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2023 (1) TMI 269 - AT - Income TaxRevision u/s 263 by CIT - deemed dividend income u/s. 2(22)(e) on ‘loans and advances’ - HELD THAT:- We find that no enquiry whatsoever has been conducted by the AO on the issue raised in show cause notice u/s. 263 by the PCIT. When the case of the assessee has been selected for scrutiny and all the necessary details were placed before him, but still the AO has not conducted any enquiry on this issue. Even the assessee has been unable to place any detail/record/information or copy of notice u/s. 142(1) or replies thereof filed in compliance to the said notice. It indicates that the ld. AO has not conducted any enquiry on the issue nor asked the assessee to furnish necessary details. It is a purely case of not conducting any enquiry. As far as finding of the PCIT in the impugned order is concerned, we notice that he had conducted sufficient enquiry, which is not controverted by the ld. Counsel for the assessee to the extent of the fact that assessee company holds 12.32% equity share of M/s. RDPL, loans and advances has been received during the year and there is an opening balance of accumulated profits in the balance sheet of M/s. RDPL. Though the assessee company has taken a plea that alleged loan has been taken for commercial expediency during the year and are in the nature of business transaction and interest paid thereon. However, the exception which the assessee has been referring provided under section 2(22)(e) applies in the case where lending of money is a substantial part of the business of the company. Before us no document what so ever has been filed in relation to M/s. RDPL, which could indicate that lending of money is a substantial part of business of M/s. RDPL. We notice that the assessee has referred to the judgment of the Hon’ble Jurisdictional Calcutta High Court in the case of Pradip Kumar Malhotra [2011 (8) TMI 16 - CALCUTTA HIGH COURT]. Perusal of the said judgment indicates that the same is not applicable on the facts of the instant case and is distinguishable. In the case of Pradip Kumar Malhotra (supra) the facts were that the assessee was owner of a property, which was used as a collateral security by the company for taking a loan and assessee received credit/loan against the property held with the company. However, in the instant case the facts are not the same and it is purely a case where the assessee is holding 12.22% equity shares in a company having accumulated profits which has given loan to the assessee company. We are of the considered view that since no enquiry has been conducted by the ld.AO on the issue raised in show cause notice u/s. 263, therefore, to this extent the assessment order is rightly held to be erroneous so far as it is prejudicial to the interest of the revenue. Therefore, we fail to find any infirmity in the impugned order of the ld.PCIT. Thus, all the grounds raised by the assessee are dismissed.
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