TaxTMI 
TaxTMI 
2019 (5) TMI 96
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....cted in Form No. 26AS. 2) The ld. CIT (A) has erred on facts and in law in confirming the addition of Rs. 17,30,520/- u/s 2(22)(e) of the Act in the assessment framed u/s 153A even when the assessment proceedings for the year under consideration has not abated and no incriminating material relating to the same was found in search and thus, the addition so made is illegal and bad in law. 3) The ld. CIT (A) has erred on facts and in law in upholding the finding of AO that advance of Rs. 23,30,520/- received from M/s. Bhatia Corporation Pvt. Ltd. against the salary of Rs. 6 lacs is in the nature of loan or advance, thereby confirming the addition of Rs. 17,30,520/- u/s 2(22)(e) of the IT Act. 4) The assessee craves to amend, alter and modify any of the grounds of appeal. 5) The appropriate cost be awarded to the assessee. Ground No. 1 is regarding addition of Rs. 14,285/- on account of undisclosed income. 2. The assessee is an individual and also Director in the company M/s. Bhatia Corporation Pvt. Ltd. The assessee filed her return of income on 29.12.2012 under section 139 of the IT Act declaring total income of Rs. 9,80,570/-. A search and seizure operation was carri....
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....ted the higher interest offered to tax by the assessee in the return of income for the assessment years 2015-16 and 16-17 whereas the addition was made of the differential amount for the assessment year 2012-13 to 2014-15. Therefore, there is a double taxation of the interest income which was offered to tax for the assessment years 2015-16 and 16-17 and also added by the AO for the assessment years 2013-14 and 14-15. Alternatively, the ld. A/R has submitted that the assessment was not pending as on the date of search and, therefore, the same was not got abated by virtue of search as on 03.03.2016. Thus, no addition can be made in the absence of any incriminating material found or seized during the search and seizure action. The addition was made by the AO based on the statement of affairs filed by the assessee during the assessment proceedings. The ld. A/R has thus contended that in the absence of any incriminating material, the addition made by the AO is not sustainable. The elaborate arguments on this point were advanced by the ld. A/R while arguing ground no. 2. 4. On the other hand, the ld. D/R has submitted that the assessee herself has admitted the correct interest income f....
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....ee in the return of income more than the computation of interest in the statement of affairs. The AO has made addition in respect of assessment years 2012-13 to 14-15 on account of less interest shown in the return of income in comparison to the statement of affairs whereas the interest income offered by the assessee more than the statement of affairs for the assessment years 2015-16 and 16-17 were accepted by the AO. Thus the difference due to the computation by taking the different accrual dates will be subsume to the extent of extra interest income offered to tax by the assessee for the assessment years 2015-16 and 16-17. Accordingly, the addition made by the AO of Rs. 14,285/- is covered by the additional interest income offered by the assessee to tax for the assessment years 2015-16 and 16-17. Hence the same is deleted. Ground No. 2 is regarding addition made on account of deemed dividend under section 2(22)(e) of the IT Act while passing the assessment order under section 153A of the Act. 7. The ld. A/R of the assessee has submitted that the AO has taken the differential amount of Rs. 23,30,520/- received by the assessee during the year under consideration from the compan....
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....criminating material is unearthed during the course of search or requisition of documents or undisclosed income or property is declared in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The issuance of notices under section 153A(1) for all the six assessment years does not entail altogether a fresh exercise of making a fresh assessment. Hence, the completed assessment can be interfered with by the AO while making assessment u/s 153A only on the basis of the incriminating documents found in search. Thus, when no incriminating documents for the year under consideration were found, disallowance made by the AO in assessment proceedings u/s 153A is illegal and bad in law. In support of his contention the ld. A/R placed reliance on the following cases laws :- Jai Steel (India) vs. Assistant Commissioner of Income Tax 219 Taxman 233 (Raj. HC) Saumya Construction Pvt. Ltd. 387 ITR 529 (Guj. HC) PCIT vs. Meeta Gutgutia 395 ITR 526 (Del. HC) CIT vs. Kabul Chawla 126 DTR 130 (Del. HC) DCIT vs. M/s. A.M. Exports In ITA No. 561/JP/2018 dated 07.01.2019. Thus the ld. A/R has submitted that in the proceedi....
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....ither under section 132 nor under section 153A, phraseology 'incriminating' is used by Parliament, therefore, any material which was unearthed during search operations or any statement made during course of search by assessee is a valuable piece of evidence in order to invoke section 153A. The ld. D/R has also relied upon the decision of Hon'ble Kerala High Court in case of CIT vs. Dr. P. Sasikumar, 73 taxmann.com 173 (Kerala) as well as decision of Hon'ble Karnataka High Court in case of Canara Housing Development Co. vs. DCIT, 49 taxmann.com 98 (Kar.) He has further pointed out that the SLP filed by the department in case of PCIT vs. Best Infrastructure (India) Pvt. Ltd., 94 taxmann.com 115 (SC) has been admitted and, therefore, the decision of Hon'ble Delhi High Court has not attained finality. Thus the ld. D/R has submitted that the addition made by the AO is based on the material available with the AO at the time of assessment and, therefore, the technical objection of incriminating material found during the course of search will not absolve the assessee from the tax liability on such income. 9. We have considered the rival submissions as well as the relevant material on rec....
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....atter of record as nothing new was detected or unearthed during the search and seizure action in respect of the deemed dividend in question. Accordingly, the decisions relied upon by the ld. D/R will not help the case of the revenue when there is no incriminating material indicating any undisclosed income nor any disclosure made by the assessee in the statement in respect of the deemed dividend in question. The decision of Hon'ble Delhi High Court as well as the decision of Hon'ble Jurisdictional High Court were finally taken up to the Hon'ble Supreme Court in case of PCIT vs. Meeta Gutgutia, 257 Taxman 441 (SC) and the SLP filed by the revenue was dismissed. This Tribunal in case of DCIT vs. A.M. Exports (supra) after considering all the relevant decisions relied upon by either of the parties have discussed this issue in para 8 as under :- "8. We have considered the rival submissions as well as relevant material on record. The first aspect involved in the matter is sustainability of the addition made by the Assessing Officer without any incriminating material found or seized during the course of search and seizure action. There is no dispute that the original return of income f....
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....7 was not a correct statement regarding the loan taken from M/s Dipnarayan Vyapar Pvt. Ltd.. Thus, for understanding of the issue, all the relevant questions put to the assessee and answered to them are to be read conjointly. Hence, we quote question No. 34 to 36 and question No. 39 of assessee's statement recorded U/s 132(4) dated 04/4/2013 and question No. 77 of statement recorded U/s 132(4) on 05/4/2013 and question No. 12 and reply of the statement of the assessee recorded U/s 131 of the Act in post search investigation by the ADIT as under: (i) Interlink saving & finance Pvt. Ltd. 57 Adarsh Nagar, Rishikesh, dehradun, Uttranchal. (ii) Parmatma Developers Pvt. Ltd., 101, Balaram Dey Street, Gr Floor, Kolkata (iii) Rameshwar Finvest Pvt. Ltd., 101 Balaram Dey Street, Kolkata (iv) Sri Ram Tie Up Pvt. Ltd., 2, Banarashi Ghosh, 2nd Bye Lane, Kolkata (v) ________________________do _________________________ (vi) Tara Vinimay Pvt. Ltd., 101, Balaram Dey Street, G. Floor, Kolkata (vii) Victor Project Pvt. Ltd., 2 Mullick Street, Ist Floor, Kolkata (viii) Yatan Traders Pvt. Ltd., 62/1, Hriday Krishna Banerjee Lane, Howrah. In reply to the question No. 34, the ....
