TMI Blog2016 (2) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... e closing balance as on 31.03.2007 was ₹ 2,42,500/- i.e. the amount due to Durvesh Construction Co. The case of the assessee before us is limited that it had received sum of ₹ 5 lakhs from M/s. Durvesh Construction Co., out of which sum of ₹ 2,57,500/- was the loan due from the said person and the balance of ₹ 2,42,500/- was the loan outstanding at the close of the year. The assessee had admittedly, received ₹ 5 lakhs from the said person and had only shown the balance of ₹ 2,42,500/- in the balance sheet. In the above said facts and circumstances, where the assessee had advanced sum of ₹ 2,57,500/- in the preceding year to Mr. S.R. Sharma, proprietor of M/s. Durvesh Construction Co., then to the extent of said amount, loan is explained as the creditworthiness can be accepted to the extent of amount which was advanced by the assessee. However, in respect of balance of ₹ 2,42,500/-, the assessee has failed to discharge his onus i.e. to establish the creditworthiness of the person advanced the loan. Accordingly, we direct the Assessing Officer to restrict the disallowance to ₹ 2,42,500/- - Decided partly in favour of assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of payment made to the labourer on the alleged ground that the said payment is covered u/s 194C of the Income Tax Act , 1961. 4. Reasons given by CIT(A) for confirming disallowance of ₹ 8,17,741/- made by the A. O. by applying the provisions of section 40(a)(ia) in respect of payment made to the labourers on the alleged ground that the said payment is covered u/s 194C of the II1C9Jne Tax 1961, are wrong insufficient and contrary to the facts and evidence on record. 5. In the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the addition made by the A.O. by treating a sum of ₹ 2,01,884 as a deemed dividend and thereby adding the same to the total income within the meaning of Sec 2(22)(e). 6. Reasons given by the learned CIT(A) in confirming the addition made by the A.O. by treating a sum of ₹ 2,01,884/- as a deemed dividend and thereby adding the same to the total income within the meaning of Sec 2(22)(e), are wrong insufficient and contrary to the facts and evidence on record. 7. In the facts and circumstances of the case and in law the learned CIT(A) erred in confirming disallowance made by the A.O. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a partnership firm carrying the business of builders developers in and around Panvel area. The Assessing Officer during the course of assessment proceedings noted from the details of salary and wages that in includes labour charges of ₹ 17,55,902/- to the labour and ₹ 3,33,150/- to casual labours. From the labour-wise details, it was seen that the amounts were paid to various persons and in respect of two persons i.e. payment made to Aier of ₹ 61,500/- and payment made to Satyam Enterprises of ₹ 7,56,241/-, aggregating to ₹ 8,17,741/- attracted the TDS provisions. Since the assessee had not deducted tax at source, the learned Authorized Representative for the assessee was requested to explain as to why the disallowance on labour charges should not be made. The learned Authorized Representative for the assessee agreed for the disallowance and an addition of ₹ 8,17,741/- was made in the hands of assessee. 7. The CIT(A) upheld the addition made by the Assessing Officer dismissing the plea of the assessee that relief was allowable since tax deduction provisions were not applicable in respect of the amounts already paid, but were applicable only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the present grounds of appeal is whether in such circumstances, the amount advanced to the assessee could be treated as deemed dividend under section 2(22)(e) of the Act. The assessee is a partnership firm, but is not a registered shareholder of the said private limited company, only its partners were the shareholders / directors of the said company. The learned Authorized Representative for the assessee in the written submissions has made reference to the decision of Mumbai Special Bench of Tribunal in ACIT Vs. Bhumik Colour Pvt. Ltd. reported in 27 SOT 17 and pointed out that the provisions of section 2(22)(e) of the Act are applicable only in the hands of the person, who is the shareholder of lender company. Since the assessee is not the registered shareholder of the said company, we find no merit in the aforesaid addition made in the hands of the assessee. Reversing the order of CIT(A), we allow the grounds of appeal No.5 and 6 raised by the assessee. 14. Coming to the issue in grounds of appeal No.7 and 8, which is against the addition of ₹ 5 lakhs on account of cash credit by invoking the provisions of section 68 of the Act. 15. Briefly, in the facts relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in assessee s books of account or not. Accordingly, addition of ₹ 5 lakhs was confirmed. 17. On perusal of record and written submissions filed by the assessee, the contention of the assessee was that the assessee requested the Assessing Officer to verify the correctness of the said loan transaction from Mr. S.R. Sharma as he was bedridden for the last six months. The Assessing Officer rejecting the explanation of the assessee, made an addition of ₹ 5 lakhs by invoking provisions of section 68 of the Act. The assessee has placed on record the letter filed before the Assessing Officer, in which it is reflected that the opening balance of loan account of Durvesh Construction Co. was debit balance of ₹ 2,57,500/- and ₹ 5 lakhs was transacted during the year and the closing balance as on 31.03.2007 was ₹ 2,42,500/-, copy of the said letter is placed at page 33 of the Paper Book. Further, a letter dated 29.12.2009 is also placed on record, in which there is no reference to the said loan transaction. The perusal of the balance sheet filed by the assessee, which is placed at page 13 of the Paper Book reflects that the closing balance as on 31.03.2007 was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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