2023 (2) TMI 521

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.....12.2021 and the notice was issued through the learned DR. However, on 29.12.2021, the Bench did not function for which the case was adjourned to 17.2.2022. However, on 17.2.2022, none appeared for which the case was adjourned to 25.5.2022 and notice was issued through the Revenue. Again on 25.5.2022, none appeared for which notice was issued to the assessee with regard to the date of hearing on 21.7.2022. Again on 21.7.2022 none appeared for which the case was adjourned to 12.9.2022. On 12.9.2022 none appeared and the case was adjourned to 11.10.2022. On 11.10.2022 one Ms. Ankita Mehta filed her power of attorney and the case was adjourned to 17.11.2022 at the request of the Counsel for the assessee. However, on 17.11.2022 none appeared for which the case was adjourned to 22.12.2022. Since the Bench did not function on 22.12.2022, the case was adjourned to 9.2.2023. However, today when the name of the assessee was called, there was no one present on behalf of the assessee. We therefore, deem it proper to dispose off these appeals on the basis of material available on record and after hearing the learned DR. 3. First we take up ITA No.747/Hyd/2020 for the A.Y 2011-12. 4. Fact....

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....g of peak debit balance for deemed dividend is not found to be acceptable, for the following reasons: 1. The opening balance is not considered for the working of the deemed dividend as the credit balance at the end of the F.Y 2009-10 was offset against the debit balance of Rs. 5,23,25, 152/- towards a partnership firm (M/s. Lakshmi Earth Movers) in which .the assessee Sri V Prabhakar Reddy is a major partner. Accordingly, the difference was brought to tax in the A.Y 2010-1l under deemed dividend. This aspect has already been covered in the assessment order for A.Y 2009-10 passed in December, 2017 and the assessee has accepted the same and not gone on any further appeal on the same. So the credit balance in the individual account available at the end of the F.Y 2009-10 cannot be given again while working the deemed dividend for the F.Y 2010-11. 2. Some of the advances given that were accounted in the individual ledger of the assessee in the seized books are explained by A.R. as being given to third parties like M/s Hamsa Minerals and M/s B V Reddy Enterprises. The plea of the A.R. in this regard has been considered but found to be unacceptable. a) The entr....

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....the assessee". Since, section 2(22)(e) includes in its gambit "..any payment by any such company on behalf, or for the individual benefit, of any such shareholder,. any such payment to the above parties has to be considered as a camouflaged transaction which has to brought within the gambit of the deeming provision of section 2(22)(e). Accordingly, the plea of the assessee is not found to be acceptable. 3. As regards the advances for the purchase of lands at kanaparthypadu village, the plea of the A.R. at point 4 above has been examined. It is noted that the A.R. has stated that the advances were given for purchase of land in the name of company. But subsequently the company decided to drop the deal and the assessee came forth to register the land in his name and therefore, the same should be considered as business transaction of the company and not considered for the purpose of deemed dividend. The plea of the A.R. is not found to be acceptable, for the reasons given below: a) As stated in preceding paragraph, that the presumption u/s 292C of Income-tax Act, 1961 is against the assessee as the said transaction is emanating from the ledger account from the seized ....

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....) as 'deemed dividend'. The AQO himself has not treated the accounts contained in Pen Drive as final and conclusive. The action of AO in excluding certain entries (both credits and debits) shows that the entries contained in Pen Drive are only tentative and roughly made calculation. The question arises as to the correctness of the items which are included by the AO. Various issues raised by the appellant which have bearing on calculation of final amount taxable as deemed dividend are as under: a The AO has taken opening balance as NIL and proceeded to complete The closing balance as on 31.03.2010 is the peak debit'. Rs.3,94,91,836/- which becomes opening balance as on 01.04.2010. For A.Y-2010-11, deemed dividend was arrived at after setting off the above amount against payment of Rs.5,23,25,152/- made to M/s. Lakshmi Earth Movers(LEM) and addition of Rs.1,28,33,318/- was made. The above was brought to tax on deeming basis which would not change the balance in the ledger account of the appellant with the company. The setting off of the balance against the payment made to M/s.LEM is for the limited purpose and it would not change the appellant's account copy in compan....

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....rises and Rs.1,00,00,000/- in respect of M/s. Hansa Minerals are to be excluded. The total of above comes to Rs.6,99,91,836/- which is more than the addition of Rs. 5,42,07, 155/- made by the AO. Further, once the opening balance is taken into account and transaction with above concerns are excluded there would not be overdrawal at any point of time during the year. Accordingly, the addition made by AO as 'deemed dividend' is not warranted and the same is deleted. The Assessing Officer has computed the closing balance at debit Rs.1,57,04,830/- which would become credit of Rs.5,42,87,006/- and be available as carry forward to the assessee". 7. Aggrieved with such order of the learned CIT (A) the Revenue is in appeal before the Tribunal by raising the following grounds: "1. The learned CIT (A) erred in law and on facts of the case. 2. The learned CIT (A) erred in holding that the opening credit balance for A.Y 2011-12 is to be allowed for working of deemed dividend u/s 2(22)(e) without appreciating the fact that in A.Y 2010-11 the entire credit balance was set off and resultant working of deemed dividend u/s 2(22)(e) was accepted by the assessee. ....