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....t recorded U/s 131 of the Act and therefore, there was no admission on the part of the assessee. Except the statement of partner of the assessee, there was nothing incriminating found or seized during the course of search and seizure action, therefore, the statement of the assessee recorded during the search and post search enquiry has to be read together and the outcome of the said statement is that the assessee has never admitted any bogus transaction except the misunderstanding due to continuous grilling by the Investigation Wing and due to mentally exhausted, the assessee given some inconsistent reply to question No. 77 which was subsequently clarified in question No. 12 of the statement recorded by the investigation Wing in the post search enquiry U/s 131 of the Act. Even otherwise, all these statements are only regarding one transaction of loan that cannot be applied to the entire transactions of loan taken from 12 parties. Therefore, except the statement of the assessee to question No. 77, which was subsequently clarified in question No. 12, there was nothing in the shape of any material or document much less incriminating material with the Assessing Officer to make the addi....
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....on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. Thus, the Hon'ble High Court has ruled that the Assessing Officer while making the assessment ....
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....Chawla (supra), the Court discussed the decision in Filatex India Ltd. (supra) as well as the above two decisions and observed as under: "31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das (supra), and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two . decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital g....
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.... and not in the context of the entire section. The words 'assess' or 'reassess'-have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents."' 60. In Kabul Chawla (supra), the Court also took note of the decision of the Bombay High Court in CIT v. Continental Warehousing Corpn (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78/232 Taxman 270/374 ITR 645 (Bom.) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was the....
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....sessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla(supra) beginning with the Gujarat High Court in Saumya Construction (P.) Ltd. (supra). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of Rs. 14.5 crores against declared income of Rs. 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India) (supra) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as un....
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....revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading "Assessment in case of search or requisition". It is "well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, i....
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....ment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court In the case of CIT v. Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years ; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.' 62. Subsequently, in Devangi alias Rupa (supra), another Be....
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....laji Perfumes generally try to record the transactions made in respect of purchase, manufacturing and sales in our regular books of accounts but it is also fact that some time due to some factors like inability of accountant, our busy schedule and some family problems, various purchases and sales of Supari, Gutka and other items dealt by our firms is not entered and shown in the regular books of accounts maintained by our firms." 65. Therefore, there was a clear admission by the Assessees in Smt. Dayawanti Gupta (supra) there that they were not maintaining regular books of accounts and the transactions were not recorded therein. 66. Further, in answer to Question No. 11, the Assessee in Smt. Dayawanti Gupta (supra) was confronted with certain documents seized during the search. The answer was categorical and reads thus: "Ans:- I hereby admit that these papers also contend details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s. Asom Trading and M/s. Balaji Perfumes." 67. By contrast, there is no such statement in ....
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....second question of law is answered again in favour of the revenue and against the assessee." 69. What weighed with the Court in the above decision was the "habitual concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Smt. Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. Conclusion 72. To conclude: (i) Questi....
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....ng incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:- "19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were pres....
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....on 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as....
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....ny incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious constructio....
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....servation of the judgment is reproduced below: "In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) The assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) Regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and just In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or 13 D.B. INCOME TAX APPEAL NO.53/2011 Jai Steel (India), Jodhpur vs. Assistant Commissioner of income Tax, Jodhpur (Along with other 16 similar matters) reassessment can be made." 7.5 Similar view point was expressed by the Hon'ble Delhi High court in the case of Kabul Chawla vs. ACIT 380 ITR 573 (Del HC). The relevant observation of Hon'ble court could be seen in para 37 & 38 of order, same is reproduced below: Para 3....
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....aterial unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.0n the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 7.6 The issue of additions made by the AO while framing the assessment u/s 143(3)/153A, if no incriminating material is found during the course of search was considered by Hon'ble Gujarat High court in the case of Soumya construction PL Vs CIT 387 ITR 529. In its order dated 14/03/2016 Hon'ble court has categorically stated that, in cases of completed assessment, if no incriminating material is found then no additions can be made in the assessment framed u/s 153A of the act. The relevant para no. 18 8s 19 of the court order can be referred to. Similar view of also taken in the following judgments, including by Hon'ble Jaipur ITAT Hon'ble ITAT Jaipur i....
