DCIT, CHENNAI V. Chemise Indus P Ltd., CHENNAI

ITA 631/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77371 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NOS. 630 & 631/MDS/2014 ( / ASSESSMENT YEARS: 2003-04 & 2004-05) DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(3), WANAPARTHY BLOCK, VI FLOOR, CHENNAI-34. VS. M/S. CHEMISE INDUS. P.LTD. 65, SIVASAKTHI VINAYAGAR NAGAR, THIRUVERKADU, CHENNAI-600 077. PAN:AABCC1996P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SHAJI P.JACOB, ADDL. CIT /RESPONDENT BY : NONE / DATE OF HEARING : 8 TH MAY, 2014 /DATE OF PRONOUNCEMENT : 27 TH JUNE, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: BOTH THESE APPEALS ARE FILED BY THE REVENUE AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-I, CHENNAI DATED 21.11.2013 FOR THE ASSESSMENT YEARS 2 003-04 & 2004-05 RESPECTIVELY. 2. BOTH THE APPEALS OF THE REVENUE ARE TIME BARRED BY 14 DAYS. THE DEPARTMENT FILED AFFIDAVITS EXPLAINING REASONS FOR DELAY IN FILING OF APPEALS AND PRAYS FOR CONDONATIO N OF DELAY. WE HAVE PERUSED THE REASONS AND ARE SATISFIED THAT THERE IS 2 ITA NOS 630 & 631/MDS/2014 A REASONABLE CAUSE FOR THE DELAY IN FILING OF THE A PPEALS. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF F OURTEEN DAYS IN FILING OF THE APPEALS. THE PETITIONS FOR CONDONA TION OF DELAY ARE ALLOWED AND THE APPEALS ARE ADMITTED. 3. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE RESPONDENT/ASSESSEE AND SINCE THE ISSUE IN THESE AP PEALS IS COVERED BY THE DECISION OF MUMBAI SPECIAL BENCH OF THIS TRIBUNAL, WE PROCEED TO DECIDE THE ISSUE ON HEARING DEPARTMENTAL REPRESENTATIVE. 4. THE ONLY GRIEVANCE OF THE REVENUE IN BOTH THESE APPEALS IS THAT COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DELETING ADDITION OF ` 50,00,000/- AND ` 1,20,00,000/- MADE UNDER SECTION 2(22)(E) OF THE ACT FOR THE ASSE SSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY. 5. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSI NG OFFICER WHILE COMPLETING THE ASSESSMENT NOTICED THA T ASSESSEE (HEREINAFTER REFERRED TO AS CIPL) RECEIVE D ` 50,00,000/- AND ` 1,20,00,000/- DURING THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY FROM THE GRO UP 3 ITA NOS 630 & 631/MDS/2014 CONCERN M/S. CHEMISE EXPORTS (P) LTD. (HEREINAFTER REFERRED TO AS CEPL). CEPL HOLDS 35% STAKE IN THE ASSESSEE I .E. CIPL. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSE SSING OFFICER ALSO ANALYZED THE SHAREHOLDING PATTERN OF B OTH THESE COMPANIES AND FOUND THAT SMT. RADHA DAGA IS HOLDIN G 54% SHAREHOLDING IN THE CASE OF CIPL AND 90% IN THE CAS E OF CEPL. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSE SSING OFFICER TREATED THESE LOANS RECEIVED BY THE ASSESSE E AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE AND MA DE ADDITION SUBSTANTIVELY. SIMILARLY, THE ASSESSING OF FICER ALSO MADE ADDITIONS IN THE CASE OF SMT. RADHA DAGA ON PR OTECTIVE BASIS. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF THE SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF ACIT VS. BHAUMIK COLOUR PVT. LTD., (313 ITR 146) (AT) HELD THAT ADDITION SHOULD BE MADE ONLY IN THE HANDS OF REGISTERED AND BENEFICIAL SHAREHOLDER AND NOT IN TH E HANDS OF THE CONCERNS IN WHICH SUCH SHAREHOLDER IS HAVING SU BSTANTIAL INTEREST. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN MAKING ADDITION IN THE HAN DS OF THE ASSESSEE. 4 ITA NOS 630 & 631/MDS/2014 6. WE HAVE PERUSED THE ORDERS OF LOWER AUTHORITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF MUMBAI SPECIAL BENCH IN THE CASE OF BHA UMIK COLOUR P.LTD. (SUPRA) AND THAT OF RAJASTHAN HIGH C OURT IN THE CASE OF HOTEL HILLTOP (313 ITR 116) HELD THAT DEEM ED DIVIDED UNDER SECTION 2(22)(E) ARISES IN THE HANDS OF SMT. RADHA DAGA AND NOT IN THE HANDS OF THE ASSESSEE CIPL . A S THE COMMISSIONER OF INCOME TAX (APPEALS) DECIDED THE IS SUE FOLLOWING THE ABOVE CITED DECISIONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS) IN DELETING THE ADDITIONS MADE IN TH E HANDS OF THE REGISTERED AND BENEFICIAL SHAREHOLDER. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY THE 27 TH DAY OF JUNE, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) . ( ' )* ) ACCOUNTANT MEMBER / , JUDICIAL MEMBER/ ) , ) /CHENNAI, - /DATED, 27 TH JUNE, 2014 SOMU 5 ITA NOS 630 & 631/MDS/2014 /0 10 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. 0 6 /DR 6. /GF .