Shri Gautam Bali vs DCIT

These twin assessees S/Sh. Gautam Bali and Shri Deepak Sood have filed their seven appeals each i.e. ITA Nos. 5860 to 5873 /Del./2025, along with the Revenue’s as many cross appeals thereto ITA Nos. 7868 to 7874/Del./2025 and ITA Nos.7894 to 7900 /Del./2025 for A.Ys. 2018-19 to 2024-25 against the CIT(A)-24, New Delhi, seven orders all dated 28.11.2025 and 19.09.2025, assessee-wise respectively, in proceedings u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

Heard both the parties. Case files perused.

It transpires at the outset during the course of hearing with the able assistance coming from both these assessees as well as the department that there arises the identical sole substantive ground for the tribunal’s apt adjudication i.e correctness of the learned lower authorities addition making Section 2(22)(e) deemed dividend addition in the taxpayers’ hands; in assessment order(s) as partly upheld in the lower appellate discussion.

We are further informed that both these assessees Shri Gautam Bali and Shri Deepak Sood hold 60 and 17% stake; respectively, in a company namely M/s. Vestige Marketing Private Limited. And that the Assessing Officer (‘AO’) had framed assessment in the said company’s case disallowing its purchases claim of Rs. 8, 86,36,574/- as bogus ones u/s 37 of the Act in the “lead” A.Y. 2018-19. He thereafter treated 80% of the said disallowance amount; coming to Rs. 7,09,09,259/-as cash generated from the alleged bogus purchases as representing dividend distributed by the company to both these directors/ shareholders. The CIT(A) lower appellate discussion on the other hand appears to have relied upon his quantum order in the said company’s case(s) wherein he had partly upheld the aforesaid bogus purchases addition to conclude that the crossponding 80% of the remaining addition amount would now be added as deemed dividend in these twin assesseees hands.

It is in this factual backdrop that both these assessees are aggrieved against the lower authority’s action treating the foregoing bogus purchases disallowance as deemed dividends added in their hands whereas the Revenue’s case is that we ought to uphold the same in entirety.

We have given our thoughtful consideration to the rival submissions of both these assessees as well as the Revenues respective stands. We find no merit in the Revenue’s arguments justifying impugned deemed dividend addition. This is for the precise reason that Section 2(22)(e) of the Act itself makes it clear that the same gets attracted in an instance of “any payment by a company i.e. “M/s. Vestige Marketing Pvt. Ltd.”, by way of advance or loan to a shareholder”. We wish to reiterate here that there is no material in the records indicating M/s. Vestige Marketing Private Limited to have actually made any such payment of advance(s) or loan to both these directors/ promoters. It is thus a case wherein the learned departmental authorities have proceeded on mere assumptions and presumptions to hold that the aforesaid bogus purchases disallowance as dividend distribution which is not sustainable in light of Commissioner v. M/s. Dilip Kumar and Company (2018) 9 SCC 1 (SC) propounding stricter interpretation of a fiscal statute. With thus accept both these assessees’ sole identical substantive ground directed against the impugned Section 2(22) (e) addition of deemed dividend addition which is deleted in entirety. The Revenue’s stand supporting the same is declined in very terms.

No other ground or argument has been pressed before us.

To sum up, both these assessee’s seven appeals each ITA No. 5860 to 5873/Del./2025 are allowed and the Revenue’s as many cross appeals ITA Nos. 7868 to 7874/Del./2025 and 7894 to 7900 /Del./2025; are dismissed in foregoing terms. A copy of this common order placed in the respectively case files.