Smt. Madhuri Pradipkumar Kawdiya, Ahmedabad V. The Dy. CIT, Circle-3(1)(2), Ahmedabad

ITA 766/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4479 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 25-03-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 27-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Deemed dividend; TDS
• Section: 143(3); 2(22)(e); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (VIRTUAL COURT) BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL ME MBER MADHURI PRADIPKUMAR KAWDIYA, C-302, PRESTIGE TOWER, B/H JUDGES BUNGALOWS BODAKDEV, VASTRAPUR, AHMEDABAD PAN: AEDPK8810M (APPELLANT) VS THE DEPUTY CIT, CIRCLE-3(1)(2), AHMEDABAD (RESPONDENT) REVENUE BY: SHRI L.P. JAIN, SR. D.R. ASSESSEE BY: SHRI TUSHAR HEMANI WIT H SHRI P.B. PARMAR, A.RS. DATE OF HEARING : 16-07-2020 DATE OF PRONOUNCEMENT : 12-10-2020 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEE'S APPEAL FOR A.Y. 2014-15, ARISES FRO M ORDER OF THE CIT(A)-7, AHMEDABAD DATED 01-12-2017, IN PROCEEDINGS UNDER SE CTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT 'THE ACT'. 2. THE SOLITARY GROUND OF APPEAL OF THE ASSES SEE IS FILED AGAINST THE DECISION OF ID. CIT(A) IN CONFIRMING THE ACTION OF THE ASSESSIN G OFFICER OF MAKING ADDITION OF RS. 48,76,872/- AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. ITA NO. 766/AHD/2018 ASSESSMENT YEAR 2014-15 I.T.A NO. 766/AHD/2018 A.Y. 2014-15 PAGE NO MADHURI PRADIPKUMAR KAWDIYA VS. DY. CIT 2 3. THE FACT IN BRIEF IS THAT THE RETURN OF INCO ME DECLARING INCOME OF RS. 17,41,470/- WAS FILED ON 2 ND MARCH, 2015. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S. 143(2) OF THE ACT WAS IS SUED ON 7 TH SEP, 2015. DURING THE COURSE OF ASSESSMENT ON VERIFICATION OF THE DET AILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS RECEIVE D AMOUNTS ON VARIOUS DATES DURING THE YEAR FROM OMKARA IMPEX AND MERCHANDISE P VT. LTD. ON FURTHER VERIFICATION, THE ASSESSING OFFICER NOTICED THAT AS SESSEE WAS HOLDING 50% OF SHARES OF OMKARA IMPEX AND MERCHANDISE PVT. LTD.. SINCE TH E ASSESSEE WAS HOLDING MORE THAN 50% SHARES OF THE SAID COMPANY, THEREFORE, THE ASSESSING OFFICER HAS APPLIED PROVISION OF SECTION 2(22)(E) OF THE ACT AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN WHY NOT THE AMOUNT OF RS. 48,76,872/- MAY BE TREATE D AS DEEMED DIVIDEND WITHIN MEANING OF SECTION 2(22)(E) OF THE ACT, 1961 . THE ASSESSEE HAS NOT MADE ANY COMPLIANCE TO THE SHOW CA USE NOTICE, THEREFORE, THE ASSESSING OFFICER HAS TREATED THE SUM OF RS. 48,76, 872/- RECEIVED ON VARIOUS DATES BY THE ASSESSEE FROM THE SAID COMPANY AS DEEMED DIV IDEND U/S. 2(22)(E) OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE ID. CIT(A). THE ID. C1T(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS B EFORE US, THE ID. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING COPIES OF DOCUMENT AND INFORMATION FURNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE T HE ID. CIT(A). THE ID. COUNSEL HAS REFERRED PAGE NO. 24 OF THE PAPER BOOK SHOWING ACCOUNT OF OMKARA IMPEX AND MERCHANDISE PVT. LTD. THE LD. COUNSEL HAS SUBMITTE D THAT THERE ARE LARGE NUMBER OF TRANSACTIONS OF BOTH DEBIT AND CREDIT SHOWING MO VEMENTS OF FUNDS BOTH WAYS ON NEED BASIS INDICATING THAT SUCH TRANSACTIONS ARE IN THE FORM OF CURRENT ACCOMMODATION ADJUSTMENT ENTRIES. HE HAS FURTHER CO NTENDED THAT THE AMOUNT I.T.A NO. 766/AHD/2018 A.Y. 2014-15 PAGE NO MADHURI PRADIPKUMAR KAWDIYA VS. DY. CIT 3 REFLECTED IN THE LEDGER ACCOUNT OF THE COMPANY WAS NOT IN THE NATURE OF LOAN ADVANCE BUT MERELY ADJUSTMENT TO WHICH PROVISION OF SECTION 2(22)(E) WOULD NOT APPLY. THE ID. COUNSEL HAS FURTHER SUBMITTED THAT A S PER LEDGER ACCOUNT PLACED AT PAGE NO. 24 OF THE PAPER BOOK THERE WAS AN OPENING BALANCE OF RS. 3,47,57,873/- (CREDIT BALANCE) AND CLOSING BALANCE WAS RS. 3,04,7 6,997/-(CREDIT BALANCE) WHICH SHOW THAT ASSESSEE HAS NOT RECEIVED ANY NEW FUND DU RING THE YEAR, HOWEVER, ASSESSEE HAS REPAID RS. 42,80,876/- TO THE COMPANY DURING THE YEAR UNDER CONSIDERATION, THEREFORE, IN ABSENCE OF FRESH LOAN' S QUESTION OF ADDITION U/S. 2(22)(E) DOES NOT ARISE AT ALL. THE ID. COUNSEL HAS PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCHES IN THE CASES OF SMT. MADHURI PR ADIP KAWDIYA VS. ACIT, ITA NOS. 1551/AHD/2015 & 735/AHD/2016 DATED 28/02/2020 & ITO VS. MEHULBHAI D. ZHAVERI, ITA NO. 102/AHD/2012 DATED 23/12/2016. TH E LD. COUNSEL HAS ALSO SUBMITTED THAT ALTERNATIVELY ADDITION OUGHT TO HAVE BEEN WORKED OUT BASED ON PEAK AND IN THIS CASE, PEAK WORKS OUT TO RS. 3,62 ,65,327/- AND HENCE ONLY RS. 15,07,454/- COULD HAVE BEEN TREATED AS DEEMED DIVID END U/S. 2(22)(E) OF THE ACT. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANCE ON THE ORDER OF LD. CIT(A). 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE HAVE GONE THROUGH THE LEDGER OF THE COMPANY PLACED AT PAGE NO . 24 OF THE PAPER BOOK SHOWING A LARGE NUMBER OF TRANSACTIONS FROM BOTH TH E SIDES INCLUDING A NUMBER OF TRANSACTIONS PERTAINING TO SERVICE TAX, TDS ETC. T HE ASSESSING OFFICER HAS NOT SPECIFICALLY EXAMINED/DISPROVED THE CONTENTION OF T HE ASSESSEE THAT AMOUNT REFLECTED IN THE LEDGER ACCOUNT WAS OF THE NATURE O F CURRENT ACCOMMODATION ADJUSTMENT ENTRIES. IT IS UNDISPUTED FACT THAT A L ARGE NUMBER OF ENTRIES IN THE REFERRED LEDGER ACCOUNT WAS ALSO PERTAINED TO SERVI CE TAX AND TDS AND THE ASSESSING OFFICER HAS TREATED THE WHOLE AMOUNT OF F UNDS RECEIVED BY ASSESSEE FROM OMKARA IMPEX AND MACHINERY PVT. LTD. AS DEEMED DIVIDEND WE HAVE ALSO I.T.A NO. 766/AHD/2018 A.Y. 2014-15 PAGE NO MADHURI PRADIPKUMAR KAWDIYA VS. DY. CIT 4 GONE THROUGH THE DECISION OF THE CO-ORDINATE BENCH OF THE ITAT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-12 AND 2012-13 WH EREIN VIDE ITA NO. 1551/AHD/2015 AND 735/AHD/2016 AND THE MAJOR PART O F SUCH DISALLOWANCE WAS DELETED. IN THE LIGHT OF THE ABOVE FACTS AND LA CUNA IN THE FINDING OF THE ASSESSING OFFICER OF NOT CATEGORICALLY POINTING OUT THE ENTRI ES OF THE NATURE OF LOAN/ADVANCES, ,WE RESTRICT THE DISALLOWANCE TO THE EXTENT OF RS. 15,07,454/- AS PER THE ALTERNATIVE CONTENTION MADE BY THE LD. COUNSEL. THEREFORE, TH E APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-10-2020 SD/- S D/- (MADHUMITA ROY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 12/10/2020 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,