Principal Commissioner Of Income Tax 4 v. Sureshkumar Popatlal Patel ==========================================================

C/TAXAP/217/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 217 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 4VersusSURESHKUMAR POPATLAL PATEL========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 26/03/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1.Revenue has filed this appeal against the judgment of the Income Tax Appellate Tribunal dated 26.09.2017 raising following questions for our consideration: “[A] Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of Rs.56,55,522/- u/s. 68 of the Act? [B]Whether the Appellate Tribunal has erred in law and on facts in deleting the deletion of addition u/s.2(22)(e) of the Act of Rs.40,53,807/-?” 2.First question pertains to addition of Rs.56.55 lakhs made by the Assessing Officer under section 68 of the Income Tax Act, 1961 ('the Act' for short), which the Commissioner of Income Tax (Appeals) deleted, which deletion, the Tribunal has confirmed. We notice from the record that assessee had produced necessary supporting evidence at the appellate stage before the Commissioner, after examining which, the Commissioner had made that deletion. The Tribunal also, after appreciating the evidence on record, confirmed the view of the Commissioner of Income Tax (Appeals). Entire issue is factual. No question of law arises. 3.The second issue pertains to the addition made in case of the assessee by way of deemed dividend in terms of section 2(22)(e) of the Act. The Assessing Officer had made such addition to the tune of Rs.40.53 lakhs (rounded off). The assessee contested the entire addition arguing that section 2(22)(e) of the Act would not apply. In the alternative, the assessee also contended that in any case, such addition could not exceed Rs.29.76 lakhs (rounded off) which was accumulated profit of the company on the relevant date. 4.The Commissioner of Income Tax (Appeals) granted partial relief to the assessee while rejecting the assessee's contention of non-applicability of section 2(22)(e) of the Act. He limited the addition to Rs.29.76 lakhs accepting the assessee's contention on the accumulated profit. The Commissioner of Income Tax (Appeals) thus gave partial relief to the assessee and deleted the addition of Rs.10.76 lakhs (rounded off). 5.This decision of the Commissioner of Income Tax (Appeals) gave rise to two separate appeals filed by the assessee as well as the Revenue to the extent this issue was decided against the respective party. The Tribunal rejected both the appeals. 6.As noted, the Commissioner of Income Tax (Appeals) as well as the Tribunal accepted the Revenue's principal contention of applicability of section 2(22)(e) of the Act. However, when it came to working out the additions, partial relief was granted to the assessee limiting the addition to the extent of the company's accumulated profit which is flowing from the scheme of the section itself. 7.In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J)