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2017 (9) TMI 1098 - AT - Income TaxDeemed dividend income u/s 2(22)(e) - loans and advances given to societies registered u/s 12A - whether the assessee was beneficially entitled to 20% or more of the income of Swami Devi Dayal Hi-tech Education Academy ? - Held that:- Swami Devi Dayal Hi-tech Education Academy is a charitable trust registered u/s 12AA of the Act. That the assessee is a trustee in the said trust has also not been disputed and the fact that there are no interest of any member of the said society in the Trust is also not disputed. In the said circumstances, we are left with no option but to agree with the Ld. CIT(Appeals) that second limb or requirement of section 2(22)(e) of the assessee having substantial interest in the concern to which loan or advance has been given has not been established and, therefore, the said advance cannot be treated as deemed dividend in the hands of the assessee. The arguments of the Ld. DR that the documents seized during the course of search show that the funds had been utilized by the members of the society, and therefore, assessee derived personal benefit is of no consequence since the requirement of section 2(22)(e) is not whether the assessee has actually derived any personal benefit from the said concern but is that the assessee is beneficially entitled to not less than 20% of the income of the said concern. The word “entitled” means having a legal right to something. Since such legal right is absent in the case of the present society, in the absence of such legal right of the assessee in the said society the amount advanced cannot be treated as deemed income as per section 2(22)(e) of the Act. Moreover even as per the argument of the Revenue the documents found during search only establish that the assessee has derived benefit from the said societies and not “substantial” benefit, as is the requirement of the section. - Decided in favour of assessee. Unexplained deposit in Oriental Bank of Commerce - addition on account of advance received on sale of land - CIT-A deleted both addition - Held that:- Above additions have been deleted by the CIT(A) on the basis of the cash flow statement which was never produced before the AO and was furnished for the first time before the CIT(A). The cash flow statement clearly is an additional evidence the admittance of which is governed by Rule 46A. The Revenue has not challenged the admission of the additional evidence. However, sub clause 3 of Rule 46 clearly requires the CIT(A) to allow the AO a reasonable opportunity to examine the evidence or document before taking it into account. In view thereof, we consider it fit to restore both the issues back to the file of the Assessing Officer to examine the additional documents/evidences filed by the assessee with respect to both the grounds and thereafter adjudicate the issue in accordance with law.- Decided in favour of revenue for statistical purposes. Addition in respect of capital introduced by assessee - CIT-A deleted disallowance - Held that:- Since the Revenue has pleaded that the cash flow statement was accepted by the CIT(Appeals) without confronting it to the Assessing Officer, the same ought to be sent back to the Assessing Officer for verification, in the interest of justice and drawing parity from the same, the issues in the present appeal also should be sent back to the Assessing Officer to decide after verifying the cash flow statement submitted by the assessee. Addition on account of seized documents - Held that:- Undeniably, during assessment proceedings the assessee had not been able to produce its cash flow statement to explain various transactions which were noticed by the Assessing Officer during the course of search which was undertaken at the assessee premises. The cash flow statement was subsequently submitted to the Ld.CIT(Appeals) during the course of hearing before him and on the basis of which the Ld.CIT(Appeals) upheld certain additions/disallowances and also deleted certain additions/disallowances. Further it is also a fact that the Ld.CIT(Appeals) did not confront the said cash flow statement to the Assessing Officer before passing his appellate order. Thus we accept the pleadings of the Ld. DR to restore the additions deleted by the Ld.CIT(Appeals) to the Assessing Officer for verification of the cash flow statement.
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