TaxTMI 
TaxTMI 
2018 (9) TMI 1552
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.... - in AY 2009-10, assessee surrendered 1.2 crore being the amount spent on marriage of daughter, in AY 2012-13, (under appeal) Rs. 7.3 crores surrendered being amount paid to Sartaj Hotel Apartment Villa Pvt Ltd. and in AY 2014-15, Rs. 6.5 crores surrendered which includes seized cash of Rs. 2.95 crores from the office of CDR Estates and Rs. 41 lakhs of advances during the year. Notice u/s 153A was issued to the assessee, required the assessee to furnish return of income within 15 days. In response thereto, the return of income u/s 153A was filed by assessee on 31.03.2014 declaring income of Rs. 7.28 crores which was declared in the original return of income filed u/s 139 of the Act. During the year under consideration, the assessee has earned income from other sources. 3. During the search on the assessee on 17.09.2013 certain documents related to the investment on properties were found and seized from the office premises of the assessee and M/s CDR Estate Pvt. Ltd. As per page no. 49-53 of Annexure A-11 party no. TO-2, seized from the office premises of the assessee and M/s CDR Estate P. Ltd., assessee had entered into Memorandum of Understanding (MOU) with M/s Meghatech Re....
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....td. and Sh. Devender Kumar and M/s Newage Infrabuilders (P) Ltd. The AO asked him to serve the summon upon both these companies but Mr. K.V. Jain showed his inability to get the summon served on both the companies. 4.1 In view of the reports of the Inspectors and statement of Mr. K.V. Jain, Shri Devender Kumar and assessee were asked to produce Directors of both the above companies. In response to the notices, no compliance was made by Sh. Devender Kumar and the assessee on the given dates. The AO in view of the noncompliance of the assessee issued show-cause notice to Sh. Devender Kumar and assessee as to why the cash amount received by both of them should not be added to their income. In response to the show cause notice both Devender Kumar and assessee have furnished the copy of MOU with respective company, copy of the balance sheet and profit and loss account as on 31.03.2012 of both the companies but failed to produce the Directors. On 03.01.2014, two letters have been received by the AO from assessee signed by the Directors of both the companies admitting therein of giving Rs. 10 crores and Rs. 20 crores to assessee and Sh. Devender Kumar out of shareholder's money. On ....
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.... 5.2 In respect of Sh. Devender Kumar, assessee submitted that he has an independent person and not related to the assessee. He has also entered into an agreement for purchase of land at Harchandpur from Smt. Saroj Sharma and others. However, later Smt. Saroj Sharma denied any such deal having been entered with the assessee as well as with Sh. Devender Kumar and, as such, they have been jointly finding the cases and that is why the agreement between him and Smt. Saroj Sharma was found in his premises. The complaint by the assessee and Sh. Devender Kumar have been filed with the economic offence wing of Delhi Police for which all the documents were also seized from his premises. Otherwise it is an independent deal and assessee is not answerable for the same, even if, document was found from his premises. 5.3 Sh. Devender Kumar was summoned u/s 131 of the I.T. Act for his personal appearance and his statement was recorded on 11.03.2016 which is reproduced in the assessment order in which he has stated MOU was signed by him on the direction of the assessee and the cash was never handed over to him. He has also stated that he is not aware of company M/s Newage Infrabuilders Pvt. Ltd....
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....were found from premises of the assessee, therefore, there is a presumption that all the documents belong to the assessee. No complaints have been made against both the companies. The AO, therefore, held that the entire cash amount Rs. 30 crores is unexplained cash and added to the income of the assessee from undisclosed sources. The AO, accordingly, made an addition of Rs. 30 crores. 7. On perusal of the submissions filed by the assessee, AO noted that during the year under consideration, assessee has received an advance of Rs. 1,97,93,369/- from M/s Dream Green Land Realtors P. Ltd. in which the assessee has 50% shareholding and also received an advance of Rs. 25 lakhs from M/s Rosemary Properties P. Ltd. in which he has 50% of the shareholding. The assessee was asked to file complete details and asked to explain why the advance received from above two companies do not attract the provisions of deemed dividend u/s 2(22)(e) of the Act and why the same should not be treated as his income being a major shareholder in M/s Brownie Estates Pvt. Ltd. The assessee explained that the said advances were received for purchase of land for the company and section 2(22)(e) of the Act does n....
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....ed the MOU at the behest of the assessee. Therefore, affidavit of the mediator is having no credibility. Ld. CIT(A) also noted that no action has been taken against Smt. Saroj Sharma etc. The AO has reported that no such investment was shown in the balance sheet of the above said two companies available with MCA and no funds were available with the aforesaid companies to make such huge investments. Ld. CIT(A), accordingly, confirmed the addition of Rs. 30 crores. As regards addition made on account of deemed dividend, the submission of assessee was recorded for AY 2009-10 in which it was also contended that addition u/s 2(22)(e) of the Act is justified to the extent of accumulated profits of lender companies. Other facts were reiterated as were submitted before AO. The Ld. CIT(A) followed his order dated 31.03.2017 for AY 2013-14 and 2014-15 and directed the AO to make addition u/s 2(22)(e) of the Act to the extent of accumulated profits. The appeal was, therefore, partly allowed. 9. The assessee is in appeal before the Tribunal. Ld. Counsel for the assessee did not press ground no. 1 & 3 of the appeal, the same are dismissed as not pressed. 10. On the remaining grounds, the ....
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....s accumulated profit taxed as deemed dividend in earlier year need to be excluded i.e. in the case of M/s Dream Green Land Realtor Ltd. in A.Y. 2008-09 was Rs. 2,871/- and in case of M/s Rosemary Properties P. Ltd. in AY 2009-10 was Rs. 86,111/-. Ld. Counsel for the assessee further submitted that advance was received for purchase of land which will not fall within the definition of deemed dividend and relied upon Board Circular No. 19/2017 dated 12.06.2017, Judgment of Delhi High Court in the case of CIT vs. Raj Kumar 318 ITR 462, CIT vs. Creative Dying and Printing P. Ltd. 318 ITR 476. Ld. Counsel for the assessee therefore, submitted that appeal of the assessee may be allowed. 12. On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that the documents in question were seized from the possession of the assessee. Therefore, section 292C/132(4) apply. Summons issued to both the companies were returned un-served. The Inspector also could not serve the summons upon both the companies because some were not available at the given address. Sh. K.V. Jain who facilitated the above MOU's expressed his inability to get the summons served on both the com....
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.... responsible to acquire the land at village Harchandpur, District Gurgaon and to hand-over the same to M/s Newage Infrabuilder P. Ltd. who has agreed to purchase 400 acres of the land from Smt. Saroj Sharma and others. Thus, Sh. Devender Kumar was responsible to acquire the land in question from Smt. Saroj Sharma and others and then transfer it to M/s Newage Infrabuilder P. Ltd. According to the MOU M/s Newage Infra Builder P. Ltd. has paid Rs. 20 crores in cash to Sh. Devender Kumar in consideration of the aforesaid MOU. The ultimate sale deed shall have to be registered in the office of Subregistrar, Gurgaon. The MOU is attested by Notary public and also attested by the witnesses. PB 96 is agreement to sell between Smt. Saroj Sharma & others and Sh. Devender Kumar dated 17.12.2011, whereby Sh. Devender Kumar has paid Rs. 10 crores to Smt. Saroj Sharma etc. for purchase of land at Harchandpur, Gurgaon. Smt. Saroj Sharma and others have acknowledged receipt of Rs. 10 crores from Sh. Devender Kumar. Smt. Saroj Sharma and others have also executed receipt of Rs. 10 crores in favour of the purchaser Sh. Devender Kumar vide separate receipt dated 17.12.2011, copy of which is filed at p....
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....sion of Rs. 50,000/- per acre from M/s Newage Infrabuilder P. Ltd. Thus, in his initial statement also Sh. Devender Kumar affirmed that he has executed MOU in question with M/s Newage Infrabuilder (P) Ltd. for acquiring the land from Smt. Saroj Sharma and others and received Rs. 20 crores from M/s Newage Infrabuilder P. Ltd. He has also affirmed that he has paid Rs. 20 crores to Smt. Saroj Sharma and others vide two agreements to sell, one of them was recovered during the course of search and he agreed to supply copy of one more agreement to sell to the investigation wing. Commission was to be paid @ Rs. 50,000/- per acre. He has further stated in his statement that the aforesaid land could not be transferred to M/s Newage Infrabuilders P. Ltd. because Smt. Saroj Sharma and others sold the land to some other person and he has filed a case in the court in which Stay has been granted in his favour. He has further stated in his statement that assessee has also entered into an agreement to sell for some other portion of the property with Smt. Saroj Sharma and others and assessee was also cheated by them, therefore, he along with assessee have filed a case in the court against Smt. S....
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....f Sh. Devender Kumar recorded on 11.03.2016 at the assessment stage in which Sh. Devender Kumar has stated that he has signed the agreement in question at the instance of the assessee. However, he has admitted that he has purchased land from Smt. Saroj Sharma and others on the basis of the agreement to sell. In this statement also he has stated that police complaint was prepared at the instance of assessee. From this statement, it appears that the AO deliberately recorded this statement without any justification against the statement recorded by the investigation wing immediately after search on 18.10.2013. Sh. Devender Kumar tried to contradict the contents of MOU and the agreement to sell without any justification. The AO has not explained as to what was necessity to record statement of Sh. Devender Kumar subsequently, at the fag end of the assessment proceedings. The statement would also show that AO put the words in the mouth of Sh. Devender Kumar so as to he may contradict his earlier statement recorded by the investigation wing. No question was put to him as to why the documents were prepared in his name, if he was not party to be agreement to sell or MOU. The entire material....
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....rial on record including the seized material found during the course of search which is corroborated by statement of Sh. Devender Kumar recorded on 18.10.2013 in ADIT(Inv.). Sh. Devender Kumar has taken action against Smt. Saroj Sharma etc., therefore, there was no justification to make addition of Rs. 20 crores against the assessee. Whatever reasons have been given by the authorities below for making addition against the assessee are irrelevant on the face of the evidences brought on record. Therefore, the decisions relied upon by the Ld. DR would not support case of the Revenue. In view of the above discussion, we are of the view that addition of Rs. 20 crores against the assessee is wholly unjustified. We, accordingly, set aside the orders of the authorities below and delete the addition of Rs. 20 crores. 15. The AO made further addition of Rs. 10 crores in the hands of the assessee on the basis of MOU dated 14.12.2011 (PB 105) which is recovered during the course of search. This MOU is executed between assessee and M/s Meghatech Realtors Pvt. Ltd. According to this MOU assessee was responsible to acquire the land at Village Harchandpur, Gurgaon from Smt. Saroj Sharma and oth....
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....r examination before the AO. However, the fact remained that sufficient material was available on record that assessee acted on behalf of M/s Meghatech Realtors P. Ltd. and assessee while acting on their behalf executed agreement to sell with Smt. Saroj Sharma and others. However, Smt. Saroj Sharma and others did not complete deal with the assessee, assessee has taken action against her with the police as well as in the court of law with Sh. Devender Kumar. Therefore, facts shall have to be verified from all the concerned parties including Smt. Saroj Sharma and witnesses to the MOU etc. It appears to us that AO has not conducted proper investigation on this issue and merely made addition for non production of Director of Company. Therefore, the matter requires reconsideration and the level of the AO. We, accordingly, set aside the orders of the authorities below and restore this issue to the file of AO with direction to re-decide this issue in accordance with law and as per observations in the order by giving reasonable opportunity of being heard to the assessee. The AO shall made all efforts to enquire from all concern parties about the facts of execution of MOU for M/s Meghate....