OMM SHREE REALCON PVT. LTD,BHUBANESWAR vs. PR.CIT-1, BHUBANESWAR

IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK (Through virtual hearing) BEFORE BEFORE S/SHRI GEORGE MATHAN, JUDICIAL JUDICIAL MEMBER AND AND RAJESH KUMAR, ACCOUNTANT MEMBER , ACCOUNTANT MEMBER Assessment Year : 2018-19 Om Shree Realcon Pvt Ltd., Om Shree Realcon Pvt Ltd., Vs. Pr. CIT- Bhubaneswar Bhubaneswar-1 Plot No.418, Forest Park, 8, Forest Park, Bhubaneswar. Bhubaneswar. PAN/GIR No. PAN/GIR No.AABCO 3118 P (Appellant (Appellant) .. ( Respondent Respondent) Assessee by : Shri S.K.Sarangi, CA S.K.Sarangi, CA Revenue by : Shri M.K.Gautam, Pr. CIT (OSD) Pr. CIT (OSD) Date of Hearing : 28 /0 06/2023 Date of Pronouncement : 28 /0 /06/2023 O R D E R Per Bench This is an appeal filed by the assessee ag This is an appeal filed by the assessee against the order passed ainst the order passed u/s.263 of the Act by the ld Pr.CIT u/s.263 of the Act by the ld Pr.CIT-Bhubaneswar-1 dated 27.3.2023 in Appeal No. ITBA/REV/F/REV5/2022 ITBA/REV/F/REV5/2022-23/1051381275(1) 23/1051381275(1) for the assessment year 2018-19. 19.

2. Shri S.K.Saran Shri S.K.Sarangi, CA appeared for the assessee and Shri gi, CA appeared for the assessee and Shri M.K.Gautam, Ld. PCIT (OSD) appeared for the revenue. M.K.Gautam, Ld. PCIT (OSD) appeared for the revenue. M.K.Gautam, Ld. PCIT (OSD) appeared for the revenue.

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4. The only issues under consideration is an issue of deemed dividend and the non-application of provisions of section 68 in respect of loans taken from the said three companies and the Director. In regard to issue of P a g e 2 | 31 deemed dividend, it was submitted by ld AR that perusal of para 3.8 of the order of the Pr. CIT itself showed that the assessee is not the shareholder in any of the three companies from whom the loans have been taken. It was the submission that the primary condition for invoking the provisions of section 2(22)(e) of the Act itself was not applicable insofar as the assessee was not the shareholder nor was the assessee beneficial owner of the shares. Further, the assessee company did not in any way have substantial interest in any of three companies much less any interest in any of three companies from whom the loan had been taken. It was the submission that on perusal of page 21 of the order the Ld. PCIT clearly showed that the assessee company was not a shareholder though admittedly two of the directors of the assessee company were shareholders in the lending company. It was the submission that in view of the decision of the Hon’ble Jurisdictional High Court of Orissa in the case of Mahimananda Mishra vs ACIT (2023) 147 taxmann.com 521 (Orissa), wherein, the Hon’ble High Court has categorically upheld the principles that the deemed dividend paid by a company was to be taxed in the hands of individual who held shares in that company and not in the hands of firm in which said individual/shareholder was a partner would apply. It was the submission that as the provisions of section 2(22)(e) had no applicability to the facts of the present case, it cannot be said that the assessment order originally passed on 29.1.2021 was erroneous and prejudicial to the interest

P a g e 3 | 31 of the revenue on this issue. In regard to second issue being the non- application of provisions of section 68 of the Act in respect of the unsecured loans taken by the assessee, it was submitted that these loans were the same amounts which have been treated by the Pr. CIT as being liable for deemed dividend. It was the submission that these loans had been specifically examined by the Assessing Officer in the course of ‘e’ assessment. Ld AR drew our attention to page 37 of the paper book, which was a copy of the notice issued u/s.142(1) and query No.5 in e questionnaire thereon, which reads as follows:

ANNEXURE Sir your company's case is selected for complete scrutiny through CASS for following Reasons BE12.O4: lnflow of funds in an entity consistently showing loss before Depreciation IN01.04: Large investment in property (Form 26QB) as compared to total income With respect to your income for the year under consideration, kindly submit the below specified details:

1. 1. Copy of Computation of income for A.Y.2018-19 and Final Accounts 2. Detailed note on during F.Y.2017-18.

