K P Nanjundi Vishwakarma Vs ACIT (ITAT Bangalore)
In this case, the appeal was filed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2018-19 concerning the addition of Rs.79,73,599 as deemed dividend under Section 2(22)(e) of the Income Tax Act.
A search and seizure operation under Section 132 was conducted on 4 January 2018. During the search proceedings, a discrepancy of Rs.79,73,599 was found between the cash book balance and the physical cash available. The Manager of Lakshmi Gold Khazaana Pvt. Ltd. stated in a statement recorded under Section 132(4) that the amount represented personal withdrawals made by the assessee. The assessee also confirmed that he had withdrawn the amount and declared it as unaccounted income for Assessment Year 2018-19. However, the amount was not disclosed in the return of income filed by the assessee.
The Assessing Officer noted that the assessee was the Managing Director of the company and held more than 10% shareholding. Since the company had accumulated reserves of Rs.79,73,599, the Assessing Officer treated the alleged withdrawal amount as deemed dividend under Section 2(22)(e) and added it to the assessee’s income. The assessment order determined total income at Rs.1,36,16,202.
The assessee challenged the addition before the Commissioner of Income Tax (Appeals), but the appellate authority confirmed the addition. The assessee then appealed before the Income Tax Appellate Tribunal.
