"On the facts and in the circumstances of the case, the learned Commissioner (Appeals)-XI, New Delhi, has erred in deleting the addition of Rs. 41,21,652 made on account of deemed dividend under section 2(22)(e) of the Income Tax Act, 1961." The assessing officer observed that the HUF through its three members, namely, Nanak Mehta, Gautam Mehta and Radhika Mehta in association with some employees had incorporated and were running eleven private limited companies and one limited company. These companies were also doing the business of export of garments as the assessee-HUF was also doing.
These companies were profit earning company and had accumulated substantial reserve and surplus and had not declared any dividend since their incorporation in 1987. The details of shareholding of the members of the HUF in these companies, total share capital and the accumulated profit as on 31-3-1990, are enclosed as Annex. I to the assessing officer's assessment order.
The assessing officer found that these companies had given loans and advances to M/s Nagar Trading Co., the main business unit of the assessee-HUF. The details of maximum amount of loan outstanding given by these companies to M/s Nagar Trading Co., as noted at page 3 of the impugned assessment are as follows : The assessing officer observed that the aforesaid loans and advances given by the said companies to M/s Nagar Trading Co. revealed that these companies were directly not declaring any dividend but indirectly releasing their profits to the concerns where substantial shareholders and the owner of these companies were beneficially interested. This attracted the provision of section 2(22)(e) of the Act. Under section 2(22)(e) dividend includes any payment made by a company not being a company in which the public are substantially interested of any sum by way of advance or loan to a shareholder being a person who is the beneficial owner of equity shares holding not less than 10 per cent of the voting power or to any concern in which such shareholder is a member or a partner and in which he had substantial interest to the extent to which the company in either case possesses accumulated profits.
The assessing officer was of the view that all the ingredients of section 2(22)(e) were present in the assessee's case as under : "(i) All the above companies are such in which public are not substantially interested, i.e., private limited companies and one is closely held limited company.
(ii) These companies are profit making companies having large amount of accumulated profit.
(iii) The companies have given loans/advances to a concern, i.e., M/s Nagar Trading Co. and M/s Vijay Mehta HUF in which the substantially shareholders of these companies, i.e., Gautam Mehta, Nanak Mehta, Radhika Mehta collectively holding around 46.6 per cent and 44 per cent shares as in Annex. I are members of the HUF entitled for more than 20 per cent shown in the income of the HUF (iv) The companies who have given the loans are not in the business of lending of money." The assessing officer required the assessee to show-cause why the provision of section 2(22)(e) be not applied to the aforesaid loans and advances received from the said companies and the amount of loans and advances be not treated as dividend under section 2(22)(e) of the Act in the hands of the assessee-HUF. In reply, the assessee submitted before the assessing officer that although Radhika Mehta is minor unmarried daughter of Shri Vijay Mehta, co-parcener of the HUF, she could not be called a member of the assessee-HUF. Mrs. Manju Mehta w/o Shri Vijay Mehta had no right to partition. So, these two persons could not be said to be beneficially entitled to any income of the assessee-HUF. So far as Nanak Mehta and Gautam Mehta are concerned, since their shareholding was much below the 10 per cent of the voting power in the company, the amount of loans and advances taken by the HUF from the company would not be regarded as payment to a concern to which provisions of clause (b) of Explanation 3 were applicable.
The assessing officer also asked the assessee to explain the source of investment by Radhika Mehta in the purchase of shares of the company.
In reply, the assessee submitted that Radhika Mehta had purchased shares out of gifts received from friends and relatives on various occasions.
The assessing officer was not satisfied and convinced with the submissions and contentions of the assessee. He observed that Radhika Mehta was member of the assessee-HUF. He referred to para 295 of Commentary of B K Singhania on Direct Tax order 1989-90 as under "The Hindu Undivided Family has not been defined under the income-tax law. The expression is, however, defined under Hindu Law as a family which consists of all persons lineally decended from a common ancestor and includes their wives and unmarried daughters".
He further observed that the Supreme Court in the two cases of C.Krishna Prasad v. CIT (1975) 97 ITR 493 (SC) at page 496 and N.V.Narinder Nath v. CWT (1969) 74 ITR 190 (SC) has repeatedly expressed the view that a HUF is akin to a joint Hindu family. He further observed that the assessee-HUF formed in assessment year 1982-83 and the Income Tax Officer vide assessment order of that assessment year under section 143(3) of the Act dated 30-3-1984, had held that the HUF comprised of following persons He added that this order of the Income Tax Officer had been accepted by the assessee and no appeal had been filed against the same. Thus, unmarried daughter Radhika Mehta was very much member of the HUF and the assessee's contention in this regard was not tenable and acceptable. He, therefore, held that the condition that member who owned 10 per cent of the voting power right/share capital in the private limited company was fulfilled in respect of all the companies the total voting power of shareholdings of Nanak Mehta, Gautam Mehta and Radhika Mehta exceeded 10 per cent of the total voting right/shareholding.
The assessing officer further observed that the assessee's contention that since Radhika Mehta could not claim partition of HUF and that even if there was partition she was not entitled to any share of the assets of the HUF and hence she could not be said to be beneficially entitled to any income of the assessee-HUF had no relevance to clause (b) of Explanation 3 to section 2(22)(e) which states of beneficially entitlement of 20 per cent income and not the asset on partition. In this case, Nanak Mehta, Gautam Mehta, Radhika Mehta, Vijay Mehta and Mrs. Manju Mehta all were beneficially entitled to more than 20 per cent income of the HUF as during the life time of the HUF all the members of the HUF whether male or female were entitled to joint possession and enjoyment, maintenance and residence, though Radhika Mehta could not claim partition of HUF and its assets.
Finally, in the light of the above observations, the assessing officer held as under : "In view of the above fact that it has been clearly proved that these companies have released their undistributed profits to the Vijay Mehta HUF/NTC, i.e., the concern in which the substantial shareholders of the companies i.e. Vijay Mehta, Gautam Mehta, Nanak Mehta and Radhika Mehta are substantially and beneficially interested for more than 20 per cent of the income of the HUF and satisfied all the conditions laid down under section 2(22)(e) of the Act. Accordingly, the entire amount of loans given by these companies to M/s Nagar Trading Co. (unit of Vijay Mehta) to the extent of accumulated profit which comes to Rs. 41,21,652 is added to the income of the assessee as deemed divided under section 2(22)(e) of the Act, 1961." Aggrieved by the impugned addition of Rs. 41,21,652 under section 2(22)(e) of the Act, the assessee preferred first appeal before the learned Commissioner (Appeals) who after considering the submissions made before him deleted the addition of Rs. 41,21,652. He observed that the shareholdings in the eleven companies were obtained in earlier year with gifts given by friends and relatives. He added that the department in the earlier years had accepted the shareholding and passed order to the said effect. Therefore, in later years, without any independent evidence it was not possible to come to the conclusion that money invested in the shareholding had come from the undisclosed funds of Shri Vijay Mehta. He further observed that the assessing officer had not taken any action to assess the income of the eleven companies in the hands of either Shri Vijay Mehta, individual and Vijay Mehta, HUF.Without such action or material on record, it is not possible to say that the beneficial owners were Shri Vijay Mehta, individual or Vijay Mehta, HUF. Therefore, the shareholdings in the case of a minor daughter Radhika Mehta had to be accepted as they existed and presented. The provisions of section 2(22)(e) could not be applied to the assessee-HUF because 10 per cent voting power was not held by the HUF. This power existed in the hands of Radhika Mehta in her individual capacity. He further observed that a minor ultimately could not be beneficially entitled to not more than 20 per cent of the income of the HUF as is the requirement of law. He added that Radhika Mehta had no right to acquire any share of the HUF as she had only right of maintenance and marriage expenses. He, therefore, held that provision of section 2(22)(e) were not applicable in the case of Radhika Mehta.
The learned Commissioner (Appeals) observed that he had considered the submissions of the assessing officer but he would not accept them because the department itself in earlier years had accepted the shareholding and it was not possible to change the position now, particularly because of Benami Transaction (Prohibition) Act, 1988. The assessing officer had also not taken any action on these lines in the assessment order. He, therefore, held that the point had to be decided in favour of the assessee.
Aggrieved, the revenue has come up in second appeal before this Tribunal.
