTED BY THE ASSESSEE- COMPANY AUTHORISING SHRI SATISH KUMAR BANSAL, SHRI SUMIT BANSAL AND SHRI ANIL GUPTA ALL C.AS IN THE FIRM M/ S B.D. BANSAL & CO. TO ENTERED APPEARANCE BEFORE THIS TRIBUNAL. ADJOURNMENT WAS TAKEN IN THE PAST ON THE GROUND THAT THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY WAS AWAY OR W AS ILL OR SHRI SATISH BANSAL, CA WAS AWAY OR SHRI JAGDISH LAL WAS AWAY OR ILL. CONSI DERING THE NUMBER OF OPPORTUNITIES SOUGHT, THE BENCH HAD SUGGESTED ON 19 .8.2010 TO ASSESSEE- COMPANY TO MAKE ALTERNATIVE ARRANGEMENTS. AFTER THAT ALSO, THE ASSESSEE WAS GIVEN LAST OPPORTUNITY ONCE AGAIN ON 5.10.2010. TAKING NOTE OF THE ATTITUDE ON THE PART OF THE ASSESSEE, ITS RELUCTANCE TO ENTER APPEARANCE BEFORE THIS TRIBUNAL AND THE FACT THAT THE MATTER HAS BEEN PENDING FOR A VERY LONG TIME, THE A PPLICATION FOR ADJOURNMENT FILED BY THE ASSESSEE ON 20.6.2011 WAS REJECTED AND ANN OUNCED IN THE OPEN COURT. SINCE NO BODY ENTERED APPEARED ON 20.6.2011, THE APPEAL FILE D BY THE ASSESSEE WAS HEARD EX- PARTE QUA THE ASSESSEE. 5. THE ASSESSEE- COMPANY WAS INCORPORATED IN 1974 IN WHICH SHARES WE RE HELD BY (1) SMT. CHARAN DEVI AND HER TWO SONS, NAMELY, SHRI GURCHARAN SINGH AND HIS FAMILY ; AND (2) SHRI RAGHUBIR SINGH AND HIS FAMILY. THE AS SESSEE- COMPANY HAD TAKEN OVER THE BUSINESS OF THE ERSTWHILE FIRM RUN IN THE NAME AND STYLE OF M/S RAGHUBIR CYCL E INDUSTRIES. AT THE TIME OF INCORPORATION, BOTH THE BROTHERS HELD 50% SHARES IEACH N THE ASSESSEE-COMPANY. HOWEVER PATTERN OF SHARE HOL DING SUBSEQUENTLY CHANGED. SHRI GURCHARAN SINGH AND FAMILY HELD 16650 SHARES, SHRI RAGHUBIR SINGH AND HIS FAMILY HE LD 16250 SHARES AND THEIR MOTHER SMT. CHANAN DEVI HELD 1500 SHARES. WITH THE PASSAGE OF TIME, DIFFERENCES AROSE BETWEEN TWO BROTHERS AS A RESULT OF WHICH SHRI GURCHA RAN SINGH WAS REMOVED FROM THE DIRECTORSHIP OF THE ASSE SSEE-COMPANY. THEREAFTER, LITIGATION FOLLOWED BETWEEN THE PARTIES FIRSTLY BEF ORE T HE HIGH COURT AND THEREAFTER BEFORE THE SUPREME COURT. THE ORDER PASSED BY THE HIGH COURT W AS CHALLENGED BY WAY OF SLP BEFORE THE HONBLE SUPREME COURT. IN VIEW O F THE REQUEST MADE BY BOTH THE PARTIES, THE HON'BLE SUPREME COURT APPOINTED SHRI B .P. JEEVAN REDDY (FORMER JUDGE OF M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 THE HON'BLE SUPREME COURT) AS AN ARBITRATOR TO DECI DE THE DISPUTE BETWEEN THE PARTIES, VIDE ITS ORDER DATED 17.9.97. SHRI JUSTICE REDDY G AVE HIS AWARD ON 24.4.98 BY WHICH HE DECIDED THAT THE PROPERTIES SHALL BE