ITO 9(1)(1), MUMBAI vs. MANOJ UPADHYAY, THANE

The captioned appeal by the Revenue and cross objection by the assessee are directed against order of CIT(A)-16, Mumbai dated 20/03/2015, which in turn arises out of an order passed by Assessing

2 Mr. Manoj Upadhyay CO No. 19/Mum/2017 Officer dated 07/03/2013 under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’).

“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made u/s.2(22)(e) without appreciating the fact that the assessee held 50% of the shares in Accu Dat Transcription Services Ltd and was both a registered and a beneficial shareholder as disclosed by the assessee in the return filed before ROC and before Income tax in which the assessee disclosed that it held 50% of the shares from A.Yr. 2007- 08 onwards.

2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the gift deed made by the assessee to transfer 4200 shares to his wife on 25.05.2007 was a sham since the gift deed was not registered and was made only to reduce the shareholding of the assessee in Accu Dat Transcription Services Ltd to less than 10% whereas on the other hand, the assessee as the Principal Officer of the company had filed returns before ROC and Income Tax disclosing the shareholding as 50%.

The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the ITO 9(1)(1) be restored.”

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3. At the outset, it was the plea of the learned representative for the assessee that the tax effect in the dispute raised in Grounds of appeal preferred by the Revenue is less than Rs. 10 lacs and, therefore, following the CBDT Circular no. 21/2015 dated 10/12/2015, the appeal of Revenue is not maintainable. Explaining the issue, the learned representative for the assessee pointed out that the total addition made in the assessment year u/s 2(22)(e) of the Act was to the extent of Rs.56,65,072/-. It is pointed out that the addition has been deleted by the CIT(A) on more than one ground. For instance, it is pointed out that in para 3 of his order, the CIT(A) has observed that addition to the extent of Rs.34,79,435/- is not maintainable in any case since the said amount represented the opening balance and was not a payment received in this year. It is further pointed out that in para 3.2 of his order, the CIT(A) further records a finding that the addition u/s 2(22)(e) of the Act, if any, can be made only to the extent there is availability of accumulated profits and, therefore, to the extent of Rs.6,79,450/- no addition was maintainable. Thirdly, the assessee pointed out that the balance of Rs.15,06,187/- has also been deleted by the CIT(A) on the ground that assessee was not the beneficial shareholder of the lending corporate. In fact, the said finding covered the entire addition made by the Assessing Officer. By adverting to the Grounds of appeal raised by the Revenue, the learned representative pointed out that the Revenue has not challenged the reasons on which deletion of Rs.41,58,885/- (Rs.34,79,435 + Rs.6,79,450) has been done by the CIT(A). The only challenge to the order of CIT(A) is on the ground that the addition could not be deleted merely because assessee was not a beneficial shareholder in the lending corporate. It was, therefore, contended that 4 Mr. Manoj Upadhyay CO No. 19/Mum/2017 the tax effect in the dispute raised after deducting the issues on which no appeal has been filed, the resultant tax effect would be below Rs.10 lacs.

5. We have carefully considered the rival stands and find that the analysis made out by the learned representative for the assessee is clearly borne out of record and evidently the tax in dispute only revolves around addition of Rs.15,06,187/- inasmuch as the balance of addition has been deleted by the CIT(A) on grounds which have not been challenged before the Tribunal. Therefore, in this background, assessee has rightly asserted that the captioned appeal of the Revenue is not maintainable as it is below the monetary limit prescribed in the CBDT Circular no. 21/2015 dated 10/12/2015 (supra). As a consequence, the captioned appeal of Revenue is dismissed as not maintainable.

6. Insofar as the Cross objection preferred by the assessee is concerned, the same has not been pressed at the time of hearing and is accordingly dismissed.

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Order pronounced in the open court on 31st March, 2017.