SRI KRISHNA BHAGWAN GIRI,KOLKATA vs. I.T.O.,WARD-1(3), KOLKATA

The assessee in the present case is an individual, who filed his return of income for the year under consideration on 10.02.2013 declaring total income of Rs.4,93,820/-. The said return was initially processed by the Assessing Officer under section 143(1) of the Act. Subsequently he, however, found that the assessee had taken a loan of Rs.2,37,65,058/- from M/s. S.K. Minerals Agencies Pvt. Limited during the year under consideration, which attracted the provisions of section Assessment Year: 2012-2013 Sri Krishna Bhagwan Giri 2(22)(e). He, therefore, reopened the assessment and after recording the reasons, a notice under section 148 was issued by him. In response to the said notice, the return of income was filed by the assessee on 05.07.2016 declaring the same total income of Rs.4,93,820/- as declared in the return of income originally filed on 10.02.2013. During the course of assessment proceedings, the assessee was required by the Assessing Officer to offer his explanation as regards the applicability of section 2(22)(e) of the Act to the loan taken from M/s. S.K. Minerals Agencies Pvt. Limited in which the assessee was the beneficial owner of the shares holding more than 10% with voting rights. Although the assessee made a submission challenging the validity of reopening of assessment, no explanation was offered by him as regards the applicability of section 2(22)(e). The Assessing Officer accordingly invoked the provisions of section 2(22)(e) and treated the amount of loan received by the assessee from M/s. S.K. Minerals Agencies Pvt. Limited to the extent of the proportionate accumulated profits of the said Company worked out at Rs.34,65,616/- as deemed dividend chargeable to tax in the hands of the assessee. Accordingly the addition to that extent was made by him to the total income of the assessee under section 2(22)(e) on account of deemed dividend in the assessment completed under section 143(3)/147 of the Act vide an order dated 10.10.2017.

Against the order passed by the Assessing Officer under section 143(3)/147, an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the addition made by the Assessing Officer on account of deemed dividend under section 2(22)(e) of the Act. During the course of appellate proceedings before the ld. CIT(Appeals), the following submission was made in support of the assessee’s case that the provisions of section 2(22)(e) of the Act were not applicable in his case:- “In the matter of Pradip Kumar Malhotra –vs.- CIT Income Tax Act, 1961 No. 219/2003(2011-ITRV-HC-Kolkata-274) the Hon’ble Calcutta High Court has held that ‘non- Assessment Year: 2012-2013 Sri Krishna Bhagwan Giri

The ld. CIT(Appeals), however, did not accept the submission made on behalf of the assessee as above on the ground that there was no evidence produced by the assessee to support and substantiate the same. He accordingly confirmed the addition made by the Assessing Officer to the total income of the assessee under section 2(22)(e) of the Act. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the sides and also perused the relevant material available on record. The ld. Counsel for the assessee has invited my attention to the copies of documentary evidence placed in his paper book to point that the said evidence to support and substantiate Assessment Year: 2012-2013 Sri Krishna Bhagwan Giri the assessee’s case that the loan in question received by the assessee from M/s. S.K. Minerals Agencies Pvt. Limited was non-gratuitous loan and the said loan was given in return to an advantage conferred upon the Company by the assessee. He has contended that this evidence filed by the assessee before the Assessing Officer, however, was completely overlooked /ignored by the ld. CIT(Appeals) while confirming the impugned addition made by the Assessing Officer under section 2(22)(e) of the Act. He has urged that this matter may, therefore, be sent back to the ld. CIT(Appeals) for deciding the same afresh after taking into consideration the documentary evidence already placed on record by the assessee. Keeping in view all the facts and circumstances of the case, I am inclined to accept this contention of the ld counsel for the assessee. Even the ld. D.R. has not raised any objection for sending the matter back to the ld. CIT(Appeals) for fresh consideration. The impugned order of the ld. CIT(Appeals) on this issue is accordingly set aside and the matter is remitted back to him for deciding the same afresh on merit after taking into consideration the evidence already placed on record by the assessee and after giving the assessee proper and sufficient opportunity of being heard.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on February 05, 2020.