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....on facts and in law in upholding the finding of AO that amount of Rs. 40,80,000/- given by M/s. Bhatia Corporation Pvt. Ltd. in business expediency to assessee for investment in share capital of its group company M/s. Bhatia Colonizers Pvt. Ltd. is in the nature of loan or advance, thereby confirming the addition of same u/s 2(22)(e) of the IT Act. 2.2) The ld. CIT (A) has erred on facts and in law in upholding the finding of AO that advance of Rs. 32,55,153/- received from M/s. Bhatia Corporation Pvt. Ltd. against the salary of Rs. 6 lacs is in the nature of loan or advance, thereby confirming the addition of Rs. 26,55,153/- u/s 2(22)(e) of the IT Act. 3) The assessee craves to amend, alter and modify any of the grounds of appeal. 4) The appropriate cost be awarded to the assessee. Ground No. 1 is regarding the addition made by the AO on account of difference in the interest income declared in the return of income and in the statement of affairs. 13. We have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. This issue is common to the issue raised by the assessee for the assessment year 2012-13. In view of our finding for the ass....
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.... section 143(2) expired on 30th September, 2014. Accordingly, when the assessment proceedings were not pending as on the date of search then the issue raised by the assessee is identical as for the assessment year 2012-13. We have already considered this issue for the assessment year 2012-13 and in view of our finding on this issue, the same is decided in favour of the assessee and against the revenue. The addition made by the AO in the absence of any incriminating material is liable to be deleted. 19. Since we have deleted the addition on legal ground, therefore, we do not propose to go into the merits of the issue whether it was the amount received by the assessee from the company falls in the ambit of loan or advance in terms of section 2(22)(e) of the Act or not. For the assessment year 2014-15 : (Revenue) 20. The revenue has raised the following grounds of appeal :- 1) Whether on the facts and in the circumstances of the case the CIT (A) was justified in deleting the addition of Rs. 85,37,400/- made by the AO u/s 2(24)(iv) of the IT Act. 2) Whether on the facts and circumstances of the case and in law, the CIT (A) was justified in observing that the price determine....
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....itted that once an incriminating material is found during the course of search indicating unrecorded consideration on sale of plot of land by M/s. Bhatia Colonizers Pvt. Ltd. then the proposition of the unrecorded consideration as detected in the seized material was rightly applied by the AO in the case of assessee for determining the benefit/perquisite received on account of less consideration paid by the assessee. He has relied upon the orders of the AO. 23. On the other hand, the ld. A/R has submitted that the consideration paid by the assessee is more than the fair market value of the property and further the rate per sq. ft. as found in the seized material is also less than the consideration declared by the assessee. He has supported the order of the ld. CIT (A) and submitted that the ld. CIT (A) has duly considered the purchase consideration which is more than the consideration indicated as per the seized documents, therefore, even applying the rate as per the seized documents though in respect of some different plots of land, no addition is justified. 24. We have considered the rival submissions as well as the relevant material on record. We note that the AO has taken th....
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....ed is Rs. 650/- and as per seized document it is Rs. 1550/- whereas in the case of assessee the recorded consideration itself is Rs. 1922/- per sq. ft. Hence the ratio applied by the AO without considering the relevant facts is not justified. The ld. CIT (Appeals) has considered this issue in para 4.3 to 4.3.5 as under :- " 4.3. I have considered the facts of the case, gone through the assessment order and the submission of the appellant. 4.3.1. The only dispute in this issue is whether assessee has obtained any benefit by selling the plot to the assessee for Rs. 90,00,000/-. AO made the addition by applying the provisions of section 2(24)(iv) by holding that assessee has purchased the villa from the company at lower price than the market price. 4.3.2. I find that section 2(24)(iv) is a deeming fiction and the deeming fiction needs to be construed strictly. For making addition under this section the assessee must have obtained some benefit. The various cases relied by the AR also supports this view. 4.3.3. However no such benefit is actually obtained. The AO in the assessment order has accepted that there is no evidence of actual record of 'On Money' and therefore no be....
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....and submitted that the ld. CIT (A) has decided the issue of validity of addition made by the AO for want of incriminating material against the assessee. Thus the ld. A/R has submitted that the appeal of the revenue is not sustainable/maintainable when the assessee succeeds in the objection of addition made without any incriminating material. He has reiterated his contention as raised for this issue for the assessment year 2012-13. 27. The ld. D/R has replied to the objection raised by the assessee under Rule 27 of the ITAT Rules and submitted that there was incriminating material based on which the AO has made the addition in respect of deemed perquisite/benefit under section 2(24)(iv) of the Act. He has reiterated his contention as raised for the assessment year 2012-13 on this issue. 28. We have considered the rival submissions as well as the relevant material on record. Since the assessee has invoked the provisions of rule 27 of the ITAT Rules to support the order of the ld. CIT (A) and against the appeal of the revenue on this issue, we, therefore, decide the objection raised by the assessee first. There is no dispute that as per Rule 27 of the ITAT Rules, a party who has n....
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....made by the AO u/s 2(22)(e) of the IT Act holding that the received amount of Rs. 1,02,00,000/- from M/s. Bhatia Corporation Pvt. Ltd. on 31.03.2015 to them, falling under the provisions of section 2(22)(e). 2. Whether on the acts and circumstances of the case and in law, the CIT (A) was justified in not directing the AO to tax the income of Rs. 5,85,625/- as withdrawn by the assessee against salary from M/s. Bhatia Corporation Pvt. Ltd after holding that the said sum was in the nature of advance of salary not chargeable to tax u/s 2(22)(e) of the I.T. Act when the provisions of section 15 of the IT Act clearly provide for charging of advance salary. 3. The applicant crave, leave or reserving the right to amend modify, alter add or forego any ground (s) of appeal at any time before or during the hearing of this appeal. Ground No. 1 of the assessee's appeal is regarding the addition made by the AO under section 2(22)(e) of the Act which was confirmed by the ld. CIT (A) to the extent of Rs. 53,20,000/-. 31. During the course of assessment proceedings, the AO noted that there are three entries of Rs. 53,20,000/-, 1,02,00,000/- and Rs. 5,85,625/- as advances given to the asse....
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....ar. HC) M/s. KG Petrochem Ltd. vs. ACIT 2016 ITL 1457 (Jaipur Trib.) 33. On the other hand, the ld. D/R has submitted that it is not an amount handed over to the assessee for any trading purposes or business purposes of the company but the assessee has availed the loan/advance from the company to invest in the share of the same company. Therefore, this is the investment in the individual and personal capacity of the assessee. Further, the assessee is paying interest on the said loan amount as per the ledger account of the assessee. The assessee as well as the company treated this amount as loan and assessee is also paying interest on the same. Therefore, this is nothing but loan taken by the assessee from the company for the purpose of investment made in the shares of the same company. He has relied upon the orders of the authorities below. 34. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee received Rs. 53,20,000/- from M/s. Bhatia Corporation Pvt. Ltd. and the said money was utilized by the assessee for investment in the shares of the same company. Therefore, the amount received from the company was....
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..../- made by the AO by treating the advance taken by the assessee from the company as deemed dividend is confirmed." The decisions relied upon by the assessee are not applicable in the facts of the present case as this is neither the amount given by the company for trading or business purposes of the said company but this amount was given to the assessee for making the investment in the shares of the company though the said investment was required for taking the loan from the bank. It was the duty of the promoters as a shareholder of the said company to infuse more capital in the said company, therefore the fund of the said company used by the assessee is nothing but the loan/advance in terms of section 2(22)(e) of the Act. Accordingly, we do not find any error or illegality in the order of the ld. CIT (A) qua this issue. In revenue's appeal ground nos. 1 & 2 are regarding additions of Rs. 1,02,00,000/- and Rs. 5,85,625/- were made by the AO which were deleted by the ld. CIT (A). 35. We have heard the ld. D/R as well as the ld. A/R and considered the material on record. We find from the record that an amount of Rs. 1,02,00,000/- was received by the assessee through cheque encas....