KAPIL N. SHAH, MUMBAI V. ITO WD 12(3)(1), MUMBAI

ITA 1580/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0406 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 26-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Recovery proceedings; Search and seizure; Opportunity of being heard; Wrong claim; Difference of opinion; Deemed dividend; Competent authority; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 246

Judgement Text

P A G E | 1 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 1580/MUM/2013 ( / ASSESSMENT YEAR: 2004 - 05 ) SHRI KAPIL N. SHAH 93, BAJAJ BHAVAN NARIMAN POINT, MUMBAI - 400021 / VS. ITO WARD 12(2)(1) AAYAKAR BHAVAN, M.K. ROAD NEW MARINE LINES, MUMBAI - 400020 ./ ./ PAN/GIR NO. AOVPS0403E ( / APPELLANT ) : ( / RESPONDENT) / APPELLANT BY : WRITTEN SUBMISSIONS / RESPONDENT BY : SHRI DURGA DUTT , D.R. / DATE OF HEARING : 22/05 /2017 / DATE OF PRONOUNCEMENT : 11 /0 8 /2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - 23 , MUMBAI, DATED 19. 1 2 .2012 , WHICH IN ITSELF ARISES FROM THE ORDER PA SSED BY THE A.O U/S 143 (3) R.W.S 148 OF P A G E | 2 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), DATED 24/12/2010 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: - (1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN RE OPENING VALIDITY COMPLETE ASSESSMENT BEYOND A PERIOD OF 4 YEAR S WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND IN LAW. (2) WITHOUT PREJUDICE TO THE ABOVE: LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.17, 50,000/ - MADE AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE I. T. ACT, 1961 ON IRRELEVANT CONSIDERATION ASSUMPTION AND PRESUMPTION. (3) THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND OR VARY ANY OF THE GROUNDS AT THE TIME OR BEFORE THE HEARING OF THIS APPEAL. (4) THE APPELLANT THEREFORE PRAYS THAT ACTION OF THE ASSESSING OFFICER IN RE - OP EN THE COMPLETED ASSESSMENT BY INVOKING PROVISIONS OF SECTION 147 MAY PLEASE BE HELD AS ILLEGAL /UNJUSTIFIED AND/ OR ALTERNATIVELY ADDITION OF RS. 17,50,000/ - MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARN ED CIT(A) MAY PLEASE BE DELETED. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF TRAD ING IN SHARES AND DERIVATIVES HAD FILED HIS RETURN OF INCOME ON 18.02.2005, DECLARING TOTAL INCOME AT RS.1,10,075/ - . THE CASE OF THE ASSESSEE WAS REOPENED U/S. 147 O F THE ACT , FOR THE REASON THAT HE BEING THE DIRECTOR OF A COMPANY, VIZ. M/S. SI M PLEX SOLUTION PVT. LTD. (HEREINAFTER REFE R RED TO AS C OMPANY) HOLDING MORE THAN 10% OF THE SHARES , HAD DURING THE YEAR UNDER CONSIDERATION RECEIVED AN AMOUNT OF RS.17,50,000 / - FROM THE COMPANY, WHICH AS PER THE A.O WAS LIABLE TO BE ASSESSED AS DEEMED DIVIDEND UNDER SEC. 2(22)(E) IN THE HANDS OF THE ASSESSEE. 3. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O. CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT OF P A G E | 3 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH RS.17,50,000/ - (SUPRA) RECEIVED BY HIM FROM THE COMPANY MAY NOT BE ASSESSED AS DEEMED DIVIDEND IN HIS HANDS U/S. 2(22)(E) . THE ASSESS EE SUBMITTED BEFORE THE A.O THAT AS THE AFORESAID AMOUNT WAS RECEIVED BY HIM IN LIEU OF AN AGREEMENT TO SELL , DATED 29.06.2002 EXECUTED BETWEEN HIM AND THE COMPANY, AS PER WHICH THE ASSESSEE WAS TO SELL HIS AGRICULTURAL LAND TO THE COMPANY, THEREFORE, THE SAME HAVING BEEN RECEIVED PURSUANT TO A COMMERCIAL TRANSACTION THUS COULD NOT BE ASSESSED AS DEEMED DIVIDEND UNDER SEC. 2(22)(E). THE ASSESSEE FURTHER SUBMITTED BEFORE THE A.O THAT AS SOMEWHERE IN THE YEAR 2009 THE AFORESAID AGRICULTURAL LAND OF THE ASSESSEE WAS COMPULSORILY ACQUIRED BY THE G OVERNMENT, THEREFORE , FOR THE SAID REASON THE DEAL WITH THE COMPANY COULD NOT FRUCTIFY. THE ASSESSEE FURTHER SUBMITTED THAT AS THE AMOUNT RECEIVED BY HIM WAS AN ADVANCE IN ANTICIPATION OF SALE OF LAND IN THE ORDI NARY COURSE OF BUSINESS, THEREFORE , THE SAME COULD NOT BE CHARACTERIZED AS DEEMED DIVIDEND U/S. 2(22)(E) . THE ASSESSEE PLACED ON RECORD OF THE A.O THE COPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE COMPANY RATIFYING THE AFORESAID TRANSACT ION OF PURCHASE OF LAND , ALONG WITH THE COP Y OF THE BALANCE SHEET AND P ROFIT AND LOSS ACCOUNT OF THE COMPANY FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE FURTHER SUBMITTED BEFORE THE A.O THAT AS BOTH THE PARTIES, VIZ. THE ASSESSEE AND THE COMPANY WERE KNOWN TO EACH OTHER, THEREFORE, FOR THE SAID REASON THE AGREEMENT TO SELL WAS NOT GOT REGISTERED WITH THE REGISTRAR , AS THE SAME WAS NOT MANDATORY. 4. TH AT AFTER DELIBERATING ON THE CONTENTIONS OF THE ASSESSEE IN THE BACKDROP OF THE FACTS OF THE CASE , THE A.O HELD A CONVICTION THAT AS THE AGREEMENT TO SELL HAD NOT BEEN REGISTERED WITH ANY AUTHORITY, THEREFORE , THE AUTHENTICITY OF THE CLAIM OF THE ASSESSEE AS REGARDS THE ANTICIPATED SALE TRANSACTI ON REMAINED UNDER SERIOUS DOUBTS. THE A.O P A G E | 4 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH FURTHER BEING OF THE VIEW THAT AS THE ADVANCING OF MONEY FOR PURCHASE OF AGRICULTURAL LAND WAS NOT THE BUSINESS OF THE COMPANY, THEREFORE , THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT HAD BEEN ADVANCED IN THE ORD INARY COURSE OF ITS BUSINESS COULD NOT BE ACCEPTED. THE A.O NOT FINDING FAVOUR WITH THE CONTENTIONS OF THE ASSESSEE, THUS , HOLDING A CONVICTION THAT THE CLAIM OF THE ASSESSEE SUFFERED FROM SERIOUS INFIRMITIES AND AS SUCH COULD NOT BE SUMMARILY ACCEPTED , THEREFORE, ASSESSED THE AMOUNT OF RS. 17,50,000/ - (SUPRA) AS THE DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. 