TaxTMI 
TaxTMI 
2026 (7) TMI 485
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....atisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: "1. That on the facts and in the circumstances of the case, the order dated 27.03.2024 under section 263 of the Income Tax Act, 1961 passed by the Ld. PCIT is bad in law and is need to be quashed. 2. That under the facts and in the circumstances of the case, the Ld. PCIT erred in passing order u/s. 263 of the Income Tax Act, 1961 setting aside the order dated 21.07.2021 passed u/s. 153A of the Act holding the same to be erroneous & prejudicial to the interest of revenue on the ground that the unsecured loan received from M/s. Welcome Distilleries Pvt Ltd should have been treated as deemed dividend in terms of section 2(22)(e) of the Income Tax Act, 1961. Since no incriminating material was found in the course of the search and seizure operation carried out in the case of the assessee, the assessment was made u/s 153A of the Act without taking any adverse vie....
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....s and prejudicial to the interest of the Revenue. Accordingly, the Ld. Pr. CIT set aside the order of the Ld. AO and directed him to pass a fresh assessment order and to recompute the income after making proper enquiries on the issues involved and after offering reasonable opportunity of being heard to the assessee. The assessment order was set aside for the purpose of proper and correct computation of the assessed income as discussed in the proceeding under section 263 of the Act and the Ld. AO was directed to decide the matter as per law. 4. Aggrieved with the order of the Ld. Pr. CIT, the assessee has filed the appeal before the Tribunal. 5. Rival contentions were heard and the submissions made have been examined. 6. Ground Nos. 1 is general in nature and concerns the entire order without mentioning any specific reason. 7. Ground No. 2 relates to the issue of deemed dividend and it was submitted by the Ld. AR that the unsecured loan received from M/s. Welcome Distilleries Pvt. Ltd. did not relate to any incriminating material found in the course of the search and seizure operation and the assessment was made u/s 153A of the Act without taking any adverse view for the....
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....nsaction in question benefits both payer and payee companies, provisions of section 2(22)(e) cannot be invoked. 9. In this case, since Shri Heera Lal Jaiswal was holding 95.93% share of JHV Construction Co. Pvt. Ltd. and 87.32% share of Welcome Distilleries Private Limited and M/s. Welcome Distilleries Private Limited had accumulated profits, the loan received by the concern in which the shareholder of the assessee company had substantial interest was to be assessed as deemed dividend in the hand of the shareholder viz. Shri Heera Lal Jaiswal and the same could not be treated as deemed dividend in the hand of the company which had received the loan as the company was not the registered shareholder. Hence, the order of the Ld. Pr. CIT being based upon incorrect appreciation of law, the order of the Ld. AO being neither erroneous nor prejudicial to the interests of the Revenue in the case of the assessee, therefore, the order u/s 263 of the Act of the Ld. Pr. CIT is hereby quashed and Ground No. 1 of the appeal is allowed. Ground No. 2 is not adjudicated as the Ld. Pr.CIT has addressed this issue in his order and the Ld. AO had also passed the order u/s 153A of the Act which....
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....llowing judicial pronouncement may also be referred in this regard: i) The Hon'ble ITAT in Mumbai in the Skyline India Recruit.com. (P.) Ltd. Vs ITO 9(3) [2008] 24 SOT 402 (MUM.) (SMC) has held that if the payments of any sum by way of advance or loan is given to company in which there is a common shareholder and that shareholder has/have the beneficial interest in both the companies. The loans and advances shall be deemed dividend under section 2(22)(e) of the Act." 7.2 We have considered the submissions made, gone through the provision and perused the record and the order of the Ld. Pr. CIT. We note that the facts are identical to the facts of the case of JHV Construction Co. Pvt. Ltd. (supra) and the assessee was not the shareholder in M/s. Welcome Distilleries Pvt. Ltd. in which only Shri Hira Lal Jaiswal was a common shareholder in both the concerns, having 14.57% shares in JHV Steels Ltd. and 87.32% of shares in Welcome Distilleries Private Limited and the deemed dividend could have been said to have deemed to have been received/arisen in the case of Shri Hira Lal Jaiswal who was the shareholder and not in the case of the assessee company, which was not a shar....