2019 (6) TMI 1081 - AT - Income Tax

Deemed dividend u/s 2(22)(e) - assessee has received loan from M/s. S.G.Equipments Machines Pvt. Ltd., where the assessee holds 50% of the share-holding - as per assessee amount has to be worked out based on the current year accumulated profits after adjustment of deemed dividend of assessment year 2008-09 - HELD THAT - Amount has been assessed in the hands of the assessee as deemed dividend in assessment year 2008-09 an as such, the deemed dividend so assessed should be reduced from the accumulated profits and balance amount of accumulated profits should be considered in the current year for the purpose of section 2(22)(e) of the Act. Accordingly, we direct the AO to compute the deemed dividend as discussed above applying the ratio of the decision in the case of M/s.Aswani Enterprises 2018 (10) TMI 373 - MADRAS HIGH COURT Unexplained credit in capital account - HELD THAT - Assessee has not filed details on this aspect of addition before the AO in assessment proceedings and there is no finding by the AO in respect of submission of any information/details by the assessee. Further there may be various reasons for the assessee for not filing the details and also the assessee shall not gain or benefited by delaying the process of furnishing evidence to substantiate the claims. - Matter remitted before AO for fresh adjudication and also provide adequate opportunity of hearing to the assessee.

Summary

Issues:
1. Condonation of delay in filing appeal with the Tribunal.
2. Addition of deemed dividend u/s 2(22)(e) of the Income-tax Act.
3. Addition of unexplained credit in capital account.

Analysis:
1. The Tribunal considered a delay of 18 days in filing the appeal and accepted the condonation petition, admitting the appeal after finding a reasonable cause supported by the appellant and no serious objection from the respondent. The delay was condoned, and the appeal was admitted.

2. Regarding the addition of deemed dividend u/s 2(22)(e), the AO treated a loan received by the assessee as deemed dividend due to unsatisfactory explanations provided. The CIT(A) confirmed this action, leading to the appeal. The Tribunal directed the AO to calculate the deemed dividend based on the current year profits after adjusting the previous year's deemed dividend, following a precedent from the Hon'ble Madras High Court.

3. The second issue involved the addition of an unexplained credit in the capital account. The appellant argued that the amounts credited were from proprietary concerns and corporate balances, supported by ledger account evidence, PAN, Aadhar, and bank statements. The Tribunal found incomplete details submitted before the CIT(A) and remanded the issue to the AO for fresh adjudication, emphasizing the need for the appellant to cooperate in providing necessary information.

Overall, the Tribunal allowed the appeal for statistical purposes, remitting the second disputed issue back to the AO for further examination and providing the appellant with an opportunity to substantiate the credits in the capital account.