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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
ORDER
PER AMIT SHUKLA, JUDICIAL MEMBER :
The aforesaid appeal has been filed by the revenue against impugned order dated 22.07.2014, passed by CIT (Appeals)-25, New Delhi for the quantum of assessment passed u/s 153A / 144 for the assessment year 2010-11.
In grounds of appeal
revenue has raised following grounds -:
1. The Ld. CIT(A) has erred in law and on facts of the case in deleting Rs. 72,18,132/- made on account of deemed dividend u/s 2(22)(e) of the I.T. Act.
2. The Ld. CIT(A) has erred in law and on facts of the case in deleting the addition of Rs. 2,46,80,000/- out of addition of Rs. 2,63,18,548/- made on account-of unexplained entries appearing in bank account.
The Ld. Commissioner of Income Tax (Appeals) has also erred in law and on facts of the case in admitting the additional/fresh evidences under Rule 46A.
(a) The order of the Ld. CIT(Appeals) is erroneous and not tenable in law and on fact.
(b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
3. At the outset, it has been submitted by both the parties that similar issue had come up before the Tribunal in the assessment year 2005-06 to 2011-12, wherein the matter has been restored back to the file of the AO for fresh adjudication.
4. The facts in brief are that during the year under consideration the assessee has obtained a loan of Rs. 2,36,80,000/- from M/s. AIMs Promoters Pvt. Ltd. in which assessee had 15.89% shareholding. Further, M/s. AIMS Promoters was having accumulated profit of Rs.72,18,132/- and Rs. 22,82,229/- as on 31.03.2010. The AO after invoking deeming provision of section 2(22)(e) has made the addition of Rs. 72,18,132/-. Apart from that, AO has also made addition on account of credit entries appearing in a bank account for sums aggregating to Rs. 2,63,18,548/- on the ground that assessee could not furnish any explanation. The Ld. CIT(A) in so far as deemed dividend is concerned after considering the entire facts and judicial principles found that the amount received by the assessee was in the nature of advance in the normal course of business on the basis of facts and material on records. He has given following as finding of fact:-
“It was noticed that the appellant sold land at village Aya Nagar, Tehsil Hauz Khas, Delhi to M/s Aims Promoters Private Limited for sale consideration of Rs 52,50,000/- and Rs 52,05,000/- aggregating to Rs l,04,55,000/-.The appellant showed capital gain on the said land in her return of income in the assessment year 2010 - 11 and 2011 - 12 respectively. Such purchase of land was shown by M/s Aims Promoters Private Limited aggregating to Rs 1,04,55,000/- in its fixed asset schedule of the audited financial statements for the financial year ended on 31/03/2011. (Pages 4 to 6 and 26 to 62 of the Paper book) Having regard to the aforesaid facts it is held by me that the advance received by the appellant from M/s Aims Promoters Private Limited was in the normal course of business of the said company as the said company was engaged in the business of real estate. For the sake of clarity the section 2(22)(e) is reproduced :- “2(22)" dividend" includes— (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) [made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits; ''On perusal of deeming provision of section 2(22)(e) of the Income tax Act, 1961, it is quite evident that the provisions of said section cannot be invoked when the trade advance is given by a company to its shareholder even though the shareholder may be holding substantial shares of the said company. The AO also fell in error in overlooking the fact that the appellant company had taken the money from M/s AIMS Promoters P Ltd in the normal course of business.”
After relying upon various decisions Ld. CIT(A) held that the addition on account of deemed dividend cannot be made on the facts of the present case.
Regarding various credit entries appearing in the bank account, he held that assessee had explained the source by stating that she has taken loan from various parties and also advance received from M/s. AIMS Promotors Pvt. Ltd. After calling for the remand report he has deleted the addition. For the sake of ready reference, the explanation given by assessee are as under :-
Date Nature of Amount Source / deposit Deposited explanation inRs. 02.07.2009 RTGS 10,00,000 Loan taken Page 11 of from Nagar Letter 250(4) Dairy Private
Limited 22.07.2009 RTGS 6,38,548 Agricultural 4,5,6 Return Income as & per Return Computation of Income of Income and Page 25 Receipt 31.07.2009 Cheque 6,00,000 Loan taken Page 11 of from S P Letter 250(4) Flour Mills Private Limited, C/o Baba ram Goel 31.07.2009 Cheque 4,00,000 Loan taken Page 11 of from S P Letter 250(4) Flour Mills Private Limited, C/o Baba ram Goel 28.08.2009 Fund 1,50,00,000 Advance Page 15 Transfer received Ledger and from AIMS 52 Balance Promoters Sheet Aims Private Promoter Limited returned on 10.09.2009 19.12.2009 Fund 68,00,000 Advance Page 15 Transfer received Ledger and from AIMS 52 Balance Promoters Sheet Aims Private Promoter Limited 19.12.2009 Fund 18,00,000 Advance Page 15 Transfer received Ledger and from AIMS 52 Balance Promoters Sheet Aims Private Promoter
Limited 30.03.2010 Fund 80,000 Advance Page 15 Transfer received Ledger and from AIMS 52 Balance Promoters Sheet Aims Private Promoter Limited Total 2,63,18,548
6. In the remand report, AO instead of examining the same has reiterated the findings given in the assessment order. The Ld. CIT(A) based on the evidences explanation has deleted credit amount of Rs. 2,36,80,000/-.
In so far as the issue of credit entries is concerned, we find that matter has been restored back to the file of the AO by the Tribunal in the earlier assessment year as well as for the assessment year 2011-12. Accordingly in line with the same direction, we are remanding back the issue to the file of the AO to decide afresh after verifying the evidences filed by the assessee.
Accordingly for this year also you are remanding back this issue to the file of the AO by the same direction.
In so far as issue of deemed dividend is concerned, we find that it is not in dispute at the nature of advance received by the assessee from M/s. AIMS Promoters Pvt. Ltd. was in the normal course of business of the said company which was engaged in business of real estate. The aforesaid finding of the Ld. CIT(A) is based on evidences on record which clearly revealed that the amount received by the assessee was in the nature of credit advance and the commercial transaction and therefore provision of deemed dividend cannot be invoked. Accordingly, the addition of Rs. 72,18,132/- is deleted.
Appeal of the assessee is partly allowed for statistical purpose. Order pronounced in open court on this 1st November, 2019.