2023 (12) TMI 546 - AT - Income Tax

Assessment u/s 153A - addition on account of unsecured loan on the ground that the assessee was not in position to prove the creditworthiness and genuineness of loan - Assessee argued these additions are not sustainable as there is no incrimination material found, as a result of search and the assessment attained finality - HELD THAT - A perusal of the assessment order clearly reveals that these additions are not based upon incriminating material found during the search. This aspect was fairly conceded by the Ld. CIT-DR. Accordingly, these addition made dehors incriminating material found during the search which are liable to be deleted on the touchstone of the decision of the Hon ble Supreme Court in the case of PCIT vs Abhisar Buildwell Pvt. Ltd. 2023 (4) TMI 1056 - SUPREME COURT they are directed to be deleted as such. Thus additions are liable to be deleted on account of lack of incriminating material. Deemed dividend u/s 2(22)(e) - AO contended that Assessee is a common director and substantial shareholder in both the companies and therefore the provisions of section 2(22)(e) of the Act get attracted and made addition - Assessee submitted that the assessee was not a registered shareholder in the concerned company from which the loan was obtained - HELD THAT - Assessee referred to the decision of Madhur Housing and Development Company 2017 (10) TMI 1279 - SUPREME COURT and Ankitech (P) Ltd. 2011 (5) TMI 325 - DELHI HIGH COURT for the proposition that addition for deemed dividend made u/s 2(22)(e) of the Act can be done in the hands of the shareholder only. Since, the assessee is not registered shareholder in the loan given company, the addition on the touchstone of above case laws is not sustainable. Hence, we delete the same. Advance payment without TDS - CIT(A) correctly deleted addition as AO has not looked into nature of the payments made by the appellant and has made the addition in a mechanical manner, without application of mind.

Summary

Issues involved:
The judgment involves appeals by the Revenue against orders of the ld. CIT (Appeals) for assessment years 2013-14, 2014-15, and 2015-16 respectively.

ITA No.1333/Del/2021:
The appeal for Assessment Year 2013-14 involved additions made on account of unsecured loan and expenses without incriminating material found during the search. The Ld. CIT(A) deleted the additions. The ITAT held that the additions made without incriminating material are liable to be deleted, following the decision of the Hon'ble Supreme Court. The appeal of the Revenue was dismissed, and the ground raised by the assessee under Rule 27 of the ITAT Rules was allowed.

ITA No.1334/Del/2021:
In this case, additions were made for unsecured loan, deemed dividend, and estimated disallowance of expenses without any seized material. The Ld. CIT(A) deleted the additions. The ITAT upheld the deletion of the additions made without incriminating material. Regarding the deemed dividend addition, it was found that the nature of the advance was a trade advance, and therefore the provisions of section 2(22)(e) of the Act could not be invoked. The appeal of the Revenue was dismissed.

ITA No.1335/Del/2021:
The additions made for unexplained unsecured loan, employee benefits, and advance payments without TDS were deleted by the Ld. CIT(A) on merits. The ITAT found that these additions were not based on incriminating material found during the search and were directed to be deleted. The addition of advance payment without TDS was also deleted by the Ld. CIT(A) after careful analysis. The appeal of the Revenue was dismissed.

The judgment pronounced on 08th December, 2023, dismissed all three appeals filed by the Revenue.