3. Detailed address of Br offices, site offices etc.

4. Details of various , loan accounts including deposits, loan accounts in the following format, along with bank/loan statement (if not already furnished) for the period F.Y.2017-18 and Bank reconciliation statements wherever necessary. Sr.No. Name of the bank Branch Type of a/c A./c No.

5. Details of unsecured loans(including squared-up loans in the following format alongwith Confirmation letters in respect of unsecured loans along with copy of ROI of the lender for A.Y.201 8-1 9:.

P a g e 4 | 31 Sr.No. Name & Opening Credits Payments/ Balance complete balance during Debits as on address of the the year during 31.3.2018 lender the year

6. Copy of challan in respect of payment of TDS of Rs. 98,87,343t- shown payable in the Balance Sheet.

7. Details of immovable properties purchased during F.Y.2017-18 in following format along with copy of purchase deed (if not already furnished)

Sr.No. Description of Date of Cost of Sources of the acquisition acquisition acquisition with immovable documentary property evidence

8. Names of Directors of the company and copies of returns of income filed by them for AY 2018-19.

9. Copy of Memorandum of Association and Articles of Association of the company. 10. Copy of Form 26AS and reconciliation of details as per Form 26AS and as per profit & loss account, wherever necessary. 11. Copy of TDS return filed for relevant period alongwith copy of TDS entry register. 12. Ledger –advance for land, other current assets, interest, architect fees. 13. Project-wise detail of break up of salary *& wages debited to P&L a/c. following format. 14. Please give the details of additions made in the income tax assessments in the last three years and present status thereof.

P a g e 5 | 31 Failure to comply this notice, necessary penalty u/s 272A(1)(d) will be levied and your assessment will be completed on the basis of material available on record. 5. Ld AR drew our attention to pages 41 to 44 of the paper book, which was the reply to the issues specifically reply to query No.5 which reads as follows:

Before the Assessing Officer, National e-assessment centre, Delhi, Income Tax Department, Ministry of Finance, Govt. Of india In the matter of : Om Shree Realcon Pvt Ltd., Plot No.418, Sahid Nagar, Bhubaneswar-7. Pan: AABCO 3118 P Assessment year: 2018-19 Sub: Compliance to the notice and furnishing documents. Ref: Notice under sub-section (1) of Section 142 of the Income tax act, 1961 bearing No.ITBA/ASTY/F/142(1)/2020-21/10239975357(1) dated 21.1.2021 Ref: Notice No.ITBA./ast?f/14291)/2020-21/1028790904(1) DATED 1.12.2020. Sir, Enclosed please find attached the supporting documents on the asked issues in support of our return of income 1. Copy of computation of income for : Attached Annexure-A A.Y. 2018-19 and final accounts Page No.A1 -A14 2. Detailed note on business activities: : Real Estate Business Carried out during FY 17-18 Land acquired. No Further activities 3. Detailed address of principal place of : Plot No.418,Sahid Business and branch offices,site office Nagar, BBSR-7 4. Details of various bank accounts including deposits, loan accounts in the following format, alongwith bank/loan account statement (if not already furnished) for the period F.Y. 2017-18 and bank re-

P a g e 6 | 31 conciliation statements where ever necessary-bank statement attached as per Annexure –B (page No.B1 – B3)

Sr.No. Name of the Branch Type of A.c No. bank a/c.

