Saga Developers Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3165/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5886 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 08-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: S SRIKANT
• Keywords: Unexplained expenditure; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Bonafide belief; Additional evidence; Reasonable cause; Deemed dividend; Documents seized
• Section: 69C; 40A(3); 273B; 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G , NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO.2601/DEL/2014 ASSESSMENT YEAR: 2009 - 10 DCIT, CENTRAL CIRCLE - 10, NEW DELHI VS. M/S. SAAMAG DEVELOPERS PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI PAN : AAJCS4952R ( APPELLANT ) (RESPONDENT) AND ITA NO.3000/DEL/2014 ASSESSMENT YEAR: 2009 - 10 M/S. SAAMAG DEVELOPERS PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI VS. ACIT, CENTRAL CIRCLE - 10, NEW DELHI PAN : AAJCS4952R ( APPELLANT ) (RESPONDENT) AND ITA NO.433/DEL/2014 ASSESSMENT YEAR: 2006 - 07 ACIT, CENTRAL CIRCLE - 10, NEW DELHI VS. M/S. SAAMAG DEVELOPERS PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI PAN : AAJCS4952R ( APPELLANT ) (RESPONDENT) AND ITA NO.2602/DEL/2014 ASSESSMENT YEAR: 2006 - 07 D CIT, CENTRAL CIRCLE - 10, NEW DELHI VS. M/S. SAGA DEVELOPERS PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI PAN : AAJCS4932K ( APPELLANT ) (RESPONDENT) 2 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 AND ITA NO .2999 /DEL/ 2014 ASSESSMENT YEAR: 2006 - 07 M/S. SAGA DEVELOPERS PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI VS. ACIT, CENTRAL CIRCLE - 10, NEW DELHI PAN : AAJCS4932K ( APPELLANT ) (RESPONDENT) AND ITA NO.2604/DEL/2014 ASSESSMENT YEAR: 2009 - 10 DCIT, CENTRAL CIRCLE - 10, NEW DELHI VS. M/S. SAGA DEVELOPERS PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI PAN : AAJCS4932K ( APPELLANT ) (RESPONDENT) AND ITA NO .3165 /DEL/ 2014 ASSESSMENT YEAR: 2009 - 10 M/S. SAGA DEVELOPERS PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI VS. ACIT, CENTRAL CIRCLE - 10, NEW DELHI PAN : AAJCS4932K ( APPELLANT ) (RESPONDENT) AND ITA NO.436/DEL/2014 ASSESSMENT YEAR: 2007 - 08 ACIT, CENTRAL CIRCLE - 10, NEW DELHI VS. M/S. SAGA TOWNSHIP PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI PAN : AAKCS1955M ( APPELLANT ) (RESPONDENT) ASSESSEE BY SH. M.P. RASTOGI, ADV. & SH. S. SRIKANT, ADV. DEPARTMENT BY SH. S.S. RANA, CIT(DR) 3 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 ORDER PER O.P. KANT , A. M. : THE AFORESAID APPEALS FILED BY THE R EVENUE AND CROSS APPEALS BY THE ASSESSEE, HAVE BEEN DIRECTED AGAINST DIFFERENT ORDERS PASSED BY THE LD. COMMIS SIONER OF INCOME - TAX (APPEALS) [ IN SHORT THE LD. CIT(A) ) IN CASE OF FOLLOWING ASSESSES: SL. NO. APPELLANT VS. RESPONDENT ASSESSMENT YEAR APPEAL NO. DATE OF ORDER OF LD. CIT(A) 1. DCIT VS. SAMAG DEVELOPERS PVT. LTD. 2009 - 10 2601/DEL/2014 28.02.2014 2. SAAMAG DEVELOPERS PVT. LTD. VS. ACIT 2009 - 10 3000/DEL/2014 28.02.2014 3. ACIT VS. SAAMAG DEVELOPERS 2006 - 07 433/DEL/2014 29.10.2013 4. DCIT VS SAGA DEVELOPERS PVT. LTD. 2006 - 07 2602/DEL/2014 28.02.2014 5. SAGA DEVELOPERS VS. ACIT 2006 - 07 2999/DEL/2014 28.02.2014 6. DCIT VS. SAGA DEVELOPERS 2009 - 10 2604/DEL/2014 28.02.2014 7. SAGA DEVELOPERS PVT. LTD. VS. ACIT 2009 - 10 3165/DEL/2014 28.02.2014 8. ACIT VS. SAGA TOWNSHIP PVT. LTD. 2007 - 08 436/DEL/2014 25.10.2013 2. SINCE IN THESE APPEALS, IDENTICAL ISSUES ARE INVOLVED IN SAME SET OF CIRCUMSTANCES, THEREFORE , THESE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATE D ORDER FOR CONVENIENCE. ITA NO S . 2601/DEL/2014 & 3000/DEL/2014 3. FIRST, WE TAKE CROSS APPEALS OF THE R EVENUE ( ITA NO. 260 1/DEL/2014 ) AND THE ASSESSEE ( ITA NO. 3000/DE L/2014) IN DATE OF HEARING 09.05.2018 DATE OF PRONOUNCEMENT 3 0 . 0 5 . 2 0 1 8 4 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THE CASE OF SAAMAG DEVELOPERS P RIVATE L IMITED FOR ASSESSMENT YEAR 2009 - 10. 4. G ROUNDS OF APPEAL RAISED BY THE REVENUE ARE REPRODUCED AS UNDER: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.52,19,500/ - ON ACCOUNT OF UN - EXPLAINED EXPENDITURE U/S 69C. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.34,25,000/ - MADE BY THE ASSESSING OFFICER U/S 2(22)(3) OF THE INCOME TAX ACT, 1961. 4. (A) THE ORDER OF THE CIT(APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEA RING OF THE APPEAL. 5. G ROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1) THE DISALLOWANCE OF RS.8,56,111/ - ON ACCOUNT OF PRIOR PERIOD EXPENSES IS WRONG AND IS OPPOSED TO EVIDENCES ON RECORD. 2) THE LIABILITIES ON ACCOUNT OF IMPUGNED SUM OF RS.8,56,111/ - HAVING ACCRUED IN THE CAPTIONED ASSESSMENT YEAR, THE SAME IS ALLOWABLE IN THE VERY SAME ASSESSMENT YEAR. 3) THE CIT(A) HAS ERRED IN HOLDING THAT SUM OF RS.34,25,000/ - IS COVERED BY PROVISIONS OF SEC. 2(22)(E) OF THE ACT. SUCH FINDING S ARE OPPOSED TO EVIDENCES ON RECORD. 4) IT IS CONTENDED THAT THE PROVISION OF SEC. 2(22)(E) OF THE ACT ARE NOT APPLICABLE TO THE IMPUGNED SUM OF RS.34,25,000/ - . 5 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 5) IT IS CONTENDED THAT THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT CANNOT APPLY TO BUSINESS ADVANCES EXTENDED DURING HT COURSE OF CARRYING ON OF BUSINESS. 6. B RIEFLY STATED FACTS OF THE CASE ARE THAT CONSEQUENT TO SEARCH A CTION UNDER SECTION 132 OF THE A CT AT THE PREMISES OF THE ASSESSEE, NOT ICE UNDER SECTION 153A OF THAT A CT WAS ISSUED AND IN C OMPLIANCE THE ASSESSEE FILED RETURN OF INCOME DECLARING LOSS OF RS. 11,16, 497 / - ON 21/07/2010. IN VIEW OF THE COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE, AUDI T UNDER SECTION 142(2A) OF THE ACT WAS REFERRED TO THE SPECIAL AUDITOR, WHO SUBMITTED HIS REPORT TO THE ASSESSING OFFICER. RELYING ON THE REPORT OF THE S PECIAL A UDITOR, THE ASSESSING OFFICER MADE CERTAIN ADDITIONS/DISALLOWANCES TO THE INCOME RETURNED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO PARTLY ALLOWED THE APPE AL OF TH E ASSESSEE. AGGRIEVED, BOTH THE R EVENUE AND THE ASSESSEE ARE IN APPEAL BEFOR E THE TRIBUNAL RAISING GROUNDS A S REPRODUCED ABOVE. 7. THE GRO UND NO. 1 OF THE APPEAL OF THE R EVENUE RELATES TO ADMITTING ADDITIONAL E VIDENCES UNDER RULE 46A OF THE INCOME - TAX RULES, 1962 [IN SHORT THE RULES ] 7.1 BEFORE US, THE LD. DR SUBMITTED THAT THE LD. CIT(A) ADMITTED EVIDENCES ON THE ISSUE OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE A CT WITHOUT FOLLOWING THE DUE PROCEDURE OF R ULE 46 A OF THE R ULES. HE SUBMI TTED THAT THE ASSESSING OFFICER OBJECTED TO ADMISSION OF ADDITIONAL EVIDENCES AND COULD NOT GIVE HIS COMMENT ON MERIT OF THE ADDITIONAL EVIDENCES DUE TO FAILURE ON THE PART OF THE ASSESSEE TO COMPLY WITH THE REMAND PROCEEDINGS . ACCORDING TO HIM, IN VIEW OF THE DECISION OF THE HON BLE DELHI HIGH COURT IN 6 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THE CASE OF CIT VS. MANISH BUILD WELL (P) LIMITED (2011) 245 CTR 397, THE LD. CIT(A) WAS REQUIRED TO SEND THE ADDITIONAL EVIDENCES TO THE LD. ASSESSING OFFICER FOR HIS COMMENT A FTER ADMITTING THE SAME. THE LD. DR , ACCORDINGLY , SUBMITTED THAT THE GROUND NO. 1 OF THE APPEAL MIGHT BE ALLOWED AND CONSEQUENTLY, THE GROUND NO. 2 OF THE APPEAL SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE ADDITIONAL EVIDENCES AND DECIDE THE ISSUE IN DISPUTE ACCORDINGLY. 7.2 THE LD. COUNSEL OF THE ASSESSEE, REFERRED TO THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT REMAND REPORT WAS CALLED FROM THE ASSESSING OFFICER AND THER EFORE THERE IS NO VIOLATION OF RULE 46A OF THE R ULES. 7.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT HON BLE DELHI HIGH COURT IN THE CASE OF MANISH BUILD WELL (P) L TD. (SUPRA) OBSERVED THAT AFTER ADMITTING THE ADDITIONAL EVIDENCES, THE LD. ASSESSING OFFICER S HOULD BE PROVIDED REASONABLE OPPORTUNITY TO REBUT THOSE ADDITION AL EVIDENCES FOR COMPLIANCE OF RULE 46A(3) OF THE R ULES. THE RELEVANT FINDING OF THE HON BLE DELHI HIGH COURT IS REPRODUCED AS UNDER: 24. IN THE PRESENT CASE, THE CIT(A) HAS OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE AO. THIS OBSERVATION TAKES CARE OF CL. (C) OF SUB - R. (1) OF R. 46A. THE OBSERVATION OF THE CIT(A) ALSO TAKES CARE OF SUB - R. (2) UNDER WHICH HE IS REQUIRE D TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIREMENT OF SUB - RS. (1) AND (2) OF R. 46A HAVE BEEN COMPLIED WITH. HOWEVER, SUB - R. (3) WHICH INTERDICTS THE CIT(A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE AO HAS HAD A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORDER OF 7 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THE CIT(A) TO SHOW THAT THE AO WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY TH E ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RESULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE WITHOUT THE AO FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT(A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB - R. (3) OF R. 46A. IN OUR OPINION AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO MIX UP THE POWERS OF THE CIT(A) UNDER SUB - S. (4) OF S. 250 WITH THE POWERS VESTED IN HIM UNDER R. 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB - R. (4) OF R. 46A [SIC - S. 250] WHICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CO NFERRED BY THE CIT(A) UNDER THE STATUTE WHILE DISPOSING OF THE ASSESSEE S APPEAL AND THE POWERS CONFERRED UPON HIM UNDER R. 46A. THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PROVISIONS OF R. 46A VIS - - VIS S. 250(4). ITS VIEW THAT SINCE IN ANY CASE THE C IT(A), BY VIRTUE OF HIS COTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WAS NO VIOLATION OF R. 