Sri Krishna Bhagwan Giri, Kolkata V. I.T.O.,Ward-1(3), Kolkata

ITA 768/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7087 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-01-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Reopening of assessment; Opportunity of being heard; Deemed dividend
• Section: 2(22)(e); 148

Judgement Text

ITA NO. 768/KOL/2019 ASSESSMENT YEAR: 2012-2013 SRI KRISHNA BHAGWAN GIRI 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 768/KOL/2019 ASSESSMENT YEAR: 2012-2013 SRI KRISHNA BHAGWAN GIRI,.......................... .........................APPELLANT 13, B.B. GANGULY STREET, ROOM NO. 105, KOLKATA-700012 [PAN: ADVPG9028Q] -VS.- INCOME TAX OFFICER,................................ ................................RESPONDENT WARD-1(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700069 APPEARANCES BY: SHRI MANISH TIWARI, FCA, FOR THE APPELLANT SHRI JAYANTA KHANRA, JCIT, SR. D.R., FOR THE RESPON DEN T DATE OF CONCLUDING THE HEARING : JANUARY 02, 2020 DATE OF PRONOUNCING THE ORDER : FEBRUARY 05, 2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATA DAT ED 28.02.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.34,64,616/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF DEEMED DIVIDEND UNDER SE CTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 10.02.2013 DECLARING TOTAL INCOME OF RS.4,93,820/-. THE SAID R ETURN WAS INITIALLY PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 14 3(1) OF THE ACT. SUBSEQUENTLY HE, HOWEVER, FOUND THAT THE ASSESSEE H AD TAKEN A LOAN OF RS.2,37,65,058/- FROM M/S. S.K. MINERALS AGENCIES P VT. LIMITED DURING THE YEAR UNDER CONSIDERATION, WHICH ATTRACTED THE PROVI SIONS OF SECTION ITA NO. 768/KOL/2019 ASSESSMENT YEAR: 2012-2013 SRI KRISHNA BHAGWAN GIRI 2 2(22)(E). HE, THEREFORE, REOPENED THE ASSESSMENT AN D AFTER RECORDING THE REASONS, A NOTICE UNDER SECTION 148 WAS ISSUED BY H IM. IN RESPONSE TO THE SAID NOTICE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 05.07.2016 DECLARING THE SAME TOTAL INCOME OF RS.4,93,820/- AS DECLARED IN THE RETURN OF INCOME ORIGINALLY FILED ON 10.02.2013. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED BY THE ASSES SING OFFICER TO OFFER HIS EXPLANATION AS REGARDS THE APPLICABILITY OF SEC TION 2(22)(E) OF THE ACT TO THE LOAN TAKEN FROM M/S. S.K. MINERALS AGENCIES PVT. LIMITED IN WHICH THE ASSESSEE WAS THE BENEFICIAL OWNER OF THE SHARES HOLDING MORE THAN 10% WITH VOTING RIGHTS. ALTHOUGH THE ASSESSEE MADE A SUBMISSION CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT , NO EXPLANATION WAS OFFERED BY HIM AS REGARDS THE APPLICABILITY OF SECT ION 2(22)(E). THE ASSESSING OFFICER ACCORDINGLY INVOKED THE PROVISION S OF SECTION 2(22)(E) AND TREATED THE AMOUNT OF LOAN RECEIVED BY THE ASSE SSEE FROM M/S. S.K. MINERALS AGENCIES PVT. LIMITED TO THE EXTENT OF THE PROPORTIONATE ACCUMULATED PROFITS OF THE SAID COMPANY WORKED OUT AT RS.34,65,616/- AS DEEMED DIVIDEND CHARGEABLE TO TAX IN THE HANDS OF T HE ASSESSEE. ACCORDINGLY THE ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 2(22)(E) ON AC COUNT OF DEEMED DIVIDEND IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3)/147 OF THE ACT VIDE AN ORDER DATED 10.10.2017. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3)/147, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THE ADDITION MADE BY THE A SSESSING OFFICER ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) O F THE ACT. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT( APPEALS), THE FOLLOWING SUBMISSION WAS MADE IN SUPPORT OF THE ASSESSEES CA SE THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT APPLICABLE IN HIS CASE:- IN THE MATTER OF PRADIP KUMAR MALHOTRA VS.