AMAR VITHALDAS GANDHI,MUMBAI vs. DCIT CIRCLE 42(2)(1), MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT () & SHRI SANDEEP SINGH KARHAIL () Assessment Year: 2015-16
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated
07.02.2023 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld.
CIT(A)’] for assessment year 2015-16, raising following grounds:
1. The learned CIT (A) has erred both in facts and in law, in upholding the addition of Rs. 1,40,00,000 made under section 2(22)(e) of the Income Tax Act by the Ld. AO. The appellant prays to delete the said addition as the loan was received in the capac company.
2. The Ld. C upholding
AO. The ap deleted as earning co
2. At the threshol with a delay of 482
passed on 07.11.202
within 60 days, i.e.
however, been filed o
2.1 Learned counse application for condo the affidavit, it is av
CIT(A) was supplied
CNK & Associates L assessee, being una unaware that the Income-tax Portal. It order was ever receiv engaged a new consu him to pursue the present appeal was fi the delay is neither solely by lack of time
ITA city of an employee and not as a dire
CIT (A) has erred, both in fact and the disallowance of Rs. 16,87,356 made appellant prays that the said addition ma s the expenses were incurred for the onsultancy income.
d, it is noticed that the appeal
2 days. The order of the learn
23, and the appeal ought to , on or before 06.01.2024. T n 02.05.2025. el for the assessee has placed re onation of delay accompanied by verred that the impugned order to the assessee by his earlier c
LLP, only on 24.02.2025 throu acquainted with income-tax p order was simultaneously av t is further stated that no phys ved. On obtaining the said cop ultant, M/s CBV & Associates LL statutory remedy of appeal, filed without further delay. It is deliberate nor contumacious, ly professional guidance.
Amar Vithaldas Gandhi
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A No. 3107/MUM/2025
ector of the in law, by e by the Ld.
y please be purpose of l has been filed ned CIT(A) was have been filed
The appeal has, eliance upon the y an affidavit. In r of the learned consultant, M/s ugh e-mail. The procedures, was vailable on the sical copy of the py, the assessee
LP, who advised whereupon the thus urged that but occasioned
2 We have heard record. The short iss can be condoned as the meaning of sectio procedural provisions 2.3 It is by now we must receive a libe substantial justice. [(1987) 167 ITR 471 that when technical justice, the latter mu vested right in injust delay. Likewise, in Im Ors. [(2010) 6 SCC pedantic approach s dismissed at the very 2.4 In the present c is consistent and sup lay person in tax mat of appellate orders, a was forwarded to h Thereafter, he acted professional and filin any mala fide intent ITA rival submissions and carefull sue before us is whether the de being attributable to ‘sufficien on 5 of the Limitation Act, 1963 s of the Income-tax Act. ell settled that the expression ‘s eral construction to advance In Collector, Land Acquisition (SC)], the Hon’ble Supreme Co considerations are weighed aga ust prevail, for the other side tice being done on account of a mprovement Trust, Ludhiana v. C 786], the Supreme Court o hould not result in meritorious y threshold. case, the explanation advanced pported by affidavit. The assess tters, was not aware of electroni and became cognizant of the ord him by his earlier consultant d with due expedition by en ng the appeal. The conduct do t, deliberate negligence, or wan Amar Vithaldas Gandhi 3 A No. 3107/MUM/2025 ly examined the elay of 482 days nt cause’ within 3, read with the sufficient cause’ e the cause of n v. Mst. Katiji ourt emphasised ainst substantial cannot claim a a non-deliberate Ujagar Singh & observed that a s matters being by the assessee ee, admittedly a ic dissemination der only when it on 24.02.2025. ngaging another oes not disclose nt of bona fides.
Further, the Revenu controvert the explan
2.5 Having regard t that refusal to con adjudication on meri has demonstrated su delay is, therefore, c the appeal on merits.
