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2017 (4) TMI 1523 - ITAT JAIPURAssessment completed u/s 143(3) - trading addition - Addition solely on the basis of statements recorded during the course of survey which stood retracted by the assessee through an affidavit filed by its director - whether additions made solely on the basis of such retracted statements deserve to be deleted? - AO not accepting the affidavit given by the director of the assessee company - HELD THAT:- If we apply the ratio of the judgment rendered in the case of CIT Vs. S.Khader Khan son [2013 (6) TMI 305 - SC ORDER] on the facts of the present case, the authorities below were no justified in making the addition on the basis of the statement recorded during the course of survey. No other material suggesting that the claim of the assessee was false, is brought on record by the revenue. Under these facts and in view of the binding precedent, we are unable to confirm the finding of the ld. CIT(A). Therefore, we direct the Assessing Officer to delete the trading addition - Decided in favour of assessee. Disallowance of stipend expenses - disallowance solely on the basis of the statement of Shri Naresh Kumar Jain recorded during the course of survey proceedings - statements recorded of Shri Naresh Kumar Jain during the survey, a surrender was obtained from him wherein he admitted 50% of the payment made to trainees as bogus. However, in the assessment order, the Assessing Officer made lump sum addition @ 75% of total expenditure claimed - CIT-A restrict the disallowances to 20% instead of 75% of the amount claimed by the appellant. - HELD THAT:- CIT(A) has restricted the disallowance on ad hoc basis. After considering the material placed before this Tribunal, we are of the considered view that when the inspection was carried out by the ESI and PF department, no discrepancy was reported in respect of rate of stipend and payment of stipend. The Assessing Officer has not placed any material suggesting that the number of trainees was not correct. Moreover, the Assessing Officer has based his finding on the basis of presumption that the assessee is not charitable institute than why it would provide training with stipend to the persons who would quit after training. This observation of the Assessing Officer is purely based on the conjecture and surmises, which cannot be the basis for making disallowance. If the Assessing Officer’s reasoning is accepted, then it would make the assessee liable for prosecution for practicing the bonded labour. Therefore, this disallowance is unjustified and the same is hereby deleted. - Decided in favour of assessee. Addition of deemed dividend u/s 2(22)(e) - HELD THAT:- The assessee in the instant case is not shown to be one of the persons, being shareholder. Of course the two individuals being partners of the assessee-firm are the common persons, holding more than requisite amount of shareholding, and are having requisite interest, in the firm, but then, thereby the deemed dividend would not be deemed dividend in the hands of the firm, rather it would obviously be deemed dividend in the hands of the individuals, on whose behalf, or on whose individual benefit, being such shareholder, the amount is paid by the company to the concern. Thus, the significant requirement of section 2(22)(e) is not shown to exist. The liability of tax, as deemed dividend, could be attracted in the hands of the individuals, being the shareholders, and not in the hands of the firm. - Decided in favour of assessee.
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