Sabina Kapoor, Jaandhar city V. The Income tax Officer, Jalandhar city

ITA 638/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0817 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 29-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K VATTA
• Keywords: Business income; Business expenditure; Opportunity of being heard; Deemed to accrue or arise in india; Deemed dividend; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO.638(ASR)/2013 ASSESSMENT YEAR:2006-07 SABINA KAPOOR, 6 TH FLOOR, HOTEL RADISSON, JALANDHAR CITY. PAN:ABNPK080C VS. ITO, RANGE III(2), CENTRAL REVENUE BUILDING, JALANDHAR CITY. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S.K. VATTA, CA RESPONDENT BY: SH. TARSEM LAL, DR DATE OF HEARING: 21.03.2016 DATE OF PRONO UNCEMENT: 13.04.2016 ORDER PER T. S. KAPOOR (AM): 1. THIS IS THE ASSESSEES APPEAL FOR THE ASSESSM ENT YEAR 2006-07 AGAINST THE ORDER DATED 30.08.2013 PASSED BY LEARNE D CIT(A), JALANDHAR. 2. THE FACTS, AS AVAILABLE FROM THE RECORD, ARE AS F OLLOWS: THE ASSESSEE INDIVIDUAL, DURING THE YEAR, WAS A PARTNER IN A FIRM, M/S THE MERCHANTS, JALANDHAR. SHE WAS HAVING 35% SH ARE THEREIN. SHE WAS ALSO HAVING 37% VOTING RIGHTS IN A COMPANY, M/S BLACK JACK (INDIA) LTD. THE ASSESSEE FILED HER RETURN OF INCOM E ON 31.10.2006, DECLARING AN INCOME OF RS. 3,56,930/- ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 2 IN THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2006-07, IN THE CASE OF THE FIRM, THE MERCHANTS, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE COMPANY, M/S BLACK JACK (INDIA) LTD. HAD GIVEN A LOAN OF RS. 69,51,952/- DURING THE PERIOD R ELEVANT TO THE ASSESSMENT YEAR 2006-07 TO THE FIRM, M/S THE MERCHA NTS. THE COMPANY WAS FOUND HAVING SUFFICIENT ACCUMULATED PRO FITS IN ITS BALANCE-SHEET. SINCE THE ASSESSEE WAS HAVING MORE T HAN 10% SHARES IN THE COMPANY AND MORE THAN 20% SHAREHOLDING IN TH E FIRM, THE ASSESSING OFFICER SOUGHT TO TREAT THE AMOUNT OF LOA N, TO THE EXTENT OF THE SHARE OF THE ASSESSEE IN THE FIRM, AS DEEMED DI VIDEND IN THE HANDS OF THE ASSESSEE, ACCORDING TO THE PROVISIONS OF SEC TION 2(22)(E) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT). AS SUCH , A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE O N 31.03.2011. IN RESPONSE, VIDE LETTER DATED 04.04.2011, THE ASSESSE E STATED THAT HER ORIGINAL RETURN, FILED FOR THE ASSESSMENT YEAR 2006 -07 ON 29.03.2007, MAY BE CONSIDERED AS A RETURN FILED IN RESPONSE TO THE SAID NOTICE UNDER SECTION 148 OF THE ACT. THE RE-ASSESSMENT PRO CEEDINGS IN THE CASE OF THE ASSESSEE WERE COMPLETED VIDE ORDER DATE D 28.12.2011, PASSED UNDER SECTION 143(3) READ WITH SECTIONS 147/ 148 OF THE ACT, AT AN ASSESSED INCOME OF RS. 22,56,530/-. WHILE DOING SO, AN ADDITION OF RS. 18,99,600/- WAS MADE IN THE HANDS OF THE ASSESS EE, AS DEEMED DIVIDEND, UNDER SECTION 2(22)(E) OF THE ACT. ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 3 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LEARNED CIT( A), WHILE DISMISSING THE APPEAL OF THE ASSESSEE, UPHELD THE I NITIATION OF THE RE- ASSESSMENT PROCEEDINGS AS WELL AS THE ADDITION MADE BY THE ASSESSING OFFICER. THIS HAS BROUGHT THE ASSESSEE IN FURTHER APPEAL BEFORE US. 4. THE FIRST CHALLENGE BY THE ASSESSEE IS AGAINST TH E CIT(A)S ACTION OF UPHOLDING THE INITIATION OF RE-ASSESSMENT PROCEEDIN GS BY THE ASSESSING OFFICER. 5. VIDE LETTER DATED 10.06.2011 (COPY AT PAGES 20 TO 25 OF THE ASSESSEES PAPER BOOK, APB FOR SHORT), THE ASSESS EE, INTER ALIA, RAISED OBJECTIONS AGAINST THE INITIATION OF THE RE-ASSESSM ENT PROCEEDINGS. VIDE LETTER DATED 15.12.2011 (APB 26-27), THE ASSES SING OFFICER REPLIED TO AND MET THE OBJECTION RAISED BY THE ASSE SSEE. DISSATISFIED THEREWITH, THE ASSESSEE ADDRESSED LETTER DATED 22.1 2.2011 (APB 28- 29), CONTENDING, INTER ALIA, THAT THE OBJECTIONS RA ISED BY THE ASSESSEE IN HER LETTER DATED 10.06.2011 (SUPRA), IN PARA 5 T HEREOF, HAD NOT BEEN DISPOSED OF BY THE ASSESSING OFFICER. THE ASSESSING OFFICER REPLIED TO THIS LETTER OF THE ASSESSEE, VIDE LETTER DATED 23.1 2.2011 (APB 30-31). THE ASSESSEE AGAIN WROTE LETTER DATED 27.12.2011 (A PB 32-33) TO THE ASSESSING OFFICER, CONTENDING, INTER ALIA, THAT HER OBJECTION HAD AGAIN NOT BEEN DISPOSED OF. THE RE-ASSESSMENT ORDER CAME TO BE PASSED ON 28.12.2011. ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 4 6. THE LEARNED CIT(A), AS OBSERVED HEREINABOVE, UPHE LD THE RE- OPENING OF THE COMPLETED ASSESSMENT. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE, DRAWING OUR ATTENTION TO APB 23, HAS SUBMITTED THAT THE LEARN ED CIT(A), WRONGLY UPHOLDING THE INITIATION OF THE RE-ASSESSMENT PROCE EDINGS, HAS FAILED TO CONSIDER THAT THE ASSESSING OFFICER DID NOT DISP OSE OF THE ASSESSEES OBJECTIONS, AS CONTAINED ON THIS PAGE OF THE APB (P ARA 4(II) AND PARA 5 OF THE ASSESSEES OBJECTION DATED 10.06.2011 FILED BEFORE THE ASSESSING OFFICER). THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THEREFORE, THE ACTION OF THE LEARNED CIT(A) IN UPHO LDING THE INITIATION OF THE RE-ASSESSMENT PROCEEDINGS IS UNSUSTAINABLE. 8. ON THE OTHER HAND, DULY SUPPORTING THE IMPUGNED O RDER, THE LEARNED DR HAS SUBMITTED THAT AS CLEARLY AVAILABLE FROM THE ASSESSING OFFICERS LETTERS DATED 15.12.2011 (SUPRA) AND 23.1 2.2011 (SUPRA), THE OBJECTIONS RAISED BY THE ASSESSEE WERE SPECIFICALLY DISPOSED OF BY THE ASSESSING OFFICER BY REJECTING THEM AND THAT SO, TH ERE IS NO ERROR IN THE ACTION OF THE LEARNED CIT(A) IN UPHOLDING THE I NITIATION OF THE RE- ASSESSMENT PROCEEDINGS. IT HAS BEEN SUBMITTED THAT THE LEARNED CIT(A) HAS DONE SO BY PASSING A WELL REASONED, ELAB ORATE AND SPEAKING ORDER. 