5 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THAT DURING THE COURSE OF THE APPEL LATE PROCEEDINGS THE ASSESSEE TRIED TO IMPRESS UPON THE CIT(A) THAT AS THE AMOUNT OF RS. 17, 50,000/ - (SUPRA) RECEIVED BY HIM WAS BY WAY OF AN ADVANCE TOWARDS ANTICIPATION OF SALE OF AGRICULTURAL LAND OWNED BY HIM TO THE COMPANY , WHICH WAS EVIDENCED BY THE A GREEMENT TO SELL, DATED 29.06.2002 EXECUTED BETWEEN THE AFORESAID PARTIES, THEREFORE , THE SAME BEING A RECEIPT IN LIEU OF A COMMERCI AL TRANSACTION COULD NOT BE ASSE SSED AS DEEMED DIVIDEND IN HIS HANDS . THE ASSESSEE IN SUPPORT OF THE PROPOSITION CANVASSED BY HIM THAT AN AMOUNT RECEIVED BY A SHAREHOLDER PURSUANT TO A COMMERCIAL TRANSACTION FALLS BEYOND THE SWEEP OF DEEMED DIVIDEND CONTEMPLATED UNDER SEC. 2(22)(E ) , RELIED ON A HOST OF JUDICIAL PRONOUNCEMENT S . THE CIT(A) AFTER DELIBERATING ON THE C ONTENTIONS OF THE ASSESSEE IN THE BACKDROP OF THE FACTS OF THE CASE , HOWEVER , DID NOT FIND FAVOUR WITH THE SAME, AND OBSERVE D AS UNDER: - 3.3.4 THE ENTIRE TRANSACTION OF RECEIPT OF ADVANCE OF RS.17.35 LAC BY THE APPELLANT FROM THE COMPANY IS A PURE AND SI MPLE CASE OF THE MONEY RECEIVED BY THE APPELLANT BY WAY OF ADVANCE OR LOAN WITHIN THE MEANING OF CLAUSE (E) OF SUBSECTION 22 OF SECTION 2 OF THE I.T. ACT WHICH A SHARE HOLDER ENJOYS FOR P A G E | 5 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH SIMPLY ON ACCOUNT OF BEING A PERSON WHO IS THE REGISTERED AS WELL AS THE BENEFICIAL OWNER OF SHARES HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER. THE AMOU NT RECEIVED BY THE ASSESSEE CAN NOT BE SAID TO BE A TRADE ADVANCE U NDER A B USINESS AGREEMENT COUPLED WITH CERTAIN OBLIGATIONS TO BE COMPLIED WITH AND, THEREFORE, COULD BE REGARDED TO BE A PAYMENT BY A COMPANY BY WAY OF - ADVANCE OR LOAN TO A SHAREHOLDER , AND, THEREFORE, SAME COULD BE ASSESSED TO TAX IN T HE HANDS OF ASSESSEE UNDER SECTION 2(22) (E) FOR THE REASONS GIVEN BELOW: - 1. THE COMPANY HAD PAID A SUBSTANTIAL AMOUNT AS PURCHASE CONSIDERATION TO THE APPELLANT . UNDER THE PROVISIONS OF SECTION 2(47) OF THE I.T. ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, WHEN THE SALE AGREE MENT TAKEN PLACE AND SUBSTANTIAL CONSIDERATION IS PAID, THE COMPANY'S BOOKS MUST SHOW THE TRANSACTION OF PROPERTY. HOWEVER, NO SUCH TRANSACTION IS SHOWN IN THE BOOKS OF THE COMPANY. HENCE GIVING A COLOUR OF TRADE TRANSACTION TO A PURE AND SIMPLE TRANSACTION OF LOAN OR ADVANCE IS NOTHING BUT AN AFTERTHOUGHT. 2. THE MEETING OF TH E BOARD TO RATIFY THE TRANSACTION WAS TAKEN PLACE ON 22/05/2002 WHEREAS THE MINUTES WERE SIGNED ON 10/07/2002, WHEN THERE ARE ONLY TWO DIRECTORS IN THE COMPANY AND THE APPELLANT IS A DIRECTOR AS WELL AS A CHAIRMAN OF THE COMPANY. 3. THE AGREEMENT OF SALE IS DATED 29/06/2002 ON A STAMP PAPER OF THE VALUE OF RS.50/ - WHICH HAS NO DETAILS OF THE DATE OF ISSUE, NAME OF VENDOR ETC. ON THE FACE OF IT. ON THE REVERSE SIDE OF THIS STAMP DUTY PAPER THE DATE OF ISSUE IS 11/01/2000 I.E. MORE THAN TWO YEARS PRIOR TO THE DATE OF AGREEMENT OF SALE BETWEEN THE APPELLANT AND THE COMPANY FOR THE IMPUGNED SALE OF LAND. THIS STAMP PAPER WAS ISSUED IN SOM E OTHER NAM E AND NOT IN THE NAME OF EITHER THE APPELLANT COMPANY OR T HE APPELLANT OR OTHER DIRECTOR/ SECRETARY OF THE COMPANY. THIS DOCUMENT IS, THUS, CLEARLY APPEARS TO HAVE BEEN MADE TO GIVE A COLOUR OF TRADE ADVANCE TO THE OTHERWISE A GENUINE TRANSACTION OF LOAN OR ADVANCE TO THE APPELLANT. 4. THE APPELLANT HAS CLAIMED TO HAVE REC EIVED AN AMOUNT OF RS.17,35,000/ - DURING THE YEAR 2003 - 04 AS ADVANCE AGAINST SALE OF HIS A GRICULTURE LAND TO THE COMPANY. HOWEVER, THE ASSESSEE HAS NOT EXPLAINED AS TO WHAT MEASURES WERE TAKEN BY HIM IN TERMS OF CLAUSE 10 OF THE SALE AGREEMENT DATED 29/06 /2002 TO CONVERT THE ABOVE P A G E | 6 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH LAND OF 30.380 ACRES FOR INDUSTRIAL PURPOSES AND OTHER PERMISSION NECESSARY FOR COMPLETION, OF SALE. 5. THE STRUCTURE OF THE AGREEMENT BETWEEN THE APPELLANT AND THE COMPANY AND THE CONDITIONS LAID DOWN THEREIN ARE ARRANGED IN SUCH A MANNER THAT THEY ARE DISCERNABLE TO HAVE BEEN DRAFTED FOR THE MUTUAL BENEFIT OF BOTH PARTIES, AND MORE PARTICULARLY IN ORDER TH AT THE APPELLANT GET RID OF THE PROVISIONS OF DEEMED DIVIDENDS. C ERTAIN CLAUSES OF THE AGREEMENT ARE REPRODUCED BELOW TO BRING HOME THIS POINT : - (I) THE SECOND PARTY HAS THIS DAY PAID TO THE FIRST PARTY (APPELLANT) THE SUM OF RS .4,00,000/ - BY WAY OF ADVANCE AND THE SECOND PARTY (COMPANY) HAS AGREED TO PAY IN IN STALLMENTS AT MUTUALITY AGREED INTERNALS, AND BALANCE OF THE PURCHASE MONEY OF RS.10,00,000/ - WOULD B E PAID AT THE TIME OF EXECUTION OF ABSOLUTE SALE DEED. SIMULTANEOUSLY, WITH THE EXECUTION OF THIS AGREEMENT THE FIRST PARTY SHALL TO THE SECOND PARTY ALL THE LITTLE DEEDS. (II) THE SALE SHALL BE THE COMPLIED WITHIN A REASONABLE PERIOD FROM THE DATE OF THE AGREEMENT. (III) THE FIRST PARTY HEREBY AGREES TO CONVENT THE ABOVE LAND OF 30.380 FOR INDUST RIAL PURPOSE. THE FEES PAID TOWARDS CONVERSION WOULD BE REIMBURSED BY THE SECOND PARTY TO THE FIRST PARTY AFTER THE CONVERSION IN COMPLETED. (IV) IF A GOOD AND MARKETABLE TITLE IS NOT MADE OUT AND FIRST PARTY'S TITLE IS NOT CLEAR, THE FIRST PARTY SHALL REF UND THE MONEY PAID AS ADVANCE IMMEDIATELY ON RECEIVING WRITTEN COMMUNICATION FROM THE SECOND PARTY. IF THE FIRST PARTY DOES NOT REFUND THE ADVANCE AMOUNT IMMEDIATELY ON RECEIVING THE WRITTEN COMMUNICATION, THEN THE FIRST PARTY SHALL BE LIABLE TO PAY INTERE ST AT 1% PER MONTH FOR THE PERIOD OF DELAY AND THE SECOND PARTY SHALL PROCEED LEGALLY TO RECOVER THE SAME. (V) IF THE FIRST PARTY FAILS OR NEGLECTS TO COMPLETE THE SALE AFTER A GOOD AND MARKETABLE TITLE IS MADE OUT AS AFORESAID OR OTHERWISE TO CARRY OUT AN Y ONE OR MORE OF HIS OBLIGATIONS ON HIS PART AS HEREUNDER PROVIDED OR REQUIRED BY LAW, THE SECOND PARTY SHALL BE AT LIBERTY TO ENFORCE THE SPECIFIC PERFORMANCE OF THE AGREEMENT BY INSTITUTION OF LEGAL PROCEEDINGS OR AT HIS OPTION MAY SUE THE FIRST PARTY FO R RECOVERY OF MONEY PAID AS ADVANCE ALONG WITH INTEREST/ COSTS AND OTHER RELIEFS. (VI) IF THE FIRST PARTY FAILS TO GET THE LAND CONVERTED FOR REASONS BEYOND HIS CONTROL OR BECAUSE OF CHANGES IN THE LEGISLATION, THEN THE SECOND PARTY IS AT LIBERTY TO CANCEL THE AGREEMENT AND GET TH E REFUND OF MONEY PAID AS ADVANCE TO THE FIRST PARTY WITHIN A REASONABLE TIME (SIX MONTHS) SUBJECTS TO THE TERMINATION OF THE AGREEMENT AND IN SUCH CASE, THE FIRST PARTY SHALL NOT PAY ANY INTEREST TO THE SECOND PARTY. P A G E | 7 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH (VII) ON THE T ITLE BEING MADE GOOD AND MARKETABLE, THE SECOND PARTY FAILS TO COMPLETE THE PURCHASE WITHIN THE TIME AFORESAID, RS.5,00,000/ - (RUPEES FIVE L AKH ONLY) SHALL BE FORFEITED FROM THE PAID ADVANCE AMOUNT AND THE FIRST PARTY SHALL REFUND THE BAL ANCE AMOUNT TO THE SECOND PARTY WITHIN ONE WEEK FROM THE COMPLETION OF THE AFORESAID TIME IN THE AGREEMENT. 6. IN SPITE OF THE SPECIFIC QUERY RAISED AS TO WHY THE DEAL WAS NOT MATERIALIZED, THE APPELLANT CAME UP WITH A LAME EXCUSE THAT HIS AGRICULTURAL PROPERTY WAS ACQUIRED BY THE NAYA RAIPUR DEVELOPMENT AUTHORITY. THE APPELLANT , HOWEVER, MISERABLY FAILED TO EXPLAIN AS TO WHY THE LAND WAS NO T SO L D TO THE COMPANY OR THE ADVANCE WAS NOT DEMANDED BY THE COMPANY UNTIL THE YEAR 2008 WHEN FOR THE FIRST TIME THE APPELLANT MADE A DECLARATION FOR ADEQUATE COMPENSATION AGAINST THE COMPULSORY ACQUISITION OF HIS LAND BEFORE THE COMPETENT AUTHORITY. 7. THE MATTER WITH REGARD TO THE MISREPRESENTATION OF THE FACTS AND THE REASON FOR DELAY IN MAKING PAYMENT OF ADVA NCE RECEIVED FROM THE COMPANY DOES NOT END HERE. EVEN AFTER THE COMPENSATION AGAINST THE LAND RECEIVED BY THE ASSESSEE IN THE YEAR 2008 - 09, THE APPELLANT MADE THE PART PAYMENT TO THE COMPANY IN 2008 RS.3,35,000/ - AND SUBSTANTIAL PAYMENT OF RS.14,00,000 WAS MADE IN THE YEAR 2010. 8. WHEN THE APPELLANT CONTENDED THAT HE COULD NOT SELL HIS LAND TO THE COMPANY DUE TO THE ACQUISITION OF THE SAID LAND BY THE GOVERNMENT, THEN IN A COMMON PARLANCE THE TRADE ADVANCE RECEIVED FROM THE COMPANY CEASED TO EXIST AS A COMMERCIAL AGREEMENT AND THE A SSESSEE WAS IMMEDIATELY LIABLE TO RETURN THE AMOUNT. IN THE CIRCUMSTANCES IT IS INCOMPREHENSIBLE AS TO WHY THE ADVANCE WAS NOT RETURNED IMMEDIATELY TO THE COMPANY. IT CANNOT BE SAID THAT THE APPELLANT COULD HEARD THE MURMURS OF THE LAND ACQUISITIO N MATTERS ONLY IN 2008. THE APPELLANT BEING HIGHLY EDUCATED, WELL CONNECTED AND BELONGING TO THE UPPER STRATA OF THE SOCIETY WAS SUPPOSED TO KNOW WELL IN ADVANCE THAT HIS LAND WAS GOING TO BE ACQUIRED. MORE SO, IN THE INSTANCE CASE, THE ADVANCES RECEIVED W ERE REPAID IN 2008 AND 2010 MUCH AFTER THE A CTUAL DATE OF ACQUISITION BY THE GOVERNMENT OF HIS TRADED PROPERTY. THEREFORE, IN THE CIRCUMSTANCES THE ADVANCES RECEIVED BY THE ASSESSEE FROM HIS COMPANY CAN NO WAY BE CALLED A TRADE ADVANCE OR COMMERCIAL TRANSACTION. SUCH TRANSACTIONS SQUARELY FALL WITHIN THE AMBIT OF THE PROVISION OF S ECTION 2(22)(E) OF THE I.T. ACT. P A G E | 8 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH 9. THE APPELLANT HAS NOT BROUGHT OUT ANY REASON ON RECORD TO PROVE THAT HE WAS IN A FINANCIAL CRUN CH AS NOT TO RETURN THE MONEY TO THE COMPANY. ONE OF THE CLAUSES OF THE AGREEMENT (SUPRA) SAYS THAT IF THE FIRST PARTY (APPELLANT) FAILS TO GET LAND CONVERTED FOR REASONS BEYOND HIS CONTROL OR BECAUSE OF CHANGES IN THE LEGISLATION, THEN THE SECOND PARTY (COMPANY) IS AT LIBERTY TO CANCEL THE AGREEMENT AND GET THE REFUND OF MONEY PAID AS ADVANCE TO THE FIRST PARTY WITHIN A REASONABLE TIME (SIX MONTHS). THE FACTS OF THE CASE CLEARLY REVEAL THAT THE ASSESSEE NEITHER PAID THE ADVANCE RECEIVED FROM HIS COMPANY NOR THE COMPANY CANCEL THE AGREEMENT AND GOT REFUND WITHIN THE STIPULATED PERIOD. ON THE OTHER HAND, THE APPELLANT CONTINUED TO HOLD THE ADVANCE FROM THE DATE OF AGREEMENT IN 2003 TILL 2010. 10. NOW ADVERTING TO THE DECISION RELIED UPON IN THE WRITTEN SUBMIS SION, IT IS STATED THAT THEY WERE RENDERED ON THE FACTS OF THEIR OWN. THE ID. AR DID NOT DEMONSTRATE AS TO HOW THESE DECISIONS ARE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF INSTANT CASE. AFTER PERUSING THESE DECISIONS, I AM OF THE OPINION THAT THE DECIS IONS RELIED UPON ARE RENDERED IN THE FACTS OF THEIR OWN AND THE RATIO LAID DOWN IN THESE DECISIONS IS NOT GERMANE TO THE ISSUE BEFORE ME. THEREFORE, I AM OF THE OPINION THAT THE RELIANCE ON THE DECISIONS IS TOTALLY MISPLACED. 11. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE AND ALSO IN VIEW OF THE FOLLOWING THAT : - (I) THE A PPELLANT IS A CHAIRMAN/ DIRECTOR WITH OTHER PERSON OF HIS FAMILY AS THE DIRECTOR; (II) THE AGREEMENT FOR SALE STIPULATING THAT THE AMOUNT RECEIVE D AGAINST SALE OF PROPERTY IN TERMS OF AGREEMENT DATED 18/09/2003, AND THE HANDING OVER OF THE PROPERTY WAS TO BE DONE WITHIN SIX MONTHS IF THE APPELLANT FAILS TO GET THE LAND CONVERTED FOR REASONS BEYOND HIS CONTROL OR BECAUSE OF CHANGES IN THE LEGISLATIO N; (III) THE FACTUAL MATRIX THAT THE PROPERTY CONTINUED TO BE REFLECTED IN THE BALANCE SHEET OF THE APPELLANT AFTER MORE THAN FIVE YEARS OF THE AGREEMENT; (IV) THE APPELLANT NOR THE COMPANY HONOURED THE CONDITION OF FORFEITURE THE AMOUNT RS.5 LAC NOR THE APPELLANT RE FUNDED THE BALANCE AMOUNT AS STIPULATED IN THE AGREEMENT; THE ASSESSING OFFICER HAS RIGHTLY RECORDED THAT THE APPELLANT'S CASE IS NOT COVERED BY THE EXCEPTION OF DEEM ED DIVIDEND AS CONTEMPLATED U/S 2(22)(E). HE HAS RIGHTLY HELD THIS TRANSACTIONS AS SHAM AN D TREATED THEM AS DEEMED DIVIDEND TO THE ASSESSEE U/S 2(22)(E). THI S GROUND OF APPEAL IS DISMISS. P A G E | 9 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH THE CIT(A) THUS IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS CONCLUDED THAT THE AMOUNT OF RS.17,50,000/ - (SUPRA) RECEIVED BY THE ASSESSEE WAS CLEARLY IN THE NATURE OF A LOAN/ADVANCE RECEIVED BY HIM FROM THE COMPANY, WHICH HAD RIGHTLY BEEN ASSESSED AS DEE MED DIVIDEND BY THE A.O U/S. 2(22)(E) OF THE ACT , THUS DISMISSED THE APPEAL OF THE ASSESSEE. 6 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) , UPHOLDING THE ADDITION OF RS.17,50,000/ - (SUPRA ) MADE BY THE A.O U/S. 2(22)(E) HAD CARRIED THE MATT ER IN APPEAL BEFORE US. THE ASSESSEE HAD FILED A LETTER DATED 17.05.2017 REQUESTING THAT THE APPEAL MAY BE DISP OSED OF AFTER CONSIDERING HIS W RITTEN SUBMISSIONS , DATED 13.06.2016. WE THUS PROCEED WITH AND DISPOSE OF THE APPEAL ON MERITS, AFTER CONSIDERING THE W RITTEN SUBMISSIONS (SUPRA) FILED BY THE ASSESSEE AND HEARING THE RESPONDENT . THE ASSESSE E IN HIS WRITTEN SUBMISSIONS DATED 17.05.2017 HAD ASSAILED THE VALIDITY OF THE REASSESSMENT PROCEEDINGS , AS WELL AS SUBMITTED THAT NO ADDITION ON M ERITS WA S CALLED FOR IN HIS HANDS. THE M AIN THRUST OF THE ASSESSEE IN HIS WRITTEN SUBMISSIONS IS TH A T IN THE ABSENCE OF ANY NEW MATERIAL COMING INTO THE POSSESSION OF THE A.O SUBSEQUENT TO THE FRAMING OF ORIGINAL ASSESSMENT IN HIS HANDS U/S. 143(1), THE INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF CHANGE OF OPINION WAS NOT SUSTAINABLE. THE ASSESSEE IN SUPPORT OF HIS CONTENTION HAD RELIED ON THE FOLLOWING CASES: - (I) TITANOR COMPONENTS LTD. VS. ACIT (2012) 343 ITR 183 (BOM) . (II) GENERAL INSURA NCE CORPORATION INDIA VS. DCIT (2012) 342 ITR 27 (BOM). P A G E | 10 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH (III) MOTILAL R. TODI VS. ACIT (ITA NO. 2910/MUM/2013, DATED 22.09.2015) (ITAT, MUMBAI) (IV) AIPITA MARKETING (P) LTD. VS. ITO (2008) 21 SOT 302 (ITAT, MUMBAI) THE ASSESSEE THUS ON THE BASIS OF HIS AFORESA ID SUBMISSIONS HAD AVERRED THAT IN THE ABSENCE OF ANY NEW MATERIAL, THE REASSESSMENT PROCEEDINGS INITIATED IN HIS CASE U/S. 147 B EING DEVOID OF ANY FORCE OF LAW, WERE THUS LIABLE TO BE VACATED. ALTERNATIVELY, THE ASSESSEE HAD SUBMITTED THAT AS THE AMOUN T OF RS.17,50,000/ - RECEIVED BY HIM FROM THE COMPANY VIZ. M/S. SIMPLEX SOLUTION PVT. LTD. WAS BY WAY OF AN ADVANCE FOR SALE OF LAND BY HIM TO THE COMPANY, THEREFORE, THE LOWER AUTHORITIES HAD ERRED IN ASSESSING THE SAME AS DIVIDEND INCOME U/S. 2(22)(E) OF ACT. THE ASSESSEE HAD FURTHER SUBMITTED THAT THE DETAILS OF SUM OF RS.17,50,000/ - HAD NEITHER BEEN GIVEN IN THE ASSESSMENT ORDER OR IN THE ORDER OF THE CIT(A) . PER CONTRA, T HE LD. D EPARTMENTAL REPRESENTATIVES (FOR SHORT D.R) HAD RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND AVERRED THAT THE AMOUNT OF RS.17,50,000/ - (SUPRA) RECEIVED BY THE ASSESSEE FROM THE COMPANY , VIZ. M/S SIMPLEX SOLUTION PVT. LTD. IN WHICH HE HAD SUBSTANTIAL IN TEREST, HAD RIGHTLY BEEN ASSESSED BY THE A.O AS DEEMED DIVIDEND U/S. 2(22)(E ) WHICH THEREAFTER HAD BEEN UPHELD BY THE CIT(A). IT WAS THUS SUBMITTED BY THE LD. D.R THAT THE APPEAL OF THE ASSESSEE BEING DEVOID O F ANY MERIT WAS THUS LIABLE TO BE DISMISSED. 7 . WE HAVE PERUSED THE CONTENTIONS RAISED BY THE ASSESSEE IN HIS WRITTEN SUBMISSIONS AND HEARD THE LD. DEPARTMENTAL REPRESENTATIVE, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. W E FIND THAT THE MAIN THRUST OF THE ASSESSEE IN HIS AVERMENTS RAISED BEFORE US IN RESPECT OF THE VALIDITY OF REASSESSMENT P A G E | 11 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH PROCEEDINGS IS THAT THE A.O IN THE ABSENCE OF ANY FRESH MATERIAL COMING INTO HIS POSSESSION AFTER THE PASSING OF THE ORDER U/S. 143(1) HAD THUS EXCEEDED HIS JURISDICTION BY INITIATING REASSESSMENT PROCEEDINGS ON THE BASIS OF A MERE CHANGE OF OPINION. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID SUBMISSIONS OF THE ASSESSEE AND ARE UNABLE TO FIND OURSELVES AS BEING IN AGREEM ENT WITH THE SAME. WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT AN A.O CANNOT ASSUME JURISDICTION INITIATE REASSESSMENT PROCEEDINGS ON THE BASIS OF A CHANGE OF OPINION, BUT THEN THE SAME PRESUPPOSES THE FORMATION OF AN OPINION BY THE A.O IN THE COURSE OF THE EARLIER PROCEEDINGS. THE PROPO SITION ADVANCED BY THE ASSESSEE WOULD UNDOUBTEDLY HOLD GOOD IN A CASE WHERE ORIGINAL ASSESSMENT HA D BEEN FRAMED U/S. 143(3), AND THEREAFTER THE A.O WITHOUT BEING IN POSSESSION OF ANY FRESH MATERIAL FORMS A DIFFERENT OPINION ON THE SAME SET OF MATERIAL WHICH WAS THERE BEFORE HIM IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. WE HOWEVER ARE AFRAID THAT SUCH A PROPOSITION CANNOT BE STRETCH ED TO TAKE WITHIN ITS SWEEP A CASE WHERE THE RETURN OF INCOME FILED BY AN ASSESSEE, AS IS THE CASE BEFORE US, HAD MERELY BEEN PROCESSED U/S. 143(1). WE ARE OF THE CONSIDERED VIEW THAT ISSUANCE OF AN INTIMATION U/S. 143(1) ONLY INVOLVES A SUMMARY PROCESSING OF THE RETURN OF INCOME , THEREFORE, THERE ARISES NO OCCASION FOR FORMATION OF AN OPINION ON THE PART OF THE A.O WHILE PROCESSING THE RETURN OF INCOME, AS A RESULT WHEREOF , A SUBSEQUENT ISSUANCE OF A NOTICE U/S. 148 CANNOT BE ASSAILED ON THE GROUND THAT THE SAME IS BASED ON A CHANGE OF OPINION. WE FIND THAT THE ISSUE AS TO WHETHER OR NOT, THE PROCESSING OF A RETURN U/S. 143(1)(A) CAN BE CONSTRUED AS AN ASSESSMENT , AND WOULD HAVE TO CLEAR THE TEST OF CHANGE OF OPINION FOR VALID ASSUMPTION OF JURISDICTION BY AN A.O FOR REASSESSING THE INCOME OF THE ASSESSEE U/S 147 OF THE ACT, HAD BEEN LOOKED INTO BY THE HONBLE SUPREME COURT P A G E | 12 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD, (2007) 291 ITR 500 (SC) . T HE HO NBLE SUPREME COURT DELIBERATIN G ON THE ISSUE UNDER CONSIDER ATION HAD CONCLUDED THAT AS AN INTIMATION U/S 143(1)(A) CANNOT BE HELD TO BE AN ASSESSMENT, THEREFORE, NO QUESTION OF CHANGE OF OPINION WOULD ARISE WHERE THE SAME IS THEREAFTER SUBJECTED TO REAS SESSMENT U/S 147 , AND HAD OBSERVED AS UNDER: 13. ONE THING FURTHER TO BE NOTICED IS THAT INTIMATION UNDER S. 143(1)(A) IS GIVEN WITHOUT PREJUDICE TO THE PROVISIONS OF S. 143(2). THOUGH TECHNICALLY THE INTIMATION ISSUED WAS DEEMED TO BE A DEMAND NOTICE ISSUED UNDER S. 156, THAT DID NOT PER SE PRECLUDE THE RIGHT OF THE AO TO PROCEED UNDER S. 143(2). THAT RIGHT IS PRESERVED AND IS NOT TAKEN AWAY. BETWEEN THE PERIOD FROM 1ST APRIL, 1989 TO 31ST MARCH, 1998, THE SECOND PROVISO TO S. 143(1)(A), REQUIRED THAT WHERE ADJUSTMENTS WERE MADE UNDER THE FIRST PROVISO T O S. 143(1)(A), AN INTIMATION HAD TO BE SENT TO THE ASSESSEE NOTWITHSTANDING THAT NO TAX OR REFUND WAS DUE FROM HIM AFTER MAKING SUCH ADJUSTMENTS. WITH EFFECT FROM 1ST APRIL, 1998, THE SECOND PROVISO TO S. 143(1)(A) WAS SUBSTITUTED BY THE FINANCE ACT, 1997 , WHICH WAS OPERATIVE TILL 1ST JUNE, 1999. THE REQUIREMENT WAS THAT AN INTIMATION WAS TO BE SENT TO THE ASSESSEE WHETHER OR NOT ANY ADJUSTMENT HAD BEEN MADE UNDER THE FIRST PROVISO TO S. 143(1) AND NOTWITHSTANDING THAT NO TAX OR INTEREST WAS FOUND DUE FROM THE ASSESSEE CONCERNED. BETWEEN 1ST APRIL, 1998 AND 31ST MAY, 1999, SENDING OF AN INTIMATION UNDER S. 143(1)(A) WAS MANDATORY. THUS, THE LEGISLATIVE INTENT IS VERY CLEAR FROM THE USE OF THE WORD 'INTIMATION' AS SUBSTITUTED FOR 'ASSESSMENT' THAT TWO DIFFER ENT CONCEPTS EMERGED. WHILE MAKING AN ASSESSMENT, THE AO IS FREE TO MAKE ANY ADDITION AFTER GRANT OF OPPORTUNITY TO THE ASSESSEE. BY MAKING ADJUSTMENTS UNDER THE FIRST PROVISO TO S. 143(1)(A), NO ADDITION WHICH IS IMPERMISSIBLE BY THE INFORMATION GIVEN IN THE RETURN COULD BE MADE BY THE AO. THE REASON IS THAT UNDER S. 143(1)(A) NO OPPORTUNITY IS GRANTED TO THE ASSESSEE AND THE AO PROCEEDS ON HIS OPINION ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE. THE VERY FACT THAT NO OPPORTUNITY OF BEING HEARD IS GIV EN UNDER S. 143(1)(A) INDICATES THAT THE AO HAS TO PROCEED ACCEPTING THE RETURN AND MAKING THE PERMISSIBLE ADJUSTMENTS ONLY. AS A RESULT OF INSERTION OF THE EXPLANATION TO S. 143 BY THE FINANCE (NO. 2) ACT OF 1991 W.E.F. 1ST OCT., 1991, AND SUBSEQUENTLY W. E.F. 1ST JUNE, 1994, BY THE FINANCE ACT, 1994, AND ULTIMATELY OMITTED W.E.F. 1ST JUNE, 1999, BY THE EXPLANATION AS INTRODUCED BY THE FINANCE (NO. 2) ACT OF 1991 AN INTIMATION SENT TO THE ASSESSEE UNDER S. 143(1)(A) WAS DEEMED TO BE AN ORDER FOR THE PURPOSE S OF S. 246 BETWEEN 1ST JUNE, 1994, TO 31ST MAY, P A G E | 13 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH 1999, AND UNDER S. 264 BETWEEN 1ST OCT., 1991, AND 31ST MAY, 1999. IT IS TO BE NOTED THAT THE EXPRESSIONS 'INTIMATION' AND 'ASSESSMENT ORDER' HAVE BEEN USED AT DIFFERENT PLACES. THE CONTEXTUAL DIFFERENCE BET WEEN THE TWO EXPRESSIONS HAS TO BE UNDERSTOOD IN THE CONTEXT THE EXPRESSIONS ARE USED. ASSESSMENT IS USED AS MEANING SOMETIMES 'THE COMPUTATION OF INCOME', SOMETIMES 'THE DETERMINATION OF THE AMOUNT OF TAX PAYABLE' AND SOMETIMES 'THE WHOLE PROCEDURE LAID D OWN IN THE ACT FOR IMPOSING LIABILITY UPON THE TAXPAYER'. IN THE SCHEME OF THINGS, AS NOTED ABOVE, THE INTIMATION UNDER S. 143(1)(A) CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT. THE DISTINCTION IS ALSO WELL BROUGHT OUT BY THE STATUTORY PROVISIONS AS THE Y STOOD AT DIFFERENT POINTS OF TIME. UNDER S. 143(1)(A) AS IT STOOD PRIOR TO 1ST APRIL, 1989, THE AO HAD TO PASS AN ASSESSMENT ORDER IF HE DECIDED TO ACCEPT THE RETURN, BUT UNDER THE AMENDED PROVISION, THE REQUIREMENT OF PASSING OF AN ASSESSMENT ORDER HAS BEEN DISPENSED WITH AND INSTEAD AN INTIMATION IS REQUIRED TO BE SENT. VARIOUS CIRCULARS SENT BY THE CBDT SPELL OUT THE INTENT OF THE LEGISLATURE, I.E., TO MINIMIZE THE DEPARTMENTAL WORK TO SCRUTINIZE EACH AND EVERY RETURN AND TO CONCENTRATE ON SELECTIVE SC RUTINY OF RETURNS. THESE ASPECTS WERE HIGHLIGHTED BY ONE OF US (D.K. JAIN, J.) IN APOGEE INTERNATIONAL LTD. VS. UNION OF INDIA (1997) 137 CTR (DEL) 93 : (1996) 220 ITR 248 (DEL). IT MAY BE NOTED ABOVE THAT UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED S . 143(1), W.E.F. 1ST JUNE, 1999, EXCEPT AS PROVIDED IN THE PROVISION ITSELF, THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER S. 143(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE, OR (B) NO REFUND IS DUE TO HIM. IT IS SIG NIFICANT THAT THE ACKNOWLEDGEMENT IS NOT DONE BY ANY AO, BUT MOSTLY BY MINISTERIAL STAFF. CAN IT BE SAID THAT ANY 'ASSESSMENT' IS DONE BY THEM ? THE REPLY IS AN EMPHATIC 'NO'. THE INTIMATION UNDER S. 143(1)(A) WAS DEEMED TO BE A NOTICE OF DEMAND UNDER S. 1 56, FOR THE APPARENT PURPOSE OF MAKING MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDICATED TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. AND NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISION. THEREFORE, THERE BEING NO ASSESSMENT UNDER S. 143(1)(A), THE QUESTION OF CHANGE OF OPINION, AS CONTENDED, DOES NOT ARISE. WE FURTHER FIND THAT THE RELIANCE PLACED BY THE ASSESSEE ON THE JUDGMENTS OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF G ENERAL INSURANCE CORPORATION OF INDIA (SUPRA) AND TITANOR COMPONENTS LTD. (SUPRA) ARE DISTINGUISHABLE ON FACTS AND WOULD NOT ASSIST THE CASE OF THE ASSESSEE. WE FIND THAT IN THE CASE OF GENERAL INSURANCE CORPORATION INDIA (SUPRA) THE FACTS INVOLVED WERE THAT THE A.O WHILE FRAMING THE ASSESSMENT U/S 143(3), HAD AFTER APPLYING HIS P A G E | 14 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH MIND TO THE CLAIM OF THE ASSESSEE IN RESPECT OF CERTAIN EXEMPTIONS U/S. 10. THEREAFTER , IN THE ABSENCE OF ANY FRESH MATERIAL THE A.O BEING OF THE VIEW THAT THE EXEMPTIONS U/S. 1 0 HAD WRONGLY BEEN ALLOWED TO THE ASSESSEE INITIATED REASSESSMENT PROCEEDINGS. THAT IT WAS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE HONBLE HIGH COURT HELD TH A T THE AFORESAID ACTION ON THE PART OF THE A.O WAS CLEARLY A CASE OF CHANGE OF OPINION, AND IN THE ABSENCE OF ANY FRESH MATERIAL THE ASSESSMENT COULD NOT BE REOPENED. WE FURTHER FIND THAT IN THE CA SE OF TITANOR COMPONENTS LTD. (S UPRA) , THE ISSUE BEFORE THE HONBLE HIGH COURT WAS IN RESPECT OF T H E SCOPE AND GAMUT OF THE FIRST PROVISO OF SECTI ON 147. THAT IT WAS IN THE CONTEXT OF THE SAID ISSUE BEFORE THE HONBLE HIGH COURT THAT IT WAS OBSERVED THAT THE ASSESSMENT FRAMED IN THE HANDS OF THE ASSESSEE U/S. 143(3) COULD ONLY BE REOPENED AFTER A PERIOD OF 4 YEARS, IF THE CONDITIONS PRESCRIBED BY TH E PROVISO TO SECTION 147 WERE SATISFIED. IT WAS THUS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE HONBLE HIGH COURT BEING OF THE VIEW THAT AS THE ASSESSMENT IN THE CASE OF THE ASSESSEE BEFORE THEM WAS FRAMED U/S. 143(3), AND THE LATTER HAD NOT FLOUTED EITHER OF THE CONDITIONS PRESCRIBED IN THE FIRST PROVISO OF SECTION 147, THEREFORE, THE REOPENING OF THE ASS ESSMENT COULD NOT BE UPHELD. WE FIND THA T AS OBSERVED BY US HEREINABOVE, THE REASSE SSMENT PROCEEDINGS IN THE CASE OF THE PRESENT ASSESSEE WERE PRECEDED BY AN INTIMATION U/S. 143(1), THEREFORE, THE FACTS OF THE CASE BEING DISTINGUISHABLE AS AGAINST THOS E BEFORE THE HONBLE HIGH COURT, WOULD THUS NOT BE OF ANY ASSISTANCE TO THE ASSESSEE. WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE ASSESSEE HAD RELIED ON THE ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL, BUT AS THE ISSUE INVOLVED IN THE CASE BEFORE US IS SQUARELY COVERED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI ( SUPRA) , THEREFORE, THE ORDERS OF THE LOWER AUTHORITIES HOLDING TO THE P A G E | 15 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH CONTRARY WILL HAVE TO GIVE WAY TO THE JUDG MENT OF THE HONBLE APEX COURT . HOWEVER, EVEN OTHERWISE WE FIND THAT AS OBSERVED BY THE CIT(A), A COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MEARSK GLOBAL SERVICE CENTRE (INDIA) (P) LTD., (2011) 16 TAXMANN.COM 47 , FOLLOWING THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P) LTD., (SUPRA) HAD HELD THAT WHERE A RETURN OF INCOME HAD BEEN PROCESSED U/S 143(1), A SUBSEQUENT INITIATION OF REASSESSMENT PROCEEDINGS IN THE ABSENCE OF ANY FRESH MATERIAL CANNOT BE CHARACTERIZED AS PROCEEDINGS EMBARKED UPON ON THE BASIS OF A CHANGE O F OPINION. WE FURTHER FIND THAT THE ASSESSEE HAD ALSO STATED THAT AS COPY OF THE REASON S TO BELIEVE WERE NOT MADE AVAILABLE TO HIM, THEREFORE, IN LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVES H A FT (INDIA) LTD. VS. ITO ( ORS ) (259 ITR 19) , THE REASSESSMENT PROCEEDINGS FRAMED WERE LIABLE TO BE STRUCK DOWN ON ACCOUNT OF THE SAID LEGAL INFIRMITY ITSELF. WE THOUGH ARE NOT OBLIVIOUS OF THE SETTLED POSITION OF LAW THAT WHERE AN ASSESSEE AFTER COMPLYING WITH THE TERMS OF A NOTICE ISSUED U/S. 148 SEEKS A COPY OF THE REASON S TO BELIEVE, THEREUPON , THE A.O REMAINS UNDER A STATUTORY OBLIGATION TO MAKE AVAILABLE A COPY OF THE SAME BE FORE PROCEEDING WITH THE REASSESSMENT PROCEEDINGS. WE FURTHER FIND THAT IN T HE CASE OF THE PRE SENT ASSESSEE THERE IS NOTHING AVAILABLE ON RECORD FROM WHERE IT COULD BE GATHERED THAT ANY REQUEST FOR OBTAINING THE COPY OF THE REASONS TO BELIEV E WAS MADE BEFORE TH E A.O. WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS ARE UNABLE TO ACCEPT THE AFORESAID CONTENTION OF THE ASSESSEE AND UPHOLD THE VALIDITY OF THE REASSESSMENT PROCEEDINGS INITIATED BY THE A.O U/S. 147. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE IS DISMISSED. P A G E | 16 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH 8. WE FURTHER FIND FROM A PERUSAL OF THE RECORDS THAT THE ASSESSEE ON BEING CALLED UPON BY THE A.O TO PUT FORTH AN EXPLANATION AS TO WHY THE AMOUNT OF RS.17,50,000/ - (SUPRA) RECEIVED BY HIM FROM M/S. SI M PLEX SOLUTION PVT. LTD., I.E. A COMPANY IN WHICH HE WAS HOLDING MORE THAN 10% OF THE SHARES , MAY NOT BE ASS ESSED AS DEEMED DIVIDEND U/S. 2(22)(E) IN HIS HANDS HAD SUBMITTED THAT AS THE SAID AMOUNT WAS AN ADVANCE RECEIVED BY HIM AS PER THE TERMS OF THE AGREEMENT TO SELL, DATED 29.06.2002, EXECUTED BETWEEN HIM AND THE COMPANY, IN RESPECT OF AN ANTICIPATED SAL E OF AGRICULTURAL LAND TO THE COMPANY, THEREFORE, THE SAME NOT BEING A SIMPLICITER ADVANCE , THUS, COULD NOT BE ASSESSED AS DEEMED DIVIDEND U/S. 2(22)(E). WE FIND THAT THE AFORESAID CLAIM OF THE ASSESSEE HAD BEEN DELIBERATED UPON AT LENGTH BY THE CIT(A), WHEREIN THE LATTER EMBARKING UPON THE VARIOUS FACETS OF THE CONTENTIONS OF THE ASSESSEE HAD DISLODGED THE SAME BY OBSERVING THAT T HERE WERE SERIOUS INFIRMITIES , CONTRADICTIONS AND LAPSES IN THE SAID CLAIM OF THE ASSESSEE, WHICH THUS COULD NOT BE ACCEPTED. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT THERE ARE A NUMBER OF LOOSE ENDS IN THE CONTENTIONS WHICH WERE RAISED BY THE ASSESSEE IN ORDER TO IMPRESS UP ON THE LOWER AUTHORI TIES THAT THE AMOUNT OF RS.17,50,000 / - (SUPRA) RECEIVED BY HIM BY WAY OF AN A DVANCE IN RESPECT OF THE ANTICIPATED SALE OF LAND BY HIM TO THE COMPANY. THE INFIRMITIES IN THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, AS GATHERED FROM THE RECORDS , ARE BRIEFLY DEALT WITH AND CULLED OUT AS UNDER: - (I) THAT THE VERY FACT THAT THE A GREEMENT TO S ELL , DATED 29.06.2002 WAS FOUND TO BE UNREGISTER ED IN ITSELF DOES CAST SERIOUS DOUBTS AS P A G E | 17 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH REGARDS THE AUTHENTICITY OF THE SAID DOCUMENT AND THE TRANSACTION CLAIMED TO BE EVIDENCED THEREOF. T HE AFORESAID DOUBTS ARE FURTHER SUPPLEMENTED BEYOND ANY SCOPE OF DOUBT FROM THE VERY FACT THAT THE S TAMP PAPER OF THE VALUE OF RS.50 / - ON WHICH THE IMPUGNED AGREEMENT TO S ELL HAD BEEN EXECUTED , DID NEITHER BE AR THE DATE OF ISSUE NOR THE NAME OF VENDOR ON THE VERY FACE OF IT. TH AT ON THE REVERSE SIDE OF THE S TAMP PAPER THE DATE OF ISSUE WAS MENTIONED AS 11.01.2000 , I.E. MORE THAN 2 YEARS PRIOR TO THE DATE OF EXECUTION OF THE AGREEMENT TO SELL, VIZ. 29.06.2002. STILL FURTHER , IT EMERGED THAT THE SAID STAMP PAPER WAS NOT ISSUED EITHER IN THE NAME OF THE ASSESSEE OR THE COMPANY OR ANY OF THE DIRECTOR/SECRETARY OF THE COMPANY, BUT WAS FOUND TO BE IN THE NAME OF A THIRD PARTY WHO WAS A STRANGER TO THE TRANSACTION UNDER CONSIDERATION . THUS THE GENUINENESS AND VERACITY OF THE AFORESAID AGREEMENT TO S ELL CAN BE WELL GATHERED BEYOND ANY SCOPE OF DOUBT ON A BARE PERUSAL OF THE AFORESAID FACTS, WHICH CAN SAFELY BE HELD TO BE A BOGUS DOCUMENT WHICH WAS PREPARED WITH THE SOLE I NTENT TO CHARACTERIZE THE ADVANCE OF RS.17,50,000/ - (SUPRA) RECEIVED BY THE ASSESSEE FROM THE COMPANY , AS AN ADVANCE RECEIVED IN LIEU OF AN AGREEMENT TO S ELL IN RESPECT OF THE AFORESAID LAND. (II) THE FACT THAT NO TRANSACTION IN RESPECT OF THE PROPERTY UNDER CONSIDERATION WAS REFLECTED IN THE BOOKS OF ACCOUNT OF THE COMPANY, FURTHER FORTIFIES THE FACT THAT THE ASSESSEE IN ORDER TO CHARACTERIZE A PURE AND SIMPLE TRANSACTION OF LOAN OR ADVANCE RECEIVED BY HIM FROM THE COMPANY, AS THAT OF A COMMERCIAL TRANSACTION , HAD THUS CAME WITH THE AFORESAID COOKED UP STORY. (III) THE MEETING OF THE BOARD OF DIRECTORS OF THE COMPANY IN ORDER TO RATIFY THE TRANSACTION IS STATED TO HAVE TAKEN PLACE ON 22.05.2002, HOWEVER , THE MINUTES ARE FOUND TO HAVE BEEN SIGNED ON 10.07.2002 . P A G E | 18 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH THUS, IN THE BACKDROP OF THE FACT THAT THERE WER E ONLY TWO DIRECTORS IN THE COMPANY AND THE ASSESSEE WAS A DIRECTOR AS WELL AS THE CHAIRMAN OF THE COMPANY, THEREFORE, GOING BY THE PRINCIPAL OF PREPONDERANCE OF HUMAN PROBABILITIES THE AFORESAID FACTS RAISES SERIOUS DOUBTS AS REGARDS THE AUTHENTICITY OF T HE AFORESAID DOCUMENT AND THE TRANSACTION REFERRED THEREIN . (IV) THAT A PERUSAL OF THE CONTENTS OF THE IMPUGNED AGREEMENT TO SELL ,DATED 29.06.2002 , REVEALS THAT THE ASSESSEE REMAINED UNDER AN OBLIGATION TO TAKE NECESSARY STEPS TO CONVERT THE LAND ADMEASURING 30.380 ACRES FOR INDUSTRIAL PURPOSE S AND OBTAIN THE NECESSARY PERMISSION S WHICH WERE NECESSARY FOR COMPLETION OF THE SALE TRANSACTION . HOWEVER, NOTHING WAS PLA CED ON RECORD IN RESPECT OF THE SAME BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES. THUS IN THE BACKDROP OF THE CONTENTION RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT HE HAD RECEIVED AN AMOUNT OF RS.17,50,000/ - (SUPRA) BY WAY OF A N ADVANCE AGAINST THE ANTICIPATED SALE OF HIS AGRICULTURAL L AND TO THE COMPANY, IT IS BEYOND COMPREHENSION AS TO HOW THE LATTER WOULD DESPITE PARTING WITH SUCH SUBSTANTIAL PURCHASE CONSIDER ATION IN FAVOUR OF THE ASSESSEE WOULD HAD PERMIT TED THE AFORESAID I NACTION ON THE PART OF THE ASSESSEE , AS THE SAME WAS INDISPENSABLY REQUIRED TO FACILITATE THE SALE TRANSACTION TO FRUCTIFY. (V) THE TERMS OF THE AGREEMENT AND THE MANNER IN WHICH THE SAME HAD BEEN DRAFTED AS HAD BEEN DELIBERATED UPON BY THE CIT(A) AT LENGTH IN HIS ORDER, THEREIN DEALING WITH THE VARIOUS FACETS OF THE CONTENTS OF THE SAID AGREEMENT TO SELL DOES NOT INSPIRE ANY CONFIDENCE AS REGARDS THE AUTHENTICITY OF THE DOCUMENT AND THE CONTENTS THEREO F, BUT RATHER ON THE CONTRARY CLEARLY REVEALS THAT THE SAME HAD BEEN EXECUTED WITH P A G E | 19 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH THE MALAFIDE INTENT TO GET RID OF THE RIGORS OF THE PROVISIONS OF DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. (VI) THAT THE EXPLANATION OF THE ASSESSEE THAT THE SALE TRA NSACTION DID NOT FRUCTIFY BECAUSE THE AGRICULTURAL PROPERTY UNDER CONSIDERATION WAS COMPULSORILY ACQUIRED BY THE G OVERNMENT ORGANISATION , VIZ. NAYA RAIPUR DEVELOPMENT AUTHORITY, CANNOT BE ACCEPTED, BECAUSE IF THAT WOULD HA D BEEN SO, THEN THE COMPANY WOULD HAD CLEARLY CALLED UPON THE ASSESSEE TO REFUND THE ADVANCE. WE HOWEVER FIND FROM THE RECORDS THAT THE COMPANY DID NOT CALL FOR THE REFUND OF THE MONEY UNTIL THE YEAR 2008 , WHEN FOR THE FIRST TIME THE ASSESSEE MADE A DECLARATION FOR ADEQUATE COMPENSATION AG AINST THE COMPULSORY ACQUISITION OF HIS LAND BEFORE THE COMPETENT AUTHORITY. (VII) THAT THE MISREPRESENTATION OF THE FACTS BY THE ASSESSEE FURTHER DRAWS FORCE FROM THE FACT THAT EVEN AFTER THE ASSESSEE WAS IN RECEIPT OF COMPENSATION IN THE YEAR 2008 - 09, ON LY AN AMOUNT OF RS.3,35,000/ - WAS REFUND ED OUT OF THE AFORESAID ADVANCE OF RS.17,50,000/ - (SUPRA) TO THE COMPANY IN THE YEAR 2008, WHILE FOR THE MAJOR AMOUNT OF RS. 14 ,00,000/ - IS STATED TO HAVE BEEN REFUNDED ONLY IN THE YEAR 2010. IT IS BEYOND COMPREHENSION AS TO HOW THE COMPANY DESPITE BEING W ELL AWARE OF THE FACT THAT THE SALE AGREEMENT WAS NOT TO FRUCTIFY IN FUTURE , AS THE LAND HAD BEEN ACQUIRED BY THE GOVERNMENT, W OULD HOWEVER EVEN THEREAFTER ALLOW IT S SUBSTANTIAL AMOUNT S TO REMAIN WITH THE ASSESSEE FOR YEARS AT STRETCH. (VIII) TH AT AS AFTER THE ACQUISITION OF THE AGRICULTURAL LAND OF THE ASSESSEE BY THE GOVERNMENT THERE REMAIN ED NO OCCASION FOR THE ASSESSEE TO HAV E PROCEEDED WITH THE SALE TRANSACTION IN FAVOUR OF THE COMPANY , THEREFORE, THE TRADE ADVANCE RECEIVED BY THE ASSESSEE FROM THE COMPANY LOST THE COLOR AS THAT OF AN AMOUNT RECEIVED BY HIM P A G E | 20 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH PURSUANT TO A COMMERCIAL TRANSACTION , THUS MAKING IT OBLIGATORY ON THE PART OF THE ASSESSEE TO IMMEDIATELY REFUND THE SAME AMOUNT TO THE COMPANY. WE ARE UNABLE TO COMPREHEND AS TO WHY THE ASSESSE E INSTEAD OF IMMEDIATELY REFUNDING THE AMOUNT TO THE COMPANY, RATHER CHOSE TO RETAIN IT FOR YEARS AT STRETCH. WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT THERE IS NO MATERIAL ON RECORD WHICH COULD GO TO SUGGEST ABOUT THE GENUINENESS OF THE TRANSACTION AS CANVASSED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, BUT RATHER , EVEN IF WHAT HAD BEEN CANVASS ED BY THE A SSESSEE IS TO BE ACCEPTED TO BE TRUE, THEN ALSO AS OBSERVED BY US HEREINABOVE, AFTER THE ACQUISITIO N OF THE LAND BY THE GOVERNMENT , THE ADVANCE RECEIVED BY THE ASSESSEE THEREAFTER NO MORE RETAINED THE COLOR AND CHARACTER AS THAT OF AN AMOUNT RECEIVED IN LIEU OF A COMMERCIAL TRANSACTION, AND THE FAILURE ON HIS PART TO IMMEDIATELY REFUND THE SAME SUFFICED THE REQUIREMENT FOR CHARACTERIZATION OF THE SAID AMOUNT AS A SIMPLE ADVANCE , WHICH THUS EVEN ON THE SAID COUNT WOULD BRING THE AFORE SAID TRANSACTION WITHIN THE SWEEP OF SECTION 2(22)(E). (IX) THAT THOUGH THE IMPUGNED AGREEMENT TO S ELL CONTEMPLATED THAT IF THE ASSESSEE WOULD FAIL TO GET THE LAND CONVERTED FOR REASON S BEYOND HIS CONTROL OR B ECAUSE OF CHANGES IN THE LEGISLATION, THEN THE COMPANY REMAIN ED AT A LIBERTY TO CANCEL THE AGREEMENT AND GET THE REFUND OF THE MONEY PAID AS ADVANCE TO THE ASSESSEE WITHIN A REASONABLE PERIOD OF 6 MONTHS. WE HOWEVER FIND THAT DESPITE THE AFORESAID OBLIGATI ON CAST UPON THE ASSESSEE TO REFUND THE AMOUNT TO THE COMPANY, THE LATTER HAD IN A WHIMSICAL MANNER HELD BACK THE SAID AMOUNT TILL THE YEAR 2010, WHICH IS BEYOND COMPREHENSION AND AS SUCH CANNOT BE ACCEPTED. P A G E | 21 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH 10 . WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS HAVE A STRONG CONVICTION THAT THE IMPUGNED AGREEMENT TO SELL PROJECTED BY THE ASSESSEE TO JUSTIFY H IS CLAIM THAT THE AMOUNT OF RS.17,50,000/ - (SUPRA) WAS RECEIVED BY HIM FROM THE COMPANY IN LIEU OF A T RANSACTION OF AN ANTICIPATED SALE OF LAND BY HIM TO THE COMPANY, WHICH HOWEVER COULD NOT FRUCTIFY ON ACCOUNT OF COMPULSORY ACQUISITIO N OF THE LAND BY THE GOVERNMENT IS MERELY A N ARRANGEMENT TAILORED BY THE ASSESSEE WITH THE S O LE INTENT TO WRIGGLE OUT OF TH E RAMIFICATIONS OF HAVING RECEIVED THE AFORESAID AMOUNT FROM THE COMPANY, WHICH AS PER LAW WAS LIABLE TO BE ASSESSED AS DEEMED DIVIDEND U/S. 2(22)(E) IN HIS HANDS. WE FIND OURSELVES TO BE IN ABSOLUTE AGREEMENT WITH THE OBSERVATIONS OF THE CIT(A) THAT THE CLAIM RAISED BY THE ASSESSEE AND THE CONTENTIONS RAISED IN CONTEXT THERETO HAVE SERIOUS LOOSE ENDS WHICH CLEARLY MILITATE AGAINST THE BASIC PRINCIPL E OF PREPONDERANCE OF HUMAN PROBABILITIES, AND RATHER , AS A MATTER OF FACT GOES TO PROVE TO THE HILT THAT T HE SAID CLAIM OF THE ASSESSEE IS THE BRAIN CHILD OF AN AFTERTHOUGHT , WHICH WAS GUIDED BY AN ULTERIOR MOTIVE OF AVOIDING ASSESSING OF THE AFORESAID AMOUNT AS A DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. WE THOUGH ARE OF THE CONSIDERED VIEW THAT THE VERY FACT THAT THE AGREEMENT TO S ELL, DATED 29.06.2002 WHICH IN ITSELF BEING UNREGISTERED WOULD HAVE NO EXISTENCE IN THE EYES OF LA W , COUPLED WITH THE FACT THAT THE SAME WAS FOUND TO HAVE BEEN EXECUTED ON A S TAMP PAPER OF THE VALUE OF RS.50/ - WHICH WAS FOUND TO BE ISSUED ON 11.01.2000, I.E. MORE THAN 2 YEARS PRIOR TO THE DATE OF THE IMPUGNED AGREEMENT OF SE LL, VIZ. 29.06.2002, BETW EEN THE ASSESSEE AND THE COMPANY, A ND WAS NOT FOUND TO HAVE BEEN ISSUED IN THE NAME OF EITHER OF THE AFORESAID PARTIES, VIZ, THE ASSESSEE OR THE COMPANY/OR DIRECTOR/SECRETARY OF THE COMPANY , BUT IN THE NAME OF A THIRD PARTY WHO WAS A STRANGER TO THE IMPUGN ED TRANSACTION , WOULD IN ITSELF HAD P A G E | 22 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH SUFFICED ESTABLISHING OF THE FALSITY OF THE AFORESAID CLAIM OF THE ASSESSEE, BUT WE HA VE FURTHER PROCEEDED WITH THE VARIOUS FACETS RELATABLE TO THE ISSUE UNDER CONSIDERATION , WITH THE PURPOSE TO UNFOLD THE SEQUENCE OF FALSE CLAIMS WHICH HA D BEEN RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES . WE FIND OURSELVES TO BE IN AGREEMENT WITH THE OBSERVATIONS OF THE CIT(A), AND ARE OF THE CONSIDERED VIEW THAT NEITHER THE CONTENTION S RAISED BY THE ASSESSEE BEFORE THE LOWE R AUTHORITIES NOR THE MATERIAL AVAILABLE ON RECORD , SUPPORT S THE CLAIM OF THE ASSESSEE THAT THE AMOUNT OF RS.17,50,000/ - (SUPRA ) WAS RECEIVED BY HIM AS AN ADVANCE FOR AN ANTICIPATED SALE OF LAND BY HIM TO THE COMPANY . WE THUS IN LIGHT OF OUR AFORESAID OB SERVATIONS UPHOLD THE ORDER OF THE CIT(A). THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 .08.2017 SD/ - SD/ - ( G.S. PANNU ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 11 .0 8 .2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// P A G E | 23 ITA NO. 1580/MUM/2013 SHRI KAPIL N. SHAH / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI