AI Drafter 
TaxTMI 
TaxTMI 
2015 (2) TMI 990
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....vt. Ltd. wherein both the department and the assessee have assailed the correctness of the order dated 27.04.2009 of CIT(A)-VIII, New Delhi on the following grounds, respectively:- Grounds raised by department in ITA No.3080/Del/2009 1. "The order of the Learned Commissioner of Income Tax (Appeals) is erroneous & contrary to facts & law. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,25,00,000/- made u/s 2(22)(e) as deemed dividend without appreciating the facts and reasons and also the case laws mentioned by the AO in his assessment order. 3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in reducing the addition made u/s 69 of Rs. 36,69,125/- to 12,41,500/-. a). Ignoring that in a group case, it has been established beyond doubt that the assessee has made payment of on money for purchasing land in the same village where other lands purchased by the assessee company are located. The Ld CIT(A) has also accepted the fact of payment of on-money for purchase of land in the said case. b) Ignoring the findings and the reasons as discussed by the AO in his assessment orde....
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....observed that the assessee company had purchased 20.19 acres of land at Village-Sultanpur, Tehsil Parukh Nagar, Gurgaon in July, August and September 2005. The details of the land purchased is summarised at page 2 of the assessment order which disclosed that land had been purchased from 9 different parties in the afore-mentioned months. These details are extracted from the assessment order hereunder for ready-reference:- S.No. Date Stamp Sale consider ation Area (Kanals & Marlas) Area in Acres Rate per acre as per sale deed Sellers Address Land Sold 1. 06.07.2005 1111009650 1851500 32K4M 4.025 460000 Sh.Om Prakash R/o- Sultanpur, Tehsil-Parukh Nagar, Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, Gurgaon 2. 11.07.2005 55560 4830 926000 128K 18M 2.0125 460124 Sh. Haneef Chunnilal Daalchand, Rameshwar, Ram Kumar, ANgoori Devi, R/o-Sultanpur, Tehsil-Parukh Nagar, Distt.-Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, Gurgaon 3. 02.08.2005 67150 1119000 17K 18M 1.34375 832744 Smt. Raj Aggarwal & Rakesh Aggarwal, R/o- 437/14, Urban Estate, Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, G....
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....erated the fact that the amount of Rs. 10 lakh over and above the amount of Rs. 20 lakh mentioned in the Registered Sale Deed was paid. The English translation of the "crossexamination" has also been extracted in page 4 & 5 of the assessment order. The AO after providing the assessee opportunity to cross-examine Smt. Dayawati subsequently later on, on the very same date also recorded the statement of the assessee's husband, Sh. Om Prakash who also confirmed that these facts were brought to the knowledge of his wife on 14.12.2008 by him and on which date his wife's statement had been recorded. The English translation of the said statement is also extracted in the assessment order. 3.3. In view of the same it was concluded that since the statements of Smt. Dayawati and her husband established the payment of Rs. 10 lakh over and above what is recorded in the Registered sale deed, a show cause notice dated 06.12.2008 was issued to the assessee. The extract of the same found reproduced in the assessment order at pages 6 & 7 is reproduced hereunder:- 0.1. "Please refer to the letter no. 806 dated 17.12.2008 in which the statement of Smt. Dayawati W/O Sh. Om Prakash which wa....
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....f facts related to the sale of land as told by him to his wife. A copy of statement is enclosed for reference and record. 2. On 26.12.2008 you were offered an opportunity to cross examine Smt. Dayawati with regard to the statement dated 14.12.2008. Cross examination of Smt. Dayawati was conducted on oath vide statement containing 4 Pages. The cross examination was conducted by Sh. U N. Marwah, CA from M/s. R. N. Marwah & Company. It may be highlighted that Smt. Dayawati has stood by her statement dated 14.12.2008 and confirmed receipt of Rs. 10 lacs cash from Si: Rajinder Singh Malik, who is the authorized signatory / Director of Mls. Kay Kay Apartments Pvt. Ltd. as per the registered sale deed). The statement was given by her in the presence of her husband Sh. Om Prakash who has also signed as witness. A copy of statement of cross examination of Smt. Dayawati recorded on 26.12.2008 consisting of 4 pages is being enclosed for your reference and record. 3. On the basis of above evidences, you are hereby required to showcause as to why a sum of Rs. 10 lacs may not be treated as unexplained investment under section 69 of the Income Tax Act, 1961 and also showcause as to why the ....
