TMI Blog2016 (6) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... estate business number of transactions of purchase and sale of the plots are being made and stamp duty finally is to be borne by the actual user of the plot at the time of registration. Therefore, generally the transactions made on agreement to sale basis. It is also a fact that this transaction was in between director of the company and company even as per this agreement, the assessee has to make registry of both the plots at the time of final conversion and allotment of Patta. The correspondence between the assessee and the JDA shows that there was efforts to convert the land commercially and get the patta from the JDA, which cannot be doubted. The assessee relied on various decisions on deemed dividend wherein it has been held that loan advances given against the consideration are business transactions not deemed dividend U/s 2(22)(e) of the Act. Therefore, we held that the transaction made between the assessee and the company are business transactions and is not covered U/s 2(22)(e) of the Act. Accordingly, we reverse the order of the ld CIT(A) - Decided in favour of assessee - ITA No. 312/JP/2015 - - - Dated:- 15-6-2016 - Shri R. P. Tolani, JM And Shri T. R. Meena, AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be the assessee. Notice U/s 153A of the Act was issued on 16/9/2001 to file return as per Rule 12 of the Income Tax Rules, 1962 (in short the Rules). The assessee had filed return declaring total income of ₹ 6,21,000/- and speculation business loss of ₹ 3,90,430/-, unabsorbed depreciation for current year of ₹ 2,51,106/- with brought forward long term capital loss of A.Y. 2005-06 at ₹ 5,65,025/- was filed on 25/10/2011. The original return filed by the assessee U/s 139(1) of the Act on 26/10/2007 and identical income had been disclosed in the return. In response to notice U/s 153A, no undisclosed income pertaining to the relevant year had been declared by the assessee. The ld Assessing Officer further observed that during the course of scrutiny proceedings, it was noticed that the assessee had taken loan of ₹ 31.65 lacs from M/s Nakshatra Real Estates Developers Pvt. Ltd. in which the assessee is shareholder of 50%. As per audited balance sheet of the company, it had reserve and surplus at ₹ 24,80,911/-. The ld Assessing Officer gave reasonable opportunity of being heard on deemed dividend. The assessee submitted before the ld Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is found from the copy of account in the books of the company that initially the assessee paid on 09/10/2006 ₹ 31.75 lacs and ₹ 30.00 lacs to M/s Nakshatra Real Estates Developers Pvt. Ltd. and in subsequent period of financial year 2006-07 from 08/11/2006 to 30/12/2006 the appellant had received total amount of ₹ 93.40 lacs from the company of different dates. On 27/3/2007, again the appellant had paid ₹ 1,01,000/- to the company, therefore, transaction with the company cannot be said to be wholly related to the sale transactions of the plots. In other words, it is noted that the assessee had advanced loan and also received loans from M/s Nakshatra Real Estates Developers Pvt. Ltd. but the assessee was claiming that the amount received from 8/11/2006 to 30/12/2006 were not loans but were amount of advances received on account of the sale of two plots. However, such contention of the appellant prima facie does not appear to be genuine inasmuch as, as per this agreement the two plots which were to be sold to M/s Nakshatra Real Estates Developers Pvt. Ltd. were never sold and the transaction was never materialized. Moreover, it may also be noted that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer issued notice on 2/11/2011 U/s 153A read with Section 143(2) of the Act. During the course of search, no incriminating documents were found, therefore, no notice can be issue U/s 153A read with Section 143(2) of the Act because no proceeding was pending before the Assessing Officer. The ld Assessing Officer made addition on the basis of entries recorded in the audited books of account of the assessee. There was no evidence found during the course of search that the assessee had received loan from M/s Nakshatra Real Estates Developers Pvt. Ltd.. The scope of Section 153A is limited to an assessment made on the basis of incriminating document found and seized during the course of search. The ld Assessing Officer made addition in routine manner without referred any seized material or incriminating documents. The assessment for the year under consideration had attended the finality. The assessment completed in the impugned assessment year will not get abated. He further relied on the decision of Hon ble ITAT, Jaipur Bench, Jaipur in the case of M/s Jadau Jewellers Manufacturers Pvt. Ltd. in ITA No. 686/JP/2014 dated 14/12/2015 wherein identical issue has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. It is undisputed fact that the return U/s 139(1) of the Act was filed on 26/10/2007 by the assessee. As per law, notice U/s 143(2) could be issued on or before 30/09/2008. There was a search and seizure in this group on 06/5/2010. The ld Assessing Officer issued notice U/s 153A read with Section 143(2) of the Act on 02/11/2011. It is evident from the assessment order that no addition was made by the Assessing Officer on the basis of incriminating documents found during the course of search except some regular additions. Technical ground can be raised at any stage before the ITAT even before the Hon'ble High Court if it goes to the root of the matter and to assess the correct income of the assessee. It is a fact that on time for selection of the case for scrutiny had already been elapsed and no proceedings were pending before the Assessing Officer. Therefore, the proceedings for the year under consideration were not abated. This issue has been considered by the various ITATs as well as Hon'ble High Courts. It has been held that assessment U/s 153A read with Section 143(3), the ld Assessing Officer has to assess the income in abated year only where incriminating docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company was against the purchase of plot from the assessee. He has further drawn our attention from the copy of account, which shows that initially the assessee has given amount to the company on 09/10/2006 ₹ 31,75,000/- and on 10/10/2006 ₹ 30,00,000/-. Thereafter, the assessee received refund of ₹ 40 lacs from the company out of the earlier advances made to the company. On 09-11-2006, the assessee received ₹ 25,00,000/- against the agreement to sale of two plots to the company. He has further drawn our attention on page No. 80 of the paper book and argued that there was correspondence with JDA for conversion of land for both the plots which were sold to the company. The assessee made full efforts to convert two plots into commercial but they could not get converted. The assessee made another application for reconstitution of plot on 19/5/2007, which was also rejected on 07/6/2007. The ld CIT(A) held that there was no saleable value of the plot and is also without any basis even disputed property has its saleable value in the market. Therefore, this observation is made by the ld CIT(A) without any basis. The assessee also ppurchased these plots through reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble ITAT in the case of Shri Ashok Kumar Agarwal ITA No 810/JP/2014 order dated 04-03- 2016. Therefore, the advances made by the company to the assessee were for the purposes of business and not covered U/s 2(22)(e) of the Act. Therefore, order of the ld CIT(A) is deserved to be deleted. 8. At the outset, the ld CIT DR has vehemently supported the order of the ld CIT(A) and argued that the assessee make believe theory not to make provisions of Section 2(22)(e) of the Act applicable. All the facts have been given by the ld CIT(A) in his appeal order clearly indicates that the assessee s agreement to sale with the company is an afterthought, therefore, he prayed to confirm the order of the ld CIT(A). 9. We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the assessee as well as the company are in the real estate business. In initially, the assessee had advanced money of ₹ 31,75,000/- on 09/10/2006. Thereafter ₹ 30.00 lacs on 10/10/2006. Thereafter, he received back amount of ₹ 40.00 lacs on 08/11/2006 on 09/11/2006. The assessee received ₹ 25.00 lacs which includes asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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