High Court of Calcutta
Pradip Kumar Malhotra Vs CIT
I.T.A. No. 219 of 2003
2 August 2011
J.P. Khaitan and C.S. Das for the Appellant P.K. Bhowmick for the Respondent
Bhaskar Bhattacharya, J
This appeal under Section 260A of the Income-tax (‘Act’) is at the instance of an assessee and is directed against an order dated April 23, 2003 read with the order dated July 10, 2003 passed by the Income-tax Appellate Tribunal, ‘C’ Bench, Kolkata, in ITA No.38(Kol) of 2002 for the Assessment Year 1999-2000 and thereby dismissing the appeal filed by the assessee. Being dissatisfied, the assessee has come up with the present appeal.
The facts leading to the filing of the present appeal may be summarised thus:-
a) The appellant is assessed to tax under the Income-tax Act (hereinafter referred to as ‘the Act’) and the present appeal arises out of the assessment for the Assessment Year 1999-2000 for which the relevant previous year was the Financial Year ending March 31, 1999.
b) The appellant has substantial shareholding in a private company called Sumoson Exports (P) Ltd. The appellant has his immovable property being plot No.22, Sector XIV, Gurgaon, Haryana which was let out to the said company on monthly rent. In the year 1987, the appellant permitted the company to provide the said property which was of substantial value, as collateral security to Vijaya Bank in order to enable the said company to obtain loan from the said bank.
c) Consequently, the property was mortgaged to the bank and in December, 1987, the Board of Directors of the company passed a resolution authorising the appellant to obtain from the company interest-free deposit up to Rs. 50,00,000/- as and when required for making available the said property as collateral security to the bank for the loan facility enjoyed by the company.
d) According to the appellant, he required funds for his personal needs and security including education of his son abroad. During the Financial Year 1997- 98 relevant to the Assessment Year 1998- 99, the appellant requested the said company to purchase the said property or to release the same so that the appellant could sell it to some other person. The said company, however, wanted to purchase the said property but subsequently finding itself unable to do so, tried to have it released. According to the appellant, being approached by the said company, the bank did not agree to release the property unless the same was replaced by another property by way of security and the company found that it was not possible for it to provide any other property as security. Accordingly, the said company requested the appellant to let the said property remain under mortgage and as already resolved by the Board in the December, 1987, the appellant was permitted to draw up to Rs.50,00,000/- from of interest in instalment so as not to jeopardise the business of the company.
e) During the previous year relevant to the Assessment Year 1998-99, the appellant received from the said company, a sum of Rs. 10,00,000/- as advance rent which was to be adjusted against the rent payable to the appellant by the said company. After such adjustment for the year ending on March 31, 1998, the amount of advance rent stood reduced to Rs. 7,88,795/-.
f) The Assessing Officer in the assessment order for the Assessment Year 1998-99 sought to treat the said sum of Rs. 7,88,795/- as deemed dividend under Section 2(22)(e) of the Act.
g) On appeal, the appellant succeeded before the Commissioner of Income-tax (Appeals) who by an order dated June 9, 2000 held that the said amount did not fall within the purview of Section 2(22)(e).
h) Against the said order dated June 9, 2000, the Revenue preferred an appeal before the Income-tax Appellate Tribunal. Before the Tribunal, it was contended on behalf of the Revenue that the Assessing Officer was not given any notice regarding hearing of the appeal before the Commissioner of Income-tax (Appeals) and as such, the provisions of Section 250(1) were violated. The Tribunal by its order dated October 30, 2002 accepted the said contention of the Revenue and set aside the said order dated June 9, 2000 and restored the appeal to the Commissioner of Income-tax (Appeals) with a direction to decide the same on merits after giving opportunity of being heard to both the parties.
