VIKRAM KRISHNAN Vs. PRINCIPAL COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee is aggrieved by an order of the ITAT, which upheld the AO's determination with respect to the addition made in this case for A.Y. 2010-11 under Section 2(22)(e) of the Income Tax Act, 1961

(2.) It is urged that the ITAT fell into error in not noticing the true nature of the transaction for refund of the advance amounts received by the assessee from the vendee company of which, he was a director.

(3.) The assessee, an individual deriving income from salary, house property, capital gain and interest from certain banks etc. was a director in a closely held company M/s Charu Home Products (P) Ltd; and was also a shareholder to the extent he also held 50% of its shares. The assessee declared Rs.50,32,223/- in the income returned by him which was subjected to scrutiny assessment under Section 143(3). During the course of assessment proceedings, the AO issued a Show Cause Notice as to why the addition ought not to be made with respect to the sum of Rs. 1,01,36,328/- under Section 2(22)(e). Apart from denying the general applicability of that provision, the assessee did not produce any material in support of its contentions. On the addition being made and the same brought to tax, the assesse preferred an appeal; the CIT(A) elicited no less than three remand reports. In the course of these remand proceedings, the assessee furnished agreements to sell that he had entered into with the company [vendee i.e. Charu Home Products (P) Ltd], other materials in the form of cancellation deed and copies of bank statement etc. were also furnished. The assessee contended that his property was sought to be sold to the company [of which he was the director and substantial shareholder] but the deal misfired and did not materialise.