Income Tax Appellate Tribunal - Chandigarh
Sh. Roshan Lal Jindal, Chandigarh vs Dcit, Chandigarh on 14 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE MS. DIVA SINGH, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.51 /Chd/2014
(Assessment Year : 2006-07)
Sh.Roshan Lal Jindal Vs. The D.C.I.T.,
# 83, NAC Manimajra, Central Circle-1,
Chandigarh. Chandigarh.
P A N : AAMPJ1997R
ITA No.110 /Chd/2014
(Assessment Year : 2006-07)
The D.C.I.T., Vs. Sh.Roshan Lal Jindal
Central Circle-1, # 83, NAC Manimajra,
Chandigarh. Chandigarh.
P A N : AAMPJ1997R
And
ITA Nos.52 to 54/Chd/2014
(Assessment Years : 2007-08 to 2009-10)
Sh.Roshan Lal Jindal Vs. The D.C.I.T.,
# 83, NAC Manimajra, Central Circle-1,
Chandigarh. Chandigarh.
P A N : AAMPJ1997R
(Appellant) (Respondent)
Appellant by : Shri Sudhir Sehgal, Advocate
Respondent by : Shri Gulshan Raj, CIT DR
Date of hearing : 03.08.2017
Date of Pronouncement : 14.09.2017
O R D E R
PER BENCH:
A l l t h e a b o ve a pp e a l s re l a t e t o th e s a m e a s s es s ee o n a c c o u n t o f a s s e ss m e n t f r a me d c on s e q u e n t to s e a rc h c a r r i e d o u t o n t h e as s es s e e . Th e r e fo r e, a l l w e r e h e a r d t o g e t h er .
While the a ppe a l in I TA N o . 5 1 / C h d /2 0 1 4 and I TA N o . 1 1 0 / C hd / 2 0 14 a r e c r o s s a p pe a l s b y t h e a s se s s e e a nd 2 the R e v e n ue against t he order p a s sed by the L d . CI T( A p p e a l s ) ( C e n t r a l ) , G u rg ao n dated 2 7 .11 . 2 0 1 3 for a s s e s s m e nt y e ar 2006-07, the appeals in I TA No. 5 2 / C h d / 2 01 4 , I TA No. 5 3 /Ch d / 2 0 1 4 and I TA No. 5 4 / C h d / 2 01 4 ha v e b e e n f i l e d by t h e a s s e s se e a g a i n s t t he order p a ss e d by the L d .CI T( A p p e a l s ) ( C e n t r a l ) , G u r g a on dated 27 . 1 1 . 2 01 3 . 3 1 .1 0 . 2 0 13 and 3 1 . 1 0 .2 0 1 3 f or a s s e s s m e nt y ea r s 2 0 0 7 - 08 , 2008-09 and 2009-10 r e s p e c t i ve l y
2. A t t h e o u t se t i t m a y b e s t a te d t h a t d u r i ng t h e c o u r s e o f h e a r i n g b e fo r e u s t h e L d . c o u ns e l f o r t h e a s s ess e e s o u g h t p e r m i s s i on t o wi t h d r a w th e a s se s s e e ' s a pp e a l fi l e d i n I TA N o s . 5 2 & 5 4/ C hd / 2 0 1 4 . I n vi e w o f t h e s a m e , t he s a i d t w o a p p e a l s ar e t r ea te d a s d i sm i s s e d.
3. W e s h a l l n o w b e f i r s t t a k i n g up R e v e n u e ' s a p pe a l i n I TA N o . 1 10 / C h d/ 2 0 1 4 I T A N o . 1 10 / C h d/ 2 0 1 4 ( R e ve n u e 's a p p e a l ) :
4. G r o u n d N o. ( i ) r a i s e d b y t he R e v enu e r e a d s a s u n der :
"(i) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.209140/- made by the Assessing Officer on account of deemed income u/s 2(22)(e) of the IT. Act, 1961?"
5. In the a bo v e gr o u n d the R e v en u e has c h a l l en g e d d e l e t i o n o f a d di t i o n m a d e o n ac c o u n t o f d e e m ed d i v i d e nd u n d e r s e ct i o n 2( 2 2 ) ( e ) am o u n t i ng t o R s . 2 ,0 9 , 1 4 0/- .
6. Brief facts re l ev a n t to the i ss u e are that du r i n g a s s e s s m e nt p r o ce e d i n g s th e A s se s s i n g O ff i c e r fo u n d t h a t 3 t h e a s s es s e e w as a s ha r e h o l de r i n a nu m b e r o f c o m p a n i e s i n w h i c h h e h a d s u b s t a n t i a l i n te r e s t a n d th e s e c o m p a n i e s h a d g i v e n l oa n s t o t h e a s s e ss e e a s w e l l a s t o c om p a n i e s i n w h i c h t he a s se ss e e h a d s u b s t ant i a l i nt e r e s t. To i l l u s t ra t e t h e p o s i t i on , t h e A s s e s s i n g O ff i c er m a d e a c h a r t re p r o d u c e d a t p a g e 4 o f t he a s s e s s m e nt o r d er a s u n d er :
Company Substantial List of Loan given Assessee's Loan Proportionate which is giving interest of Substantial to the interest in Amount Share of loan the Interested assessee or said given Deemed Assessee in shareholders to any concern being Dividend on the said in the concern in treated the basis of I company company which as shareholding (Minimum which is assessee is Deemed among the 10% giving loan substantially Dividend substantially required) Interested. u/s interested 2(22)(e) shareholders in the company Himland Agro 1640/ Gargi Jindal Swami Devi Member 525000 nil Foods India Ltd. 15800 = 2900 Dayal Hi-
(Accumulated shares = shares, tech
Profits of 10.38% Urmil Jindal Education
6230330) = 2300 society
shares,
Ashok Jindal
= 1640
Shares
1200 / 5800 Amit Jindal = Hiramoti 20% 113322 39996
shares = 600 shares, agro
Heera Moti
20.69% R.I, Jindal = products
Healthcare
1200 shares,
Product Ltd. (
Urmil Jindal
Accumulated
= 1000
Profits of
shares,
3740308) Sunita Jindal
= 600 shares
1200 / 5800 Amit Jindal = Swami Devi Member 395000 158000
shares = 600 shares, Dayal Hi-
20.69% Ashok Jindal tech
= 1200 Education
shares society
4
Roshan Lal
Jindal = 1200
shares
6061/33311 Roshan Lal Hiramoti 20%
shares = Jindal = 6061 agro
18.20% shares, products
Heeramoti Urmil
Spicy Pvt. Ltd. Jindal = 47000 47000
(Accumulated 5140 shares
Profits of 6061/33311 Roshan Lal Swami Devi Member 87000 51140
3222755) shares = Jindal = 6061 Dayal Hi-
18.20% shares, tech
Ashok Jindal Education
= 4250 society
shares
Total 2,96,136
7. On being c o n f ro n t e d with the same, th e a ss e s s ee
s u b m i t t e d t h a t th e s u m s w e r e ad v a n c e d o u t of c o m m e r c i al or b u s i ne s s e xp e d i e n c y and th e r e was no intention of p r o v i d i n g l o a n s o r a d v a n c e s. T h e a s s e s s e e al s o s u b m i t t ed that the a dv a nc e s given to Sw a m i Devi Da ya l Hi-tech S o c i e t y i n t h e b oo k s o f H e e ra M oti H e a l t h C ar e Pro d u c t Lt d .
& Heera Moti Spicy Pvt. Lt d . amounting in all to Rs.2,09,140/- could not be treated as deemed dividend under section 22(e) of the Act since the assessee was only the trustee in the said trust and was not entitled to 20% or more in the income of the trust. The Assessing Officer rejected the assessee's contention stating that commercial and business expediency for advancing the said loans had not been established by the assessee with necessary proof and with respect to advance made to 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 5 b e n e f i t h a d be en d e r i v ed b y t h e a s s e s s ee w a s no t c o r r ec t .
Th e Assessing O f f i c er , t he r ef o r e , tr e a t e d th e sum of R s . 2 , 9 6 , 13 7 / - as d e e m e d d i v i d en d a n d a d d e d th e s a m e t o the t a x a bl e i n co m e of t h e a s se s s e e for the ye a r under c o n s i d e r at i o n .
8. Th e matter was carried in appeal b e f o re the L d . CI T( A p p e a l s ) w h o d e l e t ed t h e a d d i t i o n ma d e wi t h r e s p e ct to the am o u n t s a d v a n c e d t o Sw a m i D e vi D a ya l H i - t ech E d u c a t i o n Ac a d em y o f R s . 2 , 0 9, 14 0 / - h o l d i ng t ha t s i n c e i t w a s a s o c i e t y / tr u s t w h i c h h ad b e e n g r a n t e d re g i s t r a ti o n u / s 1 2 A A of t h e I nc o m e Ta x A c t, 1 9 6 1 ( i n s h o r t ' t h e A c t ') , t h e a d v a n ce w a s o u t s i d e t he s c op e o f s e c t i o n 2 ( 22 ) ( e ) o f t he Act. Th e b a l a n ce a d d i t i o n m a d e w a s u p h e l d. I t i s a g a i n st t h e a f o re s t a t ed d e l e t i o n o f a d d i t i o n t h at t he R ev e n u e h as n o w c o m e u p i n a p p e a l b ef o r e us .
9. D u r i n g t h e c o u rs e o f h e a r i n g be f o r e us t he L d. DR r e l i e d u p o n t he o r d e r o f t h e As s e s s i n g O ff i c e r a n d s t a t e d t h a t t h e As s e s s i n g O f f i c er h a d cl e a r l y p oi n t e d ou t t h a t t he d o c u m e n t s s e i z ed d u r i n g t h e c ou r s e o f s e a r c h sh o w e d t ha t t h e f u n d s o f t h e s o c i e t y h a d b e en u t i l i z ed b y t he m e m b e rs o f t h e s o c i e t y an d t h e i r f a m i l y m e m b e r s a n d , th e r e f o r e , i t w a s i n c or r e c t t o s t a t e t h a t n o p e r s o n a l b e n e fi t h a d b ee n d e r i v e d by t h e a ss e s s e e f ro m t h e tr u s t / s o c i e t y .
10. Th e L d . c o u n s e l f o r a s s e s s e e, o n t h e o t h e r h a n d , r e l i e d u p o n t h e o r d e r o f t h e L d . CI T( A pp e a l s ) a n d s t at ed t h a t t h e s a i d t r u st / s o c i e t y b e i n g a c h a r i ta b l e s o c i e t y r eg i s t e r e d u /s 12AA of the Act and the assessee being merely a trustee in 6 the same with no defined share, it was not covered under he p r o v i s i o ns o f s ec t i o n 2( 2 2 ) ( e) o f t h e Ac t as h e l d b y the L d . CI T( A p p e a l s ) . Th e L d . c o u n s el f o r a s s es s e e pl e a d e d t h a t t h e L d .CI T( A p p ea l s ) ' s o r d e r o n th i s a c c o u n t b e , t h e r e f o r e , upheld.
11. W e h a v e h e a r d t h e c o n t e n ti o n s o f b o t h t h e p ar t i e s.
Th e i s s u e i n h a n d p e r t a i n s t o ad d i t i o n m a d e o n a c c o u n t o f d e e m e d d i v i de n d a s p e r p r o v i s i o ns o f s e c t i o n 2 ( 2 2) ( e ) o f t h e A c t . B e i n g a d e em i n g p r o v i s i on , b r i n g i n g t o t a x su m s w h i c h are not ac t u a l l y i n t h e n a t u re o f i n co m e b ut a r e o nl y d e e m e d t o b e s o, i t i s t o b e s t r i c t l y i n t e r pr e t e d. Section 2 ( 2 2 ) ( e ) o f t he A ct r e a d s as u n d er :
"2(22)(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) 5 made after the 31st day of May, 1987 , by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern, in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for- the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits."
12. A r e a d i n g o f t he s e c t i o n i n r e v ea l s t h a t a n y sum a d v a n c e d b y a c o m p a n y i n wh i c h a pe r s o n h ol d s v o ti n g r i g h t s o f 1 0 % or m o r e t o a n o t he r c o n c e r n i n wh i c h s u c h s h a r e h o l de r is a member or partner h a v i ng s u b s t a n t i al i n t e r e s t, the sum so a d v a n c ed is treated as deemed d i v i d e n d . S u b s tan t i a l i nt e r e s t h as b e e n de f i n e d u n d e r t h e s a i d s e c t i on t o be i n g b e n e f i c i a l en t i t l e m e nt t o n o t l e s s t h a n 7 2 0 % o f t h e i n c om e o f s u c h c o n ce r n . I n t h e p r es en t c a s e t h e f a c t t h a t t h e a s se s s e h o l d s m o r e t h a n 1 0 % v o t i n g r i g h t s in H e r r a M o ti H e a l t h C a r e Pr o d u c t L t d . & He e r a M o t i S p i cy P v t . L t d ., w h o h a d a d v a n ce d th e i m p u g ne d s um , i s n o t disputed. What is r e q ui r e d to be seen is wh e t h e r t he a s s e s s e e w as b en e f i c i a l l y e n t i tl ed t o 2 0 % o r mo r e o f t h e i n c o m e o f S w a m i D e v i D a y a l H i - te c h E d u c a t i o n Ac a d e m y . It i s n o t d i s p u t e d t h a t S w a mi D e v i D a y a l H i - t e c h E d u c a t i on A c a d e m y i s a ch a r i t a b l e t r us t re g i s t e r e d u / s 12 A A o f t he Act. Th a t t h e a s s e s s e e i s a t ru s t e e i n t h e sa i d t r u s t h a s a l s o n o t b ee n d i s p u t e d an d th e f a c t t h at t he r e a r e n o i n t e r e s t o f a n y m e m b e r o f th e sa i d s o ci e t y i n t he Tr u s t i s a l s o n o t d i s p u t ed . I n t h e s ai d c i r c u m s t an c e s , w e a r e l e ft w i t h n o o p t i o n b u t t o a g r e e w i th t h e L d . CI T( A p p e a l s ) t h a t second limb or r e q u i r e me n t of section 2(22)(e) of t he assessee having s u b s t a n ti a l i nt e r e s t in the co n c e r n to which l o an or advance has been g i v en has not been e s t a b l i s he d a n d, t h e r e f or e , t he said a d va n c e cannot be t r e a t e d as d e e me d d i v i d en d i n th e h a n d s of t h e a s s e s s e e. Th e a r g u m e n t s o f t h e L d . DR th a t t h e d o c um en t s s e i z e d d u r i n g t h e c o u r se o f s e a r ch s h o w t h a t t h e f u n ds h a d b e en utilized by th e members of th e s o c i et y , a nd t h e r e f or e , assessee d er i v ed personal be ne f i t is of no co n s e q u e n ce s i n c e th e r eq u i r em e n t o f s e ct i o n 2 ( 2 2 ) ( e ) i s n o t wh e t h e r t he a s s e s s e e h a s a c tu a l l y d e r i v ed a n y p e r s o n a l b e n e fi t f r o m t he s a i d c on c e r n b u t i s th a t t h e as s es s e e i s b e ne f i c i all y e n t i t l e d t o n o t l e s s th a n 2 0 % o f th e i nc om e o f t he s a i d c on c e r n . Th e w o r k " en t i t l ed " m e a n s ha v i n g a l e g a l r i g ht t o s o m e t h i n g. 8 S i n c e s uc h l eg a l r i g h t i s ab s e n t i n t h e c a s e o f th e p r e s en t society, i n t h e a b s e n c e o f s u c h l e g a l r i g h t o f t he a s s e s s e e i n t h e s a i d s o c i et y t h e a m o u nt ad v a n c e d c a n n o t b e t r e at e d as deemed i n c om e as per s e ct i o n 2 ( 2 2 ) ( e) of the Act. M o r e o v e r e v e n a s p e r t h e a r gu m e n t of t h e Re v e n u e t h e d o c u m e n t s f o u nd d u r i n g s e a rch o n l y e s t a b l i sh that the a s s e s s e e ha s d er i v e d b e n ef i t f r om t h e s a i d so c i e t i e s a nd not " s u b s t an t i a l " benefit, as is the r e q u i r em en t of the section.
13. I n v i e w of the above, we u ph o l d t h e o r d e r o f t he L d . CI T( A p p e a l s ) d e l e t i n g t h e a dd i t i o n m a d e on a c c o u n t o f d e e m e d d i v i d e n d a m o u n t i ng t o Rs . 2 , 0 9 , 1 40 / - o n a c c o u n t of l o a n s a nd a d v anc e s g i v en t o s o c i e t i e s r eg i s t e re d u / s 1 2 A o f the Act.
Ground No.1 ra i s e d by the Re v e n u e is, t h e re f o r e , d i s m i s s e d.
14. G r o u n d N o s. 2 an d 3 w e r e ta k en t o g e t h e r b y th e L d . c o u n s e l f o r as s es s e e w h i l e p ut t i n g f o r t h t h e c o nt e n t i o n s o f t h e a s s e s s ee a g ai n s t t h e g r o u nd s r a i s e d b y t h e R ev e n u e a n d c o m m o n a r g u men t s w i t h r e s p ec t t o t h e s a m e w e r e a d v a n c e d . We shall, t h e r ef o r e , be d e a l i ng with both t he g r o u n ds t o g e t h e r . G r o und N o s . 2 an d 3 rea d a s u n de r :
"(ii) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.3,75,000/-
made by the Assessing Officer on account of credit amount in the bank account of the assessee, on the basis of additional evidence of dateless cash flow statement admitted without opportunity to the AO?"
"(iii) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of 9 Rs.30,00,000/- made by the AO on account of seized documents as pages 28-30 of A-15 seized from Swami Devi Dyal Hi Tech Education Academy, on the basis of additional evidence admitted without opportunity to the AO?"
15. Ground No.2 pe r t a i n s to d e l et i o n of a d d i t i on of R s . 3 , 7 5 , 00 0 / - ma d e o n a c c o u nt o f d e p o si t i n O r i e n t a l Ba n k of C o m m e r ce ( i n short ' O B C' ) during the ye a r which r e m a i n e d un e x p l a i n e d . D u ri n g as s e s s m e n t p r o c ee d i n g s t h e Assessing O ff i ce r found that the cash amounting to R s . 3 , 7 5 , 00 0 / - wa s d e p o s i t e d b y t h e a s s es s e e i n h i s b a nk a c c o u n t m a i n ta i n e d w i t h O B C . O n b e i n g c o n f ro n t e d w i t h the same, the assessee s u bm i t t e d that the same was deposited out of w i t hd r a w a l s made out of other ba n k a c c o u n t s , & i nc om i n g s f ro m b r oug h t f o r wa r d c as h i n h a n d, i n s h o rt m ea n i ng t h a t t h e d e p o si t s c o ul d be e x pl a i n e d o ut of cash flow st a t e m e n t . Th e Assessing O f fi c er r e j e ct e d a s s e s s e e 's c o n ten t i o n s i nc e n o c a s h f l o w s t a t em e n t w as f i l e d b y t h e a s se s s e e a n d m a d e a d d i t i o n o f t h e s a i d c a s h d e p o s i t s of R s . 3, 7 5 , 0 0 0 / - to t he i n c o m e o f t he a s s e s s e e h o l d i n g th e s a me t o b e u ne x p l a i ne d .
16. D u r i n g a p p e l l a t e p r o c e e d i n g s b e fo r e t h e L d . CI T( A ) t h e a s s e s s e e f ur n i s he d t h e c a s h f l o w s t a t e m e n t. Relying upon t h e s a me , th e Ld . CI T( A ) f o u nd th a t t h e s a i d c as h d e p os i t was made out of regular savings as per cash in hand. Th e L d . CI T( A ) s t a t e d t h a t i t w a s s ub m i t t e d t h at t h e c a s h f l o w w a s p r e p a r ed f r om b a n k s t a t e men t a n d e n t r i e s i n t h e s e i z e d b o o k s a n d , t he re f o r e , n o a d ve r se i n f e r e n c e c o u l d b e d r a w n f r o m t he s am e . S h e , t h e r e fo r e , d e l e t e d t h e a d d i t i o n m ad e o n a c c o u nt o f the s a m e .
10
17. I n g r o un d N o. 3 th e R e v en u e ha s c h a l l e n g ed d el e t i o n of a d d i t i o n ma d e o f R s . 3 0 l a c s o n ac c o u n t o f se i z e d d o c u m e n t s w h i c h w a s a n ag r e e m e n t t o s e l l d a t e d 1 9 . 12 . 2 00 5 o f l a n d m e a s u r i n g 5 2 ka n a l 1 4 m a r l a b e t w e e n S h r i Ro s h a n L al J i n d a l a nd S m t .S h a l l e y & O t h e rs f o r a n a g r e e d a m o u n t o f R s . 1 6 l a c s p e r ac r e a l o n g w i t h re c e i p t o f c a s h ad v a n c e o f R s . 3 0 l ac s . Th e a s s e s s ee s u b mi t t e d t h at t h e s am e w a s on a c c o u n t o f a d v an c e r e c e i v e d on s a l e o f l a n d b u t s i n c e t he a s s e s s e e fa i l e d to g i v e c o mp l e t e d e t a i l s of t h e t ra n s a c t i o n a n d p r o d u c e d oc u m e n t a r y e vi d en c e s t o s u b s t ant i a t e its c o n t e n t i on , th e A s s e s s i n g O f fi c er m a d e a dd i t i on of the same.
18. D u r i n g a p p e l l a t e p r o c e e d i n g s b e fo r e t h e L d . CI T( A ) t h e a s s e s s e e su b m i tt e d c o p i e s of th e p u r c h a s e d ee d s o f t h e i m p u g n e d l a n d an d s u b m i t t e d t h e s o u r c e o f th e p a y m e n t as b e i n g D D p u r c ha s e d f r o m t h e r eg u l a r B a n k A c c ou n t o f t h e a s s e s s e e a n d c as h a v a i l a b l e w i th t h e a s s e ss e e as e v i d en c ed from the cash flow statement submitted. Th e a s s e s s ee f u r t h e r s t a t e d th a t t h e s a i d d ea l h a d n o t m atu r e d a n d u l t i m a t el y c a s h re c e i v e d i n a d v a nc e h a d b e e n re t ur n e d b a ck i n t h e s am e y e ar . Th e a s s e s s ee s u b m i t te d t h at b o t h t he r e c e i p t s a n d r e fu n d o f t h e a d v an c e w a s i n c or p or a t e d i n t h e c a s h f l o w s t a t em e n t . Th e L d . C I T( A p p e al s ) a c c e p t e d t he c o n t e n t i on s o f th e a s s e s s e e an d d e l e t e d t h e ad di t i o n m a d e of Rs.30 lacs.
19. B e f o r e u s t h e Ld . D R u r g e d t h at t h e L d . CI T( A pp e a l s ) had deleted b ot h the above additions on the basis of 11 a d d i t i o n al e v i d e nc e s w i t h o u t a ff o rd i n g a n o p p o r tun i t y t o t h e A s s e s s i n g O ff i c er a n d i n c o n t r a ve n t i o n o f t h e p ro v i s i o n s o f R u l e 4 6 of t h e In c o m e Ta x R u l es . Th e L d . D R u r g e d t h at the issue b e r es t o r e d b a ck to the Assessing Officer to e x a m i n e ad d i t i ona l e v i d e nc e s p rod u c e d b y t h e a sse s s e e .
20. Th e L d . c o u n s e l f o r a s s e s se e di d n o t o b j ec t t o t h e same.
2 1 . U n d e n i a bl y b o t h t h e a b o v e ad d i t i o n s h a ve b e e n d e l e t ed b y t h e CI T( A ) o n t h e b a s i s o f t h e c a s h f l o w s t a tem e n t w h i c h w a s n e v e r p r od uc e d b e f o r e t he A O a n d w a s f u r n i sh e d f o r t h e f i r s t t i m e b e f or e t h e CI T( A ) . Th e ca s h f l o w s t a t e men t c l e a r l y is an a d d i t i o n al evidence the admittance of which is g o v e r n e d b y Ru l e 4 6 A . Th e R e v en u e h a s n o t c h al l e n g e d t h e a d m i s s i o n o f th e a d d i t i o n a l e vi d en c e . H o w e v er , sub clause 3 o f R u l e 4 6 c l ea r l y r e q u i r es t he C I T( A ) t o a l l o w t h e A O a reasonable o p po r t u n i t y to e xa m i n e the evidence or d o c u m e n t b e f o r e t a k i n g i t i n t o a c co u n t . In vi e w t h e r e o f , w e co n s i d e r i t f i t t o r e s tor e b o t h t h e i s s ues b a c k t o t h e f i l e of t h e As s e s s i n g O f f i c er t o e x a m i ne t h e a d d i t i o n al d o c u m e n t s/ e v i d en c e s f i l e d b y t he a s s e s s e e w i t h r e s p e c t t o b o t h t h e g r ou nd s a n d t h e r ea f te r a d j u d i ca t e t he i s s u e i n a c c o r d a n ce w i t h l a w . N e e d l e s s to a d d t h a t t h e a s s e s s e e be g i v e n d u e o p p o rtu n i t y i n t h i s re ga r d .
I n v i e w o f t h e a b o v e b o t h t h e g ro u n d s 2 a n d 3 r a i s e d b y t h e R ev e n u e st a n d a l l o w e d f or s t a t i s t i c a l p u rp os e s .
Th e appeal of the Revenue is partly a l l o we d for s t a t i s t i c a l p u rp os e s .
12
22. We shall now take up a s s es s e e ' s a p p ea l in I TA N o . 5 1 / C h d/ 2 0 1 4.
I T A N o . 5 1/ C h d /2 0 1 4 ( A s s es s e e ' s a p p e a l ) :
23. Th e g r o u n d s r a i se d b y t h e a s s e sse e a r e a s u n d e r:
"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 Rs.85,636/- (out of Rs.2,96,136) in respect of amount shown as alleged advance to the assessee in different Companies.
4. That the Worthy CIT (A) has erred in confirming the addition of Rs. 6 lacs in respect of capital introduced by the assessee in M/s Heera Moti Agro Products as per para 9.3.3 of her order.
5. That the CIT (A) has erred in confirming the addition of Rs.43,000/- on account of certain seized documents as per para 9.5.3 of her order.
6. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed off."
24. G r o u n d N o s .1 , 2 a n d 3 r a i s e d b y t h e a s s e s s ee w e re n o t p r e s s e d b e fo r e us a n d a r e , t h e ref o r e , t r e a te d a s d i s m i s s e d. G r o u n d N o. 6 b e i n g g e n e r al i n na tu r e n e e d s n o a dju d i c a t i o n.
25. G r o u n d No s . 4 an d 5 a re b e i n g t a k e n u p t o g et he r f o r a d j u d i c a ti o n s i nc e the pleading of the Ld. counsel for a s s e s s e e v i s - à -v i s b o t h t he g r o und s w a s i de n t i c al . 13
26. In g ro u n d N o .4 the assessee has c h a l l e n g ed t he c o n f i r m a ti o n o f a d d i t i o n o f R s . 6 l a c s i n re s p e c t o f c a p i t al i n t r o d u c ed by the assessee in M/s Heera Moti Agro Products.
27. B r i e f f a ct s r e l e va n t t o t h e i s s u e a r e t h a t du r i ng t h e c o u r s e o f a s s e ss m e n t p r o c e e di ng s i t w a s f o u n d t h a t t h e a s s e s s e e h a d i n tr o d u c e d R s . . 6 l ac s a s f r e s h c a p i t a l i n t h e f i r m o f M / s He er a M o t i A g r o P r od u c t s . Th e a s s es s e e t r i e d t o e x p l a i n t h e so u r c e o f t h e s am e a s R s . 1 . 5 l ac s r e c e i v e d f r o m LI C , R s . 2 . 15 l a c s o u t o f w i t h d r a w a l s m a d e fr o m a f i rm M / s H e e r a Mo t i A g r o P r o d uc t s an d t h e b a l an c e Rs . 2 . 3 5 l a cs o u t o f c a s h fl o w s t a t e m e n t. Th e A s s e s s i n g O f f i c er n o t b e i n g s a t i s f i e d w i t h th e s u b m i ss i o n s o f t h e as s e s s ee m a d e t he a d d i t i o n o f t he e n t i r e a m o u n t o f R s . 6 l a c s ho l d i n g t h a t n e i t h e r c a s h f l o w s t a t em e n t n o r a n y do c u m e nt ar y e v i de n c e w a s f i l ed i n su p po r t o f th e c o n te nt i o n o f t h e a s se ss e e .
28. B e f o r e t h e L d .CI T( A ) , t h e a s s e s s ee s u b m i t t e d t he c a s h f l o w s t a t e m en t . Th e L d . C I T( A p p e a l s ) f o u n d t h at t h e L I C r e c e i v e d w e re n o t r e f l e c t e d in the same and the cash flow s t a t e m e n t wa s w i t h o u t d a te a nd h e n c e , t h e a va i l a b i l i t y o f f u n d s a n d i n v e st m e n t c o u l d n ot b e p r o p e r l y c om p r e h e n d ed t h e r e f r o m. Th e L d . CI T( A p p e a l s ) , t h e r e f o r e, c o n fi r m e d t h e a d d i t i o n m a d e by t h e A s s es s i n g Of f i c e r .
