RINA S. MEHTA,MUMBAI V. ACIT, CC-4(1), MUMBAI

ITA 704/MUM/2023

AI Insights

The case involves cross appeals by the assessee, Smt. Reena Sudhir Mehta, and the revenue against the order of the Commissioner of Income Tax (Appeals)-52, Mumbai, for the Assessment Year 1993-94. The primary issues in the appeals were related to the additions made by the AO on account of unexplained income from the sale of shares and estimated dividend income, as well as the disallowance of interest deduction claimed by the assessee. The Tribunal found that the additions made by the AO were not substantiated by adequate evidence and that the method of estimation used by the AO and upheld by the CIT(A) was not tenable. The Tribunal also noted that the assessee had been consistent in claiming interest deductions, which had been allowed in previous years under similar circumstances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 40903 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 1993-1994
• Other Referred Cases: Smt. Pratima H Mehta vs. DCIT, Harshad Mehta Group cases
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Set aside; Unexplained investment; Capital Gains
• Section: 144; 250; 13; 234B; 27

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JM & MS PADMAVATHY S, AM I.T.A. No. 704/Mum/2023 (Assessment Year: 1993-94) Smt. Reena Sudhir Mehta, 32, Madhuli Apartment, 3rd Floor, Dr. A B Road, Worli, Mumbai-400018. PAN: ABNPM8222C Vs. DCIT, Central Circle-4(1), Room No. 1916, 19th Floor, Air India Building, Nariman Point, Mumbai-400021. Appellant) : Respondent) I.T.A. No. 1177/Mum/2023 (Assessment Year: 1993-94) DCIT, Central Circle-4(1), Room No. 1918, 19th Floor, Air India Building, Nariman Point, Mumbai-400021. Vs. Smt. Reena Sudhir Mehta, 32, Madhuli, Dr. A B Road, Worli, Mumbai-400018. PAN: ABNPM8222C Appellant) : Respondent) Appellant /Assessee by : Shri Vijay Mehta, AR Revenue / Respondent by : Dr. P. Daniel (Spl. Counsel for the department), Sr. DR Date of Hearing : 10.03.2025 Date of Pronouncement : 01.04.2025 2 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta O R D E R Per Padmavathy S, AM: These cross appeals by the assessee and the revenue are against the order of the Commissioner of Income Tax (Appeals)-52, Mumbai [for short 'the CIT(A)'] passed under section 250 r.w.s. 254 of the Income Tax Act, 1961 (the Act) dated 09.01.2023 for the AY 1993-94. The assessee and the revenue raised the following ground of appeal:- ITA No. 704/Mum/2023- Assessee “1. The Ld. CTT(A) erred in law and in facts in confirming the addition to the tune of Ra. 3.82.018/-on account of alleged unexplained income from sale of shares. 2. The Ld. CTT(A) has erred in law and in facts in confirming the addition to the tune of Rs. 37,06,936/-on account of dividend and interest income out of the aggregate addition of Rs. 45,85,800/-made by the Ld. A.O. 3. The Ld. CIT(A) has erred in law and in facts in not granting deduction on account of interest payable by the appellant. 4. The Ld. CIT(A) has erred in law and in facts in not appreciating that the interest u/s. 234A and 234B of the Act was not computed in accordance with law.” ITA No. 1177/Mum/2023- Revenue 1 Whether on the facts and in the circumstances of the case, the Ld.CIT(A) was justified in restricting the addition to Rs.3,82,018/- and granting relief of Rs.2,13,89,367/-, on account of profit earned on unexplained sale of shares, whereas assessee had failed to explain the source of acquiring the shares satisfactorily and the books of account produced by the assessee are unreliable? 2. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) was justified in granting relief of Rs.8,78,864/- on account of dividend/interest income without appreciating the fact that A.O has made disallowance on the 3 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta basis of data provided by Custodian and assessee failed to reconcile the same and the books of account produced by the assessee are unreliable? 2. The assessee is an individual being a Member of Harshad Mehta Group and is a notified party under the Special Court (Trial of Offences relating to transactions in securities) Act, 1992. The assessee was notified as a notified party on 04.01.2007. The assessee did not file the return of income for AY 1993-94 and the original assessment proceedings of the assessee were completed under section 144 of the Act on 29.03.1996 where the AO has determined the income of the assessee at Rs. 8,04,65,305/-. Aggrieved, the assessee preferred an appeal before the CIT(A). The CIT(A) dismissed the appeal in limine for the reason that there was a violation of provisions of section 249(4) of the Act. The Co-ordinate Bench of the Tribunal vide ITA No. 3047/Mum/2006 dated 11.12.2007 set-aside the order of the CIT(A) for fresh adjudication on merits. The CIT(A) in the set-aside proceedings gave partial relief to the assessee whereby the income assessed was reduced to Rs. 6,04,35,439/-. Both the assessee and the revenue are in appeal against the order of the CIT(A). Addition on account of unexplained income from sale of shares – Ground No.1 of assessee's appeal and Ground No.1 of Revenue's appeal 3. The AO based on the closing stock of shares arrived at during the assessment proceeding for AY 1992-93 considered the same as opening stock of shares for AY 1993-94. The AO further noticed certain discrepancies in shareholding pertaining to the year 1993 as has been recorded in the assessment order for AY 1992-93 and the shareholding as has been submitted by the assessee. The assessee submitted before the AO that some of her registered shares are lying with CBI and that the same should be included for the purpose of shareholding for AY 1993-94. The AO after considering the submissions of the assessee arrived at 4 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta the variations in the shares held by the assessee and treated the difference as unexplained sale / profit to make an addition of Rs. 2,17,71,385/-. In the set-aside proceeding, the assessee submitted the details explaining the reasons for variation in the shareholding and accordingly the CIT(A) gave relief to the assessee to the tune of Rs. 2,13,89,367/- and sustained the addition for an amount of Rs. 3,82,018/-. The relevant findings of the CIT(A) in this regard are extracted below: “9.9. After considering the submissions made by the appellant and verification of records made available, I am of the view that the addition made by the AO in respect of 9 scrips for which submissions have now been received from the appellant require reconsideration to account for the factual errors / discrepancies / directions of Hon'ble ITAT in earlier years. No. Scrip Comments of CIT-A Relief Rs. 1 Colgate Palmolive The appellant has explained that it had purchased 200 shares on 5.11.1991 and that the bonus was declared on 16.12.1991 at the ratio of 3:5. Once this is considered the difference to the extent of Rs. 7,725/- stands reconciled. 7,725 2 Gujarat Ambuja Cement The appellant has submitted that the Opening Stock balance was taken wrongly. Notwithstanding the above it is the contention of the appellant that he had sold 78500 shares on 27.04.1992 and LTCG of Rs. 22811554/- was included as part of its letter dt. 28.03.1996 given before the AO during the course of original assessment proceedings. The AO has taxed Rs. 54108120/- as \"Capital gains\" as per letter dated 28.03.1996, which includes the above sum. Once this is considered the difference to the extent of Rs. 60,39,063/- stands reconciled. 60,39,063 3 Jai Prakash Industries As per the appellant the AO has taken the stock position as purchases 513300 55,10,512 5 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta and right issue application 205000 aggregating 718300. As per the appellant, against the application of 205000 shares only 158934 were allotted. Once this is considered the difference to the extent of Rs. 55,10,512/-stands reconciled. 4 Grasim Industries Ltd As per the appellant the Hon'ble ITAT has accepted the books for AY 92-93. After considering the sales of 55000 shares recorded in the books on 4.12.1991 and offered for tax in that year, the difference does not remain. 62,81,875 5 Mazda Industries and Leasing Ltd As per the appellant the Hon'ble ITAT has accepted the books for AY 92-93. The appellant has explained that the AO has considered the purchases of 40000 shares on 13.05.1991 while all the remaining transaction during FY 1991-92 were omitted to be considered. Once, the subsequent purchases and sales of 68450 shares each are considered there is no difference 28,43,898 6 Ashok Leyland Ltd As per the appellant-the Hon'ble ITAT has accepted the books for AY 92-93. While the AO has considered the holding as on 31.03.92 as 12500 shares, the actual holding by the appellant was 11951 and which continued to be held by the appellant. Hence, there is no difference. 6,12,125 7 Ashok Leyland Ltd Debentures As per the appellant the Hon'ble ITAT has accepted the books for AY 92-93. While the AO has considered the holding as on 31.03.92 as 750 debentures, the actual holding by the appellant was 236 due to partial allotment and which continued to be held by the appellant. -1,09,125 8 East Coast Steel Industries Ltd. As per the appellant the Hon'ble ITAT has accepted the books for AY 92-93. While the AO has considered the holding as on 31.03.92 as 4900 shares, 1,90,794 6 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta the actual holding by the appellant was 5000 and which continued to be held by the appellant. The appellant further pointed out that while the earlier year calculation was based on dividend information. no dividend was declared during this year and so the AO's treatment that entire share holding was sold is not correct. 9 Southern Petro Chemical Industries Ltd While the AO has taken the Closing figure as 1000 shares, it is 3000 as per appellant. The appellant has referred to letter dated 28.09.92 and annexure submitted before the AO during the original assessment proceedings, wherein it has confirmed to the AO that it continues to hold 3000 shares as on 31.03.1993. 