2013 (7) TMI 1203

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....000/- made by the Assessing Officer u/s.2(22)(e) of the IT Act. 2. The assessee is individual and partner in various concerns and received salary from M/s. Laxmi diamond Pvt. Ltd. During the year under consideration, the assessee had also derived income from House Property, income from capital gain and income from other source. During the course of assessment proceeding, on verification of balance sheet of the assessee for A.Y. 08-09, it was noticed that the assessee had shown: a) investment of Rs.25,26,00,000/- in shares of Laxmi Diamond Pvt. Ltd. and b) deposit of Rs.13,27,00,000/- in Laxmi Diamond Pvt. Ltd. Further on perusal of the balance-sheet of A.Y. 2007-08 it was noticed that in A.Y. 2007-08 the assessee had....

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....n date of loan and loan had not been advanced in the ordinary course of its business. The A.O. after analyzing all the facts and various case laws, he held that the loan advance to the tune of Rs.13.27 crore is a deemed dividend u/s.2(22)(e) of the IT Act. Thus, he made addition of Rs.13,27,00,000/-. 3. Being aggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who has allowed the appeal. The operative portion of the order is as under: "6. I have considered the assessment order as well as submissions of the appellant. I do not agree with the action of the A.O. so far as adding the amount on account of deemed income u/s 2(22)(e) is concerned. The appellant submission is self explanatory and doe....

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....w of the above facts and position of law the addition made on this account is hereby deleted and this ground of appeal is allowed." 4. Now, the Revenue is before us. Ld. CIT D.R. vehemently relied upon the order of the A.O. and argued that the assessee has maintained various accounts of the company and as on 31.03.2008, he had debited balance in the company's book at Rs. 13,27,00,000/-. The condition required for disallowance u/s. 2(22)(e) of the IT Act to satisfy in the case of assessee for making addition u/s. 2(22)(e) of the IT Act. At the outset, ld. Counsel for the appellant vehemently relied upon the order of the CIT(A) and argued that after merging all the accounts, the assessee have zero balance at the end of the year. He further....