TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 558
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....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 in appeal. 4. First we take up the Revenu....
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....peal." 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 deposit before making investment. Hence, in the light of the precedents relied ....
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.... 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 is fully explained and also cannot be added to the income of the assessee. Now coming to balance amount ....
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....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 is clear that out of 13 notices to the parties, 11 notices have been received back as the concerned party has left the given address, 01 party has submitted that he has paid Rs. 10,00,000 during the F.Y. 2009-10 and....
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.... 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 appellant has admittedly has failed in doing so and has compelled me with no option but took confirm addition of Rs. 13,98,800/- out of total credit of Rs. 50,48,800/-. With regard to balance amount of customer credit of Rs. 36,50.000/- this customer cr....
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....ere 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 of AC1T, Circle-2, on 03.1 1.2015 confirming the transaction. The above mentioned two confirmations have been received by the AO as explained above but the matter was not brought to the notice of CIT(A) by the AO and had the record not been called there would have been miscarriage of justice on these two counts. Als....
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....00 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 22,76,000 - Notice received unserved from postal authorities. Remarks left The person only bought unfinished flat and did not ask it to be finished. Total 30,80,000 Clearly the AO has on his own volition has made certain inquiry which has been clarified by the AR in his response. It is evident that in some cases there was an unfinished flat as per the sale deed and the purchaser paid extra amount for its finishing and in some cases the amounts in the sale deed and copy of account tally wh....
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....te 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 WAS GIVEN WHICH IS AGAINST THE MORAL PRINCIPLES LAW AND OF JUSTICE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS , MEERUT ERRED IN LAW BY TREATING LOAN OF RS.7,00,000/- TO A NON SHAREHOLDER AS DEEMED DIVIDEND. THE LOAN FROM PRASANDI BIOTECH PARK PVT LTD OF RS.7,00,000/- WAS A ROUTINE LOAN AND THE ASSESSEE COMPANY IS NOT A SHAREHOLDER, THUS THE ADDITION SO CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NEEDS TO BE DELETED. 3. THE ASSESSEE RESERVES ALL RIGHTS TO ADD/MODIFY ANY OF THE GROUNDS OF APPEAL FOR THE SAKE ....
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....es 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 Managing director of the assessee company and holding 74.70% share of Parsandi BIO tech private Limited and 42.69% of assessee company. In the course of assessment proceedings of Prasandi Biotech Park (P) Ltd. for A.Y. 2011-12, a sister concern of the assessee it was seen that the assessee had received a loan of Rs. 7.0 lakhs from the said company. The shareholders of Prasandi Biotech Park (P) Ltd. include Sh. Vijay Pal Yadav who holds 74.70% of its shares and also holds 42.69% of the share capital of the assessee Prasandi Builders Pvt. Ltd. Prasandi Biotech Park (P) Ltd also had adequate accumulated profits during ....
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....ful 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, ;being a person who is die beneficial owner of shares (not being shares end fed 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 bene ft, of any such shareholder, to die extent to which the company in either case possesses accumulated profits 2. Therefore, the assessee's argument that M/s Prasandi Builders is not a shareholder does not hold....
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.... 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 cannot be treated as normal business advance. Section 2(22)(e) is clearly applicable on the case of assessee company. Assessee also placed the reliance on Allahabad High Court judgment in the case of Shashi Pal Agarwal v. CIT (2015) 370 ITR 720 w herein it has been held that Section 2(22) of the Income-tax Act, 1961 - Deemed dividend (Loans and advances to shareholders/Money lending business) - Assessment year 2007-08 - Assessee, holding more than 10 per cent of equity capital of two private limited companies, received loans and advances from said companies - Whether since lending of money was not part of business of lending companies and there was no organized course of activity involving dealing with anyone ....
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....ession '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 jurisdiction has given them. In the 1961 Act, the word 'shareholder' is followed by the following words 'being a person who is the beneficial owner of shares'. This expression used in section 2(22) (e), both in the 1961 Act and in the amended provisions with effect from April 1, 1988, only qualifies the word 'shareholder' and does not in any way alter the position that the shareholder has to be a registered shareholder. These provisions also do not substitute the aforesaid requirement to a requirement of merely holding a beneficial interest in the shares without being a registered holder of shares. The expression 'being' is a present participle. A participle is a word which is partly a verb and partly an adje....
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....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 (Appeals) are to be taken note of : "It is not disputed that the appellant holds only 1.8 per cent, shares in M/s. Teletube Electronics Ltd., the question is whether the appellant on the strength of shares of M/s. Teletube Electronics Ltd. held by M/s. CEA Consultants P. Ltd. can be said to be the beneficial owner of 10 per cent, of the voting power. It is not in dispute those shares of Teletube Electronics Ltd. held by the appellant and M/s. CEA Consultants P. Ltd. are registered in their respective names. It in turn implies that both the appellant and M/s. CEA Consultants P. Ltd. are independently exercising their voting rights. 13. Under the existing provisions of section 2(22) (e), payment made by way of advance or loan to a shareholder having 'substantial interest' in the company was treated as deemed d....