2011 (6) TMI 1010 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of Rs. 25,00,000 as deemed dividend u/s 2(22)(e).
2. Addition of Rs. 17,70,500 as income from other sources.
3. Addition of Rs. 6,98,070 on account of difference in cash balance.
4. Deletion of addition of Rs. 7,29,973 by CIT(A) for A.Y. 2005-06.

Summary:

Issue 1: Taxability of Rs. 25,00,000 as deemed dividend u/s 2(22)(e)
The assessee, a shareholder in M/s. IPF Breeds (P) Ltd., received Rs. 25,00,000 from the company, which was treated as deemed dividend income u/s 2(22)(e) by the AO. The CIT(A) confirmed this, stating that the payment partakes the character of dividend paid to the appellant shareholder. The Tribunal remitted this issue back to the AO for thorough examination of the submissions and materials produced by the assessee.

Issue 2: Addition of Rs. 17,70,500 as income from other sources
The AO added Rs. 17,70,500 as income from other sources due to lack of evidence regarding the source of amounts received from M/s. IPPL, Hyderabad. The CIT(A) confirmed this addition, treating it as deemed dividend u/s 2(22)(e). The Tribunal noted the assessee's failure to provide necessary information and remitted this issue back to the AO for re-examination.

Issue 3: Addition of Rs. 6,98,070 on account of difference in cash balance
The AO added Rs. 6,98,070 due to discrepancies in the cash balance reported by the assessee. The CIT(A) upheld this addition. The Tribunal, considering the assessee's submission that the difference represented the opening cash balance, remitted this issue back to the AO for verification.

Issue 4: Deletion of addition of Rs. 7,29,973 by CIT(A) for A.Y. 2005-06
The AO added Rs. 7,29,973 as income for A.Y. 2005-06, which the assessee claimed was an opening balance receivable from Godrej. The CIT(A) deleted the addition, accepting the assessee's reconciliation statement and method of accounting. The Tribunal found inconsistencies in the findings of the AO and CIT(A) regarding the accounting method and remitted this issue back to the AO for re-examination.

Conclusion:
Both the appeals of the assessee and the Revenue were allowed for statistical purposes, with all issues remitted back to the AO for re-examination and appropriate orders in accordance with the law.