9. HAVING HEARD THE RIVAL CONTENTIONS IN THIS REGAR D WITH REFERENCE TO THE MATERIAL PLACED ON RECORD, WE FIND THAT THE ASS ESSEE IS UP AGAINST THE NON-DECISION BY THE ASSESSING OFFICER OF HER FO LLOWING OBJECTIONS ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 5 (APB 23, I.E., PARAS 4(II) AND 5 OF THE ASSESSEES OBJECTION DATED 10.06.2011 FILED BEFORE THE ASSESSING OFFICER), AS ARGUED BEFORE US BY THE LEARNED COUNSEL FOR THE ASSESSEE: 4 (II) AND ON PAGE 42 OF THE SAID ORDER, THE CIT(A ) HAS SPECIFICALLY OBSERVED THAT THERE IS NO FINDING OR EVIDENCE THAT THE SUM OF RS. 5427431/- PAID ON 30.04.2005 WAS DIVERTE D TO THE PARTNERS THROUGH THE ASSESSEE FIRM. THEREFORE, IT APPARENTLY TRANSPIRES FROM THE SAID F ACTS AND LEGAL PRINCIPLES UPHELD AND FOLLOWED BY THE HONBLE COURT AND ALSO WORTHY CIT(A) THAT THE SAID PAYMENT WAS NE ITHER PAID ON BEHALF OR FOR THE INDIVIDUAL BENEFIT OF SUC H SHAREHOLDERS, WHO HAS SUBSTANTIAL INTEREST BOTH IN THE FIRM AND THE COMPANY, WHICH COULD BE CONSIDERED AS INCOM E ASSESSABLE U/S 2(22)(E) OF THE ACT IN THE HANDS OF THE SAID SABINA KAPOOR, THE SHAREHOLDER. THEREFORE, IT IS APPARENT AND FACTUALLY TRANSPIRES THAT THERE WAS NO DEEMED DIVIDEND U/S 2(22)(E) AS ASSESSABLE IN THE HANDS OF THE SAID PARTNER/SHAREHOLDER MRS. SABINA KAPOOR, AGAINST WHOM THE SAID REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED U/S 148 OF THE ACT ON THE NON-EXISTENT R EASON TO BELIEVE THAT THE SAID INCOME U/S 2(22)(E) OF THE A CT HAS ESCAPED ASSESSMENT. THEREFORE THERE IS NO APPLICATION OF MIND FORMING T HE REASONS TO BELIEVE AND THE WHOLE EXERCISE HAS BEEN CARRIED OUT IN CONTRAVENTION OF THE PROVISIONS OF LAW AND AS SUCH THE SAID INITIATION OF THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW AND VOID AB INITIO. 5. THAT THE CONTENTION OF THE A.O., IN HIS REASON S RECORDED THAT WORTHY CIT(A) DIRECTED THE A.O. TO EXAMINED IN WHOSE HANDS, THE DEEMED DIVIDEND IS TO BE ADDED IS ALSO PRESUMPTUOUS AND MISCONSTRUING THE VERY FINDINGS, B ACKGROUND AND OBSERVATION OF THE WORTHY CIT(A) IN HIS ORDER. THE FACTS ARE THAT THE WORTHY CIT(A) IN HIS ORDER V IDE PARA 11 DECLINED TO ANSWER THE QUESTION AND REQUEST OF THE A.O. SEEKING ADVICE AS TO PERSON IN WHOSE HANDS THE DEEM ED DIVIDEND SHOULD BE TAXED; TO WHICH THE WORTHY CIT( A) CLEARLY QUOTED AND HELD THAT I DO NOT THINK THAT THIS IS THE ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 6 CORRECT FORUM FOR TAKING THIS DECISION AT THIS STAG E AS THE FACTS HAVE TO BE EXAMINED IN THE CASE OF EACH SHAREHOLDERS AND THUS THE REQUEST OF THE A.O. IS NO T ACCEPTED. THESE OBSERVATIONS & CRYPTIC FINDING CLEARLY ESTABL ISHES THAT THERE WAS NO DIRECTIONS GIVEN BY THE WORTHY CIT(A) IN HIS ORDERS AS TO ASSESS THE SAID DEEMED DIVIDEND IN THE HANDS OF ANY OF THE SHAREHOLDERS AND THUS THE SAID INITIATIO N OF REASSESSMENT PROCEEDINGS U/S 148 AGAINST THE ASSESS EE PURPORTEDLY ON THE DIRECTIONS OF THE WORTHY CIT(A) IS INCORRECT AND AS SUCH, ON THIS GROUND ALSO THE SAID INITIATION OF THE RE-ASSESSMENT PROCEEDINGS ARE ABSOLUTELY WRO NG, ARBITRARY, ILLEGAL AND IN CONTRAVENTION OF THE PROV ISIONS OF LAW; AND EVEN OTHERWISE FOR INVOKING PROVISIONS OF SECTI ON 181 THE ORDER IN APPEAL REFERENCE ETC. MUST RELATES TO THE ASSESSEE IN QUESTION AND NOT ANY DIRECTION OR ASSESSMENT MADE I N APPEAL, REFERENCE OR REVISION IN THE CASE OF ANY OT HER ASSESSEE, OR IN A PROCEEDINGS IN WHICH THE ASSESSEE IN QUESTION IS NOT A PARTY. IN THE CASE IN QUESTION, M RS. SABINA KAPOOR PARTNER WAS NEVER A PARTY TO THE APPEAL AND THE APPEAL PROCEEDINGS WERE RELATED TO A FIRM WHICH WAS INDEPENDENT ASSESSEE. KINDLY REFER TO DECISION OF T HE PATNA HIGH COURT IN THIS REGARD IN THE CASE GAURI SHANKAR CHOWDHARY VS. ADDL. CIT (1998) 234 ITR 865 (PATNA). 10. AT THIS JUNCTURE, IT WOULD BE APPROPRIATE TO REPR ODUCE THE REASONS RECORDED (APB 18-19) BY THE ASSESSING OFFIC ER ON 31.03.2011 TO INITIATE RE-ASSESSMENT PROCEEDINGS IN THE ASSESS EES CASE. THESE REASONS ARE AS UNDER: REASON FOR REOPENING THE CASE U/S 147- THE ASSESSEE HAS SHARE HOLDING IN M/S BLACK JACK (I NDIA) LTD, A COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALL Y INTERESTED WITH POWER OF VOTING OF 37%. SHE IS A PA RTNER IN M/S THE MERCHANTS, E-7, FOCAL POINT, JALANDHAR HAVI NG 35% SHARES. IT WAS FOUND IN THE ASSESSMENT OF M/S THE MERCHANTS THAT THE COMPANY M/S BLACK JACK(INDIA) LT D. HAS GIVEN A LOAN OF RS. 69,51,952/- TO THE FIRM OF M/S THE ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 7 MERCHANTS ON 30.04.2005 WHICH RESULTED IN A CREDIT BALANCE OF RS. 54,27,431/-. THE COMPANY WAS HAVING SUFFICIE NT ACCUMULATED PROFITS IN ITS BALANCE-SHEET. THE ASSES SING OFFICER OF THE FIRM M/S THE MERCHANTS TREATED THIS AMOUNT AS DEEMED DIVIDEND IN HAND OF THE FIRM AND ADDED IT TO TOTAL INCOME OF THE FIRM. LEARNED CIT(A) VIDE ORDER DATED 11.05.2008 IN THE CASE OF M/S THE MERCHANTS DELETED THE ADDITION HOLDING THAT THE ADDITION ON ACCOUNT OF DE EMED DIVIDEND CAN BE MADE ONLY IN THE HANDS OF THE SHARE HOLDER AND NOT IN THE HANDS OF ANOTHER CONCERN TO WHOM THE PAYMENTS HAS BEEN MADE. LEARNED CIT(A) DIRECTED THE A.O. TO EXAMINE IN WHOSE HANDS THE DEEMED DIVIDEND IS TO THE ADDED. HONBLE ITAT, FOLLOWING THE DECISION OF ITAT (SPECIAL BENCH) MUMBAI IN THE CASE OF M/S BHAUMIK COLOURS (P ) LTD. IN ITA NO. 5030 (MUM/04) FOR A.Y. 1997-98 WHEREIN I T WAS HELD THAT DEEMED DIVIDEND IS TO BE TAXED IN THE HAN DS OF THE SHAREHOLDER ONLY, DISMISSED THE APPEAL OF THE DEPTT ., IN THE CASE OF THE M/S THE MERCHANTS, FILED ON FOLLOWING G ROUNDS. 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN LAW IN DELETI NG THE ADDITION OF RS. 54,27,431/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME TAX ACT, 1961. 