Ramesh Nagindas Shah Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that addition u/s. 2(22)(e) of the Income Tax Act is liable to be set aside since advance was received was merely recorded as journal entry and no sum was received by the assessee. Thus, appeal allowed.
Facts- During the course of assessment proceedings, AO observed that the assessee was a director and substantial shareholder in M/s. Mahavir Submersible Pvt. Ltd., holding 49.71% of the total shares amounting to ₹35,00,000/-. AO noted that the assessee had received a loan of ₹65,22,947/- from the aforesaid company and observed that the company had accumulated profits of ₹25,93,812/- as of March 31, 2013. This situation, as per AO fell under the purview of Section 2(22)(e) of the Income Tax Act, which defines deemed dividends. Thus, the payment to the extent of accumulated profit of Rs.25,93,812/- of the company was added to the total income of the assessee as deemed dividend u/s. 2(22)(e) of the I.T. Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that since the contention of the assessee has all throughout been that no sum was received by the assessee, but a mere journal entry was passed and therefore there is no occasion to invoke the provisions of section 2(22)(e) of the Act has not been examined or verified by the Revenue Authorities, we are of the considered view that the order passed by Ld. CIT(Appeals) is liable to be set aside in absence of any finding on the above contention of the assessee.
