TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 286
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....l income of Rs. 13,25,860/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 ('Act' in short) and subsequently, the case was selected for scrutiny and the assessment was completed u/s 143(3) on total income of Rs. 23,28,860/- apart from the agricultural income declared by the assessee. During the assessment proceedings, the AO made the addition of Rs. 10,00,000/- relating to the advances related to M/s Sri Venkata Sainath through journal entry. Subsequently, Pr.CIT, Rajahmundry has taken up the case for revision and observed that the assessee has reported the capital balance of Rs. 2.38 crores and unsecured loans of Rs. 3 crores in the Balance Sheet from the following persons / companies : a. M/s Kanaka Durga Agro Oils Pvt....
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....3) dated 26.03.2016 is erroneous and prejudicial to the interest of the revenue, accordingly issued show cause notice to the assessee calling for his explanation as to why the order u/s 143(3) of the Act dated 26.03.2016 for the A.Y. 2013-14 should not be revised and the income be recomputed. In response to the notice issued by the Pr.CIT, the assessee has filed the explanation stating that no payment was made to the assessee by Nagahanuman Agro Oils Pvt Ltd., and it has transferred its liabilities i.e. its obligation to parties to the assessee who is shareholder and director of the assessee company. Hence, submitted that the provisions of section 2(22)(e) are not applicable. The Ld.Pr.CIT not being convinced with the explanation of the ass....
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....Agro Oils Pvt. Ltd. was 0.52 crores(opening balance) and even if it is presumed that accumulated profits required to be brought to tax as deemed dividend, only the opening balance required to be assessed to tax, but not the accumulated profits as at the end of the year. The Ld.AR referring to page No.10 of the paper book stated that the assessee has taken over the liability relating to NHN Agro Oils through Naga Hanuman Solvent Oils Ltd., for a sum of Rs. 1.50 lakhs. Similarly referrING to page No.11 of the paper book, the assessee submitted that the assessee has taken over the liability of Rs. 1.00 crore relating to Kanaka Durga Agro Oils Products (P) Ltd., only through journal entry. Referring to page No.15 of the paper book, the assessee....
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....ection 2(22)(e) of the Act. 22) "dividend" includes- (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) 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 com....
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....2(22)(e) of the Act, contemplates actual payment made by the company to the assessee being treated as deemed dividend in computing the income of the assessee. For the sake of clarity and convenience, we extract relevant part of the order of the Hon'ble High Court in page No.7 which reads as under : "This shows that during the relevant previous year (financial year 1996- 97), AMPL had actually lent to the assessee only a sum of Rs. 11,68,135 in two instalments, namely Rs. 6,00,000 on 10th Sept., 1996 and Rs. 5,68,135 on 31stMarch, 1997. The opening balance of Rs. 1,76,39,425 was not advanced by AMPL to the assessee during the relevant previous year and could, therefore, be not treated as the amount of loan or advance received by the assess....