2. WHILE ALLOWING THE ABOVE RELIEF, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT AS PER CBDTS CIRCULAR NO. 495 DATED 22.04.1987 DEEMED DIVIDEND HAD TO BE TAXED IN THE HANDS OF THE CONCERN I.E. PA YEE AS THE MEMBERS OF PARTNERS I.E. SH. GAUTAM KAPOOR (HUF) AND SMT. SABINA KAPOOR HAS SUBSTANTIAL INTERE ST OF SHAREHOLDING OF 31% AND 37% RESPECTIVELY IN THE CLOSELY HELD COMPANY. IN VIEW OF THESE FACTS DEEMED DIVIDEND IS TO BE TAX ED IN HAND OF THE SHAREHOLDERS OF THE COMPANY M/S BLACK J ACK (INDIA) LTD. AND THE ASSESSEE BEING ONE OF THE SHAR EHOLDERS HAVING MORE THAN 10% SHARES AND ALSO HAVING MORE TH AN 20% SHAREHOLDING IN THE FIRM THE MERCHANTS IS ONE O F THE PERSONS WHO HAS RECEIVED DEEMED DIVIDEND U/S 2(22)( E) OF THE INCOME-TAX ACT, 1961. I HAVE, THEREFORE, REASON TO BELIEVE THAT INCOME OF THE ASSESSEE TO THE TUNE OF RS. 54,27,431/-(BEING DEEME D DIVIDEND FROM M/S BLACK BACK (INDIA) LTD. HAS ESCAP ED ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 8 ASSESSMENT FOR A.Y. 2006-07 AND THEREFORE THIS IS A FIT CASE FOR REOPENING U/S 147 OF THE INCOME TAX ACT, 1961. 11. READING TO THESE REASONS RECORDED BY THE ASSESSING OFFICER FOR RE- OPENING THE COMPLETE ASSESSMENT OF THE ASSESSEE, SH OWS THAT THE ASSESSING OFFICER RECORDED THEREIN THAT IN THE CASE OF THE FIRM, M/S THE MERCHANTS, THE LEARNED CIT(A) DELETED THE ADDIT ION REPRESENTING DEEMED DIVIDEND IN THE HANDS OF THE FIRM, HOLDING T HAT THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND COULD ONLY BE MADE IN TH E HANDS OF THE SHAREHOLDERS AND NOT IN THE HAND OF ANOTHER CONCERN , TO WHOM, THE PAYMENT HAD BEEN MADE BY THE COMPANY, M/S BLACK JAC K. THE ASSESSING OFFICER FURTHER RECORDED THAT IN THE FIRM S CASE, THE LEARNED CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO EXAMIN E AS TO IN WHOSE HANDS THE DEEMED DIVIDEND WAS TO BE ADDED, AND THAT THE TRIBUNAL, FOLLOWING THE ITAT (SPECIAL BENCH), MUMBAI, DECISIO N IN THE CASE OF M/S BHAUMIK COLOURS (P) LTD., IN ITA NO. 50 30 (MUM/04) FOR A.Y. 1997-98, DISMISSED THE APPEAL OF THE DEPARTMENT IN THE CASE OF THE FIRM. THE ASSESSING O FFICER FURTHER, RECORDED THAT THE DEEMED DIVIDEND IN THE CASE OF TH E ASSESSEE WAS TO BE TAXED IN THE HANDS OF THE SHAREHOLDERS OF THE CO MPANY AND SINCE THE ASSESSEE WAS HAVING MORE THAN 10% SHARES IN THE COMPANY AND MORE THAN 20% SHAREHOLDING IN THE FIRM, SHE WAS ONE OF THE PERSONS WHO HAD RECEIVED DEEMED DIVIDEND. ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 9 12. IN HER AFORESAID OBJECTIONS, THE ASSESSEE MAINTAIN ED THAT IN THE CASE OF HOTEL HILLTOP, 217 CTR 527 (RAJ.), IT WA S HELD THAT THE REQUIREMENT OF SECTION 2(22)(E) OF THE ACT IS THAT THE PAYMENT SHOULD BE MADE ON BEHALF OF , OR FOR THE INDIVIDUAL BENEFI T OF SUCH SHAREHOLDER AND THAT THEREFORE, THE LIABILITY OF TA X WAS INTENDED TO BE ATTRACTED ON THE PERSON ON WHOSE BEHALF, OR FOR WHO SE INDIVIDUAL BENEFIT WAS PAID BY THE COMPANY; THAT IN THE CASE O F THE FIRM, THE LEARNED CIT(A) HAD SPECIFICALLY OBSERVED THAT THERE WAS NO FINDING OF EVIDENCE THAT THE SUM PAID WAS DIVERTED TO THE PART NERS THROUGH THE FIRM; THAT THE LEARNED CIT(A), THUS, FOLLOWED HOTE L HILLTOP (SUPRA) TO HOLD THAT THE PAYMENT WAS NEITHER MADE ON BEHALF OF THE ASSESSEE, NOR FOR HER INDIVIDUAL BENEFIT AND SO, IT COULD NOT BE CONSIDERED AS ASSESSEES INCOME, ASSESSABLE UNDER SECTION 2(22)(E ) OF THE ACT; AND THAT SO, IN THE REASONS RECORDED, THERE WAS A COMPL ETE ABSENCE OF REASON TO BELIEVE THAT THE SAID INCOME UNDER SECTIO N 2(22)(E) OF THE ACT HAD ESCAPED ASSESSMENT IN THE HANDS OF THE ASSE SSEE AND THERE WAS NO APPLICATION OF MIND BY THE ASSESSING OFFICER WHILE RECORDING THE REASONS WHICH WERE, IN FACT, NON-EXISTENT, REND ERING THE INITIATION OF THE RE-ASSESSMENT PROCEEDINGS BAD IN LAW. 13. THE OTHER OBJECTION RAISED BY THE ASSESSEE IS THAT THE ASSESSING OFFICER, IN THE REASONS, HAD WRONGLY RECORDED THAT THE LEARNED CIT(A), IN THE CASE OF THE FIRM, HAD DIRECTED THE ASSESSING OFFICER TO EXAMINE AS TO IN WHOSE HANDS, THE DEEMED DIVIDEND WAS TO BE ADDED, ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 10 INASMUCH AS IN PARA 11 OF HIS ORDER, IN THE CASE OF A FIRM, THE LEARNED CIT(A) HAD DECLINED TO ANSWER THE QUESTION AND REQU EST OF THE ASSESSING OFFICER SEEKING ADVICE AS TO IN WHOSE HAN DS THE DEEMED DIVIDEND OUGHT TO BE TAXED. 14. IN HIS LETTER DATED 15.12.2011 (SUPRA), THE ASSESS ING OFFICER HAS DEALT WITH THESE OBJECTIONS OF THE ASSESSEE, AS FOL LOWS (ABP 26): 2. AS REGARDS ADDITION IN THE HANDS OF M/S THE MER CHANTS IS CONCERNED, THE ASSESSEE AND THE SAID CONCERN ARE TO INDEPENDENT ASSESSES AND THEIR ASSESSMENT PROCEEDINGS ARE TO BE DECIDED ON THE BASIS OF FACTS OF EACH CASE. 3. AS REGARDS DIRECTIONS OF CIT(A), THE LEARNED C IT(A) IN HIS ORDER HAS DIRECTED THAT THE A.O. IS TO EXAMINED THE ISSUE IN THE LIGHT OF LAW EXPLAINED IN VARIOUS JUDGMENTS. EVEN IF FOR ARGUMENT SAKE, IT IS ADMITTED THAT THERE WAS NO DIRECTION FROM THE CIT(A ), THE A.O. MAY HAVE REASONS TO BELIEVE IN A CASE AND CAN TAKE NECE SSARY ACTION AS PER LAW, WHICH HAS BEEN DONE IN THE CASE OF ASSESSEE. 15. VIDE LETTER DATED 23.12.2011 (SUPRA), THE ASSESSIN G OFFICER HAS STATED AS FOLLOWS (APB 30-31): AS REGARDS REASON TO BELIEVE, IT HAS ALREADY BEEN MADE CLEAR TO YOU THAT AT THE TIME OF RECORDING REASONS, THE A.O. HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED. IN DETERMINING WHETHER COMMENCEMENT OF PROCEEDINGS U/S 147, WAS VALID, WHAT WAS TO BE SEEN WAS ONLY THE PR IME FACIE MATERIAL, THE SUFFICIENCY OR CORRECTNESS OF M ATERIAL WAS NOT A THING TO BE CONSIDERED. RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RA YMOND WOOLEN MILLS LTD. VS. ITO (1999) 236 ITR 34. RELIAN CE IS ALSO PLACED ON THE DECISION OF THE JURISDICTIONAL H IGH COURT IN THE CASE OF M/S JAWANDSONS VS. CIT (326 ITR 39) (2010) WHEREIN IT IS HELD THAT: AFTER AMENDMENT OF SEC. 147 W.E.F. 01.04.1989 POWER HAS BEEN GIVEN TO THE A.O. TO REOPEN THE ASSESSMENT EVEN IN CASES WHERE THE ASSESSEE HAD FULLY DISCLOSE D ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 11 THE MATERIAL FACTS. ONLY CONDITION FOR ACTION IS TH AT A.O. SHOULD HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN VIEW OF ABOVE, YOU ARE HEREBY AGAIN MADE CLEAR T HAT NOTICE U/S 148 WAS VALIDLY ISSUED AND THEREFORE, YO U ARE GIVEN FINAL OPPORTUNITY TO FURNISH YOUR REPLY ON FA ILING WHICH RE-ASSESSMENT WOULD BE MADE IN YOUR CASE ON T HE BASIS OF INFORMATION AVAILABLE ON RECORD. 