Appropriate representation at the assessment level is more relevant and important. Representation at subsequent appellate level don’t serve the purpose was it is considered as a colourable device to evade tax payment.

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Here is one case wherein addition could have been avoided if the same submission could have been appreciated as assessment level. At higher level of appellate hierarchy, most of the documents are considered as “after thought” approach.

Short conclusions by ITAT was as under:

Addition on account of deemed dividend is justified where the Agreement to Sell and cancellation thereof, for the purchase of property was merely a tool to cover up loan provided to the assessee by Company.

The key points are summarised in Short for the benefit of the readers:

Income—Deemed Dividend

—Assessee was an individual deriving income from salary, house property, capital gain and interest from certain banks

—He was a director in a closely held company M/s C and was also a shareholder holding 50% shares—During assessment proceedings, AO issued a Show Cause Notice asking as to why addition ought not to be made u/s 2(22)(e)

—However, assessee did not produce any material in support of its contentions—Accordingly, AO made addition to that regard

—On appeal, CIT(A) on basis of remand report was satisfied with explanation of assessee and held that amounts could not be brought to tax u/s 2(22)(e)

—On further appeal, Tribunal set aside decision of CIT(A) and upheld view taken by AO—Held, ITAT noted that assessee tried to justify that there was an agreement to sell property to Company

—However, when assessee repaid sum in part there was a Deed of Cancellation of Agreement to Sale

—Thus, Agreement to sell and subsequent cancellation entered into within merely one and half months by assessee was merely a cover up and a camouflage for giving loan to assessee by such Company and to avoid contravention of provision of s. 2(22) (e)

—Assessee also failed to give adequate evidence and cogent, reliable, and credible evidences about transaction

—CIT(A) had completely brushed aside finding of AO in remand report and statement of assessee and further had not applied his mind to find out true nature of transaction

—Tribunal’s decision was based upon an independent analysis of facts—All its findings were based upon appreciation of material facts and was a possible view that could be taken by Tribunal based upon circumstances

—Therefore, such acceptance of one view on facts as against another, unless it showed to be wholly unreasonable, could not be subject matter of an appeal u/s 260A

—Assessee’s appeal dismissed.