COMMISSIONER OF INCOME TAX Vs. KRUPESHBHAI N.PATEL

JUDGEMENT

(1.) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 29.06.2012 raising following questions for our-Consideration:

(2.) For the assessment year 2006-07, the Assessing Officer inquired with the assessee regarding the assessee's shareholding in a company namely M/s. Amod Stampings Pvt. Ltd. (hereinafter to be referred to as 'the said company'). It appears that during course of a search operation carried out by the department, it was noticed that the said company had given loans to various members including the assessee having shareholding, and voting powers exceeding 10%. The assessee was, during the search operation, confronted with such shareholding pattern and the loans advanced. Assessee wrote a letter dated 19.03.2009 agreeing to accept a sum of Rs. 881.71 lakhs as deemed dividend under Section 2(22)(e) of the Act. During the course of the assessment proceedings, however, it was asserted before the Assessing Officer that a trust was created on 16.01.2005, in which, the respondent-assessee and other family members had settled an aggregate of 5.12 lakhs of equity shares of the said company held by them. It was the case of the assessee that he did not hold any beneficial interest in the shares on the said company having more than 10% of the total voting power. He, therefore, contended that Section 2(22)(e) of the Act had no application.

(3.) The Assessing Officer, however, gave detailed reasons to reject such a stand. He was of the opinion that neither the shares of the said company were transferred nor any dividend was passed on to the trust. These facts led to a conclusion that the trust was not in existence at all.