TaxTMI 
TaxTMI 
2021 (8) TMI 898
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....e that the appellant held only 14.29% shares in Vish Wind Infrastructure Limited prior to 22.05.2010 despite the fact all the relevant material was available before the Ld. CIT(A). 3. On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in not adjudicating the ground relating to AO's action in considering the commercial and business transaction between EIL and group companies which were undertaken by EIL for the purpose of carrying on its business as payment by way of loans and advances for the purpose of section 2(22)(e). 4. On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in directing the AO to verify the ledger accounts of WWIL/EIL in the books of 4 related concerns for ascertaining the claim of appellant that there are no actual payments made/received and only journal entries were passed and if found correct delete the addition of Rs. 15,24,893/- on account of deemed dividend made by the AO in respect of transaction between WWIL/EIL with 4 related companies despite the fact that the ledger accounts were available before the AO during the course of assessment proceedings and the....
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....rns of the group and these were in the nature of deemed dividend within the meaning of section 2(22)(e) of the Act. The AO noted that M/s. Wind World India Ltd. has given advances to M/s. Vish Wind Infrastructure Ltd. Rs. 95,87,842/-, M/s. Enercon Wind Farms (Kerala) P Ltd. Rs. 20,500/-, M/s. Enercon Wind Farms (Maharashtra) P Ltd. Rs. 10,21,417/-, M/s. Enercon Wind Farms (Tamil Nadu) P Ltd. Rs. 4,96,476/- and M/s. Enercon Wind Farms (Gujrat) P Ltd. Rs. 4,500 /-. The aggregate amount of these loans and advances came to Rs. 1,11,30,735 /-. During the search it was revealed that the assessee and his mother held equity shares in M/s. Wind World India Ltd. of more than 10% and more than 20% in other related companies as stated above. The AO came to conclusion that since the M/s. Wind World India Ltd. has accumulated profits in the form of reserve and surplus and the assessee has shareholdings as stated above, therefore, the provisions of section 2(22)(e) of the Act are attracted. Accordingly issued a show cause notice to the assessee which was replied by the assessee by submitting that the money advanced by M/s. Wind World India Ltd. to various related entities was out of commercial co....
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....ch meaning thereby that it has not abated on the date of search. It is also a settled position of law that any addition in a non abated assessment year can only be made on the basis of incriminating material found during the course of search and not otherwise. We find that during the course of search no such incriminating material was found by the search team. We have also perused the order of Ld. CIT(A) wherein Ld. CIT(A) has noted that the addition made by the AO was based upon incriminating in the form of statement recorded during search action under section 132(4) of the Act and the facts collected during the search from books of accounts that the M/s. Wind World India Ltd. which has advanced some loans to the related entities thereby attracting the provisions of section 2(22)(e) of the Act as the assessee held more than 10% shareholding in M/s. Wind World India Ltd. and more than 20% in those companies to which the loans were advanced. The issue before us whether the statement recorded during search u/s 132(4) of the Act or extracts of books of accounts maintained by the assessee constitute incriminating materials found during search or not. We have perused the facts on record....
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....the basis of statement given by the assessee during the course of search. ................ 16 Now, coming to question No.2, we find that this issue is also covered by the decision of Hon'ble Jurisdictional High Court in the case of Harjeev Aggarwal (supra) and Best Infrastructure (India) (P.) Ltd. (supra). In the case of Harjeev Aggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 & 24, which are reproduced below for ready reference :-........... 17. Thus, Hon'ble Jurisdictional High Court has held "The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations". Their Lordships further observed "However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation". In paragraph 24, their Lordships have mentioned about the prevailing practice of extracting statement by exe....
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....153A, in addition to income that has already been assessed, assessment will be made on basis of incriminating material found in course of search but not produced in course of original assessment and undisclosed income or property discovered in course of search. 10. In view of the above facts and circumstances of the case and various decisions as discussed above, we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition as AO has no jurisdiction to make the addition. The ground No.1 is allowed. 11. By virtue of ground no. 2 to 5, the assessee has challenged the order of CIT(A) in partly upholding the addition to the extent of Rs. 2,95,38,019/-. 12. The facts qua the loans and advances given by M/s. Wind World India Ltd. have already been discussed in the ground no 1 and are not being repeated here. After hearing the rival parties and perusing the material on records, we find that even on merits, the assessee has a very strong case in his favour. We note that these loans and advances were given out of commercial considerations and expediency. The Wind Word (India) Ltd. is engaged in the business of installing wind Mills and sale....