1. A\xis bank Bhubaneswar Current 910020021114241 Ltd.

5. Details of unsecured loans (including squared up loans in the following format alongwith confirmation letters in respect of unsecured loans alongwith copy of ROI of the lender for A.Y. 2018-19 as per Annexure-C (Page No.1 to 4) Sr. Name & Openin Credits Payments/de Balance as No. complete g during the bits during on address of the balcne year (Rs.) the year 31.3.2018 lender (Rs.0 (Rs.) (Rs.) 1. Sangram 50,000 6,20,00,000 Nil 6,20,50,000 Keshari Nayak, (Rate of int. Promoter nil Director, Plot No.117/653, Satya Nagar, BBSR 2. Kedarnath Tie- NIL 1,05,43,890/ NIL 1,05,43,890 up Pvt ltd., - /- Poddar Court, (Principal- 2nd GateNo.4, 1,05,00,000/ floor, Room - interest No.10,18, @10%- Rabindra 48,767/- Saranik Kolkata Less:Tds- 4,877/-) 3. OM Shree NIL 2,00,83,836/ NIL 2,00,83,836 Logistics Pvt. - /- Limited, Plot (Principal- No.23, VIP Area 2,00,00,000/ IRC Village, - Interest Nayapalli, @10%- Bhubaneswasr- 93,151/- 751015 Less: Tds- 9315/-) 4. Premier Vyapaar NIL 86,99,355/- 20,00,000/- 66,99,355/- Pvt Limited, (Principal - Poddar Court, 85,00,000/- Gate No.4, 2nd Interest Floor, Room @10%- No.10,18- 2,21,506/- Rabindra Sarani, Less: Tds-

P a g e 7 | 31 Kolkata 22,151/-) P a g e 8 | 31

6. He further drew our attention to page 46 of the paper book, which was the further enquiry by the AO in the course of ‘e’ assessment, wherein, details of the persons who have given the assessee unsecured loans were called for as follows:

ANNEXURE Sir your company’s case is selected for complete scrutiny through CASS for following reasons: BE 12.04: Inflow of funds in an entity consistency showing loss before depreciation. IN01.04: Large investment in property (Form 26QB) as compared to total income. P a g e 9 | 31 On going through the submission made by you to the notice u/s.`142(1) dated 1.12.2020, it is seen that the following details ae not yet furnished by you.

1. Copies of returns of income for A.Y. 2018-19 of persons/concerns who have given you unsecured loans. You are further requested to furnish copies of bank statements of lenders of loan for the period in which the said loans were advanced by them to you. You are requested to furnish the above details by 25.1.2021 Failure to comply this notice, necessary penalty u/s 272A(1)(d) will be levied and your assessment will be completed on the basis of material available on record.

Reply of the assessee are placed at pages 47 & 48 of the paper book as under:

To The ACIT, National e-assessment centre, Delhi. Assessee: Om Shree Realcon Pvt Ltd., 418, Sahid Nagar, Bhubaneswar-7. Pan: AABCO 3118 P Assessment year: 2018-19 Sub : Compliance to notice and furnishing of documents Ref: : Notice under section (1) of section 142 of the income tax Act, 1961 bearing No.ITBA/AST/F/142(1)/2020-21/1029975357(1) dated 21.1.2021. In connection with scrutiny assessment, assessee submits as under: i) Enclosed copies of returns of income and computation of income for a.y. 2018-19 of the following persons/concerns who have given unsecured loans to our company during the relevant/previous year.

P a g e 10 | 31 Sr. Name of the Date Amount Amount No person/concern receipts in of . Rs. payments in Rs.

SR.No. Name of the person/concerns Bank Name 1. Premier Vyapaar pvt Ltd. Axis Bank ltd. ICICI Bank Ltd. 2. Om Shree Logistics Pvt Ltd. ICICI Bank Ltd Kedarnath Tie up Pvt ltd. 3. Axis Bank ltd 4. Mr Sangram Keshari Nayak ICICI Bank Ltd Axis Bank ltd Kindly acknowledge the above supporting documents for your perusal and necessary action.”

