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TMI Blog2019 (7) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on record by the assessee and explain the nexus in the transaction before holding that the assessee was benefited on account of the transaction and that M/s.AVPL was used as a conduit. We find that this factual finding is missing in the assessment order, the correctness of which was not tested by the CIT(A) nor did the Tribunal undertake such an exercise though the assessee raised such a ground. We will be well justified in terming the orders passed by both the CIT(A) as well as the Tribunal to be perverse and unsustainable. That apart, the assessee specifically raised a contention before the CIT(A) that he did not have adequate opportunity to explain his case before the AO. This ground has not been dealt with by the CIT(A). Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the conditions prescribed for taxing the deemed dividend pertaining to the transaction between the two entities in view of the holding of substantial share holding by the appellant ? And iii. Whether the provisions of Section 2(22)(e) of the Act would get attracted for taxing the advances given by M/s.Tuticorin Power Company Limited to M/s.Aban Ventures Limited in the course of their business in the hands of the appellant solely on the ground of substantial share holding in both the companies? 3. We have heard Mr.A.S.Sriraman, learned counsel for the appellant - assessee and Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the respondent - Revenue. With consent of the learned counsel o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The Assessing Officer further held that the ultimate beneficiary of the transaction in question ought to be the assessee, as the recipient company has been utilized as conduit to subvert the funds to the assessee. Thus, the Assessing Officer concluded that M/s.AVPL was utilized as a conduit to transfer the funds from M/s.TPCL to the assessee. Accordingly, a sum of ₹ 1.40 Crores was assessed as a deemed dividend under Section 2(22)(e) of the Act in the hands of the assessee under the head 'income from other sources'. 8. The assessee appellant preferred an appeal before the Commissioner of Income Tax (Appeals)-1, Chennai-34 [for short, the CIT(A)]. In the memorandum of grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the Assessing Officer failed to prove that the loans given by M/s.TPCL to M/s.AVPL resulted in any benefit to the assessee, that the Assessing Officer failed to appreciate the fact that there was only capital reserve in the balance sheet of M/s.TPCL, which could not have been distributed to the shareholders as dividend, that the Assessing Officer failed to give opportunity to the assessee to explain his case in spite of making a request by his authorized representative and that the Assessing Officer ought to have accepted the contention of the assessee that the same amount had already been taxed in the hands of M/s.AVPL and the addition made would amount to double taxation. 11. The CIT(A), vide order dated 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted. In paragraph 3 of the order passed by the CIT(A), the grounds raised by the assessee were fully extracted verbatim. The grounds, which we have referred to above also find a place. In our considered view, no exercise was done by the CIT(A) to examine as to how the Assessing Officer came to the conclusion that M/s.AVPL was used as a conduit to transfer the funds from M/s.TPCL to the assessee, when the assessee specifically stated that no such transaction took place. 18. We find that the order passed by the CIT(A) is a mere academic exercise without examining the factual position. This error, which had crept in the order passed by the CIT(A), was pointed out before the Tribunal. Nevertheless, the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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