TMI Blog2019 (5) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... st salary payment - HELD THAT:- In the absence of any incriminating material the addition made by the AO u/s 2(22)(e) is not sustainable in law. The same is liable to be deleted. Addition u/s 2(24)(iv) - assessee has purchased the villa from the company at lower price than the market price - Receipts of benefit/perquisite from the company - search and seizure operations - unrecorded consideration of 94.86% of the recorded consideration - CIT (A) deleted the addition by considering FMV and stamp duty value which is lower than price paid bu assessee - HELD THAT:- AO without considering the fact of the rate declared in the case of the assessee has applied the ratio of recorded and unrecorded value in case of sale of other plots wherein the recorded consideration was very less, if it is taken in terms of per sq. ft. It is clear that for the plot D-12, the rate per sq. ft. as recorded is ₹ 650/- and as per seized document it is ₹ 1550/- whereas in the case of assessee the recorded consideration itself is ₹ 1922/- per sq. ft. Hence the ratio applied by the AO without considering the relevant facts is not justified Sale of the villa to the assessee is at a price mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are three appeals by the assessee for the assessment years 2012-13, 13-14 16-17 and appeal by the revenue for the assessment year 14-15 and cross appeal by the revenue for the assessment year 2016-17 against separate orders dated 28.09.2018 and 23.03.2018 of ld. CIT (A)-2, Udaipur. First, we take up the assessee s appeal for the assessment year 2012-13 wherein the assessee has raised the following grounds :- 1) The ld. CIT (A) has erred on facts and in law in confirming the addition of ₹ 14,285/- on account of undisclosed interest income, being difference between the interest income of ₹ 2,00,027/- shown in the statement of affair and interest income of ₹ 1,85,742/- declared in the return filed u/s 153A on the basis of interest income reflected in Form No. 26AS. 2) The ld. CIT (A) has erred on facts and in law in confirming the addition of ₹ 17,30,520/- u/s 2(22)(e) of the Act in the assessment framed u/s 153A even when the assessment proceedings for the year under consideration has not abated and no incriminating material relating to the same was found in search and thus, the addition so made is illegal and bad in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de an addition of differential amount of ₹ 14,285/-. The ld. CIT (A) has also confirmed the addition made by the AO. 3. Before us, the ld. A/R has submitted that the difference in the interest as per Form 26AS and in the statement of affairs is only due to the different working adopted by the banker and the assessee. The assessee has computed the interest on FDR as on 31st March, 2012 whereas the banker has computed the interest as per their date of credit of interest given in the account. The ld. A/R has referred to the details of the interest computed by the assessee in the statement of affairs and the differential amount in comparison to Form 26AS and submitted that if the interest income for the assessment years 2013-14 to 16-17 is taken into consideration then the total amount of interest declared in the return of income as per Form 26AS as well as as per statement of affairs would be almost same. The AO has accepted the higher interest offered to tax by the assessee in the return of income for the assessment years 2015-16 and 16-17 whereas the addition was made of the differential amount for the assessment year 2012-13 to 2014-15. Therefore, there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion raised by the assessee at this stage as the same is considered in respect of ground no. 2, we at the outset note that the interest income declared by the assessee in the return of income for the assessment years 2012-13 to 16-17 and the income shown in the statement of affairs as well as the differential amounts are as under :- AY Interest shown in the Difference Return Statement of Affair 2012-13 1,85,742 2,00,027 14,285 2013-14 2,05,725 2,31,814 ( 26,089) 2014-15 2,26,767 2,51,683 ( 24,916) 2015-16 2,92,349 2,72,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the future salary payable to the assessee, hence the same cannot be treated as loan/advance for the purpose of section 2(22)(e) of the Act. The ld. A/R has further contended that since the assessment was not pending as on date of search and there is no incriminating material found and seized disclosing any income on account of deemed dividend, the addition made by the AO is not sustainable in law. He has submitted that assessee filed the original return of income on 29.12.2012. The time limit for service of notice u/s 143(2) for the relevant AY was upto 30.09.2013. No notice was issued to the assessee before this date. Thus, the assessment proceedings for the year under consideration were not pending on the date of search. In search, no incriminating material indicating any undisclosed income for the year under consideration was found. Section 153A empowers the AO to issue notice to a person who is searched u/s 132 to file return in respect of 6 AY s preceding the assessment year in which search is conducted and to assess or reassess the total income of these years notwithstanding anything contained in section 139, 147 and other related sections. Thus, the assessment u/s 153A are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 8. On the other hand, the ld. D/R has submitted that as per provisions of section 153A, the AO has to issue notice under section 153A(1) of the IT Act for six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. Further, the AO has to assess or reassess the total income of such years. The provisions of section 153A do not mention about any incriminating material for the purpose of assessment or reassessment of the income for these six years. The ld. D/R has pointed out that in a case where the assessee has not filed any return of income under section 139 of the Act for the relevant assessment year and no assessment order is passed under section 144 of the Act then even if no incriminating material is found during the search but other information available with the AO at the time of assessment which lead to addition to the total income of the assessee then if no addition could be made to the total income of the assessee in the assessment completed under section 153A of the act, the provision of section 153A(1) would be redundant which cannot be the intention of the legislature. Therefore, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequently the assessment was not got abated due to the reason of search and seizure action. Therefore, it is a case of reassessment as per the provisions of section 153A of the Act. There is no quarrel on the point that once a search and seizure action is carried out, the AO is bound to issue notice under section 153A in respect of six years preceding to assessment year in which search is conducted to assess or reassess the income of the assessee. However, the reassessment of the income consequent to the search and seizure action depends upon the status of the assessment proceedings as on the date of search. If the assessment for a particular assessment year falling within six assessment year is pending as on the date of search, the same shall abate by virtue of the search and seizure action under section 132 of the IT Act and consequently the AO shall assess the income of the assessee under section 153A which will be considered as a regular assessment and not a reassessment. On the other hand, if the assessment was not pending as on the date of search then the Assessing Officer has to reassess the income of the assessee depending upon the undisclosed income detected during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and specifically the question No. 77. It is pertinent to note that during the course of search and seizure action, the statement of the assessee was being recorded from 04/4/2013 to 05/4/2013 and as many as 78 questions were put to the assessee. The statement of the assessee recorded U/s 132(4) runs into about 50 pages. The statement of the assessee was recorded from 12.00 noon on 04/4/2013 and continued up to 1.00 a.m. on 05/4/2013. After the break, the recording of statement again resumed at 7.50 a.m. on 05/4/2013 we note that up to question No. 67 were recorded on 04/4/2013 and up to 1.00 a.m. on 05/4/2013 and thereafter the statement of the assessee was again resumed in the morning of 05/4/2013 and continued up to question No. 78. It is manifest from the statement recorded U/s 132(4) of the Act that repeated questions were asked about the genuineness of the loans taken by the assessee during the financial year 2009-10 relevant to the assessment year under consideration and the assessee has given the answer and stated that all these loans are genuine and taken through banking channel and the assessee also repaid these loans prior to the date of the search. These tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st in the F.Y. 2009-10 and these were repaid in the F.Y. 2011-12. Thereafter a specific question was put to the assessee regarding the loan taken from M/s Dipnarayan Vyapar Pvt. Ltd. as question No. 39 and in reply to the same, the assessee stated that the loan was taken about three years back on interest but the assessee was not able to remember the person through whom the loan was taken. Therefore, there was no ambiguity in the reply to question No. 39 except that the assessee was not able to tell the name of the person who helped the assessee in procuring the loan. Since the Investigation Wing was not satisfied with the answers of the assessee as they could not extract the statement which can be used against the assessee, therefore, question were continuously put to the assessee for two days and it is a matter of record that the assessee was grilled up to 1.00 a.m. on the night of 04/4/2013 and again restarted in the morning at 7.50 a.m. and the question No. 77 was again asked specifically regarding loan from M/s Dipnarayan Vyapar Pvt. Ltd. in reply to that the assessee has explained that after trying to remember for continuously for two days and hoping the cooperation from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere will be no admission regarding any of the loan transactions being an accommodation entry. Therefore, the question arises whether in absence of any incriminating material, the Assessing Officer can make any addition to the total income of the assessee when the assessment was not abated due to the search and seizure action. The Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra) has considered and observed in para 37 and 38 as under: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the Hon'ble High Court has ruled that the Assessing Officer while making the assessment U/s 153A of the Act can make the addition only on the basis of some incriminating material unearthed during the course of search or requisition of documents, which were not produced or not already disclosed or made known in the course of original assessment. In the case in hand, all the transactions were duly recorded in the books of account. Even the loans were already paid during the F.Y. 2011-12 and therefore, these transactions were disclosed and known in the course of original assessment/return of income. Hence in absence of any incriminating material, the Assessing Officer cannot make any addition to the total income of the assessee. In the subsequent decision, the Hon ble Delhi High Court in the case of Pr.CIT Vs. Meeta Gutgutia (supra) has held in para 57 to 72 as under: 57. The question whether unearthing of incriminating material relating to any one of the AYs could justify the re-opening of the assessment for all the earlier AYs was considered both in Anil Kumar Bhatia (supra) and Chetan Das Lachman Das (supra). Incidentally, both these decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT (A), affirmed by the ITAT, deleting the addition, was not interfered with. 59. In Kabul Chawla (supra), the Court referred to the decision of the Rajasthan High Court in Jai Steel (India) v. Asstt. CIT [2013] 36 taxmann.com 523/219 Taxman 223. The said part of the decision in Kabul Chawla (supra) in paras 33 and 34 reads as under: '33. The decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (supra) involved a case where certain books of accounts and other documents that had not been produced in the course of original assessment were found in the course of search. It was held where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration while computing the total income under Section 153A of the Act. The Court then explained as under: 22. In the firm opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also took note of the decision of the Bombay High Court in CIT v. Continental Warehousing Corpn (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78/232 Taxman 270/374 ITR 645 (Bom.) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was thereafter summarized in Kabul Chawla (supra) as under: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of ₹ 14.5 crores against declared income of ₹ 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India) (supra) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as under: '15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition' or disallowance can be made only on the basis of material collected during the search or requisition, in case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra), the earlier assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer with respect to the sale transactions in the particular assessment year.' 62. Subsequently, in Devangi alias Rupa (supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Saumya Construction (P.) Ltd. (supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in IBC Knowledge Park (P.) Ltd.(supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in Salasar Stock Broking Ltd. (supra), too, followed the decision of this Court in Kabul Chawla (supra). In Gurinder Singh Bawa (supra), the Bombay High Court held that: 6. . . . . . once an assessment has attained finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ans:- I hereby admit that these papers also contend details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s. Asom Trading and M/s. Balaji Perfumes. 67. By contrast, there is no such statement in the present case which can be said to constitute an admission by the Assessee of a failure to record any transaction in the accounts of the Assessee for the AYs in question. On the contrary, the Assessee herein stated that, he is regularly maintaining the books of accounts. The disclosure made in the sum of ₹ 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maintained by the Assessee in the present case have been accepted by the AO. In response to question No. 16 posed to Mr. Pawan Gadia, he stated that there was no possibility of manipulation of the accounts. In Smt. Dayawanti Gupta (supra), by contrast, there was a chart prepared confirming that there had been a year-wise non-recording of transactions. In Smt. Dayawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. Conclusion 72. To conclude: ( i) Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the facts and circumstances, the Revenue was not justified in invoking Section 153A of the Act against the Assessee in relation to AYs 2000-01 to AYs 2003-04? ( ii) Question (ii) is answered in the affirmative i.e., in favour of the Assessee and against the Revenue. It is held that with reference to AY 2004-05, the ITAT was correct in confirming the orders of the CIT (A) to the extent it deleted the additions made by the AO to the taxable income of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:- 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition shall abate . Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: ( a) The assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; ( b) Regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and just In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or 13 D.B. INCOME TAX APPEAL NO.53/2011 Jai Steel (India), Jodhpur vs. Assistant Commissioner of income Tax, Jodhpur (Along with other 16 similar matters) reassessment can be made. 7.5 Similar view point was expressed by the Hon ble Delhi High court in the case of Kabul Chawla vs. ACIT 380 ITR 573 (Del HC). The relevant observation of Hon ble court could be seen in para 37 38 of order, same is reproduced below: Para 37. On a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.0n the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 7.6 The issue of additions made by the AO while framing the assessment u/s 143(3)/153A, if no incriminating material is found during the course of search was considered by Hon ble Gujarat High court in the case of Soumya construction PL Vs CIT 387 ITR 529. In its order dated 14/03/2016 Hon ble court has categorically stated that, in cases of completed assessment, if no incriminating material is found then no additions can be made in the assessment framed u/s 153A of the act. The relevant para no. 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Form No. 26AS. 2) The ld. CIT (A) has erred on facts and in law in confirming the addition of ₹ 67,35,153/- u/s 2(22)(e) of the Act in the assessment framed u/s 153A even when the assessment proceedings for the year under consideration has not abated and no incriminating material relating to the same was found in search and thus, the addition so made is illegal and bad in law. 2.1) The ld. CIT (A) has erred on facts and in law in upholding the finding of AO that amount of ₹ 40,80,000/- given by M/s. Bhatia Corporation Pvt. Ltd. in business expediency to assessee for investment in share capital of its group company M/s. Bhatia Colonizers Pvt. Ltd. is in the nature of loan or advance, thereby confirming the addition of same u/s 2(22)(e) of the IT Act. 2.2) The ld. CIT (A) has erred on facts and in law in upholding the finding of AO that advance of ₹ 32,55,153/- received from M/s. Bhatia Corporation Pvt. Ltd. against the salary of ₹ 6 lacs is in the nature of loan or advance, thereby confirming the addition of ₹ 26,55,153/- u/s 2(22)(e) of the IT Act. 3) The assessee cra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0th September, 2014, therefore the assessment proceedings were not pending as on the date of search on 03.03.2016. He has reiterated his contention as raised for the assessment year 2012-13. 16. On the other hand, the ld. D/R has also reiterated his contention as raised for the assessment year 2012-13. 17. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the original return of income was filed by the assessee on 20th December, 2013. The assessment for the year under consideration was not pending as on the date of search on 03.03.2016 as the limitation for issuing the notice under section 143(2) expired on 30th September, 2014. Accordingly, when the assessment proceedings were not pending as on the date of search then the issue raised by the assessee is identical as for the assessment year 2012-13. We have already considered this issue for the assessment year 2012-13 and in view of our finding on this issue, the same is decided in favour of the assessee and against the revenue. The addition made by the AO in the absence of any incriminating material is liable to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12, E-13 and E-16 measuring 4,600 sq. ft. was sold for ₹ 75,80,000/- but in the books of M/s. Bhatia Colonizers Pvt. Ltd. the same is recorded at ₹ 38,90,000/-. Thus there is an unrecorded consideration of 94.86% of the recorded consideration. The AO applied the same ratio in respect of the Villa purchased by the assessee and consequently held that the assessee has received benefit/perquisite from the company to the extent of ₹ 85,37,400/- being 94.86% of ₹ 90,00,000/-. The AO accordingly made an addition of this amount under section 2(24)(iv) of the Act. On appeal, the ld. CIT (A) deleted the addition by considering the purchase consideration declared by the assessee as fair market value of the property even in terms of the stamp duty valuation as well as the rates detected as per the seized material. 22. Before us, the ld. D/R has submitted that once an incriminating material is found during the course of search indicating unrecorded consideration on sale of plot of land by M/s. Bhatia Colonizers Pvt. Ltd. then the proposition of the unrecorded consideration as detected in the seized material was rightly applied by the AO in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Value recorded in books Average sale price as perseized document. D-12 Plot 1000 15,50,000/- 6,50,000/- 1550/- D-13 Plot 1800 30,15,000/- 16,20,000/- 1675/- D-16 Plot 1800 30,15,000/- 16,20,000/- 1675/- Total 4600 75,80,000/- 38,90,000/- 1648/- Therefore, as per the seized documents, the total sale consideration in terms of per sq. ft. rate for these three plots is ranging from ₹ 1,550/- to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has obtained extra benefit compared the three cases wherein on money evidence was found in search. The rate per sq. ft. of these three plots including on money works out to ₹ 1648/- per sq. ft. whereas the villas sold to the assessee is at 1922/- per sq. ft. Thus infect the villas is sold to the assessee at a higher price than the others and therefore it can t be said that there is any benefit given to the assessee. In view of the above facts as discussed above, we do not find any error or illegality in the order of ld. CIT (A) in deleting the addition made by the AO under section 2(24)(iv) of the IT Act. Ground Nos. 3 4 are regarding the addition made by the AO under section 2(22)(e) was deleted by the ld. CIT (A) by holding that the said advance was against the salary income and not in the nature of loan or advances falling under the provisions of section 2(22)(e) of the Act. 25. The ld. D/R has submitted that the assessee has taken the advance of ₹ 9,42,002/- as against the total salary of ₹ 6,00,000/-, therefore, the AO has rightly taken the difference amount of ₹ 3,42,002/- as loan/advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeded then the result would be failure of the appeal of the revenue but would not disturb the finding of the ld. CIT (A) on this issue for the year under consideration. Since the assessee has not filed any appeal or cross objection, therefore, the objection raised under rule 27 of the ITAT Rules shall have the effect of defeating the appeal of the revenue but cannot reverse the order of the ld. CIT (A). As we find that the return of income for the year under consideration was filed under section 139 on 23rd March, 2015, the time limit for issuing the notice under section 143(2) expired on 30th September, 2015 and, therefore, the assessment was not pending on the date of search on 03.03.2016. An identical issue has been considered by us for the assessment year 2012-13 and in view of our finding the addition made by the AO under section 2(22)(e) without any incriminating material either found or seized during the course of search is not sustainable in law. Accordingly the assessee succeeds in the objection raised under rule 27 of the ITAT Rules on this issue and consequently the appeal of the revenue in respect of ground nos. 3 4 fails. Hence the order of ld. CIT (A) is upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire three amounts under section 2(22)(e) of the Act. On appeal, the ld. CIT (A) has sustained the addition to the extent of ₹ 53,20,000/- and deleted the balance addition. Therefore, both the assessee and the revenue have filed these cross appeals. 32. Before us, the ld. A/R has submitted that the provisions of section 2(22)(e) applies to any payment by the company to substantial shareholder by way of advance/loan but where the payment is made for business consideration, the same is not covered by deeming fiction of section 2(22)(e) of the Act. The deeming provision of the Statute has to be construed strictly and consequently all three conditions should be satisfied being (i) there should be a payment, (ii) payment should be of a sum and (iii) such payment should be by way of loan or advance. In the case of the assessee, the amount of ₹ 53,20,000/- given by the company to the assessee is not a gratuitous payment as to hold that same is in the nature of loan or advance. The ld. A/R has pointed out that during the year M/s. Bhatia Corporation Pvt. Ltd. approached the bank for renewal of loan facility. The bank renewed the loan subject to the condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount received from the company was converted into the investment and the ownership of the investment is with the assessee. The assessee took the benefit of acquiring the shares of the same company by utilizing the fund of the company taken for this purpose. Though the ld. A/R has vehemently contended that this investment was for the business consideration of the same company as the renewal of the loan was sanctioned by the bank subject to infusion of more capital and to satisfy the said conditions, the director, promoter of the company have taken the money from the company to infuse to share capital of the said company, therefore, the amount was utilized for the business of the company and not for personal use of the assessee. However, even if the amount was utilized for increase of the share capital, the ownership of the shares have now transferred to the assessee without paying anything from the assessee s own fund. We further note that in the ledger account as well as in the balance sheet the assessee is showing this amount under current liabilities and also paying the interest @ 12%. Therefore, when the treatment of the said amount received by the assessee from the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the ld. A/R and considered the material on record. We find from the record that an amount of ₹ 1,02,00,000/- was received by the assessee through cheque encashed on 24th April, 2015 and equal amount was also debited from the assessee s bank account and credited in the account of the company on the same date. Therefore, it was only a contra entry in the bank account of the assessee as well as the company and there is no real or substantial payment from either of the party. The amount was not even remained with the assessee for a day but it is only an entry in the account through contra cheque deposited in the accounts of the assessee as well as the company. Therefore, it appears that only for some window dressing or accounting purpose the cheques were exchanged by the parties and the funds were never moved from one account to another account but the same remained as it is. As regards the addition of ₹ 5,85,625/-, the ld. CIT (A) has deleted this amount treating the same as advance salary. The relevant finding of the ld. CIT (A) is in para 2.3.7 to 2.3.8 are as under :- 2.3.7. So far as addition of ₹ 5,85,625/- is concerned, I found ..... X X X X Extracts X X X X X X X X Extracts X X X X
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