4. Briefly stated, th income for the year u total income of Rs.20
and notices under th issued and complied of the Act on 30.12.2
(i) treating loan of Finsec Pvt. Ltd. as d disallowance of expe income of Rs.26,05, both the additions/
appeal before the Trib above.
5. Before us, the L containing pages 1 to ITA ue has not placed on record a nation so tendered.
to the settled principles and b ndone delay would result in its, we are persuaded to hold th ufficient cause for the delay of condoned. We accordingly proc
.
he facts are that the assessee fil under consideration on 28.08.2
0,26,090/-. The return was selec he Income-tax Act, 1961 (‘the with. In the assessment compl
2017, the Assessing Officer mad
Rs.1,40,00,000/- received from eemed dividend u/s 2(22)(e) of enses of Rs.16,87,356/- again
000/-. On appeal, the learned
/disallowance. Aggrieved, the bunal by way of raising ground
Ld. Counsel for the assessee file o 92. Amar Vithaldas Gandhi
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A No. 3107/MUM/2025
any material to bearing in mind n denial of an hat the assessee f 482 days. The ceed to consider led his return of 2015 declaring a cted for scrutiny
Act’) were duly leted u/s 143(3) de two additions:
m M/s Taurrus the Act; and (ii) nst consultancy d CIT(A) upheld assessee is in s as reproduced ed a Paper Book
The ground No addition of Rs.1,40,0 Act in the hands of dispute are that the shares in M/s Taur holding the position o under consideration property having his loans from difference amounting to Rs.1,7 Ltd. amounting to Rs that assessee being more than 10% sha Rs.1,40,00,000/- rec M/s Taurrus Finsec dividend in terms of assessee, subject to company. The asses under the company hence was received shareholder. The sa rejected by the Asses the loan/advance as Before the Ld. CIT(A ITA o. 1 of the appeal of the asse 000/- for deemed dividend u/s the assessee. The brief facts q e assessee is a shareholder h rrus Finsec Pvt. Ltd. The ass of the Director in said company . The assessee purchased a share at Rs.3.8 crores. The as e sources including loan from s 5,00,000/- and loan from Taur s.1,40,00,000/-. The Assessing registered as well as beneficial ares of the closely held compa ceived from said closely held co Pvt. Ltd. was liable to be trea section 2(22)(e) of the Act in th o upper limit of accumulated ssee contended that the loan y’s ‘loan policy’ as an employe in the capacity of an employe aid contention of the assesse ssing Officer and he treated the deemed dividend in the hands A) the assessee reiterated the su Amar Vithaldas Gandhi 5 A No. 3107/MUM/2025 essee relates to s 2(22)(e) of the qua the issue in holding 36.07% sessee was also during the year new residential ssessee received cheduled banks rrus Finsec Pvt. Office observed l shareholder of any, the loan of ompany namely ated as deemed he hands of the d profit of the was sanctioned ee benefit, and ee and not of a e was however said amount of of the assessee. ubmissions, but the learned CIT(A) lik the addition. 7. We have heard Before us, the asse submissions purport unsigned ‘loan policy acknowledgements o approving such a sc 2013. In the said s company had floated also unsigned. The Paper Book page 55 t A. Purpose: The purpose of this conditions for disbur B. Eligibility: 1. All employees, i facility from compan The employees sho interrupted service. 3. An employee wh another loan, during lapse of three month 4. This is a welfare matter of right. ITA kewise found no merit in the p the rival submissions and peru essee placed reliance on unsi tedly filed before the CIT(A), as y’ (PB 55–57). The assessee fa of filing or minutes of board/ge cheme, as required under the submissions, the assessee ha d a loan policy for its employee relevant copy of the loan poli to 57 is reproduced as under: Loan Policy s policy is to lay down standards and rsement of loans to the eligible staff of Tau irrespective of grades are eligible for a ny. ould have completed minimum five y ho has already availed this facility can g the tenure of his existing loan and furth hs from e activity and hence loan cannot be dem Amar Vithaldas Gandhi 6 A No. 3107/MUM/2025 plea and upheld used the record. igned copies of s well as on an ailed to produce eneral meetings Companies Act, as claimed that s. This policy is icy available on d terms and urus Group. availing this years of un- not avail for her before the manded as a 5. If a loan applicati loan only after comp rejection of his earlie While recommendin ensure that sufficien the money from the e C. Types of Loans: There are two typ employees: 1. Interest free loan: completed less than a. Such type of loans month salary to be r b. Short term loans availed, provided the 2. Loan with interest a. Such type of loan in the name of the em b. Loan to be repaid c. The total loan am company) of the per be decided by Man D. Monetary Limits The loan amount in the running financia However the total sa time should not exc 2014. If the number of ap sanctioned after tak person. E. Rate of Interest: ITA ion is rejected, the employee can again a pletion of a period of three months from er application. ng the loan, the Head of the Departm nt safeguards have been provided for the employee and/or his sureties. pes of loans that the company may : (Short term loans/ advances) (Employee 05 years of service are also eligible) s will be in the form of advance against s recovered in that month salary itself. upto an amount equal to six months' sa e repayment is made in a period of 12 mo t: (Long term loans and advances). ns will basically be given for buying a ho mployee. within a period of maximum twenty year mount cannot exceed ten times of the C riod, in which the application is made/sa nagement). s: any case should not exceed ten times of l year) of the employee. anction limit of all outstanding loans at ceed 15% of the Group's Networth as o pplications exceed the prescribed limit, l king into consideration the need and ur : Amar Vithaldas Gandhi 7 A No. 3107/MUM/2025 apply for the m the date of ments should e recovery of grant to its es who have salary ie one alary can be onths. ouse property rs. CTC (Cost to anctioned (to f the CTC (of any point of n March 31, loans will be rgency of the The interest bearing Gsec bond yield as annum on monthly instalments as per th at the time of disbur as on April 01, every For high value loans the year the loan is principal repayment Note: Please note tha the loan will be calc year and TDS on sal F. Repayment and 1. The EMI (Equated monthly basis. 2. The HR should en his EMI doesn't exce 3. Principal repaym individual at any p times. The mode of r 4. If the office assist credit of their accoun loans. 5. In case the emplo due to any reason, h of the loan against dues. 6. The company wi gratuity or any other G. Procedure for Ap 1. An employee has 2. The applicant has sureties for him (Th their name as on the ITA g loans will be given at a minimum rate on April 02, 2014 ie 8.96% plus 50 bas reducing balance basis, to be recovered he loan repayment schedule provided to t rsement of the loan. The 10 year Gsec rate y year. s ie above 50 lacs, only interest is to be s disbursed and the immediate followin to begin from the next following financial at in case of any type of loan, the perqu culated on the basis of the rate declared b lary will be deducted accordingly. Recovery of Loan: d monthly instalment) will deducted from t nsure that the total liability of the individ eed 50% of his monthly salary. ment in excess of the EMI can be m point of time during the year but not ex repayment will only be in cheque or a Dem tants avail the benefit of encashing their nt, it would be first adjusted against their oyee resigns or ceases to be in service of he/she will have to liquidate the outstan his name before full and final settlemen ll have the right to adjust the loan amo r dues payable to the employee. pplying: to apply in the format as given in Annexu s to provide names of two employees wh he sureties should not have any loan ou e date of application of the loan). Amar Vithaldas Gandhi 8 A No. 3107/MUM/2025 e of 10 year sis point per d in monthly the employee e to be taken recovered in ng year. The l year isite value of by SBI every the salary on dual towards made by the xceeding two mand Draft. leaves to the r outstanding the company nding amount nt of his/her ount against ure I below. ho will act as utstanding in 3. The application af the HR department w 4. The loan will be d procedural time take H. Other terms: 1. The loans already continue on the sam their disbursement. H apply. 2. Foreclosure of the 7.1 The assessee ha body required under which reads as under (2) A company may book debt, or give with any loan tak company is interes (a) a special re Provided relevant ge loans give purpose for be utilised any other r (b) the loans a business a Explanation.—For person in whom an (a) any privat member; (b) any body twenty-five controlled together; or ITA fter getting approved from the HOD has t which will present it to the Board for final disbursed only after sanction from the Bo en will be minimum 15 working days. y sanctioned till the effective date of this me terms and conditions as sanctioned a However, the recovery standards of this p loans will not attract any charges.” as not filed any minutes of mee the provisions of the Company r: y advance any loan including any loa e any guarantee or provide any secu ken by any person in whom any of sted, subject to the condition that— esolution is passed by the company in that the explanatory statement to eneral meeting shall disclose the ful en, or guarantee given or security r which the loan or guarantee or secu by the recipient of the loan or guaran relevant fact; and are utilised by the borrowing compa activities. the purposes of this sub-section, th ny of the director of the company is int te company of which any such direc corporate at a general meeting of w e per cent of the total voting power m by any such director, or by two or m r Amar Vithaldas Gandhi 9 A No. 3107/MUM/2025 to be given to l approval. oard and the s policy, will at the time of policy would eting of General y Law Act, 2013, an represented by a urity in connection the director of the n general meeting: the notice for the l particulars of the provided and the urity is proposed to ntee or security and any for its principal he expression "any terested" means— ctor is a director or which not less than may be exercised or more such directors,
(c) any body manager, directions o of the lendi
7.2 Even otherwise eligibility. The asse
01.01.2015, had no reliance on the so-cal
7.3 The assessee fu
[338 ITR 538 (Cal) advances made in co fall within s.2(22)(e).
failed to demonstrat
His services as Direc perquisites, and com
7.4 Reliance on CIT and the coordinate b
6168/Mum/2017
f misconceived. Those was a substantial pa ordinary course of bu show that money le business of Taurrus have been crafted an himself, who was the ITA corporate, the Board of directors, m whereof is accustomed to act in a or instructions of the Board, or of any ing company.
e, the policy mandates five ye ssee, appointed Managing Di ot completed the prescribed lled policy is misplaced.
urther relied on Pradip Kumar
], where the Hon’ble High C onsideration of a benefit to the c
However, in the present case, t te any corresponding benefit to ctor were already compensated mission, details of which are on T v. Jayant H. Modi [232 Taxm ench ruling in Ramesh Kumar P for assessment year
2013
e authorities applied where len art of business, or the transac usiness. Here, no material has b ending constituted a substant
Finsec Pvt. Ltd. Rather, the sch nd implemented for the benefit e first and principal beneficiary
Amar Vithaldas Gandhi
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A No. 3107/MUM/2025
managing director or accordance with the director or directors, ears’ service for irector only on tenure. Thus,
Malhotra v. CIT
Court held that company do not he assessee has o the company.
through salary, n record.
mann 737 (Bom)]
Pabbi in ITA No.
3-14
is also nding of money ction was in the been adduced to tial part of the heme appears to of the assessee
. In the instant case also this is n
Counsel for the asse loan to one more em this was a loan in the for maintaining emp these arguments of th this scheme has been Director of the asses this was not a policy the assessee is the fir taken undue advant sanctioned loan to hi than 10% satisfy all t
The exception to def any advance or loa business where lendi the company. But in whether the lending the company and th assessee.
