Sri Gyan Prakash Sarawagi, Ranchi V. ITO WARD-1(3), Ranchi

ITA 99/RAN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9664 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 17-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL
• Assessee Lawyers: M K CHOUDHURY
• Keywords: Salary income; Opportunity of being heard; Deemed dividend
• Section: 142(1); 2(22)(e); 234B

Judgement Text

1 ITA NO. 99 /RAN/ 201 7 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 99 /RAN/201 7 A.Y. : 20 1 3 - 20 1 4 SRI GYAN PRAKASH SARAWGI, 404, RAJSTHALI APARTMENT, KANKE ROAD, RANCHI - 8 34008 V S ITO, WARD - 1(3), RANCHI P AN NO. : A GJP S 4886 K (APPELLANT ) . RESPONDENT ASSESSEE BY : SHRI M.K.CHOUDHURY , ADV. REVENUE BY :SHRI P.K.MONDAL, JCIT DATE OF HEARING : 2 5 . 05 .201 8 DATE OF PRONOUNCEMENT : 28.05 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT ( A ) , RANCHI , DATED 14.02.2017 , FOR THE ASSESSMENT YEAR 2013 - 2014 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . F OR THAT LD. CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. RS. 3,82,359/ - UNDER SECTION 2(22)(E) OF THE U ACT, 1961, AS DEEMED DIVIDEND ON ACCOUNT OF LOAN OF RS.33,50,000/ - TAKEN FORM M/S SHREE BADRI KEDAR UDYOG PVT. LTD., IN WHICH THE AP PELLANT WAS A SHARE HOLDER. 2 . FOR THAT LD. CIT(APPEALS) WAS NOT JUSTIFIED IN NOT APPRECIATING THAT THAT EVEN IF THERE WERE ANY ACCUMULATED PROFITS, THE SAME WAS WIPED OFF BECAUSE THE COMPANY HAS ADVANCED SUBSTANTIAL LOAN TO ITS SHARE HOLDER, PRIOR TO ADVANC ING LOAN TO THE APPELLANT AND ON THE DATE OF LOAN TO THE APPELLANT THERE WERE NO ACCUMULATED PROFITS. 3 . FOR THAT LD. CIT(APPEALS) WAS NOT JUSTIFIED IN NOT APPRECIATING THAT ACCUMULATED PROFITS MEANS THE PROFITS ACCUMULATED AT THE 2 ITA NO. 99 /RAN/ 201 7 COMMENCEMENT OF THE YEAR UN DER CONSIDERATION AND THE CURRENT INCOME OF THE YEAR UNDER CONSIDERATION COULD NOT HAVE BEEN ADDED TO THE SAME. 4 . FOR THAT HON'BLE JHARKHAND HIGH COURT HAD GIVEN DIRECTION TO CHARGE INTEREST U/S 234A & 234B ON THE TAX PAYABLE ON RETURNED INCOME AND NOT ON T HE ASSESSED INCOME. FOLLOWING THE DECISION OF HON'BLE JHARKHAND HIGH COURT INTEREST CHARGED ON ASSESSED INCOME IS INCORRECT AND DIRECTION BE GIVEN TO CHARGED INTEREST ON THE TAX PAYABLE ON RETURNED INCOME. 5 . FOR THAT LD. AO WAS UNJUSTIFIED IN CHARGING INTER EST U/S 234C ON THE ASSESSED INCOME, BEYOND THE STATUTORY PROVISIONS OF THE IT ACT. 6 . FOR THAT OTHER GROUNDS, IF ANY, WILL BE TAKEN UP/ ARGUED AT THE TIME OF HEARING. RELIEF SOUGHT : 4 . ADDITION OF RS. 3,82,359/ - BE DELETED. 5 . INTEREST U/S 234A, 234B AND 234C B E DIRECTED TO BE CALCULATED ON TAX PAYABLE OF RETURNED INCOME AND NOT ON ASSESSED INCOME. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM SALARY AND INTEREST INCOME AND FILED THE RETURN OF INCOME ELECTRONICALLY FOR THE ASSESSMENT YEA R 2013 - 2014 ON 10.03.2014 WITH TOTAL INCOME OF RS. 4,19,900/ - AND THE RETURN OF INCOME WAS DULY PROCESSED U/S.143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . SUBSEQUENTLY, NOTICE U/S.143(2) & 142(1) OF THE ACT WERE ISSUED TO THE ASSESS EE. IN COMPLIANCE, THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND CASE WAS DISCUSSED . T HE AO ON PERUSAL OF THE BOOKS OF ACCOUNTS, FOUND THAT THE AMOUNT OF LOAN TAKEN FROM SHRI BADRI KEDAR UDYOG PVT. LTD. WAS DEEMED DIVIDEND WITHIN THE MEANING OF SEC TION 2(22)(E) OF THE ACT AND MADE AN ADDITION OF RS.3,82,359/ - AND ASSESSED TOTAL INCOME AT RS. 8,02,260/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 25.01.2016 . 3 ITA NO. 99 /RAN/ 201 7 4 . AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE FINDINGS OF AO, DISMISSED THE APPEAL OF THE ASSESSEE. 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 6 . LD. A R BEFORE US SUBMITTED THAT THE ADDITION MADE BY THE AO IN RESPECT OF DEEMED DIVIDEND, CANNOT BE SUSTAINED BECAUSE IF THERE WERE NO ACCUMULATED PROFITS AND THE SAME WAS WIPED OFF BECAUSE THE COMPANY HAS ADVANCED SUBSTANTIAL LOAN TO ITS SHARE HOLDER, PRIOR TO ADVANCING LOAN TO THE ASSESSEE AND ON THE DATE OF LOAN TO THE ASSESSEE THERE WERE NO ACCUMULATED PROFITS. LD. AR FURTHER SUBMITTED THAT THE ACCUMULATED PROFITS MEANS THE PROFITS ACCUM ULATED AT THE COMMENCEMENT OF THE YEAR UNDER CONSIDERATION AND THE CURRENT INCOME OF THE YEAR UNDER CONSIDERATION COULD NOT HAVE BEEN ADDED TO THE SAME . WHEREAS THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT CONSIDERING THE ABOVE FACTS. BEFORE U S, LD. AR ALSO FILED JUDICIAL DECISIONS MENTIONING THAT ADDITIONS CANNOT BE MADE IN RESPECT OF DEEMED DIVIDEND AND PRAYED THAT ADDITION SHOULD BE DELETED. 7 . CONTRA, DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE DISPUTED ISSUE RAISED BY THE ASSESSEE IS IN RESPECT OF DEEMED DIVIDEND. THE CONTENTION OF LD.AR THAT THE ASSESSEE HAS OBTAINED 4 ITA NO. 99 /RAN/ 201 7 THE LOAN FROM M/S SHREE BADRI KEDAR UDYOG PVT. LTD. AND AT THE TIME OF OBTAINING LOAN THE ACCUMULATED PROFIT WAS NIL, THEREFORE, NO ADDITION CAN BE MADE AND SUPPORTED HIS ARGUMENTS WITH JUDICIAL DECISIONS. WHEREAS LD. DR SUBMITTED THAT NEW FACTS WERE NOT BROUGHT BEFORE THE AO AND FOR THE FIRST TIME THE LD. AR IS MAKING THE ABOVE SUBMISSIONS BEFOR E THE TRIBUNAL. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE EXAMINED BY THE AO AFTER CONSIDERING THE SUBMISSIONS OF AR. ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE FILE OF AO, WHO SHALL VERIFY AND EXAMINE AND PASS ORDER AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE ASSESSEE SHALL COOPERATE IN SUBMITTING THE INFORMATION BEFORE THE AO. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. CHARGING OF INTEREST IS CONSEQUEN TIAL, THE AO IS DIRECTED ACCORDINGLY. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 / 05 /201 8 SD/ - SD/ - ( N.S.SAINI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI, DATED 28 / 05 /201 8 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT ANAND VIHAR PROMOTERS & DEVELOPERS (P) LTD., 1 ST FLOOR, MUNESHWARI BHAWAN, BISTUPUR, JAMSHEDPUR - 831001 2. THE RESPONDENT ITO, WARD - 1(1), JAMSHEDPUR 5 ITA NO. 99 /RAN/ 201 7 BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI 3. THE CIT(A) C ONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.