TaxTMI 
TaxTMI 
2023 (6) TMI 558
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....oans of Rs. 1,90,83,800/-; u/s 2(22)(e) out of deemed dividend Rs. 7,00,000/-; and income from other sources as per the disclosure of the assessee interest received from Era Landmark at Rs. 23,22,500/-. However, as per the total rent received from Era Landmarks comes to Rs. 27,22,500/-, therefore, the Assessing Officer added the difference of Rs. 4,00,000/- as income of the assessee. Apart from that the Assessing Officer also made addition of agriculture income of Rs. 28,250/-. 3. Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals), who after considering the submissions, partly allowed the appeal. Therefore the learned CIT(Appeals) confirmed the addition in respect of dividend income, difference in interest income of Rs. 4,00,000/-. Further, in respect of unsecured loans the learned CIT(Appeals) partly gave relief to the assessee. Therefore by deleted the opening balance of Rs. 1,40,35,000/- and out of the remaining addition of Rs. 50,48,800/- the learned CIT(Appeals) confirmed the addition at Rs. 13,98,800/-. The learned CIT(Appeals) also deleted the addition of Rs. 68,00,000/-. Aggrieved against this order both the assessee and the Revenue are ....
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....e appellant craves leave to add, modify and / or delete any ground(s) of appeal." 5. Apropos ground nos. 1 & 2, learned DR relied on the finding of the Assessing officer and submitted that the learned CIT(Appeals) was not justified in deleting the addition. He contended that the Assessing officer has given a finding on fact that the assessee could not offer any satisfactory explanation regarding source of payment of Rs. 68,00,000/- towards share application money made by Shri Vijay Pal Yadav. 6. On the contrary, learned counsel for the assessee submitted that the learned CIT(Appeals) has examined the issue thoroughly and has given a finding that it was admitted fact in the assessment order confirmation, bank statement and ITR of the Managing Director from whom the share capital had been received was duly filed. It was further pointed out that there was no cash deposit in the bank account of the share holder, which was source of capital investment. 7. We have heard the rival contentions and perused the material available on record. We find that the learned CIT(Appeals) has given a finding on fact that the assessee has duly filed the requisite evidences and there was no cash....
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....t SAPR opening amount was 1,41,60,000/- the addition during the year was 2,50,000/- and repayment was 3,75,000/- the net amount then being 1,40,35,000/-. The AO without examining the facts has added this balance amount out of this amount 1,41,60,000/- could not have been added in the first place as it represented the opening balance pertaining to earlier years. The Only amount that could have been examined was the fresh receipt of 2,50,000/- received from one customer Shri Satya Prakash Gupta the details of his form for registration of plot the copy of the receipt showing this cheque no. 221581 dated 01.08.2010 drawn on SBI Ganga Nagar Meerut has been examined along with copy of bank account from where this amount was deposited for the purchase of plot. The AO completely misread the facts and never called for or examined the specific evidence. The amount is fully explainable and no adverse inference can be drawn above the fresh receipt of 2,50,000/-. The AO also did not examine the aspect of repayment 3,75,000/-. In view of the above discussion the net loans to the extent out of opening balance cannot be considered and added in this year. 2.5 lacs received during the year ....
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....ress. 05 Mrs. Renu Rastogi 35,000 Notice received unserved from postal authorities. 06 Mrs. Shashi 4,40,000 No reply received till date. 07 Mr. V.K. Choudhary 3,91,800 No reply received till date. 08 M/s Golden Printers 40,000 No reply received till date. 09 M/s Shri Ram Building Materials 1,17,000 Notice received unserved from postal authorities. Remarks-Left 10 Mr. Naved Ahmed 1,50,000 Notice received unserved from postal authorities. Remarks- Incomplete address 11 Dr. Vikas Saini & Brajveer Singh 9,50,000 No reply received till date. 12 Smt. Usha Kiran 9,00,000 Reply Received Total 50,48,800 3. From the above table, it is clear that out of 12 notices to parties, 06 notices have been received back as the concerned party has left the given address, 05 parties has not given reply till date and remaining 01 party has confirmed payment of Rs. 9,00,000/- to the assessee company during the F.Y. 2010-11. From the above, it may be concluded that customer at credit being shown by the assessee company is not a genuine one. 5. From the above table, it i....