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTI NCTION BETWEEN THE TWO PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE R. 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT(A) CANNOT BE SUBJECTED TO THE CONDITIONS PRESCRIBED IN R. 46A BECAUSE IN ANY CASE THE CIT(A) IS VESTED WITH COTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB - S. (4) OF S. 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE COUNTE NANCED. 7.4 IN THE INSTANT CASE, ALSO THE ASSESSEE FILED ADDITIONAL EVIDENCES DURING THE FIRST A PPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), WHICH INCLUDED COPIES OF EXCHANGE DEEDS, ENGAGEMENT LETTERS AND OTHER CORRESPONDENCE WITH BROKERS AND COPY O F CERTIFICATE OF THE GRAM PRADHAN, VILLAGE BAMHETTA , CERTIFYING THAT NO BANKING FACILITIES WERE AVAILABLE IN THE VILLAGE . THE ASSESSING OFFICER OBJECTED ADMITTING OF ADDITIONAL EVIDENCES. ON THE ISSUE OF THE MERIT, THE ASSESSING OFFICER DURING REMAND PROCEEDING PROVIDED OPPORTUNITIES TO THE ASSESSEE, HOWEVER, NO COMPLIANCE 8 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 WAS MADE BY THE ASSESSEE OF THE LETTER ISSUED BY THE ASSESSING OFFICER AND , THEREFORE , HE COULD NOT PROVIDE ANY COMMENT ON THE ADDITIONAL EVIDENCES. THE RELEVANT PART OF THE REMAND REPORT AS PRODUCED BY THE LD. CIT(A) IN THE IMPUGNED ORDER IS EXTRACTED AS UNDER: 4. EVEN OTHERWISE ON MERITS ALSO THE ASSESSEE WAS AGAIN GIVEN AN OPPORTUNITY VIDE THIS OFFICE LETTER DATED 13.08.2013, FIXING THE CASE FOR 20.08.2013, NO COM PLIANCE WHATSOEVER WAS MADE TO JUSTIFY ITS CLAIM. 7.5 T HE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCES OBSERVING AS UNDER: 6. I HAVE GONE THROUGH THE CONTENTS OF THE REMAND REPORT OF THE ASSESSING OFFICER, REJOINDER OF THE APPELLANT AND ALSO THE ADDIT IONAL EVIDENCE FILED UNDER RULE 46A OF THE I.T. RULES, 1962. AS THE DOCUMENT IN FORM OF EXCHANGE DEED NOW FURNISHED BY THE APPELLANT AS ADDITIONAL EVIDENCE ARE VITAL AND GO TO THE ROOT OF THE MATTER, THE SAME ARE ADMITTED UNDER RULE 46A TO DECIDE THE ISSUE ON MERIT. IN THE CASE OF CIT VS VIRGIN SECURITIES CREDIT P. LTD. (2011)332 ITR 396(DEL) THE JURISDICTIONAL HIGH COURT HAS HELD THAT, EVIDENCE WHICH IS CRUCIAL IN DISPOSING THE CASE CAN BE ADMITTED. SINCE, THE DOCUMENT FILED BY THE APPELLANT AS ADDITIONAL EVIDENCE IS OF THE NATURE THAT MAY ADVANCE THE INTEREST OF JUSTICE AND SHOW THAT THERE WAS NO JUSTIFICATION FOR ADDITION MADE, THE SAME NEED TO BE ADMITTED AND CONSIDERED. THEREFORE, THE DOCUMENT FILED AS ADDITIONAL EVIDENCE IN THE COURSE OF APPEAL PROCEED INGS IS ADMITTED FOR CONSIDERATION. ACCORDINGLY, THE ISSUE UNDER CONSIDERATION WILL BE DECIDED ON MERITS IN THE LIGHT OF THE DOCUMENT FILED AS ADDITIONAL EVIDENCE IN THE FOLLOWING PARAGRAPHS. 9 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 7.6 I T IS EVIDENT FROM THE FACTS OF THE CASE THAT THE ADDITIONAL EVIDENCES HAVE BEEN FILED BY THE ASSESSEE ON THE ISSUE OF UNEXPLAINED EXPENDIT URE UNDER SECTION 69C OF THE A CT. ON PERUSAL OF THE CONTENTS OF THE REMAND REPORT REPRODUCED ABOVE, IT IS ALSO SEEN THAT DUE TO NON - COMPLIANCE ON THE PART OF THE ASSES SEE, THE ASSESSING OFFICER C OULD NOT GIVE COMMENT ON THE MERIT OF THE ADDITIONAL EVIDENCES. SINCE, THE LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCES WITHOUT PROVIDING OPPORTUNITY OF REBUT TING THE SAME TO THE ASSESSING OFFICER , RESPECTFULLY FOLLOWING THE FINDING OF THE HON BLE D ELHI HIGH COURT IN THE CASE OF MANISH B UILD WELL (P) LTD (SUPRA) , WE RESTORE ISSUE IN DISPUTE TO THE FILE OF THE LD. CIT(A), WITH A DIRECTION TO THE ALLOW OPPORTUNITY TO THE LD. ASSESSING OFFICER TO REBUT THE ADDITIONAL EVIDENCES F ILED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW . IT IS NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE PROVIDED ADEQUATE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE GROUND NO. 1 OF THE APPEAL OF THE R EVENUE IS ALLOWED, WHEREAS THE G ROUND NO. 2 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8 . THE GRO UND NO. 3 OF THE APPEAL OF THE R EV ENUE RELATES TO ADDITION OF RS.34, 25,000/ - FOR DEEME D DIVIDEND UNDER SECTION 2(22)( E) OF THE ACT. THE GROUND NO. 3 TO 5 OF THE APPEAL OF THE ASSESSE E ALSO RELATES TO THIS ADDITION OF DEEMED DIVIDEND. 8 .1 ON THE BASIS OF THE REPORT OF THE S PECIAL A UDITOR, THE ASSESSING OFFICER OBSERVED THAT IN VIEW OF THE SHAREHOLDING PATTERN, THE DIVIDEND INCOME WAS TAXABLE IN THE HANDS OF THE SHAREHOLDER TO THE EXTEN T OF ACCUMULATED PROFIT OF THE ASSESSEE 10 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 COMPANY. THE ASSESSEE SUBMITTED THAT ADVANCES OF RS.69,26, 109/ - HAD BEEN GIVEN TO ASSOCIATED ENTITIES ENGAGED IN REAL ESTATE DEVELOPMENT FOR BUSINESS PURPOSES AND , THEREFORE , SAME WERE OUTSIDE THE PURVIEW OF THE DEEM ED DIVIDEND. THE ASSESSEE FURTHER CLAIMED THAT THE SAID ADVANCES WERE TRADE ADVANCES AND ALSO SUBMITTED COPIES OF THE AGREEMENT EN TERED INTO FOR PURCHASE OF LAND FOR BUSINESS PURPOSES BY THOSE ASSOCIATED ENTITIES . THE LD. ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND COMPUTED D EEMED DIVIDEND AMOUNTING TO RS.34, 25,000/ - . ON FURTHER APPEAL, THE LD. CIT(A) DELETED THE ADDITION HOLDING THAT THE ASSESSEE IS A LENDER AND NOT THE BORROWER AND THEREFORE ADDITION UNDER SECTION 2(22)( E) OF THE A CT CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER : 16. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE AR OF APPELLANT. I HAVE ALSO PERUSED THE CASE LAWS RELIE D UPON BY THE APPELLANT. IN THE SE OF APPEAL PROCEEDINGS, THE AR OF THE APPELLANT FILED A COPY OF THE APPEAL ORDER DATED 22.03.2013 IN THE CASE OF M/S. SAAMAG CONSTRUCTION LTD. PASSED BY MY PREDECESSOR CIT(A) IN APPEAL NO. 37/11 - 12/ - (A)32 FOR THE A.Y. 2007 - 08 WHEREIN ON IDENTICAL FACTS, AS IN THE CASE OF THE APPELLANT FOR ASSESSMENT YEAR UNDER CONSIDERATION, MY PREDECESSOR CIT(A) HAD DELETED THE ADDITION OF RS. 44,74,198/ - MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE I.T. ACT, 1961. I HAVE PERUSED THE COPY OF MY PREDECESSOR S ORDER PASSED IN THE ABOVE MENTIONED CASE FOR A.Y. 2007 - 08 WHEREIN WHILE DELETING THE ADDITION MADE U/S 2(22)(E) OF THE I.T. ACT, 1961, HE HAS OBSERVED AS UNDER: '5.13 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE ID. AO AS PER TH E ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE ID. AR AND THE FACTS OF THE CASE ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITIONS IN THE HANDS OF THE LENDING COMPANIES ON 11 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THE BASIS THAT THE MONIES HAVE BEEN GIVEN AS LOANS TO THE GROUP COMPANIES IN WHICH THERE ARE COMMON SHAREHOLDERS. WHILE CALCULATING THE ACCUMULATED PROFITS, THE ASSESSING OFFICER HAS ADDED THE AMOUNT OF ADDITION MADE IN THE ASSESSMENT ORDER TO THE FIGURE OF THE PROFIT AVAILABLE AS PER THE BOOKS OF ACCOUNT. THE ID. AR ARGUED THAT THE APP ELLANT IS A LENDER AND NOT THE BORROWER, THEREFORE, THE ADDITION U/S 2(22)(E) MADE ON PROTECTIVE BASIS IS NOT CALLED FOR IN THIS CASE. THE APPELLANT FURTHER CONTENDED THAT THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF P.K. BADIANI VS. CIT (SUPRA) HA S BEEN APPLIED ENTIRELY ERRONEOUSLY AND EVEN AS PER THE SAID JUDGMENT ITSELF, THE ACCUMULATED PROFIT DOES NOT MEAN ASSESSABLE OR TAXABLE PROFIT LIABLE TO BE TAXED AS INCOME AND WILL NOT INCLUDE ANY ADDITION EFFECTED BY THE ASSESSING OFFICER IN DETERMINING THE TOTAL INCOME. IN THIS REGARD, THE APPELLANT HAS ALSO MADE THE WORKING OF ACCUMULATED PROFITS FOR THE ENTIRE GROUP, BASED ON THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF P.K. BADIANI VS. CIT (SUPRA). (COPY ATTACHED AS PER ANNEXURE 'A'). 5.14 ON BEING ASKED DURING THE APPELLATE PROCEEDINGS AS TO WHY THE ACCUMULATED PROFIT IS TO BE ADJUSTED / REDUCED AGAINST THE ADDITIONS MADE U/S 2(22)(E) IN THE EARLIER YEARS, THE APPELLANT RELIED UPON THE JUDGMENTS OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. G. NARASIMHAN (DEED.) AND OTHERS [1999] 238 1TR 327 (SC) AND THAT OF HON BLE CHENNAI BENCH OFLTAT IN THE CASE OF ASWANI ENTERPRISES VS. ACIT [2009] 121 TTJ (CHENNAI) 408 (SUPRA). 5.15 A S MENTIONED EARLIER, THE ADDITION IN THE INSTANT CASE WERE MA DE IN THE HANDS OF THE LENDER, WHEREAS SECTION 2(22)(E) DOES NOT CONTEMPLATE THE SAME, RATHER IT PROVIDES FOR THE GROUP COMPANIES WAS NOT PRODUCED EITHER BEFORE THE ID. AU OR BEFORE THE SPECIAL AUAITORS. HENCE, THE SAME CANNOT HE RELIED UPON. THEREFORE, IN MY CONSIDERED OPINION, THE INVOCATION OF THE PROVISIONS OF SECTION 2(22)(E) HAS RIGHTLY BEEN MADE BY THE ASSESSING OFFICER. HOWEVER, AS PER THE PROVISIONS OF SECTION 2(22)(E), THE ADDITIONS ARE REQUIRED TO BE MADE IN THE HANDS OF THE BORROWERS/SHAREHOLDER S INSTEAD OF THE LENDER, HENCE I AM UNABLE UPHOLD THE ACTION OF THE ID. AO MAKING AN ADDITION OF RS.44,74,198/ - IN THIS CASE. WITH THE ABOVE OBSERVATIONS, THE ADDITION OF RS.44,74,198/ - IS DIRECTED TO BE DELETED AND ACCORDINGLY, THE GROUND NO. 8 OF THE APP EAL IS ALLOWED IN FAVOUR OF THE APPELLANT.' 16.1 SINCE THE FACTS INVOLVED IN THE APPELLANT S CASE ARE IDENTICAL TO THE FACTS OF THE ABOVE CASE, FOLLOWING THE ABOVE 12 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 ORDER OF MY PREDECESSOR CIT(A) IN THE CASE OF M/S SAAMAG CONSTRUCTION LTD., A COMPANY OF SA AMAG GROUP, I ALSO DELETE THE ADDITION OF RS. 34,25,000/ - MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE I.T. ACT, 1961 IN THE CASE OF THE APPELLANT. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 17. GROUND NOS. 2. 3, 4, 7, 7A, 9 & 10 ARE NOT PRESSED BY THE APPELLANT. HENCE, THESE GROUNDS ARE DISMISSED AS SUCH. 8 .2 THE R EVENUE IS AGGRIEVED WITH ABOUT FINDING OF THE LD. CIT(A). 8 .3 BEFORE US, THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER , WHEREAS THE LD. COUNSEL RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT SINCE THE ASSESSEE HAS NOT RECEIVED ANY LOAN OR ADV ANCE AND THEREFORE NO ADDITION C OULD HAVE BEEN MADE IN THE HAND OF THE ASSESSEE FOR DEEMED DIVIDEND UNDER SECTION 2(22)(E ) OF THE A CT. 8 .4 WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS TREATED THE ADVANCES GIVEN BY THE ASSESSEE A S DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE U NDE R SECTION 2(22)( E) OF THE A CT. THE ASSESSING OFFICER HAS CONSIDERED ADVANCE GIVEN BY THE ASSESSEE COMPANY FOR MAKING ADDITION OF DEEMED DIVIDEND OBSERVING AS UNDER ON PAGE 14 OF THE ASSESSMENT ORDER: THE MOOT ARGUMENT OF THE ASSESSEE RESTS ON ITS CLAIM THAT THE AMOUNTS ADVANCED BY IT TO THE OTHER CONCERNS OF THE SAAMAG GROUP WERE TRADE ADVANCES AND NOT DEEMED DIVIDENDS. THE ASSESSEE S REPLY HAS BEEN EXAMINED AND CONSIDERED AND IS NOT FOUND ACCEPTABLE. AT THE OUTSET, 13 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THERE IS NO DENIAL BY THE ASSESSEE TO THE FACT THAT ADVANCES HAVE BEEN GIVEN TO THE OTHER COMPANIES BY IT. ALSO THERE IS NO DENIAL THAT THERE ARE COMMON SHAREHOLDERS IN THE COMPANY GIVING AND IN THE COMPANY RECEIVING ADVANCES. FOR THE SAKE OF BREVITY, THE DETAIL OF THE SHAREHOLDING IS NOT BEING STATED BUT IS BEING ATTACHED AS PER ANNEXURE A .] 8 .5 I N VIEW OF THE ABOVE FINDING OF THE LD. ASSESSING OFFICER , IN OUR OPINION, THERE IS NO DISPUTE ON THIS FACT THAT THE AMOUNTS ADVANCED BY THE ASSESSEE TO OTHER RELATED CONCERNS HAVE BEEN TREATED AS DEEMED DIVIDEND BY THE ASSESSING OFFICER . FROM THE PLANE LANGUAGE O F THE SECTION 2(22)(E ) OF THE A CT , IT IS CLEAR T HAT THE AMOUNT OF LOAN OR ADVANCE RECEIVED BY THE SHAREHOLDER OR ON BEHALF OF THE SHAREHOLDER IS LIABLE TO BE CONSIDERED AS DEEMED DIVIDEND. FOR READY REFERENCE THE RELEVANT PART OF THE SECTION 2(22)(E ) IS REPRODUCED AS UNDER : 2(22) 'DIVIDEND' INCLUDES (A) ; (B) . ; (C) ; (D) .. ; (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) MADE AFTE R THE 31ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS 14 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THE SAID CONCERN) OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS; 8 .6 THUS , IN VIEW OF THE PLANE LANGUAGE OF THE RELEVANT SEC TION, THE LENDER OF THE ADVANCE/ LOAN CANNOT BE HELD LIAB LE FOR DEEMED DIVIDEND . IN VIEW OF THIS FINDING, W E ARE NOT REQUIRED TO EXAMINE THE OTHER ARGUMENTS OF THE LD. COUNSEL OF THE ASSESSEE THAT THE MONEY ADVANCED WAS IN THE COURSE OF BUSINESS. IN OUR OPINION, THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUT E IS WELL REASONED AND WE DO NOT FIND ANY ERROR IN THE SAME, ACCORDINGLY WE UPHOLD THE SAME. THE GROUND NO. 3 OF THE APPEAL OF TH E R EVENUE IS ACCORDINGLY DISMISSED AND GROUND NO. 3 TO 5 OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 9 . IN GROUND NO. 1 & 2 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED SUSTAINING OF DISALLOW ANCE OF ALLEGED PRIOR PERIOD EXPENSES OF RS. 8,56,111/ - BY THE LD. CIT(A). 9 .1 THE FACTS QUA THE DISALLOWANCE ARE THAT THE ASSESSING OFFICER ON THE BASIS OF THE REPORT OF THE SPECIAL AUDITOR OBSERVED THAT COMMISSION EXPENSES OF RS.8, 5 6, 111/ - CLAIMED PERTAINING TO BOOKING OF FLATS IN FINANCIAL YEAR 2006 - 07 RELE VANT TO ASSESSMENT YEAR 2007 - 08 . THE ASSESSING OFFICER HAS REPRODUCED LIST OF THE SAID EXPENSES ON PAGE 5 OF THE AS SESSMENT ORDER, WHICH IS EXTRACTED AS UNDER FOR READY REFERENCE: 15 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 DATE OF ENTRY IN BOOKS DATE OF BILL NAME OF PARTY AMOUNT REMARKS 11.04.2008 11.04.2008 GOLDMINE DEVELOPERS PVT. LTD. 265,450 THIS COMMISSION RELATES TO PLOT BOOKINGS * MADE IN FIN YR 2006 - 07 AND HENCE THESE ARE PRIOR PERIOD EXPENSES 24.05.2008 24.05.2008 OM ESTATE CONSULTANT 56,250 THIS COMMISSION RELATES TO PLOT BOOKINGS MADE IN FIN YR 2006 - 07 AND HENCE THESE ARE PRIOR PERIOD EXPENSES 25.06.2008 31.03.2009 R. B. ASSOCIATES 61,250 THIS COMMISSION RELATES TO PLOT BOOKINGS MADE IN FIN YR 2006 - 07 AND HENCE THESE ARE PRIOR PERIOD EXPENSES 14.07.2008 14.07.2008 RR CONSULTANCY SERVICES PVT. LTD. 96,911 THIS COMMISSION RELATES TO PLOT BOOKINGS MADE IN FIN YR 2006 - 07 AND HENCE THESE ARE PRIOR PERIOD EXPENSES 31.03.2009 31.03.2009 R. B. ASSOCIATES 61,250 THIS COMMISSION RELATES TO PLOT BOOKINGS MADE IN FIN YR 2006 - 07 AND HENCE THESE ARE PRIOR PERIOD EXPENSES 31.03.2009 31.03.2009 R. B. ASSOCIATES 315,000 THIS COMMISSION RELATES TO PLOT BOOKINGS MADE IN FIN YR 2006 - 07 AND HENCE THESE ARE PRIOR PERIOD EXPENSES 9 .2 THE ASSESSEE CLAIMED THAT EXPENSES AND PAYMENT WERE RECOGNIZED WHEN SAME WERE DUE AND ACCORDINGLY ACCOUNTED I N THE BOOKS OF ACCOUNTS. ACCORDING TO THE ASSESSING OFFICER, PLOTS HAVE BEEN BOOKED IN THE PERIOD CORRESPONDING TO ASSESSMENT YEAR 2007 - 08 AND , THEREFORE , CORRESPONDING COMMISSION EXPENSES WERE DUE IN RELEVANT ASSESSMENT YEAR ONLY AND CANNOT BE ALLOWED IN THE YEAR UNDER CONSIDERATION. BEFORE THE LD. CIT(A) , THE ASSESSEE CLAIMED THAT THAT THE ASSESSEE RECEIVED PLOT BOOKING ADVANCES FROM THE PUBLIC THROUGH VARIOUS REAL ESTATE AGENTS AND THOSE AGENTS HAD RAISED BILLS DURING THE ASSESSMENT YEAR UNDER CONSIDERAT ION AND ACCORDINGLY , THE ASSESSEE HAD RECOGNIZED THE 16 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 SAID EXPENSES IN THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) REJECTING THE CONTENTION OF THE ASSESSEE OBSERVED AS UNDER: 10. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. ON PERUSAL OF THE DETAILS OF THESE EXPENSES I FIND THAT THESE EXPENSES RELATE TO THE COMMISSION FOR THE SALE OF PLOTS MADE IN THE FINANCIAL YEAR 2006 - 07 RELEVANT TO ASSESSMENT YEAR 2007 - 08. THUS, THESE EXPENSES CLEARLY PERTAINED TO THE ASSESSMEN T YEAR 2007 - 08 AND NOT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IT DOES NOT MATTER AS TO WHEN THE PERSON TO WHOM TO COMMISSION WAS PAID HAVE RAISED THE BILLS FOR PAYMENT OF SUCH COMMISSION. THE EXPENSES FOR BOOKING OF PLOTS HAVE TO BE RECOGNIZED IN THE YEAR IN WHICH THE PLOT WAS BOOKED AND ADVANCE FROM THE CUSTOMER WAS RECEIVED. THEREFORE, CONSIDERING THE FACTS OF THE CASE, I SEE NO JUSTIFICATION TO INTERFERE THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFIC ER IN DISALLOWING THE IMPUGNED EXPENSES IS UPHELD AND THE ADDITION MADE IS CONFIRMED. 9 .3 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILED A PAPER BOOK CONTAINING PAGES 1 TO 33 A ND SUBMITTED THAT THE COMMISSION EXPENSES IN QUESTION RELATE TO BU Y - BACK OF PLOTS DURING THE YEAR UNDER CONSIDERATION R ATHER THAN BOOKING OF THE PLOTS IN EARLIER YEARS. HE SUBMITTED THAT FACTS HAVE NOT BEEN CORRECTLY APPRECIATED BY THE LOWER AUTHORITIES AND THE EXPENSES IN QUESTION ARE NOT PRIOR PERIOD EXPENSES. ACCORDINGLY, HE SUBMITTED THAT MATTER MAY BE RESTORED BACK TO THE LOWER AUTHORITIES FOR DECIDING THE ISSUE AFRESH. 9 .4 THE LD. D R, ON THE OTHER HAND , RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 17 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 9 .5 WE HAVE HEARD THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF PAGE 20 OF THE PAPER BOOK , WE FIND THAT PARTY M/S OM E STATE CONSULT ANT RA ISED A BILL OF INCENTIVE OF RS.1,12,500 / - OUT OF WHICH 50% AMOUNT OF RS. 56,250 / - HAS BEEN SHOWN AS DUE AS ON 24/05/2008 . SIMI LARLY, ON PAGES 21, BIL L OF RS.1,22, 500/ - ISSUED BY ANOTHER PARTY M/S RB A SSOCIATES IS AVAILABLE, OUT OF WHICH RS. 61,250/ - HAS BEEN SHOWN AS DUE ON 25/06/2008. SIMILARLY , ON PAGE 22 AND 23 BILLS OF M/S RR CONSULT ANCY S ERVI CES PRIVATE LIMITED AND M/S RB A SSOCIATES ARE AVAILABLE. ACCORDING TO THESE BILLS , INCENTIVE WAS DUE ON BUYBACK OF BOOKINGS FROM VARIOUS PARTIES DURING THE YEAR UNDER CONSIDERATION. T HE ISSUE IN DISPUTE BEFORE US IS , WHETHER THE EXPENDITURE WAS RELATABLE TO EARLIER YEARS OR TO THE YEAR UNDER CONSIDERATION. THE C ONTENTION OF THE ASSESSEE THAT EXPENSES HAVE BEEN INCURRED IN RELATION TO BUY BACK OF THE PLOTS DURING THE YEAR UNDER CONSIDERATION, WHEREAS THE CONTENTION OF THE ASSESSING OFFICER THAT EXPENSES WERE INCURRED IN RELATION TO BOOKING OF THE FLATS IN EARLIER YEARS. AS THE MATTER RELATES TO FACTUAL FINDING ON THE ISSUE , WHETHER THE EXP ENSES ARE PRIOR PERIOD EXPENSES OR NOT, WE FEEL IT APPROPRIATE TO R ESTORE THE ISSUE FOR DECIDING A FRESH . SINCE , WH ILE DECIDING THE APPEAL OF THE R EVENUE, WE HAVE ALREADY RESTORED THE GROUND NO. 2 TO THE FILE OF THE LD. CIT(A) AND , THEREFORE , TO AVOID MULTIPLICITY OF THE PROCEEDINGS, WE RESTORE THIS ISSUE ALSO TO THE FILE OF THE LD. CIT(A) FOR DECIDING AFRESH IN THE LIGHT OF THE EVIDENCES SUBMITTED BY THE ASSESSEE. BOTH T HE ASSESSEE AND THE ASSESSING OFFICER SHALL BE AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD. ACCO RDINGLY, THE 18 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 GROUND NO. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN RESULT, THE APPEAL OF THE R EVENUE IS ALLOWED PARTLY FOR ST ATISTICAL PURPOSES, WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.433/DEL/2014 11 . NOW , WE TAKE UP THE APPEAL OF THE R EVENUE IN ITA NO. 433/DEL/2014 IN THE CASE OF S A AMAG D EVELOPERS PRIVATE LIMITED FOR ASSESSMENT YEAR 2006 - 07. THE GROUNDS OF APPEAL RAISED BY THE R EVENUE ARE REPRODUCED AS UNDER: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADMITTING ADDITIONAL EVIDENCES UNDER RULE 46A. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS OF THE CASE IN DELETING AN ADDITION OF RS.23,67,367/ - ON ACCOUNT OF DISALLOWANCE U/S 40A(3) OF THE I.T. ACT. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING AN ADDITION OF RS.2 ,59,47,379/ - ON ACCOUNT OF UNEXPLAIN ED EXPENDITURE U/S 69 OF THE I.T . ACT. 4. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACT. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DU RING THE COURSE OF THE HEARING OF THE APPEAL. 1 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT ) WAS CARRIED OUT BY THE INVESTIGATION WING OF THE INCOME T AX DEPARTM ENT ON 29/01/2009 AT THE PREMISES OF THE ASSESSEE 19 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 COMPANY ALONG WITH OTHER CASES OF S AAMAG G ROUP . CONSEQUENT TO SEARCH ACTION , NOTICE UNDER SECTION 153A OF THE A CT WAS ISSUED ON 10/07/2009 AND IN RESPONSE TO WHICH , THE ASSESSEE FILED RETURN OF INCOME ON 06/11/200 9 DECLARING TOTAL INCOME OF RS. 9,200/ - . IN THE ASSESSMENT COMPL ETED UNDER SECTION 153A OF THE A CT ON 03/08/2011, THE ASSESSING OFFICER MADE CERTAIN ADDITIONS/DISALLOWANCES TO THE RETURNED INCOME. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED, WITH THE RELIEF ALLOWED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 12.1 BEFORE THE TRIBUNAL, THE ASSES SEE FILED AN APPLICATION UNDER R ULE 27 O F THE INCOME - TAX A PPELLATE TRIBUNAL RULES, 1963 ( IN SHORT THE ITAT RULES ) SUPPORTING THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT DISALLOWANCE UNDER SECTION 40A(3) HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A) ON MERIT , HOWEVER , THE PROCEEDINGS UNDER SEC TION 153A OF THE A CT HAVE BEEN WRONGLY UPHELD BY THE LD . CIT(A). ACCORDING TO THE LD. C OUNSEL, FINDING ON THE ISSUE OF JURISDICTION ACQUIRED BY THE LD. AO U/S 153A , HAS BEEN DECIDED AGAINST THE ASSESSEE, AND , THEREFORE , ASSESSEE IS BEFORE THE TRIBUN AL BY WAY OF APPLICATION UNDER R ULE 27 OF THE ITAT RULES. 12.2 ON THE CONTRARY, LD. DR OBJECTED TO THE ADMISSION OF APPLICATION ON THE GROUND THAT ISSUE OF DISALLOWANCE UNDER SECTION 40A(3) HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BOTH ON MERIT AS WELL AS ON LEGALITY . 12.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT HON BLE DELHI HIGH 20 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 CO URT IN THE CASE OF KABUL CHAWLA VS. CIT, 281 CTR 45 (DEL.) HAS HELD THAT NO ADDITION UNDER SECTION 153A OF THE ACT COULD B E MADE IN CASE OF COMPLETED ASSESSMENTS, IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH . IN THE INSTANT CASE, BEFORE THE LD. CIT(A) THE ASSESSEE CHALLENGED THE 153A PROCEEDINGS ON THE GROUND THAT NO INCRIMINATING MATERIAL WAS SEIZED IN THE COURSE OF SEARCH . WE FIND THAT IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS REJECTED THE LEGAL CHALLENGE TO PROCEEDING UNDER SECTION 153A OF THE ACT. THE LD. CIT(A) H ELD THAT INCRIMINATING MATERIAL , WHICH LED TO ADDITION UNDER SECTION 69C OF TH E ACT, EXISTS IN THE CASE OF THE ASSESSEE AND , THEREFORE , PROCEEDING UNDER SECTION 153A HAVE BEEN VALIDLY INITIATED. FURTHER, WE NOTE THAT THE LD. CIT(A) HAS DELETED DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT ON MERIT AS WELL AS DUE TO LACK OF JURISDICT ION. THE ASSESSEE IN ITS APPLICATION UNDER RULE 27 HAS CHALLENGED BEFORE US THAT THE LEGAL ISSUE HAS BE EN DECIDED AGAINST THE ASSESSEE . HOWEVER, WE FIND THAT FACTS RAISED BY THE ASS ESSEE BEFORE US ARE NOT CORRECT . THE LD. CIT(A) HAS RIGHTLY UPHELD THE VALI DITY OF ASSESSMENT UNDER SECTION 153A IN VIEW OF THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH , LEADING TO ADDITION UNDER SECTION 69C OF THE ACT . BUT, IN RESPECT OF THE ADDITION IN QUESTION OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT IS CONCERNED , THE LD. CIT(A) HAS OBSERVED THAT THERE WAS NO NEXUS OR RELATION OF THE DISALLOWANCE WITH THE MATERIAL FOUND OR SEIZED. THE RELEVANT PART OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER : 21 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 14 IN VIEW OF ABOVE DISCUSSION, I AM OF THE CONSI DERED OPINION THAT THE PAYMENT MADE BY THE APPELLANT IN CASH TO THE FARMERS RESIDING IN THE VILLAGE/RURAL AREA THAT FELL WITHIN THE EXEMPTIONS PROVIDED IN RULE 6DD DOES NOT ATTRACT ON ADDITION U/S 40A(3). OTHERWISE ALSO THIS ADDITION MADE BY AO DID NOT HAV E ANY NEXUS OR RELATION WITH THE MATERIAL FOUND AND SEIZED DURING THE SEARCH. HENCE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.23,67,367/ - DESERVES TO BE DELETED AND THEREFORE THE SAME IS HEREBY DELETED. IN RESULT THIS GROUND OF APPEAL IS ALLOWED. 12. 4 ACCORDINGLY, THE LD. CIT(A) HAS NOT ONLY DELETED THE ADDITION IN QUESTION ON MERIT, BUT ALSO DELETED THE ADDITION DUE TO LACK OF JURISDICTION. IN OUR OPINION, THE LD. CIT(A) HAS DECIDED THE ISSUE OF DISALLOWANCE UNDER SECTION 4 0A(3) IN FAVOUR OF THE AS SESSEE , BOTH ON LEGAL GROUND AS WELL AS ON THE MERIT . I N TERMS OF RULE 27 OF THE ITAT R ULES, A RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. WE FIND THAT THE ISSUE OF DISALLO WANCE UNDER SECTION 40A(3) OF THE ACT HAS NOT BEEN DECIDED AGAINST THE ASSESSEE, EITHER ON THE ISSUE OF VALIDITY OR ON MERIT AND , THEREFORE, THERE IS NO JUSTIFICATION FOR FILING SUCH AN APPLICATION UNDER RULE 27 OF THE ITAT R ULES . AS IN THE CIRCUMSTANCES, NO APPLICATION UNDER R ULE 27 OF THE ITAT RULES LIES , IT IS DISMISSED ACCORDINGLY. 13 . NOW , WE TAKE UP THE APPEAL OF THE R EVENUE. THE GRO UND NO. 1 OF THE APPEAL OF THE R EVENUE IS IN RESPECT OF ADMITT ING ADDITIONAL EVIDENCES UNDER R ULE 46A OF INCOME - TAX RULES, 1962 (IN SHORT THE RULES ). 22 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 13 .1 ON PERUSAL OF THE ORDER OF THE LD. CIT(A), WE FIND THAT ACTUALLY ADDITIONAL EVIDENCES FILED BY THE ASSESSEE HAVE NOT BEEN ADMITTED BY THE LD. CIT(A) AND , THERE FORE , THE GROUND RAISED BY THE R EVENUE ITSELF IS INCORRECT AND LIABLE TO BE DISMISSED. THE RELEVANT FINDING OF THE LD. CIT(A) IN PARA 11 OF THE IMPUGNED ORDER IS REPRODUCED AS UNDER: 11. BEFORE ADJUDICATING THE ADDITIONS AND DISALLOWANCE MADE BY AO ON MERIT, IT IS PERTINENT TO DECIDE THE ISSUE OF ADDI TIONAL EVIDENCES FILED BY APPELLANT DURING THE APPELLATE PROCEEDING WHICH ARE OBJECTED BY AO. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF AR OF THE APPELLANT AND OBJECTIONS RAISED BY THE AO AND I FOUND FORCES IN THE OBJECTION OF THE AO. THE APPELLANT DU RING THE APPELLATE PROCEEDINGS DID NOT DEMONSTRATE ANY REASONABLE CAUSE OR SUFFICIENT REASONS FOR NOT FURNISHING THE EVIDENCES BEFORE AO DURING THE ASSESSMENT PROCEEDINGS. EVEN THE OPPORTUNITY PROVIDED BY AO DURING THE REMAND PROCEEDINGS I.E. ON 20.08.2013 , WAS NOT AVAILED BY APPELLANT TO PROVE ITS CASE. IN VIEW OF ABOVE FACTS THE ADDITIONAL EVIDENCES FILED BY APPELLANT DURING THE APPELLATE PROCEEDINGS ARE REJECTED, SINCE THE APPELLANT WAS NOT PREVENTED BY SUFFICIENT CAUSE TO PRODUCE SUCH EVIDENCES BEFORE A O. THEREFORE, THE ADDITIONAL EVIDENCES FILED BY APPELLANT ARE NOT ADMITTED. 13.2 T HE LD. DR ALSO CONCURRED THAT THE GROUND RAISED IS NOT CORRECT AND HAS BEEN RAISED INADVERTENTLY. SINCE THE LD. CIT(A) HAS NOT ADMITTED THE ADDITIONAL EVIDENCES IN TERMS OF RULE 46A OF THE R ULES, THE GROUND CHALLENGING THE ADMITTING OF ADDITIONAL EVIDENC E HAS BEEN RAISED WITHOUT ANY BASIS AND WITHOU T 23 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 APPLICATION OF MIND AND HENCE , IT DESERVED TO BE DISMISSED. WE ORDER ACCORDINGLY. THE GROUND NO.1 OF THE APPEAL IS DISMISSED. 14 . THE GROUND NO. 2 OF THE APPEAL RELATES TO DISALLOWANCE OF RS. 23,67,367/ - IN TE RMS OF SECTION 40A(3) OF THE ACT. THE ASSESSING OFFICER ON THE BASIS OF REPORT OF THE SPECIAL AUDITOR , OBSERVED THAT PAYMENTS OF RS.1,18,36, 835/ - HAVE BEEN MADE BY M/S SAAMAG C ONS TRUCTION LTD . ON BEHALF ASSESSEE , IN CASH EXCEEDING RS. 20,000/ - , WHICH ARE I N CONTRAVE NTION OF SECTION 40A(3) OF THE A CT. THE ASSESSEE EXPLAINED THAT PAYMENTS WERE MADE TO FARMERS LOCATED IN RURAL AREA FOR PURCHASE OF LAND AND IN VIEW OF NO BANK FACILITIES, THERE WAS NO ALTERNATIVE OTHER THAN MAKING CASH PAYMENTS . THE ASSESSING OF FICER , HOWEVER, REJECTED THE CONTENTION OF THE ASSESSEE AND OBSERVED THAT THERE IS NO SUCH EXCEPTION LAID OUT IN R ULE 6DD OF R ULES . ACCORDINGLY, IN VIEW OF T HE PROVISIONS OF 40A(3) OF THE A CT , HE DISALLOWED 20% OF TH E AMOUNT OF CASH PAYMENT OF RS. 1,18,36,835 / - , WHICH WAS WORKED OUT TO RS. 23,67,367/ - . THE LD. CIT(A) HAS SUMMARIZED THE FACTS OF THE ISSUE IN DISPUTE AS UNDER: 13. ON PERUSAL OF THE MATERIAL ON RECORD THE FOLLOWING UNDISPUTED FACTS ARE NOTICED: A) THE PAYMENT WAS MADE IN CASH FOR PU RCHASE OF LAND BY M/S SAAMAG CONSTRUCTION LTD. ON BEHALF OF THE APPELLANT. B) THE PAYMENTS WERE MADE TO FARMERS RESIDING IN RURAL AREA/VILLAGE. C) THE VILLAGE DID NOT HAVE THE FACILITY OF BANK AT RELEVANT TIME. D) THE LAND PURCHASED BY THE APPELLANT WA S SHOWN AS CURRENT ASSETS UNDER THE HEAD STOCK OF LAND AND NOT 24 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 DEBITED TO PROFIT & LOSS ACCOUNT DURING THE YEAR UNDER CONSIDERATION. E) NON INCRIMINATING MATERIAL RELATING TO THE PURCHASE OF LAND WAS FOUND AND SEIZED. F) THE ALLEGATION OF AO AS WELL AS THE SPECIAL AUDITORS IS THAT THE APPELLANT MADE THE CASH PAYMENT. SUCH OBSERVATION WAS MADE ON THE BASIS OF EXAMINATIONS OF REGULAR BOOKS OF ACCOUNT OF APPELLANT. THIS IS ALSO NOT A CASE OF THE AO THAT THESE ARE UNACCOUNTED TRANSACTIONS. 