TaxTMI 
TaxTMI 
2015 (6) TMI 838
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.... the assessee, in response to which the assessee vide letter dt.15.7.2011 requested that the return of income filed under Section 139 of the Act on 13.11.2007 be treated as filed in response to the aforesaid notice issued under Section 153A of the Act. The assessment was completed under Section 143(3) r.w.s. 153A of the Act vide order dt.22.11.2011 wherein the income of the assessee was determined at Rs. 7,29,72,335 as against returned income of Rs. 1,82,85,288 in view of, inter alia, an addition of Rs. 5,21,69,348 under Section 2(22)(c) of the Act, which is the subject matter of this appeal. 2.2 Aggrieved by the order of assessment for Assessment Year 2007-08 dt.22.11.2011, the assessee preferred an appeal before the CIT (Appeals) - VI, Bangalore. The learned CIT(A) dismissed the assessee's appeal vide the impugned order dt.10.9.2013. 3. Aggrieved by the order of the CIT (Appeals) - VI, Bangalore dt.10.9.2013 for Assessment Year 2007-08, the assessee is in appeal before this Tribunal raising the following grounds :- "1. The order of the learned CIT (Appeals) is bad in law and against the facts of the case. 2. The learned CIT (Appeals) failed to appreciate the fact that the....
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.... placed reliance on the decision of the Special Bench of the ITAT, Mumbai in the case of All Cargo Global Logistics Ltd. V DCIT (2012) 23 taxmann.com 103 (Mum) (SB). The learned Departmental Representative supported the order of the learned CIT(A) on this issue. 5.2 We have heard the rival contentions of both the learned Departmental Representative of the assessee and the learned Departmental Representative for revenue and perused and carefully considered the material on record, including the judicial decision placed reliance upon. Both the ld. A.R. and the ld. D.R. fairly agreed that this issue has been considered and decided by the Hon'ble Karnataka High Court in the case of Canara Housing Development Co. reported in 49 taxmann.com 98 and would cover this issue against the assessee. In this judgment, their Lordships have held that once search proceedings have been initiated, the assessing authority can take note of the income declared in the earlier return, any undisclosed income found / unearthed in the course of search and also any other income which is not disclosed in the earlier return of income or which is not unearthed in the course of search, in order to find out wha....
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....racted in para 4.6 of the assessment order. From a perusal of para 4.5 of the assessment order, it would appear that the assessee had made submissions that the payments / advances are in the nature of trade advances. We, however, also find that even though the learned CIT(A) has held that the assessee has no right to appeal, the learned CIT(A) has adjudicated on the substantive addition made under Section 2(22)(e) of the Act. That being so, this ground of appeal is only academic in nature and therefore, in our opinion, does not require any specific adjudication at this juncture. Consequently, Ground No.3 is treated as dismissed for statistical purposes. 7. Ground No.4 (4.1 to 4.5) : Addition towards Deemed Dividend. 7.1 In this ground, the assessee has assailed the addition made towards deemed dividend under Section 2(22)(e) of the Act, on the grounds that inter-corporate deposits are not covered under Section 2(22)(e) of the Act and being trade advances, will not fall within the purview of deemed dividend. The assessee has also appealed against the rejection of additional evidence presented by the assessee before the learned CIT(A) and also that assessee was allowed very little ....
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....emed dividend under Section 2(22)(e) of the Act. 7.4.1 We have heard the rival contentions and perused and carefully considered the material on record. We find from an appreciation of the impugned orders of the authorities below that both the Assessing Officer and the learned CIT(A) have not examined the issue in its totality and on merits before rendering a finding that the provisions of section 2(22)(e) of the Act are applicable to the case on hand. The entire emphasis in the impugned orders has been laid on the voluntary offer made by the assessee before the Assessing Officer during assessment proceedings, even though the assessee had indeed submitted that the advances will not fall within the ambit of deemed dividend. There is no doubt that the voluntary offer made by the assessee is a relevant consideration. However, the duty of the Assessing Officer is to assess the time and correct income and therefore it is imperative for the Assessing Officer to corroborate the additions with material evidence. This is particularly so in respect of deemed dividend, which is not a real income earned but a deemed income, which is invoked on the satisfaction of certain conditions specified i....