TMI Blog2012 (3) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... ries made in the accounts of the assessees by the company would not fall under section 2(22)(e) only for the reason that the credits were provided through journal entries - The assessing authority should have examined every journal entry conferring credit to the assessees and verify whether any fund/benefit has been transferred by the company to the assessees directly or indirectly - issue is remitted back to the Assessing Officer to re-examine the nature and character of the journal entries directing the assessee to provide evidence to prove his case. - IT Appeal Nos. 1398 to 1409 (Mad.) of 2011 - - - Dated:- 17-1-2012 - Dr. O.K. Narayanan, Hari Om Maratha, JJ. Shaji P. Jacob for the Appellant. T. Banusekar for the Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(22)(e) of the Act. 5. For the assessment year 2008-09, amounts were paid by the company into the accounts of the three directors, which also have been treated as deemed dividends by the assessing authority in terms of section 2(22)(e) of the Act. 6. When the matters were taken in first appeals, the Commissioner of Income-tax(Appeals) held that the amounts transferred by passing journal entries cannot be held to be in the nature of deemed dividends, as provided in section 2(22)(e) of the Act. He, therefore, held that the amounts credited in the accounts of the assessees by passing journal entries for the assessment years 2005-06, 2006-07 and 2007-08 could not be held to be deemed dividends in the hands of the assessees. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) has erred in holding that the amounts given to the assessees represented advances paid by the company for the purchase of properties from the assessees. It is the argument of the Revenue that reliefs were granted to the assessees on the basis of the fresh materials filed by them before the Commissioner of Income-tax(Appeals), which were not produced before the assessing authority and thus violation of Rule 46A reflected in the orders passed by the Commissioner of Income-tax(Appeals). 9. We heard Shri Shaji P Jacob, the learned Commissioner of Income-tax appearing for the Revenue and Shri T. Banusekar, the learned chartered accountant appearing for the respondent-assessees. 10. The learned Commissioner of Income-tax contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the benefits of the assessees through the medium of journal entries as in the nature provided in section 2(22)(e) of the Act. He further contended that the Commissioner of Income-tax(Appeals) has accepted the contentions of the assessees for the assessment year 2008-09 on the basis of documentary evidences and the Commissioner of Income-tax(Appeals) is competent to examine such evidences produced by the assessees as his authority is qua terminus with that of the assessing authority. 12. We heard both sides in detail and considered the issue. It is not proper on the part of the Commissioner of Income-tax(Appeals) to hold that credit entries made in the accounts of the assessees by the company would not fall under section 2(22)(e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax(Appeals) also went wrong in coming to the conclusion that the credit entries would not amount to deemed dividends under section 2(22)(e) just for the reason that the credits were passed by means of journal entries. 13. Therefore, we set aside the orders of the Commissioner of Income-tax(Appeals) as well as the assessing authority on this point for the assessment years 2005-06, 2006-07 and 2007-08. The issue is remitted back to the Assessing Officer to re-examine the nature and character of the journal entries passed by the company giving credits to the assessees. The assessing authority is directed to come to a conclusion after such examination and verification of the facts and circumstances of every journal entry passed with r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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