Tribunal deems amount from company as dividend under Income-tax Act

The Tribunal upheld the decision to treat the amount received by the assessee from the company as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961. The Tribunal found that the sale agreement was not genuine and was used to disguise a loan as a property sale, leading to the dismissal of the assessee's appeal.

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Issues:
1. Whether the amount received by the assessee from the company should be treated as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961.
2. Whether the sale agreement entered into by the assessee with the company is genuine and supports her claim that the amount received was towards the sale of property.

Analysis:
1. The assessee, a shareholder and Director of a company, received an amount from the company, which the Assessing Officer (A.O.) treated as deemed dividend under section 2(22)(e) of the Act. The A.O. found that the debit balance in the company's books, in the name of the assessee, constituted deemed dividend. The assessee contended that the amount was received for the sale of property and not a loan. The CIT(A) upheld the A.O.'s decision, questioning the genuineness of the sale agreement and the nature of the transaction. The Tribunal agreed with the CIT(A) that the assessee attempted to disguise a loan as a sale advance, supporting the CIT(A) and dismissing the assessee's appeal.

2. The Tribunal analyzed the ledger account and the sale agreement provided by the assessee. It noted discrepancies in the sale agreement, such as being unregistered and dated on stamp paper from two years prior. The Tribunal found that the sale transaction was not completed, and the assessee failed to provide evidence for deferring the sale due to the company's inability to pay. The Tribunal concluded that the sale agreement was an attempt to mask the loan as a property sale, as the assessee continued to benefit from the property without completing the sale. Therefore, the Tribunal upheld the CIT(A)'s decision to treat the amount received as deemed dividend under section 2(22)(e) of the Act.

In summary, the Tribunal affirmed the decision to treat the amount received by the assessee from the company as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961, based on the analysis of the sale agreement and ledger account. The Tribunal found that the sale agreement was not genuine and was used to disguise a loan as a property sale, leading to the dismissal of the assessee's appeal.

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