DCIT, CHENNAI V. John Bosco Peters, CHENNAI

ITA 794/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7545 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 02-04-2014
• Court: TRIBUNAL
• Department Lawyers: R MEENAKSHISUNDARAM
• Assessee Lawyers: SHIVA SRINIVAS
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , !'. . # $ % , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.794/MDS/2014 * +* /ASSESSMENT YEAR: 2007-08 THE DY. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(3), ROOM NO.513, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G.ROAD, CHENNAI-600 034. VS. SHRI JOHN BOSCO PETERS, NO.AA-29, ZENDIA, 3 RD STREET, ANNA NAGAR, CHENNAI-600 040. [PAN: AAEPJ 2708 P ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.R.MEENAKSHI SUNDARAM, ADV. ./,- 0 1 /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT # 0 2' /DATE OF HEARING : 25.01.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 15.03.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 25.11.2013 OF COMMISSIONER OF INCOME TAX (APPEALS)- II, CHENNAI, IN ITA NO.554/2013-14 FOR THE AY 2007-08. ITA NO.794/MDS/2014 :- 2 -: 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE D ISALLOWANCE OF RS.35.63 LAKHS TAXED AS DEEMED DIVIDEND U/S.2(22)(E ) OF INCOME TAX ACT (IN SHORT THE ACT). DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER (IN SHORT AO) FOUND THAT M/S.JB P TRADE LINK PVT. LTD., HAS GIVEN SUBSTANTIAL LOAN/ADVANCE TO SHRI JOHN BOS CO PETERS (PROP: JHON BOSCO PETERS & CO) WHO IS HOLDING 99.96% OF SHARES IN M/S.JBP TRADE LINK PVT. LTD. M/S.JBP IS A COMPANY IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INVESTED AND HAVING ACCUMULATED PROFITS OF RS.1,38, 60,632/- AS ON 31.03.2007. THEREFORE, THE AMOUNT OF LOAN/ADVANCE GIVEN BY THE COMPANY TO THE ASSESSEE AMOUNTING TO RS.62,32,959/- WAS ADDED BY THE AO AS DEEMED DIVIDEND U/S.2(22)(E) OF ACT. 3.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) (HEREINAFTER REFERRED TO AS LD.CIT(A)) AND THE LD.CIT(A) DELET ED THE ADDITION OF RS.34,65,900/- STATING THAT THE AMOUNT WAS IMMEDIAT ELY TRANSFERRED TO M/S.JBK TRADE PVT. LTD. 4.0 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVEN UE IS ON APPEAL BEFORE US. DURING THE APPEAL, THE LEARNED DEPARTMEN TAL REPRESENTATIVE (HEREINAFTER REFERRED TO AS LD.DR) ARGUED THAT EV EN THOUGH THE ASSESSEE EXPLAINED THAT THE AMOUNT WAS RECEIVED DIRECTLY FRO M THE CLIENTS TO THE PROPRIETARY CONCERN OF THE ASSESSE, THERE IS NO EVI DENCE TO SHOW THAT THE FUNDS WERE NOT RETAINED BY THE ASSESSEE AND IT WAS ACTUALLY TRANSFERRED OR ITA NO.794/MDS/2014 :- 3 -: PAID BY THE ASSESSEE TO THE COMPANY. THE ASSESSEE HAS RECEIVED LOAN OF RS.62,32,959/- AND THE LD.CIT(A) IS NOT CORRECT IN DELETING THE ADDITION OF RS.34,65,900/- WITHOUT HAVING PROPER EVIDENCE. ACC ORDING TO THE LD.DR, THE ENTIRE AMOUNT OF RS.62.31 LAKHS REQUIRED TO BE CONFIRMED IN THE HANDS OF THE ASSESSEE. ON THE OTHER HAND, THE LD.AR SUP PORTED THE ORDERS OF THE LD.CIT(A). 5.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. THE COMPANY M/S.JBP TRADE PVT. LTD., HAS GIVEN A L OAN/ADVANCE OF RS.62.31 LAKHS TO TO SHRI JOHN BOSCO PETERS (PROP: JHON BOSCO PETERS & CO.) WHICH WAS BROUGHT TO TAX BY THE AO AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. HOWEVER, IT WAS SUBMITTED BY THE ASSESSEE THAT A SUM OF RS.54,65,900/- WAS RECEIVED BY THE ASSESSEE DIRECTLY FROM THE CLIENTS OF THE COMPANY M/S.JBP TRADE LINKS PVT. LTD ., WHICH IN TURN REMITTED TO THE COMPANY. THE LD.CIT(A) DELETED THE ADDITION AND GIVEN A CLEAR FINDINGS IN PARA 4.2.3 WHICH IS EXTRACTED AS UNDER: 4.2.3 FROM THE PERUSAL OF THE ABOVE LEDGER EXTRACT S FURNISHED BY THE ASSESSEE, IT COULD CLEARLY BE SEEN THAT SOME OF THE DEBITS IN THE ASSE SSEES ACCOUNT IN THE BOOKS OF M/S.JBP TRADE LINK P LTD (THE COMPANY) ARE NOT THE ACTUAL P AYMENTS BY THE COMPANY TO THE ASSESSEE. SOME OF THE DEBITS ARE THE AMOUNTS DIRECT LY RECEIVED BY THE ASSESSEE FROM CERTAIN CLIENTS OF THE M/S.JBP TRADE LINK P LTD, WH ICH IN-TURN WERE REMITTED TO THE COMPANY. AS PER THE ASSESSEE, THE AMOUNTS WERE ERRO NEOUSLY RECEIVED BY THE ASSESSEE (SHRI JOHN BOSCO PETERS) FROM THE CLIENTS (M/S. G.A . MASS LEDER BV, GERMANY) OF THE COMPANY I.E. THE CLIENTS DIRECTLY REMITTED THE AMOU NTS IN THE NAME OF M/S.JOHN BOSCO PETERS & CO, THE PROPRIETARY CONCERN OF THE ASSESSE E. HENCE, THE ASSESSEE IMMEDIATELY I.E. ON THE SAME DATE(S), TRANSFERRED THE SAID AMOUNTS T O M/S.JBP TRADE LINK P LTD (THE COMPANY). SINCE THESE AMOUNTS ARE PASSED ON THROUGH THE ASSESSEES PROPRIETARY CONCERN, THE AMOUNTS ARE SHOWN AS DEBITED INTO THE ACCOUNT O F THE ASSESSEE IN THE BOOKS OF THE ITA NO.794/MDS/2014 :- 4 -: COMPANY AND THEN CREDITED ON THE SAME DAY AS THE AM OUNTS ARE TRANSFERRED TO THE COMPANY. THE DETAILS OF THE AMOUNTS SO RECEIVED BY THE ASSESSEE FROM M/S.G.A. MASS LEDER BV, GERMANY AND IN-TURN TRANSFERRED TO M/S.JB P TRADE LINK P LTD DURING THE YEAR ARE: AMOUNTS RECEIVED FROM M/S.G.A. MASS LEDER BV. GERMA NY AND THEIR PAYMENTS TO M/S. JBP TRADE LINK P LTD: AMOUNTS RECEIVED FROM M/S.G.A.MASS LEDER MV AMOUNTS PAID TO M/S.JBP TRADE LINK P. LTD. DATE AMOUNT (RS.) DATE AMOUNT (RS.) 22.05.2006 11,30,000.00 22.05.2006 11,30,000.00 21.08.2006 10,99,501.30 21.08.2006 10,50,000.00 12.10.2006 8,65,887.05 14.10.2006 8,65,900.00 13.01.2007 4,68,238.80 13.01.2007 4,20,000.00 TOTAL 35,63,627.15 TOTAL 34,65,900.00 THUS, OUT OF THE AMOUNTS OF RS.35,63,627/- RECEIVED FROM M/S.G.A. MASS LEDER MV, GERMANY, AN AMOUNT OF RS.34,65,900/- WAS IMMEDIATEL Y TRANSFERRED ON THE SAME DATE TO M/S.JBP TRADE LINK P. LTD. THEREFORE, OUT OF THE A MOUNTS OF RS.35,63,627/- RECEIVED FROM M/S.G.A. MASS LEDER BV, GERMANY, THE ASSESSEE RETAI NED OF RS.99,727/- ALONE IS TO BE CONSIDERED FOR THE PURPOSE OF SEC.2(22)(E) OF THE A CT. IN OTHER WORDS, OUT OF THE TOTAL AMOUNTS SHOWN AS DEBITS OF RS.62,31,959/- INTO THE ASSESSEES ACCOUNT IN THE BOOKS OF THE COMPANY, THE ABOVE AMOUNT OF RS.34,65,900/- IS TO B E EXCLUDED. 6.0 THE REVENUE CONTESTED THAT THERE WAS NO EVIDENCE T O PROVE THAT THE SAID AMOUNT WAS ACTUALLY PAID BY THE ASSESSEE ON TH E SAME DATES TO THE COMPANY. THE FACT WHETHER THE SAID SUM WAS ACTUALL Y PAID BY THE ASSESSEE OR NOT REQUIRED TO BE VERIFIED AT THE END OF THE AO. THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF AO FOR A LI MITED PURPOSE OF VERIFICATION OF THE TRANSFER OF FUNDS BY THE ASSESS EE TO M/S.JBP TRADE LINKS PVT. LTD., ON THE SAME DATE OR NOT AND DECID E THE ISSUE AFRESH ON MERITS. ITA NO.794/MDS/2014 :- 5 -: 7.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' . . # $ % ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 15 TH MARCH, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 69 .2 /DR 3. # 82 ( ) /CIT(A) 6. '* < /GF