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4. The learned assessing officer noted that assessee and his wife have purchased the property for ₹ 40 Lakhs and incurred expenses of registration of ₹ 270,000. Assessee was asked to explain the source of investment made for acquisition of the above property. Assessee explained that it has obtained an interest free loan of ₹ 40 lakhs from one company and the payment was directly made by that company to the seller of the property. The learned assessing officer on further examination found that the assessee and his wife are director of that company and their shareholding in that particular company is 50% each. He also noted that company had reserve and surplus of Rs. 1178304/- as on 31/3/2010 and ₹ 8 60376 as on 31/3/2009. Consequently the AO issued notice under section 2 (22) (e) of the act that why ₹ 20 Lakhs should not be taken as a deemed dividend income in the hands of the assessee. The assessee explained that Company is operating the business of event management personally and gave a contract for providing the services of the event expenses to the assessee, who was a director of the company.Assessee supplied the services related to event management services to the company and company has paid the amount towards the services to other person on behalf of the assessee and therefore the above sum is not a deemed dividend but is on account of business transaction. It was further stated that above sum cannot be treated as a loan or advance. The learned assessing officer asked further details to the company and asked to produce the books of accounts for verification. The lender company submitted a detailed reply on 27/12/2017. The AO rejected the explanation of that company because of the reason that AO asked that company to submit the details of sundry debtors which was not so furnished by that company. Even when the summons were issued under section 131 of the act to the director of that Page | 2 company know books of accounts of bills and vouchers et cetera were produced for the verification as well as the account of the assessee and his wife along with the copies of the bills raised by the assessee. Therefore, learned assessing officer reached at the conclusion that the detailed submitted by the lender company is just to avoid the taxation of deemed dividend income against the interest free loans and advances taken by the assessee from that company. He further held that fabricated fund flow statement is furnished. He further noted that on examination of ITD database, it was found that assessee has filed his return of income on 14/2/2010 declaring that salary income of ₹ 380,000 received from the above company who have deducted the tax at source. Therefore, assessee did not have any other source of income except the salary income and no business activity was carried out by the assessee during the year under consideration. Therefore, he rejected the contention of assessee that assessee has carried out any business during the year under consideration of event management and the payment has been received from the company against the sale and services is merely a concocted story and afterthought just to avoid the deemed dividend income in the hands of the assessee. Therefore, he made an addition of Rs, 1178304/- in the hands of the assessee as deemed dividend. He further found that assessee has filed his return of income showing that salary income of ₹ 3 80000 therefore to the net returned income as per ITR of ₹ 1 47490/-. He further made an addition of ₹ 3 80000/-. Accordingly the total income of the assessee was determined at ₹ 1 705794/- and passed an order under section 143 (3) of the income tax act on 27/12/2017.