DCIT Vs Jateen Madanlal Gupta (ITAT Ahmedabad)
On perusal of the reasons recorded by the AO, we find that the AO at the threshold has recorded that it is seen that the assessee is having substantial share in ‘JPIL’ which has advanced loan to the companies namely M/S Gujarat Mall Management Pvt. Ltd, and M/S Aryan Arcade Pvt. Ltd and the assessee also holds 50% and 22% shares in both the companies. Thus the entire transaction of advancing loan fall under the preview of section 2(22)(e) of the Act and represent deemed dividend of the assessee.
From the above details, we note that the AO nowhere mentioned that he has new information or fresh material in possession from where he has seen such fact. Further the AO has recorded that assessee is having 22% share in M/S Aryan Arcade Pvt Ltd. which came to be factually wrong as the assessee is not holding any share in such company. There were also incorrect information recorded in reason by the AO with regard to amount of loan and accumulated profit. All this fact suggest that the AO has not applied his/her mind in reaching to the reason to believe or formed believe in mechanical order without adducing supporting material that income of the assessee has escaped to assessment. Thus reopening of assessment in absence of tangible material and without applying mind is not permissible.
In view of the above, we hold that the reopening was made without bringing any fresh material on record. Thus we quash the assessment framed under section 147 of the Act. Hence, the ground raised by the assessee in the CO is allowed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeal is filed by the Revenue and the CO is filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-3 Ahmedabad, [Ld. CIT (A) in short] dated 20/06/2017 arising in the matter of assessment order passed under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) dated 10/03/2016. The assessee has filed Cross Objection in the Revenue’s appeals bearing ITA no. 1932/AHD/2017 for the Assessment Year 2008-2009.
2. The Revenue has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,62,33,800/- made on account o f deemed devident u/s. 2(22)(e) of the I.T. Act, 1961.
2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) ought to have upheld the order of the A.O.
3. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O be restored to the above extent.
3. The only issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition made by the AO amounting to ₹ 2,62,33,800/- on account of deemed dividend under section 2(22)(e) of the Act.
4. Briefly stated facts are that the assessee in the present case is an individual and having income from salary, rent, interest and short term capital gain. The assessee, among other companies, is a registered shareholder and carrying voting rights not less than 10% in the companies as detailed under:
