9911796707
TMI Blog2015 (2) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee have assailed the correctness of the order dated 27.04.2009 of CIT(A)-VIII, New Delhi on the following grounds, respectively:- Grounds raised by department in ITA No.3080/Del/2009 1. "The order of the Learned Commissioner of Income Tax (Appeals) is erroneous & contrary to facts & law. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,25,00,000/- made u/s 2(22)(e) as deemed dividend without appreciating the facts and reasons and also the case laws mentioned by the AO in his assessment order. 3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in reducing the addition made u/s 69 of Rs. 36,69,125/- to 12,41,500/-. a). Ignoring that in a group case, it has been established beyond doubt that the assessee has made payment of on money for purchasing land in the same village where other lands purchased by the assessee company are located. The Ld CIT(A) has also accepted the fact of payment of on-money for purchase of land in the said case. b) Ignoring the findings and the reasons as discussed by the AO in his assessment order. c) Without appreciating that when for almost all the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age-Sultanpur, Tehsil Parukh Nagar, Gurgaon in July, August and September 2005. The details of the land purchased is summarised at page 2 of the assessment order which disclosed that land had been purchased from 9 different parties in the afore-mentioned months. These details are extracted from the assessment order hereunder for ready-reference:- S.No. Date Stamp Sale consider ation Area (Kanals & Marlas) Area in Acres Rate per acre as per sale deed Sellers Address Land Sold 1. 06.07.2005 1111009650 1851500 32K4M 4.025 460000 Sh.Om Prakash R/o- Sultanpur, Tehsil-Parukh Nagar, Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, Gurgaon 2. 11.07.2005 55560 4830 926000 128K 18M 2.0125 460124 Sh. Haneef Chunnilal Daalchand, Rameshwar, Ram Kumar, ANgoori Devi, R/o-Sultanpur, Tehsil-Parukh Nagar, Distt.-Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, Gurgaon 3. 02.08.2005 67150 1119000 17K 18M 1.34375 832744 Smt. Raj Aggarwal & Rakesh Aggarwal, R/o- 437/14, Urban Estate, Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, Gurgaon 4. 06.09.2005 18000 300000 4K 16M 0.6 500000 Sh.Vinay Kumar, R/o- A 54, Gujrawala, New Delhi Vil.-Sultanpur, Tehsil-Parukh Nagar, Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee opportunity to cross-examine Smt. Dayawati subsequently later on, on the very same date also recorded the statement of the assessee's husband, Sh. Om Prakash who also confirmed that these facts were brought to the knowledge of his wife on 14.12.2008 by him and on which date his wife's statement had been recorded. The English translation of the said statement is also extracted in the assessment order. 3.3. In view of the same it was concluded that since the statements of Smt. Dayawati and her husband established the payment of Rs. 10 lakh over and above what is recorded in the Registered sale deed, a show cause notice dated 06.12.2008 was issued to the assessee. The extract of the same found reproduced in the assessment order at pages 6 & 7 is reproduced hereunder:- 0.1. "Please refer to the letter no. 806 dated 17.12.2008 in which the statement of Smt. Dayawati W/O Sh. Om Prakash which was recorded under section 131 of the Income Tax Act, 1961 on 14.12.2008 was confronted and you were asked to submit your reply to the Show-cause on 21.12.2008. In response to the letter you requested for an opportunity vide letter 22.12.2008 to cross examine Smt. Dayawati. In the lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted on oath vide statement containing 4 Pages. The cross examination was conducted by Sh. U N. Marwah, CA from M/s. R. N. Marwah & Company. It may be highlighted that Smt. Dayawati has stood by her statement dated 14.12.2008 and confirmed receipt of Rs. 10 lacs cash from Si: Rajinder Singh Malik, who is the authorized signatory / Director of Mls. Kay Kay Apartments Pvt. Ltd. as per the registered sale deed). The statement was given by her in the presence of her husband Sh. Om Prakash who has also signed as witness. A copy of statement of cross examination of Smt. Dayawati recorded on 26.12.2008 consisting of 4 pages is being enclosed for your reference and record. 3. On the basis of above evidences, you are hereby required to showcause as to why a sum of Rs. 10 lacs may not be treated as unexplained investment under section 69 of the Income Tax Act, 1961 and also showcause as to why the rate of Rs. 6.6 Iacs per Acre may not be applied to the land of 20.19 Acres purchased by the assessee company in Village - Sultanpur during the same period." 3.4. The assessee in response to the same is found to have reiterated its position and further submitted that opportunity to cross-examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sold by Smt. Raj Aggarwal on 2.8.2008, which has been registered for Rs. 11,19,000 @ Rs. 8.32 lakhs per acre, sale of all the other lands have been registered @ 4.5 to 5 lakhs per acre. The sale of most of the land has been registered in September 2005. 17. It was also gathered through field enquiries made by Inspector of this office that the land value in Village Sultanpur and neighboring villages like Village Jhanjrollakhedi reached as high as Rs. 22 lakhs per acre when 'Reliance group' started purchasing land in the same Village. Thus, the minimum prevailing market rate in Village Sultanpur was at least Rs. 6,60,000 in September 2005 as established from the statements of Smt. Dayawati and Sh. Om Prakash. 18. On the basis of minimum rate of Rs. 6,60,000 per acre the unexplained investment made by assessee company on purchase of land (other than the land purchased from Smt. Dayawati) by payment of part of sale consideration in cash outside the books has been computed as under- S.No. Date Location of Land Sold Sale consideration as per registered sale deed A Area in Acres Rate per acre as per sale deed Sale Consideration @ Rs. 6,60,000 per acre B Unexplained inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im and as such the statement of Mr. Om Prakash has no validity. 4.1. The remaining addition of Rs. 26,29,125/- made by the AO was assailed on various grounds contending that apart from the statement of Smt. Dayawati there was no other basis to uniformly applying a flat rate of Rs. 6,60,000/- per acre on all the purchases from different parties ignoring the basic fact that price of property is determined by criteria like location of the land; distance from the road etc. and cannot be based on extraneous and irrelevant evidences. Referring to the material on record it was pointed out that it can be seen that for one of the properties the rate of purchase was Rs. 8,32,744/- per acre which was in excess of the assumed rate of Rs. 6,60,000/- applied by the AO. The AO's stand accordingly was assailed on the ground that it was arbitrary and not in consonance with the provisions of the Act. Reliance yet again was placed on the decisions relied upon by before the AO. Reliance was also placed upon the CIT vs R.S.Rathore (1995) 212 ITR 390, 394 (Raj.). It was submitted that the onus placed upon the department to prove that the amount invested is more than the recorded consideration has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied out the said transaction also approved it unequivocally and unambiguously. How the transaction was disclosed in the return of the seller is immaterial to the issue under consideration particularly when the user of the amount received in cash is clearly brought out by the seller in her statement. Under these circumstances, it is proved conclusively by the AO that the consideration paid for the said transaction was understated by Rs. 10 lakhs. In the light of the ratio of the decisions refer to above in Para 7.3, I hold that the AO has discharged to burden cast specifically upon him, enough material of independent nature has been placed on record which justify the stand adopted by the AO and that due opportunity was afforded to the assessee to put forth its view. In view of the above, I uphold the action of the AO in bringing to tax a sum of Rs. 10 lakhs as undisclosed consideration/undisclosed investment in terms of the provisions of section 69B." 5.1. However the uniform application of the rate of Rs. 6,60,000/- per acre to the other 8 instances of sale by the AO was not approved by him. The Ld. CIT(A) assailed the AO's stand in ignoring the relevant parameters governing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent cannot be ruled out and therefore, coupled with the instance in the case of Smt. Dayawati, I hold that the unexplained investment/understated consideration for properties at S.No. 1 & 2 was for an aggregate sum of Rs. 2,41,500/-. The AO is directed to allow the relief for the differential amount concerned for these transactions. 7.6.3 So far as the property at S.No. 3 of the table is concerned, the AO himself has considered that the rate shown by the assessee as correct and therefore, no action is necessary on my part. 7.6.4 So far as the instances of the purchase at S.Nos. 4 to 6, 8 & 9 are concerned, in all these cases the stamp duty authority has applied the rate of 6 % and no other charges have been levied which indirectly indicates that the consideration disclosed is correct. In view of it, the action of the AO in adopting higher consideration cannot be upheld. The AO is directed to allow relief to the appellant on these instance of the purchases. 7.7. In nutshell, the addition tot he extent of Rs. 2,41,500/- for property at S.No.1 & 2 and Rs. 10 lakhs for property at S.No.7 is upheld." 6. Aggrieved by this both the assessee and the Revenue are in appeal before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly deprecated. It was his submission that the reasoning of the CIT(A) to restrict the addition to the extent of Rs. 2,41,500/- is contrary to facts on record and law. 9. We have heard the rival submissions and perused the material available on record. In view of the fact that the departmental case has been built on the statement of Smt. Dayawati and her husband it is necessary to our minds to first consider the same. The record shows that the statement of Smt. Dayawati was duly confronted to the assessee and opportunity to cross-examine her was also provided, on which occasion it is seen that Smt. Dayawati has maintained her stand. The departmental case built on the above edifice has further been fortified according to the AO and the CIT(A) by the statement of Sh. Om Prakash, husband of Smt. Dayawati which was considered to be not necessary for confronting to the assessee as it merely supported the statement of Smt. Dayawati and nothing new was stated.. On an impartial consideration of the statements it is seen that the so-called prime witness Smt. Dayawati has no personal knowledge of the events and is basing her statement on hearsay and can be safely described as a "tutored wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r personal knowledge on the issue was completely non-existent. The hearsay knowledge in the facts of the present case does not inspire any confidence whatsoever. It is not to say that hearsay knowledge is to be disregarded in all instances. There may be occasions when immediately on the occurrence of an event the first information report based on the statement of a witness even based on hearsay can be taken as an evidence in support of a conclusion. However while relying upon the same due consideration has to be given to the fact whether it is supported by other surrounding circumstances leading to the same possible conclusion. As no doubt the statement recorded of a witness based on hearsay at the time of the instance generally inspires greater confidence in its correctness and truthfulness as opposed to a statement of a witness based on hearsay after a few years as is evident in the facts of the present case. In the facts of the present case the statement recorded based on hearsay is after three years and a few month of the event having occurred during which period Smt. Dayawati remained in constant ignorance of having allegedly received Rs. 10 lakh over and above the stated amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt received as per sale deed was in form of bank drafts, which were deposited by us in Oriental Bank of Commerce, DCF-III, Gurgaon. Balance amount of Rs. 10 lakh was received in cash." The record shows that when within less than 2 weeks from the said date i.e. the time of her so-called "cross-examination" her response to Question No-4 on 26.12.2008 shows that she did not even know/remember whether she had received the payment through pay order or cheque. 9.1. Accordingly on a consideration of the material available on record and the arguments on behalf of the parties we are of the considered view that the Revenue has not been able to refer to any argument or evidence available on record to show that the Smt. Dayawati (the owner of the land) and her husband, Sh. Om Prakash (who handled the sale of his wife land) were reliable witnesses. Infact the manner of recording statement reeks of a position where the couple appear to have given statements to explain the expenses incurred on the marriage of their daughter in February 2008. Nothing is available on record qua the education and financial status of the Smt. Dayawati except the fact that she is a PAN holder and blindly accepted her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears to be in severe doubt and he most definitely cannot be treated to be a reliable witness. In the facts as they stand the addition in the hands of the assessee based on the statement of Smt. Dayawati and her husband cannot be upheld, ordered accordingly. 