Deemed dividend u/s 2(22)(e) was added by the Assessing Officer ...

Tax tribunal rules no deemed dividend if shareholder loan is mere journal entry, not actual cash payment.

Case Laws     Income Tax

October 30, 2024

Deemed dividend u/s 2(22)(e) was added by the Assessing Officer (AO) on the grounds that the assessee, a director and substantial shareholder in a private company, had received a loan from the company. The assessee contended that the provisions apply only to actual cash payments, not journal entries. The Tribunal observed that the addition was based on advances presented as mere journal entries, suggesting no actual loan was received. The assessee consistently explained this before the authorities, but it was not adequately examined. The Tribunal held that since the assessee's contention of no sum being received, only a journal entry passed, was not verified, the CIT(A)'s order was liable to be set aside for lack of findings on this crucial aspect. The assessee's appeal was allowed.

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