IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.26/PUN/2024 िनधा(cid:330)रण वष(cid:330) / Assessment Year : 2015-16 ACIT, Central Circle-1, Vs. Avinash Kantilal Jain, Nashik. 36, Aryan Bunglow, Samta Nagar Road, Venketesh Colony- 425001.

PAN : ACWPJ9538Q Appellant Respondent Revenue by : Shri Ramnath P. Murkunde Assessee by : Smt. Deepa Khare Date of hearing : 11.02.2025 Date of pronouncement : 08.05.2025 आदेश / ORDER PER VINAY BHAMORE, JM:

This appeal filed by the Revenue is directed against the order dated 04.10.2023 passed by Ld. CIT(A), Pune-12 [‘Ld. CIT(A)’]

for the assessment year 2015-16.

2. The Revenue has raised the following grounds of appeal :-

“01. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Rs 3,27,81,102/- on account of deemed dividend u/s 2(22)(e) of the I.T. Act by not considering the contents of the deeming provision.

02. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) erred in not appreciating the fact that the decision in the case of Pradeep Kumar Malhotra Vs. CIT(Calcutta High Court), which was relied by Ld.CIT(A) has distinguishable facts and was already considered by the AO while finalising the issue under consideration.

03. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) erred in not appreciating the fact that the decision of Hon'ble Bombay High Court in the case of CIT Vs. P.K. Badani 76 ITR 369, which was confirmed by the Hon'ble Supreme Court of India vide 105 ITR 642 is applicable to the facts of the case under consideration.

04. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case.”

3. Facts of the case, in brief, are that the assessee is an individual and is proprietor of Jain Solar Agency and also engaged in the business of manufacturing of Solvent cement. He had filed his original return of income u/s 139 of the Act on 31.10.2015, declaring total income at Rs.38,56,480/-. The case was selected for limited scrutiny under CASS. Accordingly, notice u/s 143(2) and 142(1) of the Act were issued and duly served on the appellant. During the course of scrutiny proceedings, the Assessing Officer had observed that the appellant has held substantial interest in the company M/s JB Plastochem Pvt, Ltd. and the company JB Plastochem Pvt. Ltd. has reserves as under on 31.03.2014 and 31.03.2015 at Rs.2,92,05,079/- and Rs.4,14,78,383/- respectively. It was also found by the Assessing Officer that the above company has advanced following amounts to the assessee :-

(i) Shri Avinash Kantilal Jain - Rs.2,26,38,107/- (ii) M/s Jain Solar, Proprietor Shri Avinash Kantilal Jain - Rs.1,51,43,000/-

Total - Rs.3,77,81,102/-

4. In this regard, the assessee contended that he has also maintained two loan accounts with the company, one for loan taken and given in individual capacity and the other is maintained for loan given and taken in the capacity of proprietor of Jain Solar. The assessee claimed that the account with the company is the current account and the transactions entered in these accounts were mutual. Not being satisfied with the reply of the assessee, the Assessing Officer held that the provisions of section 2(22)(e) of the IT Act are applicable in this case and therefore addition of Rs.3,77,81,102/- was required to be made in the hands of the assessee as deemed dividend. However, it was found by the Assessing Officer that the maximum amount which was outstanding with the assessee during the year was only Rs.3,27,81,102/- & therefore the Assessing Officer made addition of Rs.3,27,81,102/- u/s 2(22) e of the IT Act & the assessment was completed by determining income at Rs.3,66,37,582/- as against income returned by the assessee at Rs.38,56,480/-.

5. After considering the reply of the assessee, Ld. CIT(A)

allowed the appeal by observing