9.3. Considering the other sale instances wherein the AO applied a flat rate of Rs. 6,60,000/- per acre and the CIT(A) proceeded to sustain the addition on the basis of value adopted for stamp duty purposes found recorded in the Registered Sale Deeds itself, we find that since the whole action had started on the basis of the fact that Smt. Dayawati has alleged that the figures given in the sale deed were not reliable and the same on facts has not been upheld by us in the circumstances the very edifice on the basis of which the additions have been made having fallen the remaining additions fall. Thus where the very basis justifying interference by the Revenue stands demolished the occasion to interpolate the amounts in the absence of any other cogent evidence does not arise. We have seen that no doubt that in certain instances the valuation by the Stamp Duty authority is more however it is equally true that in certain instanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Parukh Nagar, Distt.-Gurgaon, in financial year 2005-06. Please give complete details. Ans. Yes, I had sold land measuring 36 kanals 7 marlas at Village Sultanpur, Tehsil Parukh Nagar, Distt. Gurgaon to Mls Kay Kay Apartments Pvt. Ltd, 701, Udyog Vihar, Gurgaon. Initially one Mr. Chaudhary had offered to purchase the said land from us. Later I had transacted directly with the company. Here I wish to tell that the matter relating to sale of land was handled by my husband Sh. Om Prakash and he was dealing directly with the company. Q. 3. Please tell the amount for which the land was sold. Ans. The land was sold at the rate of Rs. 6,60,000 per acre. The land measured 36 kanals 7 marlas or approximately 4.5 acres. The full value of sale consideration was Rs. 30 lakhs. Sale was registered for Rs. 20 lakhs on 9.9.2005. The amount received as per sale deed was in form of bank drafts, which were deposited by us in Oriental Bank of Commerce. DLF-III, Gurgaon. Balance amount of Rs. 10 lakhs was received in cash. 0.4. Please tell how was the amount of Rs. 10 lakhs received on sale of land was utilized by you? Ans. The amount of Rs. 10 lakhs received on sale of land was used for marriag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns.My name is Om Prakash. I live at U-15/62, DLF-III, Townhouse, Gurgaon. Q.2. land measuring 36 kanalas 7 marlas in Village Sultanpur, tehsil Parukh Nagar, Gurgaon in the name of your wife Smt. Dayawati was sold in F.Y.2005-06. Give complete details. Ans. There was a land measuring 36 kanals 7 marlas in Village Sultanpur, Tehsil Parukh Nagar, Gurgaon in the name of your wife Smt. Dayawati. It was sold to M/s Kay Kay Apartments Pvt Ltd in FY 2005-06 and the sale was registered on 9.9.2005. I had handled the deal with Kay Kay Apartments Pvt Ltd for sale consideration of Rs. 30,60,000. Out of this amount, Rs. 20,00,000 was received vide bank drafts as per registered sale deed and Rs. 10,00,000 was received in cash. I have incorporated the complete details of the deal in the statement of my wife Smt. Dayawati recorded on 14.12.2008. Q.3.Did you inform your wife about the money received from the said deal? Ans. I did not inform my wife at the time of deal because in our families such matters are not shared with ladies in the house. However, on 14.12.2008 when the statement of my wife was recorded, I told her about the deal and incorporated all the details in her statement. Q.4. Do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the public are substantially interested, of any sum to any concern in which such shareholder (who is the beneficial owner of shares, holding not less than 10% of the voting power) is a member and in which he has a substantial interest is deemed to be dividend to the extent to which the company in either case possesses accumulated profits. In this background, show cause as to why the sum of Rs. 1.25 crores may not be treated as deemed dividend in your hands under section 2(22)(e) of the Act" 10.1. The record shows that the assessee replied vide letter dated 29.12.2008 stating that the original shareholders of the company were Ajay Vats and Vinay Vats and that they transferred the shares subsequently to the two shareholders of M/s Kohli Housing & Development Pvt. Ltd. It was canvassed that at the time of advancement the loan by M/s Kohli Housing & Development Pvt. Ltd. Sudharshan Kohli and Kum Kum Kohli were not shareholders of the assessee company accordingly the provision of the said section were not attracted. However the AO was not convinced as he was of the view that M/s Kohli Housing & Development Pvt. Ltd. had given loan of the following amounts to the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rada vs CIT (1998) 229 ITR 444 (SC); Nandlal Kanoria vs CIT [1980] 122 ITR 405 (Cal); CIT vs Durga Prasad More [1971] 82 ITR 540 (SC); M.D.Jindal vs. CIT [1987] 164 ITR 28 (Cal.); LIC vs Escorts Ltd. [1986] 59 Comp Case 548 (SC) so as to conclude that the corporate veil has to be lifted and the true nature of transactions was required to be examined. The decisions relied upon by the assessee in support of its claim were considered to be not relevant. In view this addition of Rs. 1,25,00,000/- was made in the hands of the assessee holding as under:- 26."Accordingly, the amount advanced by M/s Kohli Housing & Development Pvt. Ltd. to the assessee company is held to be deemed dividend u/s 2(22)(e) of the Act to be taxed in the hands of assessee company to the extent to which M/s Kohli Housing & Development Pvt. Ltd. possesses accumulated profits, which in the present case would be more than adequate to cover the entire loan under the ambit of deemed dividend u/s 2(22)(e). 27.At the time of giving advance to the assessee company, M/s Kohli Housing & Development Pvt.Ltd had reserve and surplus/accumulated profits as envisaged by the provisions of section 2(22)(e) of the Act. The balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of 4.025 acres of agricultural land at Village Sultanpur, Gurgaon @ Rs. 4,60,000/- per acre. Some other plots of land were also purchased. In terms of article 7 of the Article of Association, the promoters issued letter dated 7th October 2005 to the company signifying their intention to sell their shareholding to Mr. Sudarshan Kumar Kohli and Mrs. Kum Kum Kohli. After complying with the necessary legal compliances of the Companies Act, and having received the sale consideration of Rs. 50,000/- each by cheques dated 21.10.2005 from Mr. Sudarshan Kumar Kohli and Mrs. Kumkum Kohli; the promoters transferred the shares and it was duly approved by the board of directors alongwith recorded in the register of Transfer & Members on 24th October 2005. Thus, Mr. Sudarshan Kumar Kohli and Mrs. Kum Kum Kohli became registered and beneficial shareholders of the assessee company on 24th October 2005. It is submitted that all these facts are duly supported by the relevant documents placed in the paper book, a certificate of an independent company secretary and an affidavit of the seller of the shares confirming the facts. 3.3 It is submitted that the AO has considered the loan given by M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that McDowell's case was not applicable. It is submitted that the decision in the McDowell case has been subsequently, referred to, analysed and explained by the Supreme Court in Union of India Vs PlayWorld Electronics Pvt. Ltd 184 ITR 808 and observed, "this court in McDowell case tried to discourage colorable devices, tax planning is legitimate provided it is within the frame work of law. Colorable devices shouldn't be part of planning". The Gujarat High Court in the' case of Banyan & Berry Vs CIT 222 ITR 831 (Guj) have stated that the revenue sees in McDowell case, more than what it says and frowned upon such misapplication as in that decision, tax avoidance by colorable devices/dubious methods or subterfuge done is deprecated. That is to say what has been deprecated as tax planning for avoidance of tax are those acts which have doubtful or questionable character as to their bona fide and righteousness, not all legitimate acts of a taxpayer which in the ordinary course of conducting his affairs a person does and are under law he is entitled to do, can be branded as being of questionable character on the anvil of McDowell Case. In the McDowell decision, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case is not applicable. 3.4.6 In M.D. Jindal v. CIT (1987) 164 ITR 28 (CAL), the issue was about the applicability of Sec. 2(22)(e), when Assessee & wife were only directors of Co dealing in Iron materials. Material was supplied by Co to directors but subsequently agreement was made to circumvent Sec 2(22)(e). In such circumstances court could pierce corporate veil. But the facts in the impugned case are different. 3.4.7. The facts in Juggilal Kamlapat v. CIT (1969) 73 ITR 702 (SC) were that the Partnership firm M/s. Juggilal Karnlapat [in which Singhania Brothers were majority partners] were also the majority shareholders in a company namely J.K. Iron & Steel Co. Ltd. & in J.K. Commercial Corporation in which the Singhania Brothers, their wife and children were majority shareholders. It was in such circumstances in view of the majority holding in all the concerns that it was held that termination of the Managing agencies was a collusive device practiced for the purpose of evading Income tax as there was only a change of personnel of the managing agency company and not a change in office. But no such case can be made out in the impugned case. 3.4.8 In all the cases relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is a recipient of the loan and the recipient is not a shareholder and the loan cannot be treated as a dividend in its hands for which proposition reliance placed upon CIT vs Hotel Hilltop [2008] 217 CTR 527 (Raj.) and ACIT vs Bhaumik Color Pvt. Ltd. [2009] 120 TTJ 865 (Spl. Bench, Mum.). 12. Considering the arguments on facts and law the CIT(A) after examining the requirements of section 2(22)(e) and taking into consideration the specific facts concluding that on the date of taking of loan by the assessee company the relationship between the assessee and the Kohli group was not established in terms of section 2(22)(e) as on the dates of taking the loan the assessee company or the sister concerns were not a shareholder in any of the Kohli Group of companies including Kohli Housing & Development Company and there was no common shareholders also. Thus it was concluded neither the payer qualified nor the receiver qualified for bringing the amount of loan received within the ambit of section 2(22)(e) of the Act. These findings are found recorded in para 4.1 to 4.2 at pages 10 to 12 and reproduced hereunder for ready-reference:- 4.1 "I have perused the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bscribers/directors who agreed to subscribe for minimum shares of Rs. 50,000/- each. 2. Allotment of shares to original subscribers 30.06.2005 Co. Received Rs. 50,000/- each from Ajay Vats & VInay Vats on 30thh June 2005 as undertaken by them. Co. allotted 5000 shares each to each of them. 3. Reimbursement of expenditure on incorporation 05.07.2005 Ajay Vats had personally incurred expenditure of Rs. 4,800/- towards incorporation of Co. Which was reimbursed by issue of cheque. 4. Co. received loan of Rs. 30 lacs from VPN Management & Consulting Pvt. Ltd. 04.07.2005 The said loan was arranged by Vats group to purchase land. 5. Initial land purchased at Village Sultanpur, Gurgaon, Haryana 06.07.2005 Co. purchased 4.025 acres of land for Rs. 18.51,500/- (excl. Rs. 1,20,750/- stamp duty.) 6. Loan from Kohli Housing & Development Pvt. Ltd. 09.07.2005 Rs.50 lacs received as loan. 7. Loan from Kohli Housing & Dev. Pvt. Ltd. 16.08.2005 Rs.75 lacs received as loan. 8. Letter issued by Ajay Vats & Vinay Vats to co.signifying intention to sell shareholding to Kohli Group 07.10.2005 The said letter was issue in terms of article 7 of the Article of Association of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the legal spirit would normally fall within the ambit of tax planning. He observed that their Lordships have held that the tools used are not meant to defraud the revenue. In view of the AO's reliance on the decision of the Apex Court in the case McDowell & Co. Ltd. he also took into consideration the fact that the said decision has been a subject matter of discussion in several cases which have been amplified by the Supreme Court in the case of Playworld Electronics and Azadi Bachao Andolan 263 ITR 706 which have held that it is applicable only the device is beyond that what is permissible by law. On a consideration of these factual findings and judicial precedent the CIT(A) concluded that it has been held that bonafide, legitimate tax planning is permissible and proceeded to delete the addition in the following words:- 4.7.4. "The decision in the other cases relied upon by the AO are also not applicable in the facts and circumstances of the cases. The AO has not brought anything on record to establish that the sequence of events had been only with a view to evade the payment of tax. The presumption made by the AO has not been substantiated by any evidence whatsoever on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the ITAT proceeded to delete the addition. 13. Aggrieved by this the Revenue is in appeal before the Tribunal. The Ld. Sr. DR, Sh. Vikram Sahay placed reliance upon the assessment order however no infirmity on facts in the impugned order was pointed out by him nor any distinction on facts was sought be argued from the decisions relied upon by the CIT(A). 14. Ld. AR apart from relying upon the impugned order and the detailed arguments on facts and law relied upon before the CIT(A) placed further reliance upon the various orders of Tribunal which have consistently upheld the same principle. Relying upon the written submissions and synopsis filed following facts in support of the impugned order were highlighted:- 1.1 "The aforesaid Companies were promoted and incorporated by Mr Ajay vats & Mr Vinay Vats as original subscribers, under certificates of incorporation dated 24th May 2005 in case of cos at Sr No (ii) & (iii) and 18th July 2005 in case of Cos at Sr No (i) & (iv) with the main object of dealing in real estate. The initial expenditure on incorporation being fees paid to Registrar of Companies amounting to Rs. 4,800/- was undertaken by the said Mr. Ajay Vats and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kay Kay Royal Apptts.P.Ltd. 24.10.2005 14.3. It was submitted that the assessee in response to the show cause notice furnished letter dated 29.12.2008 alongwith all relevant documents in support of it's claim including