TaxTMI 
TaxTMI 
2017 (2) TMI 108
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....,23,75,485/- 2.2 Aggrieved by the order of assessment dated 14.03.2013 for A.Y. 2010- 11, the assessee preferred an appeal before the CIT(A)-35, Mumbai challenging the aforesaid additions/disallowances made therein and cited in para 2.1 (supra) at (i) Unexplained expenditure under section 69C of the Act and at (iv) addition on account of deemed dividend under section 2(22)(e) of the Act. The learned CIT(A) disposed off this appeal vide the impugned order, allowing the assessee relief on both the aforesaid issues raised in appeal. 3. Revenue, being aggrieved by the order of the CIT(A)-35, Mumbai dated 01.05.2014 for A.Y. 2010-11, has preferred the instant appeal, raising the following grounds as under challenging both the issues on which the learned CIT(A) allowed relief to the assessee: - "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs. 96,45,645/- made u/s 69C of the Act as unexplained expenditure. 2. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in relying upon judgments of the CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. without appreciating that the facts involve....
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....learned CIT(A) erred in ignoring the fact that addition made by the AO was based on the finding of the investigation carried out by the Sales Tax Department of Government of Maharashtra. The learned D.R. was heard in support of the grounds raised by Revenue and strong reliance was placed by him on the order of the AO on this issue. 4.2 Per contra, the learned A.R. of the assessee submitted that there was no error in the finding of the learned CIT(A) in the impugned order on this issue in deleting the addition under section 69C of the Act in view of following the binding decision of the Hon'ble Bombay High Court in the case of Nikunj Eximp Enterprises Pvt. Ltd. (supra), by which the case of the assessee is squarely covered. It was further contended that the assessee's case was squarely covered by the decision of the Coordinate Bench of the Tribunal, inter alia, the case of Vaman International Pvt. Ltd. in ITA No. 794/Mum/2015 dated 16.12.2016, wherein on similar facts and similar grounds of appeal raised by Revenue, the Coordinate Bench, relying, inter alia, on the decision of the Hon'ble Bombay High Court in the case of Nikunj Eximp Enterprises Pvt. Ltd. (supra) and other ....
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....ee in letter dated 13.03.2013, claimed that the aforesaid purchases are genuine and in this regard submitted copies of purchase invoices, copy of bank statements reflecting payments made to the above parties through banking channels, ledger extracts of some parties, site wise stock register and site wise goods inward register. The AO did not accept the explanations/details put forth by the assessee, brushing these aside, as he was of the view that the documentary evidence put forth was not supported by delivery challans, lorry receipts; that the said 12 parties from whom purchases were allegedly made did not attend in response to notices issued under section 133(6) of the Act; the said parties were not produced by the assessee and placed reliance on the statements, depositions, affidavits made before the Sales Tax Department. In that view of the matter, the AO treated the purchases from the aforelisted 12 parties (supra) amounting to Rs. 96,45,645/- as unexplained expenditure under section 69C of the Act in respect of alleged bogus purchases. 4.3.3 On appeal, the learned CIT(A), inter alia, placing reliance on the decision of the Hon'ble Bombay High Court in the case of Nikunj....
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....sh that the list of allegedly suspicious suppliers on the website of Sales Tax Department was found to be sham, the appeal of the appellant is accepted." 4.3.4 On an appreciation of the material on record, it is evident from the order of assessment that it is primarily on the basis of information/details obtained from the Sales Tax Department, Government of Maharashtra that the AO issued the show cause notice to the assessee to explain the said purchases and issued notices under section 133(6) of the Act to the said 12 parties from whom the said purchases were made, to which there was no response. We find that the AO primarily relying on the information obtained from Sales Tax Department, i.e. statements/affidavits given before them by these parties, held the said purchases amounting to Rs. 96,45,645/- to be bogus. While it may be true that the said parties did not appear before the AO, for whatever reason, the fact remains that the assessee had filed copies of purchase invoices; extracts of stock ledger showing entry/exit of materials, copies of bank statements to evidence that payments for these purchases were made through normal banking channels, etc. to establish genuineness ....
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....s, inter alia, the Hon'ble Bombay High Court in the cases of Nikunj Eximp Enterprises Pvt. Ltd. (supra) and Ashish International (supra) and the decision of the Coordinate Bench in the case of M/s. Vaman International Pvt. Ltd. (ITA No. 794/Mum/2015 dated 16.11.2016). In this factual and legal matrix of the case on this issue, as discussed above, we find no reason for interference in the order of the learned CIT(A) and consequently uphold her order deleting the addition of Rs. 96,45,645/- made under section 69C of the Act as unexplained expenditure in respect of the aforesaid purchases. Consequently, ground 1 to 4 of the Revenue's appeal are dismissed. 5. Grounds 5 & 6 - Deemed dividend under section (2)(22)(e) of the Act 5.1 In these grounds (supra), Revenue assails the impugned order of the learned CIT(A) in deleting the addition of Rs. 1,23,75,485/- as deemed dividend made under section 2(22)(e) of the Act in respect of loans taken by the assessee's proprietary concern and in his personal capacity from M/s. Giriraj Civil Developers Pvt. Ltd. where the assessee is a Director holding more than 10% of equity shareholding. It is contended that in doing so the learned CIT(A) re....
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....d the material available on record. It is undisputed fact that the assessee has offered his own asset valuing more than Rs. 2 crores as a collateral security to the bank so that the loan/credit facilities is available to the company, Giriraj Civil Developers Pvt. Ltd. When the assessee was in dire need for funds and had no assets against which he could have received loan from the bank, he approached the company for a loan. The said company on the basis of its board resolution, advanced loan to the assessee for sum of Rs. 83,60,000, on interest. The said loan has also been repaid back in the subsequent year. Now, these facts, whether it can be held that the provisions of deemed dividend under section 2(22)(e), can be held to be attracted. Under the deeming provisions of sub-clause (e) of section (2(22), a distinction has to be made in the cases, where the loan and advance has been given to shareholder merely because such a person is a beneficial owner of shares and from the cases where loan or advance has been given as the matter of commercial consideration which has been given as the matter of commercial consideration which has benefited the company from such a shareholder i.e., th....