Mr. Manish Mimani, Kolkata V. CIT-Central-I, Kolkata, Kolkata

ITA 787/KOL/2012

• Counselvise Citation: 78723514 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: RAVI TULSIAN F
• Keywords: Opportunity of being heard; Principle of natural justice; Deemed dividend
• Section: 263

Judgement Text

I.T.A. NO . 787 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 787 /KOL . / 20 1 2 ASSESSMENT YEAR : 200 8 - 20 0 9 MR. MANISH MIMANI,................. ......... ... .... ............ .. .APP ELL ANT FLAT NO. 11, 4 TH FLOOR, 32, ROWLAND ROW, KOLKATA - 700 020 [PAN : A ETPM 1173 K ] - VS. - COMMISSIONER OF INCOME TAX (CENTRAL) - 1 , .......... . RESPONDENT KOLKATA APPEARANCES BY: SHRI RAVI TULSIAN , F.C.A. , FOR THE ASSESSE E SHRI RAVI JAIN , CIT, D.R. , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : FEBRU ARY 0 3 , 2 01 5 DATE OF PRONOUNCING THE ORDER : FEBRU ARY 03 , 201 5 O R D E R PER GEORGE MATHAN : THIS IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX, CENTRAL - 1, KOLKATA PASSED UNDER SECTION 263 IN M. NO. CIT(C - 1)/263/MANISH KR. MIMANI/TECH/11 - 12/KOL/3588 - 90 DATED 30.03.2012 FOR THE ASSESSMENT YEAR 200 8 - 0 9 . 2 . SHRI RAVI TULSIAN , F.C.A. , REPRESENTED ON BEHALF OF THE ASSE SSEE AND SHRI RAVI JAIN , CIT, D.R. , REPRESENTED ON BEHALF OF THE REVENUE. 3 . AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. A.R. ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE IS AN INDIVIDUAL. IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS ON 31.03.2007 RE LEVANT TO THE ASSESSMENT YEAR 2007 - 08, THERE WAS A LOAN OUTSTANDING FROM M/S. PANCHADEEP DISTRIBUTORS (P) LTD. (HEREINAFTER REFERRED AS PDPL ) TO AN EXTENT OF RS.49,07,330/ - . IT WAS THE SUBMISSION THAT THE SAID PDPL AND ANOTHER COMPANY BY THE NAME OF M/S. I.T.A. NO . 787 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 2 OF 4 MIMA FOOD (P) LTD. (HEREINAFTER REFERRED AS MFPL ) AMALGAMATED WITH ANOTHER COMPANY BY THE NAME OF M/S. GANESH WHEAT PRODUCTS (P) LTD. (HEREINAFTER REFERRED AS GWPPL ) ON 01.04.2007 RELEVANT TO THE ASSESSMENT YEAR 2008 - 09 AS PER THE ORDER OF THE HON BLE CALCUTTA HIGH COURT. IT WAS THE SUBMISSION THAT THE ASSESSEE DID NOT HAVE MORE THAN 10% SHAREHOLDING POSITION IN M/S. PDPL. HOWEVER, AFTER THE AMALGAMATION AS THE ASSESSEE WAS HAVING 24.74% REGISTERED SHAREHOLDING IN GWPPL, THE OPENING BALANCE OF THE LOAN TO THE TUNE OF RS.48,78,547/ - WAS TREATED AS LIABLE TO BE DEEMED DIVIDEND UNDER SECTION 10(22)(E) OF THE ACT. IT WAS THE SUBMISSION THAT THE LD. CIT ERRED IN HOLDING THAT THE OPENING BALANCE OF THE LOAN IN THE AMALGAMATED COMPANY WAS LIABLE TO BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. - PARLE PLASTICS LTD. AND ANOTHER REPORTED IN 332 ITR 63 (BOM.), WHEREIN THE HON BLE HIGH COURT HAD CATEGORICALLY HELD THAT THE OPENING BALANCE OF THE LOAN, ADVANCES DURING THE RELEVANT PREVIOUS YEAR COULD NOT BE TREATED AS THE AMOUNT OF LOAN AND ADVANCES RECEIVED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR AND, THEREFORE, TH E SAID AMOUNT COULD NOT BE INCLUDED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. IN THE PRESENT CASE, ADMITTEDLY THE LOAN HAS BEEN RECEIVED BY THE ASSESSEE FROM M/S. PDPL AND THE SAME STOOD AS CLOSING BALANCE AS ON 31.03.2007. DUE TO THE AMALGAMAT ION OF M/S. PDPL WITH M/S. GWPPL W.E.F. 01.04.2007, THE OPENING BALANCE IN THE CASE OF GWPPL STOOD AT RS.48,75,547/ - . THIS DOES NOT MEAN THAT GWPPL HAS GIVEN ANY LOAN TO THE ASSESSEE TO THE EXTENT OF RS.48,75,547/ - DURING THE RELEVANT ASSESSMENT YEAR. IT W AS THE SUBMISSION THAT THE ORDER PASSED BY THE LD. CIT UNDER SECTION 263 WAS LIABLE TO BE CANCELLED. 4. IN REPLY, LD. CIT, D.R. SUBMITTED THAT THE SUBMISSION MADE BY THE ASSESSEE WAS NOT BEFORE THE LD. CIT AND THE LD. CIT DID NOT HAVE THE I.T.A. NO . 787 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 3 OF 4 BENEFIT OF THE E XPLANATION NOW MADE BY THE ASSESSEE. LD. CIT, D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. COMING TO THE ISSUE OF THE ARGUMENT RAISED BY THE LD. CIT, D.R. THAT THE EXPLANATION PU T FORWARD BY THE ASSESSEE NOW WAS NOT BEFORE THE LD. CIT WHEN HE PASSED HIS ORDER UNDER SECTION 263. THE SAME CANNOT BE FOUND FAVOUR WITH IN SO FAR AS THE LD. CIT WHEN INVOKING HIS POWERS UNDER SECTION 263 IS EXPECTED TO ONLY INFORM THE ASSESSEE OF THE GRO UND ON WHICH HE IS PROPOSING TO INITIATE REVISION AND INVOKE HIS POWERS OF REVISION. THERE IS NO REQUIREMENT OF AN OPPORTUNITY OF BEING HEARD WHEN PASSING AN ORDER UNDER SECTION 263. TRUE NATURAL JUSTICE WOULD REQUIRE THE ASSESSEE TO BE HEARD BUT WHAT IS A CTUALLY REQUIRED UNDER SECTION 263 IS ONLY THAT THE ASSESSEE SHOULD BE INFORMED OF THE ISSUES ON WHICH THE LD. CIT IS INVOKING HIS POWERS UNDER SECTION 263. COMING TO THE EXPLANATION BY THE ASSESESE THAT THE ASSESESE HAS NOT RECEIVED ANY LOAN OR ADVANCE FR OM M/S. GWPPL DURING THE RELEVANT ASSESSMENT YEAR , I T IS NOTICED THAT A PERUSAL OF THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263 CLEARLY SHOWS THAT THE AMOUNT OF RS.48,75,547/ - IS ADMITTEDLY THE OPENING BALANCE OF THE LOAN FROM THE AMALGAMATED COMPANY M/S. GWPPL. A PERUSAL OF THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF PARLE PLASTICS LIMITED AND ANOTHER REFERRED TO SUPRA SHOWS THAT THE HON BLE BOMBAY HIGH COURT AT PAGE 70 IN PARA 11 CLEARLY SHOWS THAT ONLY THE AMOUNT ACTUALLY RECEIVED B Y THE ASSESSEE BY WAY OF LOAN OR ADVANCE DURING THE RELEVANT ASSESSMENT YEAR WOULD FALL WITHIN INCLUSIVE CLAUSE (II) OF THE DEFINITION OF DIVIDEND APPEARING IN SECTION 2(22)(E) OF THE ACT. AS THE LOAN AND ADVANCE IN THE ASSESSEE S CASE FROM M/S. GWPPL IS NOT AN AMOUNT ACTUALLY RECEIVED BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR, THE SAME CANNOT BE TREATED AS DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. CONSEQUENTLY RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF PARLE PLASTRICS LIMITED AND ANOTHER REFERRED TO I.T.A. NO . 787 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 4 OF 4 SUPRA, THE ORDER PASSED BY THE LD. CIT IS FOUND TO BE UNSUSTAINABLE AND CONSEQUENTLY QUASHED. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N 3 RD FEBRU ARY , 201 5 . SD/ - SD/ - SHAMIM YAHYA GEORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) KOLKATA, THE 3 RD D AY OF FEBRU ARY , 201 5 COPIES TO : (1) MR. MANISH MIMANI, FLAT NO. 11, 4 TH FLOOR, 32, ROW LAND ROW, KOLKATA - 700 020 (2) COMMISSIONER OF INCOME TAX (CENTRAL) - 1, KOLKATA ( 3 ) COMMISSIONER OF INCOME TAX ( 4 ) THE DEPARTMENTAL REPRESENTATIVE ( 5 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S.