SHANTIDEVI MAHAVIR PRASAD GUPTA, MUMBAI V. ITO 3(3)(2), MUMBAI

ITA 7733/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75508 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 31-01-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 10-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: NARAYAN ATAL
• Keywords: Deemed dividend; Competent authority
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO , JM AND SHRI N.K. BIL LAIYA, AM ./ I.T.A. NO.7733/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR : 2003-04 SMT. SHANTIDEVI MAHAVIR PRASAD GUPTA, 161-C, MITTAL TOWERS, NARIMAN POINT, MUMBAI-400 021 / VS. THE ITO-3(3)(2), MUMBAI ( % ./ ) ./ PAN/GIR NO. : AEIPG 5438C ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: SHRI NARAYAN ATAL +,(* . - / RESPONDENT BY: SHRI ASHOK SURI . /0% / DATE OF HEARING :31.01.2014 12' . /0% / DATE OF PRONOUNCEMENT :05.02.2014 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-7, MUMBAI DT.16.08.2010 PERTAINING TO A.Y. 2003-04. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S. 271(1)(C) OF THE ACT AM OUNTING TO RS. 5,90,158/- ON ADDITION OF INCOME U/S. 2(22)(E) OF T HE ACT. ITA NO. 7733/M/2010 2 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASS ESSMENT ORDER DT. 23.3.2006 PASSED U/S. 143(3) OF THE ACT. DURING T HE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, ON PERUSING THE BA LANCE SHEET OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT UNDER THE HEAD CURRENT LIABILITY, THE ASSESSEE HAS SHOWN ADVANCES OF RS. 1,95,53,644/- AGAINST FLATS. ON FURTHER VERIFICATION, THE AO NOTICED THA T THE ASSESSEE HAS SHOWN ADVANCES FROM MANGLA INTERNATIONAL PVT. LTD., MARVE BEACH REALTORS PVT. LTD AND FROM SHUB MANGAL FINVEST PVT. LTD. ON FURT HER VERIFICATION, THE AO NOTICED THAT THE ASSESSEE IS A REGISTERED SHAREH OLDER IN ALL THESE THREE COMPANIES HAVING BENEFICIAL OWNERSHIP OF SHARES OF 92.5% IN MANGLA INTERNATIONAL PVT. LTD., 95% IN MARVE BEACH REALTOR S PVT. LTD., AND 90% IN SHUB MANGAL FINVEST PVT. LTD. THE AO WAS CONVIN CED THAT PROVISIONS OF SEC. 2(22)(E) OF THE ACT SQUARELY APPLY ON THE FACTS OF THE CASE. THOUGH THE ASSESSEE STRONGLY OBJECTED TO THIS MOVE OF THE AO CONTENDING THAT THE THREE COMPANIES HAVE BEEN ALLOTTED COMMERC IAL SPACE IN THE PROJECT CARRIED ON BY THE ASSESSEE, THEREFORE THESE PAYMENTS ARE NOT IN THE NATURE OF LOANS NOR ANY INTEREST HAVE BEEN CHARGED. ACCORDING TO THE ASSESSEE, THE PROVISIONS OF SEC. 2(22)(E) SHOULD NO T BE INVOKED. THE OBJECTION OF THE ASSESSEE DID NOT FIND ANY FAVOUR A ND THE AO MADE THE ADDITION OF RS. 18,73,518/- AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) IN QUANTUM PROCEEDINGS BUT FAILED TO CONVINCE THE LD. CIT(A). GOING FURTHER IN APPEAL, THE TRIBUNAL ALSO CONFIRMED THE ADDITION TH OUGH RESTORED THE MATTER BACK TO THE FILES OF THE AO FOR RECOMPUTATIO N OF DEEMED DIVIDEND. ON THESE FACTS, THE AO INITIATED PENALTY PROCEEDING S AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. ITA NO. 7733/M/2010 3 5. DURING THE PENAL PROCEEDINGS ALSO THE ASSESSEE C LAIMED THAT THE AMOUNT RECEIVED FROM THREE COMPANIES WERE NOTHING B UT ADVANCES AGAINST ALLOTMENT OF COMMERCIAL SPACE AND THE SAME CANNOT B E TREATED AS DEEMED DIVIDEND LEVIABLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. THE ASSESSEE FURTHER CONTENDED THAT DEEMED DIVIDEND IS MERELY A NOTIONAL INCOME THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE HAS C ONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND ANY FAVOUR AND THE AO LEVIED MINIMUM PENALTY OF RS. 5,90,158/-. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STRO NGLY CONTENDED THAT NO PENALTY CAN BE LEVIED ON NOTIONAL INCOME AND THE ADDITIONS BEING MADE U/S. 2(22)(E) OF THE ACT TREATING THE ADVANCES FROM THREE COMPANIES AS DEEMED DIVIDEND THAT BEING A NOTIONAL INCOME, NO PE NALTY IS LEVIABLE. IN SUPPORT, THE LD. COUNSEL RELIED UPON THE DECISION O F THE MUMBAI TRIBUNAL IN ITA NO. 2539/MUM/2011. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE LOWER AUTHORITIES STATE D THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS KNOWINGLY WELL THAT TH E ADVANCES TAKEN FROM THE THREE COMPANIES WERE NOTHING BUT DEEMED DIVIDEN D. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IT IS AN UNDI SPUTED FACT THAT THE ASSESSEE HAS SHOWN ADVANCES OF RS. 49,78,267/- FROM MANGLA INTERNATIONAL PVT. LTD., RS. 34,36,664/- FROM MARVE BEACH REALTORS PVT. ITA NO. 7733/M/2010 4 LTD AND RS. 40,73,047/- FROM SHUB MANGAL FINVEST PV T. LTD. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE IS A BENEFICIAL O WNER OF SHARES IN THESE COMPANIES HAVING 92.5%, 95% AND 90% RESPECTIVELY. NOW LET US CONSIDER THE FACTS IN THE LIGHT OF THE SUBMISSIONS MADE BY THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THAT THESE THREE COMPANIES HAVE PAID ADVANCES AGAINST ALLOTMENT OF COMMERCIAL SPACE IN T HE SECOND PHASE OF THE PROJECT. HOWEVER, FACTS ON RECORD SHOW THAT ON THE DATE OF TAKING THESE ADVANCES, THERE WAS NO APPROVED PLAN OF PHASE -II. THE ASSESSEE COULD NOT FURNISH COPY OF PLAN OF PHASE-II PUT UP F OR APPROVAL BEFORE THE COMPETENT AUTHORITY. SINCE NO APPROVED PLAN WAS AV AILABLE, THERE CANNOT BE ANY QUESTION OF ALLOTTING COMMERCIAL SPACE TO TH ESE THREE COMPANIES. THESE FACTS WERE VERY MUCH IN THE KNOWLEDGE OF THE ASSESSEE YET THE ASSESSEE CHOSE TO SHOW THESE ADVANCES UNDER THE HEA D CURRENT LIABILITY AS ADVANCES FOR COMMERCIAL SPACE. IN OUR CONSIDERE D VIEW, THIS CONDUCT OF THE ASSESSEE CLEARLY ESTABLISHES THE CONCEALMENT OF FACTS AND FILING OF INACCURATE PARTICULARS. 10. THE QUESTION BEFORE US IS NOT WHETHER THE INCOM E IS OF THE NATURE OF NOTIONAL INCOME BUT THE QUESTION IS WHETHER THE A SSESSEE HAS FILED INACCURATE PARTICULARS OR CONCEALED THE TRUE FACTS. AS STATED HEREINABOVE, IN OUR HUMBLE OPINION, THE ASSESSEE HAS CONCEALED T HE TRUE FACTS THEREBY FILED INACCURATE PARTICULARS. THEREFORE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). THE P ENALTY U/S. 271(1)(C) IS LEVIABLE ON THE FACTS OF THE CASE. THE RELIANCE ON THE DECISION OF THE TRIBUNAL IS CLEARLY DISTINGUISHABLE ON THE FACTS. WE, ACCORDINGLY CONFIRM THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 11. BEFORE CLOSING, THE TRIBUNAL IN QUANTUM APPEAL HAS RESTORED THE MATTER FOR RECOMPUTATION OF THE DEEMED DIVIDEND. T HE AO IS DIRECTED TO ITA NO. 7733/M/2010 5 RECOMPUTE THE PENALTY AFTER RECOMPUTING THE DEEMED DIVIDEND FOLLOWING THE DIRECTIONS OF THE TRIBUNAL IN QUANTUM PROCEEDIN GS. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2014 . 3 . 2' % 4 56 5.2.2014 2 . 7 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 5 DATED . . ./ RJ , SR. PS 3 3 3 3 . .. . +/ +/ +/ +/ 8 '/ 8 '/ 8 '/ 8 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// = == = / > > > > (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI