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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
आदेश / ORDER PER SUSHMA CHOWLA,VP Both appeals filed by assessee are against order of CIT(A)-1, Gurgaon dated 01.04.2015 & 07.04.2015 relating to assessment year 2011-12 against order passed under section 201(1)/201(1A) and 271C of the Income-tax Act, 1961 (in short ‘the Act’) respectively.
ITA Nos.3994 & 3995/Del/2015 Assessment Year 2011-12
ITA No.3994/Del/2015 [Assessment Year 2011-12]
The assessee has raised following grounds of appeal:-
“That the impugned order is bad in law as well as on merits. 2. That the impugned order and proceedings is without jurisdiction. 3. That under the facts and circumstances of the case and in view of documents and explanation filed, the liability for TDS of Rs.1,01,489/- on deemed dividend u//s 2(22)(e) for Rs.10,14,893/- and sustained by Ld.CIT(A) deserves to be deleted in law as well as on merits. 4. That under the facts and circumstances of the case, no demand u/s 201 should have been created in view of demand created by the ITO, Ward-1(2), Gurgaon in case of Surbhi Jain. 5. That no interest 201(1A) should have been levied, without prejudice, the interest charged is excessive.”
Briefly in the facts of the case the assessee company had advance Rs.70
lakhs to its associated concerns namely Arihant Agency which was treated as
deemed dividend to the extent of accumulated profits (Rs.10,14,893/-), as per
provision of section 2(22)(e) of the Act. The assessee had not deducted tax at
source on deemed dividend of Rs.10,14,893/- and Assessing Officer held the
assessee to be in default u/s 201/201(1A) of the Act and raised demand of
Rs.1,46,149/-. The CIT(A) upheld the said order of the AO against which the
assessee is in appeal before us.
We have heard the rival contentions and perused the record. The
assessee company had advanced the loan to its associated concern M/s.
Arihant Agencies which was then transferred to the account of Sh.Dinesh
Kumar Jain and the fund was transferred back to the assessee company on the
ITA Nos.3994 & 3995/Del/2015 Assessment Year 2011-12
same day as Director’s share capital. The explanation filed by the assessee
before the CIT(A) is as under:-
“During Assessment Year 2011-12, as business was growing, there was a requirement for more funds. For increasing director capital an amount of Rs.70 Lakhs was transferred to M/s. Arihant Agencies (Prop. Firm of other director). Arihant Agencies transferred the amount to Dinesh Kumar Jain (Director of VAPL) and the funds were transferred to VAPL as director’s share capital. This amount was received in VAPL on the same date, without giving Arihant Agencies or Dinesh Kumar Jain time for any other utilization of funds. VAPL Arihant Agencies Dines Kumar Jain VAPL on same day.”
The case of the assessee before the authorities was that the aforesaid
transaction was undertaken in order to raise bank loans and the assessee
explained that “it had transferred the funds aggregating Rs.50,00,000/- only to
M/s. Arihant Agencies on 30.04.2010 and Rs.20,00,000/- on 01.05.2010 which
were received the same day in form of director’s capital. Out of available funds
of Rs89,65,100.16 only Rs.70,00,000/- were outstanding in books of accounts.
The difference amount of Rs.19,65,100.16 was still lying in firm as director’s
capital and profits. therefore, no part of borrowed funds was diverted in making
interest free advance.”
We find that the issue of deemed dividend u/s 2(22)(e) of the Act in
respect of similar transaction being made wherein the transaction of receipt
and payment were on the same date itself by both the parties, arose before the
Tribunal in series of cases i.e. Seema Devi Bansal in ITA No.6462/Del/2014
order dated 18.07.2018 relating to Assessment Year 2010-11 and Sh. Harish
Kanwar in ITA No.529/Del/2017 order dated 18.10.2017 relating to 3
ITA Nos.3994 & 3995/Del/2015 Assessment Year 2011-12
Assessment Year 2011-12. We have also decided similar issue in Surbhi Jain
vs ITO in ITA No.3993/Del/2015 vide order dated 14.05.2020 relating to
Assessment Year 2011-12, applying the ratio laid down by Hon’ble Bombay
High Court in Praveen Bhimsi Chheda Shivsadan vs DCIT reported in 141 TTJ
The Hon’ble Bombay High Court in Praveen Bhimsi Chheda Shivsadan vs
DCIT (supra) held that under similar circumstances, it was not case of deemed
dividend u/s 2(22)(e) of the Act.
Applying the said parity of reasoning and we hold that the assessee
cannot held to be in default u/s 2(22)(e) of the Act and there is no merit in
raising the demand u/s 201(1) and charging interest u/s 201(1A) of the Act.
Consequently, the AO is directed to delete the same. Thus, grounds of appeal
raised by the assessee are allowed.
ITA No.3995/Del/2015 [Assessment Year 2011-12]
The assessee has raised following grounds of appeal:-
“That the impugned order is bad in law as well as on merits. 2. That the impugned order and proceedings is without jurisdiction. 3. That under the facts and circumstances of the case and in view of documents and explanation filed, the levy of penalty of Rs.1,01,489/- for non-deduction of TDS on deemed dividend u/s 2(22)(e) for Rss.10,14,893/- and sustained by Ld.CIT(A) deserves to be deleted in law as well as on merits. 4. That under the facts and circumstances of the case, no penalty should have been levied before treating the assessee as assessee in default in order passed u/s 201. 5. That without prejudice, penalty proceedings are without jurisdiction for not initiating the penalty proceedings in order passed u/s 201.
ITA Nos.3994 & 3995/Del/2015 Assessment Year 2011-12 9. Further penalty was levied u/s 271C of the Act for the aforesaid default u/s 201(1) of the Act. Since we have already deleted the demand raised u/s 201(1) of the Act, there is no merit in levy of penalty u/s 271(1)(c) of the Act and the same is deleted. Grounds of appeal raised by assessee are thus allowed.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 21st May, 2020.
Sd/- Sd/- (PRASHANT MAHARISHI) (SUSHMA CHOWLA) लेखा सद�य / ACCOUNTANT MEMBER उपा�य� / VICE PRESIDENT
�द�ल� / �दनांक Dated : 21st May, 2020 * Amit Kumar * आदेश क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. मु�य आयकर आयु�त / The Pr. CIT 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �द�ल� / DR, ITAT, Delhi 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER,
स�या�पत ��त //True Copy//
सहायक रिज��ार, आयकर अपील�य अ�धकरण ,�द�ल� Assistant Registrar, ITAT, Delhi