DISTRIBUTED IN THE RA TIO OF 62:38 BETWEEN (1) SHRI RAGHUBIR SINGH AND HIS FAMILY; AND (2) SHRI GURCHARAN SINGH AND HIS FAMILY RESPECTIVELY. THE AFORESAID AWARD GIVEN BY SHRI JU STICE REDDY WAS MADE RULE OF THE COURT, VIDE ORDER DATED 13.10.98. SHRI JUSTICE RED DY SUBSEQUENTLY GAVE A SUPPLEMENTARY AWARD DATED 1.9.98 WHICH WAS CONFIRME D BY THE HON'BLE SUPREME COURT BY ITS ORDER DATED 6.8.99. AFTER THE SUPPLEMENTARY AWARD, THE ASSETS OF SHRI RAGHUBIR SINGH AND HIS FAMILY AND SHRI GURCHARAN SINGH AND H IS FAMILY WERE VALUED AND DIVI DED IN THE RATIO OF 62:38. ACCORDING TO THE AFORESAID AWARD, SHRI RAGHUBIR SINGH GROUP WAS REQUIRED TOGIVE RS. 4,13,60,000/- TO SHRI GURCHARAN SINGH. BY THE XSAID AWARD, VALU E OF TWO CINEMA THEATRES, NAMELY, ARORA AND MINI ARO RA PALACES WAS FIXED AT RS. 5 CRORES WHICH WAS REQUIRED TO BE TRANSFERRED TO SHRI GURCHARAN SINGH AND HIS FAMILY AND THUS A SUM OF RS. 86.40 LACS WAS REQUIRED TO BOE GI VEN BY SHRI GURCHARAN SINGH TO SHRI RAGHUBIR SINGH. AS DIRECTED BYTHE COURT, SHRI GURCH ARAN SINGH DEPOSITED RS. 86. 40 LACS IN THE COURT AND B3ECAME THE OWNER OF TWO THEA TRES. 6. THE AFORESAID AWARD CAME TO THE NOTICE OF THE AO. ON THE BASIS OF INFORMATION CULLED OUT FROM THE AWARD/RECORD, THE AO FORMED A P RIMA FACIE BELIEF THAT THE PROVISIONS OF SECTION 50 WERE ATTRACTED ON THE TRAN SFER OF PROPERTY, NAMELY, ARORA AND MINI ARORA THEATRES BY THE ASSESSEE-COMPANY TO SHRI GURCHARAN SINGH THROUGH SHRI RAGHUBIR SINGH, DIRECTOR OF THE COMPANY FOR CONSIDE RATION OF RS. 5.00 CRORE S AS PER VALUATION MADE BY THE ARBITRATOR TO SETTLE THE LIAB ILITY OF RS. 4,13,60,000/- . THE AO ALSO NOTICED THAT THE AFORESAID TWO CINEMA THEATRES WERE DEPRECIABLE ASSETS OWNED BY THE ASSESSEE-COMPANY AND THAT ITS WDV AS ON 1.4.99 WAS SHOWN AT RS. 25,62,902/- . THE AO THEREFORE, FORMED PRIMA BELIEF THAT THE ASSE SSEE-COMPANY WAS LIABLE TO PAY SHORT TERM CAPITAL GAINS U/S 50 OF THE INCOME- TAX ACT AS A RESULT OF TRANSFER OF ITS DEPRECIABLE ASSETS VALUED AT RS. 5.00 CORERS . HE FURTHER FOUND THAT A SUM OF RS. 4,42,71,256/- BEING AMOUNT OF ACCUMULATED PROFIT WA S ALSO LIABLE TO BE TAXED AS DEEMED DIVIDEND U/S 22(2)(E) OF THE ACT. 6. AFTER RECORDING THE SATISFACTION AS REQUIRED BY SECTION 147/148 , THE AO ISSUED A NOTICE U/S 147/148 ON 22.3.95 FOR TAXING RS. 4,74,3 7,098/- AS SHORT TERM CAPITAL GAIN U/S 50 AND FURTHER A SUM OF RS. 4,42,71,256/- AS DEEMED DIVIDEND IN TERMS OF SEC 2(22)(E). ASSESSMENT ORDER WAS FINALLY PASSED BY H IM TAXING THE AFORESAID TWO AMOUNTS. M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 7. AGGRIEVED BY THE ORDER PASSED BY THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHICH WAS DISMISSED. 8. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 9. GROUND NO. 1 TAKEN BY THE ASSESSEE READS AS UNDE R:- 1 THE LD. CIT(A)- II LUDHIANA HAS WRONGLY CONFIRMED THE INITIATION OF PROCEEDING U/S 148 AS VALID WHICH IS BAD IN LAW AND ON FACTS. 10. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI AL A VAILABLE ON RECORD BEFORE US. RETURN OF INCOME DECLARING NIL INCOME WAS FILE D BY THE ASSESSEE ON 30.11.2000 FOR THE ASSESSMENT YEAR UNDER APPEAL, I.E., AY 2000-01. NOTICE U/S 147/148 WAS ISSUED BY THE AO ON 22.3.2005, I.E., WELL BEFORE THE EXPIRY O F FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, VALIDITY OF THE PROCEEDINGS INITIATED BY THE AO U/S 147/148 IS REQUIRED TO BE DECIDED ON THE BAS IS OF REQUIREMENTS CONTEMPLATED BY THE MAIN PROVISIONS OF SEC 147 AND NOT BY THE REQUIREMENTS C ONTEMPLATED BY THE PROVISO TO SEC 147. THE ONLY REQUIREMENT CONTEMPLATED BY THE MAIN PROVI SIONS OF SECTION 147 IS THAT THE ASSESSING OFFICER SHO ULD HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THIS REQUIREMENT IS FULLY MET IN THE MATTER UNDER APPEAL. IT IS ON THE BASIS OF AWARD GIVEN BY SHRI JUSTICE B .P. JEEVAN REDDY THAT THE AO HAS COME TO PRIMA FACIE CONCLUSION THAT TWO CINEMA THEATRES BEING DEPRECIABLE ASSETS WERE TRANSFERRED BY THE ASSESSEE- COMPANY FOR A SUM OF RS. 5.00 CRORES TO SHRI GURCHARAN SINGH AND HIS FAMILY MEMBERS AND THEREFOR E THE ASSESSEE WAS LIABLE TO PAY SHORT TERM CAPITAL GAINS AS THE ASSETS I N QUESTION WERE DEPRECIABLE ASSETS. THE INFORMATION CULLED OUT BY THE AO FROM THE AWARD GIV EN BY SHRI JUSTICE JEEVAN REDDY CANNOT BE SAID AS IRRELEVANT OR VAGUE. THE AO WAS JUSTIFIED IN MAKING USE OF INFORMATION AVAILABLE IN THE SAID AWARD AND TO ISSU E NOTICE U/S 147/148 ACCORDINGLY . IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE LD . CIT(A) UPHOLDING THE VALIDITY OF NOTICE ISSUED BY THE ASSESSING OFFICER U/S 147/148 IS CONFIRMED. GROUND NO. 1 IS DISMISSED. 11. GROUND N0. 