KRISHNA KUMAR MITTAL,MUMBAI vs. ITO 8(2)(2), MUMBAI

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ITA 1482/MUM/2013Status: DisposedITAT Mumbai09 February 2017AY 2005-064 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that similar matters involving the same transactions and parties were remanded back to the Assessing Officer (AO) by co-ordinate benches. Following judicial discipline, the Tribunal also remanded the matter back to the AO for fresh verification and adjudication.

What were the facts?

The assessee's assessment was re-assessed, and an addition of Rs. 27,12,747/- was made as deemed dividend under Section 2(22)(e). The assessee argued that the amount was advanced by companies in which he had substantial interest to another company, and similar additions were made in the hands of other individuals with substantial interest.

What were the issues?

Whether the amount advanced between companies in which the assessee has substantial interest constitutes deemed dividend under Section 2(22)(e), and whether the addition could be made in the hands of the assessee when similar additions were made to other individuals.

Which sections of the Income-tax Act were involved?

Section 2(22)(e),Section 147

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

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

For Appellant: Ms. Aarti Sathe & Sh. Kalpesh, Dr. Anupama Singla, DR

Shri Krishan Kumar Mittal Assessment Year 2005-2006 आदेश / O R D E R Per MANOJ KUMAR AGGARWAL(Accountant Member):

1. 1. The captioned appeal of the assessee for Assessment Year [AY] 2005-06 assails order of Ld. Commissioner Income Tax(Appeals)-17, [CIT(A)], Mumbai order dated 10/12/2012 primarily qua confirmation of certain addition of Rs.27,12,747/-. The legal grounds challenging the reassessment u/s 147 and other grounds are not pressed before us during proceedings and hence the same are dismissed as being ‘not pressed’.

2. Briefly stated, the assessee was resident individual earning salary and interest income whose assessment of impugned year was subjected to re-assessment u/s 143(3) ‘read with section’ 147 of the Income Tax Act, 1961 vide Assessing Officer order dated 30/11/12011. In the reassessment, an amount of Rs.27,12,747/- was added to the income of the assessee as deemed dividend u/s 2(22)(e), being amount advanced by two companies to a third companies and the assessee had substantial interest in all the three companies. The same was assailed before First Appellate Authority vide order dated 10/12/2012 wherein the assessee while contesting the addition contended that this amount has been added in the hands of three persons for impugned AY namely K.K.Mittal HUF, K.K.Mittal and Uma Mittal, all of which holds substantial interest in the three companies. The law do not provided as to in whose hands the amount shall be taxed and thus, the charging section fails and therefore, the amount could not be brought to tax in view of Apex court judgment in B.C.Srinivas Shetty 128 ITR 294. However, not convinced CIT(A) confirmed the action of AO. Aggrieved, the assessee is in appeal before us.

3. At the outset, the Ld. Counsel for Assessee [AR] drew our attention to the fact that same addition has been made in the hands of three persons who hold similar Shri Krishan Kumar Mittal Assessment Year 2005-2006 substantial interest in the three companies. The similar matter in case of the other two shareholders has already been adjudicated by the Tribunal vide order dated 09/11/2016 in the case of Mrs. Uma Krishan Kumar Mittal and ITA No. 1368/Mum/2012 order dated 15/07/2016, the copies of which has been placed before us. In both the cases, the Tribunal while noting that the transactions between the three companies inter-se arose in current account transactions carried out in normal course of business, remanded the matter back to the file of AO for fresh verification/ adjudication of the pleas raised by the assessee. The Ld. DR conceded his position.

4.

We have heard the rival contentions and perused relevant material on record including the cited decisions of the co-ordinate bench of the Tribunal. We note that Tribunal in ITA No. 1368/Mum/2012 order dated 15/07/2016 in the case of K.K.Mittal HUF has decided the issue in the following manner:- “7.We have considered the rival submissions and also perused the accounts submitted by the assessee stating that the transactions of the M/s Mittatex Exports Pvt. Ltd. with the two other parities are current account transaction during the course of business. Though the said plea is a new plea, but, the same cannot be brushed aside and it needs detailed verification and examination by AO to ascertain that whether the transactions are covered under the definition of Section 2(22)(e) of the Act or not. Therefore, in our considered opinion in the interest of justice, the assessee should be given one more opportunity to substantiate his arguments on the applicability of Section 2(22)(e) of the act on the transaction. Hence while setting aside the impugned order the matter is sent back to the file of the AO with a direction to examine the whole issue of applicability of section 2(22)(e) of the act afresh in the light of assessee’s plea that the transactions have been undertaken in the ordinary course of business.

8.

Needless to say that an opportunity of hearing to put forth the case should be given to the assessee.”

Shri Krishan Kumar Mittal Assessment Year 2005-2006 Following the above decision, similar directions have been given in order dated 09/11/2016 in the case of Mrs. Umashankar Krishankumar Mittal.

5.

Hence, as a view has been taken by the co-ordinate bench on similar arguments, following judicial discipline and the facts and circumstances being identical, we restore the matter back to the file of AO with similar directions. The assessee’s appeal stands allowed for statistical purposes.

6.

Order pronounced in the open court on 9th February, 2017.

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