The learned Departmental Representative submitted that the learned Commissioner (Appeals) was not justified in deleting the addition of Rs. 41,21,652 made by the assessing officer under section 2(22)(e) of the Act. He added that the assessing officer had convincingly established that Radhika Mehta was member of the assessee-HUF. He had referred to the case law and Income Tax Officer's order in assessment year 1982-83 in the case of HUF when the assessee-HUF was formed comprising of four members including Radhika Mehta. The Income Tax Officer's order was final. It was an important evidence to the effect that Radhika Mehta was member of the HUF. He further submitted that the shareholding of the members of the HUF jointly constituted 10 per cent of the total voting right/shareholding of the company and as such the provisions of section 2(22)(e) of the Act were attracted in the case.
He further submitted that the assessing officer had with clarity and convincingly pointed out that all the conditions laid down in section 2(22)(e) were fulfilled and satisfied in the case vide page 4 of the assessing officer's order. The companies were private limited companies, they were profit making companies, they had large amount of accumulated profits, they had given loans and advances to the assessee-HUF which were less than accumulated profits, the members of the HUF including Radhika Mehta had 20 per cent voting right/share capital of the company, etc. In view of these facts, the provisions of section 2(22)(e) were clearly attracted in the case and the learned Commissioner (Appeals) had wrongly deleted the addition without proper appreciation of the facts of the case, the provisions of law and the detailed reasons given bY4 the Income Tax Officer in the impugned assessment order.
The learned Departmental Representative further submitted that the learned Commissioner (Appeals) had wrongly mentioned that the department had accepted the shareholding of the said members of the HUF as their own individual shareholding in earlier years. The assessee had not brought any evidence on record to this effect. There was no evidence of independent source of acquisition of shareholding by the said members of the HUF. He pointed out that the assessing officer had given opportunity to the assessee to explain the source of investment by Radhika Mehta in the shares of the said private limited companies but the assessee simply submitted that the source of investment was the gifts received from friends and relatives on various occasions. No details and no evidence in this regard were furnished before the assessing officer. After considering this explanation of the assessee, the assessing officer vide page 2 of the assessment order held that it was a case of diversion of undisclosed funds/funds of Vijay Mehta for investment in the name of Radhika Mehta. The learned Commissioner (Appeals) did not confront the assessee during the course of appellate proceedings before him and he did not ask the assessee to furnish evidence of independent source of funds from which investments were made by Radhika Mehta. Thus, the conclusion arrived at by the learned Commissioner (Appeals) was not based on evidence on record.
The learned counsel for the assessee, on the other hand, submitted that the assessing officer was wrong in applying the provisions of section 2(22)(e) of the Act and treating the loans and advances as deemed dividend in the hands of the assessee-HUF. He added that the learned Commissioner (Appeals) had rightly appreciated the facts of the case and the provisions of law and he was justified in deleting the addition. He reierated the submissions made before the assessing officer and the learned Commissioner (Appeals). He contended that Radhika Mehta was not member of the assessee-HUF and hence her shareholding could not be considered as beneficial shareholding of the assessee-HUF. He added that the, assessee-HUF was not a registered shareholder of the shareholding of Radhika Mehta and the assessee-HUF could not be treated as beneficial owner of the shareholding belonging to Radhika Mehta and other members of the HUF. He further added that the assessee-HUF was neither registered shareholder nor beneficial owner of the shareholding of 10 per cent or more. He also referred to the legal opinion of Dr. V. Gaurishanker senior advocate of the Supreme Court.
The learned counsel further submitted that Radhika Mehta had acquired the shares out of gifts received by her and the investments in the shares were not made by the assessee-HUF either from any disclosed or undisclosed source. He contended that since the shares were acquired by her out of independent source the assessee-HUF could not be considered as the beneficial owner of those shares. He added that with regard to shareholding of other members of HUF also, the assessing officer had not brought any material on record to prove that the sources of investments in the shares were from the assessee-HUF and not the independent source of the registered owner. He, therefore, contended that the assessee-HUF would not be treated as beneficial owner of these shares also.
The learned counsel for the assessee supported the order of the learned Commissioner (Appeals). In this connection he relied on the decisions in S.K. Umar v. Assistant Commissioner (1993) 46 ITD 463 (Mad) and Mithilesh Kurnari & Anr. v. Prern Behari Khare The learned counsel further submitted that the amounts received by the assessee-HUF from the said private limited companies had wrongly been treated by the assessing officer as loans and advances. He stated that the amounts were received on account of business transactions/sales. He further submitted that some of the amounts received were mere transfer entries and did not represent actual receipt of loans or advances in cash or by cheque. He contended that such credit entries were not covered under section 2(22)(e) of the Act.
