2024 (10) TMI 1565

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.... taken the following grounds of appeal:- "1.1 The order passed u/s 250 passed on 15-7-2019 for A.Y.2013-14 by CIT(A)- 5, A'bad upholding the addition of Rs. 25,93,812/- as deemed dividend u/s. 2(22)(e) and Rs. 20,000/- towards house property income is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition towards provisions of section 2(22)(e) in respect of Rs. 65,22,947/- taken by the appellant from Mahavir Submersible P Ltd. and holdin....

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....deemed dividends. The AO held that any payment made by a company, particularly one not substantially held by the public, to a substantial shareholder or a concern in which that shareholder has a significant interest, should be treated as deemed dividend to the extent of the company's accumulated profits. The Assessing Officer held that assessee, a substantial shareholder in Private Ltd company namely Mahavir Submersibles Pvt. Ltd. (MSPL a company in which public are not substantially interested) has received the loan of Rs, 65,22,947/- Therefore, the payment to the extent of accumulated profit of Rs. 25,93,812/- of the company was added to the total income of the assessee as deemed dividend u/s. 2(22)(e) of the I.T. Act 4. In appeal ....

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....Counsel for the assessee submitted before us that the funds purportedly advanced by MSPL did not originate from the company itself. Instead, the directors and shareholders of MSPL, including the assessee, had taken a bank loan to purchase property, with the loan disbursed in the names of the individual Directors rather than the company. To support this argument, the Counsel for the assessee submitted copies of the ledger accounts and bank loan documents, which indicated that the financial transactions were only recorded in MSPL's books as journal entries. The counsel for the assessee requested the Bench to seek a report from the AO regarding this explanation and the accompanying evidence. However, we noted that the evidence presented was cl....