NITIN AGARWAL,KHATIMA vs. ITO WARD 2(3)(5), KHATIMA, KHATIMA

PER SANJAY AWASTHI, ACCOUNTANT MEMBER:

1.1 The Ld. AO treated the impugned amounts as deemed dividend u/s 2(22)(e) of the Act.

1.2 The aggrieved assessee approached the Ld. CIT(A), where also he could not succeed on the basis of findings given in the impugned order as under: -

“………Apparently appellant contentions as advanced on this analogy to hold the stated property as only pertains to the appellant related company that too without even referring to the stated company in the registration document as the owner of the property transacted so as to justify appellant claims as applicable as per law. Appellant mere claims that the stated property is only registered for the sake of representing the company as its directors neither has a substantiations nor has any basis when the intrinsic rights over the property are not bestowed to the stated company and same being available to appellant and other persons as per the stated document of registration etc., such claims of the appellant to hold the property as only pertains to the stated company is to be treated as apparently not maintainable as analysed and reasoned by AO in the assessment order as pertains to the two properties involved one at Haldwani and other at Khiccha as discussed supra. Further with reference to the second property at Khiccha, appellant is contending the same as attributable to two directors including appellant and could not substantiate the same with such reconcilable supporting proofs of investments/workings as needed to establish the same before AO as applicable as per law in spite of availing sufficient time and opportunities. Considering these finer facts of the case involving apparent discrepancies as attributable to appellant claims 2 /contentions, apparently there exists no infirmities in the reasoning adduced by AO in invoking the provisions u/s. 2(22)(e) of I.T Act as applicable to appellant facts of case and thereby appellant relevant claims / contentions / GOA as advanced on this analogy to hold such invocation of these provisions as not maintainable is to be treated as apparently not substantiated and thereby same are to be treated as not maintainable. Further, appellant has placed reliance on various citations as per the submissions to hold the same as allowable and on perusal of facts of case/ ratios of adjudication of the citations as applicable to appellant facts of case involving clear registration of property in the name of the appellant without referring company's name to deny such ownership on the property registered as analyzed and discussed by AO and the same are neither comparable nor equitable in its facts of case and ratios of adjudication apparently as per law, Further, appellant did not bring out such comparative analysis as applicable to appellant facts of case and ratios of adjudication as attributable to the citations as needed to adduce and thereby appellant mere contentions on this analogy is to be treated as not maintainable as per the facts of case and circumstances as explained above. Considering all these facts of case, apparently there exists no infirmity in the order of the AO as per the facts available on record and in view of the same, appellant various inter-related/over-lapping contentions as advanced in grounds of appeal needs to be treated as not maintainable as per law. In the result, appellant appeal is dismissed as not maintainable as per facts available on record on merits as appellant is failed to adduce any such supporting proofs/ evidences as needed to advance the grounds of appeal contrary to the findings of AO in the assessment order. Accordingly, appellant appeal is dismissed as not maintainable as per law.” 1.3 Further aggrieved the assesse has approached the ITAT with grounds which challenge the impugned action.

The Ld. AR narrated the sequence of events and stated that the said Nainital Motors Private Limited could not purchase agricultural land in the state of Uttarakhand but the directors were eligible to do so. Accordingly, the company deemed it fit to purchase such land in the names of the directors for putting the said parcels of land to commercial use. On a query from the Bench regarding any minutes of the Board meeting in evidence of the fact that such a decision was actually taken, the Ld. AR expressed his inability to produce the same at the time of hearing. It was also pointed out to the Ld. AR that there is a specific mention in the Ld. AO’s order at page 3 in para 3.2 that the sale deed of the property reveals that the absolute right of the property vests jointly with the four directors of the company. This was apparently done without entering into any kind of conveyance deed between the company and the owners. The Ld. AR argued that the arrangement was for the directors to be shown as owners but the properties would be utilized by the company for commercial purposes. The Ld. AR relied on several case laws in his favour and filed details of such cases through paper books. The Ld. AR concluded his arguments by stating that there was no loan or advance given by the company to its directors to qualify as deemed dividend.

2.1 The Ld. DR supported the orders of the authorities below and stated that the arrangement between the company and its directors was not clear and since the directors, including the assessee, remained absolute owners of the said properties even when the company had borne the cost of the same, then it was clearly a case of application of section 2(22)(e) of the Act in the hands of the assesse.

Order pronounced in the open court on 22.04.2026

Sd/- Sd/- (YOGESH KUMAR US) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22.04.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI