Dr. HM Venkatappa Vs DCIT (ITAT Bangalore)
Assessee an individual, majority shareholder & managing director of a private limited company. AO observed that unaccounted cash was found & seized from the office of Shri H.B. Sunil, to which Dr. H.M. Venkatappa (the assessee) admitted to have handed over to Shri H.B. Sunil for purchasing 2 acers of land property in his & his son’s name.
This cash, according to the assessee, was originated from suppressed bills in the books of the company. Additionally, during a search at the residence of the assessee cash was seized, which he also claimed was from suppressed sales in the Company. AO concluded that a total of cash was withdrawn by assesee from the company for personal use & therefore, the same should be considered as deemed dividend under section 2(22)(e) since assessee is a substantial shareholder in the company
Assessee contended that the cash in question belonged to the company which was generated through unaccounted sales & the money remained the company’s property & was never withdrawn or used by him for personal purposes. Seized cash found was still in the company’s possession & had not been used as a loan or advance by him. Assessee denied any personal utilization or diversion of funds from the company.