16. BEFORE THE LEARNED CIT(A), THE ASSESSEE FILED WRIT TEN SUBMISSION DATED 27.06.2012 (APB 34-46), THEREIN, THE SAME OBJ ECTIONS, AS RAISED BEFORE THE ASSESSING OFFICER, WERE TAKEN. THE LEARN ED CIT(A) FORWARDED THE ASSESSEES WRITTEN SUBMISSIONS TO THE ASSESSING OFFICER AND ASKED FOR A REMAND REPORT. IN THE REMAND REPORT DATED 30.01.2013/04.02.2013, REITERATING THEREIN, AS OBSE RVED IN THE LAST SUB-PARA OF THE FIRST PARA OF THE ASSESSMENT O RDER, WHILE HOLDING THE NOTICE UNDER SECTION 148 OF THE A CT TO HAVE BEEN VALIDLY ISSUED, THAT THE OBJECTIONS OF TH E ASSESSEE HAD BEEN DULY DISPOSED OF (AS REPRODUCED IN PARA 5. 3 OF THE IMPUGNED ORDER), THE ASSESSING OFFICER STATED AS FO LLOWS: ON 10.06.2011 THE ASSESSEE FILED A LETTER RAISING OBJECTIONS TO THE REASONS RECORDED AND MORE NOTICE ISSUED U/S 148. THE OBJECTIONS RAISED BY THE ASSESSEE WERE MET WITH VID E THIS OFFICE LETTER NO. ITO/W-III(2)/6214 DT. 15.12.2011 THE CON TENTS OF THE LETTER ARE PART OF THE ASSESSMENT ORDER. THEREAFTER THE AS SESSEE FILED OTHER OBJECTION ON THE JURISDICTION OF INITIATION OF PROC EEDINGS U/S 148 WHICH WERE ALSO DISPOSED OFF VIDE THIS OFFICE LETTE R NO. ITO/W- III(2)/6294 DT. 23.12.2011, WHICH IS ALSO PART OF O RDER. AND THE ASSESSMENT WAS COMPLETED ON 28.12.2011 BY MAKING AN ADDITION OF RS. 18,99,600/- I.E. 35% OF RS. 54,27,431/-. IN HIS LETTER DT. 27.06.2012 ADDRESSED TO YOUR GO OD-SELF THE COUNSEL OF THE ASSESSEE HAS AGAIN RAISED THE SAME I SSUES. IT IS ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 12 RESPECTFULLY SUBMITTED THAT THE ISSUES RAISED BY TH E ASSESSEE HAVE ALREADY BEEN ADDRESSED TO DURING THE ASSESSMENT PRO CEEDINGS. DURING THE ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESEE WAS HAVING 37% VOTING RIGHTS IN M/S BLACK JACK INDI A LTD., THEREFORE, THE ASSESSEE WAS A BENEFICIAL OWNER OF T HE SHARES HAVING IN M/S THE MERCHANTS SHE HAS SUBSTANTIAL INTEREST I N M/S THE MERCHANTS. THE COMPANY M/S BLACK JACK INDIA LTD. WA S HAVING ACCUMULATED PROFITS AND THE COMPANY MADE PAYMENT OF SUM TO THE M/S THE MERCHANTS. THE SUM ADVANCED TO M/S THE MERC HANTS WAS NOT IN THE ORDINARY COURSE OF BUSINESS OF BOTH THE CONCERN AS NONE OF THESE CONCERN WAS IN THE BUSINESS OF LENDING OF MON EY. IN VIEW OF THE RATIO LAID DOWN BY SPECIAL BENCH OF ITAT, MUMBA I IN ITA NO. 5030 IN THE CASE OF ACIT, CENTRE-33 VS. BHUMIK COLO R (P) LTD. AS THE ASSESSEE WAS A REGISTERED SHAREHOLDER WAS BENEFICIA L OWNER OF THE SHARES THE ADDITION OF RS. 18,99,600/- HAS RIGHTFULLY BEEN MAD E IN THIS CASE. 17. IN HER COUNTER COMMENTS DATED 28.02.2013 (AS REPRODUCED IN PARA 5.4 OF THE IMPUGNED ORDER), THE ASSESSEE ONCE AGAIN REITERATED HER OBJECTION AGAINST THE RE- OPENING. THIS WAS ONCE MORE REPEATED BY THE ASSESSEE VIDE HE R FURTHER WRITTEN SUBMISSIONS DATED 05.03.2013 (AS RE PRODUCE IN PARA 5.5 OF THE IMPUGNED ORDER) FILED BEFORE THE LEARNED CIT(A). IT IS APT TO MENTION HERE THAT THESE OBJECT IONS ALSO FORMED PART OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE THE LEARNED CIT(A), AS IS THE CASE BEFORE US TOO. 18. THE LEARNED CIT(A), VIDE PARAS 5.6 AND 5.7 OF HIS ORDER, HAS ELABORATELY DEALT WITH THIS ASPECT OF THE MATTE R, HOLDING AS FOLLOWS: 5.6 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS MADE IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT ON THE ISSUE OF REOPENING OF ASSESSME NT. I HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE ASSESSE E AS ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 13 MADE VIDE VARIOUS LETTERS AS WELL AS COUNTER COMMEN TS IN THIS REGARD. THE MOOD QUESTIONS WHICH NEED CONSIDER ATION IS THAT AS TO WHETHER THE ASSESSING OFFICER WAS HAV ING ANY REASON TO BELIEVE AT THE TIME OF REOPENING OF ASSES SMENT IN THE CASE OF THE ASSESSEE. TO DECIDE ON THE ISSUE, F IRST OF ALL LET US LOOK INTO THE LEGAL OBJECTIONS RAISED BY THE ASSESSEE AND THEIR APPLICABILITY TO THE FACTS OF THE CASE OF THE ASSESSEE. (A) THE FIRST OBJECTION OF THE ASSESEE IS THAT THE ASSESSING OFFICER HAS MECHANICALLY RELIED ON THE SATISFACTION OF ACIT, RANGE-II, JALANDHAR WHILE REC ORDING THE REASONS TO BELIEVE IN THE CASE OF THE ASSESSE E AND HAS NOT APPLIED HIS MIND INDEPENDENTLY. IN MY CONSIDERED OPINION, THE ASSESSING OFFICER HAS CAREF ULLY GONE THROUGH THE INFORMATION RECEIVED BY HIM FROM A CIT, RANGE-II, JALANDHAR AND AFTER INDEPENDENTLY ANALYZI NG IT APPLIED HIS MIND BEFORE STARTING REASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE. MOREOVER, NEITHER THE LEARNED CIT(A) NOR THE HONBLE ITAT HAS HELD IN THEIR RESPECTIVE ORDERS IN THE CASE OF M/S THE MERCHANTS THAT THE LOAN GIVEN BY BJIL TO THE FIRM M/S THE MERCHANTS CANNOT BE TREATED AS DEEMED DIVIDEND. IN MY CONSIDERED OPINION THE LEARNED CIT(A) AND HONBL E ITAT HAVE CATEGORICALLY HELD THAT THE DEEMED DIVIDE ND CAN ONLY BE ASSESSED IN THE HANDS OF SHAREHOLDERS O F BJIL AND AS THE FIRM IS NOT A SHAREHOLDER OF BJIL, PROVISIONS OF SECTION 2(22E) OF THE INCOME TAX ACT, 1961 ARE NOT ATTRACTED IN ITS CASE. IN OTHER WORDS, IT H AS BEEN CATEGORICALLY HELD BY THE CIT(A) AND LEARNED ITAT T HAT THE LOAN ADVANCED ATTRACT THE PROVISIONS OF SECTION 2(2 2E) OF THE INCOME TAX ACT, 1961 IN THE CASE OF SHAREHOLDER S IF OTHER CONDITIONS ARE SATISFIED. I AM, THEREFORE, OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER WAS H AVING SUFFICIENT AND PRIMA FACIE REASONS TO BELIEVE THA T THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT BEFOR E STARTING REASSESSMENT PROCEEDINGS. I AM ALSO OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS N OT REOPENED THE CASE OF ASSESSEE ON BORROWED SATISFACT ION BUT HAS INDEPENDENTLY APPLIED HIS MIND BEFORE INITI ATING REASSESSMENT PROCEEDINGS. SO, THE OBJECTION RAISED BY THE ASSESSEE HAS NO FORCE. (B) THE SECOND OBJECTION OF THE ASSESSEE THAT THER E IS COMPLETE ABSENCE OF REASON TO BELIEVE THAT DEEMED ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 14 INCOME U/S 2(22)(E) OF THE INCOME TAX ACT, 1961 HAS ESCAPED ASSESSMENT IS ALSO BASELESS. IN MY OPINION, THE ASSESSING OFFICER WAS HAVING SUFFICIENT REASONS FOR THE FORMATION OF HIS BELIEF WHEN THE LEARNED CIT(A) AS WELL AS HONBLE ITAT HAVE CATEGORICALLY HELD THAT THE DEEME D DIVIDEND CAN ONLY BE ASSESSED IN THE HANDS OF THE SHAREHOLDERS. FROM THIS CATEGORICAL FINDING ONE CAN NOT SAY THAT THERE WAS COMPLETE ABSENCE OF REASON TO B ELIEVE THAT THE DEEMED DIVIDEND HAS ESCAPED ASSESSMENT. (C) THE THIRD OBJECTION THAT THE DEEMED DIVIDEND C ANNOT AGAIN BE ASSESSED IN THE HANDS OF ASSESSEE AS IT HA S ALREADY BEEN ASSESSED IN THE HANDS OF THE FIRM THE MERCHANTS IS ALSO NOT CORRECT. THIS OBJECTION OF T HE ASSESSEE IS SELF CONTRADICTORY. ON ONE HAND THE ASS ESSEE IS SAYING THAT THE DEEMED DIVIDEND HAS ALREADY BEEN ASSESSED IN THE HANDS OF THE FIRM AND ON THE OTHER HAND THE ACTION OF THE DEPARTMENT WITH REGARD TO TAXATIO N OF DEEMED DIVIDEND IN THE HANDS OF THE FIRM IS BEING OPPOSED BY TAKING PLEA THAT THE FIRM IS NOT THE SHAREHOLDER OF BJIL. THE ASSESSEE CANNOT TAKEN CONTRADICTORY STAND TO SUIT HIS PURPOSE WHEREAS THE DEPARTMENT HAS TO SEE IN WHOSE HANDS THE DEEMED DIVIDEND TO BE ASSESSED CORRECTLY. IN OTHER WORDS, THIS OBJECTION RAISED BY THE ASSESSEE HAS ALSO NO FORCE. (D) THE OBJECTION THAT IN THE REASONS RECORDED THE RE IS NO OBSERVATION, FINDING OR ANY FACT TRANSPIRING THA T THE PAYMENT MADE BY BJIL TO THE FIRM THE MERCHANTS HA VE BEEN MADE FOR AND ON BEHALF OF THE INDIVIDUAL BENEF IT OF SHAREHOLDER MRS. SABINA KAPOOR IS ALSO INCORRECT. W HEN THE LOAN HAS BEEN GIVEN BY A CLOSELY HELD COMPANY T O A FIRM IN WHICH THE ASSESSEE IS PARTNER, IT IS CERTAI NLY FOR THE BENEFIT OF THE PARTNERS DIRECTLY OR INDIRECTLY. (E) THE OBJECTION THAT THE LOAN WAS GIVEN FOR BUSI NESS CONSIDERATION AND FOR BUSINESS EXPEDIENCY IS ALSO N OT CORRECT. THE LEARNED CIT(A) HAS CATEGORICALLY HELD IN THE CASE OF THE FIRM THAT THE BJIL IS NOT SUBSTANTIALLY ENGAGED IN THE BUSINESS OF MONEY LENDING OR FINANCI NG. IT WAS HELD BY THE LEARNED CIT(A) IN THE CASE OF BJIL THAT NEITHER A LARGE PART OF THE ASSETS OF BJIL ARE INVE STED IN EARNING INTEREST INCOME NOT DOES INTEREST FORM ANY SIGNIFICANT PART OF ITS BUSINESS. IT MEANS, THE LOA N HAS NOT BEEN GIVEN BY BJIL TO THE FIRM IN THE ORDINARY COURSE ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 15 OF BUSINESS. IT WAS ALSO HELD BY HIM THAT LENDING O F MONEY IS CERTAINLY NOT ONE OF THE MAIN OBJECTS, BUT IT IS AN ANCILLARY OBJECT. IT WAS FURTHER HELD THAT THERE WERE NO BUSINESS TRANSACTIONS OF PURCHASE AND SALE BETWEEN THE TWO SISTER CONCERNS. IT WAS CATEGORICALLY HELD BY T HE CIT(A) THAT THE CONTENTION THAT INTEREST HAVING BEE N PAID ON THE AMOUNTS RECEIVED, THE RECEIPT OF MONEY SHOUL D NOT BE TAXED AS DEEMED DIVIDEND DOES NOT APPEAR TO BE ACCEPTABLE SINCE SECTION 2(22E) DOES NOT DISTINGUIS H BETWEEN A LOAN GIVEN ON INTEREST OR WITHOUT INTERES T (A REFERENCE MAY BE MADE TO PARA 7, 7.1, 7.2 & 7.3 OF CIT(A) ORDER IN THE CASE OF FIRM). I AM ALSO ENTIRELY OF T HE SAME VIEW AS THAT OF LD. CIT(A) IN THE CASE OF THE FIRM THE MERCHANTS. IN THESE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, IT CANNOT BE SAID THAT LOAN ADVANCED TO T HE FIRM WAS FOR BUSINESS CONSIDERATIONS OR FOR BUSINESS EXPEDIENCY. MOREOVER, IT HAS NOT BEEN BROUGHT ON RE CORD THAT THE BJIL AND THE MERCHANTS HAVE ANY OTHER BUSI NESS TRANSACTIONS EXCEPT LOAN TRANSACTIONS WHEREAS IT HA S BEEN THE CATEGORICAL FINDING OF CIT(A) THAT THERE I S NO BUSINESS TRANSACTION BETWEEN THESE CONCERNS. (F) THE OBJECTION OF THE ASSESSEE THAT THE DEPARTME NT IS AGITATING BEFORE THE HONBLE JURISDICTIONAL HIGH CO URT WITH REGARD TO THE TAXABILITY OF DEEMED DIVIDEND IN THE HANDS OF FIRM AND THE SAME ACTION CANNOT BE TAKEN I N THE HANDS OF ASSESSEE IS ALSO BASELESS AS THE INCOME HA S TO BE ASSESSED IN THE CORRECT HANDS AS PER PROVISIONS OF LAW. MOREOVER, THE ASSESSEE HAS NOT ACCEPTED THE TAXABIL ITY OF DEEMED DIVIDEND IN THE HANDS OF THE FIRM. (G) THE ACTION OF THE ASSESSING OFFICER IN ALLOWI NG INTEREST EXPENDITURE IN THE HANDS OF FIRM AND ITS TAXABILITY IN THE HANDS OF BJIL ALSO CANNOT DEBAR T HE DEPARTMENT TO TAKE ACTION U/S 2(22)(E) OF THE INCOM E TAX ACT, 1961 IN THE HANDS OF SHAREHOLDER. THE OBJECTIO N OF THE ASSESSEE IN THIS REGARD IS ALSO INCORRECT AS TH E PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX AC T, 1961 ARE CLEAR AND UNAMBIGUOUS AND DOES NOT TAKEN INTERE ST BEARING LOAN TRANSACTIONS OUT OF ITS AMBIT. (H) EVEN IF IT IS PRESUMED THAT THERE IS NO DIRECT ION OF THE LEARNED CIT(A) WITH REGARD TO THE TAXABILITY OF DEEMED DIVIDEND IN THE CASE OF THE FIRM, IT IS IMPLIEDLY INTERPRETED FROM HIS ORDER IN THE CASE OF THE FIRM THAT THE ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 16 DEEMED DIVIDEND CAN ONLY BE ASSESSED IN THE HANDS O F SHAREHOLDERS. THE OBJECTION OF THE ASSESSEE IN THIS REGARD IS ALSO INCORRECT. (I) THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE ARE ALSO NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS THE FACTS IN ALL THESE CASES WERE ENTIR ELY DIFFERENT. MOREOVER, THE ASSESSEE HAS NOT DEMONSTRA TED THAT AS TO HOW THE FACTS OF THE CASE LAWS RELIED UP ON ARE THE SAME WITH THAT OF THE ASSESSEE. I AM, THEREFORE , OF THE CONSIDERED OPINION THAT THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE TO T HE FACTS OF THE CASE OF THE ASSESSEE. IN ALMOST ALL OF THE CASE LAWS RELIED UPON BY THE ASSESSEE EITHER THE TRANSAC TIONS WERE FOUND TO BE BUSINESS TRANSACTIONS OR FOUND TO BE FOR BUSINESS CONSIDERATIONS OR WERE NOT FOUND TO BE IN RESPECT OF LOANS OR ADVANCES WHEREAS IN THE CASE OF THE ASSESSEE, THE TRANSACTIONS ARE ADMITTEDLY LOAN TRANSACTIONS ON WHICH PROVISIONS OF SECTION 2(22E) ARE CLEARLY ATTRACTED. 5.7 IN MY OPINION, THE ASSESSEE HAS RAISED SIMILAR OBJECTIONS BEFORE THE ASSESSING OFFICER ALSO AS MAD E DURING THE COURSE OF APPELLATE PROCEEDINGS, I AM ALSO OF T HE OPINION THAT THE ASSESSING OFFICER HAS SATISFACTORILY REBUT TED ALL THE OBJECTIONS OF THE ASSESSEE BEFORE FINALIZING REASSE SSMENT IN THE CASE OF THE ASSESSEE. I AM OF THE FURTHER OPINI ON THAT THE ASSESSING OFFICER WAS HAVING THAT THE ASSESSING OFFICER WAS HAVING SUFFICIENT REASON TO BELIEVE THAT THE IN COME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. ALTHOUGH THE ASSESSING OFFICER HAS RECEIVED INFORMATION FROM THE ACIT, CIRCLE-II, JALANDHAR, REGARDING TAXABILITY OF DEEME D DIVIDEND IN THE HANDS OF THE ASSESSEE, BUT HE HAS A PPLIED HIS MIND INDEPENDENTLY AFTER CAREFULLY CONSIDERING THE OBSERVATIONS OF THE CIT(A) AND HONBLE ITAT AND CAM E TO THE CONCLUSION THAT THE TAXABLE INCOME OF THE ASSESSEE IN THE FORM OF DEEMED DIVIDEND HAS ESCAPED ASSESSMENT. 19. A PERUSAL OF THE ABOVE, ELABORATE AND WELL REASONE D OBSERVATIONS OF THE LEARNED CIT(A) SHOWS THAT THE L EARNED CIT(A) HAS DULY CONSIDERED THE OBJECTIONS OF THE AS SESSEE. IT IS THE CONSIDERED OPINION OF THE LEARNED CIT(A) THA T IN THE ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 17 CASE OF THE FIRM, THE LEARNED CIT(A) AND THE ITAT H AD CATEGORICALLY HELD THE DEEMED DIVIDEND TO BE ASSESS ABLE IN THE HANDS OF THE SHAREHOLDERS OF THE COMPANY, AND T HAT SINCE THE FIRM WAS NOT A SHAREHOLDER OF THE COMPANY , THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT APPLICABLE IN THE CASE OF THE FIRM. IT IS ON THIS BASIS THAT I T HAS BEEN HELD IN THE PRESENT CASE BY THE LEARNED CIT(A) THAT THE COMPLETE ASSESSMENT OF THE ASSESSEE WAS NOT RE-OPEN ED BY THE ASSESSING OFFICER ON BORROWED SATISFACTION AND THAT THE ASSESSING OFFICER HAD INDEPENDENTLY APPLIED HIS MIN D BEFORE INITIATING THE RE-ASSESSMENT PROCEEDINGS. IT HAS AL SO BEEN HELD THAT SINCE IN THE CASE OF THE FIRM, IT HAD BEE N HELD BY THE LEARNED CIT(A) AND THE ITAT, THAT THE DEEMED DI VIDEND COULD ONLY BE ASSESSED IN THE HANDS OF THE SHAREHOL DERS, IT CANNOT AT ALL BE SAID THAT THERE WAS A COMPLETE ABS ENCE OF REASONS TO BELIEVE ESCAPEMENT OF THE DEEMED DIVIDEN D AND THAT THE ASSESSING OFFICER WAS HAVING SUFFICIENT RE ASONS FOR THE FORMATION OF HIS BELIEF (PARAS 5.6 (A) AND (B) OF THE IMPUGNED ORDER). 20. APROPOS THE ASSESSEES OBJECTION THAT IN THE REASO NS RECORDED, THERE IS NO OBSERVATION, FINDING OF FACT TO THE EFFECT THAT THE PAYMENT MADE BY THE COMPANY TO THE FIRM WAS MADE EITHER ON BEHALF OF THE ASSESSEE, OR FOR H ER ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 18 INDIVIDUAL BENEFIT, THE LEARNED CIT(A) HAS MET THIS OBJECTION IN PARA 5.6(D) OF HIS ORDER, HOLDING THAT WHEN THE LOAN HAS BEEN GIVEN BY A CLOSELY HELD COMPANY TO A FIRM TO W HICH THE ASSESSEE IS A PARTNER, IT IS CERTAINLY FOR THE BENE FIT OF THE PARTNERS DIRECTLY OR INDIRECTLY. FURTHER, IN PARA 5 .6(H), THE OBJECTION THAT IN THE CASE OF THE FIRM, NO DIRECTIO NS WERE ISSUED BY THE LEARNED CIT(A) WITH REGARD TO THE TAX ABILITY OF THE DEEMED INCOME. IN THE CASE OF THE FIRM, IT HAS BEEN OBSERVED THAT IT IS IMPLICIT IN THE CIT(A)S ORDER IN THAT CASE, THAT THE DEEMED DIVIDEND COULD ONLY BE TAXED IN THE HANDS OF THE SHAREHOLDERS, DUE TO WHICH, SUCH OBJEC TION OF THE ASSESSEE WAS ALSO INCORRECT. 21. FROM THE ABOVE DISCUSSION AND ANALYSIS, IT IS AMPL Y CLEAR THAT THE OBJECTIONS OF THE ASSESSEE WERE CONS IDERED, ADDRESSED AND DISPOSED OF ELABORATELY, NOT ONLY BY THE ASSESSING OFFICER, BUT ALSO BY THE LEARNED CIT(A). IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY FORCE WHATSO EVER IN THE GRIEVANCE SOUGHT TO BE RAISED BY THE ASSESSEE B EFORE US IN THIS REGARD. ACCORDINGLY, SUCH GRIEVANCE IS REJE CTED AND THE ACTION OF THE LEARNED CIT(A) IN UPHOLDING THE I NITIATION OF RE-ASSESSMENT PROCEEDINGS IN THE CASE OF THE PRE SENT ASSESSEE IS CONFIRMED. ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 19 22. THE REMAINING GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE LEARNED CIT(A) IN UPHOLDING THE ASSES SMENT OF THE DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. 23. TO REITERATE, THE ASSESSEE WAS HAVING 35% SHARE (M ORE THAN 20% OF THE SHAREHOLDING) AS PARTNER IN THE FIR M, THE MERCHANTS AND 37% VOTING RIGHTS (MORE THAN 10% SHA RES) AS SHAREHOLDER OF THE COMPANY M/S BLACK JACK (INDIA ) LTD. THE COMPANY GAVE A LOAN OF RS. 69,51,952/- TO THE F IRM IN THE ASSESSMENT YEAR 2006-07. INVOKING THE PROVISION S OF SECTION 2(22)(E) OF THE ACT, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 18,99,600/-, REPRESENTING DEEMED DI VIDEND IN THE HANDS OF THE ASSESSEE. THE LEARNED CIT(A) CO NFIRMED THIS ADDITION. 