certificate of an independent company secretary and an affidavit of the sellers of the shares confirming the facts. These documents available in the Paper Book it was argued have not been rebutted by the Revenue. It was submitted that the action of the AO based on the case laws distinguished in detail before the CIT(A) has also not been contradicted by the Ld. Sr. DR as no contrary argument either on fact or law has been advanced. It was also submitted that no contrary decision has also been referred to by the Revenue to take a contrary view. In view of the same it was submitted that the impugned order deserves to be upheld. For the sake of completeness attention was invited to the specific provisions of section 2(22)(e) so as to submit that they are attracted as per bare reading of the section and judicial precedent only if all the following additions are fulfilled namely:- (a) Payment has to be made by a closely held company (b) Payment by the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P.) Ltd. [2014] 45 taxmann.com 253 (Delhi) (d) CIT v. Daisy Packers (P.) Ltd. (2014) 220 Taxman 331 (Guj)(HC) (e) CIT vs. Ankitech (P.) Ltd. [2011] 199 Taxman 341 (Delhi High Court) (f) CIT vs. Gopal Clothing Company (P.) Ltd. [2012] 207 Taxman 134 (Delhi HC)(MAG.) (g) CIT vs. Impact Containers Pvt. Ltd (Bombay High Court) ITA No. 114/2012 (h) CIT v. MCC Marketing (P.) Ltd. [2011] 16 taxmann.com 411 (Delhi) (i) ACIT v. Britto Amusement P. Ltd. (2014) 360 ITR 544 (Bom) (j) CIT v. Hotel Hilltop (2008) 217 CTR 527 (Raj.) 14.6. Specific reliance was also on the following findings of the CIT(A) in para 4.8.5 & 4.9 which read as under:- 4.8.5. "Thus, it is evident that even after the amendment to section 2(22)(e), the amount received will not be taxable in the hands of the recipient until and unless he is not only a registered shareholder but also a beneficial shareholder. The case of the appellant company does not fall in either category when the loans were taken and on this account also, the case made out by the AO cannot be accepted. 4.9. Considering all the facts and circumstances of the case, I hold that the appellant company did not satisfy the stipulated conditions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be correct as it is seen that in all these appeals Ground Nos. 1 & 5 are identical and vide Ground No.-2 similar addition deleted by the CIT(A) is assailed on same set of facts. Vide Ground No.-3 and 4 it is seen that based on the very same statement of Smt. Dayawati and Sh. Om Prakash in ITA No.-3079/Del/2009 considering the six instances of purchases made and in ITA No.-3081/Del/2009 and ITA No.- 3082/Del/2009 considering the 12 and 5 instances of purchases respectively the AO has proceeded to make addition in similar lines which has been restricted by the CIT(A) in ITA No.-3079/Del/2009 and totally deleted in the remaining two appeals as admittedly the stamp value was much less than the settled price for similar reasoning the CIT(A)'s order assailed by the Revenue vide Ground No.-2 in each of these appeals is upheld and the finding in Ground Nos.-3 & 4 in the remaining Grounds in view of the relief granted in the respective Cos being allowed stands substituted. 20. As a result thereof ITA No.-3079/Del/2009, ITA No.-3081 & 3082/Del/2009 are dismissed and CO. No.-273/Del/2009 is allowed; CO. Nos.- 275 & 276/Del/2009 which appear to be in support of the respective impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no relationship with the appellant company. It is trite that the provisions of section 69B and 69C are applicable on the assessee who makes the undisclosed investment/payment and the amount concerned is deemed to be the income of that person only. Moreover, privity is not established by the AO between the appellant company and the 4 entities mentioned in the assessment order about the utilization of loans raised from the appellant company and their use for the purposes of acquisition of the agricultural land. Considering the position of law and that the addition to the extent required have been upheld substantively in the respective cases of M/s Kay kay Apartments Pvt. Ltd. and M/s Kay Kay Royal Apartments Pvt. Ltd., I hold that the protective addition in the case of the assessee company is not proper. The AO is, therefore, directed to give relief to the assessee on the aggregate protective addition of Rs. 1,26,05,741/-" 21.2. In the afore-mentioned peculiar facts and circumstances of the case where the very basis of the addition in the case of Kay Kay Apartments has not been upheld by us, we find that the departmental appeal is devoid of merit. The same is accordingly dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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