TMI Blog2019 (7) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... so noted that the transactions mentioned on the seized documents were only proposals sent by broker for the land deal for approval of the management and on the basis of such rough proposals no adverse conclusion should have been drawn by the AO. CIT(A) has rightly held that AO was not justified in making the impugned addition merely on the basis of the observations of the Auditors without going into the veracity of the same, hence, the addition made by the AO u/s. 69C was rightly deleted by the CIT(A), which does not need any interference on our part Addition u/s 2(22)(e) - HELD THAT:- As perusing the aforesaid findings of the Ld. CIT(A) for the assessment year 2007-08 in assessee s own case, we find that since the facts involved in the assessee s present case are identical to the facts of the above case in respect of assessment year 2007-08 in assessee s own case, hence, following the above order of the earlier Ld. CIT(A) of the assessment year 2007-08 in the case of M/s Samag Construction Ltd., a company of Saamag Group, Ld. CIT(A) has rightly deleted the addition made by the AO u/s. 2(22)(e) in the case of the assessee, which does not need any interference on our part, henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER H.S. SIDHU, JM The Revenue have filed these 04 appeals against the respective orders of the Ld. CIT(A), New Delhi in respect of 04 different assessees pertaining to assessment year 2006-07, 2007-08 2011-12. Since the grounds raised in some of the Appeals are common and identical, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience, by dealing with ITA No. 2599/Del/2014 (AY 2006-07). 2. The following grounds have been raised in ITA No. 2599/Del/2014 (AY 2006-07) in the case of DCIT vs. Saamag Construction Ltd.:- 1. That the CIT(A) erred in admitting additional evidence under Rule 46A. 2. That the CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 1,63,41,365/- on account of unexplained expenditure u/s. 69C. 3. That the CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 2,04,01,195/- made by AO u/s. 2(22)(e) of the Income Tax Act, 1961. 4(a) The order of the CIT(A) is erroneous and not tenable in law and on facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The facts in all the appeals are common and identical and ground no. 1, 2 are exactly the same in Appeal No. 2599/DEL/14, 2600/DEL/14 2603/DEL/14, hence for the sake of convenience we are dealing with the facts of ITA No. 2599/Del/2014 (AY 2006-07) in the case of DCIT vs. Saamag Construction Ltd. 7. The brief facts of the case are that a search and seizure operation u/s. 132 of the Income Tax Act, 1961 (in short Act ) was conducted by the Investigation Wing of the Department on 29.1.2009 in the case of M/s Sammag Group of cases. The assessee company s business premises at B-67, Sarita Vihar, New Delhi 44 was also covered u/s. 132(1) of the Act. Notice u/s. 153A of the Act was issued to the assessee on 10.7.2009. In response to the said notice, return declaring an income of ₹ 6,51,670/- was filed on 19.2.2010. Notices u/s. 143(2) and 142(1) of the Act were issued alongwith a questionnaire dated 31.8.2010. Due to change of incumbency fresh notices u/s. 143(2) and 142(1) were again issued on 20.10.2010 and fixed for hearing on 29.10.2010. In response to various statutory notices, the AR of the Assessee attended the proceedings alongwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been discharged. The Ld.CIT(A) has merely and incorrectly accepted contention of the assessee that they were merely proposals. Reliance is placed on decisions mentioned below. In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to presumption of entries found recorded in books of account seized during search as per sections 132(4A) 292C of I.T. Act: 1. CIT Vs Sonal Construction [2012-TIOL-851-HC-DELIT1 (Delhi) (Copy enclosed) where Hon ble Delhi High Court held as follows: the Tribunal has also held that the presumption about the genuineness and truth of the contents of the documents seized, as provided in Section 132(4A), was not available to the AO in the assessment proceedings. The judgment of the Supreme Court in the case of P.R. Metrani, no doubt held that the presumption was not available to the AO while completing the assessment and that it was limited to the prior proceedings in connection with the search. However, there was a later statutory amendment; Section 292C was introduced by the Finance Act, 2007 with retrospective effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness of the contents of the seized documents and its handwriting was not available to the AO in the course of the assessment proceedings. This position has now been nullified by the retrospective amendment. Even otherwise, there is no merit in the conclusion of the Tribunal that the correlation between the seized material and the books of account, on which reliance was placed by the AO, was not sufficient for the purpose of making the additions; 2- CIT Vs Naresh Kumar Aggarwala [2011] 9 taxmann.com 249 (Delhi)/[2011] 198 Taxman 194 (Delhi/[2011] 331 ITR 510 (Delhi) (Copy Enclosed) where Hon ble Delhi High Court held that there was a presumption raised under section 132(4A) on seizure of fax message and it was upon assessee to rebut that presumption by offering a plausible explanation. 3- Mahabir Prasad Runqta Vs CIT [2014] 43 taxmann.com 328 (Jharkhand)/r20141 266 CTR 175 (Jharkhand) (Copy Enclosed) where Hon ble Jharkhand High Court held that loose sheets seized during search sometimes contain valuable information and thus those are to be regarded as 1 documents' within meaning of section 158B(b). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk Advertising Marketing (P.) Ltd (56 taxmann.com 286, 231 Taxman 384. 375 ITR 373) (Copy Enclosed) where Hon ble Delhi High Court held that in case of unaccounted entries found in books of account of assessee, though it is obligation of Assessing Officer to conduct proper scrutiny of material, in event of Assessing Officer failing to discharge his functions properly, obligation to conduct proper inquiry shifts to Commissioner (Appeals) and Tribunal and they cannot simply delete addition made by Assessing Officer on ground of lack of inquiry 3- ACIT VS Mohar Sinah (16 taxmann.com 37. 49 SOT 129. 137 TTJ 654) (Copy Enclosed) where Hon ble Jodhpur High Court held that where assessee filed an application under rule 46A, Commissioner (Appeals) must dispose of the application by way of a reasoned order and thereafter proceed to dispose of appeal on merits In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to deemed dividend u/s 2(22)(e) of I.T.Act: 1 Miss P. Sarada Vs CIT [96 Taxman 11, 229 ITR 444. 144 CTR 2091 (Copy Enclosed) where Hon ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need any interference on our part. 10. We have heard both the parties and perused the records especially the orders of the revenue authorities as well as the Written Submission filed by the ld. CIT(A) and the case laws cited by him therein. 10.1 As regards ground no. 1 involved in Appeal No. 2599/Del/14, 2600/Del/14 2603/Del/14 is concerned which is relating to admission of additional evidence under Rule 46A, we note that during the appellate proceedings the Assessee moved an application dated 13.12.2012 for admission of additional evidence under Rule 46 on the issues of relating to the additions made by the AO u/s. 69C and 40A(3) of the Act and Ld. CIT(A) forwarded the same to the AO for his examination and his report on the same was received vide letter dated 25.9.2013 and copy of the remand report was provided to the assessee for rejoinder and in response to the same, the Assessee filed its rejoinder on 12.12.2013. We further note that as the documents in the form of affidavits furnished by the assessee as additional evidences are vital and go to the root of the matter, hence, the same were rightly admitted by the Ld. CIT(A) under Rule 46At to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to examine all these aspects before reaching the conclusion, which he failed to do so. It is also noted that the transactions mentioned on the seized documents were only proposals sent by broker for the land deal for approval of the management and on the basis of such rough proposals no adverse conclusion should have been drawn by the AO. Considering the above, Ld. CIT(A) has rightly held that AO was not justified in making the impugned addition merely on the basis of the observations of the Auditors without going into the veracity of the same, hence, the addition of ₹ 1,63,41,365/- made by the AO u/s. 69C was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on the issue in dispute and dismiss the ground no. 2 in Appeal No. 2599/DEL/14, 2600/DEL/14 2603/DEL/14. The case laws cited by the Ld. CIT(DR) are distinguished on facts. 10.3 As regards ground no. 3 involved in Appeal No. 2599/Del/14 is concerned, which is relating to deletion of addition of ₹ 2,04,01,195/- made by the AO u/s.2(22)(e) of the Act, we note that during the appellate proceedings before the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides for the addition in the hands of the borrowers. Under section 2(22)(e), there is no distinction between a loan given for the business purpose or otherwise. Moreover, the appellant has not brought on record any cogent evidence in support of its contention that the amounts advanced were for business purpose. The so called master land development agreement amongst the various aroup companies was not produced either before the Id. AO or before the special auditors Hence the same cannot be relied upon. Therefore, in my considered opinion, the invocation of the provisions of section 2(22)(e) has rightly been made by the Assessing Officer. However as per the provisions of section 2(22)(e), the additions are required to be made in the hands of the borrowers/shareholders instead of the lender, hence I am unable uphold the action of the Id. AO making an addition of ₹ 44,74,198/- in this case. With the above observations, the addition of ₹ 44,74,198/- is directed to be deleted and accordingly, the ground no. 8 of the appeal is allowed in favour of the appellant. 10.3.1 After perusing the aforesaid findings of the Ld. CIT(A) for the assessment year 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Revenue. 11. In the result, the Appeal No. 2599/DEL/14 (AY 2006-07), 2600/DEL/14 (AY 2007-08) 2603/DEL/14 (AY 2007-08) of the Revenue stand dismissed. ITA NO. 4058/DEL/2015 (AY 2011-12) 12. The brief facts of the case are that the assessee company is engaged in the business of real estate development i.e. acquisition of land, development thereof, construction of residential apartments, commercial complexes etc. The assessee filed its return of income on 30.9.2011 declaring a loss of ₹ 8,11,002, which was processed u/s. 143(1) of the Income Tax Act, 1961 (in short Act ). The case of the assessee was taken up for scrutiny and statutory notices u/s. 143(2) and 142(1) were issued. In response to the same, the AR of the assessee attended the assessment proceedings and furnished necessary details, information and documents as called for by the AO from time to time. Thereupon, the assessment in this case was completed in terms of an order u/s. 143(3) dated 03.3.3014 at a total income of ₹ 1,68,80,020/-, as against the returned loss of ₹ 8,11,002/- wherein the AO made an addition of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee but there was no evidence on record to show that either the same was received back by the AO or the same was served upon the assessee on or after the prescribed time limit. Thus, in this case, the notice u/s. 143(2) of the Act was not proved to have been served upon the assessee on or before 30.9.2012. Therefore, Ld. CIT(A) by following the various case laws relied upon by the assessee including the decision of the Hon ble Supreme Court of India in the case of Y. Narayana Chetty vs. ITO reported in 31 ITR 388 (SC) has held that a notice prescribed in section 143(2) of the Act is not merely a procedural requirement. Such notice will have to be served on the assessee within the state date. If no notice is issued or if notice is issued but not served on the assessee within the state time, then the validity of the proceedings taken by the AO would be illegal and void, has rightly held that since there was no service of notice u/s. 143(2) of the Act within statutory time limit in this case, the proceedings initiated thereafter were null and void as it was assumption of jurisdiction without following the procedures laid in the Act and accordingly, quashed the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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