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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF AUGUST 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR.JUSTICE HEMANT CHANDANGOUDAR I.T.A. NO.9 OF 2017 BETWEEN: SHRI. JAGADISH N. HINDUJA NO.7 & 12, INDUSTRIAL SUBURB 2ND STAGE, YESHWANTHPUR BENGALURU-560022.
... APPELLANT (BY SRI. ASHOK A. KULAKARNI, ADV.,) AND: THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-11(3), BENGALURU.
... RESPONDENT (BY SRI. E.I. SANMATHI, ADV., FOR SRI. K.V. ARAVIND, ADV.,) - - - THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961 ARISING OUT OF ORDER DATED 12.08.2016 PASSED IN ITA NO.1373/BANG/2012 AND CROSS OBJECTION NO.48/BANG/2013 AND ASSESSMENT ORDER DATED 24.12.2010, FOR THE ASSESSMENT YEAR 2006-07, PRAYING TO:
I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. II. ALLOW THE APPEAL BY SETTING ASIDE THE ORDER OF THE ITAT IN ITA NO.1373/BANG/2012 & CROSS OBJECTION NO.48/BANG/2013 DATED 12.08.2016 AND ASSESSMENT ORDER DATED 24.12.2010 AND SUITABLY MODIFY IT AS SOUGHT IN THE APPEAL. III. PASS SUCH OTHER SUITABLE ORDER AS THIS HON'BLE COURT DEEMS FIT TO GRANT IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY. THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been filed by the assessee. The subject matter of the appeal pertains to the Assessment Year 2006-07. The appeal was admitted by a Bench of this Court on the following substantial questions of law: 1) Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in law in upholding that the action of the Assessing Officer in assuming jurisdiction u/s 147 of the Income Tax Act, 1961 is valid on the basis of the recording of his u/s 148(2)? 2) Whether on the facts and in the circumstances of the case the Appellate Tribunal
3 was correct in upholding reassessment proceedings on the basis of reasons not contained in the recorded reasons for reopening of assessment? contrary to law as pronounced by it in the very order? (3) Whether on the facts and in the circumstances of the case and having regard to the material on record the Appellate Tribunal was justified in holding that the requirements for invoking provisions of Section 147 are satisfied? (4) Whether on the facts and in the circumstances of the case there was any reliable and cogent material in the recording u/s 148(2) of the Assessing Officer to initiate reassessment proceedings? (5) Whether on the facts and circumstances of the case, the funds provided to the associate concerns by GIP Ltd as per the terms of the SSSA the understanding and agreements thereunder can be treated as deemed dividend u/s 2(22)(e) of the Income Tax Act in the hands of the appellant, without appreciating the fact that such advances were given for business purposes including capital induction of GI(P) Ltd. (6) Without prejudice even if the books of accounts and material on record showed that moneys were lent to the "Directors" a group as
4 such and not to the appellant one of the 5 Directors as such, can such lending be deemed dividend in the hands of the appellant. (7) When no benefit whatsoever as such is derived by the loanee director through the alleged lending benefiting the lending company can see 2(22)(e) be invoked. (8) Whether on the facts and in the circumstances of the case the finding of the Tribunal that there is absence of any stipulation in the records of the case indicating the manner in which the loan given and treated as dividend should be utilized in a particular manner is a perverse finding of fact and therefore the entire order is vitiated. (9) Whether on the facts and in the circumstances of the case even assuming that the Tribunal is right in holding that the lending by GI Pvt. Ltd. was not for its business purposes but for the benefit of the appellant only 5.5 crores could be taxed in the hands of the appellant u/s 2(22)(e). (10) Whether on the facts of the case Sec.2(22)(e) was rightly applied in respect of any part of the sum of Rs.6,85,00,000/- taxed as deemed dividend.
5 2. For the reasons assigned in ITA No.7/2017, the order dated 12.08.2016 passed by the Tribunal is quashed and the matter is remitted to the Tribunal for decision afresh after taking into account the material available on record. In the result, appeal is disposed of. Sd/- JUDGE Sd/- JUDGE RV