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2019 (4) TMI 359 - AT - Income TaxReopening of assessment - deemed dividend addition u/s 2(22)(e) - HELD THAT:- The conditions for invoking the provisions of section 2(22)(e) are satisfied and given the fact that no original assessment has happened, the income to that extent has escaped assessment. The Assessing officer thus has the tangible material in his possession to form a prima facie view that the advances are in nature of deemed dividend u/s 2(22)(e) and income to that extent has escaped assessment. It is a trite law that before invoking jurisdiction u/s 147 AO has to record a prima facie belief that income has escaped taxation and there should be a nexus between the material and the formation of belief that income has escaped taxation. In the instant case, the necessary nexus has been established between the material in possession of the Assessing officer and the formation of a prima facie belief that the income has escaped assessment. - Decided against assessee Deemed dividend addition u/s 2(22)(e) - HELD THAT:- In case of M/s Raj Auto Wheels Private Limited advances to the tune of ₹ 51 lacs for the purposes of business and therefore, to that extent, the same would not be considered and reduced for the purposes of determining the deemed dividend in hands of the assessee. Further, there is a payment of ₹ 18.50 lacs made on 18.01.2010 which has been returned on the very next day on 19.01.2010 and the same appears to be a current account transaction and not to be considered for determining the deemed dividend. There is nothing on record in terms of remaining advances either for business purposes or any current account transaction. The fact that such advances have been repaid in the subsequent financial year will not provide any relaxation from the rigours of section 2(22)(e). Therefore, remaining advances to the tune of ₹ 32.45 lacs will be considered for determining deemed dividend. The AO has determined the accumulated profits at ₹ 28.35 lacs of M/s Raj Auto Wheels Private Limited which has not been disputed by the assessee. The lower of the two i.e, ₹ 28.35 lacs has thus been rightly brought to tax as deemed dividend u/s 2(22)(e) - Decided against assessee Cash deposit in his bank account maintained with the Bank of Baroda, Ajmer - HELD THAT:- When an amount is found deposited in the assessee’s bank account, the onus is on the assessee to explain the source of such deposits. In the instant case, the explanation of the assessee is that source of such deposits is the withdrawal of cash from his capital account maintained with his proprietary concern M/s Govind Garg & Co. - AO’s finding is that the assessee has not produced the cash book in support of the said explanation to which the assessee has contended that he was never asked to produce the cash book at first place. In view of the contradictory stand taken by both the parties, we believe that it would be just and fair that the assessee is given one more opportunity to produce the cash book of his proprietary concern M/s Govind Garg & Co. before the AO. The matter is accordingly set-aside to the file of the AO to examine the same afresh Rental income from Bank of Baroda - rent has been paid in HUF bank account however, by mistake, the TDS has been deducted by the Bank by quoting assessee’s PAN and it has wrongly been reflected in assessee’s Form 26AS - HELD THAT:- Mere reflection of a transaction in assessee’s Form 26AS cannot be made a sole basis for bringing certain transaction to tax especially where the assessee is contending that such transaction doesn’t belong to him and but belong to the HUF. However, it is for the assessee to demonstrate that such transaction doesn’t belong to him especially where HUF is a related entity and the assessee has access to the records of the HUF and is being controlled by the assessee. We accordingly believe that where the HUF is the right full owner of the subject rental income and it has already included the same in its return of income, the same cannot be brought to tax in the hands of the assessee. Addition on account of interest income - HELD THAT:- Interest income has been shown in other income of ₹ 1,63,317/- in the books of account of the proprietary concern M/s Govind Garg & Co as clear from the journal entry and P & L A/c and the same cannot be brought to tax in the hands of the assessee. The matter is accordingly set-aside to the file of the AO to examine the aforesaid contention so raised and where the same is found to be correct and duly offered to tax in hands of M/s Govind Garg & Co, delete the impugned addition. In the result, ground is allowed for statistical purposes.
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