Tribunal allows appeals, rejects additions under Section 2(22)(e) for multiple Assessment Years.

The Tribunal allowed the appeals of the assessees by concluding that the additions made under Section 2(22)(e) for the Assessment Years 2009-10 to 2011-12 were not sustainable due to the absence of incriminating material found during the search. Additionally, for the Assessment Year 2012-13, the Tribunal deleted the addition as the payment in question was not made with the intention to avoid Dividend Distribution Tax.

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Issues Involved:
1. Validity of assessment under Section 153A r.w.s. 143(3) of the Income Tax Act.
2. Sustainability of addition made under Section 2(22)(e) of the Income Tax Act without any incriminating material found during the search.
3. Assessment of deemed dividend under Section 2(22)(e) for Assessment Year 2012-13.

Issue-wise Detailed Analysis:

1. Validity of Assessment under Section 153A r.w.s. 143(3) of the Income Tax Act:
Ground No.2, regarding the validity of the assessment under Section 153A r.w.s. 143(3) on the grounds of the validity of the search, was dismissed as not pressed by the assessee. Both parties agreed to this dismissal, and thus, no further adjudication on this matter was required.

2. Sustainability of Addition Made Under Section 2(22)(e) Without Any Incriminating Material Found During the Search:
The assessees, Directors of M/s. Brindavan Beverages Pvt. Ltd. (BBPL), challenged the addition of deemed dividend under Section 2(22)(e) made during the assessment under Section 153A. The Tribunal noted that the assessments for the years 2009-10 to 2011-12 were not pending as on the date of the search (18.12.2012). The learned Authorised Representative argued that the additions were not based on any incriminating material found during the search, as the Assessing Officer did not reference any such material or statements recorded during the search. The Tribunal referred to several judicial decisions, including CIT Vs. IBC Knowledge Park Pvt. Ltd., CIT Vs. Lancy Constructions, and CIT Vs. Kabul Chawla, which emphasized that in the absence of incriminating material, no additions could be made to the already assessed income. The Tribunal concluded that the addition towards deemed dividend under Section 2(22)(e) for the Assessment Years 2009-10 to 2011-12 was not sustainable in law and thus liable to be deleted.

3. Assessment of Deemed Dividend Under Section 2(22)(e) for Assessment Year 2012-13:
For the Assessment Year 2012-13, the assessment was pending as on the date of the search, and thus, the regular assessment proceedings stood abated. The Tribunal noted that the payment made by BBPL towards the tax liability of the assessee was treated as deemed dividend under Section 2(22)(e). The assessee argued that the payment was made at the request of her husband, who had a substantial credit balance with BBPL, and thus, it should not be considered a loan or advance under Section 2(22)(e). The Tribunal referred to the decision of the Hon'ble jurisdictional High Court in Bagmane Construction Vs. CIT, which stated that the provisions of Section 2(22)(e) are attracted only when the intention is to avoid payment of Dividend Distribution Tax. The Tribunal found that the payment in question did not affect the reserves and surplus of BBPL and was not made with the intention to avoid DDT. Therefore, the addition made under Section 2(22)(e) for the Assessment Year 2012-13 was not sustainable and was deleted.

Conclusion:
The Tribunal concluded that the additions made under Section 2(22)(e) for the Assessment Years 2009-10 to 2011-12 were not sustainable due to the absence of any incriminating material found during the search. For the Assessment Year 2012-13, the addition was also deleted as the payment was not made with the intention to avoid DDT. Thus, the appeals of the assessees were allowed.

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