12,500 Total 2,13,89,367 9.10. Pursuant to the above, out of the additions of Rs. 2,17,71,385/-, the appellant has been able to explain the differences to the extent of Rs 2,13,89,367/-. Thus, the appellant gets relief to the extent of Rs.2,13.89,367/- while addition to the extent of Rs.3,82,018/- stands confirmed. 9.11. One of the contention of the appellant is that the addition made by the AO in respect of unaccounted purchases and sales as above has direct nexus with the addition on account of unexplained investments made in the case of the appellant in the immediately preceding year i.e. AY 1992-93. In that year addition of Rs. 19,86,14,228/- was made on account of unexplained investments by the AO. This matter came to be heard by the Hon'ble ITAT vide ITA No. 1367/Mum/2016 and ITA No. 1455/Mum/2016 for AY 1992-93. Vide order dated 05.04.2021 the Hon'ble ITAT has deleted the entire addition in para 19. Accordingly, there is merit in the claim of the appellant that once the order giving effect is given in respect of the closing investment quantity for AY 1992-93, the corresponding addition in respect of unaccounted sales for AY 1993-94 will automatically fall through. It may be noted that the effect of the above as given by the appellant has been incorporated in the above table (Grasim, Mazda, Ashok Leyland shares & Ashok Leyland Debentures). 7 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta 9.12. In nutshell, addition to the Rs.3,82,018/- stands confirmed while the appellant gets relief to the tune of Rs.2,13,89,367/-. The ground stands PARTLY ALLOWED.” 4. The ld. AR submitted that the AO while making the addition has not given the individual breakup scrip-wise value considered for the purpose of making the addition. The ld. AR submitted that on the identical addition made in the case of Smt. Pratima H Mehta (ITA No. 3443/Mum/2012 dated 05.09.2014) and the Co- ordinate Bench has deleted the addition on the ground that the methodology adopted by the AO is not tenable. The ld. AR further submitted that the Hon'ble Bombay High Court in ITA No. 521 of 2015 dated 26.09.2017 has upheld the above order of the Co-ordinate Bench. 5. The ld. DR on the other hand argued that the CIT(A) while deleting the addition made by the AO has not considered the fact that the assessee has failed to explain the source of acquiring the shares satisfactorily and the books of accounts produced by the assessee are unreliable. The ld. DR accordingly supported the order of the AO. 6. We heard the parties and perused the material on record. The AO during the course of assessment proceedings has considered the closing stock of shares as of 31.03.1992 as the opening stock of shares for the year under consideration. The AO also considered the shares held details as per the assessment order for AY 1992-93 pertaining to the Financial Year (FY) 1992-93 and called upon the assessee to reconcile the number of shares as per the letter submitted by the assessee. The details of the discrepancies recorded by the AO and the value based on which addition is made are tabulated below: 8 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta 7. The main contention of the assessee in this regard is that the method in which the AO has arrived at the amount of addition is not correct. The assessee is also contending that no enquiry has been made by the AO and that the AO has simply relied on the earlier year assessment order to make addition for the year under consideration. In this regard we notice that the Co-ordinate bench in the case of Smt. Pratima H Mehta (supra) has considered the issue of addition made on similar grounds and held that “19. The first grievance of the Revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 3,31,20,180/- made on account of profit on sale of shares. 20. The ld. CIT(A) has considered this issue at para 6(C) of his order. During the course of assessment proceedings, on the basis of several information obtained from RBI, Custodian, BSE companies and third parties about the share holding of the assessee, the data were analysed and the holding in share of the assessee was determined as on 31-3-1992. The same was taken as opening stock for the year under consideration. The closing stock of the assessee was determined for the year under consideration and on comparing the opening stock and closing stock, whenever there was a difference where opening stock was higher than the closing stock, it was treated as sale and 9 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta wherever the closing stock was higher than the opening stock, the difference was treated as unexplained purchase. The purchases were determined at Rs. 8,85,75,861/- and the sales were determined at Rs. 15,55,67,482/-. The profit on sale of shares was determined at Rs. 3,31,20,180/-. The A.O. added this amount. Before the ld. CIT(A), it was contended that the information relied upon by the A.O. were either given to the assessee during the proceedings of A.Y. 1992-93 or during the proceedings for A.Y. 1993-94. It was further contended that the A.O. has computed the holding of shares from the information collected from difference sources. It was further submitted that the working