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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Bharat N. Zaveri Income Tax Officer, B-35 Mangaldas Bldg No.1, Ward 4(3)(4) Vs. Shamaidas Gandhi ARD, Aayakar Bhavan Mumbai-400 002 Mumbai Appellant .. Respondent PAN No. AAAPZ0864D Assessee by .. Shri Vishwas V. Mehendale, AR Revenue by .. Shri Suman Kumar, DR Date of hearing .. 24-04-2017 Date of pronouncement .. 26-04-2017 O R D E R PER BENCH:
These are appeals by the assessee against respective orders of the learned CIT(A) for concerned assessment years. Since the issues are common and connected and the appeals were heard together, these are being consolidated and disposed of by this common order.
2. The common issue raised in these appeals is that the learned CIT(A) erred in confirming the assessment of deemed dividend in the hands of the assessee.
The issue for A.Ys. 96-97,97-98 & 98-99 had earlier travelled to ITAT. On the facts and circumstances of the case ITAT had principally affirmed the assessment of deemed dividend in the hands of the assessee. However, for the re- computation of accumulated profits the matter was remitted to the AO. The assessee is again aggrieved by the computation of deemed dividend in the hands
ITA No.8298/Mum/2010 & 4437 & 4438/Mum/2012 Bharat N. Zaveri of the assessee and by the conformation thereof the learned CIT(A) and has accordingly filed appeal before the ITAT.
At this stage, the assessee has filed common additional grounds which reads as under: -
“1. On the Facts and Circumstances of the case and in Law, Hon. Commissioner of Income tax Appeals-9, Mumbai erred in rejecting appellant's contention that the provisions of S.2(22)(e) are not applicable to the Advances received from Royal Anti-Biotics & Investments Pvt. Ltd. as the substantial part of business of the said company is borrowing and lending, which view has been upheld by the Hon. Jurisdictional High Court in case of CIT vs. Parle Plastics Ltd. - 332 ITR 63-Bom.
On the Facts and Circumstances of the case and in Law, Hon. Commissioner of Income tax Appeals-9, Mumbai erred in not considering the aforesaid Decision of Hon. Bombay High Court, which is in violation of the law laid down by Hon. Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd., 305 ITR-227.
3. On the Facts and Cir4imstances of the case and in Law, Hon. Commissioner of Income tax Appeals-9, Mumbai erred in not admitting the Additional Evidence in the form of alternate calculation of accumulated profits filed during the Appellate Proceedings before him.”
While raising the additional ground the assessee has prayed as under: -
“With reference to the above, I have to request our Honours to kindly admit the attached Additional Ground of Appeal in the above case.
ITA No.8298/Mum/2010 & 4437 & 4438/Mum/2012 Bharat N. Zaveri In this connection I would like to further submit that, all the necessary facts regarding the said Grounds of Appeal are already on the records of the Income Tax Officer and therefore, the discussion on the additional Grounds does not require investigation of new facts. It is also a fact that, the Additional Grounds have been raised in these proceedings for the first time. However, the same are necessary for the purpose of correctly determining my income of the assessment. It is also true that, the said Additional Grounds have been raised based on the decision of Hon. Bombay HC in the case of CIT vs Parle Plastics Ltd. 332 ITR 63-Bom. Regarding the admission of the Additional Grounds of Appeal and the binding nature of the decision of Hon. Jurisdictional High Court, I respectfully place reliance on the decisions of Hon. SC in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd., 305 ITR-227. National Thermal Power Co. Ltd., 229 ITR-383.”
5. Upon careful consideration we find that the additional ground raises an important issue i.e. with regard to the non-consideration of our jurisdictional high court decision which was also available earlier. However, as the same was not pointed out earlier, the same had been overlooked. We find that prima facie the above jurisdictional high court decision is germain to the issue under appeal. Hence, consideration of the same is also necessary in light of the Hon’ble Apex Court decision in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd., 305 ITR-227. Accordingly, we admit the additional ground.
6. Upon careful consideration, we find that the said additional ground needs factual verification at the level of the Assessing Officer as to whether the company from which borrowing has been made was engaged in lending business. This needs verification of the memorandum and article as well as the financial working and results of the company. Accordingly, we remit this issue to the file of the Assessing Officer. The Assessing Officer shall make the factual
ITA No.8298/Mum/2010 & 4437 & 4438/Mum/2012 Bharat N. Zaveri verification required for this issue and decide keeping in mind the Hon’ble Jurisdictional High Court decision cited above. Needless to add the assessee should be given adequate opportunity of being heard.
Since the necessity of adjudication of the other issues raised in these appeals hinge on the outcome of adjudication as remitted above, we are not engaging into adjudication of other aspects. The assessee is at liberty to appeal afresh if he so desires subsequent to the order of the AO after our set aside as above.
In the result, these appeals by the assessee is allowed for statistical purposes. Order pronounced in the open court on 26-04-2017.