P.M. Jagtap ORDER
P.M. Jagtap, Vice President
1. This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-11, Kolkata dated 23.05.2019.
2. At the outset, it is noted that there is a delay of 199 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, the assessee has moved an application seeking condonation of the said delay and keeping in view the reasons given therein, I am satisfied that there was a sufficient cause for the delay of 199 days on the part of the assessee in filing this appeal before the Tribunal. Even the ld. D.R. has not raised any objection in this regard. The said delay is accordingly condoned and this appeal of the assessee is being disposed of on merit.
3. The grounds raised by the assessee in this appeal read as under:-
"1. That under the facts & circumstances of the case Ld. CIT(A) erred in confirming the addition of Rs. 5,10,590/- made by AO invoking section 2(22)(e) being the amount of loan or advance received by the assessee shareholder from M/s. Akshat Plywood (P) Ltd.; despite such amount was received in the ordinary course of his business and interest was paid by the assessee on the said amount, the addition so made is liable to be deleted.
2. That under the facts & circumstances of the case Ld. CIT(A) erred in disallowing interest paid on housing loan Rs. 3,68,115/- (Rs. 5,18,115 - Rs. 1,50,000 deduction claimed u/s.24(b) arbitrarily, although the said interest Rs. 3,68,115/- was not claimed by the appellant and was not matter of dispute.
3. That under the facts & circumstances of the case, Ld. CIT(A) erred in not considering the depreciation disallowance Rs. 76,401/- on motor car, disallowance of motor car maintenance Rs. 38,800/- made by AO".
4. As regards the issue raised in Ground No. 1 relating to the addition of Rs. 5,10,590/- made on account of deemed dividend under section 2(22)(e) of the Act, the relevant facts of the case are that the assessee is an individual, who is engaged in the business of trading and retailing of ply and allied products. The return of income for the year under consideration was filed by him on 09.10.2013 declaring total income of Rs. 15,42,711/-. Although the said return was initially processed by the Assessing Officer under section 143(1) of the Act, it was subsequently selected for scrutiny in CASS. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee was 50% shareholder of the company, namely M/s. Akshat Plywoods Pvt. Ltd. and had taken a loan amounting to Rs. 7,68,000/- from the said Company during the year under consideration. According to the Assessing Officer, the said transaction was falling within the purview of section 2(22)(e) of the Act and since M/s. Akshat Plywoods Pvt. Ltd. was having sufficient reserve and surplus, which was more than the loans and advances given to the assessee, the amount of Rs. 7,68,000/- was added by the Assessing Officer to the total income of the assessee as deemed dividend under section 2(22)(e) of the Act.
5. The addition made by the Assessing Officer on account of deemed dividend under section 2(22)(e) of the Act was challenged by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), it was submitted on behalf of the assessee that the relevant transactions with M/s. Akshat Plywoods Pvt. Limited were purely of business nature and, therefore, section 2(22)(e) had no application. The ld. CIT(Appeals), however, found that there was another account in the books of Akshat Plywoods Pvt. Limited standing in the individual name of the assessee and there was an addition of Rs. 5,10,590/- in the said account representing loan standing in the name of Akshat Plywoods Pvt. Limited. Since these transactions in the nature of loan were not business transactions, the ld. CIT(Appeals) treated the amount of Rs. 5,10,590/- as deemed dividend and addition made by the Ass........