7.5 The CBDT Circ that genuine trade a transactions would f loan cannot be so c
ITA not a normal business transa essee submitted that the compa mployee other than the assesse e normal course of the business ployee relationship. We do no he Ld. Counsel for the assessee.
n floated by the assessee. He wa ssee company for facilitating lo y which was in existence for ea rst beneficiary of such policy. T tage of his position of managin imself. The assessee being shar the conditions laid down u/s 2(2
finition of said deemed dividen an by a company in ordinary ing of money is substantial par the case of assessee has failed of the money is substantial par herefore, said exception does n cular No. 19/2017 dated 12.0
advances in the ordinary course fall outside the ambit of s.2(22) characterised; it was neither i
Amar Vithaldas Gandhi
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A No. 3107/MUM/2025
action. The Ld.
any had granted ee and therefore s of the assessee t subscribes to . In our opinion, as the Managing oans to himself, arlier years and The assessee has ng director and reholder of more
22)(e) of the Act.
nd provides that y course of its rt of business of d to substantiate rt of business of not apply to the 6.2017 clarifies e of commercial
(e). The present in the ordinary course of business n a misuse of authority personal benefit.Thu deemed dividend u/s appeal of the assesse
8. Ground No. 2 p claimed by the asse declared under the h had disclosed consu from three concerns o
Sr. No.
1. M/s. Tau
2. M/s. Tau
3. M/s. Tau
P/Ltd.
1 The assessee s functioning of debt services for trading i he received consult deduction of various ITA nor a trade advance. On the con y by the Managing Director to s us, this loans squarely falls in s 2(22)(e) of the Act. The groun ee is accordingly dismissed. pertains to the disallowance of essee as expenditure against c head ‘Income from Other Source ultancy receipts aggregating to of the Taurrus Group as under: Name of the concern A urrus Finsec. P. Ltd. 5,05 urrus Corps P. Ltd. 9,00 urus Treasury Management Services 12,0 Total 26, submitted that he was well fa market and therefore, he pro n debt market to those enterpr tancy services.The assessee c s expenses, including interest Amar Vithaldas Gandhi 12 A No. 3107/MUM/2025 ntrary, it reflects secure funds for nto definition of nd No. 1 of the Rs.16,87,357/- consultancy fee es’. The assessee Rs.26,05,000/-
Amount
5,000
0,000
00,000
05,000
amiliar with the ovided advisory rises from which claimed claimed on loan, petrol, electricity, society against above consul
Sr.No. Particulars
1. Electricity expe
2. Petrol Expense
3. Interest on loa
4. Society Mainte
5. Telephone Exp
6. Bank Charges
Total Rs.
8.2 The Assessing assessee had failed t claimed and the earn the interest expend unconnected with th expenses such as pe also not shown to h consultancy receipts associated entities. T same reasoning.
8.3 Before us also evidence to demons incurred wholly an consultancy income.
section 57 of the Act
ITA maintenance, telephone and ltancy income as under:
Amount Rs.
enses es n taken for business enance penses
Officer, on examination, fo o establish any nexus between ning of the consultancy income diture of Rs.12,64,043/- wa he advisory services rendered, etrol, electricity, and society ma have proximate connection with s, which were in any case
The Ld. CIT(A) affirmed the disa o, the assessee has not plac strate that the impugned ex nd exclusively for the purpo
In the absence of such nexus, d cannot be allowed.
Amar Vithaldas Gandhi
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A No. 3107/MUM/2025
bank charges
56,450
2,58,053
12,64,043
85,488
11,800
11,522
16,87,356
ound that the the expenditure e. In particular, as held to be while the other aintenance were h the earning of sourced from allowance on the ced any cogent xpenditure was ose of earning deduction under 8.4 Accordingly, we authorities and uph assessee is according
9. In the result, th
Order pronoun (SANDEEP SING
JUDICIAL M
Mumbai;
Dated: 28/08/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
////
ITA e find no infirmity in the orde old the same. The ground No.
gly dismissed.
he appeal of the assessee is dism ced in the open Court on 28/0
GH KARHAIL)
(OM PRAK
MEMBER
ACCOUNTA ded to :
BY ORDER
(Assistant Re
ITAT, Mu
Amar Vithaldas Gandhi
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A No. 3107/MUM/2025
ers of the lower
. 2 of appeal of missed.
08/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai