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01-01-2020, Anumod Sharma, Section 2(22)(e), 68, Tribunal Delhi

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2 weeks 3 days ago #11916 by amit
Section - 2(22)(e), 68
Order Date - 01-01-2020
Favouring - Assessee
Court - Tribunal Delhi
Appellant - ACIT
Respondent - Anumod Sharma
Justice - H. S. Sidhu JM & Dr. B. R. R. Kumar AM
Citation - 120Taxpundit36
Appeal No. - ITA No. 6892/Del/2015
Asstt. Year - 2012-13


PER : Dr. B. R. R. Kumar

The present appeal has been filed by the revenue against the order of ld . CIT (A)-XXVI, New Delhi dated 12 .10.2015.

2. The only one ground raised in this appeal reads as under:

“1. On the facts and in the circumstances of the case , the ld. CIT (A) has erred in law in deleting the additions of Rs.10,57,01 ,194/- made u/s 2(22)(e) of the I .T Act on account o f deemed dividend.”

3. The facts have been taken from the order of the ld. CIT (A), the record of the revenue and the paper book filed. The AO, in the assessment order, has highlighted the fact that the assessee was holding 86.67% shares in M/s Apra Auto India P. Ltd and had been in receipt of amount running into Rs.10.57 crores from the account of M/s Apra auto India P. Ltd. Keeping in view the fact, that the said company that is M/s. Apra Auto India p. Ltd. was also having accumulated profits of Rs. 21.65 crore, the amount so received by the assessee has been treated as deemed dividend as per the Section 2(22)(e) of the Income Tax Act, 1961.

4. The assessee claimed before the AO that the amount received from M/s Apra Auto India Pvt. Ltd. represented following three distinct transactions:

“i) Advance against commercial building Rs. 5,62,00,000/-
ii) Anumod Sharma (expense account) Rs. 73,76,584/-
iii) Anumod Sharma ledger account Rs. 6,00,84,793/-“ (showing Rs. 1,95,390/- as credit Balance)

5. The AO after considering the assessee’s exp anation on the issue highlighted that claim of receiving advance against commercial building was a ploy to escape the deeming provision of section 2(22)(e). The AO highlighted that agreement to sell between the assessee and M/s Apra Auto India Pvt. Ltd. was dated 03.04 2011 in which reference of bank transaction dated 08.04.2011 was recorded representing a sum of Rs.1.40 crore given as advance payment and credited in assessee’s bank account on 08.04.2011. The impugned agreement also recorded that the balance payment of Rs.5.60 crore had to be paid by 31st December 2011 and in the event of non compliance the agreement was to be terminated leading to refund of advance payment without interest. The AO concluded that the claim of an agreement to sell put forward by the assessee was a colourable device intended to escape the provision of section 2(22)(e). It was also highlighted that similar pattern of receipt of amount running into crores was evident from the bank statement of early years. The AO also held that the expenses paid or amount transferred to different persons by M/s Apra Auto India Pvt. Ltd. on behalf of the assessee also came under the purview of deemed dividend. The AO placed reliance on the following judgments:

Walchand & Co. Ltd. vs CIT (1975) 100 ITR 598(Bom)
CIT vs. K. Shrinavasan 50 ITR 788
CIT vs. P. Sarada 154ITR 387 (1985) (Mad)
MD Jindal vs. CIT 164 1TR 028 (Cal) (1987)
Tarulata Shyam vs. CIT 108 ITR 345 (1977)(SC)
Rajesh P. Ved vs. AC1T 001 ITR 275 (ITAT Mumbai) (2010)
Ms. Sarada P vs. CIT 229 ITR 444(SC) (1998)

6. During the arguments before us, the ld. DR argued that the trifurcation of the total amount into three different heads as

i) Advance against commercial building Rs. 5,62,00,000/-
ii) Anumod Sharma (expense account) Rs. 73,76,584/-
iii) Anumod Sharma ledger account Rs. 6,00,84,793/-

is a cover up exercise to camouflage the issue of deemed dividend u/s 2(22)(e) of the Act. The assessee has re-casted his account into receipts, loans, advances, expense account and ledger accounts. It was argued that the initial submissions, there was no such differentiation such loans and advances rather the entire amount s shown as advance. It is the afterthought of the assessee to built a story of advance against commercial building in support of which buyer’s agreement dated 03.04.2011 has been prepared on a non-judicial stamp paper of Rs.100/- which was purchased on 17.09.2010 between the assessee who is the main promoter and holding 86.67% of shares in M/s Apra Auto (India) Pvt. Ltd. the ld. DR vehemently argued that the buyer’s agreement does not even bear complete details of the two witness, not been verified by the oath commissioner and also not registered. It is a ploy to escape the rigors of provisions of Section 2(22)(e). The documents like buyer’s agreement and the trifurcated ledger accounts of the assessee in the books of said company appear to have been prepared in so haste that in those ledger accounts the name of the bank in all entries (Debit/Credit) has been mentioned as bank of Baroda whereas all the transactions have been made through bank account of assessee as well as of the company in

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