14 .1 AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) DELETED ADDITION , OBSERVING AS UNDER: 13.1 AFTER CONSIDERING THE ABOVE FACTS, AND THE OBSERVATION OF THE AO, THE PROVISIONS ENVISAGED IN SECTION 40A(3) AND RULE 6DD CLAUSE (G) AS UNDER: WHERE THE PAYMENT MADE IN A VILLAGE OR TOWN, WHICH ON DATE OF SUCH PAYMENT IS NOT SERVED BY ANY BANK TO ANY PERSON WHO ORDINARILY RESIDES OR IS CARRYING ON ANY BUSINESS OR PROFESSION OR VOCATION IN ANY SUCH VILLAGE OR TOWN. SUCH PAYMENT MENTIONED AS ABO VE WOULD NOT COME UNDER THE MISCHIEF OF THE PROVISIONS OF SEC. 40A(3). IN THE CASE, IN HAND, ADMITTEDLY THE PAYMENT WAS MADE TO THE FARMERS, LIVING IN A VILLAGE AND THAT VILLAGE DID NOT HAVE THE FACILITY OF A BANK, HENCE, THE PROVISIONS OF SEC. 40A(3) OF T HE INCOME TAX ACT, 1961 DO NOT HAVE ANY APPLICATION TO THESE CASH PAYMENT . 14. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THE PAYMENT MADE BY THE APPELLANT IN CASH TO THE FARMERS RESIDING IN THE VILLAGE/RURAL AREA THAT FELL WIT HIN THE EXEMPTIONS PROVIDED IN RULE 6DD DOES NOT ATTRACT AN ADDITION U/S 40A(3). OTHERWISE ALSO THIS ADDITION MADE BY THE AO DID NOT HAVE ANY NEXUS OR RELATION WITH THE MATERIAL FOUND AND SEIZED DURING THE SEARCH. HENCE, THE ADDITION MADE BY THE AO AMOUNTI NG TO RS.23,67,367/ - DESERVES TO BE DELETED AND 25 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THEREFORE THE SAME IS HEREBY DELETED. IN THE RESULT THIS GROUND OF APPEAL IS ALLOWED. 14 .2 BEFORE US, THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO JUSTIFY EXIGENCIES OF CASH PAYMENT AND DOCUMENTARY EVIDENCES TO SUPPORT ITS CONTENTION OF SPECIFIC DEMAND OF CASH PAYMENT BY THE FARMERS. ACCORDING TO HIM, THERE ARE NO EXCEPTION AS CONTESTED BY THE ASSESSEE I N RULE 6 DD OF R ULES AND , THEREFORE , THE ASSESSEE IS LIABLE FOR DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. 14 .3 THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND ALSO SUBMITTED THAT NO INCRIMINATING MATERIAL IN RELATION TO THE D ISALLOWANCE HAS BEEN FOUND AND SEIZED DURING THE COURSE OF SEARCH AND , THEREFORE , THE ABOVE ADDITION COULD NOT BE MADE IN ASSESSMENT YEAR UNDER CONSIDERATION. 14.4 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE DISALLOW ANCE UNDER SECTION 40A(3) OF THE ACT CAN BE MADE OUT OF THE EXPENSES CLAIMED UNDER THE HEAD PROFIT AND G AINS OF BUSINESS AND PROFESSION . IN THE INSTANT CASE, THE FACT THAT CASH PAYMENTS IN QUESTION HAVE NOT BEEN CLAIMED AS EXPENDITURE HAS NOT BEEN DISPUTED BY THE LD. DR. IN OUR OPINION, IF EXPENDITURE HAS NOT BEEN CLAIMED, THE QUESTION OF DISALLOWANCE ALSO CANNOT ARISE. IN OUR OPINION, FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY ERROR IN THE SAME, ACCORDINGLY WE UPHOLD THE SAME. THE GROUND NO. 2 OF THE APPEAL IS ACCORDINGLY DISMISSED. 15 . THE GROUND NO. 3, RELATES TO ADDITION OF RS. 2,59,47, 379/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. 26 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 15 .1 THE FACTS QUA THE ADDITION - IN - DISPUTE ARE THAT FROM THE REPORT OF THE SPECIAL AUDITOR, THE ASSESSING OFFICER OBSERVED THAT ON RECONCILIATION OF SEIZED DOCUMENTS WITH BOOKS OF ACCOUNTS, THE PAYMENTS OF RS. 2, 59,47, 379/ - WERE FOUND TO BE MADE OUT OF BOOKS OF ACCOUNTS . THE ASSESSEE FILED RECONCILIATI ON OF SEIZED DOCUMENTS WITH BOOKS OF ACCOUNTS AND EXPLAINED THAT ALL THOSE EXPENSES WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE FURNISHED A CERTIFICATE FROM M/S APEX MARIN CONSULTING LTD. CLAIMING THAT TRANSACTIONS MENTIONED IN SEIZED DOCUMEN TS NEVER MATERIALIZED . THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE AS SESSEE AND MADE ADDITION OF RS.2, 59,47,379/ - IN TERMS OF SECTION 69C OF THE ACT. 15.2 THE LD. CIT(A) OBSERVED THAT THE S PECIAL A UDITOR HAS MENTIONED THAT THE SAID PAYMENT OF E X PENSES WERE MADE BY M/S SAMMAG C ONSTRUCTION LTD . ON BEHALF OF THE ASSESSEE AND NOT BY THE ASSESSEE ITSELF. IN VIEW OF THE OBSERVATION, THE LD. CIT(A) CONCLUDED THAT SINCE THE EXPENDITURE WAS NOT INCURRED BY THE ASSESSEE, NO ADDITION UNDER SECTION 69C OF T HE ACT COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. THE RELEVANT FINDING OF THE LD. CIT(A) ON THE ISSUE - IN - DISPUTE IS REPRODUCED AS UNDER: 16.1 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND ALSO THE CONTENTS OF ASSESSMENT ORDER WHICH ARE REPRODUCED ABOVE ON THIS ISSUE. THE MAIN OBSERVATION OF THE AO IS THAT THE APPELLANT INCURRED EXPENSES WHICH WERE NOT RECORDED IN ITS REGULAR BOOKS O F ACCOUNT. THE SPECIAL AUDITORS IN THEIR AUDIT REPORT MADE A DETAILED OBSERVATION ON THE BASIS OF SEIZED MATERIAL AND THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY APPELLANT. THE AMOUNT OF EXPENSES INCURRED AND WHICH ARE NOT RECORDED IN BOOKS OF ACCOUNT OF TH E APPELLANT WAS QUANTIFIED AT 27 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 RS.2,59,47,379/ - FOR THE YEAR UNDER CONSIDERATION. IN THE SPECIAL AUDIT REPORT THE AUDITORS ALSO MENTIONED THAT THESE PAYMENT OF EXPENSES WERE MADE BY M/S SAAMAG CONSTRUCTION LTD. ON BEHALF OF THE APPELLANT AND NOT BY THE APPE LLANT ITSELF. 16.2 THE AR OF THE APPELLANT SUBMITTED THAT FROM THE ALLEGED SEIZED MATERIAL, IT CANNOT BE DETERMINED ON WHICH DATE THESE PAYMENTS WERE MADE. IT WAS ALSO NOT POSSIBLE TO ASCERTAIN THE MONTH AND YEAR OF THE ALLEGED PAYMENT. THEREFORE, THESE DO CUMENTS WERE DUMB DOCUMENTS AND CANNOT BE USED TO ASCERTAIN THE FINANCIAL VALUE. THE AR OF THE APPELLANT ALSO ARGUED AT LENGTH THAT THE ADDITIONS SHOULD NOT BE MADE ON THE BASIS OF DUMB DOCUMENTS. THE AR OF THE APPELLANT FURTHER SUBMITTED THAT SINCE THE SP ECIAL AUDITORS IN THEIR AUDIT REPORT U/S 142(2A) HAD SPECIFICALLY OBSERVED THAT THE ALLEGED PAYMENTS WERE MADE BY M/S SAAMAG CONSTRUCTION LTD. AND IF ANY ADDITIONS WERE TO BE MADE THE SAME SHOULD BE MADE IN THE HANDS OF THE SAAMAG CONSTRUCTION LTD. AND NOT IN THE HANDS OF THE APPELLANT. 16.3 FROM THE FACTS ON RECORD AND ALSO EVIDENT FROM THE AUDIT REPORT OF SPECIAL AUDITORS THAT THE ALLEGED PAYMENTS WERE MADE BY M/S SAAMAG CONSTRUCTIONS LTD. AND NOT BY THE APPELLANT. I HAVE ALSO CONSIDERED THE SEIZED MATERI AL AVAILABLE ON RECORD AND IT IS NOT CLEAR WHETHER THESE DOCUMENTS BELONGED TO THE APPELLANT OR M/S SAAMAG CONSTRUCTIONS LTD. HOWEVER, AFTER A DETAILED EXAMINATION OF THE SEIZED MATERIAL AND REGULAR BOOKS OF ACCOUNT OF THE APPELLANT, THE AUDITORS IN THEIR SPECIAL AUDIT REPORT HAVE GAVE A CATEGORICAL FINDING THAT THESE PAYMENTS WERE MADE BY M/S SAAMAG CONSTRUCTIONS LTD. SECTION 69C CAN BE INVOKED WHEN THE APPELLANT ON ITS ON INCURS ANY EXPENDITURE AND THE SOURCE SUCH EXPENDITURE WAS SATISFACTORILY EXPLAINED WITH REGARD TO THE EXPENDITURE OR APART THEREOF, WHERE THE AMOUNT COVERED BY SUCH EXPENDITURE WOULD BE DEEMED TO BE INCOME OF THE APPELLANT. IN VIEW OF ABOVE UNDISPUTED FACTS I AM OF THE CONSIDERED OPINION THAT IF ANY ADDITIONS ARE REQUIRED TO BE MADE THEN IT SHOULD BE MADE IN THE HANDS OF M/S SAAMAG CONSTRUCTIONS LTD. AND NOT IN HANDS OF APPELLANT. 28 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THEREFORE, THE ADDITION OF RS.2,59,47,379/ - MADE BY THE AO U/S 69C DESERVES TO BE DELETED AND SAME IS HEREBY DELETED. IN THE RESULT THIS GROUND OF APPEAL IS ALL OWED. 15.3 BEFORE US, THE LD. DR RELIED ON THE FINDING OF THE ASSESSING OFFICER AND SUBMITTED THAT ADDITION IN QUESTION HAS BEEN RIGHTLY MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE. THE LD. COUNSEL OF THE ASSESSEE, ON THE OTHER HAND RELIED ON THE FINDING OF THE LD. CIT(A) AND SUBMITTED THAT PROCEEDINGS IN THE CASE OF M/S SAMMAG CONSTRUCTION LTD HAVE ALREADY BEEN REOPENED ON THIS COUNT. 15.4 WE HAVE HEARD THE RIVAL SUBMISSION AND PER USED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT CERTAIN EXPENSES FOUND IN SEIZED RECORDS COULD NOT BE RECONCILED BY THE SPECIAL AUDITOR WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION UNDER SECTION 69C OF THE ACT. THE LD. CIT(A) HAS GIVEN A FINDING OF THE FACT REFERRING REPORT OF THE SPECIAL AUDITOR THAT THOSE PAYMENTS IN QUESTION WERE MADE BY M/S SAMMAG CONSTRUCTION LTD ON BEHALF OF THE ASSESSEE. ACCORDINGLY, THE LD. CIT(A) CONCLUDED THAT ADDITION IF ANY COULD BE MADE IN THE HANDS OF THE M/S SAMMAG CONSTRUCTION LTD AND NOT IN THE HANDS OF THE ASSESSEE. IN OUR OPINION, THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS JUSTIFIED, BECAUSE IF THOSE EXPENSES HAVE NOT BEEN INCURRED BY THE ASSESSEE, HOW THE ASS ESSEE CAN BE ASKED SOURCE OF SUCH EXPENDITURE. THE SECTION 69C CAN BE INVOKED ONLY WHEN AN ASSESSEE INCURS THE EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE . THE FACT THAT EXPENDITURE WAS INCURRED BY M/S SAMMAG CONSTRUCTION 29 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 LTD, HAS NOT BEEN DISPUTED BY THE LD. DR BEFORE US. IN VIEW OF A B O V E FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY ERROR IN THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE. ACCORDINGLY, WE UPHOLD THE SAME. T HE GROUND OF THE APPEAL OF THE R EVENUE IS ACCO RDINGLY DISMISSED. 16 . IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSED ITA NO S . 2602 /DEL/2014 & 2999 /DEL/2014 17 . NOW WE TA KE UP THE CROSS APPEALS OF THE R EVENUE (ITA NO . 2602/DEL/2014) AND ASSESSEE ( ITA NO. 2999 /DEL/2014) IN THE CASE OF SAGA D EVELOPERS P RIVATE L IMITED FOR ASSESSMENT YEAR 2006 - 07. THE RESPECTIVE GROUNDS RAISED BY THE PART IES ARE REPRODUCED AS UNDER : (I) G ROUNDS OF APPEAL RAISED BY THE R EVENUE ARE AS UNDER: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADMITTING ADDI TIONAL EVIDENCE UNDER RULE 46A 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,00,42,833/ - ON ACCOUNT OF UN - EXPLAINED EXPENDITURE U/S 69C. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN LAW ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.16,26,160/ - ON ACCOUNT OF CASH PAYMENT FOR PURCHASE OF LAND. 4. (A) THE ORDER OF THE CIT(APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. (II) GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 30 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 1) THE ORDER PASSED U/S 153A OF THE ACT IS WITHOUT JURISDICTION. 2) THE CIT(A) HAS ERRED IN HOLDING THAT THERE IS NO REQUIREMENT FOR AN ASSESSMENT U/S 153A OF THE ACT TO BE BASED ONLY ON ANY MATERIAL SEIZED IN THE COURSE OF SEARCH . SUCH FINDINGS ARE OPPOSED TO PRESENTLY PREVAILING SETTLED LEGAL POSITIONS. 3) THE ADDITION OF RS. 7,03,45 0/ - ON ACCOUNT OF NEGATIVE CASH IN HAND, NOT BEING BASED ON SEIZED MATERIAL, BEING BASED ON REGULARLY MAINTAINED BOOKS OF ACCOUNTS, THE ASSESSMENT BEING COMPLETED BEFORE THE DATE OF SEARCH, CANNOT BE SUSTAINED U/S 153A OF THE ACT. THE CIT(A) HAS ERRED IN C ONFIRMING THE D ISALLOWANCE OF RS. 7,03,450/ - 4) THE CIT(A) HAS ERRED IN ENHANCING THE INCOME OF THE APP ELLANT BY TREATING A SUM OF RS. 4,62,093/ - BY INVOKING THE PROVISIONS OF SEC. 2(2)(E) OF THE ACT. 5) IT IS CONTENDED THAT THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT ARE NOT APPLICABLE TO ADVANCES MADE IN THE COURSE OF CONDUCT OF BUSINESS AND FOR THE PURPOSES OF BUSINESS. 6) WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO.S 4 & 5, THE ADDITION OF RS. 4,62,093/ - NOT BEING BASED ON SEIZED MATERIALS, THE ASSESSM ENTS HAVING BEEN COMPLETED PRIOR TO DATE OF SEARCH, IS NOT SUSTAINABLE U/S 153A OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 1 8 . B RIEFLY STATED FACTS OF THE CASE ARE THAT CONSEQUENT TO SEARCH AND SEIZURE ACTION AT THE PREMISES OF THE ASSESSEE CARRIED OUT ON 29/01/2009, NOTI CE UNDER SECTION 15 3A OF THE A CT WAS ISSUED AND IN RESPONSE THE ASSESSEE FILED RETURN OF INCOME ON 10/02/201 0 DECLARING TOTAL INCOME OF RS.22,81, 180/ - . I N THE ASSESSMENT COMPLETED ON 03/08/2011, THE ASSESSING OFFICER 31 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 MADE CERTAIN ADDITIONS/DISALLOWANCE S TO THE RETURNED INCOME. ON FURTHER APPEAL, THE LD. CIT(A) ALLOWED THE APPEAL PARTLY. AGGRIEVED, BOTH THE PARTIES ARE IN CROSS - APPEAL BEFORE THE T RIBUNAL RA ISING RESPECTIVE GROUNDS. 19 . THE GROUND NO. 1 OF THE APPEAL RELATES TO ADMITTING ADDITIONAL EVIDENCES UNDER R ULE 46A OF THE RULES. BOTH THE PARTIES AGREED THAT THE ADDITIONAL EVIDENCES FILED BEFORE THE LD. CIT(A) ARE RELATED TO GROUND NO. 2 AND GRO UND NO . 3 OF THE APPEAL OF THE R EVENUE. IN THE INSTANT CASE ALSO THE LD. ASSESSING OFFICER IN REMAND PROCEEDING OBJECTED TO ADMISSION OF ADDITIONAL EVIDENCES, HOWEVER DUE TO NON - COMPLIANCE ON THE PART OF THE ASSESSEE, NO COMMENTS ON MERIT WAS GIVEN BY HIM. 19 .1 BEFORE US, THE LD . DR RELYING ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF MANISH BUILD WELL (P) LTD. (SUPRA) SUBMITTED THAT GROUND NO . 2 AND 3 OF THE APPEAL OF THE R EVENUE MIGHT BE RESTORED BACK EITHER TO THE LD. CIT(A) OR THE ASSESSIN G OFFICER FOR DECIDING A FRESH AFTER PROVIDING OPPORTUNITY OF REBUTTING THE ADDITIONAL EVIDENCES TO THE ASSESSING OFFICER . THE LD. COUNSEL OF THE ASSESSEE ALSO CONCURED WITH THE LD. DR AND SUBMITTED THAT LIST OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE THE LD. CIT(A), ARE AVAILABLE ON PAGE 69 TO 70 OF THE PAPER BOOK OF THE ASSESSEE . 19 .2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE IDENTICAL ISSUE IN SAME SET OF CIRCUMSTANCES HAS BEEN DECIDED BY US IN PRECEDING PARAS IN THE CASE OF SAAMAG DEVELOPERS PRIVATE LIMITED ( ITA NO. 2601/DEL/2014) FOR ASSESSMENT YEAR 2009 - 10. ACCORDINGLY, TO 32 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 HAVE CONSISTENCY IN OUR FI NDING, IN THE INSTANT CASE, ALSO WE HOLD THAT THE LD. CIT(A) HAS NOT COMPLIED WIT H THE PROVISIONS OF THE R ULE 4 6A OF R ULES AND ACCORDINGLY, WE ALLOW THE GRO UND NO. 1 OF THE APPEAL OF THE R EVE NUE AND RESTORE THE GROUND NO . 2 AND 3 OF THE APPEAL OF THE R EVEN UE TO THE FILE OF THE LD. CIT(A) FOR PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER FOR REBUTTING THE ADDITIONAL EVIDENCES. IT IS NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD. 20 . THE GRO UND NO. 4 OF THE APP EAL OF THE R EVE NUE, BEING GENERAL IN NATURE, WE ARE NOT REQUIRED TO ADJUDICATE UPON. 21 . THE GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS GENERAL IN NATURE AND COVERED BY OTHER GROUNDS OF APPEAL, AND HENCE, WE NOT REQUIRED ADJUDICATING SPECIFICALLY. 22 . THE GROUND NO. 2 AND 3 OF THE APPEAL OF THE ASSESSEE ARE RELATED TO ADDITION OF RS.7,03, 450/ - ON ACCOUNT OF NEGATIVE CASH BALANCE. THE ASSESSEE HAS CHALLENGED THE ADDITION ON THE GROUND THAT IN PROCEEDIN GS UNDER SECTION 15 3A OF THE A CT , IN ABSENCE OF INCR IMINATING MATERIAL, NO ADDITION COULD BE SUSTAINED IN COMPLETED ASSESSMENTS. 22 .1 THE LD. COUNSEL OF THE ASSESSEE, RELIED ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) AND SUBMITTED THAT IN THE INSTANT CASE RETURN OF INCOME WAS FILED ON 22/11/2006 AND LIMITATION FOR ISSUE OF NOTICE UNDER SECTION 143(2) OF THE A CT EXPIRED ON 30/11/2007. ACCORDING TO HIM , NO NOTI CE UNDER SECTION 143(2) OF THE A CT WAS ISSUED AND , THEREFORE , A S ON THE DATE OF SEARCH THE ASSESSMENT IS TREAT ED AS COMPLETED ASSESSMENT. THE LD. COUNSEL SUBMITTED THAT ADDITION IN DISPUTE 33 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 HAS BEEN MADE NOT ON RELYING ON ANY INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF SEARCH AND THEREFORE THIS ADDITION COULD NOT BE SUSTAINED IN VIEW OF THE DECISION OF THE HO N BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA(SUPRA). 22 .2 THE LD. DR , ON THE OTHER HAND, RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 22 .3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. COUNSEL OF THE AS SESSEE, REFERRED TO PAGE 1 AND 2 OF THE PAPER BOOK, WHICH IS A COPY OF THE ACKNOWLEDGEMENT OF THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. IT IS EVIDENT FROM THE SAID PAGES, THAT THE RETURN OF INCOME WAS FILED ON 22/11/2006. NO SCRUTINY PROCEEDINGS WERE PENDING IN THE CASE OF THE ASSESSEE AS ON THE DATE OF THE SEARCH I.E. 29/01/2009 AND THEREFORE ASSES SMENT IS TREATED TO BE IN THE CATEGORY OF COMPLETED ASSESSMENT. THE ASSESSING OFFICER HAS NOT REFERRED ANY INCRIMINATING MATERIAL FOR MAKING THIS ADDITION IN THE CURRENT PROCEEDI NG UNDER SECTION 15 3A OF THE A CT. IN VIEW OF THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA(SUPRA), NO ADDITION COULD BE MADE IN THE PROCEED INGS UNDER SECTION 153A OF THE A CT, IN ABSENCE OF ANY INCRIMINATING MATERIAL WHERE REGULAR ASSESSMENT PROCEEDINGS ALREADY STOOD COMPLETED. IN THE INS TANT CASE, BOTH THE CONDITIONS A S HELD IN THE CASE OF KABUL CHAWLA (SUPRA) ARE SATISFIED AND , THEREFORE , IN OUR VIEW , THE ADDITION IN DISPUTE COULD NOT BE SUSTAINED . A CCORDINGLY , WE DIRECT THE LD. AO TO DELETE THE SAME. THE GROUND OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 34 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 23. SIMILARLY, GROUND NOS. 4 TO 6 OF THE APPEAL OF THE ASSESSEE RELATE TO ADDITION OF RS. 4,62,093/ - UNDER SECTION 2(22)(E ) OF THE A CT. IN GROUND NO. 6, THE ASSESSEE CHALLENGED THE ADDITION IN VIEW OF THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA(SUPRA). 23.1 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ADDITION MADE IS NOT BASED ON ANY INCRIMINATING MATERIAL AND THEREFORE IT CANNOT BE SUSTAINED IN VIEW OF THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF K ABUL CHAWLA (SUPRA). THE LD. COUNSEL REFERRED TO PARA 24 TO 25 OF THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THERE IS NO REFERENCE OF ANY INCRIMINATING MATERIAL FOR MAKING THE ABOVE ADDITION. 23.2 ON THE CONTRARY, THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A). 23.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE INSTANT CASE , T HE FACT OF COMPLETED ASSESSMENT HAS ALREADY BEEN DECIDED BY US WHILE ADJUDICATING GROUND NO. 2 AND 3 OF THE APPEAL. WE HAVE ALSO PERUSED THE PARAS 24 TO 25 OF THE IMPUGNED ORDER OF THE LD. CIT(A), AND FIND THAT THERE IS NO REFERENCE OF ANY INCRIMINATING MA TERIAL WHICH HAS BEEN RELIED UPON BY THE LD. CIT(A) FOR MAKING THE SAID ADDITION. IN VIEW OF THE ABOVE FACTS, THIS ADDITION COULD NOT HAVE BEEN MADE IN THE CASE OF THE ASSESSEE IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH. ACCORDINGLY, WE DIRECT THE LD. AO TO DELETE THE ADDITION. THE GROUND NO. 6 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED. SINCE THE ADDITION HAS BEEN DELETED BY US ON THIS GROUND, THE 35 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 GROUND NO. 4 AND 5 OF THE APPEAL ARE NOT REQUIRED TO BE ADJUDICA TED. 24. IN RESULT, THE APPEAL OF THE R EVENUE IS ALLOWED FOR STATISTICAL PURPOSES , WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO S . 2604/DEL/2014 & 3165/DEL/2014 24 . NOW WE TAKE UP THE CROSS APPEALS OF THE R EVENUE ( ITA NO . 2604/D EL/2014) AND ASSESSEE ( ITA NO. 3165/D EL/2014) IN THE CASE OF SAGA DEVELOPERS PRIVATE LIMITED FOR ASSESSMENT YEAR 2009 - 25 . THE GROUNDS RAISING IN RESPECTIVE APPEALS ARE REPRODUCED AS UNDER: (I) GROUNDS OF APPEAL RAISED BY THE R EVENUE ARE AS UNDER: 1. THAT THE COMMIS SIONER OF INCOME TAX (APPEALS) ERRED IN ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.21,55,835/ - ON ACCOUNT OF UN - EXPLAINED EXPENDITURE U/S 69C. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.4,58,24,310/ - MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE INCOME TAX ACT, 1961. 4. (A) THE ORDER OF THE CIT(APPEALS) IS ERR ONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. (II) G ROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE CIT(A) HAS ERRED IN HOLDING THAT SUM OF RS.4,58,24,310/ - IS COVERED BY THE PROVISIONS OF SEC. 36 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 2(22)(E) OF THE ACT. SUCH FINDINGS ARE OPPOSED TO EVIDENCES ON RECORD. 2) IT IS CONTENDED THAT THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT ARE NOT APPLICABLE TO THE IMPUGNED SUM OF RS.4,58,24,310/ - . 3. IT IS CONTENDED THAT THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT CANNOT APPLY TO BUSINESS ADVANCES EXTENDED DURING THE COURSE OF CARRYING ON OF BUSINESS. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW A NY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 26 . THE BRIEF FACTS OF THE CASE IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS AND CIRCUMSTAN CES IN ASSESSMENT YEAR 2006 - 07, EXCEPT THE AMOUNT OF ADDITIONS DISPUTED IN GROUND NO. 2 AND 3 OF T HE APPEAL. 2 7 . WE NOTE THAT IN GROUND NO. 1 O F THE APPEAL, THE R EVENUE HAS CHALLENGED ADMITTING ADDITIONAL EVIDENCES BY THE LD . CIT(A) UNDER RULE 46A OF THE R ULES. THE PARTIES HAVE AGREED THAT THE ADDITIONAL GROUNDS FILED BEFORE THE LD. CIT(A) RELATE TO G ROUND NO. 2 RAISED BEFORE THE T RIBUNAL . WE NOTE THAT IN THIS CASE ALSO THE ADDITIONAL EVIDENCES HAVE BEEN ADMITTED BY THE LD. CIT(A) WITHOUT PROVIDING OPPORTUNITY OF REBUTTING THOSE ADDITIONAL EVIDENCES TO THE ASSESSING OFFICER , WHICH IS EVIDENT FROM PORT ION OF THE REMAND REPORT REPRODUCED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS OBJECTED TO ADMISSION OF THE ADDITIONAL EVIDENCES HOWEVER , HE COULD NOT PROVIDE COMMENTS ON MERIT DUE TO NON - COMPLIANCE ON THE PART OF THE ASSESSEE. SINCE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE BEING IDENTICAL TO THE FACTS AND CIRCUMSTANCES IN GROU ND NO. 1 IN THE CASE OF SAAMAG D EVELOPERS PRIVATE LIMITED (IT A NO. 2601/D EL/2014) , TO MAINTAIN 37 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 CONSISTENCY IN ADJUDICATING ON ISSUE IN DISPUTE, WE ALLOW THE GROUND NO. 1 OF THE INSTANT APPEAL, AND RESTORE AROUND NO. 2 TO THE FILE OF THE LD. CIT(A) FOR C OMPLIANCE OF PROVISIONS OF THE R ULE 46A OF THE R ULES AND DECIDE AFRESH AFTER PROVIDING OPPORTUNITY OF BEING HEARD BOTH, TO THE ASSESSING OFFICER AND THE ASSESSEE. THE GROUND NO. 2 OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES . 28 . THE GRO UND NO. 3 OF THE APPEAL OF THE R EV ENUE RELATES TO ADDITION OF RS. 4 ,58,24,310/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 2(22)(E) OF THE A CT. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS MENTIONED THAT THE ASSESSEE COMPANY PROVIDED LOANS AND ADVANCES TO OTHER CONCERN OF THE SAAMAG GROUP WHICH BEING LIABLE FOR D EEMED DIVIDEND U NDER SECTION 2(22)(E ) OF THE A CT, HE MADE THE ADDITION. THE LD. CIT(A), HOWEVER DELETED THE ADDITION HOLDING THAT NO ADDITION COULD BE MADE IN THE HAND OF THE LENDING COMPANIES. IN SUPPORT, HE RELIED ON THE FINDING OF HIS PREDECESSOR. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 14. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE AR OF THE APPELLANT. I HAVE ALSO PERUSED THE CASE LAWS RELIED UPON BY THE APPELLANT. IN THE COURSE OF APPEAL PROCEEDINGS, THE AR OF THE APPELLANT FILED A COPY OF THE APPEAL ORDER DATED 22.03.2013 IN THE CASE OF M/S. SAAMAG CONSTRUCTION LTD. PASSED BY MY PREDECESSOR CIT(A) IN APPEAL NO. 37/11 - 12/ - (A)32 FOR THE A.Y. 2007 - 08 WHEREIN ON IDENTICAL FACTS, AS IN THE CASE OF THE APPELLANT FOR ASSESSMENT YEAR UNDER CONSIDERATION, MY PREDECESSOR CIT(A) HAD DELETED THE ADDITION OF RS. 44,74,198/ - MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE I.T. ACT, 1961. I HAVE PERUSED THE COPY OF MY PREDECESSOR S ORDER PASSED IN THE ABOVE MENTIONED CASE FOR A.Y. 2007 - 08 WHEREIN 38 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 WHILE DELETING THE ADDITION M ADE U/S 2(22)(E) OF THE I T. ACT, 1961, HE HAS OBSERVED AS UNDER: '5.13 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE ID. AO AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE ID. AR AND THE FACTS OF THE CASE ON RECORD. THE ASSESSING OFFICER HAS MA DE ADDITIONS IN THE HANDS OF THE LENDING COMPANIES ON THE BASIS THAT THE MONIES HAVE BEEN GIVEN AS LOANS TO THE GROUP COMPANIES IN WHICH THERE ARE COMMON SHAREHOLDERS. WHILE CALCULATING THE ACCUMULATED PROFITS, THE ASSESSING OFFICER HAS ADDED THE AMOUNT OF ADDITION MADE IN THE ASSESSMENT ORDER TO THE FIGURE OF THE PROFIT AVAILABLE AS PER THE BOOKS OF ACCOUNT. THE ID. AR ARGUED THAT THE APPELLANT IS A LENDER AND NOT THE BORROWER, THEREFORE, THE ADDITION U/S 2(22)(E) MADE ON PROTECTIVE BASIS IS NOT CALLED FOR IN THIS CASE. THE APPELLANT FURTHER CONTENDED THAT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF P.K BADIANI VS. CIT (SUPRA) HAS BEEN APPLIED ENTIRELY ERRONEOUSLY AND EVEN AS PER THE SAID JUDGMENT ITSELF, THE ACCUMULATED PROFIT DOES NOT MEAN ASSESS ABLE OR TAXABLE PROFIT LIABLE TO BE TAXED AS INCOME AND WILL NOT INCLUDE ANY ADDITION EFFECTED BY THE ASSESSING OFFICER IN DETERMINING THE TOTAL INCOME. IN THIS REGARD, THE APPELLANT HAS ALSO MADE THE WORKING OF ACCUMULATED PROFITS FOR THE ENTIRE GROUP, BA SED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF P.K. BADIANI VS. CIT (SUPRA). (COPY ATTACHED AS PER ANNEXURE 'A'). 5.14 ON BEING ASKED DURING THE APPELLATE PROCEEDINGS AS TO WHY THE ACCUMULATED PROFIT IS TO BE ADJUSTED / REDUCED AGAINST THE AD DITIONS MADE U/S 2(22)(E) IN THE EARLIER YEARS, THE APPELLANT RELIED UPON THE JUDGMENTS OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. G. NARASIMHAN (DEED.) AND OTHERS [1999] 238 ITR 327 (SC) AND THAT OF HON'BLE CHENNAI BENCH OFLTAT IN THE CASE OFASWANI E NTERPRISES VS. ACIT [2009] 121 TTJ (CHENNAI) 408 (SUPRA). 5.15 AS MENTIONED EARLIER, THE ADDITION IN THE INSTANT CASE WERE MADE IN THE HANDS OF THE LENDER, WHEREAS SECTION 2(22)(E) DOES NOT CONTEMPLATE THE SAME, RATHER IT PROVIDES FOR THE ADDITION IN THE HANDS OF THE BORROWERS. UNDER SECTION 2(22)(E), THERE IS NO DISTINCTION BETWEEN A LOAN GIVEN FOR THE BUSINESS PURPOSE OR OTHERWISE. MOREOVER, THE APPELLANT HAS NOT BROUGHT ON RECORD ANY COGENT EVIDENCE IN SUPPORT OF ITS CONTENTION THAT THE AMOUNTS ADVANCED WERE FOR BUSINESS PURPOSE. THE SO CALLED MASTER LAND DEVELOPMENT AGREEMENT AMONGST THE VARIOUS GROUP COMPANIES WAS NOT PRODUCED 39 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 EITHER BEFORE THE ID. AO OR BEFORE THE SPECIAL AUDITORS. HENCE, THE SAME CANNOT BE RELIED UPON. THEREFORE, IN MY CONSIDERED OPI NION, THE INVOCATION OF THE PROVISIONS OF SECTION 2(22)(E) HAS RIGHTLY BEEN MADE BY THE ASSESSING OFFICER. HOWEVER, AS PER THE PROVISIONS OF SECTION 2(22)(E), THE ADDITIONS ARE REQUIRED TO BE MADE IN THE HANDS OF THE BORROWERS/SHAREHOLDERS INSTEAD OF THE L ENDER, HENCE I AM UNABLE UPHOLD THE ACTION OF THE ID. AO MAKING AN ADDITION OF RS.44,74,198/ - IN THIS CASE. WITH THE ABOVE OBSERVATIONS, THE ADDITION OF RS.44,74,198/ - IS DIRECTED TO BE DELETED AND ACCORDINGLY, THE GROUND NO. 8 OF THE APPEAL IS ALLOWED IN FAVOUR OF THE APPELLANT' 14.1 SINCE THE FACTS INVOLVED IN THE APPELLANT S CASE ARE IDENTICAL TO THE FACTS OF THE ABOVE CASE, FOLLOWING THE ABOVE ORDER OF MY PREDECESSOR CIT(A) IN THE CASE OF M/S SAAMAG CONSTRUCTION LTD., A COMPANY OF SAAMAG GROUP, I ALSO DELETE THE ADDITION OF RS.4,58,24,310/ - MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE I.T. ACT, 1961 IN THE CASE OF THE APPELLANT. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 15. GROUND NOS. 6, 6A, 7 AND 8 ARE NOT PRESSED BY THE APPELLANT. HENCE, T HESE GROUNDS ARE DISMISSED AS SUCH. 28.1 WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES ON THE ISSUE IN DISPUTE. WE NOTE THAT FACTS AND CIRCUMSTANCES IN THE INSTANT CASE ARE IDENTICAL TO THE FACTS AND CIRCU MSTANCES IN THE CASE OF SAAMAG D EVELOPERS P RIVATE LIMITED . (ITA NO. 2601/DEL/2014), WHEREIN PRECEDING PARAS WE HAVE DELETED THE ADDITION. TO MAINTAIN CONSISTENCY IN OUR DECISION, IN THE INSTANT CASE ALSO WE UPHOLD THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE. T HE GROUND OF THE APPEAL OF T HE R EVENUE IS ACCORDINGLY DISMISSED. 29. AS REGARD TO THE APPEAL OF THE ASSESSEE (IN ITA NO. 3165 /DEL/2014) IS CONCERNED, THE DIRECTOR OF THE ASSESSEE 40 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 COMPANY HAS FILED A LETTER DATED 08/05/2018 BEFORE US , WITHDRAWING THE APPEAL. ACCORDINGLY , IN VIEW OF THE WITHDRAWAL OF THE APPEAL, ALL THE GROUNDS RAISED STAND DISMISSED. 30 . IN THE RESULT, APPEAL OF THE R EVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES , WHEREAS APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 436/DEL/2014 31 . NOW, WE TAKE UP THE APPEAL IN THE CASE OF SAGA TOWNSHIP PRIVATE LIMITED (ITA NO. 436/DEL/2014) 32 . THE GROUNDS OF APPEAL RAISED BY THE R EVENUE ARE REPRODUCED AS UNDER: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE PENALTY OF RS.83,00,000/ - IMPOSED U/S 271D FOR ACCEPTING CASH LOANS. 2. THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND FACTS OF THE CASE IN ACCEPTING THE CONTENTION OF ASSESSEE THAT IT ACTED UNDER BONAFIDE BELIEF IN ACCEPTING CASH LOANS IN PURSUANCE TO THE TERMS OF MOU BETWEEN GROUND COMPANIES, AND THERE WAS REASONABLE CAUSE FOR NOT IMPOSING PENALTY U/S 271D. 3. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLAN T CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 33 . B RIEFLY STATED FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDING THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD ACCEPTED LOAN/DEPOSITS IN CASH ON FOLLOWING DATES FROM M/S SAAMAG C ONSTRUCTION LTD ., WHICH BEING EXCEEDING RS.20,000/ - , 41 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 ARE IN VIOLATION OF PROV ISION OF SECTION 269 SS OF THE A CT AND , THEREFORE , LIABLE FOR PEN ALTY UNDER SECTION 271D OF THE A CT: S. NO. DATE AMOUNT (I) 12.05.06 47,00,000/ - (II) 14.11.06 16,00,000/ - (III) 15.11.06 17,00,000/ - ( IV) 05.12.06 3,00,000/ - TOTAL 83,00,000/ - 33.1 THE MATTER WAS REFERRED TO THE A DDITIONAL COMMISSIONER FOR LEVY OF PENALTY U/S 271D OF THE ACT . THE ASSESSEE SUBMITTE D THAT OUT OF THE AMOUNT OF RS. 83 LAKHS, THE AMOUNT O F RS.53,21, 800/ - HAS BEEN PAID TO THE FARMERS FOR TOKEN MONEY AND RS.28,54, 400/ - HAS BEEN PAID FOR STAMP DUTY AND WHICH IS AN ESSENTIAL WAY OF MAKING LAND DEALS AND AS A NECESSITY OF BUSINESS. THE ADDITIONAL COMMISSIONER OF INCOME - TAX , REJECTED SUBMISSION OF THE ASS ESSEE AND LEVIED PENALTY OF RS.83,00, 000/ - VIDE ORDER DATED 25/02/2013. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE PENALTY OBSERVING AS UNDER: 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND WRITTEN SUBMISSIONS OF THE APPELLANT. I HAVE ALSO PERUSED THE CASE LAWS RELIED UPON BY THE AR OF THE APPELLANT IN SUPPORT OF HIS SUBMISSION. ON CONSIDERING THE FACTS OF THE CASE AND THE NATURE OF TRANSACTION, I FIND THAT THE PROVISIONS OF SECTION 269SS ARE NOT APPLICABLE IN THIS CASE. IN THE INSTANT CASE; DURING THE ASSESSMENT YEAR 2007 - 08, THE APPELLANT COMPANY ALONGWITH THE OTHER GROUP COMPANIES VIZ. M/S SAAMAG CONSTRUCTION LTD., M/S S AAMAG TOWNSHIP PVT. LTD. AND M/S. SAAMAG DEVELOPERS PVT. LTD. 42 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 ENTERED INTO A MEMORANDUM OF UNDERSTANDING (MOU) VIDE MOU DATED 02.06.2006 TO DEVELOP AN INTEGRATED TOWNSHIP IN RUDRA PUR (UTTRAKHAND). THIS MOU WAS DULY APPROVED BY THE BOARD OF DIRECTORS OF TH E APPELLANT COMPANY AND OTHER THREE COMPANIES, IN A RESOLUTION PASSED ON 02.06.2006. IN THE - RESOLUTION PASSED, CERTAIN DUTIES/OBLIGATIONS OF THE APPELLANT COMPANY AND OTHER THREE COMPANIES WERE CLEARLY LAID OUT. AS PER SAID MOU AND BOARD RESOLUTION, THE A PPELLANT HAD TO PURCHASE LAND IN ITS NAME AND DEVELOP THE SAME IN ASSOCIATION WITH OTHER GROUP COMPANIES. ONE OF THE DUTY/OBLIGATION AS PER BOARD RESOLUTION LAS THAT M/S SAAMAG CONSTRUCTION LTD. WAS ALSO RESPONSIBLE TO ARRANGE FINANCES FOR THE RUDRAPUR PRO JECT. IT WAS IN THE PROCESS OF IMPLEMENTATION OF THE DUTIES/OBLIGATIONS A SSIGNED, THAT M/S SAAMAG CONSTRUCTION LTD. PROVIDED FUNDS TO THE APPELLANT COMPANY AMOUNTING TO RS.83 LAKHS IN CASH ON VARIOUS - DATES. IT WAS WITH THESE FUNDS RECEIVED IN CASH, FROM M /S SAAMAG CONSTRUCTION LTD., THE APPELLANT ENTERED INTO SALE AGREEMENTS WITH VARIOUS PERSONS AND MADE PAYMENTS, BOTH IN CASH AND BY CHEQUES. THEREFORE, CONSIDERING ALL THESE FACTS AND THE NATURE OF THE TRANSACTIONS, IT IS CLEAR THAT IN THIS CASE THERE WERE TRANSFER OF FUNDS FROM THE GROUP COMPANY FOR THE PURPOSE OF BUSINESS OF DEVELOPMENT OF RUDRA PUR PROJECT. THUS, THE TRANSACTION OF RS.83 LAKHS IS NOT A LOAN OR DEPOSIT AS CONTEMPLATED IN SECTION 269SS 'OF THE I.T. ACT. 1961. THESE TRANSACTIONS ARE IN THE NATURE OF BUSINESS TRANSACTIONS CARRIED OUT BY THE APPELLANT PURSUANT TO THE TERMS OF THE MOU FOR DEVELOPMENT OF THE RUDRA PUR PROJECT. THE TRANSACTIONS OF TRANSFER OF FUNDS AMONG THE GROUP COMPANIES PURSUANT TO THE TERMS OF THE MOU AND BOARD RESOLUTION ON LY REPRESENTED DIVERSION OF FUNDS FROM ONE GROUP COMPANY TO ANOTHER GROUP COMPANY DEPENDING UPON THE EXIGENCIES OF THE BUSINESS. HENCE, THE PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED TO THE FACTS OF THE PRESENT CASE. EVEN IF THERE WAS VIOLATION OF PRIN CIPLES OF SECTION 269SS, THE ACTION OF THE APPELLANT COMPANY IN ACCEPTING THE FUNDS IN CASH COULD BE ASCRIBED TO ITS BONA FIDE BELIEF THAT IT WOULD NOT ATTRACT THE PROVISIONS OF SECTION 269SS GIVEN THE NATURE OF THE 43 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 TRANSACTIONS. BONA FIDE BELIEF COUPLED W ITH THE GENUINENESS OF THE TRANSACTIONS WOULD CONSTITUTE REASONABLE CAUSE FOR NOT INVOKING THE PROVISIONS OF SECTION 271D OF THE I.T. ACT, 1961. 33.2 AGGRIEVED , THE R EVENUE IS IN APPEAL BEFORE THE T RIBUNAL RAISING THE GROUNDS A S REPRODUCED ABOVE. 34 . DURING THE HEARING, THE COUNSEL OF THE ASSESSEE DRAWN OUR ATTENTION TO APPLICATION UNDER R ULE 27 OF THE IT AT R ULES FILED BY THE ASSESSEE. IN THE SAID APPLICATION, THE ASSESSEE HAS CHALLENGED THE PENALTY S HOULD HAVE BEEN IMPOSED BY THE J OINT COMMISSIONER RA THER THAN A DDITIONAL COMMISSIONER OF I NCOME T AX. THE ASSESSEE ALSO RAISED THE ISSUE THAT PENALTY LEVIED IS BARRED BY LIMITATION UNDER SECTION 275 OF THE ACT. 34 .1 ON THE CONTRARY, THE LD. DR OPPOSED THE APPLICATION ON THE GROUND THAT THE ASSESSEE DID NO T RAISE THESE ISSUES BEFORE THE LD. CIT(A) AND SINCE HE HAS NOT ADJUDICATED THOSE ISSUES, THEREFORE, THE ASSESSEE CANNOT BE AGGRIEVED ON THE ISSUE S AND THE NO APPLICATION UNDER R ULE 27 OF THE IT AT R ULES COULD LIED. 3 4 .2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE AGREED WITH THE CONTENTION OF THE LD. DR THAT ISSUES RAISED BY THE ASSESSEE IN APPLICATION UNDER R ULE 27 ARE NOT EMANATING FROM THE IMPUGNED ORDER, AND THEREFORE A SSESSEE CANNOT TAKE SHELTER OF R ULE 27 OF THE IT AT R ULES, UNDER WHICH THE ASSESSEE CAN SUPPORT THE ORDER OF THE LD. CIT(A) ON THE ISSUE WHICH IS DECIDED AGAINST THE ASSESSEE. 44 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 ACCORDINGLY, WE DISMISS THE APPLICATION UNDER R ULE 27 OF THE IT AT R ULES FILED BY THE ASSESSEE. 3 5 . IN RESPECT O F THE GROUNDS OF APPEAL OF THE R EVENUE, BEFORE US, THE LD. DR SUBMITTED THAT THE TRANSACTIONS AMONG GROUP COMPANIES ARE IN THE NATURE OF LOAN OR DEPOSITS AND NOT BUSINESS TRANSACTIONS AS CLAIMED BY THE ASSESSEE. THE LD. DR FURTHER SUBMITTED THAT THE ENTIT IES FROM WHOM THE PAYMENTS ARE RECEIVED HAVE BEEN SHOWN AS UNSECURED LOAN IN BALANCE SHEET , WHICH CONFIRM THE FACT OF LOAN TRANSACTIONS. 3 6 .1 ON THE CONTRARY, THE LD. C OUNSEL OF THE ASSESSEE, RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT AMOUN T IN QUESTION WERE RECEIVED FROM M/S SAAMAG C ONSTRUCTION LTD . IN THE PROCESS OF DUTIES /OBLIGATION ASSIGNED UNDER THE MEMORANDUM OF U NDERSTANDING (MOU) AMONG THE PARTIES, WHICH WAS ALSO APPROVED BY THE BOARD OF DIRECTOR OF THE ASSESSEE COMPANY. THE LD. COUN SEL SUBMITTED THAT CASH PAYMENT WERE MADE FOR PURCHASE OF LANDS IN TERMS OF MOU AND , THEREFORE , IT WAS MERELY A TRANSACTION OF TRANSFER OF FUNDS AMONG THE GROUP COMPANIES AND NOT IN THE NATURE OF LOAN OR DEPOSITS. MOREOVER, THE LD. COUNSEL SUBMITTED THERE WAS A REASONABLE CAUSE FOR NON - COMP LIANCE OF THE PROVISIONS OF 269 SS OF THE A CT AND THEREFORE PENALTY MAY NOT BE REQUIRED TO LEVIED IN TERMS OF SECTION 273B OF THE A CT AND ACCORDINGLY, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE PENALTY. 36 .2 WE HAVE HEAR D THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FACT THAT AMOUNT MENTIONED BY THE LD. ADDITIONAL COMMISSIONER OF INCOME T AX IN THE IMPUGNED ORDER, HAVE BEEN RECEIVED CONSEQUENT TO T HE M EMORANDUM OF 45 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 U NDERSTANDING (MOU) AMONG THE PARTIES I.E. THE ASSESSEE, M /S SAAMAG CONSTRUCTION LIMITED AND M/S SAAMAG DEVELOPERS PRIVATE LIMITED, HAS NOT BEEN DISPUTED BY THE R EVENUE. IN FURTHERANCE OF THE MOU, THE ASSESSEE RECEIVED PAYMENT AND MADE PAYMENT IN CASH FOR TOKEN MONEY AS WELL AS FO R A STAMP DUTY. THE ONLY ARGUMENT OF THE LD. DR IS THAT THOSE TRANSACTIONS HAVE BEEN RECORDED IN BALANCE SHEETS OF THE COMPANIES AS UNSECURED LOANS. IN OUR OPINION , W HEN PAYMENTS HAVE BEEN RECEIVED IN CASH IN TERMS OF MOU IN RELATION TO BUSINESS PURPOSE, T HE PURPOSE OF TRANSACTION IS BUSINESS TRANSACTION AND SAME CANNOT BE TREATED AS LOAN/DEPOSIT IRRESPECTIVE OF THE MANNER IN WHICH ACCOUNTING ENTRIES HAVE BEEN MADE IN THE BOOKS OF ACCOUNTS. IN SUBSTANCE , THE TRANSACTIONS ARE BUSINESS TRANSACTION. IN OUR OPI NION, THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS WELL REASONED. FURTHER, THE AMOUNTS ARE BEEN RECEIVED IN CASH FOR PAYMENT TO FARMERS AS WELL AS PAYMENT TO GOVERNMENT ACCOUNTS FOR A STAMP DUTY. THE CONTENTION OF THE ASSESSEE THAT IT COULD NOT COMPLY WITH THE REQUIREMENT OF SECTION 269 SS DUE TO REASONABLE FAILURE ON ITS PART, HAS ALSO BEEN CONSIDERED BY US. THE ARGUMENT OF THE LD. COUNSEL IS JUSTIFIED TO SOME EXTENT AS IT IS GENERALLY KNOWN THAT WHILE PURCHASE OF LAND, FARMERS PREFER PAYMENT IN CASH. THE PAYMENT BY CHEQUE IS ALSO NOT ACCEPTED SOMETIMES BY STAMP DUTY AUTHORITIES. IN OUR OPINION, IT CONSTITUTES A REASONABLE CAUSE FOR NOT ADHERING T O THE PROVISIONS OF SECTION 269 SS BY THE ASSESSEE. 36 .3 IN VIEW OF THE ABOVE, WE DID NOT FIND ANY E RROR IN THE ORDER OF THE LD. CIT(A), IN DELETING THE PENAL TY UNDER SECTION 271D OF 46 ITA NOS. 2601/DEL/2014; 3000/DEL/2014; 433/DEL/2014; 2602/DEL/2014; 2999/DEL/2014; 2604/DEL/2014; 3165/DEL/2014 & 436/DEL/2014 THE A CT, AND ACCORDINGLY , WE UPHOLD THE SAME. THE GROUNDS OF THE APPEAL OF THE R EVENUE ARE DISMISSED. 31. IN RESULT, BOTH THE APPEAL OF THE R EVENUE AND THE APPLICATION OF THE ASSESSEE UNDER RULE 27 OF THE ITAT R ULES ARE DISMISSED. 32. TO SUM UP, DECISIONS IN THE APPEALS OF THE ASSESSEE AND REVENUE ARE SUMMARIZED AS UNDER: SL. NO. ITA NO S . (ASSESSEE/REVENUE) ASSESSMENT YEAR RESULT 1. 2601/DEL/2014 (REVENUE) 2009 - 10 PARTLY ALLOWED FOR STATISTICAL PURPOSES . 2. 3000/DEL/2014 (ASSESSEE) 2009 - 10 ALLOWED FOR STATISTICAL PURPOSES . 3. 433/DEL/2014 (REVENUE) 2006 - 07 DISMISSED 4. 2602/DEL/2014 (REVENUE) 2006 - 07 ALLOWED FOR STATISTICAL PURPOSES . 5. 2999/DEL/2014 (ASSESSEE) 2006 - 07 ALLOWED 6. 2604/DEL/2014 (REVENUE) 2009 - 10 PARTLY ALLOWED FOR STATISTICAL PURPOSES . 7. 3165/DEL/2014 (ASSESSEE) 2009 - 10 DISMISSED 8. 436/DEL/20014 (REVENUE) 2007 - 08 DISMISSED THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 0 T H MAY , 201 8 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H MAY , 201 8 . RK / - (D.T.D . ) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI