DCIT, CHENNAI V. Deepa Vijay, CHENNAI

ITA 912/CHNY/2015

• Counselvise Citation: 91221714 RSA 2015
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: VIKRAM VIJAYARAGHAVAN
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ ITA NO. 912/MDS/2015 / ASSESSMENT YEAR : 2009-10 THE DEPUTY COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-4(1), CHENNAI. APPELLANT) V. MRS. DEEPA VIJAY, FLAT NO.C-4, GOLDEN SCRONBRUNN APTS., NO.29, CENOTAPH 2 ND LANE ALWARPET, CHENNAI 600 018. PAN ABTPV9570C RESPONDENT) / APPELLANT BY : SHRI A.V.SREEKANTH, JCIT / RESPONDENT BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCAT E ! / DATE OF HEARING : 07.07.2015 '# ! / DATE OF PRONOUNCEMENT : 17.07.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 16 .2.2015 FOR THE ASSESSMENT YEAR 2009-10. - - ITA 91 2/15 2 2. THE GROUND RAISED BY THE REVENUE IS THAT THE CIT(APPEALS) ERRED IN DELETING THE ADDITION OF ` 1,25,25,492/- MADE U/S.2(22)(E) OF THE ACT . 3. THE FACTS OF THE CASE ARE THAT THE AO HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE RECEIVED A S UM OF ` 3,00,000/- ON 10 . 04.2008 AND ` L,22,25,492/- ON 30.07.2008 FROM M/S MAYA APPLIANCES P. LTD ., WHICH WAS A PRIVATE LIMITED COMPANY, WHEREIN THE ASSESSEE HELD MORE THA N 10% OF SHARES AND WHEN QUESTIONED AS TO WHY THE RECEIPT S SHOULD NOT BE ASSESSED U/S 2(22)(E) OF THE ACT, IT WAS REP LIED THAT SHE HAD ENTERED INTO AN AGREEMENT WITH M/S. MAYA APPLIANCES P. LTD. ON 09.07.2008 FOR SALE OF ONE OF HER PROPERTIES CO-OWNED WITH HER HUSBAND AT CENOTAPH RO AD, TEYNAMPET, CHENNAI AND THE PAYMENT OF ` L,25,25,492/- REPRESENTED ADVANCE RECEIVED FOR THE PROSPECTIVE PU RCHASE OF THE SAID PROPERTY, WHICH WAS RETURNED BACK DUE T O NON- MATERIALISATION OF THE SALE OF T HE SAID PROPERTY DUE TO OBJECTIONS RAISED BY THE OTHER TENANTS OF THE BUILD ING I N WHICH THE SAID PROPERTY IS LOCATED. THE AO ADDED BACK THE AMOUNT U/S 2(22)(E) STATING THAT THE ASSESSEE EXCEPT STATI NG THAT THE - - ITA 91 2/15 3 ADVANCE WAS RECEIVED FO R COMMERCIAL TRANSACTION DID NOT PROVE THAT THE SAID TRANSACTION WAS GENUINE AND ENT ERED INTO AN AGREEMENT DURING THE COURSE OF REGULAR BUSINESS OF M/S. MAYA APPLIANCES P . LTD . AND FURTHER THAT THE ASSESSEE FAILED TO PROVE THAT SHE HAD MADE ANY ATTEMPT TO SELL THE PROPERTY IN A GENUINE MANNER IN THE OPEN MARKET. THE AO ACCO RDINGLY TREATED THE ADVANCE OF ` 1,25,25,492/- RECEIVED BY THE ASSESSEE FROM M/S . MAYA APPLIANCE P . LTD. AS DEEMED DIVIDEND U/S 2(22)(E) AND ADDED IT BACK TO THE TOTA L INCOME. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE TH E CIT(APPEALS). 4. ON APPEAL, THE CIT(APPEALS) OBSERVED THAT THE SA ID AMOUNT WAS PAID BY M/S. MAYA APPLIANCES P. LTD. TO THE ASSESSEE TOWARDS ADVANCE RECEIVED FOR THE PURCHASE OF THE FLAT SITUATED AT TEYNAMPET, FOR WHICH THE VALUE IS AROUN D ` 2.25 CRORES. THIS ADVANCE WAS SUPPORTED BY THE AGREEMEN T TO PURCHASE THE SAID PROPERTY AND ALSO BOARD RESOLUTIO N PASSED BY M/S. MAYA APPLIANCES P. LTD. ON 9.4.2008 AND THIS T RANSACTION WAS TAKEN PLACE AND THE SAME WAS CANCELLED VIDE BOA RD RESOLUTION DATED 27.8.2008. ACCORDINGLY, THE CIT(A PPEALS) - - ITA 91 2/15 4 DELETED THE ADDITION MADE U/S.2(22)(E) OF THE ACT, OBSERVING THAT THIS IS ONLY A BUSINESS TRANSACTION AND IT DOES NOT WARRANT APPLICABILITY OF SEC.2(22)(E) OF THE ACT. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR SUBMITTED THAT THE CIT(APPEALS) ERRED IN HOLDING THAT AN AMOUNT OF ` 1,25,25,492/- IS NOT TAXABLE AS DEEMED DIVIDEND UNDER SEC.2(22)(E) IN THE HANDS OF THE ASSESSEE FIRM, ON THE BASIS OF FRESH EVIDENCE PRODU CED BEFORE HIM IN THE FORM OF SALE AGREEMENT ENTERED BETWEEN T HE ASSESSEE AND M/S. MAYA APPLIANCES P. LTD. AND COPY OF BOARD S RESOLUTIONS OF THE SAID COMPANY. FURTHER, HE SU BMITTED THAT ACCORDING TO THE PROVISIONS OF RULE 46A OF THE I.T. RULES, THE CIT(APPEALS) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE FRESH EVIDENCE PRO DUCED BEFORE HIM FOR THE FIRST TIME. THE LD. DR FURTHER SUBMITTED THAT HAVING REGARD TO THE BOARDS CIRCULAR NO.495 DATED 22.9.1987 (EXPLANATORY NOTES TO THE FINANCE ACT, 1987), THE C IT(APPEALS) OUGHT TO HAVE UPHELD THE ACTION OF THE AO IN MAKING ADDITION UNDER SEC.2(22)(E) OF THE ACT. - - ITA 91 2/15 5 6. ON THE OTHER HAND, THE LD. AR RELIED ON THE ORDE R OF THE CIT(APPEALS) AND SUBMITTED ALL THE DOCUMENTS, WHICH WERE PRODUCED BEFORE THE CIT(APPEALS) AND WHICH WERE AVA ILABLE WITH THE ASSESSING OFFICER. THEREFORE, HE SUBMITTED THA T THERE IS NO VIOLATION OF RULE 46A OF THE I.T. RULES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, THERE IS NO WHISPER ABOUT T HE BOARD RESOLUTION PASSED BY M/S. MAYA APPLIANCES PVT. LTD. TO BUY THE PROPERTY SITUATED AT TEYNAMPET FOR A CONSIDERATION OF ` 2.4 CRORES AND ALSO THERE IS NO MENTION OF RESOLUTION P ASSED BY THE BOARD DATED 25.8.2008, WHEREIN M/S. MAYA APPLIANCES PVT. LTD., THROUGH WHICH SHE OPTED OUT TO SELL THE SAID PROPER TY. IT WAS ENQUIRED BY THE ASSESSING OFFICER AT THE TIME OF AS SESSMENT, REGARDING THE NATURE OF RECEIPT OF MONEY BY THE ASS ESSEE FROM M/S. MAYA APPLIANCES PVT. LTD. THE ASSESSEE THOUGH STATED THAT THE SAID MONEY WAS RECEIVED ON ACCOUNT OF COMMERCIA L TRANSACTION, THE ASSESSEE WAS NOT ABLE TO SUBSTANTI ATE HER CLAIM. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SPITE OF GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND FAILED TO PROVE THAT SHE HAS MADE ANY ATTEMPT TO SELL THE PROPERTY IN A GENUINE - - ITA 91 2/15 6 MANNER IN THE OPEN MARKET. THE ASSESSEE HAS ALSO E XPRESSED HER INABILITY TO BE PRESENT IN PERSON FOR EXAMINATI ON ON OATH TO ASCERTAIN THE FACTS AND CIRCUMSTANCES UNDER WHICH S HE HAS ENTERED INTO AGREEMENT TO SELL HER PROPERTY TO M/S. MAYA APPLIANCES PVT. LTD. BEFORE THE ASSESSING OFFICER. BEING SO, THE AO HAVING NO OPTION, CONSIDERED THE AMOUNT RECEIVED BY THE ASSESSEE AS AN ADVANCE FROM M/S. MAYA APPLIANCES PV T. LTD., AS DEEMED DIVIDEND UNDER THE PROVISIONS OF SEC.2(22 )(E) OF THE ACT. HOWEVER, THE ASSESSEE HAS PRODUCED CERTAIN BO ARD RESOLUTIONS STATING THAT WHETHER M/S. MAYA APPLIANC ES PVT. LTD., INTERESTED TO PURCHASE THE PROPERTY FROM THE ASSESS EE AND THE AMOUNT RECEIVED BY THE ASSESSEE WAS ADVANCE TOWARDS PURCHASE OF THE PROPERTY. THESE DOCUMENTS WERE NOT MADE AVAILABLE BEFORE THE AO BUT IT WAS PRODUCED BEFORE THE CIT(APPEALS). IN VIEW OF THIS, WE ARE INCLINED TO REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H CONSIDERATION. ACCORDINGLY, THE AO IS DIRECTED TO DECIDE THE ISSUE AFRESH, IN ACCORDANCE WITH LAW, AFTER MAKING NECESSARY ENQUIRI ES IN THE LIGHT OF BOARD RESOLUTION PRODUCED BEFORE THE CIT(A PPEALS). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. - - ITA 91 2/15 7 ORDER PRONOUNCED ON FRIDAY, THE 1 7 TH OF JULY, 2015 AT CHENNAI. SD/- SD/- ( $% &'( ) ) ( $ ( * + ) ,-.//.0.12345.65.7.48 ,-.345.699:.5 ;8 ' )< /JUDICIAL MEMBER ! )<=>>9?3@.3@A2BC25 $' /CHENNAI, D) /DATED, THE 17 TH JULY, 2015. MPO* )E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I8 /CIT(A) 4. I /CIT 5. GJ& K /DR 6. &LM /GF.