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2017 (9) TMI 1098
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.... 2008-09 and 2009-10 respectively 2. At the outset it may be stated that during the course of hearing before us the Ld. counsel for the assessee sought permission to withdraw the assessee's appeal filed in ITA Nos.52 & 54/Chd/2014. In view of the same, the said two appeals are treated as dismissed. 3. We shall now be first taking up Revenue's appeal in ITA No.110/Chd/2014 ITA No.110/Chd/2014(Revenue's appeal): 4. Ground No.(i) raised by the Revenue reads as under: "(i) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 209140/- made by the Assessing Officer on account of deemed income u/s 2(22)(e) of the IT. Act, 1961?" 5. In the above ground the Revenue has challenged deletion of addition made on account of deemed dividend under section 2(22)(e) amounting to Rs. 2,09,140/-. 6. Brief facts relevant to the issue are that during assessment proceedings the Assessing Officer found that the assessee was a shareholder in a number of companies in which he had substantial interest and these companies had given loans to the assessee as well as to companies in which the assessee had substantial interest. ....
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....evi Member Dayal Hi- tech Education 395000 158000 shares society Roshan Lal Jindal = 1200 shares 6061/33311 Roshan Lal Hiramoti 20% shares = Jindal = 6061 agro 18.20% shares, products Heeramoti Spicy Pvt. Ltd. (Accumulated Profits of 3222755) Urmil Jindal = 5140 shares 47000 47000 6061/33311 shares = 18.20% Roshan Lal Jindal = 6061 shares, Swami Devi Dayal Hitech Member 87000 51140 Ashok Jindal Education = 4250 shares society Total 2,96,136 7. On being confronted with the same, the assessee submitted that the sums were advanced out of commercial or business expediency and there was no intention of providing loans or advances. The assessee also submitted that the advances given to Swami Devi Dayal Hi-tech Society in the books of Heera Moti Health Care Prod....
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....he Ld.CIT(Appeals)'s order on this account be, therefore, upheld. 11. We have heard the contentions of both the parties. The issue in hand pertains to addition made on account of deemed dividend as per provisions of section 2(22)(e) of the Act. Being a deeming provision, bringing to tax sums which are not actually in the nature of income but are only deemed to be so, it is to be strictly interpreted. Section 2(22)(e) of the Act reads as under: "2(22)(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) 5 made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern, in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for- the individual....
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....earch only establish that the assessee has derived benefit from the said societies and not "substantial" benefit, as is the requirement of the section. 13. In view of the above, we uphold the order of the Ld.CIT(Appeals) deleting the addition made on account of deemed dividend amounting to Rs. 2,09,140/- on account of loans and advances given to societies registered u/s 12A of the Act. Ground No.1 raised by the Revenue is, therefore, dismissed. 14. Ground Nos.2 and 3 were taken together by the Ld. counsel for assessee while putting forth the contentions of the assessee against the grounds raised by the Revenue and common arguments with respect to the same were advanced. We shall, therefore, be dealing with both the grounds together. Ground Nos.2 and 3 read as under: "(ii) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 3,75,000/- made by the Assessing Officer on account of credit amount in the bank account of the assessee, on the basis of additional evidence of dateless cash flow statement admitted without opportunity to the AO?" "(iii) Whether on the facts and in the circumstances of the cas....
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....urce of the payment as being DD purchased from the regular Bank Account of the assessee and cash available with the assessee as evidenced from the cash flow statement submitted. The assessee further stated that the said deal had not matured and ultimately cash received in advance had been returned back in the same year. The assessee submitted that both the receipts and refund of the advance was incorporated in the cash flow statement. The Ld.CIT(Appeals) accepted the contentions of the assessee and deleted the addition made of Rs. 30 lacs. 19. Before us the Ld. DR urged that the Ld.CIT(Appeals) had deleted both the above additions on the basis of additional evidences without affording an opportunity to the Assessing Officer and in contravention of the provisions of Rule 46 of the Income Tax Rules. The Ld. DR urged that the issue be restored back to the Assessing Officer to examine additional evidences produced by the assessee. 20. The Ld. counsel for assessee did not object to the same. 21. Undeniably both the above additions have been deleted by the CIT(A) on the basis of the cash flow statement which was never produced before the AO and was furnished for the first time b....
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....ff." 24. Ground Nos.1, 2 and 3 raised by the assessee were not pressed before us and are, therefore, treated as dismissed. Ground No.6 being general in nature needs no adjudication. 25. Ground Nos.4 and 5 are being taken up together for adjudication since the pleading of the Ld. counsel for assessee vis-à-vis both the grounds was identical. 26. In ground No.4 the assessee has challenged the confirmation of addition of Rs. 6 lacs in respect of capital introduced by the assessee in M/s Heera Moti Agro Products. 27. Brief facts relevant to the issue are that during the course of assessment proceedings it was found that the assessee had introduced Rs..6 lacs as fresh capital in the firm of M/s Heera Moti Agro Products. The assessee tried to explain the source of the same as Rs. 1.5 lacs received from LIC, Rs. 2.15 lacs out of withdrawals made from a firm M/s Heera Moti Agro Products and the balance Rs. 2.35 lacs out of cash flow statement. The Assessing Officer not being satisfied with the submissions of the assessee made the addition of the entire amount of Rs. 6 lacs holding that neither cash flow statement nor any documentary evidence was filed in support of the c....
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....ably, during assessment proceedings the assessee had not been able to produce its cash flow statement to explain various transactions which were noticed by the Assessing Officer during the course of search which was undertaken at the assessee premises. The cash flow statement was subsequently submitted to the Ld.CIT(Appeals) during the course of hearing before him and on the basis of which the Ld.CIT(Appeals) upheld certain additions/disallowances and also deleted certain additions/disallowances. Further it is also a fact that the Ld.CIT(Appeals) did not confront the said cash flow statement to the Assessing Officer before passing his appellate order. Since in the Revenue's appeal in ITA No.110/Chd/2014 we have accepted the pleadings of the Ld. DR to restore the additions deleted by the Ld.CIT(Appeals) to the Assessing Officer for verification of the cash flow statement, we accept the pleadings of the Ld. counsel for assessee in the present appeal and restore the issues raised in the above two grounds also to the Assessing Officer to examine the same afresh in the light of the additional evidences filed by the assessee and decide the same thereafter in accordance with law. Needless....