24. IN THIS REGARD, LEARNED COUNSEL FOR THE ASSESSE E HAS CONTENDED THAT WHILE WRONGLY UPHOLDING THE ILLEGAL ASSESSMENT, THE LEARNED CIT(A) HAS FAILED TO CONSID ER THE CASE- LAWS CITED BEFORE HIM FOR THE PROPOSITION THAT UNLE SS THE FIRM WAS HELD TO BE A CONDUIT AND UNLESS THE PAYMENT WAS MADE EITHER ON BEHALF OF, OR FOR THE PERSONAL BENEFIT OF THE SHAREHOLDER, NO ADDITION FOR DEEMED DIVIDEND COULD BE MADE. THE LEARNED AR ALSO CONTENDED THAT LOAN WAS GIVEN I N REGULAR COURSE OF BUSINESS BY M/S BLACK JACK INDIA (P) LTD. ON WHICH INTEREST WAS PAID BY M/S THE MERCHANTS AND SUCH EXP ENDITURE ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 20 WAS ALSO ALLOWED AS DEDUCTION BY ASSESSING OFFICER IN THE ASSESSMENT OF THE FIRM AND THEREFORE SUCH LOAN CAN NOT BE CLASSIFIED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE A CT. THE FOLLOWING DECISIONS, ACCORDING TO THE LEARNED COUNS EL FOR THE ASSESSEE, WERE NOT TAKEN INTO CONSIDERATION BY THE LEARNED CIT(A): I. MUKANDRAY K. SHAH VS. CIT, (2005) 277 ITR 128 (SC) II. NAND LAL KANORIA VS. CIT, (1980) 122 ITR 405 (CAL.) III. HOTEL HILLTOP, 217 CTR 527, (RAJ.) IV. CIT VS. CREATIVE DYEING PRINTING (P) LTD., (2009) 3 0 DTR 143 V. CIT VS. NAGINDAS M. KAPADIA, 177 ITR 393 (BOM.) VI. CIT VS. FRANCIS WACZIARG, 66 DTR 453 (DEL.) 25. ATTENTION HAS BEEN DRAWN TO PAGES 21 AND 22 OF THE IMPUGNED ORDER, WHEREIN THE LAST 3 OF THE ABOVE DEC ISIONS STAND NOTED IN THE ASSESSEES WRITTEN SUBMISSIONS D ATED 27.06.2012 FILED BEFORE THE LEARNED CIT(A). 26. IT HAS BEEN POINTED OUT THAT IN THE ORDER DATED 11.05.2008 (APB 70-113), PASSED BY THE LEARNED CIT(A) IN THE C ASE OF THE FIRM, THE CASE-LAWS ON THE POINT, WERE TAKEN INTO CONSIDERATION. IT HAS ALSO BEEN POINTED OUT THAT TH EREIN, THE LEARNED CIT(A) RECORDED A FINDING TO THE EFFECT THA T THERE WAS ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 21 NO FINDING OR EVIDENCE THAT THE AMOUNT PAID WAS DIV ERTED TO THE PARTNERS THROUGH THE FIRM. 27. THE LEARNED DR, PER CONTRA, HAS PLACED STRONG RELIANCE ON THE ORDER UNDER APPEAL QUA THIS ISSUE ALSO. IT H AS BEEN CONTENDED THAT IT HAS BEEN RIGHTLY HELD BY THE LEA RNED CIT(A) THAT SINCE THE TRANSACTIONS BETWEEN THE COMPANY AND THE FIRM WAS A LOAN TRANSACTION, THE PROVISIONS OF SECTION 2 (22)(E) OF THE ACT CAME INTO PLACE, AND THAT SUCH TRANSACTION WAS NEITHER FOR BUSINESS CONSIDERATION, NOR OUT OF BUSI NESS EXPEDIENCY. 28. AT THE OUTSET, IT WOULD BE APPROPRIATE TO NOT E THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. AS PER T HIS SECTION, DIVIDEND INCLUDES ANY PAYMENT BY A COMPANY, BY WA Y OF ADVANCE OR LOAN, TO ANY CONCERN, A PARTNER IN WHICH CONCERN IS ALSO A PERSON WHO IS A BENEFICIAL OWNER OF SHARES H OLDING NOT LESS THAN 10% OF THE VOTING POWER OF THE COMPANY AN D IN WHICH CONCERN, SUCH SHAREHOLDER HAS A SUBSTANTIAL I NTEREST, OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR T HE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESS ACCUMULATE D PROFITS. ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 22 29. IN THE PRESENT CASE, THE ASSESSING OFFICER MAD E THE ADDITION OF DEEMED DIVIDEND IN THE HANDS OF THE ASS ESSEE ON THE BASIS THAT THE ASSESSEE WAS A BENEFICIAL SHAREH OLDER OF THE COMPANY, HAVING 35% SHAREHOLDING THEREIN AND A REGI STERED SHAREHOLDER OF THE FIRM. THUS, ACCORDING TO THE ASS ESSING OFFICER, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT GET SQUARELY ATTRACTED. THE LEARNED CIT(A) HELD THE TRA NSACTION BETWEEN THE COMPANY AND THE FIRM TO BE A LOAN TRANS ACTION, BRINGING IT WITHIN THE KEN OF THE PROVISIONS OF SEC TION 2(22)(E) OF THE ACT. HE FURTHER OPINED THAT SUCH TRANSACTION WAS NOT EITHER FOR BUSINESS CONSIDERATION, OR OUT OF BUSINE SS EXPEDIENCY. 30. SO FAR AS REGARDS THE CASE-LAWS RELIED UPON B Y THE ASSESSEE BEFORE THE LEARNED CIT(A), THE LEARNED CIT (A) HELD AS FOLLOWS (SUB-PARA H (I), PAGE 38 OF THE IMPUGNED OR DER): THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASS ESSEE ARE ALSO NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS THE FACTS IN ALL THESE CASES WERE ENTIRELY DIFFERENT. M OREOVER, THE ASSESSEE HAS NOT DEMONSTRATED THAT AS TO HOW TH E FACTS OF THE CASE LAWS RELIED UPON ARE THE SAME WIT H THAT OF THE ASSESSEE. I AM, THEREFORE, OF THE CONSIDERED OPINION THAT THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE CAS E OF THE ASSESSEE. IN ALMOST ALL OF THE CASE LAWS RELIED UPO N BY THE ASSESSEE EITHER THE TRANSACTIONS WERE FOUND TO BE BUSINESS TRANSACTIONS OR FOUND TO BE FOR BUSINESS CONSIDERATIONS OR WERE NOT FOUND TO BE IN RESPECT O F LOANS OR ADVANCES WHEREAS IN THE CASE OF THE ASSESSEE, TH E TRANSACTIONS ARE ADMITTEDLY LOAN TRANSACTIONS ON WH ICH PROVISIONS OF SECTION 2(22E) ARE CLEARLY ATTRACTED. ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 23 31. THE QUESTION UP FOR CONSIDERATION BEFORE US IS AS TO WHETHER THE DECISIONS RELIED ON BY THE ASSESSEE, SU PPORT THE ASSESSEES CAUSE AND IF SO, WHETHER THE LEARNED CIT(A) WAS JUSTIFIED IN IGNORING THEM ALTOGETHER. 32. WE FIND THAT ASSESSING OFFICER HAS PASSED THE O RDER RELYING UPON THE PROVISIONS OF SECTION 2(22)E) BY HOLDING THAT T HE ADVANCE GIVEN TO M/S THE MERCHANTS, WAS NOT IN THE ORDINARY COURSE O F BUSINESS OF BOTH THE CONCERNS AS NON OF THESE CONCERNS WAS INTO THE BUSINESS OF LENDING MONEY. THE LEARNED CIT(A) ALSO DID NOT CONS IDER THE CASE LAWS RELIED UPON BY ASSESSEE AND UPHELD THE ADDITION BY HOLDING THAT IN THE CASE LAWS RELIED UPON BY ASSESSEE THE TRANSACTI ONS WERE FOUND TO BE BUSINESS TRANSACTIONS WHEREAS IN THE CASE OF ASS ESSEE THE TRANSACTIONS WERE LOAN TRANSACTIONS. THE ASSESSEE O N THE OTHER HAND, HAS BEEN MAINTAINING THAT THE LOANS WERE ADVANCED T O M/S THE MERCHANTS IN DUE COURSE OF BUSINESS AND INTEREST IN COME ON SUCH LOANS BY THE COMPANY WAS ASSESSED AS BUSINESS INCOM E IN THE HANDS OF COMPANY AND EXPENDITURE HAD BEEN CONSIDERED AS E XPENDITURE IN THE HANDS OF FIRM. IN THIS RESPECT THE SUBMISSIONS OF ASSESSEE AS NOTED BY LEARNED CIT(A) ARE RELEVANT WHICH ARE REPR ODUCED BELOW. (IX) THAT RATHER THE RATIO OF THE JUDGMENT AT PARA 27 IN THE CASE OF CIT VS. ANKITESH (P) LIMITED ITA 462/2009 OF THE HO NBLE DELHI COURT IS MORE RELEVANT AND APPLICABLE: TO QUOTE: PRECISELY, FOR THIS VERY REASON, THE COURTS HAVE H ELD THAT IF THE AMOUNTS ADVANCED ARE FOR BUSINESS TRANSACTIONS BETWEEN THE PARTIES, SUCH ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 24 PAYMENT WOULD NOT FALL WITHIN THE DEEMING DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. THE AFORESAID EXCEPTS, AS QUOTED HAS BEEN QUOT ED AT PARA 4 PAGE 8 OF THE SAID JUDGMENT OF HONBLE DELHI COURT IN THE CASE OF CIT VS NATIONAL TRAVEL SERVICE. AND IN THE CASE OF THE FIRM M/S THE MERCHANTS, VIS A VIS M/S BLACK JACK INDIA LIMITED, THE COMPANY, THE TRANSACTION WAS FOR A BUSINESS CONSIDERATION, AS THE INTEREST INCOME ON SUCH LOAN BY THE COMPANY HAVE BEEN ASSESSED AS BUSINESS INCOME IN THE HANDS OF TH E COMPANY AND EXPENDITURE OF INTEREST ON SUCH LOAN BY THE COMPANY HAS BEEN ALLOWED AS BUSINESS EXPENDITURE IN THE HANDS OF THE FIRM. ON SIMILAR CONSIDERATION, THE PROVISIONS OF SECTIO N 2(22)(E) WAS ALSO HELD NOR APPLICABLE ATTRACTED AS WAS HELD IN THE FOLLOWI NG JUDGMENTS AS RELIED UPON IN OUR SUBMISSIONS OF 28 TH FEB,2013. A) CIT VS. CREATIVE DYING & PRINTING (P) LTD. 2009, 30 DTR 143 (DELHI HIGH COURT). B) CIT VS. NAGIN DASS M KAPADIA (1989) 177 ITR 393 (BO MBAY HIGH COURT). C) CIT VS. FRANCIS WAEZIARG (2012) 66 DTR 953 DELHI HI GH COURT. THE LEARNED CIT(A) IN HIS ORDER HAS NOT GIVEN A NY FINDINGS ON THESE SUBMISSIONS AND HAS JUST HELD THE TRANSACTIONS TO B E IN THE NATURE OF LOAN OR ADVANCES. IN THIS RESPECT PARA 6.2 OF LEARN ED CIT(A)S ORDER IS QUITE RELEVANT WHICH IS REPRODUCED BELOW. 6.2 I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS O F THE ASSESSING OFFICER AS MADE IN THE ASSESSMENT ORDER AS WELL AS OBSERVAT IONS AS MADE IN OTHER COMMUNICATIONS. I HAVE ALSO CONSIDERED VARIOUS SUBM ISSIONS OF THE ASSESSEE INCLUDING COUNTER COMMENTS. I HAVE ALSO CO NSIDERED THE OTHER MATERIAL BROUGHT ON RECORD. AFTER CAREFULLY EXAMINI NG THE MATERIAL AVAILABLE ON RECORD, I AM OF THE OF THE CONSIDERED OPINION THAT AS THE TRANSACTIONS UNDER CONSIDERATION ENTERED INTO BETWE EN BJIL AND THE FIRM THE MERCHANTS ARE ADMITTEDLY LOAN TRANSACTIONS AN D THEREFORE THE PROVISIONS OF SECTION 2(22(E) OF THE INCOME TAX ACT , 1961 ARE CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE. I AM ALSO OF THE CONSIDERED OPINION THAT THE PROVISION OF SECTION 2(22(E) OF THE INCOME TAX ACT, 1961 DO NOT TAKE OUT OF ITS AMBIT THE LOAN TRANSACTION OR ADVAN CE TRANSACTIONS OF ANY KIND I.E. WITH INTEREST OR WITHOUT INTEREST. I AM F URTHER OF THE OPINION THAT THE TRANSACTIONS UNDER CONSIDERATIONS ARE ALSO NOT FOR BUSINESS CONSIDERATIONS OR MADE OUT OF BUSINESS EXPEDIENCY A S HAS ALREADY BEEN HELD EARLIER IN THE PRECEDING PARAGRAPHS. LASTLY, I HOLD THAT THE TRANSACTION ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 25 OF LOAN UNDER CONSIDERATION CLEARLY COMES UNDER THE PREVIEW OF SECTION 2(22(E) OF THE INCOME TAX ACT, 1961. 6.3 IN THE ABOVE STATED FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, I UPHOLD THE ACTION OF THE ASSESSING OFFICER IN MAKIN G AN ADDITION OF RS.18,99,600/- BEING 35% OF THE LOAN AMOUNT OF RS.5 4,27,431/- UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX AC T,1961 BY TREATING IT AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. IN TH E RESULT, GROUNDS OF APPEAL NO.2&3 TAKEN BY THE ASSESSEE ARE ALSO DISMIS SED. FROM THE ABOVE FINDINGS RECORDED BY LEARNED CIT(A) WE FIND THAT THE SUBMISSIONS OF ASSESSEE THAT INTEREST WAS PAID ON T HE LOAN ADVANCES AND WAS ALSO ALLOWED AS EXPENDITURE AND CONSEQUENTL Y INTEREST INCOME WAS ASSESSED AS INCOME IN THE HANDS OF COMPA NY WERE NOT ADDRESSED. 33. SIMILARLY, WE FIND THAT AS PER CLAUSE 15 AND 16 OF OBJECT INCIDENTAL TO THE ATTAINMENT OF THE MAIN OBJECTS OF M/S BLACK JACK (INDIA) LTD. AUTHORIZED THE COMPANY TO INVEST AND D EAL WITH THE MONEY OF THE COMPANY NOT IMMEDIATELY REQUIRED IN SU CH MANNER AS IT MAY SEEM PROPER FROM TIME TO TIME, THEREFORE, THE FINDINGS OF LEARNED CIT(A) THAT TRANSACTIONS UNDER CONSIDERATIO N ARE NOT FOR BUSINESS CONSIDERATION ARE NOT CORRECT AS THE ASSES SEE HAS CLAIMED THAT INTEREST WAS PAID ON SUCH LOANS. THE HONBLE D ELHI HIGH COURT IN THE CASE OF CIT VS. CREATIVE DYEING & PRINTING ( P) LTD., (2009) 30 DTR 143 HAS HELD THAT PROVISIONS OF SECTION 2(22)(E ) CAN BE APPLIED ON LOANS OR ADVANCES SIMPLICITOR AND NOT TO THOSE T RANSACTIONS CARRIED IN COURSE OF BUSINESS AS SUCH THE HONBLE C OURT HAD HELD THAT THERE IS NO LEGAL BAR IN HAVING SUCH TRANSACTI ONS AND IF THE ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 26 AMOUNT IS GIVEN AS ADVANCE SIMPLICITOR WITHOUT ANY FURTHER OBLIGATION BEHIND RECEIVING SUCH ADVANCE THEN ONLY CAN BE TREATED AS DEEMED DIVIDEND. SIMILARLY, THE HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. NAGINDAS M KAPADIA 177 ITR 393 BOMBAY HAS HELD THAT BUSINESS TRANSACTIONS ARE OUTSIDE THE PRO VISIONS OF SECTION 2(22)(E) OF THE ACT. 34. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE TO THE OFFICE OF AS SESSING OFFICER WHO IN THE LIGHT OF DECISIONS RELIED UPON BY ASSESS EE WILL ASCERTAIN THE NATURE OF SUCH TRANSACTIONS AND HE WILL ALSO VE RIFY THE CLAIM OF ASSESSEE THAT INTEREST INCOME EARNED BY THE COMPANY WAS ASSESSED AS INCOME OF THE COMPANY AND THE EXPENDITURE INCURR ED BY M/S THE MERCHANTS WAS ALLOWED AS EXPENDITURE IN THE ASS ESSMENT PROCEEDINGS AND WILL DECIDE ACCORDINGLY. 35. NEEDLESS TO SAY THAT ASSESSEE WILL BE PROVIDED SUFF ICIENT OPPORTUNITY OF BEING HEARD. 36. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSESS EE IS PARTLY DISMISSED AND PARTLY ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH APRIL, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:13.04.2016. /PK/PS. ITA NO.63 8 (ASR)/2013 ASST. YE AR: 2006-07 27 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.