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....value. Accordingly on account of the following reasons addition of Rs. 26,69,125/- was also made by him. The relevant extract from the assessment order is reproduced hereunder:- 16. "As per the details of sale summarized in table in para 4 above, it can be seen that except the land measuring 17 kanals 18 marlas sold by Smt. Raj Aggarwal on 2.8.2008, which has been registered for Rs. 11,19,000 @ Rs. 8.32 lakhs per acre, sale of all the other lands have been registered @ 4.5 to 5 lakhs per acre. The sale of most of the land has been registered in September 2005. 17. It was also gathered through field enquiries made by Inspector of this office that the land value in Village Sultanpur and neighboring villages like Village Jhanjrollakhedi reached as high as Rs. 22 lakhs per acre when 'Reliance group' started purchasing land in the same Village. Thus, the minimum prevailing market rate in Village Sultanpur was at least Rs. 6,60,000 in September 2005 as established from the statements of Smt. Dayawati and Sh. Om Prakash. 18. On the basis of minimum rate of Rs. 6,60,000 per acre the unexplained investment made by assessee company on purchase of land (other than the land pu....
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.... as having been given by the assessee company to subvert enquiry of the income tax department with regard to marriage expenses. (f) The seller neither negotiated the transaction nor admitted to have received the alleged on money, which has purportedly been received by her husband. The statement of her husband has been recorded after the cross examination of the deposed had been completed and the appellant's AR had left the office. The appellant is denied the right to cross examine him and as such the statement of Mr. Om Prakash has no validity. 4.1. The remaining addition of Rs. 26,29,125/- made by the AO was assailed on various grounds contending that apart from the statement of Smt. Dayawati there was no other basis to uniformly applying a flat rate of Rs. 6,60,000/- per acre on all the purchases from different parties ignoring the basic fact that price of property is determined by criteria like location of the land; distance from the road etc. and cannot be based on extraneous and irrelevant evidences. Referring to the material on record it was pointed out that it can be seen that for one of the properties the rate of purchase was Rs. 8,32,744/- per acre which was in e....
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....ment has been affirmed by her husband namely Shri Om Prakash before the AO. A proper show cause notice was issued to the assessee by the AO and thereafter the AO arrived at the decision of the under statement of the consideration. Under these circumstances, the arguments put forth by the assessee cannot be considered relevant. The facts remains that the seller consistently admitted to have received the sum of Rs. 10 lakhs in cash, in addition to the recorded consideration and that her husband who had carried out the said transaction also approved it unequivocally and unambiguously. How the transaction was disclosed in the return of the seller is immaterial to the issue under consideration particularly when the user of the amount received in cash is clearly brought out by the seller in her statement. Under these circumstances, it is proved conclusively by the AO that the consideration paid for the said transaction was understated by Rs. 10 lakhs. In the light of the ratio of the decisions refer to above in Para 7.3, I hold that the AO has discharged to burden cast specifically upon him, enough material of independent nature has been placed on record which justify the stand adopted b....
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.... 9,26,000 80,500 2,41,500 5.3. In view of the above he restricted the addition of Rs. 26 lakh odd to Rs. 2,41,500/- for properties found mentioned at Sl. No.-1 & 2, apart from that the addition of Rs. 10 lakh sustained by him for the property mentioned at Sl. No.-7 by holding as under:- "Thus, for the instances at S.No.1 & 2, the stamp duty authority has itself has considered the sale by higher sum by Rs. 1,61,000/- and 80,500/- respectively. The stamp duty levied by the stamp duty authority is an evidence which is independent in nature and which has been accepted by the assessee while registration of the said properties. The payment of understated consideration to this extent cannot be ruled out and therefore, coupled with the instance in the case of Smt. Dayawati, I hold that the unexplained investment/understated consideration for properties at S.No. 1 & 2 was for an aggregate sum of Rs. 2,41,500/-. The AO is directed to allow the relief for the differential amount concerned for these transactions. 7.6.3 So far as the property at S.No. 3 of the table is concerned, the AO himself has considered that the rate shown....
