2016 (4) TMI 419 - AT - Income Tax

Deemed dividend u/s 2(22)(e) - revision u/s 263 - Held that - We are of the considered view that Ld. CIT(A) have made these addition u/s 2(22)(e) and 56(2)(vi) of the I.T. Act 1961 under different heads which has not been discussed / adjudicated by the AO in the assessment order which is not sustainable in the eyes of law. The AO has not considered any of these issues pertaining to these sections. In our view Ld. CIT(A) did not have any jurisdiction to make any such additions on the issues which were never considered by the Assessing Officer in the assessment order. Although the powers of the CIT(A) are co-terminus with the powers of the AO yet the Ld. CIT(A) has jurisdiction only on those issues which have been considered by the AO irrespective of the fact that whether the issue is subject matter of the Appeal or not. The Ld. CIT(A) does not have any jurisdiction over those issues which have not been considered by the AO. This may be subject matter of revision u/s. 263 of the I.T. Act or reassessment u/s. 148 of the I.T. Act. If the Ld. CIT(A) tries to examine those issues which have not been considered by the AO then the provisions of section 147 as well as section 263 of the I.T. Act will become redundant and the condition for their operation will be nullified. Thus we hold that Ld. CIT(A) did not have any jurisdiction to make such additions on the issues which were never considered by the AO as has been done in the present case. - Decided in favour of assessee Addition on a/c of insufficient withdrawals for household expenses - Held that - No doubt the appellant is living jointly with his parents and therefore withdrawal of all the members of the family living together have to be considered while estimating house hold expenditure. In the capital account of the appellant as on 31.3.2008 drawings of 2, 92, 77, 983/- have been shown. This fact has been ignored by the AO and also not highlighted in the submission filed on behalf of the appellant. With such large drawings the question of any addition on account of low house hold expenses does not arise. - Decided in favour of assessee

Issues Involved:
1. Addition of Rs. 3,87,33,295/- as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961.
2. Addition of Rs. 59,21,600/- out of loan from Shri D.K. Gupta and his AOP u/s 56(2)(vi).
3. Addition of Rs. 3,30,00,000/- out of loan from Shri Pankaj Kapur u/s 56(2)(vi).
4. Addition of Rs. 48,00,000/- being loan from Ms. Tanisha Mohan u/s 56(2)(vi).
5. Addition on account of insufficient withdrawals for household expenses.

Detailed Analysis:

1. Addition of Rs. 3,87,33,295/- as Deemed Dividend u/s 2(22)(e):
The assessee received an advance from M/s Arlington Impex Pvt. Ltd., where he is a significant shareholder. The CIT(A) confirmed the addition, treating it as deemed dividend under section 2(22)(e) of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had correctly identified that the transaction could not be considered unexplained but erred in applying section 2(22)(e) as it was not within his jurisdiction. The Tribunal concluded that the CIT(A) had no jurisdiction to make such additions, which were not considered by the AO.

2. Addition of Rs. 59,21,600/- out of Loan from Shri D.K. Gupta and his AOP u/s 56(2)(vi):
The CIT(A) sustained the addition of Rs. 59,21,600/- as income under section 56(2)(vi) because the amounts were received without consideration and there was no commercial expediency established. The Tribunal found that the CIT(A) had no jurisdiction to make such additions under section 56(2)(vi), which were not considered by the AO.

3. Addition of Rs. 3,30,00,000/- out of Loan from Shri Pankaj Kapur u/s 56(2)(vi):
The CIT(A) sustained the addition of Rs. 3,30,00,000/- as income under section 56(2)(vi), noting that the transactions took place through banking channels but were without consideration. The Tribunal again held that the CIT(A) had no jurisdiction to make such additions under section 56(2)(vi), which were not considered by the AO.

4. Addition of Rs. 48,00,000/- being Loan from Ms. Tanisha Mohan u/s 56(2)(vi):
The CIT(A) confirmed the addition of Rs. 48,00,000/- as income under section 56(2)(vi), noting that the amounts were received without consideration. The Tribunal found that the CIT(A) had no jurisdiction to make such additions under section 56(2)(vi), which were not considered by the AO.

5. Addition on Account of Insufficient Withdrawals for Household Expenses:
The AO made an addition of Rs. 3,00,000/- on account of insufficient withdrawals for household expenses. The CIT(A) deleted this addition, noting that the assessee had shown drawings of Rs. 2,92,77,983/- in the capital account, which was sufficient to cover household expenses. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere with the well-reasoned order.

Conclusion:
The Tribunal allowed the assessee's appeal, canceling the CIT(A)'s order as it was without jurisdiction. The Tribunal dismissed the revenue's appeal on the deletion of additions and upheld the deletion of the addition on account of insufficient withdrawals for household expenses. The assessee's appeal against the CIT(A)'s order under section 154 became infructuous and was dismissed.

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