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7. It was the submission that the issue of unsecured loans having been completely examined in e-assessment and no error having been found, it is not permissible for the Pr. CIT to enter into the issues which have been examined at length by the Assessing Officer in the course of e-assessment. It was the submission that the Assessing Officer having already considered the issue and taken a possible view and not made any addition, it cannot be said that the assessment order is erroneous and prejudicial to the interest of the revenue. It was the prayer that the order u/s.263 is liable to be quashed.

8. In reply, d Pr. CIT(OSD) has filed written submission, as under:

The assessee company has filed the present appeal against the revision order dated 27.03.2023 passed by the Pr. CIT-1, Bhubaneswar. Kindly refer to the assessment order u/s.143(3) passed by the A.O. on 29.01.2021 (pages-42 & 43 of papers enclosed with the Form No. 36). It must be noted here that said assessment order is totally cryptic and non-speaking one.

3. The fiction of deemed dividend is not restricted to the beneficial owner of shares only but it is also extended to any concern also in which such shareholder is a member, or a partner and in which he has a substantial interest.

P a g e 12 | 31 The loans and advances as mentioned in section 2(22)(e) of the Act shall include any type of loans or advances including Inter Corporate Deposits (ICD) but not trade advances.

5. The lending companies were neither banking companies nor NBFCs. These companies were also not engaged in any money landing business as per section 2(13)(i) of Money Lending Act. Hence these lending companies had distributed their accumulated profits to their substantial shareholders in the guise of loans either to utilize their idle surplus income or to escape DDT for purchase of immovable property by the assessee company. The assessee was required to pay interest @ 10% on such loans.

P a g e 15 | 31 The main thrust of the assessee's arguments, relying on the decision in Mukundray K. Shah (supra), was that whenever a loan or advance is given, the benefit clause of the provision is to be satisfied, i.e., in all cases where the provision is to be applied. We find this plea to be in complete disregard of the clear provision, which casts the extension of 'benefit' as a separate limb (i.e., as one of the three independent prerequisite conditions for the application of the provision), which has not been invoked in the present case, as well as the decisions by the Apex Court in Navnit Lal C. Jhaveri (supra) and Tarulata Shyam (supra). As a mere reading of the provision, language of which is clear and unambiguous, suggests and, in any case, upon a fair look and reading thereof, the provision is triggered where:

(a) a loan or advance is given by a company (in which the public is not substantially interested) to a shareholder who beneficially owns shares therein to the extent not less than 10% of the voting power therein; or (b) a loan or advance is given by such a company to any concern in which such shareholder has substantial interest (explained as entitling him to a beneficial interest in 20% of its income); or (c) any payment is made by such a company on behalf of, or for the benefit of, such a shareholder.

The loan or advance or payment is, under such circumstances, to be deemed as dividend to the extent the paying company has accumulated profits, the exception being where the lending company is in the business of money lending. We have already noted satisfaction of all the required conditions in the present case, as well as of the lending companies being not in the money lending business, so that exceptions to the provision are excluded. It is clearly limb (b) supra that is attracted in the present case, and which does not provide for a further requirement to show that the monies were intended for the benefit of such shareholder. There is nothing in the decision to suggest such a benefit being required to be shown in all cases. In the facts of that case, it was limb (c) supra that was applied. The assessee-respondent in Mukundray K. Shah (supra) did not in fact have substantial interest in both the concerns, MKF and MKI, so that limb (b) could not, in any case, be applied. In fact, the assessment in that case was of P a g e 16 | 31 'undisclosed income', on the basis of a dairy seized in search, and which revealed the source of funds invested by the assessee in bonds, tracing the source thereof (on the basis of the said diary) to two concerns, and which had been, in turn, released funds by the payer company in which (the assessee) had substantial interest. It was on that basis that the provision of section 2(22)(e) became applicable, and which was upheld by the Hon'ble Court. The reliance on the said decision is, thus, completely misplaced. The Hon'ble Court after noting some precedents held that where the loan or advance is given in return to an advantage conferred upon the company by such shareholder, as where it is given as a trade advance as a consideration for the goods received or for purchase of a capital asset which would benefit the company advancing the loan, it would fall outside the ambit of 'loan' or 'advance' as contemplated u/s. 2(22)(e). We are unable to see as to how the said decision assists the assessee's case which, as afore-stated, is a case of loan (or advance) per se. The aspect of charge of interest (on loan or advance) has already been considered by the Apex Court as irrelevant, and which, being charged in the instant case itself proves the loan (advance) to be not a trade advance. Rather, where the advance is in the course of a commercial transaction between the advancing and the advance-company, it is not a loan or advance proper for it to be regarded as a loan or advance u/s. 2(22)(e).

