KAMLESH PARSHURAM KUMAR,NAVI MUMBAI vs. ITO WD 22(3)-2, NAVI MUMBAI

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ITA 48/MUM/2011Status: DisposedITAT Mumbai21 February 2018AY 2007-084 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee had placed additional evidence before it to support the claim that the transactions were business-related. Therefore, the matter was restored back to the Assessing Officer for reconsideration.

What were the facts?

The assessee received unsecured loans aggregating to Rs. 96.72 Lacs from two companies in which he had substantial interest. The Assessing Officer invoked Section 2(22)(e) and added this amount to the assessee's income, which was confirmed by the CIT(A).

What were the issues?

Whether the loans received by the assessee from related entities constitute deemed dividend under Section 2(22)(e) or were genuine business transactions.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI MAHAVIR SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM

Per Manoj Kumar Aggarwal (Accountant Member)

1.

The captioned appeal by assessee for Assessment Year [AY] 2007-08 contest the order of Ld. Commissioner of Income-Tax (Appeals)-33 [CIT(A)], Mumbai, Appeal No.CIT(A)-33/IT/1085/09-10 dated 12/10/2010 by raising the following effective Grounds of Appeal: - 1) The Appellants prays and submits that the learned Appellate Authority has passed the assessment order in haste and without giving sufficient

ITA.No.48/Mum/2011 Kamlesh Parshuram Kumar Assessment Year 2007-08 opportunity of being heard therefore without considering full facts put before him during the time of assessment. 2) The Appellant prays and submits that the Learned CIT(A) erred in treating business transaction as Loans and Advances and further holding that section 2(22)(e) is applicable to business transaction, without considering the facts and circumstances of the business activities of all three firms i.e. two private limited companies and one proprietor concern having the same kind of business that is export of Marine Machinery Components and Spare parts and when the amount was used for advance for purchase of material for due compliance of Export sales, payment to creditors for specific purchases, personal guarantee to bank and to foreign vendors. 3) The learned CIT(A) erred in confirming addition of Rs.96,72,500/- as deemed dividend. 4) The Appellant prays and submit the learned CIT(A) has erred in not holding that the said advances were not for any personal benefit of the appellant The assessment for impugned AY was framed by Ld. Income-tax Officer- Ward 22(3)(2), Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 on 10/12/2009 wherein the total income has been determined at Rs.106.58 Lacs after certain additions / adjustments as against returned income of Rs.9.86 Lacs filed by the assesse on 02/11/2007. The solitary issue involved in the appeal is certain addition u/s 2(22)(e).

2.

Facts qua the same are that the assessee being resident individual engaged in the business of export of marine machinery components and spares under proprietorship concern namely Marline Marine Trade Inc. was found to have received certain unsecured loans aggregating to Rs.96.72 Lacs from two entities namely KPS Tronics India Pvt. Ltd. & Marline Marine Services Pvt. Ltd. It was further found that the assessee had substantial interest in both these concerns in terms of Section 2(22)(e) and both the concerns had sufficient accumulated reserves at the time of granting of loans. Resultantly, the said loans were added to the income of the assessee by invoking the provisions of Section 2(22)(e). The aforesaid addition, upon confirmation by Ld. CIT(A) vide ITA.No.48/Mum/2011 Kamlesh Parshuram Kumar Assessment Year 2007-08 impugned order dated 12/10/2010, has been contested by the assessee before us.

3.

The assessee-in-person pleaded for another opportunity to substantiate his stand that the said transactions were business transactions and the amount were advanced to carry out certain transactions on behalf of two entities and not covered by the provisions of Section 2(22)(e). Per Contra, Ld. DR pointed out that the assessee utilized the said unsecured loans in making Fixed Deposits with the bank and therefore, the said plea could not be accepted.

4.

We have carefully heard the rival contentions and perused orders of lower authorities. Prima facie, the assessee was unable to substantiate his stand before the lower authorities. However, we find that the assessee, before us, has placed certain additional evidences in the paper-book to support the contention that the said amount were received to carry out business transactions for the said entities. Therefore, in all fairness, we see no harm in providing another opportunity to the assessee to substantiate his contentions before the lower authorities. Therefore, without delving much deeper into the issue, the same is restored back to the file of Ld. AO to consider the said contention of the assessee in the light of the additional evidences.

5.

Resultantly, the assessee’s appeal stands allowed for statistical purposes.

ITA.No.48/Mum/2011 Kamlesh Parshuram Kumar Assessment Year 2007-08 Order pronounced in the open court on 21st February, 2018

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