of opening stock is borrowed from the working given in A.Y. 1992-93 without any break-up and without any basis. After considering the facts and the submissions, the ld. CIT(A) at para 9.7 of his order observed that the A.O. did not gave any breakup and the basis as to how the figures of sales and purchases were derived by him which fact was also admitted by the A.O. in the remand proceedings. At para 9.8, the ld. CIT(A) held “I find that during the course of present proceedings also, the things have not improved. The A.O. has still not been able to provide any break up or the details and information as to how the figure of profit on sale of shares have been derived by him in the assessment order. Thus, I find that the very basis details germane to the addition made by the A.O. are not available on record”. Thereafter the ld. CIT(A) followed the findings given in the case of Shri Hitesh Mehta for A.Y. 1993-94 and deleted the addition. Aggrieved by this, the Revenue is in appeal before us. 21. The ld. D.R. strongly supported the findings of the A.O. Per contra, the ld. Counsel for the assessee reiterated what has been submitted before the lower authorities. 22. We have carefully perused the orders of the authorities below. We have also gone through the order of the first appellate authority in the case of Shri Hitesh Mehta dtd, 29-3-2012. We find that the entire addition has been made by the A.O. on the basis of information gathered from different sources. We find that the A.O. has merely picked up figure from the Annexure and arrived at the figure of addition without making enquiry or bringing any evidence on record. We find that on identical facts in the case of Shri Hitesh Mehta, the additions were deleted. The said order was challenged before the Tribunal in ITA No. 5138/Mum/2003 but this issue was not raised before the Tribunal. The facts and circumstances are being similar, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. is accordingly dismissed.” 10 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta 8. In assessee's case, from the perusal of the Table annexed to AO's order as extracted herein above, we notice that the AO has not specified the value adopted for each of the scrip but has given only the total value of all scrip put together. Therefore there is merit in the contention that the AO has made the addition in an adhoc manner. Further it is relevant to notice that the coordinate bench in assessee's own case for AY 1992-93 has deleted the addition made towards unexplained investments. Therefore the opening stock of shares as considered by the AO for the year under consideration is not a valid and accordingly the discrepancies recorded also cannot be sustained. The coordinate bench in the above case has deleted addition on the ground that the AO has made the addition on the basis of information collected from various sources without making any enquiry. In assessee's case also we notice that the AO has collated the details of shares from various sources and computed the difference to treat the same as unexplained investment. We further notice that the AO has not considered the submission of the assessee that some of the shares are in the custody and is the reason for the discrepancy. In view of these facts we are of the view that the decision of coordinate bench in the above case is applicable to the assessee also and therefore we hold that the entire addition made by the AO is not sustainable. Accordingly the ground raised by the assessee is allowed and the ground raised by the revenue is dismissed. Dividend Income – Ground No.2 of assessee's appeal and Ground No.2 of Revenue's appeal 9. The ld. AO during the course of hearing called on the assessee as to why the dividend should not be calculated based on the holding of the debentures/ shares as per Departmental records and the published details of dividend issued coupon rate 11 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta by the respective company. The assessee submitted that the holding of shares as arrived at by the Department for AY 1992-93 are not reliable under contested in appeal and therefore the same cannot be taken as the basis for computing the dividend income. The assessee further objected before the AO that the shares might not have been registered in the name of the assessee since the special court has attached the assets of the assessee and the dividend income is taxable only in the hands of the registered owner. The AO did not accept the submissions of the assessee and estimated the dividend income at Rs. 45,85,800/- based on the shareholding as of June and by taking the published details of dividend of the relevant companies. Aggrieved the assessee filed further appeal before the CIT(A). The CIT(A) after considering the various submissions made by the assessee held that the dividend income declared by the assessee is very low as compared to the earlier years and that the details of sale of shares during the year under consideration have not been furnished by the assessee. Accordingly, the CIT(A) reduced the dividend income by estimating the income at 1.88%. The relevant observations of the CIT(A) in this regard is extracted below: “10.15. To be specific vide letter dt.15.06.2022 the appellant has stated the dividend income earned by it at Rs. 1,89,747/-. This has been reiterated in the submission dated 25.11.2022. Surprisingly, after a query was raised on 25.11.2022 the appellant has furnished a list of scrip wise dividend income totalling at Rs. 1,99,259/-, vide letter dated 01.12.2022. Considering that this is a best judgment assessment and the multiple discrepancies in the claim of the appellant, it does become imperative that the appellant's computation of dividend income not be accepted. At the same time, there has to be a reasonable basis for such computation. The appellant herself has pointed out that Hon'ble Bombay High Court has held that dividend income offered by the group entities are reasonable on facts. In the instant case, I find the best comparable to be that of her husband i.e. Sh. Sudhir S. Mehta, against whom sample verification has been made in the preceding para. The dividend income of Sh. Sudhir S. Mehta is 1.88% (33,75,944 /18,00,05,274). Applying the same 12 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta ratio, the dividend income of the appellant to the extent of Rs. 32,97,748/- is upheld.” 10. The ld. AR submitted that the assessee during the year under consideration has offered the actual dividend income received from companies and the same would be substantiated by the bank statements of the assessee. The ld. AR further submitted that the assets of the assessee have been attached by the Special Court Act and therefore under the orders of Hon'ble Special Court the dividend income was not received by the assessee and this fact has been verified by the revenue also. The ld. AR also submitted that due to these proceedings the dividend income was either not received or received in the subsequent AYs and that the assessee has offered the dividend income in the year in which it is actually received. The ld. AR argued that the CIT(A) has estimated the dividend income by applying a percentage which is arrived at based on the dividend income and the shareholding in the case of assessee's husband Mr. Sudhir S. Mehta. The ld. AR further argued that the dividend income cannot be taxed on the basis of estimation and is taxed only on actual receipt basis. The ld. AR also argued that only in cases where the assessee is the registered owner the dividend income can be taxed in the hands of the assessee. 11. We heard the parties and perused the material on record. The AO made an addition towards dividend income in the hands of the assessee considering the shareholding details that are available with the Department and based on the details available in public platform with regard to declaration of dividend by the various companies. The CIT(A) while confirming the addition revised the estimation by applying a percentage which is calculated on the basis of the dividend income in the hands of the assessee's husband as compared to the shareholding in husband's name. In this regard it is relevant to take note of the 13 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta following observations of the Hon'ble Bombay High Court in the case of CIT vs M/s.Aatur Holdings Pvt Ltd (ITA No.2214 of 2006 dated 12.03.2008) with regard to the taxability of dividend income. “3. On behalf of the revenue, it is submitted by the learned Counsel that as the assessee has paid consideration, for all purposes they are the owners of the shares and consequently the dividend ought to be assessed in the hands of such a person. On the other hand on behalf of the assessee, submitted that the shares are not it is registered in their name in the books of the company and the dividend has been paid to the person in whose name the shares were registered. It is therefore, submitted that this cannot be income in the hands of the assessee and consequently no fault can be found with the orders of either ITAT or the Commissioner (Appeals). 4. To consider the contention, we shall first refer the provisions of Section 206 of the Indian Companies Act. The relevant portion of which reads as under :- “206. (1) No dividend shall be paid by a company in respect of any share therein, except- (a) to the registered holder of such share or to his order or to his bankers; or (b) in case a share warrant has been issued in respect of the share in pursuance of section 114, to the bearer of such warrant or to his bankers.\" . A perusal therefore, of the said section would mandate that the dividend must be paid to the registered holder of such share or to his order to his bankers. 5. Similarly, under Section 27 of the securities Contracts (Regulation) Act, 1956 (hereinafter referred to the Security Contract Act\") the relevant provision is section 27(1), which reads as under :- 27(1) It shall be lawful for the holder of any security whose name appears on the books of the company issuing the said security to receive and retain any dividend declared by the company in respect of thereof for any year, notwithstanding that the said security has already been transferred by him consideration, unless the transferee who claims 14 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta the dividend from the transferor has lodged the security and all other documents relating to the transfer which may be required by the company with the company for being registered in his name within fifteen days of the date on which the dividend became due.\" . It is thus provided that the person in whose name the securities appear in the books of the company issuing the said securities, is entitled to receive and retain any dividend declared by the company, notwithstanding that the said security has already been transferred by him for consideration, unless the transferee who claims the dividend from the transferor has lodged all the documents which mist be required by the company for the registration. In (b) the event this has been done, then section 27 (2) reserves the right of such a transferee to enforce against the transferor or any other person his right, if any, in relation to the transfer where the company has refused to register the transfer of the security in the name of the transferee. It is thus clear that under this provision also it is the registered shareholder alone who would be entitled to receive the dividend subject to the limitation as set out under section 27 (1) and 27 (2). 6. Learned Counsel for the assessee has also drawn attention to the Accounting Standard (AS) 9 to contend that once there be an accounting standard as noted by the Supreme Court in Challapalli Sugars Ltd., V/s.C.I.T. (S.C.) reported in 98 ITR 167 in the absence of any other statutory provision the accountancy standard should be accepted. In the instant case in dividend income is so far as revenue arising from concerned, the accounting standard sets out as under :- “13. Revenue arising from the use by others of enterprise resources yielding interest, royalties and dividends should only be recognised when no significant uncertainty collectability exists. AD to measurability These recognised on the following basis: (i) Interest : on a time proportion basis taking into account the amount outstanding and the rate applicable. (ii) Royalties :on an accrual basis in accordance with the terms of the relevant agreement. (iii) Dividends from investments in shares: : when the owner's right to receive payment is established. 15 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta . Nothing has been brought to our attention to show that under the provisions of the Companies Act and the provisions of the Securities Contract Act that there is any other standard or statutory rules under the Income-tax Act by which such dividend can be taxed in the hands of the assessee. 7. The other aspect of the matter which needs to be considered is that the burden of proving that amount year of an was taxable because it was received in the account lies upon the department. This proposition has been reiterated in CIT V/s. Bikaner Trading Co.Ltd., reported in 78 ITR 12. Income of the assessee has to be received by the assessee an income tax is levied on income. For this purpose we may refer judgment of the Supreme Court in CIT V/s. M/s. 144 Shoorji Vallabhadas & Co. reported in 46 ITR which was reiterated in Godhra Electricity Co. Ltd., V/s. CIT reported in 225 ITR 746. Supreme Court summed up the law as under: “Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz. the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income, which does not materialise.” 8. It is thus clear that merely because a person may have purchased or in receipt of shares, in the absence of the share being registered in his name in the books of account of the company, such a person is not entitled to receive the dividend. The dividend has to be paid by the company in the name of the registered shareholders and it is the registered shareholders alone who can claim the dividend under Section 27 of the Securities Contract Act. On the facts on record, the A.O. in respect of the shares as reflected in the balance- sheet has shown it under four heads :- (a) Non delivered shares: (b) Shares handed over to the Custodian but remaining to be registered; (c) Shares forming a part of Shri Harshad S.Mehta's affidavit in the case of Benami shares; (d) Shares which are lost or stolen. . The A.O. has further set out that in respect of all these categories the ownership of the has not been recognised by any person or any authority. The A.O. has recorded finding that dividend income has not been received by the Custodian in respect of the shares referred to above. The dividend also has been received by some other person. There is also nothing brought record to 16 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta indicate that the assessee in terms on of section 27(1) of the Securities Contract Act has lodged the shares for transfer. 9. Considering these circumstances, in our opinion, we find no reason to interfere with the findings recorded by the Commissioner (Appeals) and as confirmed by the CIT. The questions of law therefore, as raised would not arise and consequently, appeal dismissed.” 12. From the above observations of the Hon'ble High Court it is clear that the dividend income is taxable in the hands of the person who is the registered owner of the shares. In assessee's case the AO has considered the shareholding based on the details available with the Department without considering whether the assessee is the registered owner of the scrip. Further the action of the AO in taking the shareholding of previous year end and website information of dividend declaration is not the valid basis to compute the dividend income taxable in the hands of the assessee. We also notice that the CIT(A) has a step further by estimating the dividend income on the basis of a percentage computed basis the dividend income as compared to the shareholding in the case of assessee's husband. In our considered view dividend income cannot be brought to tax on the basis of estimation the dividend income as laid down by the Hon'ble High Court should be taxed on the basis of actual dividend declared on shares which are registered in the name of the assessee. Considering these facts, we are of the view that the addition made towards dividend income on estimate basis by the revenue cannot be sustained. Accordingly we direct the AO to delete the entire addition made in this regard. The ground raised by the assessee is allowed and the ground raised by the revenue is dismissed. Deduction on account of interest payable/paid – Ground No.3 in Assessee's appeal 17 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta 13. The assessee before the AO submitted that interest has been allowed as deduction in the earlier years by the decision of the Co-ordinate Bench in assessee's own case. However, the AO did not accept the submissions of the assessee to disallow the interest claimed as a deduction. The CIT(A) on further appeal confirmed the disallowance. 14. We heard the parties and perused the material on record. 15. The ld. AR submitted that the Co-ordinate bench in assessee's own case (ITA No.1455/M/2016 dated 05.04.2021) has considered the identical issue and directed the AO to allow the deduction towards interest expenses. The relevant observations of the Co-ordinate Bench is extracted below: “26.At the outset, the Ld. Counsel of the assessee submitted that the issue is of recurring in nature arising in every year in the case of the assessee and also her family members for the past several years and has been decided in favour of the assessee and her family members under identical facts. The Ld. A.R. relied on the following decisions of the coordinate benches in support of his arguments: a. Rina S. Mehta (appellant) v. DCIT [ITA No. 5804/Mum/2017 and others] for A.Y. 2010-11 and others dated 28.12.2017 (Para 32-333 of the order) [Page 772-812of PB No. 4] of PB No. 4] of PB No. 4]. b. Hitesh S. Mehta v. DCIT [ITA No. 5190/Mum/2017] for A.Y. 1992-93 dated 31.08.2020 (Para 18-22 of the order) [Page 713- [Page 713- 736 of PB No. 4]. 736 of PB No. 4] c. Growmore leasing and investments Ltd v. DCIT [ITA No. 6091- 6093/Mum/2018] for A.Y. 2013-14 to A.Y. 2015-16 dated 16.12.2020 (Para 7-8 of the order) [Page 737-754of PB No. 4]. No. 4] d. Harsh Estates Pvt. Ltd. v. DCIT [ITA No. 6957- 6959/Mum/2018] for A.Y. 2013-14 to A.Y. 2015-16 dated 15.09.2020 (Para 4-18 of the order) [Page 755-771of PB No. of PB No. 4]. 18 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta 27. The Ld. D.R. , however, relied on the grounds of appeal and order of authorities below. 28. We have heard the rival submissions of both the parties and perused the material on record. We find that the issue has been decided by the coordinate benches under identical facts in the assessee’s own case in ITA No.5804/M/2017 & others for A.Y. 2010-11 & ors. vide order dated 28.12.2017. We, therefore, respectfully following the decision of the co- ordinate bench of the Tribunal in assessee’s own case in A.Y. 2010-11 and also in the case of family members set aside the order of Ld. CIT(A) and direct the AO to allow the deduction of interest expenses on borrowed funds to the assessee as claimed. Accordingly the ground no. 6 is allowed.” 16. The facts for the year under consideration being identical and that the revenue for the year under consideration did not bring any new material on record. Respectfully following the above decision of the Co-ordinate Bench we direct the AO to allow the deduction claimed by the assessee towards interest expenses. Ground raised by the assessee is allowed 17. Ground No. 4 raised by the assessee is with regard to interest under section 234A and 234B which are consequential not warranting any separate adjudication. 18. Ground No. 3 of the revenue is general not warranting any separate adjudication. 19. In result, the appeal of the assessee is allowed and the appeal of the revenue is dismissed. Order pronounced in the open court on 01-04-2025. Sd/- Sd/- (ANIKESH BANERJEE) (PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS Copy of the Order forwarded to : 19 ITA No. 704 & 1177 /Mum/2023- Smt. Reena Sudhir Mehta 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "