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TMI Blog2019 (1) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... g documents were found which were seized. Consequent to the search, a Notice under Section-153A of the Act was issued on 07.02.2006. In response, the assessee filed a return of income on 20.02.2006, declaring the said income at Rs. 3,85,250/-, as per the originally returned income. Subsequently, a Notice dated 15.03.2007, under Section-143(2) of the Act, was issued to the assessee. Thereafter, Notices under Section-142(1) of the Act along with questionnaires were issued to the assessee on various occasions. 3. While going through the seized books of accounts and documents, it was found that the assessee had paid a sum of Rs. 11 Crores as on 24.05.2004 to his wife Smt.Vadana Poddar, apparently, on a personal commitment to her. The same was indicated as 'gift fromSri.Basant Poddar' to his wife, in a sum of Rs. 25 Crores, which constituted Rs. 11 Crores already paid, Rs. 6 Croresto be paid before 10.06.2004 and Rs. 8 Crores to be paid between July-August'2004, along with certain other commitments. The same was signed by the assessee as well as his wife, which was witnessed by Sri.S.Badrinarayan. 4. A Notice dated 20.06.2007, under Section-142(1) of the Act, along with a questionnair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Poddar and accordinglythe said payment was considered as 'dividend' within themeaning of Section-2(22)(e) of the Act. 8. Questioning the order of the Assessing Officer, the assessee preferred an appeal before the Commissionerof Income Tax (Appeals). The Commissioner of Income Tax (Appeals) was of the view that the Assessing Officer was not justified in treating the entire amount of 11.05 Crores as 'deemed dividend' in the hands of the assessee. That since M/s.SREL had advanced only a sum of Rs. 10.80 cores to Vasanth Poddar, the same has to be treated as 'deemed dividend'. Therefore, it upheld the addition of Rs. 10.80 Cores, as 'deemed dividend' at the hands of the assessee by granting partial relief of Rs. 25 lakhs on that ground. 9. Aggrieved by the same, the assessee preferred an appeal before the Tribunal. The Tribunal on reconsidering the facts of the case, was of the view that the assessee had no direct or indirect control over M/s.SREL. That SREL is a 'Separate Corporate Entity' and is separately assessed to Income tax. That the company M/s.MEL during the course of its ordinary activity has given 'Inter-Corporate Deposit' of Rs. 11.05 Crores to M/s.SREL. That M/s.MEL has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by MEL at the instance of the assessee who was the MS and the shareholder to M/s.Solid Real Estate Private Limited and in turn to Smt. Vandana Poddar would amount to deemed dividend as per Section.2(22)(e) of the Act, and the judgments of the Apex Court in 229 ITR 444, 290 ITR 893? 2. Whether the Tribunal was correct in holding that the amount paid by MEL to M/s.Solid Real Estate Private Limited and thereafter to Smt.Vandana Poddar was a commercial transaction, despite the 5% interest shown was only on paper and not actual and the entire series of transactions was entered into is the sole object of avoiding tax? 3. Whether the Tribunal was correct in not taking into consideration the relevant material considered by the AO and CIT(A) which clearly shows that the entire income was dividend income liable to tax, which had been avoided by entering into these series of transactions?" 12. Shri.K.V.Aravind, learned counsel appearing for the Revenue contends that the order of the Tribunal is erroneous and liable to be interfered with. That thematerial on record would indicate that incriminating documents were seized from the assessee. That the documents would clearly indicate that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts borrowed by it, inasmuch as, it has received interest for the amounts paid to Smt.Vandana Poddar. All these transactions are reflected in the books of accounts and are also reflected in the bank entries. Therefore, the Tribunal was justified in passing the order so far as the recovery of the incriminating material is concerned. That there is no nexus between the payments made and the suspected payment herein and the material seized. 16. It is the further contention that the material seized would only indicate that the transaction in question is a settlement plan arrived at between the husband and wife. That even if the said settlement is not accepted, the same has no nexus with the instant transaction in question, and has to be considered as a separate transaction and not relatable to the issue on hand. That the transaction being inter-related between the assessee, M/s.MEL and Vandana Poddar are assessed by the same Assessing Officer. That since it is related to one and the same transaction and the same having been accepted in the case of M/s.MEL and Smt.Vandana Poddar, the question of raising the said issue only so far as the assessee is concerned is unacceptable. 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments would contend that they are only 'Journal Entries'. One such document is that of M/s.MEL with reference to M/s.SREL. A copy of the paper book produced before theTribunal is placed before us. The said material would also indicate that there is a 'journal entry' with regard to Rs. 8,52,181/-, with regard to the interest received from M/s.SREL. The same would also further indicate that interest has also been received. That there is a total receipt of Rs. 35,44,763/-, through American Express BankLimited and therefore the accounts stands closed. Therefore, the Tribunal was justified in holding that all the entries did not constitute mere 'Journal Entries'. That the same are backed by the relevant bank entries. Therefore, it held that firstly there is no nexus so far as the seized documents are concerned. Secondly, the transactions between M/s.MEL and M/s.SREL and Smt.Vandana Poddar are business transactions which are reflected in the books of accounts of the three of them. Therefore, the Tribunal was justified in coming to such a conclusion. We do not find any ground to interfere in the order of the Tribunal. The same is an appropriate finding recorded on the facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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