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2018 (5) TMI 1378 - AT - Income TaxDeemed dividend u/s 2(22)(e) - earnest money paid by the company on behalf of the directors - money was not returned after cancellation of sell agreement - collateral security given by the Director of the company in individual capacity - Held that:- Perusal of the correspondence between assessee and Director of M/s. Alpex Exports Pvt. Ltd. & M/s. Karishma Machine Tools apparently shows that the huge amount of ₹ 1,28,52,217/- alleged to have been taken as earnest money by the assessee has been demanded by the Directors of the companies and paid by the assessee leisurely in installments at will under the garb of Agreement to Sell which has been rightly treated as sham and collusive transaction between the assessee and both the companies by the AO. The contention of the assessee that the property in question was being sold to the companies by the assessee as the bank was insisting upon that the same be transferred in the name of the company as it was given as a collateral security at the time of taking loan for running the business of the companies is prima facie not sustainable because when the property in question was already pledged with the bank as collateral security by the Director in her individual capacity, there is no legal ground with the bank to insist upon for transferring the property in the name of the companies. Rather collateral security given by the Director of the company in individual capacity is a potent security with the bank than the properly in the name of the company. So, this plea also is an after-thought and as such, the entire arrangement between the assessee and both the companies falls within the mischief of provisions contained u/s 2(22)(e) of the Act. - Decided in favour of revenue Notice u/s 143 validity - AO jurisdiction to pass the assessment order for want of issuance of valid notice u/s 143 (2) - whether mere proving of dispatch is not enough to prove the service of notice on the assessee which is a mandatory requirement - Held that:- No doubt, the ACIT, Circle 46 (1) who has issued the notice u/s 143 (2) dated 12.08.2009 has no jurisdiction and subsequently, the case was transferred to ACIT, Circle 1 (1), New Delhi before whom the assessee continued to attend the proceedings and get the assessment completed without raising any objections. So, in view of the judgment in case of Mega Corporation Ltd. (2017 (2) TMI 1253 - DELHI HIGH COURT), we are of the considered view that now the assessee is not entitled to question the jurisdictional issue. - Decided against assessee.
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