TMI Blog2012 (10) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf, the assessing officer made an addition of Rs.15,00,000/- to the income returned by the assessee, to cover the income relatable to the additional income tax admitted at the time of survey, to be paid for the year under appeal. Held that:- Impugned addition made by assessing office is merely based on the above statement and without pointing out any deficiencies in the books of account or bringing on record any material to substantiate the addition of Rs.15,00,000 is not justified and has to be disallowed - in favour of assessee. - ITA No.831/Hyd/2011 & ITA No.706/Hyd/2011 - - - Dated:- 6-7-2012 - SMT. ASHA VIJAYARAGHAVAN AND SHRI D.KARUNAKARA RAO, JJ. Assessee by : Shri S.Rama Rao Department by : Shri K.Gnana Prakash, DR ORDER Per D.Karunakara Rao, Accountant Member: These are cross appeals for assessment year 2007-08 and they are directed against the order of the Commissioner of Incometax( Appeals), Vijayawada dated 28.2.2011. Since common issues are involved, these appeals are being disposed off with this common order for the sake of convenience. Revenue s Appeal: ITA No.831/Hyd/2011 : Assessment year 2007-08 2. The only ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue involved in this appeal is squarely covered in favour of the assessee by the decision decisions of the Allahabad High Court in the case of Raj Kumar Singh (supra) and of the Special Bench of the Tribunal in the case of Bhaumik Colour Pvt. Ltd. (supra) and several other decisions rendered by various benches of the Tribunal in similar cases. 7. We heard both thte parties and perused the orders of the lower authorities and other material available on record. There is no dispute with regard to the factual aspects of the matter. The only dispute is with regard to the question, whether the advances received by the assessee from M/s. Golden Gate Properties Ltd., constitutes deemed dividend under S.2(22)(e) of the Act. We find that the CIT(A) decided this issue in favour of the assessee in the following manner- 6. The main thrust of the argument is that the provisions of Sec.2(22)(e) are applicable only to shareholders and not to the recipient non-shareholders. Elaborating further, it was contended that the appellant company was not a registered shareholder of M/s. Golden Gate Properties Ltd. There is no dispute over the fact that the share holders of the appellant company have su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en Gate Properties Ltd. Consequently, the addition of Rs.1,23,50,000/- u/s. 2(22)(e) made in the assessment order is lnto lsustainable in law and therefore, is deleted .. Considering the fact that Shri K.Pratap is a shareholder of both the companies in his individual capacity, and the assessee company itself is not the shareholders, in view of the decision of the Allahabad High Court in the case of CIT V/s. Raj Kumar Singh (295 ITR 9) and the Special Bench(Mumbai) of the Tribunal in the case of Bhaumik Colour Pvt. Ltd. (supra), the provisions of S.2(22)(e) dot apply to the facts of the present case, and the advance of Rs.1,23,50,000 received by the assessee company cannot be treated as deemed dividend. In this view of the matter, we find no infirmity in the impugned order of the CIT(A), which is accordingly confirmed, and the grounds of the Revenue in its appeal are dismissed. 8. In the result, Revenue s appeal is dismissed. Assessee s Appeal: ITA No.706/Hyd/2011 : Assessment year 2007-08 9. The only effective grounds of the Revenue in its appeal are as under- 1. The order of the learned Commissioner of Income-tax(Appeals) is erroneous to the extent it is prejudici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector of the assessee company at the time of survey, copy of which is furnished at pages 89 to 92 of the paper-book, which has been extracted by both the lower authorities in the impugned orders, he submitted that nowhere in the said statement any offer was made to pay tax of Rs.5 lakhs in addition to the tax payable in the normal course. He accordingly submitted that the impugned addition is not justified and in any event, basing merely on the statement of the Director made at the time of survey, and without reference to any material found at the time of survey or subsequently during the assessment proceedings, no addition could be made. 12. The Learned Departmental Representative, per contra, strongly supported the impugned orders of the lower authorities. 13. We heard the parties and perused the impugned orders of the lower authorities and other material on record. Relevant portion of the statement of the Director of the assessee company, based on which impugned addition of Rs.15-lakhs was made, reads as follows- Q.7 You are the director of M/s. Golden Gate Infotech Ltd as such you are supposed to file ROI with some assessing officer. Why are you filing the return in Rang ..... X X X X Extracts X X X X X X X X Extracts X X X X
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