After considering the aforesaid submissions and the materials on the file, the learned counsel was asked to furnish following information and details : "1. In connection with the question whether the assessee was the beneficial owner of shares of the companies held in the name of Miss Radhika Mehta, etc., it was necessary that the assessee should file details of the funds from which the shares were purchased along with the copies of orders in which the sources of the funds were accepted in their respective hands.
2. In connection with the alternative plea of the assessee that the amount received by the assessee from the companies was not loan but payment of business transaction, it is necessary that the assessee should file all the relevant details along with copies of accounts to proves this point.
3. The assessee should state whether the amount was returned to the companies and, if so, details thereof should be filed.
4. The above details are required because they are not found in the paper book. The assessee should also state whether the above details were filed before the assessing officer/Commissioner (Appeals)." The learned counsel submitted his reply dated 6-5-2002, in which he reiterated the facts of the case, and the submissions of the assessee already made. It is stated in the reply that the information and details required in item No. 1 regarding the evidence of source of acquisition of shares by Radhika Mehta the same were not with the assessee and could not be furnished by the assessee as more than 20 years had passed since then. He contended that there could be no presumption that the funds for acquisition of the shares by Radhika Mehta, etc. had flown from the assessee-HUF. He, however, filed a copy of the wealth-tax assessment order for the assessment year 1991-92 in her case to show that the shares were owned by her. He further stated that Radhika Mehta was married in the year 2000 and under the circumstances the assessee-HUF does not possess any record pertaining to Radhika Mehta. He contended that it was the duty of the assessing officer to substantiate allegation that the shares were acquired out of the funds of the HUF.As regards item No. 2 above, the learned counsel submitted that the moneys had been borrowed by M/s Nagar Trading Co. a proprietory concern of the assessee-HUF, for purchase of goods and services for the company as had been explained in letter dated 6-10-1993 (page 17-18 of annexure). The amounts received had been repaid also. Copies of the unit in which the amount was employed was furnished. Copies of accounts of the company in the books of the HUF were also furnished. Evidence of repayment was placed at pages 19-27 of the annexure. The learned counsel further contended that the issue involved in the present appeal before the Tribunal was not to be decided based upon the information to be furnished which information in any case was not in possession of the assessee.
The learned Departmental Representative as well as the learned counsel were heard after the submission of the above reply. During the hearing the learned Departmental Representative contended that since the assessee had failed to furnish any evidence of sources of investments in the shares out of gifts, etc. received by Radhika Mehta, the presumption that the shares were purchased in her name by the assessee-HUF out of its own funds was proper and valid. He further contended that the assessee's claim that the amounts received from the said companies were not loans and advances but the amounts were given by the said companies on account of business transactions/sales could not be accepted without proper verification by the assessing officer.
The learned counsel, on the other hand, reiterated the submissions and contentions made in the written reply.
We have considered the rival submissions and the materials on the file.
We are of the view that on the facts and in the circumstances of the case as discussed in the impugned assessment order Radhika Mehta, minor daughter of Karta of the HUF, was a member of the assessee-HUF during the relevant year and the submissions and contentions of the learned counsel in this regard are not tenable and acceptable. The assessing officer referred to the Income Tax Officer's order in assessment year 1982-83 in which it was held that the HUF comprised of the following persons : He observed that this order was final and the same had been accepted and no appeal was filed. He rightly observed that unmarried daughter is member of the HUF and the contention of the assessee that Radhika Mehta could not be called a member of the assessee-HUF was wrong. The assessing officer also rightly referred to para 295 of the Commentary of BK Singhania on Direct-tax order 1989-90 as under : "The Hindu Undivided Family has not been defined under the income-tax law. The expression is however, defined under Hindu Law as a family which consists of all persons lineally decended from a common ancestor and includes their wives and unmarried daughters." The assessing officer was also justified in referring the Supreme Court's decision and observations in C. Krishna Prasad v. CIT (supra) and N.V. Narinder Nath v. CWT (supra). We are also of the view that the contentions raised by the assessee/learned counsel regarding the right of Radhika Mehta to claim partition and to have share in the assets of the HUF was not relevant to the issue in the present case.
Clause (b) of Explanation 3 to section 2(22)(e) states of beneficial entitlement of 20 per cent income and not the asset on partition. In this case Nanak Mehta, Gautam Mehta, Radhika Mehta and Vijay Mehta all were beneficially entitled to more than 20 per cent income of the assessee-HUF as during the lifetime of the HUF, all the members of the HUF whether male or female were entitled to right to joint possession and enjoyment and maintenance and residence, though Radhika Mehta could not claim partition of HUF and its assets. On the facts and in the circumstances of the case, we, therefore, reject the contention of the learned counsel.
Again, the assessee had claimed that the sources of funds for acquiring the shareholding in the aforesaid companies by Radhika Mehta were gifts received by her and that the HUF had not invested its own funds for the purchase of shares. It is noted that the assessing officer had asked the assessee to furnish details and evidence in this regard but the assessee failed to furnish the required details and evidence. The learned Commissioner (Appeals) accepted this plea of the assessee without bringing the required details and evidence on record and getting them verified. In the course of hearing of the appeal before us we called for similar details and evidence but the learned counsel expressed his inability to comply. We are of the view that this plea of the assessee on the facts and in the circumstances of the case cannot be accepted merely on the assessee's claim without the support of details and evidence, Radhika Mehta was a minor daughter of the Karta of the HUF during the relevant year. She did not have any independent source of income or fund. No details and evidence were furnished in support of the claim of receipts of gifts. No gift-tax assessment order, donor's declaration, Bank account, etc. were filed for the same.
The total value of shares in the name of Miss Radhika Mehta alone was more than Rs. 17 lakhs. It would have been impossible for the assessing officer to accept the assessee's claim of investment by the minor daughter without concrete evidence. The assessing officer, was, therefore, justified in not accepting this plea and presuming under the circumstances that the source of funds for the acquisition of the shares in the name of Radhika Mehta had flown from the assessee-HUF.The observations and findings of the learned Commissioner (Appeals) in this regard accepting the assessee's plea were not proper and justified. The assessee cannot get away with the plea that since more than 20 years had elapsed he was unable to furnish the details and evidences. The fact is that these details and evidences were required right from the assessment stage. The assessee did not file concrete evidence before the assessing officer and the learned Commissioner (Appeals) had accepted the assessee's plea without such evidence. If the assessee had filed such evidence before the learned Commissioner (Appeals), the same would have been on record and the assessee would have filed the same before us on our calling for the same. Copy of wealth-tax assessment for assessment year 1991-92 of Radhika Mehta in which the value of the share is included in her wealth would not clinch the issue about the sources of investment.
Moreover, it must be made clear here that under the provisions of section 2(22)(e) it would make no difference even if the shares were acquired by Radhika Mehta and other members of the HUF out of their own funds and not out of the funds of the assessee-HUF. According to section 2(22)(e), dividend includes any payment made by a company, not being a company in which the public are substantially interested, of any sum by way of advance or loan to a shareholder, being a person who is the beneficial owner of equity shares, holding not less than 10 per cent of the voting power or to any concern in which such shareholder is a member or a partner and in which he had substantial interest to the extent to which the company in either case possesses accumulated profits. Explanation 3 to section 2(22)(e) provides that for the purposes of this clause : (b) a person shall be deemed to have a substantial interest in a concern other than a company if he is, at any time during the previous year, beneficially entitled to not less than 20 per cent of the income of such concern." Thus, the assessee-HUF is a concern under Explanation 3(a) above and Radhika Mehta, etc. who together hold more than 10 per cent enquiry shares/voting power of the companies are members of the assessee-HUF having substantial interest in it as they were beneficially entitled to not less than 20 per cent of the income of the assessee-HUF. Thus, the requisite conditions are fulfilled and there is no provision to the effect that if shares were acquired by the members of the HUF out of their own funds then in such case the amount of advance or loan to the concern will not be treated as dividend.
In the above view of the matter, it is held that the learned Commissioner (Appeals) had not correctly appreciated the provisions of section 2(22)(e) and he had misdirected himself in giving his finding on consideration of assessee's claim that Radhika Mehta had acquired the shares out of alleged gifts received by her.
