Shri Devendra Kumar Jain, Bhopal V. ACIT 2(1), Bhopal

ITA 104/Ind/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9299 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 20-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Deemed dividend; TDS
• Section: 143(3); 2(22)(e)

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA No.104/Ind/2021 Assessment Year: 2014-15 Shri Devendra Kumar Jain Bhopal PAN No.ADPPJ1603A : Appellant V/s ACIT 2(1) Bhopal : Respondent Appellant by Shri S.S. Deshpande, AR Respondent by Shri Amit Soni, Sr. DR Date of Hearing 21.01.2022 Date of Pronouncement 07.02.2022 O R D E R PER MANISH BORAD, A.M.: The above captioned appeal filed at the instance of the Assessee is directed against the order of National Faceless Appeal Centre(NFAC), Delhi dated 31.03.2021 which is arising out of the Devendra Kumar Jain ITA No.104/Ind/2021 2 order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 29.12.2016 by DCIT-Bhopal. The Assessee has raised following grounds of appeal in: “1.The ld. CIT(A) has erred in maintaining the addition of Rs.16,50,000/-u/s 2(22)(e). 2. It was prove before the lower authorities that if the total account is considered there is no debit balance in the books of the company, as such the provisions of section 2(22)(e) are not attracted and the addition made is illegal and bad in law. 3.The Ld. CIT(A) has grossly erred in not considering and applying the cases cited before him, where the facts of the cases were practically the same as that of the assessee. The additions upheld by Ld. CIT(A) are illegal and bad in law, and hence, be deleted. 4. The addition of Rs.16,50,000/- may please be deleted. 2. Ld. counsel for the assessee submitted that the assessee was having one current account in which transactions of salary were taking place and other account was unsecured loan. Net balance of the assessee in books of account of the company namely M/s Didymous Trade Links Pvt. Ltd. at the year end is credit and Ld. AO erred in considering only the amount debited in the account of the assessee and treating it as loans and advances liable to taxed as deemed dividend u/s 2(22)(e) of the Act. Reference was made to the written submissions filed before Ld. CIT(A) as well as the paper book containing case laws running into 47 pages. Devendra Kumar Jain ITA No.104/Ind/2021 3 3. Per contra Ld. DR vehemently supporting the orders of both lower authorities. 4. We have heard rival contentions, perused the records placed before us. The assessee is an individual earning income from salary which also includes salary from company M/s Didymous Trade Links Pvt. Ltd. It is not in dispute that the assessee is a director in this company and also a majority shareholder holding 27.5% of the equity share and fulfills one of the condition of section 2(22)(e) of the Act. Now the issue remains is that whether any addition was required to be made in the hands of the assessee for the alleged loan or advance given by company to the assessee. 5. To examine this aspect we have perused two ledger accounts of the assessee in the books of M/s Didymous Trade Links Pvt. Ltd. . In the first ledger account in the name of director Shri D.K. Jain there is an opening credit balance of Rs. 25,791/- and during the year there are regular entries of salary given to the assessee. Assessee received salary of Rs.2,00,000/- per month and after deducting tax at Rs.20,000/-, Rs.1,80,000/- is credited in the assessee’s account from April till October 2013. Thereafter during the November and December salary of Rs.1,75,000/- per month Devendra Kumar Jain ITA No.104/Ind/2021 4 and after deducting TDS amount of Rs.1,15,054/- is credited. For the remaining period salary of Rs. 1,00,000/- is being given against the salary. Overall against the credit entries including salary and opening balance totaling to Rs. 39,57,343/- assessee was paid Rs.38,65,070/- leaving a net credit balance of Rs.92,273/-. We find that Ld. AO has made the addition for deemed dividend at Rs.16,50,000/- mainly for the amounts paid by the company to the assessee against salary expense. In the other ledger account placed page 10 of the paper book there is credit balance of unsecured loan of Rs.24,16,000/- given by the assessee to the company and the same balance continued till the year end. Except these two ledger accounts there are no other transactions between the assessee and the company namely M/s Didymous Trade Links Pvt. Ltd. In our considered view there is no transaction of loans or advances given to the assessee during the year in any of the ledger account. There was opening credit balance in both ledger accounts and the closing balance is also credit balance. Cheques issued to the assessee during the year are against the salary given to the assessee for looking after the affairs of the company and there are some current account transactions which cannot be termed as Devendra Kumar Jain ITA No.104/Ind/2021 5 loans and advances for the purpose of section 2(22)(e) of the Act. Therefore, finding of Ld. CIT(A) deserves to be reversed as case of the assessee does not fall under the provisions of section 2(22)(e) of the Act as no ‘loans and advances’ in terms of the provisions of section 2(22)(e) of the Act has been given to the assessee. Therefore additions for deemed dividend of Rs.2(22)(e) of the Act at Rs. 16,50,000/- stands deleted. Accordingly, grounds raised by the assessee are allowed. 6. In the result, Assessee’s appeal ITANo.104/Ind/2021 is allowed. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 07.02.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated : 07.02.2022 Patel/Sr. PS Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore