TMI Blog2022 (5) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the long term capital gains claimed as exempt by the assessee and also the commission paid by the assessee in respect of the said transaction. As a result, ground Nos. 3 and 4 raised in assessee s appeal are dismissed. Deemed dividend under section 2(22)(e) - assessee claimed that advances were received as business advances, however, the assessee failed to produce any documentary evidence in support of this submission - HELD THAT:- As is evident from the fact as available on record, it is not in dispute that the assessee is holding 25.34% of shares in M/s A.R. International Private Limited from which the assessee has received advance of Rs. 28,53,251. Further, it has not been claimed that the said company is a company in which the public is substantially interested. Thus, the basic conditions of section 2(22)(e) of the Act are satisfied in the present case. Further, such a payment for the purpose of section 2(22)(e) of the Act should be to the extent to which the company possesses accumulated profits. As noted by the Assessing Officer accumulated profit of the company was Rs. 34,92,721. Thus, in view of the above, we do not find any infirmity in the order passed by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Learned Assessing Officer in making addition on account of deemed dividend U/s. 2(22)(e) of the Act out of advance taken by the appellant to the tune of Rs. 28,53,251/- for business purposes. The action of the Learned Commissioner of Income Tax (Appeals) is contrary to the facts of the case and law and deserves to be deleted. 06. The appellant craves to add, amend, modify or alter the above grounds of appeal at any stage of appellate proceedings. 07. The appellant humbly prays that the appeal be allowed in toto. 3. When the appeal was called for hearing, no one was present on behalf of the assessee to present the case. There is no application seeking adjournment either. On perusal of the record, it is observed that the appeal was listed for hearing on ten previous occasions and no one appeared for / on behalf of the assessee in any of the hearings. Therefore, we are proceeding to hear this appeal on the basis of submissions made by the learned Departmental Representative ( learned DR ) and the material available on record. 4. The first issue arising in present appeal is with regard to addition made under section 68 of the Act on account of long term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to evade tax. The Assessing Officer further held that the assessee s claim of earning huge tax-exempt gains fails the test of both genuineness and human probabilities as laid down by the Hon ble Supreme Court in Sumati Dayal v/s CIT: 214 ITR 801 and CIT v. Durga Prasad More [1971] 82 ITR 540. Thus, the Assessing Officer disallowed the exemption claimed by the assessee under section 10(38) in respect of long term capital gains and added the same as unexplained cash credit under section 68 of the Act. Similarly, the commission of Rs. 24,713 paid by the assessee in respect of the aforesaid transaction was also disallowed and added to the total income of the assessee. 6. In appeal before the learned CIT(A), assessee submitted that the assessee had paid due Securities Transaction Tax at the time of sale of the securities on the Recognised Stock Exchange. The assessee further submitted that at the time when he bought/sold the said shares, dealing in such shares was absolutely legal and free from any malpractice. The learned CIT(A) vide impugned order dated 03/10/2017 dismissed appeal filed by the assessee on this issue on the basis of the report of SEBI and Directorate Of Investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries. 9. Further, the Assessing Officer noted that when the price increase in the shares was compared with the movement in the Sensex, it was observed that there was no correlation. While Sensex had shown almost no progress, the price of the shares moved phenomenally. Further, from the following data of Kailash Auto Finance Ltd from BSE, as noted by the Assessing Officer, it is clearly discernible that share price of Kailash Auto Finance Ltd increased from Rs. 10.5/share in closing of year 2012 to as high as Rs. 39.45/share in closing of year 2013. Further, in the year 2016 the price of shares has gone down to Rs. 0.64/share. Year Opening Closing Increase % in shares Decrease % in shares Trade Count / Year Increase % in Trade Count Turn Over Rs. in lakh % Increase % Decrease 2012 (Base) 10.5 10.5 1 1050 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from M/s A.R. International Private Limited. As the assessee was a shareholder of this company having stake of his shares at 25.34% and transaction being covered under the provisions of section 2(22)(e) of the Act, the assessee was asked to furnish the copy of return of M/s A.R. International Private Limited for assessment year 2014 15. From the verification of the IT return and balance sheet as on 31/03/2014 of M/s A.R. International Private Limited, it was observed that an amount of Rs. 28,53,251 is shown under the head loans and advances paid to the assessee, as proprietor of A.H. Traders. Accordingly, the assessee was specifically asked to justify why the provisions of deemed dividend should not be attracted as the assessee has received advances from the company wherein he was holding 25.34% of shares. In the absence of any satisfactory explanation along with supporting documents justifying the advance received at Rs. 28,53,251, the Assessing Officer vide order dated 28/12/2016 passed under section 143(3) of the Act treated the said amount received by the assessee as deemed dividend and accordingly taxed the same in the hands of the assessee under section 2(22)(e) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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