TMI Blog2017 (9) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... society, and therefore, assessee derived personal benefit is of no consequence since the requirement of section 2(22)(e) is not whether the assessee has actually derived any personal benefit from the said concern but is that the assessee is beneficially entitled to not less than 20% of the income of the said concern. The word entitled means having a legal right to something. Since such legal right is absent in the case of the present society, in the absence of such legal right of the assessee in the said society the amount advanced cannot be treated as deemed income as per section 2(22)(e) of the Act. Moreover even as per the argument of the Revenue the documents found during search only establish that the assessee has derived benefit from the said societies and not substantial benefit, as is the requirement of the section. - Decided in favour of assessee. Unexplained deposit in Oriental Bank of Commerce - addition on account of advance received on sale of land - CIT-A deleted both addition - Held that:- Above additions have been deleted by the CIT(A) on the basis of the cash flow statement which was never produced before the AO and was furnished for the first time before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER BENCH: All the above appeals relate to the same assessee on account of assessment framed consequent to search carried out on the assessee. Therefore, all were heard together. While the appeal in ITA No.51/Chd/2014 and ITA No.110/Chd/2014 are cross appeals by the assessee and the Revenue against the order passed by the Ld.CIT(Appeals)(Central), Gurgaon dated 27.11.2013 for assessment year 2006-07, the appeals in ITA No. 52/Chd/2014, ITA No. 53/Chd/2014 and ITA No. 54/Chd/2014 have been filed by the assessee against the order passed by the Ld.CIT(Appeals)(Central), Gurgaon dated 27.11.2013. 31.10.2013 and 31.10.2013 for assessment years 2007-08, 2008-09 and 2009-10 respectively 2. At the outset it may be stated that during the course of hearing before us the Ld. counsel for the assessee sought permission to withdraw the assessee s appeal filed in ITA Nos.52 54/Chd/2014. In view of the same, the said two appeals are treated as dismissed. 3. We shall now be first taking up Revenue s appeal in ITA No.110/Chd/2014 ITA No.110/Chd/2014(Revenue s appeal): 4. Ground No.(i) raised by the Revenue reads as under: (i) Whether on the facts and in the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Accumulated shares = shares, tech Profits of 10.38% Urmil Jindal Education 6230330) = 2300 shares, Ashok Jindal = 1640 Shares society 1200 / 5800 Amit Jindal = Hiramoti 20% 113322 39996 shares = 600 shares, agro product Heera Moti Healthcare Product Ltd. Accumulated Profits of 3740308) 20.69% R.I, Jindal = 1200 shares, Urmil Jindal = 1000 shares, Sunita Jindal = 600 shares 1200 / 5800 shares = 20.69% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Swami Devi Dayal Hi-tech Education Academy, the documents seized during the course of search showed that the funds had been utilized by the members of the society and their family members and, therefore, the contention of the assessee that no personal benefit had been derived by the assessee was not correct. The Assessing Officer, therefore, treated the sum of ₹ 2,96,137/- as deemed dividend and added the same to the taxable income of the assessee for the year under consideration. 8. The matter was carried in appeal before the Ld.CIT(Appeals) who deleted the addition made with respect to the amounts advanced to Swami Devi Dayal Hi-tech Education Academy of ₹ 2,09,140/- holding that since it was a society/trust which had been granted registration u/s 12AA of the Income Tax Act, 1961 (in short the Act ), the advance was outside the scope of section 2(22)(e) of the Act. The balance addition made was upheld. It is against the aforestated deletion of addition that the Revenue has now come up in appeal before us. 9. During the course of hearing before us the Ld. DR relied upon the order of the Assessing Officer and stated that the Assessing Officer had clearly pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not less than 20% of the income of such concern. In the present case the fact that the assesse holds more than 10% voting rights in Herra Moti Health Care Product Ltd. Heera Moti Spicy Pvt. Ltd., who had advanced the impugned sum, is not disputed. What is required to be seen is whether the assessee was beneficially entitled to 20% or more of the income of Swami Devi Dayal Hi-tech Education Academy. It is not disputed that Swami Devi Dayal Hi-tech Education Academy is a charitable trust registered u/s 12AA of the Act. That the assessee is a trustee in the said trust has also not been disputed and the fact that there are no interest of any member of the said society in the Trust is also not disputed. In the said circumstances, we are left with no option but to agree with the Ld.CIT(Appeals) that second limb or requirement of section 2(22)(e) of the assessee having substantial interest in the concern to which loan or advance has been given has not been established and, therefore, the said advance cannot be treated as deemed dividend in the hands of the assessee. The arguments of the Ld. DR that the documents seized during the course of search show that the funds had been utilized b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs the Assessing Officer found that the cash amounting to ₹ 3,75,000/- was deposited by the assessee in his bank account maintained with OBC. On being confronted with the same, the assessee submitted that the same was deposited out of withdrawals made out of other bank accounts, incomings from brought forward cash in hand, in short meaning that the deposits could be explained out of cash flow statement. The Assessing Officer rejected assessee s contention since no cash flow statement was filed by the assessee and made addition of the said cash deposits of ₹ 3,75,000/- to the income of the assessee holding the same to be unexplained. 16. During appellate proceedings before the Ld.CIT(A) the assessee furnished the cash flow statement. Relying upon the same, the Ld.CIT(A) found that the said cash deposit was made out of regular savings as per cash in hand. The Ld.CIT(A) stated that it was submitted that the cash flow was prepared from bank statement and entries in the seized books and, therefore, no adverse inference could be drawn from the same. She, therefore, deleted the addition made on account of the same. 17. In ground No.3 the Revenue has challenged deletio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to examine the additional documents/evidences filed by the assessee with respect to both the grounds and thereafter adjudicate the issue in accordance with law. Needless to add that the assessee be given due opportunity in this regard. In view of the above both the grounds 2 and 3 raised by the Revenue stand allowed for statistical purposes. The appeal of the Revenue is partly allowed for statistical purposes. 22. We shall now take up assessee s appeal in ITA No.51/Chd/2014. ITA No.51/Chd/2014(Assessee s appeal): 23. The grounds raised by the assessee are as under: 1. That the Worthy CIT (A) has also erred in dismissing the grounds of appeal pertaining to objection of assessee with regard to reference to the Special Auditor in terms of section 142 (2A). 2. That the Worthy CIT (A) has erred in not considering that the conditions or reference to the special audit have not been fulfilled and since the assessee had not been maintaining any personal books of accounts, no complexity was there for the purpose of referring the case to the special audit and, as such, the assessment having been completed beyond the limitation time, the same deser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has contested the addition of ₹ 43,000/- made on account of seized documents. 30. Brief facts relevant of the Act the same are that during the course of search pages 2, 26, 28 and 34 of Annexure A 14 Delta-1 were found and seized. The same was a note pad maintained by the assessee for day-to-day cash receipts and payments entered. As per page-34 of the said annexure cash received of ₹ 43,000/- was reflected in the same. No reply explaining the nature of the same was filed by the assessee during assessment proceedings and, the Assessing Officer, therefore, added the entire amount to the income of the assessee. 31. Before the Ld.CIT(Appeals), the assessee submitted that the said sum represented regular withdrawals from the bank and which as per the assessee was duly reflected in the cash flow statement filed. The Ld.CIT(Appeals) rejected assessee s contention and upheld the addition so made. 32. Before us with respect to both the above grounds raised by the assessee, the only contention raised by the Ld. counsel for assessee was that the Ld.CIT(Appeals) had upheld the addition rejecting the cash flow statement submitted by the assessee while, on the other h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: 1. That the Worthy CIT (A) has also erred in dismissing the grounds of appeal pertaining to objection of assessee with regard to reference to the Special Auditor in terms of section 142 (2A). 2. That the Worthy CIT (A) has erred in not considering that the conditions or reference to the special audit have not been fulfilled and since the assessee had not been maintaining any personal books of accounts, no complexity was there for the purpose of referring the case to the special audit and, as such, the assessment having been completed beyond the limitation time, the same deserves to be quashed. 3. That the Worthy CIT(A) has erred in confirming the addition of deemed dividend U/s 2(22)(e) amounting to ₹ 1,50,401in respect of amount shown as alleged advance to the assessee in different Companies. 4. Notwithstanding the above said ground of appeal the Worthy CIT (A) has erred inn not giving relief of ₹ 43,150/- in respect of amount shown as advance in the books of M/s Mahaprabhu Ram Mulkh. 5. That the Worthy CIT (A) has erred in confirming the addition of ₹ 30,69,300/- on account of certain seized documents as per para 11.2.3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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