TMI Blog2015 (8) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... xplaining the source before the AO. It is impossible to reconcile this statement with the availability of funds at a given point of time. There is no head and tail of the exact amount available on a particular date, out of which, it can be alleged that the investment was made in the advancement of loans.No doubt, on 21.2.2002, cheque bearing no.0303541 for ₹ 7 lakhs has been cleared. But this cheque number has not been mentioned in the promissory note. It cannot be said that the loan of ₹ 7 lakhs in the Asstt.Year 2002-03 was given through account payee cheques, and that the cheque was bearing no.0303541. In the promissory note, there is a cutting of cash with the cheque, but neither the assessee has alleged the cheque number during the assessment proceedings nor mentioned in the promissory note. This fact can easily be demonstrated before the AO by producing the bank account of the borrower indicating the fact that cheque no.0303541 was credited to his account, but no such effort was made by the assessee during the assessment proceedings. Before us, it is not possible to cross-verify this aspect at this stage. Therefore, we do not find any merit in this contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrips deserve to be excluded on the ground that the investment does not pertain to this year. No such efforts have been made. The AO has, accordingly, recorded a finding that the assessee did not submit any detail. He has worked out the details on analysis of DEMAT account. No material has been brought to our notice which can suggest this erroneous approach adopted by the Revenue authorities. We, therefore, do not find any merit in this ground of appeal. It is rejected. - Decided against assessee. Addition on deemed dividend u/s 2(22)(e) - Held that:- The assessee has never raised any plea that the company was incorporated on 1.9.2003. The ld.counsel drew our attention towards page no.119 where certificate issued by the Asstt.Registrar of Companies, Gujarat, exhibiting the incorporation of the company has been placed on record. He also drew our attention towards copy of the balance sheet prepared on 31.3.2004. These documents were not brought to notice of the AO during the assessment proceedings. Therefore, we deem it proper to set aside this issue to the file of the AO for re-adjudication. The ld.AO shall determine the date of incorporation of the company, and thereafter, dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oprietorship concerns etc. She has annexed a list Exhibit-I along with return. The assessee had owned up all transactions in these names and offered the income. The assessee has also contended that transactions in the bank account and cash book were intermingled in such a manner that there were overlapping of funds. She has rotated cash available with her. Thus, there may be duplication of certain entries. She has offered income of ₹ 10.00 crores in the Asstt.Years 2002-03 to 2008-09 This income has been worked out on the basis of peak level in the cash book seized by the department, and from the bank account maintained by the assessee, and other family members and concerns, whose names have been given in Exhibit-I. The assessee has compiled the details in tabular form exhibiting the particulars of assets/investments identified against the amount of additional income offered in the return for each assessment year. This paper has been reproduced by the ld.First Appellate Authority at page nos.4 5 of the paper book in the Asstt.Year 2002-03 to 2004-05. The returns have been filed on 9.12.2009. There was only 22 days time left with the AO for scrutinizing the details submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 31.12.2009, then the same could not have been served upon the appellant on 31.12.2009 This clearly shows that there is a mistake in the assessment order. 4.1 For this purpose, the order sheet of the assessment records was verified by me. From the perusal of the order sheet, it is seen that on30/12/2009 the AO has made two notings prior to this noting of 31/12/2009 in the order sheet regarding the receipt of two replies from the appellant. The first noting on 31/12/2009 at 12.15 a.m. is regarding the receipt of the submissions dated 28/12/2009, 29/12/2009 and 30/12/2009. It is seen that the representative of the appellant Shri C.P. Rawal has also signed this order sheet entry by mentioning the date as 31/12/2009 at 12.15. It is thus clear that the assessment proceedings continued throughout the day of 30/12/2009 beyond 12.15 o clock in the night. This is proved by the signature of the representative of the appellant Shri C P Rawal, who has also, mentioned the time at 12.15 a.m. on 31/12/2009. Prior to this order sheet entry, no hearing has taken place on 31/12/2009! It is not expected that the AO has started the hearing in this case on 31/12/2009 in midnight. Further a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in. Had it been 12:15am after 31st January, then the AO would not have mentioned 31.12.2009, rather it would have been 1st January, 2010. The learned First Appellate Authority has made elaborate discussions on this point in the findings extracted (supra), and we do not find any merit in the submissions of the learned counsel for interfering in the above findings of the CIT(A). This ground of appeal is rejected in all three years. 10. The ground no.3 and 4 is also common in all these three years. The assessee has pleaded that the ld.CIT(A) has erred in confirming the addition of ₹ 15.00 lakhs, ₹ 9.50 lakhs and ₹ 15.50 lakhs made by the AO on account of alleged investment/expenditure in the property situated at 6, Kaushal Co-op. Hsg. Society only on surmises and conjectures, and without bringing any evidence on record in respect of these transactions in the Asstt.Years 2002-03 to 2004-05 respectively. 11. Brief facts of the case are that during the course of search, various promissory notes, cheque and copies of agreement were found and inventorised as page nos.101 to 107, 108 to 110 of Annexure-A/73. On perusal of these papers, it revealed that Shri Hasubhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for ₹ 13 lakhs on 7.2.2005. Therefore, the second sale deed executed by father of the assessee, on the strength of irrecoverable power of attorney, cannot be executed. It indicates that no investment was made by the assessee in purchase of 6, Kaushal Co-op. Hsg. Society. In the third fold submission, it was contended that the assessee has sufficient cash withdrawal in earlier years. Out of which, it can be assumed that loans have been given by the assessee. For buttressing this contention, the learned counsel for the assessee has filed a summary of cash available, prepared from the bank statements of various persons. 14. The ld.CIT-DR has, on the other hand, relied upon the order of the CIT(A). He contended that all these aspects have already been considered by the learned First Appellate Authority. 15. We have duly considered rival contentions and gone through the record carefully. Before the ld.First Appellate Authority, the assessee has contended that the property viz. 6, Kaushal Co-op. Hsg. Society was sold by its owner to one Shri Kishorebhai V. Thakore for ₹ 13 lakhs vide sale deed dated 17.2.2005. If that be so, then how the power attorney holder, i.e. fath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available with the assessee, out of which, it can be alleged that the loan to this extend was advanced from this amount in the Asstt.Yewar 2002-03. As far as the arguments of the ld.counsel for the assessee that if all the bank accounts are perused minutely, then it will reveal that the assessee has sufficient withdrawal, and therefore, it would construe that advancement of loan was made out of this withdrawal. We have perused the alleged fund flow statement submitted by the ld.counsel for the assessee at the time of hearing. However, we don t find any merit in this contention, because the assessee has not taken any such plea before the ld.First Appellate Authority. The assessee has not submitted any fund flow statement for the purpose of explaining the source before the AO. It is impossible to reconcile this statement with the availability of funds at a given point of time. There is no head and tail of the exact amount available on a particular date, out of which, it can be alleged that the investment was made in the advancement of loans. 16. The ld.counsel for the assessee has further contended that in the Asstt.Year 2002-03, one of the promissory notes was executed on 21.2.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as Annexure A/73 were also found. These pages are copies of receipts issued by Bhagyodaya Owners Association to Shri Gopalbhai Shah. The total receipts are for ₹ 40 lakhs, out of the above, payment of ₹ 12.25 lakhs was made in F.Y.2003-04 and ₹ 27.75 lakhs in the F.Y.2004-05. The AO has made an addition of ₹ 12.25 lakhs in the Asstt.Year 2004-05 and ₹ 27.75 lakhs in the Asstt.Year 2005-06. 20. Dissatisfied with these additions, the assessee took the matter with the ld.CIT(A). It was contended before the CIT(A) that Shri Hasubhai Thakkar is the Chairman of Bhagyodaya Owners Association. He had issued alleged allotment and possession letter along with receipt of payment. In fact, this person, along with his family members took loan of ₹ 40 lakhs. He executed promissory note, issued undated cheques and an agreement vide which it was intended that in case he failed to repay the amount, then the plot no.6, Kaushal Co-op. Hsg. Society would be transferred in the name of assessee at the market rate. For this purpose, he has executed an irrevocable power of attorney in favour of the assessee s father, Shri Gopal Shah on 29.6.2004. Before, the fat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the second alternative security for the loan amount which was given from financial year 2001. The need for execution of these papers was felt because, Plot No.6, Kaushal Co-op. Hsg. Society, though transferred by way of registered sale deed in the name of her mother, by her father, on the basis of irrecoverable power of attorney, but in fact, this plot was already transferred by the owner to one Shri Kishorebhai on 7.2.2005 for consideration of ₹ 13 lakhs. In order to buttress this argument, it was contended that Bhaghyodaya Plaza was never constructed, and Shri Hasmukh Thakkar has filed a letter deposing therein that he had never received any sum from Shri Gopalbhai Shah and Smt.Pareshaben Shah. On due consideration of these contentions, we are of the view that as far this letter from Shri Hasubhai Thakkar is concerned, it was not taken on record by the ld.CIT(A). The assessee sought to produce this letter by way of additional evidence. But prayer of the assessee was rejected. The copies of the receipts indicate that the payment of ₹ 12.25 lakhs in the accounting year relevant to the Asstt.Year 2004-05. Had the amount was not given, then it was for the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 32100453 21554300 25. The ld.AO in this way made addition of ₹ 24,05,384/- on account of unexplained investment in shares. 26. On appeal, the ld.CIT(A) has confirmed the addition. The findings of the ld.CIT(A) is worth to note in this connection. 6.2 I have considered the submission of the appellant. As per the Annexure attached to the assessment order, the AO has worked out the total investment of ₹ 24,05,384/- in shares in the name of the appellant, her brother Mit Shah, her father Gopalbhai Shah, her mother Mrs.Pareshaben Shah. In the absence of any details whatsoever given by the appellant before the AO, the AO worked out the investment in shares from the DMAT account of the above mentioned persons as on 3173/2004 by taking the market rate of the shares as on 31/3/2004. The case of the appellant is that the AO should have adopted the cost or the market rate whichever is lower for the purpose of valuation of the shares. Another contention of the appellant is that since the appellant has worked out her income on the basis of peak theory, the AO should have not made separate addition on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total unaccounted income of the appellant. As the appellant has worked out the additional income on the basis of the income or the investments, whichever is higher, and for assessment year 2004-2005, the additional income has been worked out on the basis of investments, the investment of ₹ 24,06,389/- should have formed part of the total investments as on 31/3/2004. This means that, the peak theory adopted by the appellant has not considered the investment in the listed companies which has been worked out by the AO at ₹ 24,06,389/- in assessment year 2004-2005. In fact, the appellant has not included any investment in the shares of limited companies in any of the assessment years. I have, therefore, no hesitation in holding that the amount of ₹ 24,06,389/- represent the unaccounted investment of the appellant in the various shares of limited companies. In other words, the AO was justified in making addition of ₹ 24,06,389/-on account of undisclosed investment in the shares of listed companies in assessment year 2004-2005. The addition made by the AO is therefore confirmed. 27. The ld. counsel for the assessee submitted that the AO has made additions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than 10% of voting power. Therefore, the loans and advances were treated as deemed dividend. The addition of ₹ 1,45,293/- in the Asstt.Year 2004-05 has been made with the aid of section 2(22)(e) of the Act. 32. The ld.counsel for the assessee at the very outset submitted that the company was incorporated on 1.9.2003. The first balance sheet was prepared on 31.3.2003. The profit of the company has to be determined at the end of the year, and therefore, the accumulated profit is to be worked out on the date of closing of the accounts. In the Asstt.Year 2004-05, there was no accumulated profit before the close of the accounts i.e. 31.3.2004. If it is presumed that the assessee has taken loan from this company, then these were taken before 31.3.2004, and there was no accumulated profit before this date. Therefore, no addition under section 2(22)(e) of the Act can be made. For buttressing his contention, he relied upon the decision of the ITAT, Ahmedabad Bench in the case of M.B. Stock Holding Pvt. Ltd. Vs. ACIT, 84 ITD 542 (Ahd). He also relied on the decision of the Hon ble Supreme Court in the case of CIT Vs. Damodaran, 121 ITR 572. According to the ld.counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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