P a g e 17 | 31 We do not therefore consider it necessary to encumber this order any further by discussing those decisions. Suffice to say that we have perused the same, finding our decision as not inconsistent therewith and, further, consistent with the law as explained by the Apex Court as well as the Hon'bleJurisdictional High Court per their judicially binding decisions. We decide accordingly, and the assessee fails. 6. In the result, the assessee's appeal is dismissed."

9. In the case of CIT vs. Nalwa Investments Ltd. (11 taxmann.com 98), the assessee was a non-banking finance company engaged in business of investment in shares, securities, other debt instruments and financing loans and providing guarantees. The income of assessee comprised of receipts from interest on loans and securities, professional income as well as dividend income and entire income was shown under head 'Income from business and profession'. The Assessing Officer treated dividend income as income from other sources but at same time allowed business losses of earlier years to be set-off against said dividend income as well. The Commissioner, while exercising powers under section 263, set aside order of Assessing Officer on ground that Assessing Officer had failed to examine nature of investments on which dividend was earned and to conduct required enquiry as regards application of provisions of section 72 of the Income Tax Act. On appeal, Tribunal quashed the revision order on the ground that view of Assessing Officer was a plausible view and it could not be said that Assessing Officer had not applied his mind. It was held by the Hon'ble Delhi High Court that when Assessing Officer had not applied his mind to issue as to whether dividend income could be given character of business income for purpose of set-off, question of there being a plausible view did not arise and, therefore, Tribunal was not justified in quashing order of Commissioner on that ground. The observations of the Hon'ble Delhi High Court are reproduced as under: "13. So far so good. But the relevant question, which is the core one and led CIT to pass the order under section 263, of the Act is as to whether the Assessing Officer applied his mind to the issue as to whether the dividend income could be given the character of business income for the purpose of set off. We have already taken note of the order of the Assessing Officer. He recorded that even a dividend income in question P a g e 18 | 31 was shown as business income by the assessee. The Assessing Officer did not agree with the same, as in the previous years this income was shown as dividend income. After saying so, the Assessing Officer straightaway allowed the set off of this income against the carry forward losses. The assessment order is totally silent and there is no discussion as to how this dividend income was to be given the character of business income for the purpose of set off under section 72 of the Act. It was for this reason that the CIT held that the Assessing Officer had not conducted any inquiry. The Tribunal, instead of appreciating these facts, went into the merits of the issue which the Assessing Officer is supposed to deal with. It addressed the question as to whether dividend income could be given the character of business income and then observed that the view taken by the Assessing Officer was plausible without appreciating that the Assessing Officer had not even taken any view on this issue, it could not be said that the Assessing Officer had not applied his mind. The entire reading of the assessment order clearly demonstrates that no such view is taken at all by the Assessing Officer on this aspect. It is intriguing, in the circumstances, as to from where the Tribunal came to the conclusion that the view taken by the Assessing Officer was plausible or that the Assessing Officer had applied his mind.

14. The Tribunal failed to appreciate the limited scope of appeal before it, viz., the validity of the order passed by the CIT exercising his revisionary power under section 263 of the Act. Order of the CIT clearly revealed that he had applied his mind on the relevant aspect and had rightly noticed that the character of the said income was not investigated by the Assessing Officer. This is highlighted by the CIT in Para 7 of the order passed by him, which is already extracted above. Therein, the CIT recorded that the Assessing Officer had failed to conduct the required enquiry and also had failed in application of the provisions of section 72(1) of the I.T. Act. This rendered order passed by the Assessing Officer erroneous and prejudicial to the interest of Revenue to that extent. The Tribunal was, thus, supposed to adjudge the validity of such an order and not to go beyond when the challenge before it was limited to the said order passed by CIT in exercising the powers under section 263 of the Act.

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15. Mr. Ajay Vohra, learned counsel appearing for the assessee argued that when the view taken by the Assessing Officer was plausible one, it was not proper for the CIT in exercise of his revisionary jurisdiction to interfere with that order and referred to the judgment of the Punjab and Haryana High Court in the case of CIT v. Max India Ltd. [2004] 268 ITR 128 which is approved by the Supreme Court in the case of CIT v. Max India Ltd. [2007] 295 ITR 282 /[2008] 166 Taxman 188 . However, this argument based on the aforesaid judgment is of no avail in the facts of the present case when it is found that the Assessing Officer had not examined the issue at all and therefore, question of there being a plausible view does not arise.

12. The particulars appearing from paragraph-9, quoted above, of the judgment of CIT have not been disputed nor the factual aspects appearing from paragraph-10 of the judgment of the CIT have been disputed. We are, as such, of the opinion that CIT had reasons to hold that creditworthiness of the alleged lenders was not enquired into. Mere examination of the bank pass book, profit and loss account and balance sheet, as we already have indicated, is not enough. When the requisite enquiry was not made, the order is bound to be erroneous and prejudicial to the interest of the revenue. The learned Tribunal proceeded on the theory that it was not a case of no enquiry; that no doubt is true, but that is not enough. If the relevant enquiry was not made it may in appropriate cases amount to no enquiry and may also be a case of non- application of mind. "

13. It was held by the Hon'ble Gujarat High Court in the case of Manoj Kumar Saraf vs. ITO (45 taxmann.com 63) that where even though assessee took unsecured loan through cheques, yet he could not establish identity and creditworthiness of lenders, the amount of loan was rightly added by the Assessing Officer to assessee's taxable income under section 68. The Hon'ble High Court held in para-5 as under: "5. We are, however, of the opinion that the revenue authorities as well as the Tribunal have examined the evidence on record and come to the conclusions which do not give rise to question of law. It may that the transactions being through cheques, the genuineness thereof was established by the assessee. However, two additional requirements of the identity of the creditors and their creditworthiness yet remained to be established. The authorities found that the assessee did not provide sufficient evidence in this respect. In case of Sumati Dayal v. CIT [1995] 214 ITR 801/80 Taxman 89 (SC) the Apex Court held that regarding cash credit, burden is on the assessee to prove that the amounts credited did not represent his income. It was observed that in view of section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, it may be charged to income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is not satisfactory". 14. The Hon'ble Delhi High Court in the case of Siddharth Exports vs. ACIT (112 taxmann.com 193) held that where the assessee received unsecured loan from a person outside India but failed to produce relevant documents to prove identity and creditworthiness of creditor and genuineness of transaction either before Assessing Officer or before Commissioner (Appeals), certain documents produced by assessee during instant appeal before High Court under section 260A could not be accepted and therefore, impugned addition made under P a g e 22 | 31 section 68 in respect of said loan was justified. The Hon'ble Delhi High Court held in paras-18 & 19 as under: "18. The next question that arises for consideration is whether the appellant has raised any substantial question of law. The transaction is sought to be proved by producing the bank statement of Ms. Jasmine Kochhar Kapoor. The assessee has strongly relied upon the fact that since the creditor has been identified by way of her copy of passport, PAN No. etc, the initial onus of proof has been discharged. The appellant strongly contends that since it had discharged the onus on production of the relevant documents, the onus shifted on the Respondent and if the Assessing Officer had any doubt, he could have carried out independent inquiry. Section 68 of the Income Tax Act, raises a presumption whenever unexplained credits are found in the books of account of the assessee. Indisputably, the credit entries stand in the name of the assessee himself. Thus the burden is undoubtedly on him to prove, satisfactorily, the nature and source of these entries and to show that they do not constitute a part of income liable to tax. There can also be no doubt that the onus is always shifting and oscillates and this burden on the assessee can shift on to the Revenue. However, such a situation can arise only if the initial or primary onus is discharged by the assessee. It is, therefore, first necessary to examine whether the assessee has been able to discharge the initial onus of proving the unexplained cash credit.

