9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 119 - AT - Income TaxDeemed dividend under section 2(22)(e) - Held that - The transactions between group companies are in the nature of current account transactions and cannot be regarded as deemed dividend. In this case, the admitted position is that there was opening balance of ₹ 4,33,000/- in the books of M/s. Magnum International of M/s. Courage Financial Services Pvt. Ltd. This opening balance of ₹ 4,33,000/- increased to ₹ 21,62,000/- on account of fresh amount of ₹ 17,29,000/- received during the instant year. Likewise in the audited balance sheet of M/s. B.R. Associates, there was opening balance of ₹ 36,52,000/- of M/s. Courage Financial Services Pvt. Ltd. which balance increased to ₹ 43,25,000/- at the close of the year on account of ₹ 7,00,000/- received during the year. Thus, apparently, these are transactions between group companies which are on year to year basis and therefore, the current account transactions and business transactions. We have already held above following the judgment of CIT vs. Arvind Kumar Jain 2011 (9) TMI 363 - DELHI HIGH COURT that business transactions did not constitute deemed dividend under section 2(22)(e) of the Act Following the above findings, additions made for deemed dividend are deleted - Decided in favour of assessee. Unexplained cash credit under section 68 - Held that - The ld. counsel in his arguments submitted that such surrender was never acted upon and no sum was offered for tax or assessed to tax on the basis of such said surrender given by Shri I. C. Jindal. A chart tabulating the various additions made in all the four companies has also been placed on record. It was contended that no addition has been made on the basis of surrender but on independent examination of the claim. He alternatively contended that such surrender in any case has no bearing on the advance received by the appellant. We find that there are no factual findings vis- -vis the above submission of the appellant. We therefore direct that the issue regarding addition of ₹ 45,00,000/- be decided de-novo by the Assessing Officer after granting adequate opportunity of being heard to the appellant. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Legality of the jurisdiction assumed by the AO under section 153A/143(3) of the Income Tax Act. 2. Validity of the search warrant and search operation under section 132. 3. Violation of principles of natural justice by the AO. 4. Addition of deemed dividend under section 2(22)(e) for AY 2005-06 and 2007-08. 5. Addition of unexplained cash credit under section 68 for AY 2007-08. 6. Levy of interest under sections 234A and 234B. Issue-wise Detailed Analysis: 1. Legality of Jurisdiction Assumed by AO under Section 153A/143(3): The appellant argued that the AO erred in assuming jurisdiction and passing orders under section 153A/143(3) as there was no undisclosed income or material found during the search. The Tribunal, however, did not specifically adjudicate this legal issue separately as the matter was already dealt with on merits. 2. Validity of the Search Warrant and Search Operation under Section 132: The appellant contended that the search was illegal due to the absence of a separate search warrant. This ground was not pressed by the appellant and was dismissed. 3. Violation of Principles of Natural Justice by the AO: The appellant claimed that the AO violated the principles of natural justice by not providing adequate opportunity and issuing a show cause notice regarding the additions made. This ground was not specifically adjudicated by the Tribunal. 4. Addition of Deemed Dividend under Section 2(22)(e): For AY 2005-06, the AO added Rs. 51,92,469 as deemed dividend, which was upheld by the CIT(A). The Tribunal found that the transactions between M/s. B.R. Associates Pvt. Ltd. and M/s. Deluxe Alloys Pvt. Ltd. were business transactions and not loans or advances. Therefore, the addition was deleted. For AY 2007-08, the AO made an addition of Rs. 78,85,954, which was enhanced to Rs. 10,78,73,000 by the CIT(A). The Tribunal held that the transactions between M/s. Magnum Steels Ltd. and M/s. Magnum International Ltd. were current account transactions between group companies and could not be classified as loans or advances under section 2(22)(e). Thus, the addition was deleted. 5. Addition of Unexplained Cash Credit under Section 68: The AO added Rs. 45,00,000 as unexplained cash credit, which was upheld by the CIT(A) based on the statements of Shri Asheem Gupta and Shri I.C. Jindal. The Tribunal directed the AO to decide the issue de novo after granting adequate opportunity to the appellant, as there were no factual findings vis-`a-vis the appellant's contention regarding the incorrect entry in the account. 6. Levy of Interest under Sections 234A and 234B: The levy of interest under sections 234A and 234B was considered consequential in nature and was not specifically adjudicated. Conclusion: The appeal for AY 2005-06 was allowed, and the appeal for AY 2007-08 was partly allowed. The Tribunal deleted the additions made under section 2(22)(e) for both assessment years and directed a de novo decision on the addition under section 68 for AY 2007-08.
|
