Amit Rawal, J. - (1.) THE revenue has approached this Court by invoking the provisions of Section 260A of the Income -tax Act, 1961 (hereinafter called "the Act") by challenging order dated 21.5.2013 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "ITAT") in I.T.A. No. 105/CHANDI/2012 in respect of assessment year 2008 -09. The revenue has, in the appeal, raised the following substantial questions of law: - - "(i) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in law in upholding the order of the Ld. Commissioner of Income -tax(A) in which addition of Rs. 52,46,062/ - made by the A.O u/s. 2(22)(e) of the Act was deleted, ignoring the facts brought on record by the A.O that the assessee had 38.8% shareholding in M/s. Frontier Cycles (P) Ltd. (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT erred in not appreciating the facts brought on record by A.O in para 4.2 of the order that the change in shareholding is an afterthought. (iii) Whether on the facts and circumstances of the case, the Hon'ble ITAT has erred in law in not considering the ratio of decision of Hon'ble Supreme Court in the case of Durga Parsad More : 82 ITR 540 (SC) and the decision of Punjab & Haryana High Court in the case of Som Nath Maini : 306 ITR 414 (P&H) relied upon by A.O in para 4.3 of order." As per the facts culled out from the appraisal of the paper book, Paramjit Singh on 20.8.2008 (hereinafter called "the assessee") filed his return of income tax individually for assessment year 2008 -09 by showing an income of Rs. 34,12,120/ -. The income of the assessee was processed under Section 143(1) of the Act at an income of Rs. 34,12,120/ -. Subsequently, the return of the assessee was selected for scrutiny and accordingly a notice dated 18.9.2009 under Section 143(2) of the Act was served upon the assessee on 18.9.2009 and thereafter notice dated 6.1.2010 along with questionnaire under Section 142(1) of the Act was served upon the assessee on 9.1.2010. The Assessing Officer on 22.7.2010 commenced assessment proceedings and during the proceedings, again served a notice under Section 142(1) upon the assessee on 14.5.2010. In response to the notice dated 14.5.2010, the assessee appeared through his representative. The point raised in the aforesaid notice by the Assessing Officer was that on perusal of the copy of the account of the assessee in the books of M/s. Frontier Cycles Pvt. Ltd. of which assessee is also a Director showed, that during the relevant assessment year, the assessee had received loans from the said Company. The assessee was called upon to furnish the share holding pattern. On examination of the annual returns of the Company, the Assessing Officer found that the assessee was holding 3200 shares out of 36000, i.e., a share holding of 8.8%. It would not be out of place to mention here that the annual returns produced before the Assessing Officer were revised ones.
(2.) IN order to ascertain the veracity/genuineness of the revised returns, the Assessing Officer downloaded the annual returns from the website of Registrar of Companies and found that the assessee had owed 14000 shares out of 36000 which amounted to a share holding of 38.8%. The Assessing Officer on browsing through the website of the Registrar of Companies found that the Company had allegedly filed a revised return on 22.2.2010, whereby the share holding pattern of the assessee was changed from 38.8% to 8.8% and the shares were transferred to none else but to his wife and son. Accordingly, the Assessing Officer opined that it was a loan received by the assessee from the Company and, therefore, it was termed to be deemed income as envisaged under Section 2(22)(e) of the Act. During the course of the assessment proceedings, the assessee vide letter dated 3.9.2010 sought directions to be issued to the Assistant Commissioner of Income -tax, Circle -I, Ludhiana under Section 144A of the Act and on the basis of the said application, the Assessing Officer was also asked to furnish report on the contention in the application. However, for the sake of brevity, the contentions raised in the application under Section 144A of the Act are reproduced herein below: - - "1. That the assessee has gifted the shares to his wife & son on 03.03.2007 as per share transfer deeds lodged with the company. The said share transfer deeds were duly stamped by the Registrar of Companies on 29.01.2007. After lodging of share transfer deeds, the company held the board meeting on 10.03.2007 & approved the share transfer. Copies of the share transfer register, members register, share transfer deeds and share certificates showing endorsement on 10.03.2007 in favour of the transfers have been filed with the ACIT on 03.09.2010 vide our Letter dated 02.09.2010. 2. The company's person who was handling the company law matters regarding filing of balance sheet and annual returns with the ROC, has forgotten to take effect of share transfer in the annual returns filed for the year 31.02.2007, 31.03.2008 & 31.03.2009. When the mistake was found, these annual returns were revised and filed with t he ROC on 10.02.2010 and the copies of said annual revised returns as permitted by the company law & accepted by the ROC have been filed with the ACIT. We are to further state that the shareholder had a credit balance in the beginning of year & at the end of year. The said credit balance has been treated by the company as an unsecured loan in the previous years. We have already filed copy of the interest account of this loan and after calculating the interest, the interest payable is more than the interest receivable on the debit balance during the year. Copy of interest account is again enclosed herewith for your honour's ready reference. In view of the facts stated above, it is clear that S. Paramjit Singh had a shareholding of 8.89% as on 31.03.2008 less than 10% which is required for invoking the provisions of Section 2 (22)(e) of the I.T. Act, 1961 against the assessee. This addition, if made, shall be against the provisions of law and will create un -necessary litigation and harassment to the assessee. Therefore, your honour is requested to kindly direct the ACIT not to treat the advance to the shareholder as deemed dividend as per provisions of section 2(22)(e). We have also relied upon the direct judgment of Hon'ble Kerala High Court in the case of CIT v. Smt. S. Parvathavarthini Ammal : 131 CTR 433 and the Hon'ble ITAT Delhi Bench judgment in the case of Victor Aluminium Industries Pvt. Ltd. v. ACIT : 9 SOT 197, copies of both the judgments have already been filed with the ACIT & are also enclosed herewith for your honour's ready reference."
(3.) THE Assessing Officer submitted report dated 21.10.2010 on the said application of the assessee. After pondering such report, it was allegedly found that the returns furnished by the assessee during the assessment proceedings were actually revised returns and the returns were filed after 18.9.2009 when the notice under Section 143(2) of the Act was served upon the assessee and the assessee did not disclose before the Assessing Officer that the annual returns filed by the Company were revised ones and, therefore, as per the report it was prima -facie opined that the returns were revised in February, 2010 and not on 30.3.2010 as alleged by the assessee.;