P a g e 23 | 31 and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act.

15. The Hon'ble Delhi High Court in the case of Toby Consultants (P.) Ltd. vs. CIT(324 ITR 338) held that where assessee-company had shown in books unsecured loans of Rs. 2.68 crores and Rs. 2.45 crores from its two directors and it was explained that money belonged to its own entity and was routed through directors and Tribunal found that directors who advanced loan were admittedly not at all men of means for advancing such huge amount of loan amounting to about

P a g e 24 | 31 Rs. 5 crores and secondly that assessee even for taking such huge amount of loan did not want to pay any interest for which creditors also agreed, the Tribunal had rightly, arrived at a finding of fact, on analysis of all relevant material on record, that genuineness of transaction had not been established and assessee had failed to independently prove the same. The Hon'ble High Court held that the Tribunal had observed that it was humanly improbable that a person merely knowing another person for a long period, even though having very good relation, would advance such huge amount of loan free of interest for a indefinite period, merely for investing in a company, that too not in their name but in the name of that person, who could legally claim the recovery of the same from the assessee company, as undisputedly the debt still remained undischarged. It was further held that the assessee had not succeeded in proving the genuineness of the transaction as it was improbable when the test of human probabilities was applied to the surrounding circumstances of the case in entirety. Thus, the assessee, having failed to test of human probabilities, was unable to prove the genuineness of the loan transaction, so, in view of the ratio of the decisions (supra) relied upon the learned Departmental representative for the Revenue it is held that in view of the provisions of section 68, since the genuineness of the transaction has not been proved by the assessee, the impugned amount found credited in the name of Shri P. N. Jain and Ms. Urvashi Jain in the books of the assessee in the year under consideration is to be charged to income-tax as the income of the assessee for that year and hence the impugned addition made/sustained by the tax authorities below under section 68 of the Income-tax Act are upheld. Hence, impugned addition was held to be justified. In view of above facts, the appeal of the assessee is required to be dismissed.”

P a g e 27 | 31 clearly, the order of the Pr. CIT on this issue is erroneous on facts and in law and on this ground, the issue stands quashed.

12. The decision relied upon by ld Pr. CIT(OSD) in the case of Namita V Samant (supra) is in fact in favour of the assessee insofar as the deemed dividend has been assessed in that case in the hands of the shareholder and not in the hands of the recipient company.

P a g e 28 | 31 insofar as what is written in the assessment order is beyond the control of the assessee. The e-assessment has been done on the basis of the SOP issued by the revenue. All that can be seen is whether the details have been called for and the issue has been examined. A perusal of the notice u/s./142(1) shows that the first notice was issue on 1.12.2020. The reply was given on 14.12.2020. Further clarification was on 21.10.2021 and the assessee has responded to that also vide letter dated 23.1.2021. Thus, clearly this has also been examined at depth by the Assessing Officer in the e- assessment proceedings and no addition has been proposed which means that one plausible view has been taken. Once a plausible view has been taken, it cannot be made subject matter of revision u/s.263 unless it is specifically shown to be erroneous which has caused prejudice to the revenue and this has not been done in the order of Pr. CIT. This being so, on this issue also, the order of Pr. CIT is unsustainable and stands quashed.

Order dictated and pronounced in the open court on 28/06/2023.