2020 (8) TMI 514 - AT - Income Tax

Deemed dividend u/s 2(22)(e) - amount advanced by the company, M/s. B.T. Kadlag Construction Pvt. Ltd. BTKCPL wherein the assessee is a substantial shareholder to the firm, M/s. Renuka Construction, wherein the assessee is a partner having substantial interest - assessee has not complied with the notices of hearing nor has cared for appearing before the First Appellate Authority for prosecuting his appeal - HELD THAT - As evident from records, the Ld. CIT(Appeal) has passed his order on 15.03.2017 whereas, the submissions of the assessee was filed on 16.03.2017 i.e. one day subsequent to the passing of the order by the Ld. CIT(Appeal). CIT(Appeal) has passed the appellate order only on the basis of the assessment order, Form-35, statement of facts and grounds of appeal. It is also true as evident from the order of the Ld. CIT(Appeal) that sufficient opportunities were provided to the assessee. There was not even a single compliance from the assessee on the given dates of hearing. Though several opportunities were given to the assessee by the Ld. CIT(Appeal), we find that in the interest of justice and for the fact that the Income Tax Laws are within the ambit of welfare legislation one more opportunity may be given to the assessee and therefore, we are of the considered view that the matter should be restored to the file of the Ld. CIT(Appeal) wherein he is directed to examine the facts of the assessee‟s case in terms of Section 2(22)(e) of the Act and various case laws referred by the Ld. AR of the assessee. - Appeal of the assessee is partly allowed for statistical purposes

Summary

Issues:
Appeal against addition under section 2(22)(e) for deemed dividend.

Analysis:
1. Grounds of Appeal: The appellant contested the addition made under section 2(22)(e) of the Income Tax Act, 1961, arguing that it was not warranted on facts and in law. The appellant also challenged the classification of the amount advanced by a company as deemed dividend, citing the mortgaging of personal assets for obtaining finance. Reference was made to legal precedents to support the case.

2. Adjudication of Grounds: The appellate tribunal dismissed general grounds and those not pressed by the appellant, focusing on the effective grounds related to deemed dividend. The tribunal examined the assessment order, submissions, and materials on record to assess the situation.

3. Representation Before CIT(A): The tribunal noted that the appellant did not represent themselves before the CIT(A), and the appellate order was based on the assessment order and other documents. The appellant's submissions were filed after the CIT(A) passed the order, raising concerns about compliance.

4. Legal Submissions: The appellant's Authorized Representative relied on legal judgments not submitted before the CIT(A), arguing for relief based on similar cases. The Department Representative emphasized the lack of compliance by the appellant and supported the CIT(A)'s order upholding the addition.

5. Remittance for Fresh Adjudication: Considering the importance of natural justice and compliance, the tribunal set aside the CIT(A)'s order and remitted the matter back for fresh adjudication. The appellant was directed to present detailed submissions and relevant documents before the CIT(A) to ensure a fair assessment of the case.

6. Conclusion: The tribunal partly allowed the appeal for statistical purposes, emphasizing the need for compliance with legal processes and principles of natural justice. The decision aimed to uphold fairness and thorough examination of the case, ensuring all relevant aspects are considered in the assessment of deemed dividend under section 2(22)(e) of the Act.