As regards the next contention that the amounts received from the said companies were not loans and advances but they were received on account of business transactions/sales and hence the provisions of section 2(22)(e) of the Act were not applicable in the case, we are of the view that the assessee had failed to prove these contentions by furnishing details and evidences. As mentioned above, although no details and evidence were filed before the assessing officer/learned Commissioner (Appeals), the assessee was given opportunity by us in this regard but the assessee failed to furnish necessary details and evidence to establish and prove the contention that the amounts were received on the assessee had been given sufficient and reasonable opportunity and still the assessee had failed to furnish necessary details and evidence, we have no other alternative but to reject the contention and hold that the amounts received by the assessee-HUF were loans and advances covered under section 2(22)(e) of the Act. We have perused the copies of accounts of the said companies and other papers enclosed with the reply dated 6-5-2002. We do not find any such details or evidence which would support the assessee's contention that the amounts, were not loans and advances received from the said companies.
The learned counsel filed copy of the Tribunal, Delhi Bench 'C', New Delhi, order dated 18-5-2001 in ITA No. 1072/Del/1995 for the assessment year 1991-92 in the assessee's own case and contended that since similar addition under section 2(22)(e) of the Act was deleted by the learned Commissioner (Appeals) and his order was confirmed by the Tribunal, the impugned addition under section 2(22)(e) in the assessment year 1990-91 covered under the present appeal should also be deleted. We have perused the said order of the Tribunal in the assessment year 1991-92. We find that the Tribunal upheld the order of the learned Commissioner (Appeals) deleting similar addition in assessment year 1991-92 on the basis of wrong information given to the Tribunal that the Commissioner (Appeals)'s order deleting similar addition in assessment year 1990-91 had been accepted by the department and no second appeal had been filed by the revenue. It is worth noting here that in the present appeal before us we are concerned with revenue's appeal against the Commissioner (Appeals)'s order for the assessment year 1990-91. Thus, the department had not accepted the Commissioner (Appeals)'s order for the assessment year 1990-91 and the Tribunal was misinformed, and on the basis of that wrong information the Tribunal upheld the order of the learned Commissioner (Appeals) for the assessment year 1991-92. Paras 11 and 12 of the Tribunal order for the assessment year 1991-92 in which the issue was discussed and decided are reproduced below : "The last ground taken by the revenue is against the deletion of addition of Rs. 2,56,000 made on account of deemed dividend under section 2(22)(e) of the Act.
The Commissioner (Appeals) decided this issue against the revenue on the basis of the order of the Commissioner (Appeals) for assessment year 1990-91. It seems the revenue has accepted this decision and hence the Commissioner (Appeals) following the decision of the immediately earlier years deleted this addition also. Keeping in view these facts we do not find any reasons to interfere on this account as well." In view of the above, the contention of the learned counsel that we should follow the Tribunal order for the assessment year 1991-92 and similarly uphold the Commissioner (Appeals)'s order for assessment year 1990-91 cannot be accepted.
The amended provisions (amendment by Finance Act, 1987, with effect from 1-4-1988) are applicable in a case where a shareholder held 10 per cent on more of equity capital. Further, deemed dividend would be taxed in the hands of a concern where all the following conditions are satisfied : "(i) Where the company takes the payment by way of loans or advances from a concern; (ii) where a member or a partner of the concern holds 10 per cent of the voting power in the company; and (iii) where the member or partner of the concern is beneficially entitled to 20 per cent of the income of such concern." Finally, therefore, we hold that the conditions laid down in section 2(22)(e) and Explanation 3 to section 2(22)(e) as amended by Finance Act, 1987, with effect from 1-4-1988, are satisfied in the case as under : "(i) All the above companies are such in which public are not substantially interested, i.e., private limited companies and one is closely held limited company.
(ii) These companies are profit making companies having large amount of accumulated profit.
(iii) The companies have given loan/advance to a concern, i.e., M/s Nagar Trading Co., a proprietary concern of Vijay Mehta HUF, in which the substantial shareholders of these companies, namely, Gautam Mehta, Nanak Mehta, Radhika Mehta, collectively holding more than 40 per cent shares are members of the HUF and entitled to more than 20 per cent share in the income of the HUF.(iv) The companies which have given the loan are not in the business of lending of money." In the above view of the matter, we hold that the assessing officer was justified in treating the amounts received from the aforesaid companies as loans and advances and treating the same as deemed dividend under section 2(22)(e) of the Act. Accordingly, we reverse the order of the learned Commissioner (Appeals) and confirm the addition made by the assessing officer.