- CIT I NCOME TAX ACT, 1961 NO. 219/2003(2011-ITRV-HC-KOLKATA-274 ) THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT NON- ITA NO. 768/KOL/2019 ASSESSMENT YEAR: 2012-2013 SRI KRISHNA BHAGWAN GIRI 3 GRATUITOUS ADVANCE TO SUBSTANTIAL SHAREHOLDER IS N OT DEEMED DIVIDEND U/S 2(22)(E), IT WAS HELD:- THE PHRASE BY WAY OF ADVANCE OR LOAN S. 2(22)(E) MUST BE CONSTRUED TO MEAN THOSE ADVANCED OR LOANS WHICH A SHARE HOLDER ENJOYS ON ACCOUNT OF BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES. IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION RECEIVED FROM SHAREHOLDER, THEN SUCH ADVANCE OR LOAN CANNOT BE SAID TO BE DEEMED DIVIDEND U/S 2(22)(E). THUS, WHILE GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO A SUBSTANTIAL SHAREHOLDER COMES WITHIN THE PURVIEW OF S. 2(22)(E), A CASE WHERE THE LOAN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY BY THE SHAREHOLDER DOES NOT. IN THE CASE BEFORE US, THE ASSESSEE PERMITTED HIS PROPERTY TO BE MORTGAGED TO THE BANK FOR ENABLING THE COMPANY TO TAKE THE BENEFIT OF THE LOAN AND IN SPITE OF REQUEST OF THE ASSESSEE, THE COMPANY IS UNABLE TO RELEASE THE SAID PROPERTY FROM THE MORTGAGE. IN SUCH A SITUATION, FOR RETAINING THE BENEFIT OF LOAN AVAILED FROM VIJAYA BANK IF DECISION IS TAKEN TO GIVE ADVANCE TO THE ASSESSEE SUCH DECISION IS NOT GIVEN GRATUITOUS ADVANCE TO ITS SHARE HOLDER BUT TO PROTECT THE BUSINESS INTEREST OF THE COMPANY. 4. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT TH E SUBMISSION MADE ON BEHALF OF THE ASSESSEE AS ABOVE ON THE GROUND TH AT THERE WAS NO EVIDENCE PRODUCED BY THE ASSESSEE TO SUPPORT AND SU BSTANTIATE THE SAME. HE ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE A SSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 2(22 )(E) OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS INVITED MY ATTENTION TO THE COPIES OF DOCUMENTARY E VIDENCE PLACED IN HIS PAPER BOOK TO POINT THAT THE SAID EVIDENCE TO SUPPO RT AND SUBSTANTIATE ITA NO. 768/KOL/2019 ASSESSMENT YEAR: 2012-2013 SRI KRISHNA BHAGWAN GIRI 4 THE ASSESSEES CASE THAT THE LOAN IN QUESTION RECEI VED BY THE ASSESSEE FROM M/S. S.K. MINERALS AGENCIES PVT. LIMITED WAS N ON-GRATUITOUS LOAN AND THE SAID LOAN WAS GIVEN IN RETURN TO AN ADVANTA GE CONFERRED UPON THE COMPANY BY THE ASSESSEE. HE HAS CONTENDED THAT THIS EVIDENCE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, HOWEVER, WAS COMPLETELY OVERLOOKED /IGNORED BY THE LD. CIT(APPEALS) WHILE C ONFIRMING THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER UND ER SECTION 2(22)(E) OF THE ACT. HE HAS URGED THAT THIS MATTER MAY, THER EFORE, BE SENT BACK TO THE LD. CIT(APPEALS) FOR DECIDING THE SAME AFRESH A FTER TAKING INTO CONSIDERATION THE DOCUMENTARY EVIDENCE ALREADY PLAC ED ON RECORD BY THE ASSESSEE. KEEPING IN VIEW ALL THE FACTS AND CIRCUMS TANCES OF THE CASE, I AM INCLINED TO ACCEPT THIS CONTENTION OF THE LD COUNSE L FOR THE ASSESSEE. EVEN THE LD. D.R. HAS NOT RAISED ANY OBJECTION FOR SENDI NG THE MATTER BACK TO THE LD. CIT(APPEALS) FOR FRESH CONSIDERATION. THE I MPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE IS ACCORDINGLY SET A SIDE AND THE MATTER IS REMITTED BACK TO HIM FOR DECIDING THE SAME AFRESH O N MERIT AFTER TAKING INTO CONSIDERATION THE EVIDENCE ALREADY PLACED ON R ECORD BY THE ASSESSEE AND AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 05, 2020. SD/- (P.M. JAGTAP) VICE-PR ESIDENT) KOLKATA, THE 5 TH DAY OF FEBRUARY, 2020 COPIES TO : (1) SRI KRISHNA BHAGWAN GIRI, 13, B.B. GANGULY STREET, ROOM NO. 105, KOLKATA-700012 (2) INCOME TAX OFFICER, WARD-1(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700069 ITA NO. 768/KOL/2019 ASSESSMENT YEAR: 2012-2013 SRI KRISHNA BHAGWAN GIRI 5 (3) COMMISSIONER OF INCOME TAX (APPEALS)-1, KO LKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.