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....of Smt. Dayawati, it was submitted cannot be upheld as when read alongwith the cross-examination the record shows that the AO needed to support the same by the statement of her husband, Sh. Om Prakash. It was submitted the record would show that it was never confronted to the assessee and the request for opportunity to cross-examine the husband was arbitrarily brushed aside. Accordingly it was his submission that the same should be deleted. Addressing the other additions it was his submission that the finding of the CIT(A) that a uniform rate cannot apply to the remaining instances of sale was correct but in the absence of any evidence to the contrary how the evidence supported by Sale Deeds could be interfered with it was submitted should be strongly deprecated. It was his submission that the reasoning of the CIT(A) to restrict the addition to the extent of Rs. 2,41,500/- is contrary to facts on record and law. 9. We have heard the rival submissions and perused the material available on record. In view of the fact that the departmental case has been built on the statement of Smt. Dayawati and her husband it is necessary to our minds to first consider the same. The record shows ....
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....by her husband who for reasons best known to himself only on 14.12.2008 addressing the transaction which took place on 09.09.2005 affirms in his answer to Question No.-4 (extracted at page 5 of the assessee order) that he concurred with the statement of his wife and further the fact that "the statement is based on the facts as told to my wife by me, which are correct and based on truth". Whether the statement is based on truth and is correct or not cannot be based on self certification of Sh.Om Prakash and will be addressed subsequently, however, the fact remains that Smt. Dayawati as a witness who no doubt was "cross-examined" by a Chartered Accountant was clearly a dumb tutored witness as her knowledge was based purely on hearsay since evidently her personal knowledge on the issue was completely non-existent. The hearsay knowledge in the facts of the present case does not inspire any confidence whatsoever. It is not to say that hearsay knowledge is to be disregarded in all instances. There may be occasions when immediately on the occurrence of an event the first information report based on the statement of a witness even based on hearsay can be taken as an evidence in support of ....
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....ibe to this blind faith and repose the same trust in the evidence of a prime witness based on hearsay. Nothing has been placed on record by the Revenue to address the fact why Sh.Om Prakash and his assertions blindly accepted by his wife in good faith in his overall wisdom and welfare for her family be accepted and given greater preference as opposed to the recorded evidence by way of sale deed on record. The fact that Smt. Dayawati is a tutored witness it is seen further demonstrated by the fact that in response to Question no.-3 recorded on 14.12.2008 she is found to have stated as per the extract at page 3 of the assessment order that "the full value of sale consideration was Rs. 30 lakh. Sale was registered for Rs. 20 lakh on 09.09.2005. The amount received as per sale deed was in form of bank drafts, which were deposited by us in Oriental Bank of Commerce, DCF-III, Gurgaon. Balance amount of Rs. 10 lakh was received in cash." The record shows that when within less than 2 weeks from the said date i.e. the time of her so-called "cross-examination" her response to Question No-4 on 26.12.2008 shows that she did not even know/remember whether she had received the payment through pa....
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....e statements of Smt. Dayawati or Sh. Om Prakash and the consequent addition of Rs. 10 lakhs in the hands of the assessee or the addition of brokerage etc. for the purchase of the specific land. 9.2. Accordingly in view of the above reasoning on facts, we hold that the AO erred in making the addition of Rs. 10 lakh and the CIT(A) erred in conforming the same based on the statement of a tutored witness who as per her own statement had no personal knowledge of the events and relied blindly in good faith on hearsay information given to her by her husband. The other witness infact who could have been prime witness as the facts allegedly were only known to him was never made available for cross-examination and even otherwise his credibility and reliability appears to be in severe doubt and he most definitely cannot be treated to be a reliable witness. In the facts as they stand the addition in the hands of the assessee based on the statement of Smt. Dayawati and her husband cannot be upheld, ordered accordingly. 9.3. Considering the other sale instances wherein the AO applied a flat rate of Rs. 6,60,000/- per acre and the CIT(A) proceeded to sustain the addition on the basis of val....
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....e statement of a tutored witness the action cannot be upheld. Accordingly the remaining additions sustained by the CIT(A) are also ordered to be deleted. Since the sale price remains undisturbed the addition on brokerage etc. also does not survive which was made by the AO u/s 69C and partly sustained by the CIT(A). 9.4. For ready-reference we reproduce the statements from the assessment order relied upon by the Revenue:- Statement of Smt. Dayawati recorded on 14.12.2008 Q.1. Please identify yourself. Ans:-My name is Dayawati. My husband's name is Sh.Om Prakash. I reside at House No.-U-15/62, DLF-III, Town House, Gurgaon. I am showing my PAN card (ABGPY9951K) for identification. Q.2.As per information, you have sold land at village Sultanpur, Tehsil Parukh Nagar, Distt.-Gurgaon, in financial year 2005-06. Please give complete details. Ans. Yes, I had sold land measuring 36 kanals 7 marlas at Village Sultanpur, Tehsil Parukh Nagar, Distt. Gurgaon to Mls Kay Kay Apartments Pvt. Ltd, 701, Udyog Vihar, Gurgaon. Initially one Mr. Chaudhary had offered to purchase the said land from us. Later I had transacted directly with the company. Here I wish to tell that the ma....
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....08 0.10. Please inform where did you keep the cash for 2 ~ years? Ans -. This is an internal matter, which I do not wish to divulge. 0.11. What was the amount of sale consideration as admitted before the registrar? Ans. Amount mentioned in the sale deed. Q.12.Did you give the earlier statement voluntarily? Ans. Yes, The statement was given in the presence of my husband. Q.13. Do you wish to state anything else? Ans.No, nothing else. Cross examination conducted by Sh.U.N.Marwah CA on behalf of M/s Kay Kay Apartments Pvt. Ltd. On 26/12/2008 at camp office of DCIT, Circle-5(1), Delhi at U-15/62, Town House, DLF-III, Gurgaon, Haryana in the presence of Sh. Anil Kumar and SH. Om Prakash." 9.6. Statement of Sh. Om Prakash recorded on 26.12.2008 extracted from the assessment order:- Q.1.Please identify yourself. Ans.My name is Om Prakash. I live at U-15/62, DLF-III, Townhouse, Gurgaon. Q.2. land measuring 36 kanalas 7 marlas in Village Sultanpur, tehsil Parukh Nagar, Gurgaon in the name of your wife Smt. Dayawati was sold in F.Y.2005-06. Give complete details. Ans. There was a land measuring 36 kanals 7 marlas in Village Sultanpur, Tehsil Parukh N....
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....i and Smt. Kum Kum Kohli as common shareholders having 50% share each in both these companies. In the circumstances he was of the view that the loan amount is deemed dividend u/s 2(22)(e) of the Act in the hands of assessee company to the extent to which M/s Kohli Housing & Development Pvt. As a result thereof he issued a show cause notice to the assessee to explain its stand. The show cause notice is extracted from the assessment order hereunder for ready-reference:- "During the relevant year. assessee company has received unsecured loan of Rs. 1,25.00,000 from M/s Kohli Housing & Development Pvt. Ltd. Shareholding pattern of both these companies shows that Sh, Sudershan Kohli and Smt, Kum Kum Kohli are shareholders in both these companies having 50% share each, As per section 2(22)(e) of the Income Tax Act, 1961, any payment by a company, not being a company in which the public are substantially interested, of any sum to any concern in which such shareholder (who is the beneficial owner of shares, holding not less than 10% of the voting power) is a member and in which he has a substantial interest is deemed to be dividend to the extent to which the company in either case posse....
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....Development Pvt. Ltd. for acquiring the land at Gurgaon on 24.10.2005/22.11.2005. He observed that the above mentioned companies became the land holdings companies of M/s Kohli Housing Hosing & Development Pvt. Ltd. who is a developer and by virtue of land holding in sister concerns is controlling the land holdings. The AO was of the view that the transactions have been planned to take the advance from M/s Kohli Housing & Development Pvt. Ltd. prior to transfer of shares of the assessee company from the original shareholders in order to avoid payment of taxes and the transaction was considered to be colourable in nature attracting the applicability of various judgements and was considered to be a device created by the assessee to avoid tax liability. Reliance was placed upon Workmen, Associated Rubber Industry Ltd. vs Associated Rubber Industry Ltd. and Another 157 ITR 77 (SC); Miss P.Sarada vs CIT (1998) 229 ITR 444 (SC); Nandlal Kanoria vs CIT [1980] 122 ITR 405 (Cal); CIT vs Durga Prasad More [1971] 82 ITR 540 (SC); M.D.Jindal vs. CIT [1987] 164 ITR 28 (Cal.); LIC vs Escorts Ltd. [1986] 59 Comp Case 548 (SC) so as to conclude that the corporate veil has to be lifted and the true....
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....scribers had in terms of the Memorandum & Articles of Association undertaken to subscribe for 5,000 equity shares each of the company of a face value of Rs. 10/- each. Accordingly Mr. Ajay Vats and Mr. Vinay Vats made payment of a sum of Rs. 50,000/- each by means of bank transfer on 30th June 2005 from their respective saving Bank A/cs with Andhra Bank, Gurgaon Branch, Gurgaon, The company pursuant to the aforesaid payment issued share, certificate no. 0001 bearing distinctive no. 1-5000 in the name of Mr. Ajay Vats and no. 0002 bearing distinctive no. 5,001-10,000 in the name of Mr. Vinay Vats. 3.2 The company took loan of Rs. 30,00,000/- from M/s. VPN Management & Consulting Pvt. Ltd. New' Delhi, on 4th July 2005. The company constituted of the said directors purchased the first parcel of land in terms of sale deed executed by Shri Omprakash in favour of the company on 6th July 2005 in respect of 4.025 acres of agricultural land at Village Sultanpur, Gurgaon @ Rs. 4,60,000/- per acre. Some other plots of land were also purchased. In terms of article 7 of the Article of Association, the promoters issued letter dated 7th October 2005 to the company signifying their intentio....
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....iling the AO's stand are found to have been advanced:- 3.4 "Reacting to the case laws relied by the AO in the assessment order, the Id,AR of the appellant submitted that none of the cases have any resemblance or similarity with the facts of the appellant's case. Explaining the facts of the respective cases, the distinctions were outlined. 3.4.1. It is submitted that in McDowell & Co. Ltd v. Commercial Tax officer (1985) (SC) 154 ITR 148, the dispute was about the demand of sales tax on gross turnover including excise. In these facts the decision was rendered and the aspect of tax-evasion came into play. But in the present case, there are no legal obligations which have been arranged or could be called a sham. It is submitted that. in a case involving a similar issue regarding authenticity of dates to determine shareholdlnq for the purposes of section 2(22)(e); the Hon'ble Kerala High Court in 219 ITR 661 held that McDowell's case was not applicable. It is submitted that the decision in the McDowell case has been subsequently, referred to, analysed and explained by the Supreme Court in Union of India Vs PlayWorld Electronics Pvt. Ltd 184 ITR 808 and observed....
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....ellant's case, the facts are wholly different and as such not applicable to the present case. 3.4.5 In the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC), it is submitted that the assessee purchased certain house property and claimed it should not be brought to tax in his hands in view of the deed of trust executed by his wife. The assessee merely made a statement that the amount represented "Stridhan", but could not produce any material to show that his wife had any money or independent source of income. On these facts the court held "that though an apparent statement must be considered real unless it is shown that there were reasons to believe that the apparent was not real". But in the present case, the assessee has furnished all supporting documents, material to establish that Sudarshan Kohli and Smt. Kum Kum Kohli were not shareholders till 24th October 2005. Thus the ratio of the said judgment on the facts of the case is not applicable. 3.4.6 In M.D. Jindal v. CIT (1987) 164 ITR 28 (CAL), the issue was about the applicability of Sec. 2(22)(e), when Assessee & wife were only directors of Co dealing in Iron materials. Material was supplied by Co to directors ....
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....the registered holder is the real owner and the burden to prove whether the transaction is benami or sham is on the department. Reliance was also placed upon the following decisions so as to contend that the assessee company does not fall in the ambit of section 2(22)(e) of the Act:- - CIT vs. Parvathavardini Ammal 219 ITR 661 (Kerala); - CIT vs H.K.Mittal (1996) 219 ITR 420 (All.); - Victor Aluminium Industries Pvt. Ltd. vs ACIT (2006) 9 SOT 197 (Delhi); - Seamist Properties PVt. LTd. vs ITO (2005) 95 TTJ (Mum) 201; - Sagar Sahil Investments Pvt. Ltd. (2008) 13 DTR 350 (Mum.) 11.4. It was reiterated that on the date of receiving the loans, shareholding pattern of the assessee company and M/s Kohli Housing & Development Pvt. Ltd. were inconfirmity with the provision of section 2(22)(e) of the Act. 11.5. Without prejudice it was also alternately canvassed that the recipient cannot be taxed u/s 2(22)(e) of the Act and the record shows that the assessee is a recipient of the loan and the recipient is not a shareholder and the loan cannot be treated as a dividend in its hands for which proposition reliance placed upon CIT vs Hotel Hilltop [2008] 217 CTR 527 (Raj.) ....
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.... out of the accumulated profits of the company. All these four ingredients in relation to the qualification of the company, the shareholder, the concern and the payment by way of loan or advance in respect of the first two categories and any kind of payment in respect of the third category out of accumulated profits, are required to be established. The issue of taxability of loan raised to be taken as dividend is, therefore, governed by the following determinants: 1. Whether the basic conditions stipulated above have been satisfied? 2. If no, whether it is a device of tax evasion? 4.2 Before venturing into the realm of the ratio of the decided cases on the subject, the facts of the case of the assessee company are enumerated below in terms of the relevant dates having bearing on the matter under consideration: S.No. Particulars of event Relevant date Comments 1. Incorporation of assessee company 24.05.2005 Co. Incorporated by Ajay Vats & Vinay Vats as original subscribers/directors who agreed to subscribe for minimum shares of Rs. 50,000/- each. 2. Allotment of shares to original subscribers 30.06.2005 Co. Received Rs. 50,000/- eac....
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....s Pvt. Ltd. [2008] 120 TTJ 925 (Mum.) and CIT vs. John PV 181 ITR 1 (Ker.); CIT vs H.K.Mittal [1996] 219 ITR 420 (All.) and various other decisions of the ITAT. He further took into consideration the fact that the assessee company was not a registered shareholder in Kohli Housing & Development company relying upon and various decisions of the High Court and ITAT concluded that the provision of section 2(22)(e) on this ground also could not be attracted. Considering the parameters for considering the distinction in regard to tax evasion, tax avoidance and tax planning as considering by the Hon'ble Calcutta High Court in the case of Hela Holdings'case [2003] 263 ITR 129 (Cal.) and inviting specific attention to para 3.4 of the same, he held that the view taken by him stood fortified. 12.2. Further taking into consideration the observations of Justice Rangnathan Mishra in McDowell Ltd. vs. CTO [1985] 154 ITR 148/22 Taxman 11 (SC) which held that all such arrangements by which tax laws are fully complied with, not using 'colourable devices' and having no intention to deceit the legal spirit would normally fall within the ambit of tax planning. He observed that their ....
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....ere closely related to each other and therefore, apprehension of tax evasion was made. However, in the case of the appellant company, it is noticed that the relationship of the concerned nature between Kohli Group and the appellant company took germination only in the second week of Oct. 2005 while the transaction for loan had been concluded in July/August 2005." 12.3. It is seen that the CIT(A) further went on to examine that the provisions of section 2(22)(e) were amended by Finance Act, 1987 w.e.f 01.04.1988 to include a case where the payment is received by any concern in which the common shareholder is a member partner and holding that in view of the findings arrived at holding that primary conditions were not fulfilled. However by way of abundant caution he still proceeded to examine the conclusion from that aspect and relying on CIT vs Hotel Hilltop (cited supra) and the decision of the Special Bench in ACIT vs Bhaumik Color Pvt. Ltd. (cited supra) came to the conclusion that the action of the AO was not warranted on facts. Apart from these he further referred to various other decisions of the ITAT proceeded to delete the addition. 13. Aggrieved by this the Revenue is ....
