Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2005 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2005 (5) TMI 543 - ITAT MUMBAIUnexplained Cash credits - source of source is not properly explained - deemed dividend u/s 2(22)(e) - HELD THAT:- It is difficult to understand as to how is this relevant for examining explanation of a credit in the case of this assessee. The law is very well settled that while examining applicability of section 68, source of source cannot be investigated, but then this is precisely what the CIT(A) ended up doing. The factum of borrowing can also not be in dispute as the assessee has borrowed the money by way of an account payee cheque. The identity can not be said to be in doubt either. The means of the lender have been proved inasmuch as he was clearly in possession of this fund received from the shareholders. The CIT(A) was, therefore, clearly in error in confirming the addition under section 68 on account of money received from Cyberspace Films Private Limited. In any event, the purpose of section 2(22)(e) is to tax the receipts from the company which are out of the accumulated profits available for distribution of dividends. The share forfeiture amount is not available for distribution of dividend, and, therefore, a borrowing from the company, when such a company has no amount available for distribution of dividend, cannot be treated as deemed dividend either. The addition fails on this test as well. Coming to the addition, we have noticed that not only the source of this amount is free from doubt, even the source of source is clearly established. As evident from the paper book filed before us, the source of money was withdrawal from the saving bank account and maturity of fixed deposit. The copies of bank accounts and copies of accounts have also been filed before, and perused by us. The income-tax return and the certification regarding her earnings is also placed in paperbook before us.The identity of lender and the means of lender are, in our humble understanding, beyond any doubt. The factum is not in dispute either. In these circumstances, CIT(A) was also in error in confirming the addition u/s 68 in respect of money received from Mrs. Prity Dadlani. We cannot approve this action either. Thus, we deem it fit and proper to direct the Assessing Officer to delete the impugned additions. The assessee gets the relief accordingly. In the result, the appeal is allowed
|