2017 (11) TMI 1054 - ITAT MUMBAI

Addition made on account of on money cash payment for purchase of property at Delhi - incriminating documents/evidences received from DRI, Mumbai as the assessee was unable to explain the transaction or rebut the presumption that on money was paid for the purchase of the property - Held that:- Totality of facts clearly indicates that the Ld. Assessing Officer could not collect any evidence to substantiate that in fact any cash was transacted for purchase of property. The case of the assessee is further fortified by the facts that the demand drafts issued for purchase of property were reflected in the documents, no statement was recorded by DRI either of Ms. Zaver Cyrus Dadina or of any other person during the course of search in respect of the details contained in the hard disc. Even, the information received from the investigation wing was never corroborated with any evidence, statement that any cash changed hands for the transaction. When the Ld. Assessing Officer recorded the statement of Shri Atul Sud, Director of the assessee company, though he admitted the transaction to be made through demand draft but he never tendered that any cash was transacted. Ms. Zaver Cyrus Dadina completely expressed or ignorance with regard to details of land dealings as has been alleged. The efforts of Assessing Officer to record the statement of Miss Damini Vadhwa, and Miss Reeta Bhatia also could not provide any information leading to the addition. The seized material/print out was not in the handwriting of the assessee and even there is no material to suggest that the seized material was maintained either by the assessee or it’s of or employees.

Even the statement of Rajaratanam was discarded by the Ld. Commissioner of Income Tax (Appeal) as the floor price, fixed by the authorities, for such property was found much lower than the value. Considering the factual matrix and the judicial pronouncements, discussed hereinabove, we find no infirmity in the conclusion of the Ld. First Appellate Authority. Our view is further fortified by the fact that the concerned data was even not found from the premises of the assessee and further the assessee has not started any substantial business activity and for acquisition of the land to inter corporate loan of ₹ 40 lakh from Strategic Capital Corporation. Thus, the presumption of the Ld. Assessing Officer for making the addition on presumptive basis was rightly deleted by the Ld. Commissioner of Income Tax (Appeal). - Decided against revenue

Deemed dividend addition u/s 2(22)(e) - loan by the assessee from sister concern - Director of the assessee company was holding more than 10% of the voting power in the company which advance loan to the assessee - Held that:- Addition made by the Assessing Officer is on the assumption that the common director hold more than 10% in SCCPL, which is factually incorrect. Both companies have common directory namely Shri Atul Sud, who is having 9% stakes in SCCPL (sister concern) which has given loan to the assessee to bring this amount within the ambit of deemed dividend u/s 2(22)(e) it has to be established that the same has to be given to shareholders out of the accumulated profit and further it was in the nature of loan or advance.

Assessing Officer made the addition u/s 2(22)(e) of the Act of ₹ 40 lakh, taken as a loan by the assessee from sister concern, SCCPL by holding that the shareholding is more than 10%. It is undisputed fact that the assessee is not a shareholder in the sister concern (SCCPL). However, before invoking section 2(22)(e) of the Act, it has to be established that the same was given to the shareholder out of the accumulated profit and further it was in the nature of loan or advance. This issue has been elaborately dealt with by Hon'ble jurisdictional High Court in CIT vs Universal Medicare Pvt. Ltd.(2010 (3) TMI 323 - BOMBAY HIGH COURT ). Thus, the deemed dividend cannot be invoked in the hands of the present assessee, resultantly, we affirm the stand of the Ld. Commissioner of Income Tax (Appeal). - Decided against revenue