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....s been closed due the Dewali holidays and it will take more time as the matter is old and the data is transferred to the service branch. The total amount is Rs. 13,98,800/-. The assessee may be given one more opportunity as it will take about a month to trace these 8 persons. 5.5 From the perusal of the above facts it is evident that more than sufficient opportunity was provided to the appellant to bring forth all possible evidence so as to establish the bona fide of these persons who have given customer credit. The matter was remanded in 6th October, 2015 the AO sent his remand report on 27th October, 2015 and the AR filed his rejoinder on 23.11.2015. The AR was fully aware of the issue and despite having got so much time up to 11.12.2015, the AR failed to bring on record any credible evidence with regard to creditor listed at serial 3 to 10 of the remand report. The AO also at his hand has made an effort to enquire about these persons. In the above mentioned cases neither the AR nor the AO got any response from these sundry creditors. The onus was squarely on the appellant to bring forth evidence and prove the genuineness of transactions with these persons. The ....
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....s powers with power of A.O. - Appellate authority has all powers which original authority has, subject to condition / restriction, if any, prescribed by law as per ratio laid down in case of Jute corporation of India Ltd. vs. CIT, 187 ITR 688, 693 (SC) - in present case concurrent findings were given by both by appellate authorities and in absence of any adverse material, same was confirmed". Further with regard to other three parties i. Rajender Kumar Agarwal Rs. 1,00,000/- ii. Brijveer Singh Rs. 9,50,000/- iii. Smt. Usha Kiran Rs. 9,00,000/- In these three cases the AO vide his report dated 27.10.2015 had reported that no reply was received. However, on 11.12.2015 the assessment folder was called for and it was noticed that at page no. 450 to 459 of the assessment record there is confirmation of account of Rajendra Kumar Agarwal along with copy of ITR dated 03.11.2015 which has been received in the office of Asstt. Commissioner of Income-tax, Circle-2 on 09.11.2015. Further at page no. 425 to 427 there is confirmation of Brijveer Singh along with copy of ITR the confirmation is dated 28.10.2015 and was received in the office o....
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.... Amounts match as deed shows finished flat 08 Sh. Lalit Joshi 19,00,000 19,00,000 - Notice received unserved from postal authorities. Remarks left The person only bought unfinished flat and did not ask it to be finished. 09 Sh. Pran Nath Bhatia 15,00,000 - - Notice received unserved from postal authorities. Remarks left Opening Balance does not pertains to this year 10 Sh. S. Gurunath & P.K. Gurunath 32,00,000 26,00,000 6,00,000 Paid Rs. 26,00,000/- only. Balance payment for extra work as the deed shows flat unfinished. 11 Sh. Tanuj Garg 12,00,000 12,00,000 - Notice received unserved from postal authorities. Remarks left Amounts match as deed shows finished flat 12 Smt. Kiran & Gauri Shanker 19,00,000 19,00,000 - Notice received unserved from postal authorities. Remarks left Amounts match as deed shows finished flat 13 Smt. Prabha Rani & Satish Chandra Aron 36,60,000 33,10,100 5,50,000 Notice received unserved from postal authorities. Remarks left We have been informed that confirmation has been set to AO* 14 Smt. Rajni Sharma 22,76,000 22,76,....
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....emaining deletion of addition, learned CIT(Appeals) has given a finding on fact that in some cases there was an unfinished flat as per sale-deed and purchaser paid extra amount for its finishing and in some cases the amounts in the sale-deed and copy of account tally where the finished flat is being sold. The Revenue has not brought any material to rebut this finding of the learned CIT(Appeals). The same is hereby affirmed. Thus, ground no. 3 of the Revenue's appeal is dismissed. 14. Ground nos. 4 & 5 of the Revenue's appeal are general in nature and need no separate adjudication. 15. Appeal of the Revenue is dismissed. 16. Now coming to the appeal of the assessee, the assessee has raised following grounds of appeal: "1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS , MEERUT ERRED IN LAW BY NOT GRANTING OPPORTUNITY TO THE ASSESSEE FOR TRACING THE EIGHT PERSONS WHO HAD DEPOSITED Rs.13,98,000/- WITH THE ASSESSEE AS ADAVNCE FOR THE PURCHASE OF PLOTS. THE CONFIRMATION SO MADE BY THE LD COMMISSIONER OF INCOME TAX (APPEALS) NEEDS TO BE DLETED AS NO OPPORTUNITY AS REQUESTED BY THE ASSESSEE FOR TRACING THE EIGHT PERSONS WA....
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....the addresses of the customers. Therefore, in the light of the binding precedence the impugned addition deserves to be deleted. Hence, ground no. 1 of the assessee's appeal is allowed. 20. Ground no. 2 is against sustaining the addition of Rs. 7,00,000/-. It is contended that the learned CIT(Appeals) committed an error by treating loan of Rs. 7,00,000/- to a non shareholder as deemed dividend. It is contended that loan from Prasandi Biotech Park Pvt. Ltd. of Rs. 7,00,000/- was a routine loan and the assessee company is not a shareholder. The addition so confirmed by the learned CIT(Appeals) requires to be deleted. 21. On the contrary, learned DR opposed the submissions and supported the orders of the authorities below. 22. We have heard rival submissions and perused the material on record. We find that the learned CIT(Appeals) has decided the issue by observing as under: "6. Deemed dividend u/s 2(22)(e) The AO has also made the addition of Rs. 7,00,000 as deemed dividend the facts of the case are that, Parsandi Biotech Private Limited (a sister concern of assessee company) had advanced a sum of Rs. 7,00,000/- to assessee company. Mr. Vijay Pal Yadav is Ma....
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....enefit from the advance from Prasandi Biotech Park Pvt. Ltd. The advance for the development of Land received by the assessee company cannot be treated as Loan. This is a business transaction and is out of the reach of the section 2(22)(e) of the IT Act. Transactions is normal course of Business cannot be treated as loans or advance and cannot be taxable as deemed dividend. The assessee company had received the advance from Prasandi Biotech Park Pvt Ltd. for the development of site and the same was a business advance. The copy of account along with the copy of request is enclosed. We hope by the above your honor is satisfied and would do the needful and drop the proceedings for taxing the business advance as deemed dividend." The above reply has been perused but the assessee's submissions cannot be accepted due to the following reasons:- 1. A's per the provisions of S 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 die assets of die company or otherwise)11made after die 31 St day of May, 1987, by way of advance or loan to a shareholder,....
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....ary evidence such as copy of agreement/exact location and description of site for development of which advance was paid. No evidence was also furnished about reasons for cancellation due to which the advance was refunded. No details are also mentioned about the advance of Rs.1.0 lakh given by Parsandi Biotech Park (P) Ltd on 20/09/2010. In view of the above this letter written by Smt Sunita yadav who is a Director in both Parsandi Builders (P) Ltd and Parsandi Biotech Park (P) Ltd is nothing but a self-serving statement. Therefore the amount of Rs 7.0 lakhs received as advance from Prasandi Biotech Park (P) Ltd, sister concern of the assessee is added to total income as deemed dividend u/s 2(22)(e) 6.2 During appeal proceedings, appellant has not filed any documents to establish its submission, and has simply gone on to repeat the same story that was given in assessment proceedings. The Case laws cited by assessee have also been considered . It is undisputed fact that the assessee company had received Rs. 7 lac from Parsandi Biotech private Limited as advance. The BusitiessmfiT*5rsancfid3toTech private Limited is that of developers and not as a finance company, hence it ca....
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....ment of the hon'ble Supreme Court that to attract the first limb of the provisions of section 2(22) (e) the payment must be to a person who is a registered holder of shares. As already mentioned the condition under the 1922 Act and the 1961 Act regarding the payee being a shareholder remains the same and it is the condition that such shareholder should be beneficial owner of the shares and the percentage of voting power that such shareholder should hold that has been prescribed as an additional condition under the 1961 Act. The word 'shareholder' alone existed in the definition of dividend in the 1922 Act. The expression 'shareholder' has been interpreted under the 1922 Act to mean a registered shareholder. This expression 'shareholder' found in the 1961 Act has to be, therefore, construed as applying only to registered shareholder. It is a principle of interpretation of statutes that where once certain words in an Act have received a judicial construction in one of the superior courts, and the Legislature has repeated them in a subsequent statute, the Legislature must be taken to have used them according to the meaning which a court of competent jurisdi....
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....s deemed dividend under section 2(22) (e) of the Act, we find that the Commissioner of Income-tax (Appeals) had given additional ground for non applicability of the said provision. In this case, the assessee had taken a loan of Rs. 1.40 crore from M/s. Teletube Electronics Ltd., which was treated as deemed dividend by the Assessing Officer on the ground that the shareholders of M/s. Teletube Electronics Ltd. had a substantial interest in the assessee. Admittedly, the assessee is not a shareholder of M/s. Teletube Electronics Ltd. The shareholding pattern of the two companies as on Mar5ch 31, 2002, which is concerned financial year, was as under: Shareholders TEL (lender company) Roxy (borrower company/ appellant) Roxy Investment Pvt. 1.8% Nil CEA Consultant Pvt. Ltd. (CEA) 22.08% 17.06% SW Consultant Pvt. Ltd. (SW) (100% subsidiary of CEA) Nil 24.58% Kaura Properties Pvt. Ltd. 36.59% 11.28% Others 39.53% 47.08% Total 100% 100% 48 It is clear from the above that no shareholder individually holds more than 10 per cent, shares. The following observations of the Commissioner of Income tax (Ap....