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2023 (11) TMI 931 - AT - Income Tax


Issues Involved:
The judgment involves the assessment of deemed dividend u/s. 2(22)(e) of the Income-tax Act, 1961 for the assessment year 2011-12.

Issue 1: Jurisdiction of the Commissioner of Income Tax (Appeals)
The appellant contended that the order of the Commissioner of Income Tax (Appeals) was contrary to law and opposed to principles of equity, natural justice, and fair play. The appellant argued that the Assessing Officer's order lacked jurisdiction.

Issue 2: Addition of Deemed Dividend
The Assessing Officer treated a debit balance in the company's books as deemed dividend u/s. 2(22)(e) of the Act due to the appellant's substantial interest in the shareholding. The Commissioner of Income Tax (Appeals) upheld this addition, citing judicial precedents.

Issue 3: Nature of Transactions
The appellant argued that the transactions between the appellant and the company were in the nature of a current account in the normal course of business, not loans or deposits as per section 2(22)(e) of the Act. The appellant provided explanations for various debit balances and payments, emphasizing the temporary nature of the balances.

Issue 4: Verification and Decision
The Tribunal found that the transactions needed to be examined in light of the specific nature of the appellant's dealings with the company. Several debit balances were explained by the appellant as inadvertent errors that were promptly rectified. The Tribunal directed the Assessing Officer to verify the appellant's claims and decide the issue based on the evidence provided.

In conclusion, the Appellate Tribunal ITAT Chennai allowed the appeal filed by the assessee for statistical purposes. The Tribunal set aside the Commissioner of Income Tax (Appeals) order and directed the Assessing Officer to verify the appellant's claims regarding the deemed dividend additions and decide accordingly based on the evidence presented.

 

 

 

 

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