ACIT, Mangalore V. Mrs. Shahanaz Mohiuddin, Mangalore

ITA 1118/BANG/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8615 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained investment; Gift; Business income; Depreciation; Business expenditure; Document seized; Opportunity of being heard; Principle of natural justice; Additional evidence; Deemed dividend; Block assessment; Retraction; Documents seized
• Section: 143(3); 153A; 234B; 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ITA NOS. A.Y. APPELLANT VS. RESPONDENT 1223/BANG/2010 2006-07 MR. A. MOHIUDDIN # 202, VEEKAY CHAMBERS, KULUR BANGRA ROAD, KULUR, MANGALORE 575 013 PAN: AEBPM 6716Q THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MANGALORE. 163/BANG/2011 2003-04 164/BANG/2011 2004-05 165/BANG/2011 2005-06 166/BANG/2011 2007-08 167/BANG/2011 2008-09 1088/BANG/2012 2007-08 MRS. SHAHANAZ MOHIUDDIN, # 202, VEEKAY CHAMBERS, KULUR BANGRA ROAD, KULUR, MANGALORE 575 013 PAN: AIIPM 7608B THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MANGALORE. 1118/BANG/2012 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MANGALORE. MRS. SHAHANAZ MOHIUDDIN, MANGALORE 575 013 PAN: AIIPM 7608B ASSESSEE BY : SHRI V. SRINIVASAN, ADVOCATE REVENUE BY : SHRI K.V. ARAVIND, STANDING COUNSEL DATE OF HEARING : 04.11.2016 DATE OF PRONOUNCEMENT : 25.01.2017 ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 2 OF 37 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE APPEALS ARE PREFERRED BY THE ASSESSEE AS WE LL AS REVENUE AGAINST THE RESPECTIVE ORDERS OF THE CIT(APPEALS). CERTAIN ISSUES ARE COMMON IN THESE APPEALS, THEREFORE, THESE WERE HEAR D TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. WE, HOWEVER, PREFER TO ADJUDICATE THEM ONE AFTER THE OTHER. 2. THE FACTS IN BRIEF RELATING TO THESE APPEALS BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE, SHRI A. MOHIUDDIN AND HIS WI FE, MRS. SHAHANAZ MOHIUDDIN ARE CARRYING ON BUSINESS OF TRANSPORTATIO N AND CIVIL CONSTRUCTION. THE ASSESSEE IS ALSO MANAGING DIRECTOR OF M/S. HML AGENCIES PVT. LTD. [NOW KNOWN AS DELTA INFRALOGISTICS (WORLDWIDE) LTD. ], WHICH CARRIES ON THE BUSINESS OF CUSTOM HOUSE AGENCY AND STEVEDORING AT VARIOUS PORTS. 3. A SEARCH WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF THE APPELLANT, SHRI A. MOHIUDDIN ON 17.01.2008 ALONG WITH THE SEAR CH CONDUCTED IN THE BUSINESS PREMISES OF M/S. HML AGENCIES PVT. LTD. DURING THE COURSE OF SEARCH, STATEMENT OF THE ASSESSEE, SHRI A. MOHIUDDI N WAS RECORDED U/S. 132(4) OF THE ACT. PURSUANT TO THE SEARCH, NOTICE U/S. 153A WAS ISSUED FOR AYS 2002-03 TO 2007-08. IN RESPONSE TO THE AFORESA ID NOTICE, THE ASSESSEE HAD CHALLENGED THE VALIDITY OF SEARCH. TH AT APART, IT WAS ALSO SUBMITTED THAT RETURNS OF INCOME FILED ORIGINALLY F ILED U/S. 139 OF THE ACT MAY ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 3 OF 37 BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S. 153 A OF THE ACT. THE AO THEREAFTER COMPLETED THE ASSESSMENT PROCEEDINGS U/S . 153A R.W.S. 143(3) OF THE ACT FOR THE AYS 2002-03 TO 2007-08 MAKING SE VERAL ADDITIONS THEREIN. 4. THE ASSESSEE HAS CHALLENGED THE ASSESSMENT ORDERS BEFORE THE CIT(APPEALS). THE CIT(APPEALS) DISPOSED OF THE APP EALS FILED BY THE ASSESSEE BY PASSING TWO SEPARATE ORDERS; ONE ORDER DATED 30.09.2010 RELATING TO AY 2006-07 AND THE OTHER COMMON ORDER D ATED 16.12.2010 FOR THE AYS 2003-04, 2004-05, 2005-06, 2007-08 & 2008-0 9. IN AY 2008-09, THE CIT(APPEALS) HAS GIVEN A PARTIAL RELIEF, BUT IN OTHER APPEALS THE ORDER OF THE AO WAS CONFIRMED. 5. AGGRIEVED, THE ASSESSEE AS WELL AS REVENUE PREFERR ED THE APPEAL AGAINST THE RESPECTIVE ORDERS BEFORE THE TRIBUNAL. 6. IN ALL THE APPEALS, THE LD. COUNSEL FOR THE ASSESS EE HAS CHALLENGED THE VALIDITY OF THE SEARCH BY RAISING SPECIFIC GROU NDS BEFORE THE TRIBUNAL, BUT DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS OPTED NOT TO PRESS THIS GROUND RELATING TO VALIDITY OF TH E SEARCH. ACCORDINGLY, THE GROUNDS RELATING TO VALIDITY OF SEARCH ARE DISMISSE D IN ALL THE APPEALS AS NOT BEING PRESSED. 7. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED SYNOPSIS OF ARGUMENTS AND A CHART RELATING TO THE ADDITIONS MADE IN DIFFERENT ASSESSMENT YEARS WITH HIS SUBMISSIONS. W E THEREFORE, FOR THE ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 4 OF 37 SAKE OF BREVITY, INSTEAD OF DEALING WITH THE ISSUES GROUND-WISE RAISED IN THE APPEALS, PREFER TO ADJUDICATE THE APPEALS ISSUE-WIS E RAISED IN THE SYNOPSIS AND THE CHART FOR DIFFERENT ASSESSMENT YEARS. ITA 1223/BANG/2010 8. IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE ORDE R OF CIT(A) THAT HE HAS ERRED IN CONFIRMING THE ADDITION OF RS.24,74,09 7/- AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT WITHOUT APPRECIAT ING THE NATURE OF TRANSACTIONS UNDERTAKEN BY THE ASSESSEE WITH THE CO MPANY BESIDES CHALLENGING THE VALIDITY OF SEARCH. SINCE THE GRO UND RELATING TO VALIDITY OF SEARCH HAS BEEN WITHDRAWN BY THE ASSESSEE, THE ONLY GROUND OF APPEAL LEFT WITH US IS WITH REGARD TO ADDITION ON ACCOUNT OF DE EMED DIVIDEND AND THE FACTS BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE AO HAS NOTED THAT THE ASSESSEE IS A MANAGING DIRECTOR OF M/S. HML AGENCIES PVT. LTD., HAVING MORE THAN 10% S HARE HOLDINGS AND HAS RECEIVED A SUM OF RS.24,74,097/- IN TOTAL FROM THE ABOVE SAID COMPANY DURING THE IMPUGNED FINANCIAL YEAR AND AFTER HAVING TREATED IT AS DEEMED DIVIDEND AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, HE PROPOSED TO ASSESS THE SAME AS DEEMED DIVIDEND. THE ASSESSEE H AS SUBMITTED BEFORE AO THAT THIS IS NEITHER A LOAN NOR ADVANCE BUT THE AMOUNT DRAWN BY WAY OF REMUNERATION TO WHICH HE IS ENTITLED AND HENCE THE PROVISIONS OF SECTION 2(22)(E) ARE NOT APPLICABLE. AO WAS NOT CONVINCED WITH THE EXPLANATION OF ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 5 OF 37 THE ASSESSEE AND HE ACCORDINGLY TREATED THIS RECEIP T AS A DEEMED DIVIDEND AND MADE THE ADDITION OF THE SAME. 9. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT AS PER THE LEDGER ACCOUNT IN TH E BOOKS OF M/S. HML AGENCIES PVT. LTD., FROM 01.04.2005 TO 31. 03.2006 AT THE END OF THE YEAR, THERE IS NIL BALANCE. THE ASSESSEE HAS C URRENT ACCOUNT WITH THE COMPANY IN WHICH THE ASSESSEES REMUNERATION IS CRE DITED AND THE AMOUNTS DRAWN TOWARDS REMUNERATION FROM TIME TO TIM E DURING THE MONTH AND UPTO THE PERIOD TO WHICH THE REMUNERATION IS CR EDITED ARE FOUND TO BE DEBITED. FURTHER HE STATED THAT THE AMOUNTS WHICH ARE DEBITED IN THE CURRENT ACCOUNT ARE NOT IN THE NATURE OF LOAN AT AL L AND THEY ARE IN THE NATURE OF PAYMENTS MADE TOWARDS REMUNERATION TO THE APPELLANT. THEREFORE THE PROVISIONS OF SECTION 2(22)(E) ARE NO T APPLICABLE. IT WAS FURTHER EXPLAINED THAT THE DEEMED DIVIDEND OF RS.4, 67,300/- AS ON 16.02.2006 AROSE BECAUSE OF THE TWO PAYMENTS MADE F OR PURCHASE OF HOUSE, WHICH WAS INTENDED TO BE PURCHASED BY THE CO MPANY TO BE PROVIDED TO THE MANAGING DIRECTOR. THE COMPANY OUGHT TO HAV E DEBITED RS.5,00,000/- EACH AGGREGATING TO RS.10,00,000/- ON 16.02.2006, RS.3,99,797/- TOWARDS REGISTRATION CHARGES ON 17.02 .2006 AND RS.16,00,000/- PAYMENT MADE TO THE LANDLORD ON 18.2 .2006 TO THE HOUSE ACCOUNT INSTEAD OF THE APPELLANTS ACCOUNT AS THE H OUSE CAME TO BE PURCHASED IN THE NAME OF THE APPELLANT INSTEAD OF I N THE NAME OF THE COMPANY TO FACILITATE THE PURCHASE. FURTHER WHEN T HE LOAN WAS GRANTED ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 6 OF 37 WITH REFERENCE TO THE PURCHASE, THE SAID LOAN AMOUN T WAS CREDITED TO THE APPELLANTS ACCOUNT ON 31.03.2006 AS THE DEBITS WER E MADE TO THE APPELLANTS ACCOUNT, THEREBY THE BALANCE IS NULLIF IED. SINCE THE PROPERTY WAS TO BE PURCHASED AND PROVIDED TO THE MANAGING DI RECTOR OF THE COMPANY, THEY SHOULD HAVE FIGURED AS AN ASSET OF TH E COMPANY. HOWEVER, THE PROPERTY CAME TO BE PURCHASED IN THE NAME OF TH E APPELLANT AND FUNDS PAID WITH REFERENCE TO THE SAME CAME TO BE DEBITED TO THE APPELLANTS ACCOUNT AND THE LOAN AMOUNT FROM BANK ALSO CREDITED TO THE APPELLANTS ACCOUNT. THIS IS IN TERMS OF TACIT CONTRACT OF EMP LOYMENT AND IT DOES NOT PARTAKE THE CHARACTER OF A DIVIDEND MUCH LESS A DEE MED DIVIDEND AS THE SAME IS NEITHER AN ADVANCE NOR A LOAN TO ATTRACT TH E PROVISIONS U/S 2(22)(E) OF THE ACT. 10. DEBITS IN THE ACCOUNT ARE NOT BY WAY OF ANY LOANS OR ADVANCES ON WHICH INTEREST IS PAYABLE BUT IT IS A CURRENT ACCOU NT. SUCH EXCESS OF NET DEBITS BY WAY OF WITHDRAWALS IN THE CURRENT ACCOUNT AT THE END OF THE YEAR COULD NOT BE REGARDED AS LOANS AND ADVANCES WITHIN THE MEANING OF SECTION 2[6A][E] OF THE INCOME TAX ACT, 1922 CORRES PONDING TO SECTION 2[22][E] OF THE INCOME TAX ACT, 1961, EXCEPT WHERE INTEREST IS CHARGEABLE, AS HELD BY THE HONBLE MADRAS HIGH COURT IN THE CAS E OF CIT VS. K. SRINIVASAN REPORTED IN 50 ITR 788. 11. CIT(A) WAS NOT CONVINCED WITH THE EXPLANATION OF T HE ASSESSEE AND HE ACCORDINGLY CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 7 OF 37 12. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE TH E TRIBUNAL AND REITERATED ITS CONTENTIONS. THE LEARNED COUNSEL FO R THE ASSESSEE FURTHER CONTENDED THAT AT THE END OF THE YEAR, THERE WAS NI L BALANCE AND WHATEVER AMOUNT WAS DEBITED TO THE ACCOUNT OF THE ASSESSEE I T WAS LATER ON CREDITED AFTER THE LOAN WAS SANCTIONED FROM THE BANK. THE D ETAILED EXPLANATION WITH REGARD TO THE RECEIPT IN THE CURRENT ACCOUNT AND FU RTHER CREDIT ON SANCTION OF LOAN WAS DULY EXPLAINED TO THE AO AND FILED A REPLY DATED 20.08.2009. ATTENTION WAS ALSO INVITED TO THE ACCOUNTS OF THE A SSESSEE WITH M/S. HML AGENCIES PVT. LTD., TO DEMONSTRATE THAT THE ASSESSE E WAS MAINTAINING A CURRENT ACCOUNT WITH THE COMPANY IN WHICH THE REMUN ERATION WAS CREDITED FROM TIME TO TIME AND WHATEVER CASH PAYMENTS WERE M ADE ON BEHALF OF THE COMPANY, THE SAME WAS DEBITED TO THE SAID ACCOUNT. HE HAS ALSO PLACED RELIANCE UPON THE JUDGMENT OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF BAGMANE CONSTRUCTIONS P. LTD., VS. CIT 119 DTR 49, COPY OF WHICH IS PLACED AT PAGE NOS. 32-40 IN SUPPORT OF HIS CONTENT ION THAT LOAN OR ADVANCE GIVEN TO THE SHAREHOLDERS OR TO A CONCERN, UNDER NO RMAL CIRCUMSTANCES WOULD NOT QUALIFY AS DIVIDEND. IT WAS FURTHER CONT ENDED THAT THE JURISDICTIONAL HIGH COURT HAS CLARIFIED THAT SUCH L OAN OR ADVANCES GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF OTHER CONSIDER ATION WHICH IS BENEFICIAL TO THE COMPANY RECEIVED FROM SUCH SHAREH OLDER, ANY SUCH ADVANCES OR LOAN CANNOT BE SAID TO BE DEEMED DIVIDE ND WITHIN THE MEANING OF THE ACT. RELIANCE WAS FURTHER PLACED UPON THE O RDER OF THE TRIBUNAL, KOLKATA BENCH, IN THE CASE OF ITO VS. GAYATRI CHAKR OBORTY IN ITA ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 8 OF 37 NO. 151/KOL/13 IN WHICH IT WAS HELD THAT LOAN ACCOU NT IS DIFFERENT FROM A CURRENT ACCOUNT WITH A SHAREHOLDER. THE TRANSACTIO N BETWEEN THE ASSESSEE AND THE COMPANY ARE IN THE NATURE OF THE CURRENT AC COUNT, THEREFORE PROVISION OF SECTION 2(22)(E) OF THE ACT WILL NOT B E APPLICABLE TO THE CASE. RELIANCE WAS ALSO PLACED UPON THE JUDGMENT OF HONB LE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. SURAJ DEV DADA 367 ITR 78 IN WHICH IT HAS BEEN HELD THAT COMPANY HAVING RUNNING ACCOUNT WITH THE SHAREHOLDER AND NO EVIDENCE OR INTENT TO EVADE TAXE S, LOAN COULD NOT TREATED AS A DEEMED DIVIDEND. 13. THE LEARNED DR ON THE OTHER HAND HAS PLACED RELIAN CE UPON THE ORDER OF THE CIT(A). 14. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM CAREFU L PERUSAL OF THE RECORD, IN THE LIGHT OF THE JUDGMENTS REFERRED TO T HE PARTIES, WE FIND THAT UNDISPUTEDLY THE ASSESSEE WAS HAVING A RUNNING ACCO UNT WITH THE COMPANY IN WHICH THERE ARE SO MANY DEBIT AND CREDIT ENTRIES THROUGHOUT THE YEAR. THE COPY OF THE CURRENT ACCOUNT STATEMENT IS AVAILA BLE AT PAGE NOS. 147 TO 164 IN WHICH THERE ARE VARIOUS DEBIT AND CREDIT ENT RIES IN DIFFERENT FINANCIAL YEARS. DURING THE IMPUGNED ASSESSMENT YEAR, THE RE MUNERATIONS PAYABLE TO THE ASSESSEE WAS CREDITED IN ITS CURRENT ACCOUNT BESIDES A SUM OF RS.4,67,300/-, RS.5,00,000/-, RS.10,00,000/- AND RS .16,00,000/- WAS CREDITED TO ITS ACCOUNTS FOR DIFFERENT PURPOSES. IT IS ALSO AN UNDISPUTED FACT THAT AMOUNT WAS CREDITED IN ORDER TO PURCHASE THE H OUSE TO BE GIVEN TO THE ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 9 OF 37 ASSESSEE (MANAGING DIRECTOR) OF THE COMPANY. LATER ON THE BANK LOAN WAS SANCTIONED AND ACCORDINGLY THE DEBIT ENTRIES WE RE MADE AND AT THE END OF THE FINANCIAL YEAR THERE WAS NIL BALANCE AGA INST THE ASSESSEE. SINCE THE ASSESSEE IS THE MANAGING DIRECTOR AND HAS BEEN MAINTAINING CURRENT ACCOUNT WITH THE COMPANY IN WHICH DEBIT AND CREDIT ENTRIES ARE FOUND, IT CANNOT BE PRESUMED THAT WHATEVER CREDIT ENTRIES ARE FOUND IN THE CURRENT ACCOUNT AMOUNTS TO BE DEEMED DIVIDEND. WE HAVE ALS O CAREFULLY PERUSED THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF BHAGMANE CONSTRUCTION PVT. LTD., VS. CIT (SUPRA). WE FIND T HAT IN THIS JUDGMENT THEIR LORDSHIPS HAD CATEGORICALLY HELD THAT IF ANY LOAN O R ADVANCE GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE TO ANY FURTHER CONSIDE RATION WHICH IS BENEFICIAL TO THE COMPANY RECEIVED FROM SUCH SHAREH OLDER, ANY SUCH LOAN OR ADVANCE CANNOT BE DEEMED DIVIDEND WITHIN THE MEA NING OF THE ACT. THE RELEVANT OBSERVATIONS OF JURISDICTIONAL HIGH COURT IS REPRODUCED HEREUNDER FOR THE SAKE OF REFERENCE: THE PURPOSE OF THE INSERTION OF SUB-CL. (E) OF S. 2(22) WAS TO BRING WITHIN THE TAX NET ACCUMULATED PROFITS WHICH ARE DISTRIBUTED BY CLOSELY HELD COMPANIES TO HIS SHAREHOLDERS IN TH E FORM OF LOANS TO AVOID PAYMENT OF DIVIDEND DISTRIBUTION TAX UNDER S. 115- O. THE PURPOSE BEING THAT PERSONS WHO MANAGE SUCH CLOSELY HELD COMPANIES SHOULD NOT ARRANGE THEIR AFFAIRS IN A MANNER THAT THEY ASSIST THE SHAREHOLDERS IN AVOIDING PAYMENT OF TAX BY HAVING THESE COMPANIES PAY OR DISTRIBUTE MONEY IN THE FORM OF ADVANCE OR LOAN. LOAN OR ADVANCE GIVEN TO THE SHAREHOLDERS OR TO A CONCERN, UNDER NORMAL CIRCUMSTANCES WOULD NOT QUALI FY AS DIVIDEND. IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION, WHICH I S BENEFICIAL TO THE COMPANY RECEIVED FROM SUCH A SHAREHOLDER, IN SU CH CASE, SUCH ADVANCE OR LOAN CANNOT BE SAID TO A DEEMED DIVIDEND WITHIN THE ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 10 OF 37 MEANING OF THE ACT. THUS, GRATUITOUS LOAN OR ADVAN CE GIVEN BY A COMPANY TO THOSE SPECIFIED SHAREHOLDERS WOULD COME WITHIN THE PURVIEW OF S. 2(22) BUT NOT TO THE CASES WHERE THE LOAN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON T HE COMPANY BY SUCH SHAREHOLDER. THE INTENTION BEHIND THE PROVIS IONS OF S. 2(22)(E) IS TO TAX DIVIDEND IN THE HANDS OF SHAREHO LDERS. IT IS IN THIS BACKGROUND, THE WORD ANY PAYMENT, BY A COMPA NY, BY WAY OF ADVANCES OR LOANS, HAS TO BE INTERPRETED. THE A TTRIBUTE OF A LOAN IS THAT IT IS A POSITIVE ACT O LENDING MONEY C OUPLED WITH ACCEPTANCE BY THE OTHER SIDE OF THE REPAYMENT. THE TERM ADVANCE MAY OR MAY NOT INCLUDE LENDING. THE WORD ADVANCE IF NOT FOUND IN THE COMPANY OR IN CONJUNCTION WITH THE WORD LOAN MAY OR MAY NOT INCLUDE THE OBLIGATION OF REPAYMENT. IF IT DOES THEN IT WOULD BE A LOAN. HOWEVER, THE LEGISLATURE HAS USED THE EXPRESSION BY WAY OF ADVANCE OR LOAN. THEREFORE, B OTH THESE WORDS ARE USED TO MEAN DIFFERENT THINGS. THE PRINC IPLE OF STATUTORY INTERPRETATION BY WHICH A GENERIC WORD RE CEIVES A LIMITED INTERPRETATION BY REASON OF ITS COMPANY IS WELL ESTABLISHED. IN SUCH CIRCUMSTANCE, ONE CAN LEGITIM ATELY DRAW ON THE NOSCITUR A SOCIIS PRINCIPLE. IN FACT THIS LATT ER MAXIM IS ONLY AN ILLUSTRATION OR SPECIFIC APPLICATION AND BROADER TH AN THE MAXIM EJUSDEM GENERIS. 15. WE HAVE ALSO EXAMINED THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. SMT. GAYATRI CHAKROBORTY IN WHICH IT WAS HELD T HAT LOAN ACCOUNT IS DIFFERENT FROM THE CURRENT ACCOUNT AND THE TRANSACT ION BETWEEN THE ASSESSEE AND THE COMPANY ARE IN THE NATURE OF THE C URRENT ACCOUNT AND THEREFORE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WILL NOT BE APPLICABLE. SIMILAR VIEW WAS ALSO EXPRESSED BY THE HONBLE PUNJ AB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. SURAJ DEV DADA. 16. TURNING TO THE FACT OF THE CASE, WE FIND THAT UNDI SPUTEDLY THE ASSESSEE MAINTAINED THE CURRENT ACCOUNT WITH THE CO MPANY AND THE ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 11 OF 37 AMOUNTS WERE CREDITED TO ITS ACCOUNT TOWARDS PURCHA SE OF THE PROPERTY AND LATER ON WHEN THE LOAN WAS SANCTIONED FROM THE BANK , THE CREDIT ENTRIES WERE SCORED OFF. THEREFORE, SINCE THE CREDIT ENTRY WAS MADE FOR PURCHASE OF PROPERTY FOR THE COMPANY, THE SAID CREDIT ENTRIE S CANNOT BE CALLED THE DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. ACCO RDINGLY, WE FIND NO MERIT IN THE ADDITION AND THEREFORE WE SET ASIDE TH E ORDER OF THE CIT(A) AND DELETE THE ADDITION MADE IN THIS REGARD. ITA 163/BANG/2011 17. THIS APPEAL IS FILED BY THE ASSESSEE RELATING TO A Y 2003-04 AND THE ASSESSEE HAS RAISED TWO GROUNDS; ONE RELATING TO TH E ADDITION ON ACCOUNT OF UNEXPLAINED GIFT OF RS.6 LAKHS, AND THE OTHER RE LATING TO DISALLOWANCE OF EXPENSES OF RS.64,614. THESE ADDITIONS WERE CHALLE NGED BY THE LD. COUNSEL FOR THE ASSESSEE MAINLY ON THE GROUND THAT NO SEIZED MATERIAL RELATING TO THESE ADDITIONS WAS FOUND DURING THE CO URSE OF SEARCH, THEREFORE THE ADDITIONS ARE NOT SUSTAINABLE IN THE EYES OF LA W. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF IBC KNOWLEDGE PARK REPORTED IN 136 DTR 65 AND CIT V. LANCY CONSTRUCTIONS LTD. (237 TAXMAN 728) . 18. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSMENT FOR THE AY 2003-04 WAS COMPLETED, THEREF ORE ON THE BASIS OF SEARCH, THE OTHER ISSUES WITH REGARD TO WHICH INCRI MINATING MATERIAL WAS NOT SEIZED DURING THE COURSE OF SEARCH CANNOT BE EXAMIN ED. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 12 OF 37 19. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED THAT NOTHING HAS BEEN PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSE E TO ESTABLISH THAT THIS ISSUE WAS EXAMINED BY THE AO WHILE COMPLETING THE O RIGINAL ASSESSMENT. IF THE ISSUE WAS NOT EXAMINED, THE REVENUE AUTHORIT IES ARE COMPETENT TO EXAMINE THE ISSUE IN THE ASSESSMENT PROCEEDINGS INI TIATED CONSEQUENT TO THE SEARCH. IT WAS FURTHER CONTENDED BY THE LD. DR THAT THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS NOT APPLICABLE AS I N THAT CASE, THE ORIGINAL ASSESSMENT WAS CONCLUDED, BUT IN THE INSTANT CASE N O EVIDENCE HAS BEEN PLACED TO ESTABLISH THAT ORIGINAL ASSESSMENT WAS CO NCLUDED. 20. ON MERITS, IT WAS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT ASSESSEE HAS FILED ADDITIONAL EVIDENCE FOR DECLARAT ION OF GIFTS AND THE CONFIRMATION BEFORE THE CIT(APPEALS), BUT HE DID NO T ADMIT THE SAME AND CONFIRMED THE ADDITION. 21. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT SEARCH WAS CONDUCTED UPON THE ASSESSEE AS WELL AS ITS COMPANY, M/S HML AGENCIES PVT. LTD., TO WHICH THE ASSESSEE I S THE MANAGING DIRECTOR. NOTHING HAS BEEN PLACED ON RECORD TO EST ABLISH AS TO HOW THE ORIGINAL ASSESSMENT WAS COMPLETED, EITHER U/S 143(1 ) OR 143(3). 22. WE HAVE ALSO CAREFULLY EXAMINED THE JUDGMENT OF HO N'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF IBC KNOWLEDGE PARK (SUPRA) AND LANCY CONSTRUCTIONS LTD. (SUPRA) , BUT WE FIND THAT IN THOSE CASES ORIGINAL ASSESSMENT WAS CONCLUDED AND THEREAFTER SEARCH WAS CONDUCTED AND ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 13 OF 37 THEIR LORDSHIPS OF THE JURISDICTIONAL HIGH COURT HA VE HELD THAT WITHOUT FINDING ANY INCRIMINATING MATERIAL DURING THE COURS E OF SEARCH, ADDITIONS CANNOT BE MADE IN ASSESSMENT PROCEEDINGS FRAMED CON SEQUENT TO SEARCH. BUT IN THE INSTANT CASE, NOTHING HAS BEEN PLACED BE FORE US TO ESTABLISH AS TO HOW THE ASSESSMENT WAS COMPLETED. IT IS NOT CLE AR WHETHER ASSESSMENT WAS CONCLUDED OR NOT AND IN THE ABSENCE OF THESE FA CTS, WE ARE OF THE VIEW THAT THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN T HE CASE OF IBC KNOWLEDGE PARK (SUPRA) AND LANCY CONSTRUCTIONS LTD. (SUPRA) WOULD NOT APPLY. SINCE THE AO HAS NOTICED FOR THE FIRST TIME WITH REGARD T O RECEIPT OF GIFT OF RS.6 LAKHS, HE IS COMPETENT TO EXAMINE THE SAME. 23. ON MERITS, WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT THE ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A) WAS NOT ADMITTED AND THE ADDITION WAS CONFIRMED. WE HAVE ALSO CAREFULLY EXA MINED THE ASSESSMENT ORDER AND THE ORDER OF CIT(APPEALS) AND WE FIND THA T BEFORE THE AO THE ASSESSEE SOUGHT TIME FOR FILING ADDITIONAL EVIDENCE , BUT HE WAS NOT ALLOWED AND WHEN HE FILED THE SAME BEFORE THE CIT(A), IT WA S TURNED DOWN BY THE CIT(A). WHEN THE ASSESSEE HAS FILED CONFIRMATION O F DECLARATION OF GIFT, IT SHOULD HAVE BEEN EXAMINED BY THE CIT(A) AND THEREAF TER HE SHOULD HAVE CALLED FOR A REMAND REPORT FROM THE AO BEFORE DECID ING THE ISSUE. BUT HE DID NOT DO SO. THEREFORE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH ADJUDICATION BY THE AO. WE ACCORDINGLY SET ASIDE T HE ORDER OF CIT(APPEALS) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 14 OF 37 RE-EXAMINE THE GENUINENESS OF GIFT, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 24. SO FAR AS THE OTHER GROUNDS RELATING TO DISALLOWAN CE OF RS.64,614 IS CONCERNED, WE FIND THAT SIMILAR DISALLOWANCE WAS AL SO MADE IN AY 2004-05 (ITA NO.164/B/11) AND BOTH THE GROUNDS WERE EXAMINED BY THE CIT(APPEALS) IN PARA 2.4.1 OF HIS ORDER. THE AO HA S DISALLOWED THESE EXPENSES AS IT IS NOT ALLOWABLE AGAINST INCOME FROM OTHER SOURCES AND THOSE EXPENSES INCURRED FOR BUSINESS PURPOSE CAN ON LY BE ALLOWED BY COMPUTING THE BUSINESS INCOME OF THE ASSESSEE. THE CIT(A) HAS ALSO EXAMINED THE CONTENTIONS OF THE ASSESSEE THAT THE E XPENSES ARE RELATED TO PROPRIETARY BUSINESS OF THE APPELLANT IN THE NAME O F DELTA TRANSPORT CORPORATION AND DELTA CONSTRUCTIONS WHICH HAVE NOT BEEN DEBITED IN THE RESPECTIVE PROFIT & LOSS ACCOUNT AND THEREFORE IT W AS CLAIMED SEPARATELY. SINCE THE EXPENSES ARE WHOLLY AND EXCLUSIVELY INCUR RED FOR THE PURPOSE OF BUSINESS, THEREFORE SAME MAY BE ALLOWED AS DEDUCTIO N. BUT THE CIT(A) WAS NOT CONVINCED WITH THE CONTENTION OF THE ASSESS EE AND HE OBSERVED THAT ASSESSEE HAS SEPARATELY PREPARED THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET FOR DELTA TRANSPORT CORPORATION AND D ELTA CONSTRUCTIONS, THE INCOME/LOSS FROM WHICH IS SEPARATELY COMPUTED IN TH E COMPUTATION OF INCOME, WHEREAS THE ABOVE EXPENSES HAVE BEEN CLAIME D IN A PROFIT & LOSS ACCOUNT SEPARATELY PREPARED, WHICH ONLY INCLUDES RE CEIPT OF INTEREST AND INTEREST ON INCOME-TAX REFUNDS WHICH ARE ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CIT(A) FURTHER OB SERVED THAT EXCEPT ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 15 OF 37 TAKING THE ARGUMENT THAT EXPENSES ARE RELATED TO BU SINESS OF DELTA TRANSPORT CORPORATION AND DELTA CONSTRUCTION, THE A SSESSEE FAILED TO PRODUCE ANY EVIDENCE TO SUPPORT THAT THE EXPENSES W HICH HAVE BEEN DISALLOWED BY THE AO ARE INCURRED FOR THE PURPOSE O F BUSINESS OF THE ASSESSEE OR THE EXPENSES HAVE BEEN INCURRED FOR EAR NING THE INCOME FROM OTHER SOURCES. 25. DURING THE COURSE OF HEARING OF APPEAL, NO EVIDENC E WAS FILED BEFORE US THAT THESE EXPENSES WERE INCURRED FOR THE PURPOS E OF BUSINESS OF THE ASSESSEE OR FOR EARNING THE INCOME FROM OTHER SOURC ES. IN THESE CIRCUMSTANCES, WE FIND NO MERIT IN THE ASSESSEE'S C LAIM. ACCORDINGLY, WE DISMISS THE SAME. ITA NO.165/BANG/2011 26. IN THIS APPEAL THE ASSESSEE HAS ASSAILED THE ORDER OF CIT(APPEALS) MAINLY ON TWO GROUNDS. ONE IS WITH REGARD TO ADDIT ION OF RS.29 LAKHS AS UNEXPLAINED INVESTMENT IN THE PROPERTY PURCHASED FR OM S.M. RASHEED U/S. 69B; AND THE OTHER IS ON ACCOUNT OF UNEXPLAINED INV ESTMENT OF RS.14,52,000 IN THE IMMOVABLE PROPERTY AT ANKOLA, B ESIDES THE CHALLENGE TO THE VALIDITY OF THE SEARCH. 27. THE GROUNDS RELATING TO VALIDITY OF THE SEARCH HAS ALREADY BEEN WITHDRAWN BY THE ASSESSEE AND THE SAME STANDS DISMI SSED AS STATED ABOVE. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 16 OF 37 28. SO FAR AS THE ADDITION OF RS.29 LAKHS ON ACCOUNT O F UNEXPLAINED INVESTMENT IS CONCERNED, IT IS NOTICED THAT DURING THE COURSE OF SEARCH LEDGER BOOK WAS SEIZED WHEREFROM ENTRY CONTAINING D ETAILS OF PAYMENTS TO MR. S.M. RASHEED WAS FOUND FOR PURCHASE OF LAND FRO M HIM BY THE ASSESSEE. OUT OF THE TOTAL AMOUNT OF RS.56 LAKHS P AID TO S.M. RASHEED, RS.29 LAKHS WAS PAID IN CASH AND THE BALANCE AMOUNT WAS PAID THROUGH CHEQUE. INITIALLY THE ASSESSEE HAS ADMITTED PAYMEN T OF CASH OF RS.29 LAKHS AS ADDITIONAL INCOME FOR THE AY 2005-06, BUT LATER ON, HE RETRACTED FROM THE DECLARATION MADE U/S. 132(4) OF THE ACT. THE RETRACTION MADE BY THE ASSESSEE WAS NOT ACCEPTED BY THE DEPARTMENT AND THE AO MADE THE ADDITION OF RS.29 LAKHS U/S. 69B OF THE ACT. THE A O LATER ON RECORDED THE STATEMENT OF S.M. RASHEED IN WHICH MR. S.M. RASHEED HAS ADMITTED THE RECEIPT OF PAYMENT IN CASH OF RS.29 LAKHS TOWARDS V ACATING THE TENANTS WHO WERE OCCUPYING THE LAND. BUT ASSESSEE WAS NOT ALLOWED TO CROSS-EXAMINE MR. S.M. RASHEED. THE ASSESSEE, HOWEVER, MADE A RE QUEST IN WRITING TO THE AO TO ALLOW HIM CROSS-EXAMINATION OF MR. RASHEE D, BUT THE AO DID NOT ALLOW THE SAME. COPY OF THE LETTER BY THE ASSESSEE IS APPEARING AT PAGE 178-179 OF THE ASSESSEE'S COMPILATION. BUT THE AO WHILE MAKING THE ADDITION HAS STRONGLY RELIED UPON THE STATEMENT OF MR. S.M. RASHEED. 29. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CONTENDE D THAT FIRST OF ALL, NO INCRIMINATING MATERIAL WAS SEIZED FROM THE ASSES SEE DURING THE COURSE OF SEARCH RELATING TO THIS ADDITION, THEREFORE THIS ADDITION IS NOT SUSTAINABLE IN THE EYES OF LAW. ON MERITS, THE LD. COUNSEL FOR THE ASSESSEE HAS ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 17 OF 37 CONTENDED THAT AO HAS SOLELY RELIED UPON THE STATEM ENT OF MR. S.M. RASHEED WHILE MAKING THE ADDITION, BUT HE DID NOT A LLOW THE ASSESSEE TO CROSS-EXAMINE MR. S.M. RASHEED NOR DID HE DIG OUT T HE CORRECT FACTS. THEREFORE, THERE IS A CLEAR VIOLATION OF THE PRINCI PLES OF NATURAL JUSTICE AND ADDITION MADE BY THE AO IS NOT SUSTAINABLE IN THE E YES OF LAW. 30. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED THAT DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S. HML AGENCIES PVT. LTD. OF WHICH THE ASSESSEE IS A MANAGING DIRECTOR, A REGISTER WAS SEI ZED AND IT CONTAINED THE DETAILS OF PAYMENT TO MR. S.M. RASHEED FOR PURC HASE OF LAND FROM HIM BY THE ASSESSEE. IN THIS REGISTER, DETAILS OF PAY MENTS WERE MENTIONED AND IN THIS REGARD ASSESSEE WAS EXAMINED U/S. 132(4) OF THE ACT DURING THE COURSE OF SEARCH AND THE ASSESSEE CATEGORICALLY ADM ITTED THE PAYMENT IN CASH AND HAS AGREED FOR ITS SURRENDER AS ADDITIONAL INCOME FOR AY 2005-06. BUT LATER ON, HE RETRACTED FROM THE SAID STATEMENT. ON HIS RETRACTION, THE AO HAS EXAMINED THE RECIPIENT OF THIS CASH MR. S.M. RASHEED AND MR. S.M. RASHEED HAS ADMITTED IN HIS STATEMENT ABOUT THE REC EIPT OF THE SAID AMOUNT IN CASH. THEREFORE, IT IS NOT ONLY THE STAT EMENT OF MR. RASHEED ON WHICH THE AO HAS MADE THE ADDITION, BUT ALSO THERE ARE OTHER EVIDENCE WHICH SPEAKS OF PAYMENT OF CASH OF RS.29 LAKHS BY T HE ASSESSEE TO S.M. RASHEED. THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(APPEALS). ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 18 OF 37 31. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AUTH ORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSEE IS A MANAGING DIRECTOR OF HML AGENCIES PVT. LTD. AND SEARCH WAS SIMULTANEOUSL Y CONDUCTED UPON THE ASSESSEE AND HIS COMPANIES AND IF THE DOCUMENTS ARE FOUND EITHER FROM THE ASSESSEE OR COMPANY PREMISES, THE ASSESSEE CANNOT TAKE A PLEA THAT SEIZED MATERIAL FOUND AT THE PREMISES OF THE C OMPANY DO NOT RELATE TO ANY ADDITIONS MADE IN THE HANDS OF ASSESSEE. THE A SSESSEE IS NOT A STRANGER TO THIS COMPANY. THESE COMPANIES ARE BEIN G CONTROLLED BY THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY FORCE IN T HE ARGUMENT OF THE ASSESSEE THAT SEIZED MATERIAL FOUND AT THE BUSINESS PREMISES CANNOT BE USED AGAINST THE ASSESSEE, THOUGH IT RELATES TO THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE. 32. WE HAVE ALSO CAREFULLY EXAMINED THE FACT THAT SEAR CH WAS CONDUCTED ON 17.1.2008 AND 18.1.2008 AND ASSESSEE HAS MADE A SURRENDER STATEMENT WHICH WAS RETRACTED ON 15.4.2008 BY WRITI NG A LETTER. ONCE THE DECLARATION HAS BEEN RETRACTED BY THE ASSESSEE, THE AO IS REQUIRED TO COLLECT MORE EVIDENCE IN SUPPORT OF THE ADDITION MA DE BY HIM. THE AO ACCORDINGLY RECORDED THE STATEMENT OF MR. S.M. RASH EED, WHO ADMITTED THE RECEIPT OF RS.29 LAKHS IN HIS STATEMENT, BUT THE ST ATEMENT WAS RECORDED IN THE ABSENCE OF ASSESSEE AND ASSESSEE WAS NOT ALLOWE D TO CROSS-EXAMINE MR. S.M. RASHEED WITH REGARD TO RECEIPT OF RS.29 LA KHS IN CASH. THE ASSESSEE HAS SPECIFICALLY WRITTEN A LETTER TO THE A O (COPY PLACED IN PAGE 178-179 OF COMPILATION) THROUGH WHICH A SPECIFIC RE QUEST WAS MADE TO ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 19 OF 37 AFFORD OPPORTUNITY TO HIM TO CROSS-EXAMINE MR. S.M. RASHEED, BUT THE ASSESSEE WAS NOT ALLOWED TO CROSS-EXAMINE MR. RASHE ED. THE AO MADE THE ADDITION OF RS.29 LAKHS AS UNEXPLAINED INVESTME NT IN THE HANDS OF ASSESSEE. WHILE MAKING THE ADDITION, THE AO HAS PU T THE MAIN THRUST ON THE STATEMENT OF MR. RASHEED, BUT THE ASSESSEE WAS NOT ALLOWED TO CROSS- EXAMINE MR. RASHEED. THEREFORE THE STATEMENT OF MR . RASHEED WAS NOT TESTED UPON THE TOUCHSTONE OF CROSS-EXAMINATION. I T IS SETTLED POSITION OF LAW THAT OPPORTUNITY SHOULD BE AFFORDED TO THE ASSE SSEE RELATING TO THAT EVIDENCE, WHICH THE AO INTENDS TO RELY UPON FOR MAK ING THE ADDITION. SINCE THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE , WE ARE OF THE VIEW THAT ASSESSEE SHOULD BE ALLOWED TO CROSS-EXAMINE MR. RAS HEED BEFORE MAKING THE ADDITION. THIS ASPECT WAS ALSO NOT LOOKED INTO BY THE CIT(APPEALS), THOUGH A SPECIFIC PLEA WAS RAISED BEFORE HIM. WE T HEREFORE SET ASIDE THE ORDER OF CIT(APPEALS) IN THIS REGARD AND RESTORE TH E MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO AFFORD OPPORT UNITY OF CROSS-EXAMINATION OF MR. S.M. RASHEED TO THE ASSESSEE AND THEREAFTER READJUDICATE THE ISSUE AFTER AFFORDING OPPORTUNITY OF BEING HEARD. 33. SO FAR AS ADDITION OF RS.14,52,000 IS CONCERNED, W E FIND THAT DURING THE COURSE OF SEARCH, A FILE WAS FOUND AND SEIZED I N WHICH PHOTOCOPY OF SALE AGREEMENT DATED 4.10.2004 BETWEEN RAMADAS VENK ATESH SHANBHOGUE OF ANKOLA TALUK AND ASSESSEE FOR SALE OF 3 ACRES OF LAND PROPERTY SITUATED AT ALAGERI VILLAGE, ANKOLA. AS PER THE AGREEMENT, THE SALE CONSIDERATION WAS FIXED AT RS.20,100 PER GUNTA (RS.8,04,000 PER ACRE) ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 20 OF 37 AND THE ASSESSEE HAS PAID AN ADVANCE OF RS.51,000 A ND LATER ON RS.5 LAKHS WAS ALSO PAID BY THE ASSESSEE TO SHRI RAMDAS VENKATESH SHANBHOGUE ON 19.12.2004. BUT AS PER SALE DEED FOU ND IN ASSESSEE'S FILE DATED 17.1.2005, SALE CONSIDERATION WAS STATED TO B E RS.9,60,000 AND THE AO HAS WORKED OUT THE DIFFERENCE OF RS.14,52,000 BE TWEEN THE SALE CONSIDERATION AS PER AGREEMENT AT RS.24,12,000 AND AS PER SALE DEED AT RS.9,60,000 AND HE ACCORDINGLY ADDED THIS AMOUNT AS UNEXPLAINED INVESTMENT ON ACCOUNT OF ON-MONEY U/S. 69B OF THE A CT. THE ASSESSEE FILED LETTER DATED 30.6.2009 STATING THAT THE SO-CA LLED SALE AGREEMENT IS NOTHING BUT A PHOTOCOPY OF SIGNED AGREEMENT DATED 4 .12.2004 AND IN ORDER TO INDUCE HIM TO PAY RS.20,100 PER GUNTA FOR 3 ACRE S OF LAND, THIS DOCUMENT WAS PREPARED. HOWEVER, HE HAS NOT AGREED FOR THE PR ICE OFFERED BY MR. RAMDAS VENKATESH SHANBHOGUE AND FINALLY THE PROPERT Y WAS BARGAINED FOR RS.9,60,000 AND ACCORDINGLY SALE DEED WAS EXECUTED. THE AO HAS ALSO EXAMINED RAMDAS VENKATESH SHANBHOGUE IN THIS REGARD AND HE HAS ALSO DEPOSED THAT HE HAS NOT RECEIVED THIS ON-MONEY. WH ATEVER SALE CONSIDERATION IS MENTIONED IN THE SALE DEED WAS ONL Y RECEIVED BY HIM. HE ALSO SUPPORTED THE CONTENTIONS OF THE ASSESSEE. TH E AO WAS NOT CONVINCED WITH THIS EXPLANATION AND HE MADE AN ADDI TION OF RS.14,52,000 AS UNEXPLAINED INVESTMENT. 34. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(AP PEALS), BUT DID NOT FIND FAVOUR WITH HIM. NOW THE ASSESSEE IS IN AP PEAL BEFORE THE TRIBUNAL. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 21 OF 37 35. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT AO HAS RELIED UPON THE PHOTOCOPY OF THE SO-CALLED AGREEMENT, WHICH WAS NEVER MATERIALISED. THE PROPE RTY WAS PURCHASED FROM RAMDAS VENKATESH SHANBHOGUE FOR A SUM OF RS.9, 60,000. COPY OF THE AGREEMENT IS ALSO PLACED ON RECORD AND ITS TRAN SLATED COPY IN ENGLISH IS ALSO PLACED ON RECORD. DURING THE COURSE OF HEARIN G, THE LD. COUNSEL HAS INVITED OUR ATTENTION TO THE STATEMENT OF RAMDAS VE NKATESH SHANBHOGUE WHICH IS APPEARING AT PAGE 216 - 231 OF THE ASSESSE E'S COMPILATION. IN RESPONSE TO A SPECIFIC QUERY, MR. RAMDAS VENKATESH SHANBHOGUE HAS CATEGORICALLY STATED THAT HE HAS NOT ENTERED INTO A GREEMENT WITH THE ASSESSEE ON ANY OCCASION FOR THE SALE OF LAND. WIT H REGARD TO RECEIPT OF CASH RELATING TO IMPUGNED PROPERTY, IT WAS STATED B Y RAMDAS VENKATESH SHANBHOGUE THAT HE HAS NOT RECEIVED ANY ADVANCE IN THE FORM OF CASH OR CHEQUE OR DD FROM MR. MOHIUDDIN AS PART CONSIDERATI ON FOR SALE OF LAND. THE ENTIRE SALE CONSIDERATION WAS RECEIVED ON THE D ATE OF REGISTRATION. IT WAS SPECIFICALLY STATED THAT HE HAS NOT RECEIVED AN Y CONSIDERATION OVER AND ABOVE RS.9,60,000 MENTIONED IN THE SALE DEED TOWARD S SALE CONSIDERATION OF THE SAID 3 ACRES OF LAND IN QUESTION. A SPECIFI C QUERY WAS RAISED TO ASSESSEE IN THIS REGARD AND HE HAS REPEATEDLY DENIE D ANY PAYMENT OVER AND ABOVE THE SALE CONSIDERATION. THE LD. COUNSEL FURTHER CONTENDED THAT SINCE THERE IS NO INDEPENDENT EVIDENCE IN SUPPORT O F THE STAND TAKEN BY THE REVENUE THAT ASSESSEE HAS PAID A SUM OF RS.14,52,00 0 OVER AND ABOVE THE ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 22 OF 37 SALE CONSIDERATION, THE IMPUGNED ADDITION IS NOT SU STAINABLE IN THE EYES OF LAW. 36. THE LD. DR PLACED RELIANCE UPON THE ORDER OF CITA. 37. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AUTH ORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY THE PHOTOCOPY OF AGREEMENT WAS FOUND DURING THE COURSE OF SEARCH, ON THE BASIS OF WHICH THE AO HAS FORMED AN OPINION THAT ASSESSEE HAS PAID A SUM OF R S.14,52,000 OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE SALE DEED. BUT IN THIS REGARD, HE HAS NOT COLLECTED ANY OTHER EVIDENCE EXC EPT THE DOCUMENT FOUND DURING THE COURSE OF SEARCH. THE STATEMENT OF ASSE SSEE AS WELL AS RAMDAS VENKATESH SHANBHOGUE WAS RECORDED ON OATH AN D IN THEIR STATEMENTS, THEY HAVE CATEGORICALLY DENIED THE RECE IPT OF THIS AMOUNT OF RS.14,52,000 OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE SALE DEED. WHEN THE PAYER AND PAYEE HAVE DENIED THE REC EIPT OF THE SAID AMOUNT WHICH WAS CONSIDERED TO BE ON-MONEY BY THE A O, THE AO IS REQUIRED TO COLLECT SOME MORE EVIDENCE IN SUPPORT O F HIS STAND THAT SOME ON-MONEY WAS PAID. SINCE THE REVENUE HAS NOT BROUG HT OUT ANYTHING ON RECORD IN THIS REGARD, EXCEPT THE PHOTOCOPY OF THE SAID DOCUMENT WHICH WAS DULY EXPLAINED BY THE ASSESSEE, WE FIND NO JUSTIFIC ATION IN THIS ADDITION MADE BY THE AO. ACCORDINGLY, WE SET ASIDE THE ORDE R OF CIT(A) AND DELETE THE ADDITION. 38. ACCORDINGLY, THIS APPEAL IS DISPOSED OF. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 23 OF 37 ITA NO.166/BANG/2011 39. IN THIS APPEAL THE ASSESSEE HAS ASSAILED THE ORDE R OF CIT(A) MAINLY ON TWO GROUNDS. FIRST GROUND IS WITH REGARD TO ADD ITION MADE ON ACCOUNT OF DEEMED DIVIDEND AND THE OTHER ON ACCOUNT OF CASH PA ID OVER AND ABOVE THE TRANSACTION RECORDED IN THE BOOKS OF ACCOUNTS B ESIDES CHALLENGING THE VALIDITY OF THE SEARCH. SINCE THE GROUND RELATING TO VALIDITY OF SEARCH HAS BEEN WITHDRAWN BY THE ASSESSEE, WE ARE LEFT WITH ON LY AFORESAID REMAINING TWO GROUNDS. 40. WITH REGARD TO ADDITION ON ACCOUNT OF DEEMED DIVI DEND, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AO HAS MADE ADDITION OF RS.13,18,568/- AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT, CONSEQUENT TO THE AMOUNTS DEBITED AND CREDITED FOR RUNNING OF CUR RENT ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE COMPANY IN WHICH THE A SSESSEE IS A SHAREHOLDER. THE ASSESSEE HAS REITERATED ITS ARGUM ENT THAT THE ASSESSEE WAS HAVING A CURRENT ACCOUNT WITH THE COMPANY IN WH ICH HIS REMUNERATION WAS CREDITED TIME TO TIME. THEREFORE THE AMOUNT CR EDITED IN THE CURRENT ACCOUNT CANNOT BE TREATED TO BE LOAN OR ADVANCE FOR TREATING IT TO BE DEEMED DIVIDEND. RELIANCE WAS ALSO PLACED UPON THE JUDGMENT OF THE BHAGMANE CONSTRUCTIONS, SURAJ DEV DADA AND GAYATHRI CHAKROBORTI. THIS ISSUE HAS ALREADY BEEN EXAMINED BY US IN THE FOREGO ING APPEALS IN WHICH IT WAS HELD THAT WHENEVER THE ASSESSEE HAS A CURRENT A CCOUNT WITH THE COMPANY AND REGULAR DEBIT AND CREDIT ENTRIES ARE FO UND THEREIN, THE CREDIT ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 24 OF 37 ENTRIES FOUND IN THE CURRENT ACCOUNT CANNOT BE CALL ED TO BE THE LOAN OR ADVANCE FOR TREATING IT TO BE DEEMED DIVIDEND. ACC ORDINGLY, FOLLOWING THE VIEW TAKEN IN THE ABOVE SAID APPEALS, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ADDITION MADE BY THE CIT (A) IS DELETED IN THIS REGARD, AFTER SETTING ASIDE HIS ORDER. 41. THE OTHER GROUND IN THIS APPEAL RELATE TO ADDITION OF RS.40,79,000/- ON ACCOUNT OF CASH PAYMENT MADE IN PURCHASE OF PROP ERTY. THE FACTS BORNE OUT OF THE RECORD ARE THAT THE WIFE OF THE AS SESSEE MRS. SHAHANAZ MOHIUDDIN AND MRS. BADDRUDIN PURCHASED THE PROPERTY . DURING THE COURSE OF SEARCH, ONE DOCUMENT WAS SEIZED WITH REGARD TO THE NOTING OF CASH PAYMENT IN PURCHASE OF PROPERTY. THE AO ASSUMED ON THE BASIS OF THE STATEMENT GIVEN BY THE ASSESSEE THAT A SUM OF RS.35 ,50,000/- WAS A CASH PAID OVER AND ABOVE THE REGISTERED SALE CONSIDERATI ON. HE HAS ALSO PLACED RELIANCE UPON THE STATEMENT OF THE ASSESSEE WHEREIN HE HAS DEPOSED THAT HE WOULD DECLARE IT AS HIS INCOME IN CASE OF MR. BH ADRUDDINS DENIAL. THOUGH THE STATEMENT WAS RETRACTED BY THE ASSESSEE VIDE LETTER DATED 15.4.2008, THE AO PLACED RELIANCE UPON THE STATEMEN TS OF THE ASSESSEE AND MADE THE ADDITION OF RS.40,79,000/- (RS.35,50,0 00/- + RS.5,29,000/-) AS CASH PAYMENT MADE OVER AND ABOVE THE SALE CONSID ERATION DECLARED IN THE BOOKS OF ACCOUNT. THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT WHEN THE PROPERTY WAS PURC HASED BY THE TWO LADIES, THE ADDITION ON ACCOUNT OF CASH PAYMENT OVE R AND ABOVE THE SALE CONSIDERATION CANNOT BE MADE IN THE HANDS OF THE AS SESSEE ALONE. IT WAS ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 25 OF 37 ALSO CONTENDED THAT WHEN THE STATEMENT WAS RETRACTE D, THE SAME CANNOT BE TAKEN AS A GOOD PIECE OF EVIDENCE AGAINST THE ASSES SEE. 42. CIT(A) WAS NOT CONVINCED WITH THE CONTENTIONS OF T HE ASSESSEE AND HE ACCORDINGLY CONFIRMED THE ADDITION. NOW THE ASS ESSEE IS BEFORE US WITH THE SUBMISSION THAT THE STATEMENT WAS RECORDED DURI NG THE COURSE OF SEARCH ON 18.01.2008 BUT BY FILING A LETTER DATED 1 5.04.2008, THE ASSESSEE HAS RETRACTED FROM HIS STATEMENT BY STATING THAT AL L PAYMENTS OF PURCHASE OF PROPERTY HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT S AND HE HAS NOT PAID ANY SUM OVER AND ABOVE THE SALE CONSIDERATIONS AS R ECORDED IN THE BOOKS OF ACCOUNTS. HE FURTHER CONTENDED THAT MONEY RETUR NED BY THE PERSONS TO WHOM MONIES WERE EARLIER PAID WERE NOT RECORDED AT ALL IN THOSE CASES. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT DESPITE THE RETRACTION FROM THE SUMMARIZED STATEMENT OF THE ASS ESSEE, THE AO HAS NOT MADE ANY EFFORT TO COLLECT SOME INDEPENDENT EVIDENC E TO SUBSTANTIATE THAT THE ASSESSEE HAS MADE THE CASH PAYMENT OVER AND ABO VE THE SALE CONSIDERATIONS RECORDED IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER CONTENDED THAT MR. BHADRUDDIN HAS ALSO DENIED THE PAYMENT IN CASH BECAUSE NOTHING WAS PAID IN CASH TO THE SELLER OVER AND ABOVE THE S ALE CONSIDERATION. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT WHEN THE PROPERTY WAS PURCHASED IN JOINT NAMES, HOW THE ADDITION OF C ASH PAYMENT CAN BE MADE IN THE HANDS OF ONE BUYER AND THAT TOO IN THE HANDS OF THE HUSBAND OF THE BUYER. THEREFORE, THE ADDITION MADE BY THE AO IS WITHOUT ANY BASIS AND DESERVES TO BE DELETED. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 26 OF 37 43. THE LEARNED DR HAS ON THE OTHER HAND PLACED RELIAN CE ON THE ORDER OF THE CIT(A). 44. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER A UTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT UNDISP UTEDLY DURING THE COURSE OF SEARCH ONE DOCUMENT WAS SEIZED IN WHICH THERE WERE SOME ENTRIES OF CASH PAYMENT OVER AND ABOVE THE SALE CONSIDERATION FOR T HE PURCHASE OF PROPERTY IN THE NAME OF MRS. SHAHANAZ MOHIUDDIN AND MRS. BHADRUDDIN. NO DOUBT THE ASSESSEE HAS MADE A STATEMENT DURING T HE COURSE OF SEARCH THAT THOUGH THIS AMOUNT WAS PAID BY MR. BHADRUDDIN, BUT IF HE DID NOT ACCEPT THE SAME, HE WOULD SURRENDER THIS AMOUNT. B UT AFTER FEW MONTHS, THE ASSESSEE HAS RETRACTED FROM HIS EARLIER STATEME NT BY STATING THAT HE HAS NOT MADE ANY CASH PAYMENT OVER AND ABOVE THE SALE C ONSIDERATION TO PURCHASE ANY PROPERTY, THOUGH THIS RETRACTION LETTE R WAS GIVEN ON 15.04.2008 AND AO HAS COMPLETED HIS ASSESSMENT ON 4 .12.2009. THEREFORE THERE WAS AMPLE TIME WITH THE AO TO EXAMI NE THE VERACITY OF THIS STATEMENT IN WHICH THE ASSESSEE HAS ACKNOWLEDGED TH E PAYMENT OF CASH FOR PURCHASE OF PROPERTY. BUT THE AO HAS NOT MADE ANY EFFORT IN THIS REGARD. HE SIMPLY RELIED UPON THE SEIZED DOCUMENTS AND THE STATEMENT OF THE ASSESSEE MADE DURING THE COURSE OF SEARCH. IT IS A SETTLED POSITION OF LAW THAT ONCE THE SURRENDER STATEMENT IS RETRACTED, THE ONUS UPON THE AO IS HEAVIER AND HE HAS TO BRING SOME MORE INDEPENDENT E VIDENCE IN SUPPORT OF HIS VIEW OR CONCLUSION DRAWN ON THE BASIS OF SEIZED DOCUMENT AND SURRENDER STATEMENT. IN SUCH TYPE OF CASES WHERE T HE PAYER AND PAYEE ARE ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 27 OF 37 INVOLVED AND THE PAYER DISPUTES THE PAYMENT OF CASH OVER AND ABOVE THE RECORDED CONSIDERATION, THE AO SHOULD HAVE EXAMINED THE PAYEE TO VERIFY THE CORRECTNESS OF STATEMENT. BUT IN THE INSTANT C ASE, THE AO HAS NEITHER EXAMINED THE PAYEE IN THIS REGARD NOR BROUGHT ANY I NDEPENDENT EVIDENCE IN SUPPORT OF HIS VIEW OR CONCLUSION THAT THE ASSES SEE HAS MADE A PAYMENT IN CASH OVER AND ABOVE THE RECORDED CONSIDERATIONS. MOREOVER, WHEN THE PROPERTY WAS PURCHASED BY TWO LADIES, THE ADDITION OF CASH PAYMENT CANNOT BE MADE IN THE HANDS OF HUSBAND OF ONE LADY ALONE. IF THE FACTS OF PAYMENT IN CASH IS FOUND TO BE CORRECT, THE ADDITION CAN ON LY BE MADE IN THE HANDS OF BOTH THE LADIES IN EQUAL MANNER. BUT THIS HAS N OT BEEN DONE BY THE AO. HE HAS SIMPLY RELIED UPON THE STATEMENT OF THE ASSE SSEE WHILE MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. THIS APPROA CH OF THE AO CANNOT BE APPRECIATED. ACCORDINGLY, WE FIND NO MERIT IN THIS ADDITION AND WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITIONS. ITA NO.167/BANG/2011 45. THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, W EIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT[A] IS NOT JUSTIFIED IN RESTRIC TING A SUM OF RS.75,02,887/- AS AGAINST A SUM OF RS. 1,86,01,958/ - AS DEEMED DIVIDED U/S.2[22][E] OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 28 OF 37 2.2 THE AUTHORITIES BELOW HAVE ERRED THAT THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF P.SHARADA REPO RTED IN229 ITR444 [SC] IS CLEARLY APPLICABLE TO THE FACT S OF THE APPELLANT'S CASE, WITHOUT APPRECIATING THAT IT WAS RENDERED ON A CONCESSION OR ADMITTED FACT BY THE AFORESAID ASSESS EE THAT SUCH WITHDRAWALS AMOUNTED TO AN ADVANCE WHEREAS, IN THE APPELLANT'S CASE THE AMOUNT ARE MERE DEBITS AND CREDITS IN THE CURRENT ACCOUNT AND THERE IS NO UNDERSTANDING TO CHARGE ANY INTERES T ON THE CURRENT ACCOUNT AND SUCH DEBITS ARE AGAINST THE SALARY ENTI TLEMENTS, ETC., AND THESE DO NOT CONSTITUTE LOANS AND ADVANCE ATTRA CTING THE PROVISIONS OF SECTION 2[22][E] OF THE ACT. 2.3 WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIE S BELOW ERRED IN ASSESSING THE AGGREGATE OF THE DEBIT BALANCES DU RING THE YEAR INSTEAD OF THE CLOSING BALANCE AT THE END OF THE YE AR, WHICH ALONE WOULD CONSTITUTE LOAN OR ADVANCES IN AN EXTREME CAS E TO ATTRACT THE PROVISIONS OF SECTION 2[22][E] OF THE ACT AS PER THE RATIO OF THE MADRAS HIGH COURT IN THE CASE OF K.SRINIVASAN REPORTED IN 50 ITR 788 AND IN THE INST ANT CASE THERE IS NO EXCESS WITHDRAWAL AND THEREFORE, THERE IS NO WARRANT TO APPLY SECTION 2[22][E] OF THE ACT. 2.4 WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIE S BELOW HAVE ERRED IN TAXING THE AGGREGATE OF THE DEBIT BALANCE THAT TOO AS ERRONEOUSLY DEPICTED BY THE A.O. IN THE ASSESSMENT ORDER AS AGAINST THE ACTUAL ACCOUNT COPY AS PER THE BOOKS OF THE COMPANY AND FILED WITH THE AUTHORITIES BELOW [SEE PAPER BOO K AT PAGE NOS. 1 07 TO NO.113] WITHOUT TAKING INTO ACCOUNT THE CRE DITS BY WAY OF REMUNERATION CREDITED TO THE ACCOUNT AS DEEMED DIVI DEND UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT 'S. THEY FAILED TO APPRECIATE THAT EVEN IN EXTREME CASE AT THE END OF THE YEAR SINCE NO AMOUNT IS DUE, THERE IS NO JUSTIFICATION T O TAX ANY SUM AS DEEMED DIVIDEND UNDER THE FACTS AND IN THE CIRCUMST ANCES OF THE APPELLANT'S. 2.5 THE LEARNED CIT[A] FAILED TO APPRECIATE THAT THE EXTRACT OF THE ACCOUNTS AS SHOWN AT PAGES [15 & 16] OF THE ASS ESSMENT ORDER IS ERRONEOUS AND QUITE DIFFERENT FROM THE ACTUAL AC COUNT COPY OF THE APPELLANT IN THE BOOKS OF THE COMPANY AND HE OU GHT TO HAVE TAKEN THE SAME INTO CONSIDERATION WHILE DEALING WIT H THE ISSUE IN THE APPEAL. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 29 OF 37 3.1 THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN DIS ALLOWING A SUM OF RS.16,145/- RELATING TO HIS BUSINESS OF M/S.DELTA TRANSPORT CORPORATION AND DELTA CONSTRUCTIONS, WHIC H HAVE NOT BEEN DEBITED IN THE RESPECTIVE PROFIT & LOSS ACCOUN T AND THEREFORE, CLAIMED SEPARATELY. THESE EXPENSES ARE I NCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS AND THEREFO RE, THEY ARE REQUIRED TO BE ALLOWED. THE DISALLOWANCE IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND CONSE QUENTLY, REQUIRES TO BE DELETED. 3.2 THE LEARNED CIT[A] ERRED IN OBSERVING THAT EX CEPT TAKING THE ARGUMENT THAT THE EXPENSES WERE RELATED TO BUSI NESS FAILED TO PRODUCE ANY EVIDENCE TO SUPPORT THE EXPENSES DISALL OWED BY THE LEARNED A.O. WERE INCURRED FOR THE PURPOSES OF THE BUSINESS OF THE APPELLANT OR INCURRED FOR EARNING THE INCOME BROUGH T TO TAX, WHICH IS VERY OBVIOUS ON THE VERY FACE OF THE FINAN CIAL STATEMENTS, NEITHER THE LEARNED A.O. OR THE LEARNED CIT[A] HAVE ASKED FOR PRODUCTION OF THE VOUCHERS IN RELATION TO THE EXPENSES CLAIMED IN THE FINANCIAL STATEMENTS. 3.3 THE DISALLOWANCE IS PURELY ON SUSPICION AND SU RMISE, ASSUMPTIONS AND PRESUMPTIONS AND CONSEQUENTLY, REQU IRES TO BE DELETED. 4. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN DIS ALLOWING A SUM OF RS.83,328/- AS EXCESS CLAIM OF DEPRECIATION UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S C ASE. THE ADDITION MADE IS PURELY ON SUSPICION AND SURMISE, A SSUMPTIONS AND PRESUMPTIONS AND CONTRARY TO THE EVIDENCE ON RE CORD. 5. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER W ITH THE HON'BLE CCIT/DG, THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S. 234B AND 234C OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT 'S CASE DESERVES TO BE CANCELLED. 6. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE C OSTS. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 30 OF 37 46. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO INDE PENDENT ADJUDICATION. 47. GROUND NOS. 2.1 TO 2.5 RELATE TO THE ADDITION ON A CCOUNT OF DEEMED DIVIDEND. THIS ISSUE HAS BEEN EXAMINED BY US IN TH E FOREGOING APPEALS IN WHICH WE HAVE CATEGORICALLY HELD FOR DIFFERENT REAS ONS THAT THE SO-CALLED ADVANCES SHOWN TO THE ASSESSEE CANNOT BE CALLED TO BE DEEMED DIVIDEND. WE ACCORDINGLY, FOLLOWING THE VIEW TAKEN IN THE FOR EGOING APPEALS, HOLD THAT ADVANCES SHOWN TO THE ASSESSEE CANNOT BE CALLED TO BE DEEMED DIVIDEND. THEREFORE, NO ADDITION U/S. 2(22)(E) IS CALLED FOR. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(APPEALS) AND DELETE THE ADDITI ON IN THIS REGARD. 48. GROUND NOS.3.1 TO 3.3 RELATE TO THE ADDITION ON AC COUNT OF DISALLOWANCE OF BUSINESS EXPENSES OF RS.16,145. TH IS DISALLOWANCE WAS MADE BY THE AO ON VERIFICATION OF P&L ACCOUNT FILED AND HAVING NOTED THAT ASSESSEE HAS CLAIMED DEPRECIATION ON THE INTEREST R ECEIVED FROM BANK, ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THIS CLAIM SHOULD NOT BE DISALLOWED. IN RESPONSE THERETO, IT WAS SUBMITTED THAT THESE ARE ALLOWABLE EXPENSES SINCE THE ASSESSEE IS IN THE BUSINESS OF P ROPRIETARY CONCERN, M/S. DELTA TRANSPORT CORPORATION. THE AO DID NOT F IND ANY MERIT IN THE SUBMISSIONS AND ACCORDINGLY DISALLOWED THE CLAIM AN D MADE THE ADDITION. 49. BEFORE THE CIT(APPEALS), THOUGH SPECIFIC GROUND WA S RAISED, BUT NO SPECIFIC FINDING IS GIVEN IN THIS REGARD. WE HAVE, HOWEVER, CAREFULLY ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 31 OF 37 EXAMINED THIS GROUND, BUT WE FIND NO MERIT THEREIN. ACCORDINGLY, WE CONFIRM THE ADDITION. 50. GROUND NO.4 RELATES TO THE ADDITION OF RS.83,328 A ND IN THIS REGARD IT IS NOTICED THAT ASSESSEE HAS CLAIMED DEPRECIATION A T RS.5,88,355 ON WDV OF THE ASSETS AS ON 1.4.2006. THE AO HAS ALSO WORKE D OUT THE WDV OF THE ASSETS AS ON 1.4.2007 ALSO AND HAVING NOTED THAT EX CESS DEPRECIATION WAS CLAIMED AT RS.83,328, HE DISALLOWED THE SAME. 51. THOUGH A SPECIFIC GROUND WAS RAISED BEFORE THE CIT (APPEALS), BUT THE CIT(A) WAS NOT CONVINCED WITH THE ARGUMENTS OF THE ASSESSEE AND HE CONFIRMED THE ADDITION. 52. NOW THE ASSESSEE HAS RAISED A GROUND BEFORE THE TR IBUNAL, BUT COULD NOT EXPLAIN AS TO WHY HE HAS CLAIMED EXCESS D EPRECIATION. WE THEREFORE FIND NO INFIRMITY IN THE ORDER OF THE CIT (APPEALS). ACCORDINGLY, WE CONFIRM THE SAME IN THIS REGARD. 53. ACCORDINGLY, THE APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. ITA NOS.1088 & 1118/BANG/2012 54. THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE CIT(APPEALS) PERTAINING TO AY 2007-08. SINCE THESE APPEALS WERE HEARD TOGETHER, THEY ARE DISPOSE D OF THROUGH THIS CONSOLIDATED ORDER. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 32 OF 37 ITA NO.1088/BANG/2012 55. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, W EIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF RE-ASSESSMENT IS BAD IN LAW AND VO ID-AB-INITIO FOR WANT OF REQUISITE JURISDICTION ESPECIALLY, THE MANDATORY REQUIREMENTS TO ASSUME JURISDICTION U/S 148 OF THE ACT DID NOT EXIST AND HAVE NOT BEEN COMPLIED WITH AND CONSEQUEN TLY, THE ORDER OF RE-ASSESSMENT PASSED REQUIRES TO BE CANCEL LED. 2.1 THE LEARNED AUTHORITIES BELOW FAILED TO APPREC IATE THE INCOME WHICH IS SOUGHT TO BE ASSESSED HAS BEEN ONCE BEEN ASSESSED U/S.143[3] BY INVOKING THE PROVISIONS OF S ECTION 153C OF THE ACT AND THE SAID ASSESSMENT HAS BEEN CANCELL ED AND IT CANNOT BE SAID THAT INCOME HAS NOT BEEN ASSESSED AT ALL TO ACQUIRE THE CHARACTER OF INCOME ESCAPING ASSESSMENT . 2.2 THE LEARNED AUTHORITIES BELOW FAILED TO APPREC IATE THAT IF AN INCOME IS LIABLE FOR ASSESSMENT AND IS ASSESSED AND SUCH ASSESSMENT IS CANCELLED ON ACCOUNT OF ANY FAULT OF THE ACTION OF THE A.O. THE INCOME SO ASSESSED WILL NOT ACQUIRE TH E CHARACTER OF INCOME ESCAPING ASSESSMENT AS PER THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CHATIURAM HOLL RAM REPORTED IN 27 ITR 709. 2.3 THE AUTHORITIES BELOW FAILED TO APPRECIATE TH AT THE ASSESSMENT PASSED U/S.143[3] BY INVOKING THE JURISD ICTION U/S.153C OF THE ACT IS NOT SIMILAR TO AN ASSESSMENT MADE UNDER CHAPTER XIV-B I.E., U/S.158BD OR 158BC OF THE ACT, AS IN SUCH CASES, SUCH ASSESSMENT IS IN ADDITION TO THE NORMAL ASSESSMENT. 2.4 THE AUTHORITIES BELOW FURTHER FAILED TO APPREC IATE THAT U/S.153A OR 153C OF THE ACT, THE CONCEPT OF A BLOCK ASSESSMENT AND A REGULAR ASSESSMENT IS NOT THERE AND ONLY ONE ASSESSMENT U/S.143[3] OR 144 IS CONTEMPLATED TO BE MADE WITH O R WITHOUT RECOURSE TO SECTION 148 OF THE ACT. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 33 OF 37 2.5 THE AUTHORITIES BELOW FAILED TO APPRECIATE THA T THE INCOME EARLIER ASSESSED AND SUCH ASSESSMENT IS CANCELLED A ND THEREFORE, THE ASSUMPTION OF JURISDICTION U/S.147 OF THE ACT, TO ASSESS IT ONCE AGAIN WOULD NOT AMOUNT TO ASSESSING ESCAPED INCOME AND CONSEQUENT ASSESSMENT REQUIRES TO BE CANCELLED. 3.1 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T[A] IS NOT JUSTIFIED IN SUSTAINING A SUM OF RS.1 ,54,742/- AS DEEMED DIVIDED U/S.2[22][E] OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3.2 THE LEARNED CIT[A] HAS ERRED THAT THE DECISIO N OF THE HON'BLE SUPREME COURT IN THE CASE OF P .SHARADA REP ORTED IN 229 ITR 444 [SC] IS CLEARLY APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE, WITHOUT APPRECIATING THAT IT WAS RENDERED ON A CONCESSION OR ADMITTED FACT BY THE AFORESAID ASSESS EE THAT SUCH WITHDRAWALS AMOUNTED TO AN ADVANCE WHEREAS, IN THE APPELLANT'S CASE THE AMOUNT ARE MERE DEBITS AND CREDITS IN THE CURRENT ACCOUNT AND THERE IS NO UNDERSTANDING TO CHARGE ANY INTERES T ON THE CURRENT ACCOUNT AND SUCH DEBITS ARE AGAINST THE SALARY ENTI TLEMENTS, ETC., AND THESE DO NOT CONSTITUTE LOANS AND ADVANCE ATTRA CTING THE PROVISIONS OF SECTION 2[22][E] OF THE ACT. 3.3 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T[A] ERRED IN ASSESSING THE AGGREGATE OF THE DEBIT BALANCES DU RING THE YEAR INSTEAD OF THE CLOSING BALANCE AT THE END OF THE YE AR, WHICH ALONE WOULD CONSTITUTE LOAN OR ADVANCES IN AN EXTREME CAS E TO ATTRACT THE PROVISIONS OF SECTION 2[22][E] OF THE ACT AS PE R THE RATIO OF THE MADRAS HIGH COURT IN THE CASE OF K.SRINIVASAN R EPORTED IN 50 ITR 788. 4. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WI TH THE HONBLE CCIT/DG, THE APPELLANT DENIES HERSELF LIABL E TO BE CHARGED TO INTEREST U/S.234A, 234B, 234C AND 234D O F THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF T HE APPELLANT'S CASE DESERVES TO BE CANCELLED. 5. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE LEVY OF INTEREST U/S.234A, 234B AND 234C ARE COMPENSATORY I N NATURE AND IF THE PRE-PAID TAXES AND TDS ARE TAKEN INTO ACCOUN T AT THE TIME OF FILING THE RETURN IN RESPONSE TO NOTICE U/S.153A RW S 153C OF THE ACT AND THE FACT THAT TDS IS REQUIRED TO BE DEDUCTE D IF THE DEEMED DIVIDED IS SUSTAINED, THERE IS NO TAX PAYABL E AT ALL AND ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 34 OF 37 CONSEQUENTLY, THE LEVY OF INTEREST U/S.234A[3], 234 B[3] AND 234C ARE MISCONCEIVED AND UNAUTHORIZED AND LIABLE TO BE CANCELLED. 6. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE C OSTS. 56. GROUND NOS.1 & 6 ARE GENERAL IN NATURE AND NEEDS N O INDEPENDENT ADJUDICATION. 57. APROPOS GROUND NOS.2 & 3 WHICH RELATE TO THE ISSUE OF DEEMED DIVIDEND AND IN THIS REGARD WE FIND THAT THE ASSESS EE WAS HAVING A RUNNING CURRENT ACCOUNT WITH THE COMPANY IN WHICH SHE IS A DIRECTOR. IN THE RUNNING CURRENT ACCOUNT, REMUNERATION WAS TIMELY CREDITED. THIS IDENTICAL ISSUE EXAMINED BY US IN THE FOREGOING APPEALS IN WHICH WE HAVE HELD THAT AMOUNT CREDITED IN THE CURRENT ACCOUNT OF ASSESSEE CANNOT BE TERMED TO BE THE ADVANCES/LOANS FOR INVOKING THE PROVISIONS OF D EEMED DIVIDEND. ACCORDINGLY, FOLLOWING THE VIEW TAKEN IN THE FOREGO ING APPEALS, WE HOLD THAT WHATEVER CREDIT ACCOUNT IS FOUND IN THE ACCOUNTS OF THE ASSESSEE, THE SAME CANNOT BE TERMED AS DEEMED DIVIDEND. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(APPEALS) AND DELETE THE ADDITION. 58. GROUND NOS.4 & 5 ARE CONSEQUENTIAL IN NATURE AND N EEDS NO INDEPENDENT ADJUDICATION. 59. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE STANDS AL LOWED. ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 35 OF 37 ITA NO.1188/BANG/2012 60. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE LD. CI.T. (APPEALS) ERRED IN DELETING THE ADDITION MADE AMOUNTING TO RS 40,79,000/- ON UNEXPLAINED INVESTMENT IN THE LAND. 2. THE LD.CIT(APPEALS) HAS MADE FACTUAL ERROR BY S TATING THAT RS. 40,79,000 ADDED AS UNEXPLAINED INVESTMENT OF THE ASSESSEE HAS BEEN SUBSTANTIALLY CONFIRMED BY THE CL T(A) IN THE CASE OF SHRI MOHIUDDIN. BUT FACT IS THAT IN THE CAS E OF SHRI MOHIUDDIN, SAME INCOME IS ADDED PROTECTIVEL Y. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING THE ORDERS OF LD. C.I.T (A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED. 61. THE ISSUE INVOLVED IN THIS APPEAL IS WITH REGARD T O ADDITION OF RS.40,79,000 AS UNEXPLAINED INVESTMENT IN THE LAND. ON A CAREFUL PERUSAL OF THE RECORD, WE FIND THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO HAS NOTED THAT ASSESSEE HAS MADE A PAYMENT O F RS.40,79,000 OVER AND ABOVE THE SALE CONSIDERATION RECORDED IN THE BO OKS OF ACCOUNT. THOUGH THE PROPERTY WAS PURCHASED IN THE NAME OF TW O LADIES, BUT THE ADDITION WAS MADE IN THE NAME OF ASSESSEE AS WELL A S HER HUSBAND. THIS ISSUE WAS EXAMINED BY US IN THE CASE OF HUSBAND OF ASSESSEE, MR. A. MOHIUDDIN IN ITA NO.166/BANG/2011 IN WHICH WE HAVE DISCUSSED THE FACTS OF THE CASE. HAVING CAREFULLY EXAMINED THE LEGAL P OSITION, WE HOLD THAT ADDITION CANNOT BE MADE IN THE HANDS OF MR. A. MOHI UDDIN, THE HUSBAND OF ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 36 OF 37 THE ASSESSEE. MOREOVER, THE AO HAS NOT EXAMINED TH E ASSESSEE IN WHOSE NAME, HE INTENDS TO MAKE THE ADDITION ON PROTECTIVE BASIS. EVEN PAYEE WAS NOT EXAMINED BY THE AO. FOR THE DETAILED REASO NS, WE HAVE DELETED THE ADDITION IN THE HANDS OF MR. A. MOHIUDDIN. SINC E WE HAVE DEALT WITH THE ISSUE IN DETAIL IN THE FOREGOING APPEAL, WE FIND NO JUSTIFICATION TO DEAL WITH THE ISSUE AGAIN. ACCORDINGLY, FOLLOWING THE VIEW T AKEN THEREIN, WE HOLD THAT THIS ADDITION IN THE HANDS OF ASSESSEE IS NOT CALLE D FOR LACK OF INVESTIGATION. WE ACCORDINGLY FIND NO MERIT IN THE REVENUES APPEA L. WE DISMISS THE SAME. 62. IN THE RESULT, THE APPEALS OF THE ASSESSEES IN ITA NO.1223/BANG/2010, 166/BANG/2011 AND 1088/BANG/2012 ARE ALLOWED; ITA NOS. 163, 165 & 167/BANG/2011 ARE PARTLY ALLOWE D FOR STATISTICAL PURPOSES; ITA NO.164/BANG/2011 IS DISMISSED; AND A PPEAL BY THE REVENUE IN ITA NO.1118/BANG/2012 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 25TH DAY O F JANUARY, 2017. SD/- SD/- ( S. JAYARAMAN ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 25 TH JANUARY, 2017. /D S/ ITA NOS.1223/B/10, 163 TO 167/B/11, 1118 & 1088/B/12 PAGE 37 OF 37 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.