29. I n g r o un d N o . 5 th e a s s e s s e e h a s c o n t e s t e d t h e a dd i t i o n o f R s . 4 3 ,0 0 0 / - ma d e o n a cc o u n t of s e i z e d d o c u m ent s . 14
30. B r i e f f a c t s r e l e v an t o f t h e A c t t h e s a m e a r e t h a t d u r i n g t h e c o u r s e o f s ea r c h p a g e s 2 , 2 6, 2 8 a n d 3 4 o f A n n e x u r e A - 1 4 D e l t a - 1 we r e fo u n d a n d s e i ze d . Th e s a m e w a s a n o t e p a d m a i n t a i n ed b y t he a s s e s se e f or d a y - t o - d a y c a s h r ec e i p t s an d p a y m e n t s e n t e red . A s p e r p a g e- 3 4 o f t h e s a i d a n n e x u re c a s h r e ce i v e d o f R s . 4 3 , 0 0 0/ - w a s r e f l e c te d i n t h e s a m e . No r e p l y e xp l a i n i ng t h e n a tu r e o f th e s a m e w a s f i l e d b y t he a s s e s s e e d u r i n g a s s e s s m e nt p r o ce e d i n g s an d , t h e A s s e s s i ng O f f i c e r , th e r e f or e, a d d e d t h e en t i re a m o u n t t o th e i n c o m e o f t h e a s s e ss e e .
31. Before the L d .C I T( A p p e al s ) , t he a s s e ss e e s u bm i t t e d t h a t t h e s ai d s um r e p r e s e nt e d r eg u l a r w i t hd r a w a l s f r o m t he b a n k a n d w h i c h a s p e r t h e as s es s e e w a s d u l y re f l e c t e d i n t h e c a s h f l o w s ta t e m e n t f i l e d . Th e L d . CI T( A p p e al s ) r e j e c t ed a s s e s s e e 's c o n ten t i o n a n d u p h e l d t h e a d d i t i o n so m a d e .
32. Before us with respect to b o th the a b ov e g ro u n ds r a i s e d b y t he a ss e s s e e , t he o n l y c o n t e n t i o n r a i se d b y t h e L d . c o u n se l f o r a s s e s s e e w a s t ha t t h e L d .CI T( A p p e a l s ) h ad upheld the ad di t i o n re j e c t i n g the c a sh flow statement s u b m i t t e d b y t h e a s s e s se e w hi l e , o n t h e o t h e r h a nd , o n t h e b a s i s o f t h e v e r y s a m e c a s h fl o w s t a t e m e nt i t h a d d e l e t e d a d d i t i o n m a d e wh i c h h av e b ee n co n t e s t e d b y t h e R e v e n u e i n i t s a p pe a l i n I TA N o . 1 10 / C h d /20 1 4 . Th e L d . co u n s e l f o r a s s e s s e e s t a t e d th a t s i n c e t h e R ev e n u e h a s p l e a de d t h a t t he c a s h f l o w s ta t em e n t w a s a c c ept e d b y t h e L d . CI T( A p p e a l s ) w i t h o u t c o n f r on ti n g i t t o th e A ss e s s i n g O f f i ce r , t h e s a m e ought to be se n t back to th e A s s e s si n g Officer f or 15 v e r i f i c at i o n , i n t h e i n t e r e st o f ju s t i c e a n d d r a wi n g p a r i t y f r o m t h e s a m e, th e i s s u es i n t h e p r e s e n t a p p e a l al s o s h o ul d be sent ba c k to the A s se s s i ng O f f i c er to dec i d e a f t er verifying t he cash flow s t a t em e n t s u b m i t te d by the assessee.
33. Th e L d . D R d i d no t o b j e c t t o t he sa m e .
34. W e f i n d m er i t i n t h e c o n t en t i o n o f t h e L d . c o u n se l f or assessee. U n d en i a b l y , d ur i n g as s e s s m e n t p r o c ee d i n g s t h e assessee ha d no t been able to produce its cash flow statement to explain v a ri o u s t r a n s a c ti o n s which w e re n o t i c e d by t h e As s e s s i n g O f f i c er d u r i n g t he c o u rse o f s e a rc h w h i c h wa s un d e rt a k e n at t he a s se s s e e pr e m i s es . Th e c a sh flow s t at e m e n t was s u b se q ue n t l y s u bm i t t ed to t he L d . CI T( A p p e a l s ) d u r i n g t h e c o u r se o f h e a r i n g b e f or e h i m a n d o n t h e b a s i s o f w h i c h t h e L d . CI T( A p p e a l s ) up h el d c e r ta i n a d d i t i o n s/ d i s a l l o w a n c e s a nd also d e l e t ed certain a d d i t i o n s/ d i s a l l o w a n c e s . F u rt h er i t i s a l so a f a ct t h a t t h e L d . CI T( A p p e a l s ) did not c o n fr o n t the said cash flow statement to the Assessing Of f i c e r b e f or e pa s s i n g his appellate order. S i n c e i n t h e R e v e n u e ' s ap pe a l i n I TA N o . 1 1 0 / C hd / 2 0 14 w e h a v e a c c e p t e d t h e p l e a d i ng s o f t h e Ld. DR to re s t o r e the additions deleted by the Ld.CIT(Appeals) to the Assessing Officer for verification of the cash flow statement, we accept the pleadings of the Ld. counsel for assessee in the present appeal and restore the issues raised in the above two grounds also to the Assessing Officer to examine the same afresh in the 16 l i g h t o f t h e ad d i t i o n a l e v i de n c e s f i l e d b y t h e a ss e s s e e a nd decide the s am e thereafter in accordance with law. N e e d l e s s t o a d d t h e a s s e s se e be g i v e n d u e o p po r t u n i t y of h e a r i n g i n th i s re g a r d . G r o un d N o s . 4 an d 5 r a i se d b y t he a s s e s s e e , t h e r ef or e , s t a n d a l l o w e d f o r s t at i s t i ca l pu r p o s e s .
35. I n v i e w o f t h e a bo v e , t h e a p p e al o f t h e a s s e s s e e sta n d s p a r t l y a l l o w e d f or s t a t i st i c a l p u r po s e s .
36. We shall now take up a s s es s e e ' s a p p ea l in I TA N o . 5 3 / C h d/ 2 0 1 4.
I T A N o . 5 3/ C h d /2 0 1 4 ( A s s es s e e ' s a p p e a l ) :
37. Th e g r o u n d s r a i se d b y t h e a s s e sse e a r e a s u n d e r :
"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 Rs.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 Rs.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 Rs.30,69,300/- on account of certain seized documents as per para 11.2.3 of her order.
6. That the Worthy CIT (A) has erred in confirming the addition of Rs.77,78,633/- on account of certain seized documents as per para 11.3.3 of her order.17
7. That the Worthy CIT (A) has erred in confirming the addition of Rs.5,00,000/- on account of certain seized documents as per para 11.4.3 of her order.
8. That the Worthy CIT (A) has erred in confirming the addition of Rs.33,11,300/- on account of certain seized documents as per para 11.5.3 of her order.
9. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed off."
38. G r o u n d N o s .1 , 2 a n d 3 r a i s e d b y t h e a s s e s s ee w e re n o t p r e s s e d b e fo r e us a n d a r e , t h e ref o r e , t r e a te d a s d i s m i s s e d. Ground No.8 being g e n e r al in nature re q u i r e s no a d j u d i c a ti o n .
3 9 . I n G r o u nd No . 4 - 7 va r i o u s a dd i t i o n s a s me n t i o n e d i n t he s a i d g r o u n ds w er e m a d e o n t he b a s i s o f s ei z e d d o c u m e n t s which t he a s se s s e e e xp l a i n ed during the a p p e l l ate p r o c e e d i ng s t hr ou g h i t s c a s h f l o w s t a t em e n t a n d w h i c h w a s n o t a c c e pt e d b y th e L d . CI T( A p p e al s ) .
40. B e f o r e u s th e co n t e n t i o n r a i s e d b y th e as s e s s ee w as s i m i l a r to t h a t ra i s e d i n i t s a p pea l i n I TA N o . 5 1 /C h d / 2 0 1 4 i . e . t h e CI T( A ) ha s a c c e p t e d t he c o n t e n t s o f t h e c a s h f l o w w i t h r e g a r d t o c er t a i n i s s u es a n d r e j e c t e d i t o n o th e r i s s u e s w h i l e a s p e r Ru l e 4 6 A t h e c as h f l o w s h o u l d h a v e b e e n a l l o w e d t o b e f i rs t e x a m i n e d b y th e A O . L d C o uns e l f o r t h e assessee r e q u est e d r e st o r i n g th e m a t te r b ack to th e A s s e s s i n g Of f i c er f o r f r e s h a d j u di c a t i o n a f te r e x am i n i n g t he c a s h f l o w s t a t eme n t .
41. Since the f a c ts and c i r c u m s t an c e s in the p re s e n t a p p e a l a re i d e nt i c a l t o t h a t i n I TA N o . 51 / C h d/ 2 0 1 4 , t he d e c i s i o n r e nd e r ed t h e r e i n w i l l ap p l y m u t a t i s mu t a n d i s to 18 t h i s a p p ea l a l s o f o l l o w i ng w h i ch w e r e s t or e G r ou n d N o . 4 -7 of the present appeal to the file of the AO for fresh a d j u d i c a ti o n i n a c c o r d a n ce w i t h l a w a n d i n t h e l i g h t o f t h e c a s h f l o w s t a t eme n t s u b m i t t e d by t h e a s s es s e e .
Th e appeal of the a s s e s s ee is partly allowed for s t a t i s t i c a l p u rp os e s
42. I n t h e r es u l t ,
i) Th e appeal of the Revenue in I TA N o . 1 1 0 / C hd / 2 0 14 is p ar t l y allowed for s t a ti st i c a l purposes.
ii) Th e appeals of the assessee in I TA Nos.52 & 5 4 / C h d / 2 01 4 a re d i s m i s se d a s wi t h d r a w n
iii) Th e appeals of the assessee in I TA No.51 & 5 3 / C h d / 2 01 4 are p a rt l y al l o w e d f or s t ati s t i c a l purposes.
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(DIVA SINGH) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 14 t h September, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh