आयकर अपील(cid:547)य Ûयाया(cid:876)धकरण म(cid:581), हैदराबाद ‘ए’ ब(cid:581)च, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad ঒ी रवीश सूद, माननीय (cid:586)ाियक सद(cid:735) एवं ঒ी मधुसूदन साविडया, माननीय लेखा सद(cid:735)

SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No. 598/Hyd/2025 (िनधा१रण वष१/ Assessment Year: 2018-19)

ACIT, Circle 5(1) Vs. Madineni Sitaramaiah Hyderabad Hyderabad PAN : ANNPM5682Q (अपीलाथ(cid:334)/ Appellant) ((cid:366)(cid:529)थ(cid:334)/ Respondent)

CO No. 16/Hyd/2025 Arising out of आयकर अपीलसं./I.T.A.No.598/Hyd/2025)

(िनधा१रण वष१/ Assessment Year: 2018-19)

ACIT, Circle 5(1) Vs. Madineni Sitaramaiah Hyderabad Hyderabad PAN : ANNPM5682Q (अपीलाथ(cid:334)/ Appellant) ((cid:366)(cid:529)थ(cid:334)/ Respondent)

करदाता का ঋितिनिध(cid:533)/ : S/Sri. EV Sri Krishna & Siva Assessee Represented by Charan, Chartered Accountants राज(cid:738) का ঋितिनिध(cid:533)/ : Sri. S Arun Kumar, Sr. DR Department Represented by O R D E R (cid:292)(cid:467)त रवीश सूद, ज.े एम./PER RAVISH SOOD, J.M:

The present appeal filed by the Revenue is directed against the order passed by the CIT(Appeals), dated 26.12.2024, which in turn arises from the order passed by the AO under section 143(3) of the Income-tax Act, 1961 (for short, “Act”), dated 27.03.2021 for the Assessment Year 2018-19. The revenue has assailed the impugned order of the CIT(Appeals) on the following grounds of appeal before us:

“(i) The learned CIT(A) erred in deleting the addition of Rs.1.97 crores taxed as "deemed income" though the assessee has not demonstrated any evidence to show that he had spent the loan amount during normal course of his business or it is akin to any trade advances.

(ii). The learned CIT(A) erred in appreciating the fact that the nature of loans advanced by the company to assessee do not fall under normal business activity or under any exceptional clauses (i) to (v) of sec.2(22)(e) and that the assessee was having substantial interest in the company and therefore provisions of sec.2(22)(e) are applicable.

(iii). The learned CIT(A) erred in recognizing the agreement of sale dt.24.04.2017 between the assessee and the company which is not registered a instrument.

(iv) The learned CIT(A) erred in observing that there would be a case of no positive amount for considering any "deemed income" in the hands of the assessee which is against the spirit of section 2(22)(e) of the Act, as the assessee had received the loan amounts from out of substantial accumulated profits of the company.

(v) The learned CIT(A) ought to have appreciated that the AO has restricted the addition towards "deemed dividend" to the extent of the accumulated profits of the company.

(vi). Any other ground(s) that may be urged at the time of appeal hearing”

Also, the assessee is before us as a cross-objector, whereby his contention that the AO had exceeded the scope of “limited scrutiny” was rejected by the CIT(Appeals), raising the following objections:

“1 The learned CIT(A), NFAC erred in dismissing the ground of appeal of the Assessee that, the Assessing Officer erred in making the addition in the assessment in violation of CBDT Instruction Number F.No.225/402/2018/ITA.II dated 28th November, 2018.

2 The learned CIT(A), NFAC ought to have considered that the addition made u/s 2(22)(e) as deemed dividend in the hands of Assessee was never part of reasons for limited scrutiny and thus making such addition is not valid since no prior approval from CIT was obtained by the Assessing Officer for making such other addition.

3 The learned CIT(A), NFAC ought to have considered that the limited scrutiny reason of ‘Unsecured Loans ‘cannot be considered as origin for making addition under Section 2(22)(e) as ‘Deemed Dividend’ and thus erred in stating that addition made originated from the reasons for limited scrutiny.

4 The learned CIT(A), NFAC erred in not considering the judicial precedence that the addition made