2 TAKEN BY THE ASSESSEE READS AS UND ER: 2 THE LD. CIT(A) HAS WRONGLY CONFIRMED THE ACTION OF THE AO WHO HAD WRONGLY FRAMED THE ASSESSMENT ORDER IN SPITE OF THE STAY GRANTED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT WHICH HAS NOT BEEN VACA TED SO FAR. 12. THE LD. CIT(A) DEALT WITH THE ISSUE IN PARAGRAPH 10 OF HIS APPELLATE ORDER AS UNDER: M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 10 I HAVE CONSIDERED THE ARGUMENTS OF THE LD. A.R FOR THE APPELLANT AND HAVE ALSO PERUSED THE ASSESSMENT ORDER AND THE CASE LAWS RELIED UPON BY THE AO AND THE LD. A.R. IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, I AM NOT INCLINED TO AGREE WITH THE ARGUMENTS OF THE LD. A.R. FIRSTLY TH E VALIDITY OF NOTICE U/S 148. FROM THE RECORD IT IS EVIDENT THAT THE AO HAD RECOR DED REASONS BEFORE ISSUING THE NOTICE U/S148 AND THE REASONS GIVEN FOR THE REO PENING OF THE ASSESSMENT IN MY OPINION, WERE SUFFICIENT VALID AND JUSTIFIED. T HE PROVISIONS OF SECTION 147 AS STOOD AFTER THE DIRECTOR TAX LAW (AMENDMENT) ACT, 1 989 IT IS SUFFICIENT FOR THE AO TO COME TO A REASONABLE BELIEF THAT ANY INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT. PRIMA FACIE, IN THE FACTS THE AO HAD SUFFICIENT MATERIAL TO ARRIVE AT SUCH BELIER. IT IS DIFFERENT MATTER WHET HER THE BE LIEF FORMED BY THE AO IS SUBSEQUENTLY SUSTAINABLE IN THE EYES OF LAW OR N OT. FOR INITIATION OF ACTION U/S 147 OF THE ACT, WHAT IS REQUIRED IS THE FORMATION OF REAS ONABLE BELIEF AND NOT A CONCLUSIVE FINDING OF FACTS. THE WORD REASONABLE BELIEF CANNOT MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACTS ON LEG AL EVIDENCE. THE COURT HAVE REITERATED THIS FACT IN THE PLETHORA OF CASE LAWS. SECOND AS FAR AS TH E REASSESSMENT AFTER ISSUING A NOTICE U/S 148 DURING THE PENDENCY OF RETURN IS CONCERNED , IT IS SUFFICIENT TO STATE HERE THAT FOR ISSUING A NOTICE U/S 148, THERE IS NO BAR AS SUCH. THIS FACT HAS BEEN MADE AMPLY CLEAR BY THE AO IN THE ASSESSMENT ORDER AND ALSO BY THE JCIT IN HIS DIRECT ION U/S 144A. I FIND NO REASON TO DIFFER FROM THE DECISION OF THE AO AND THE JCIT . THE CASE LAWS RELIED UPON BY THE LD. A.R ARE OF NO HELP BECAUSE THEY ARE DISTINGUISHABLE O N FACTS. IN THIS CASE, THE NOTICE WAS ISSUED U/S 143(2) AND THE ASSESSMENT WAS NOT FINAL IZED IN PURSUANCE OF THAT NOTICE. HOWEVER THERE IS NOTH ING IN THE LAW WHICH DEBARS THE AO FROM TAKING ACTION U/S 147 IF HE HAS REASONA BLE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN THE FACTS AND CIRCUMSTANCES I, THE REFORE, FIND NO INFIRMITY IN THE ORDER OF THE AO IN REOPENING THE ASSESSMENT BY ISSUING N OTICE U/S 148 AND THE SAME IS, THEREFORE, SUSTAINED. 10.1 IN SO FAR AS THE STAY GRANTED BY THE HON'BLE P UNJAB & HA RYANA HIGH COURT IS CONCERNED, I FIND THAT THE AO HAS TAKEN UP THIS ASSESSMENT AFTER CAREFUL PERUSAL OF THE ORDER OF THE COURT AND UPON THE ADVI SE OF THE SR. STANDING LD. COUNSEL FOR THE ASSESSEE. THE LD. A.R HAS NOT FURN ISHED ANY EVIDENCE BEFORE ME SO AS TO ARRIVE AT A DIFFERENT CONCLUSION THAT THE AO AN D THE JCIT. IT WAS ALSO ARGUED BY THE LEARNED. A.R THAT THE CAS E OF THE APPELLANT WAS TRANSFERRED U/S 127 FROM LUDHIANA TO PATNA BY THE CIT. HOWEVER I FIND THAT IN THAT ORDE R NO EFFECTIVE DATE WAS FIXED FOR THE TRANSFER. THEREFORE, IT CANNOT BE SAID TH AT THE M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 ORDER U/S 127 WAS OPERATIVE IN THE CASE OF THE ASSE SSEE. IN VIEWS OF THESE FACTS, I FIND THAT THE AO HAS NOT MADE ANY MISTAKE IN TAKING UP THIS ASSESSMENT AND SUBSEQUENTLY FINALIISING THE ASSESSMEN T. THERE IS NO EVIDENCE, LED BY THE A.R TO SHOW THAT THE ORDER OF THE HON'BLE HIGH COUR T WAS APPLICABLE IN THE IMPUGNED AY. THEREFORE, THIS GROUND OF APPEAL IS A LSO REJECTED. THEREFORE, GROUND OF APPEAL NOS. 1 & 2 ARE DECIDED AGAINST THE ASSESSEE. 13. NO MATERIAL HAS BEEN PLACED BEFORE US TO REBUT THE AFORESAID FINDING RECORDED BY THE LD. CIT(A). IN OUR OPINION, THE VIEW TAKEN BY THE LD. CIT(A) IN THIS BEHALF IS REASONABLE AND IS THEREFORE, CONFIRMED. GROUND NO . 2 IS DISMISSED. 14. GROUND NO. 3 AND 4 TAKEN BY THE ASSESSEE READ A S UNDER: 3 THE LD. CIT(A) HAS WRONGLY REJECTED THE CLAIM OF TH E APPLICANT OF FAMILY SETTLEMENT FOR DIVISION OF ASSETS AMONGST THE FAMI LY MEMBERS AS PER AWARD. 4 THE LD. CIT(A) HAS WRONGLY CONFIRMED THE ACTION OF THE AO TO CHARGE SHORT TERM CAPITAL GAIN U/S 50 IN RESPECT OF A P ROPERTY GIVEN IN FAMILY SETTLEMENT AT RS. 47437098/- AS PER THE AWARD. 15. THE LD. CIT(A) HAS DEALT WITH THE IN PARAGRAPH 13 OF HIS APPELLANT ORDER. WE A RE IN AGREEMENT WITH THE REASONING GIVEN BY HIM. BESID ES, THE I MPUGNED ASSETS ARE DEPRECIABLE ASSETS AND THEREFORE THEY HAVE TO BE DE ALT WITH IN ACCORDANCE WITH PROVISIONS OF SECTION 50 OF INCOME-TAX ACT IN THE H ANDS OF THE ASSESSEE- COMPANY AS THEY WERE NOT ONLY HELD AND TRANSFERRED WITHIN THE ME ANING OF SECTION 2(47) BY THE ASSESSEE-COMPANY BUT ALSO DEPRECIATION THEREON WAS ALSO CLAIMED BY THE ASSESSEE. IN OUR OPINION, THE LD. CIT(A) HAS RIGHTLY DECIDED THE ISSUE AGAINST THE ASSESSEE. WE ARE IN AGREEMENT WITH THE REASONING GIVEN BY HIM IN THI S BEHALF . GROUNDS NO. 3 & 4 TAKEN BY THE ASSESSEE ARE DISMISSED. 16. GROUND NO. 5 TAKEN BY THE ASSESSEE READS AS UND ER: 5 THE LD. CIT(A) HAS WRONGLY CONFIRMED THAT THE ABOVE TRANSACTION OF SHORT TERM CAPITAL GAIN AS ALSO DEEMED DIVIDEND AS PER SECTION 115-O OF INCOME- TAX ACT EVEN WITHOUT THE OUTGO OF CASH FLOW. 17. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL PLACED ON RECORD BEFORE US. THE LD. CIT(A) HAS DEALT WITH THE ISSUE IN PARAGRAP H 19 OF HIS APPELLATE ORDER AS UNDER: 19 I HAVE GIVEN A CAREFUL CONSIDERATION ON THE SUB MISSION OF THE LEARNED. A.R. THE IMPORTANT WORD IN SEC 2(22)(E) ARE LOAN O R ADVANCE AND FOR THE INDIVIDUAL BENEFIT OF SUCH SHARE HOLDERS. SEC 2(22)(E) SHOWS THAT FOR THE M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 PURPOSES OF THE ACT ANY PAYMENT MADE BY A COMPANY O F ANY SUM OF MONEY BY WAY OF ADVANCE OF LOAN TO THE SHARE HOLDERS IS DEEM ED TO BE A DIVIDEND SINCE THE ACT HAS NOT PROVIDED FOR ANY OTHER DEFINITION O F THE WORD DIVIDEND EXCEPT THE WORD ENUMERATED IN SEC 2(22) IT SHOULD BE CONSTRUCTED THAT THAT DEFINITION WOU LD BE APPLICABLE TO ALL PROVISIONS WHICH CONTAINS A TERM DIVIDEND IN THE ACT. FROM THE READING OF THIS SEC IT WOULD ALSO SHOW THA T DISTRIBUTION CAN BE PHYSICAL OR CONSTRUCTIVE. DIVIDEND IN ITS ORDINARY SENSE CO NNOTES MEANS THE SUM PAID TO REASONABLE OPPO RTUNITY OF HEARING SHALL BE GIVEN TO RECEIVED BY A SHAREHOLDER PROPORTIONATE TO HIS SHARE HOLDING IN A COMPANY OUT OF THE TOTAL SUM DISTRIBUTION. DIVIDEND DISTRIBUTED BY THE COMPANY BEING THE SHARE OF ITS PROFIT DECLARED AS DISTRIBUTABLE AMONG THE SHAREHO LDER IS NOT IMPRESSED WITH THE CHARACTER OF THE PROFIT FROM WHICH IT REACHES THE H AND OF THE SHAREHOLDER. THE HON'BLE HIGH COURT OF DELHI IN THE CAS E OF R. DALMIA V. CIT, 133 ITR 169 (DEL). HELD THAT PAYMENT MADE BY WAY OF LOAN OR ADVANCE TO SHAREHOLDER OR ANY PAYMENT MADE ON BEHALF OF OR FOR THE BENEFIT OF SHA REHOLDERS ARE TO BE TREATED AS DIVIDEND IN EITHER CASE, TO THE EXTENT TO WHICH THE COMPANY POSSESSES ACCUMULATED PROFIT. A COMPANY CAN BE SAID TO HAVE PROFITS OR TO BE POSSESSED OF PROFIT WHEN IT ACTUALLY POSSESSES THE AMOUNT OR IS IN ITS CONTROL. THE HON'BLE SUPREME COURT IN THE CASE OF SMT. TARU L ATA SHAM & OTHERS V. CIT, 108 ITR 345 (SW.C) HELD THAT THERE ARE FOUR CONDITIONS WHICH MUST BE SPECIFIED BEFORE THE PROVISIONS U/S 2(22)(E) CAN BE INVOKED AGAINST THE SHAREHOLDER: 1) THAT THE COMPANY IN QUESTION MUST BE ONE IN WHICH T HE PUBLIC ARE NOT SUBSTANTIALLY/INTERESTED. 2) THAT LOAN WAS ADVANCED TO SHAREHOLDERS ALT THE DATE WHEN THE LOAN WAS ADVANCED. 3) THAT LOAN ADVANCED TO A SHAREHOLDER BY SUCH A COMPA NY CAN BE DEEM ED TO BE DIVIDEND ONLY TO THE EXTENT TO WHICH IT IS SH OWN THAT THE COMPANY POSSESSED ACCUMULATED PROFIT ON THE DATE OF THE LOA N. 4) THAT THE LOAN MUST NOT HAVE BEEN ADVANCED BY THE COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS. 18. THE FACTS GIVING RISE TO TREATING A SUM OF RS. 4,42,71,256/ AS DEEMED DIVIDEND ARE THAT THE ASSESSEE- COMPANY TRANSFERRED TO CINEMA THEATRES FOR A SUM OF RS. 5.00 CRORES IN THE YEAR UNDER APPEAL. ACCORDING TO THE ASSESSING OFFICER, THE ACCUMULATED PROFITS OF THE ASSESSEE-COMPANY, ON TRANSFER OF THE AFORESAID CINEMA THEATRES, WERE RS. 4,47,71,256/- AND THEREFORE THE SAID AMOUNT GIV EN FOR THE IND IVIDUAL BENEFIT OF M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007 SHAREHOLDERS WAS DEEMED DIVIDEND. THE AFORESAID FACTS HAVE NOT BEEN REBUTTED BY THE ASSESSEE. THE SAID AMOUNT HAS INDEED BEEN GIVEN FOR THE PERSONAL BENEFIT OF T HE SHAREHOLDERS AND THEREFORE CONSTITUTES DEEMED DIVID END WITHIN THE MEANING OF SECTION 2(22)(E). IN THIS WAY OF THE MATTER, THE ORDER PAS SED BY THE CIT(A) IN THIS BEHALF IS CONFIRMED. GROUND NO. 5 IS DISMISSED. 18. GROUND NO. 6 TAKEN BY THE ASSESSEE READS AS UND ER: 6 THE LD. CIT(A) WRONGLY CONFIRMED THE AOS ACTION WH O HAD FAILED TO ALLOW A REASONABLE TIME TO EXPLAIN AND TO GIVE EVIDENCE I N RESPECT OF NO5ICE SERVED ON 28.3.2006 (EVENING) FOR FILING A REPLY 30.3.3006 BY 11.00 AM AND ALSO FAILED TO CONSIDER THE REPLY FILED ON 30.3.2006. 19. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL PLACE BEFORE US. REPEA TED OPPORTUNITY WERE GIVEN TO THE ASSESSEE TO MAKE SUBM ISSIONS IN THIS BEHALF. ASSUMING THAT THE ASSESSING OFFICER HAD FAILED TO GIVE OPPORTUNI TY OF HEARING, THE ASSESSEE HAD ANOTHER ROUND OF OPPORTUNITIES BEFORE THE CIT(A) TO ESTABLISH ITS CASE. THEN THE ASSESSEE HAD ANOTHER ROUND OF OPPORTUNITIES TO ESTA BLISH ITS CASE BEFORE THIS TRIBUNAL ALSO . DESPITE REPEATED OPPORTUNITIES GIVEN BY US, THE ASSESSEE HAS NEVER COME FORWARD TO MAKE DETAILED SUBMISSIONS. IN THIS VIEW OF THE MATTER, GROUND NO. 6 TAKEN BY THE ASSESSEE IS DISMISSED. 20. APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 29TH JUNE 2011 SD/- SD/- (SUSHMA CHOWLA) (D K SRIVA STAVA) JUDICIAL MEMBER ACCOUNT ANT MEMBER CHANDIGARH: THE 29TH JUNE 2011 SURESH COPY TO: 1. THE APPELLANT, M/S RAGHBIR CYCLE (P) LTD. LUDHIA NA 2. THE RESPONDENT, ITO, LUDHIANA 3. THE CIT(A), LUDHIANA 4. THE LD. CIT, LUDHIANA 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH ASSISTANT REGISTRAR, ITAT, CHANDIGARH M/S RAGHBIR CYCLES (P) LTD V. ITO, LUDHIANA ITA NO. 608/CHANDI/2007