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....ay vats 5000 50000/- 13.09.2005] 2.2. The First directors of the company as per MOA and AOA of the aforesaid four companies were:- 1. .Mr. Ajay Vats (50%) 2. Mr. Vinay vats (50%) 14.1. The specific dates on which loans were received from M/s Kohli Housing & Development Pvt. Ltd. which were not in dispute were re-emphasized:- 2.3. "Details of loan received from Kohli One Housing Name of the Date of Receipt of Loan Amount 1.Kay Kay Apptt. P. Ltd. 09.07.2005 5000000/- 16.07.2005 7500000/- 12500000/- 2.Kay Kay Buildworth P. Ltd. 09.07.2005 10000000/- 3.Kay Kay Executive Apptts Pvt.Ltd. 22.11.2005 7500000/- 4.Kay Kay Royal Apptts. 18.07.2005 5000000/- 14.2. To drive home the point in support of the impugned order the specific dates on which S.K.Kohli & K.K.Kohli became the shareholders in the assessee company and sister companies available from the record were also emphasised as under:- 2.4. Date when S.K.Kohli & k.K.Kohli became share Holder Name of the Company Date of becoming Shareholder 1.Kay Kay Apptt. P. Ltd. 24.10.2005 2.Kay Kay Buil....
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....fairs solely to deprive the Revenue it was submitted as per judicial precedent has to be substantiated by the Revenue and this onus has not been discharged. It was submitted that if the AO is under a belief that either Vats were the benami holders and Kohlis were the real holder of shares or the fact that Kohli's were the beneficial holders. These suspicions it was argued have not been demonstrated by any evidence on record. Apart from relying upon decisions relied upon before the CIT(A) reliance was also placed upon the following decisions:- (i) In CIT v. Parvathavardini Ammal 219 ITR 661 (Kerala) (ii) CIT v K.K.Mittal (1996) 219 ITR 420 (All) Assessee not a shareholder-advance received from company not deemed dividend. (iii) (b) Victor Aluminium Industries Pvt. Ltd. v ACIT, New Delhi (2006) 9 SOT 197 (Delhi) (iv) Seamist Properties Pvt. Ltd. v ITO (2005) 95 TTJ (Mum) 201. 14.5. In support of the alternate legal submissions that deemed dividend cannot be taxed in the hands of Recipient company as recipient is not a shareholder. Reliance was placed upon the following decisions:- (a) CIT v. AR Magnetics (P.) Ltd. (2014) 220 Taxman 209 (Delhi)(HC) (b) CIT ....
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....rranged only to deprive the collection of tax having not been substantiated the finding of the CIT(A) on facts deserving to be upheld. Since the primary condition for attracting the provisions of section 2(22)(e) admittedly stand unfulfilled, the occasion to bring the assessee within the rigorous of the said section cannot be upheld. We have also seen that the issue has been examined by the CIT(A) from various angles and facets on facts and law and this discussion has also been addressed by us in great detail which also stands unassailed. In these afore-mentioned peculiar facts and circumstances in the face of the clear mandate of the judicial precedent cited, we find that the Ground of the Revenue has to be dismissed. 16. In the result, Ground No.-2 raised by the Revenue in ITA No.- 3080/Del/2009 is dismissed. 17. Since Ground Nos. 1 & 5 in ITA No.-3080/Del/2009 being general and residuary in nature respectively, no specific adjudication on facts is required. 18. In the result, ITA No.-3080/Del/2009 is dismissed and CO.-274/Del/2009 is allowed. 19. As per the common stand of the parties the facts and arguments on the two issues in the ITA No.-3079/Del/2009; ITA No.-308....
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....n was deleted:- 4. "The Ld. AR of the company submitted that the addition made in the case of the appellant company on protective basis is unwarranted. The protective addition has been made for the substantive additions made u/s 69 & 69C by the AO in the case of M/s Kay Kay Apartments Pvt. Ltd., M/s Kay Kay Royal Apartments Pvt. Ltd., M/s Kay Kay Executive Apartments Pvt. Ltd. and M/s Kay Kay Buildworth Pvt. Ltd. It is submitted that detailed submissions have been made in their respective cases to highlight that no addition is warranted in their cases. The appellant company has advanced loans to the above companies in normal course of business and these companies have utilized the loan amount according to their business requirements. The appellant company is not the benamidar of any of these entities and therefore, the addition is not warranted in the case of the appellant company." 21.1. The specific reasoning for deleting the addition which is under challenge by the Revenue reads as under:- 5. "I have perused the assessment order and the submission of the appellant company. The additions made by the AO u/s 69 & 69C in the case of four companies mentioned above have been ....