Unsecured loans and deemed dividend additions deleted under sections 153A and 2(22)(e) without incriminating material or shareholding proof

ITAT Delhi allowed the assessee's appeal on multiple grounds. Additions under section 153A regarding unsecured loans were deleted as they were not based on incriminating material found during search, following SC precedent in PCIT vs Abhisar Buildwell. Deemed dividend addition under section 2(22)(e) was deleted since the assessee was not a registered shareholder in the lending company, relying on SC decision in Madhur Housing and Delhi HC ruling in Ankitech. The advance payment addition without TDS was also deleted as the AO made mechanical additions without examining the nature of payments.

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Issues involved:
The judgment involves appeals by the Revenue against orders of the ld. CIT (Appeals) for assessment years 2013-14, 2014-15, and 2015-16 respectively.

ITA No.1333/Del/2021:
The appeal for Assessment Year 2013-14 involved additions made on account of unsecured loan and expenses without incriminating material found during the search. The Ld. CIT(A) deleted the additions. The ITAT held that the additions made without incriminating material are liable to be deleted, following the decision of the Hon'ble Supreme Court. The appeal of the Revenue was dismissed, and the ground raised by the assessee under Rule 27 of the ITAT Rules was allowed.

ITA No.1334/Del/2021:
In this case, additions were made for unsecured loan, deemed dividend, and estimated disallowance of expenses without any seized material. The Ld. CIT(A) deleted the additions. The ITAT upheld the deletion of the additions made without incriminating material. Regarding the deemed dividend addition, it was found that the nature of the advance was a trade advance, and therefore the provisions of section 2(22)(e) of the Act could not be invoked. The appeal of the Revenue was dismissed.

ITA No.1335/Del/2021:
The additions made for unexplained unsecured loan, employee benefits, and advance payments without TDS were deleted by the Ld. CIT(A) on merits. The ITAT found that these additions were not based on incriminating material found during the search and were directed to be deleted. The addition of advance payment without TDS was also deleted by the Ld. CIT(A) after careful analysis. The appeal of the Revenue was dismissed.

The judgment pronounced on 08th December, 2023, dismissed all three appeals filed by the Revenue.

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