Tanuj Holdings Pvt. Ltd., Kolkata V. DCIT, CC-1(2), KOLKATA, Kolkata

ITA 360/KOL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3418 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2015
• Court: TRIBUNAL
• Assessee Lawyers: D S DAML E FCA LD
• Keywords: Period of limitation; Source of fund; Deemed dividend; Reassessment proceedings
• Section: 143(3); 80HHC; 153A; 14A; 263; 63; 132; 15

Judgement Text

ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, KOLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 360/KOL/2015 ASST YEAR 2007-08 ITA NO. 361/KOL/2015 ASST YEAR 2008-09 ITA NO. 362/KOL/2015 ASST YEAR 2009-10 ITA NO. 363/KOL/2015 ASST YEAR 2010-11 M/S. TANUJ HOLDINGS PVT. LTD VS. DY.CIT, CC-1(2), KOLKATA PAN: AAACT 9223D (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.S DAMLE, FCA, LD. AR FOR THE RESPONDENT: NONE APPEARED DATE OF HEARING: 21-12--2015 DATE OF PRONOUNCEMENT: 20 -01-20 16 ORDER SHRI M.BALAGANESH, AM THESE APPEALS OF THE ASSESSEE ARISE OUT OF THE O RDERS OF THE LEARNED CIT (CENTRAL), KOLKATA-1 VIDE PROCEEDINGS DATED 16.3. 2015 U/S 263 OF THE INCOME TAX ACT, 1961 AGAINST THE ORDER OF ASSESSMENT U/S 153C / 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASST YEARS 2007-08 , 2008-09 , 2009- 10 & 2010-11. 2. THE ASSESSEE HAD RAISED ADDITIONAL GROUNDS OF APPEAL FOR THE ASST YEARS 2009-10 & 2010-11 AS BELOW:- 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT ERRED IN PASSING THE REVISION ORDER U/S 263 DATED 1 6.03.2015 EVEN THOUGH PROCEEDINGS U/S 263 HAD COME BARRED BY LIMIT ATION PRIOR TO 01.04.2014 AND IN THAT VIEW OF THE MATTER THE CIT'S ORDER U/S 263 DESERVES TO BE CANCELLED HOLDING IT TO BE AB INITIO VOID. ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 2 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT FAILED TO APPRECIATE THAT PROCEEDINGS U/S 153C WER E CONFINED ONLY TO ITEMS OF INCOME ASSESSABLE WITH REFERENCE TO INC RIMINATING MATERIAL OR INFORMATION GATHERED FROM THE BOOKS OR DOCUMENTS UNEARTHED ON ACCOUNT OF SEARCH AND IN THE IMPUGNED CASE RECEIPT OF THE INTER CORPORATE DEPOSIT BEING RECORDED IN THE R EGULAR BOOKS, THE CIT WAS UNJUSTIFIED IN REVISING THE ORDER U/S 153C/ 143(3) ON THE GROUND BEING ERRONEOUS BECAUSE DIVIDEND U/S 2(22)(E ) WAS NOT ASSESSED. 3. FOR THAT THE APPELLANT CRAVES LEAVE TO FILE ADDI TIONAL GROUNDS AND/ OR AMEND OR ALTER THE GROUNDS ALREADY TAKEN EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. AS THESE ADDITIONAL GROUNDS OF APPEAL GO INTO THE R OOT OF THE MATTER AND NO ENQUIRY WITH REGARD TO FACT IS REQUIRED TO BE VERIFIED, WE ADMIT THESE ADDITIONAL GROUNDS IN VIEW OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF NTPC LTD VS CIT REPORTED IN 229 ITR 383 (SC). 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL INCLUDING ADDITIONAL GROUNDS IN COMMON FOR ALL THE ASSESSMENT YEARS AND HENCE ALL THE APPEALS ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE :- 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE CIT ERRED IN PASSING THE REVISION ORDER U/S 263 DATED 1 6.03.2015 EVEN THOUGH PROCEEDINGS U/ S 263 HAD COME BARRED BY LIMITATION PRIOR TO 0 L.04.20 14 AND IN THAT VIEW OF THE MATTER THE CITS ORDER U/S 263 DESERVES TO BE CANCELLED HOLDING IT TO BE AB INITIO VOID 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT FAILED TO APPRECIATE THAT PROCEEDINGS U/S 153C WERE CONFINED ONLY TO ITEMS OF INCOME ASSESSABLE WITH REFERENCE TO INCRIMINATIN G MATERIAL OR INFORMATION GATHERED FROM THE BOOKS OR DOCUMENTS UN EARTHED ON ACCOUNT OF SEARCH AND IN THE IMPUGNED CASE RECEIPT OF THE INTE R CORPORATE DEPOSIT BEING RECORDED IN THE REGULAR BOOKS, THE CIT WAS UN JUSTIFIED IN REVISING THE ORDER U/S 153C/ 143(3) ON THE GROUND BEING ERRONEOU S BECAUSE DIVIDEND U/S 2(22)(E) WAS NOT ASSESSED. ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 3 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE CIT ERRED IN HOLDING THE ASSESSMENT ORDER TO BE ERRONEO US WITH REFERENCE TO AN ISSUE WHICH WAS HIGHLY CONTENTIOUS AND LEGALLY DEBA TABLE AND THERE BEING CONCEIVABLY MORE THAN 2 LEGAL VIEWS POSSIBLE ON THE QUESTION OF APPLICABILITY OF SEC 2(22)(E) ON THE ICD RECEIVED; THE CIT COULD NOT REVISE THE ORDER IN EXERCISE OF POWERS U/S 263 BECAUSE THE ORDER PASSED BY THE AO WAS NOT ERRONEOUS WITHIN THE PROVISIONS OF SEC 2 63 OF THE ACT. 4. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, SINCE THE APPELLANT COMPANY DID NOT HOLD ANY EQUITY SHARES IN THE COMPANY GRANTING INTER CORPORATE DEPOSIT THE CIT COULD NOT HOLD THAT THE ASSESSMENT U/S 153C/143(3) WAS ERRONEOUS SINCE DEEMED DIVIDEND U/S .2(22)(E) WITH REFERENCE TO INTER CORPORATE DEPOSIT RECEIPT WAS NO T ASSESSABLE IN THE HANDS OF THE APPELLANT, A NON SHAREHOLDER. 5. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THERE BEING SEVERAL JUDGMENT OF THE HIGH COURTS HOLDING THAT DE EMED DIVIDEND U/S.22(2)(E) WAS NOT ASSESSABLE UNLESS THE RECIPIEN T OF THE LOAN IS A SHAREHOLDER OF THE LOAN GRANTING COMPANY AND THE AO HAVING FOLLOWED THE VIEW EXPRESSED IN THESE HIGH COURT JUDGMENTS, THE O RDER OF THE AO COULD NOT BE CONSIDERED TO BE; ERRONEOUS WITHIN THE MEANING O F SEC 263 AND IN THAT VIEW OF THE MATTER THE CIT WAS UNJUSTIFIED IN REVIS ING THE AO'S ORDER U/S 263. 6. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LOAN GRANTING COMPANY BEING SUBSTANTIALLY ENGAGED IN GRA NTING OF LOAN FOR THE PURPOSES OF EARNING INTEREST, THE PROVISIONS OF SEC 2(22)(E) OF THE ACT WERE NOT APPLICABLE SINCE THE CASE WAS COVERED BY THE EX CEPTION PROVIDED IN CLAUSE (II) OF EXPLANATION TO SEC 2(22) OF THE ACT AND IN THAT VIEW OF THE MATTER THE CIT ERRED IN INVOKING SEC 263 OF THE I T ACT. 7. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT GROSSLY ERRED IN HOLDING CLAUSE (II) OF EXPLANATION TO SEC 2(22) WAS NOT APPLICABLE BECAUSE THE 'MAIN' AND 'PRINCIPAL' BUSIN ESS OF THE LOAN GRANTING COMPANY WAS NOT FINANCING OR GRANTING OF L OANS; IGNORING AND OVERLOOKING THE FACT THAT THE SAID CLAUSE(II) NOWHE RE REQUIRED THE 'MAIN' BUSINESS OF THE COMPANY TO BE LOAN GRANTING AND IN THAT VIEW OF THE MATTER THE CIT ERRED IN REVISING THE ORDER U/S 153C/ 143(3 ). 8. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE CIT ERRED IN PASSING THE ORDER VI] S 263 ON THE GROUND OF NON APPLICATION OF MIND AND NON EXAMINATION OF THE RELEVANT MATERIAL B EFORE PASSING THE ORDER ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 4 U/S 153C / 143(3 AND THEREBY JUSTIFYING THE INVOCAT ION OF POWERS U/S 263 EVEN THOUGH IN THE SHOW CAUSE NOTICE THE CIT HAD NO T CONSIDERED THE AO'S ORDER TO BE ERRONEOUS ON THE GROUND OF NON APPLICAT ION OF MIND OR NON EXAMINATION OF RELEVANT FACTS AND IN THAT VIEW OF T HE MATTER THE ORDER U/S. 263 WAS LEGALLY UNSUSTAINABLE. 9. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER PASSED U/S. 263 DATED 16.03.2015 BE CANCELLED AND T HE ASSESSMENT ORDER U/S. 143C/143(3) BE RESTORED SINCE THE SAME WAS NEI THER ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 10. FOR THAT THE APPELLANT CRAVES LEAVE TO FILE AD DITIONAL GROUNDS AND / OR AMEND OR ALTER THE GROUNDS ALREADY TAKEN EITHER BEF ORE OR AT THE TIME OF HEARING OF THE APPEAL. 4. THE BRIEF FACTS OF THESE APPEALS ARE THAT PUR SUANT TO THE SEARCH OPERATION U/S 132 OF THE ACT CONDUCTED IN THE PRASAD GROUP INCLUDED IN ABHIJEET GROUP OF CASES ON 18.1.2011, CERTAIN DOCUMENTS BELONGING TO THE ASSES SEE WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AND ACCORDINGLY PROCEEDINGS WE RE INITIATED U/S 153C OF THE ACT ON THE ASSESSEE. THE ASSESSEE HAD ORIGINALLY FILED I TS RETURN OF INCOME ON REGULAR DATES FOR ALL THE ASSESSMENT YEARS AND ASSESSMENTS FOR TH E SAME WERE DULY COMPLETED U/S 143(1) OF THE ACT. PURSUANT TO NOTICE U/S 153C OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING THE SAME INCOME AS WAS ORIGINAL LY DECLARED BY IT IN THE REGULAR RETURNS. THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS , VOUCHERS AND BANK STATEMENTS AND ASSESSMENTS WERE COMPLETED U/S 153C / 143(3) OF THE ACT ACCEPTING THE INCOME RETURNED BY THE ASSESSEE EXCEPT FOR ASST YEAR 2009- 10, WHEREIN AN ADDITION OF RS. 1,52,598/- WAS MADE TOWARDS SECTION 14A OF THE ACT. THE SAID ORDER WAS SUBJECTED TO REVISION PROCEEDINGS U/S 263 OF THE ACT AS IN TH E OPINION OF THE LEARNED CIT, THE ORDER PASSED BY THE LEARNED AO U/S 153C OF THE ACT DID SUFFER FROM CERTAIN IRREGULARITIES BY NOT BRINGING TO TAX THE AMOUNT O F DEEMED DIVIDENDS IN SEVERAL ASSESSMENT YEARS. THE LEARNED CIT HELD THAT THE PRO VISIONS OF SECTION 153C OF THE ACT USES THE WORD ASSESS OR REASSESS. HENCE HE HEL D THAT THE LEARNED AO OUGHT TO HAVE MADE ADDITION TOWARDS DEEMED DIVIDEND IN SECTION 15 3C PROCEEDINGS IRRESPECTIVE OF ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 5 THE EXISTENCE OF ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. HE HELD THAT MOREOVER THE ORIGINAL ASSESSMENTS WERE CO MPLETED ONLY U/S 143(1) OF THE ACT AND HENCE THE LEARNED AO DID NOT HAVE AN OCCASION T O GO INTO THE ASPECT OF DEEMED DIVIDEND. HOWEVER, THE LEARNED AO OUGHT TO HAVE CO NSIDERED THE SAME IN PROCEEDINGS U/S 153C OF THE ACT WHICH HAS NOT BEEN DONE BY HIM. HENCE HIS ORDER U/S 153C OF THE ACT BECOMES ERRONEOUS AND PREJUDICIAL T O INTERESTS OF THE REVENUE BY NOT CONSIDERING THE ASPECT OF DEEMED DIVIDEND. HENCE THE OBJECTION RAISED BY THE ASSESSEE THAT THE REVISION JURISDICTION U/S 263 OF THE ACT IS BARRED BY LIMITATION WAS REJECTED BY LEARNED CIT. ACCORDINGLY HE HELD THAT THE ORDER PASSED BY THE LEARNED AO U/S 153C OF THE ACT TO BE ERRONEOUS AND PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON T HE AFORESAID GROUNDS FOR ALL THE ASST YEARS. 4.1. THE LEARNED AR ARGUED THAT THE ORIGINAL ASSES SMENTS IN THIS CASE WERE COMPLETED FOR THE ASST YEARS 2007-08 TO 2010-11 U/S 143(1) OF THE ACT. HE REITERATED THE ENTIRE FACTUAL BACKGROUND OF THE CASE WHICH REM AIN UNDISPUTED. HE ARGUED THAT THE ASSESSEE DID NOT HOLD ANY SHARES IN M/S GEETA GANES H PROMOTERS LTD AND HENCE THERE CANNOT BE ANY QUESTION OF DEEMED DIVIDEND THAT COUL D BE ASSESSED IN THE HANDS OF THE ASSESSEE. HE FURTHER ARGUED THAT ABSOLUTELY NO INCR IMINATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH WHICH WARRANTS ASSESSM ENT OR REASSESSMENT OF TOTAL INCOME IN TERMS OF SECTION 153C OF THE ACT AND HENC E IN THIS SCENARIO, THERE IS NO NEED TO DISTURB THE ASSESSMENTS ALREADY MADE U/S 143(1) OF THE ACT FOR THE COMPLETED ASSESSMENTS. HE STATED THAT THE ADDITION TOWARDS D EEMED DIVIDEND WAS PROPOSED BY THE LEARNED CIT BASED ON THE AUDITED ACCOUNTS ONLY WHICH ARE ALREADY PART OF THE ORIGINAL ASSESSMENTS. HENCE HE ARGUED THAT THE ORD ER PASSED BY THE LEARNED AO U/S 153C OF THE ACT CANNOT BE TREATED AS ERRONEOUS WARR ANTING REVISION JURISDICTION U/S 263 OF THE ACT BY THE LEARNED CIT. HE FURTHER ARGUED THAT THE AUDITED ACCOUNTS WERE FURNISHED TO THE LEARNED AO ALONG WITH THE ORIGINAL RETURN OF INCOME FILED U/S 139(1) OF THE ACT AND THEREFORE THE RELEVANT INFORMATION W AS VERY MUCH AVAILABLE WITH THE ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 6 LEARNED AO WHEN THE ASSESSMENT U/S 143(1) OF THE AC T WAS MADE IN FEBRUARY 2009. THE ALLEGED MISTAKE, IF ANY, OF NOT ASSESSING THE I NCOME U/S 2(22)(E) OF THE ACT WAS THEREFORE COMMITTED IN THE ORDER DATED 26.2.2009 AN D THEREFORE THE PERIOD OF LIMITATION U/S 263 WAS REQUIRED TO BE COMPUTED WITH REFERENCE TO THE ORDER DATED 26.2.2009. IF THE PERIOD OF LIMITATION IS SO COUNTED, THEN IT WIL L BE EVIDENT THAT THE PROCEEDINGS U/S 263 COULD VALIDLY BE INITIATED ONLY TILL 31.3.2011 AND NOT THEREAFTER ON 2.2.2015. TO SUPPORT THIS ARGUMENT, HE PLACED RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS ALGENDRAN FINANCE LTD REPORT ED IN 293 ITR 1(SC) . 5. WE HAVE HEARD THE LEARNED AR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LEARNED DR WAS NOT PRESENT AT THE TIME THE CASE WAS CALLED ON FOR HEARING , EVEN THOUGH HE WAS VERY MUCH PRESENT IN T RIBUNAL ON THE SAID DATE BEFORE ANOTHER BENCH. ACCORDINGLY THIS CASE WAS PASSED OV ER IN ORDER TO WAIT FOR THE ARRIVAL OF LEARNED DR. BUT WE FIND THAT THE LEARNED DR AF TER COMPLETING HIS CASES BEFORE THE OTHER BENCH , CHOSE NOT TO PRESENT HIMSELF BEFO RE US FOR ADVANCING THE ARGUMENTS. HENCE WE DEEM IT FIT AND APPROPRIATE TO PROCEED FUR THER BASED ON THE ARGUMENTS ADVANCED BY THE LEARNED AR AND THE MATERIALS AVAILA BLE ON RECORDS. 5.1. THE FOLLOWING CHART WOULD MAKE US UNDERSTAND THE FACTUAL BACKGROUND OF THE CASE BETTER:- M/S. TANUJ HOLDINGS PVT. LTD COMPARATIVE STATEMENT PARTICULARS A.Y 2007-08 A.Y 2008-09 AY 2009-10 AY 2 010-11 RETURN OF INCOME U/S. 139(1) FILED ON 24.08.2007 30.09.2008 24.09.2009 25.09.2010 RETURN OF INCOME PROCESSED & ASSESSMENT U/S. 143(1) COMPLETED ON 26.02.2009 - 22.03.2011 15.03.2011 ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 7 INCOME RETURNED RS.7,24,871 RS.7,84,086 RS.17,77,148 RS.43,80,143 INCOME ASSESSED U/S. 143(1) RS.7,24,871 RS.7,84,086 RS.17,74,650 RS.43,80,140 NOTICE U/S. 153C ISSUED ON 26.04.2012 26.04.2012 26.04.2012 26.04.2012 INCOME ASSESSED U/S. 153C RS.7,24,871 RS.7,84,086 RS.19,27,246 RS.43,80,140 5.2. DEEMED DIVIDEND COULD BE ASSESSED ONLY IN THE HANDS OF THE SHAREHOLDER AND WHETHER DEEMED DIVIDEND COULD BE APPLIED FOR INTER CORPORATE DEPOSIT RECEIVED BY THE ASSESSEE FROM A LENDING COMPANY WE FIND THAT THE ASSESSEE IS NOT A SHAREHOLDER IN T HE LENDING COMPANY. THE HONBLE APEX COURT IN THE CASE OF RAMESHWARLAL SANWARMAL VS CIT REPORTED IN 122 ITR 1(SC) HELD THAT IN ORDER TO INVOKE SECTION 2(22)(E) OF TH E ACT, IT IS NECESSARY FOR THE TAX AUTHORITIES TO PROVE THAT THE PERSON WHO RECEIVED T HE LOAN FROM A BODY CORPORATE WAS A PERSON WHO HELD THE SHARES IN THE LOAN GRANTING COM PANY AS A BENEFICIAL AS WELL AS LEGAL SHAREHOLDER. THIS VIEW WAS REITERATED BY THE SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF V.BHAUMICK COLOR LAB PVT LT D REPORTED IN 118 ITD 1 . WE HOLD THAT THE DEEMED DIVIDEND COULD BE ASSESSED ONL Y IN THE HANDS OF THE SHAREHOLDER AND ONLY WHEN THE LOAN IS ADVANCED BY A COMPANY TO SUCH SHAREHOLDER. THE DEEMED DIVIDEND CANNOT BE ASSESSED IN THE HANDS OF A NON-S HAREHOLDER MERELY ON THE GROUND THAT SOME OTHER PERSON IS A COMMON SHAREHOLDER IN B OTH THE COMPANIES AND HOLDS SUBSTANTIAL INTEREST IN BOTH SUCH COMPANIES. WE AL SO FIND THAT THE MONIES RECEIVED BY THE ASSESSEE FROM THE LENDING COMPANY IS ONLY INTER CORPORATE DEPOSIT AND NOT LOAN AND HENCE IS AUTOMATICALLY OUTSIDE THE AMBIT OF APPLICA BILITY OF SECTION 2(22)(E) OF THE ACT. IT IS WELL SETTLED THAT INTER CORPORATE DEPOSIT AND LOAN ARE TOTALLY DISTINCT AND SEPARATE. ADMITTEDLY, THE ASSESSEE WAS NOT A SHAREHOLDER OF M /S GEETA GANESH PROMOTERS LTD ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 8 (GGPL) IN ANY OF THE FOUR ASSESSMENT YEARS I.E ASS T YEARS 2007-08 TO 2010-11 FOR WHICH THE PROCEEDINGS U/S 263 OF THE ACT HAVE BEEN INITIATED. WE FIND THAT M/S PRASAD GROUP RESOURCES PVT LTD (PGRPL) HOLDS MORE THAN 20% SHARES IN THE ASSESSEE COMPANY AS WELL AS IN GGPL. IN VIEW OF THIS COMMON SHAREHOLDING ALONE, THE PROVISIONS OF DEEMED DIVIDEND WOULD NOT GET AUTOMAT ICALLY ATTRACTED. WE FIND THAT THE LEARNED AO HAD RIGHTLY NOT MADE ANY ADDITION TO WARDS DEEMED DIVIDEND IN THE PROCEEDINGS COMPLETED U/S 153C OF THE ACT IN VIEW O F THIS FACT. THE FOLLOWING DECISIONS SUPPORT OUR VIEW IN THIS REGARD:- CIT VS SARVA EQUITY PVT LTD REPORTED IN 225 TAXMAN 172 (KARNATAKA HC) CIT VS AR MAGNETICS (P) LTD REPORTED IN 220 TAXMAN 209 (DELHI HC) CIT VS IMPACT CONTAINER PVT LTD REPORTED IN 367 ITR 346 (BOMBAY HC) CIT VS GTZ SECURITIES LTD REPORTED IN 359 ITR 345 ( J&K HC) CIT VS DAISY PACKERS (P) LTD REPORTED IN 220 TAXMAN 331 (GUJARAT HC) CIT VS ANKITECH PVT LTD REPORTED IN 340 ITR 14 (DEL HI HC) 5.3. WHETHER THE LENDING OF INTER CORPORATE DEPOSI T BY GGPL COULD BE CONSIDERED AS SUBSTANTIAL PART OF BUSINESS OF GGPL WE FIND THAT GGPL DEPLOYED IN GRANTING LOANS IN EXC ESS OF 20% OF NET OWNED FUNDS. IT WOULD THUS BE EVIDENT THAT GRANTING OF INTER COR PORATE DEPOSITS WAS ORDINARY BUSINESS OF GGPL AND INCOME DERIVED FROM SUCH ACTIVITY WAS C ONSISTENTLY ASSESSED. HOWEVER, WE FIND IN THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT BY THE LEARNED CIT, IT HAS BEEN STATED THAT THE MAIN BUSINESS OF LOAN GRANTI NG COMPANY I.E GGPL WAS REAL ESTATE DEVELOPMENT. IN THIS REGARD, WE FIND THAT T HE LEGISLATURE IN SECTION 2(22) HAD CONSCIOUSLY USED THE WORDS SUBSTANTIAL PART OF THE BUSINESS IN CONTRADISTINCTION TO THE WORDS MAIN BUSINESS OR PRINCIPAL BUSINESS. WE ALSO FIND THAT THE WORDS SUBSTANTIAL PART OF THE BUSINESS IS NOT DEFINED IN THE ACT WHI CH LED TO JUDICIAL INTERPRETATIONS BY VARIOUS JUDICIAL FORUMS AND IT HAS BEEN HELD THAT T HE EXPRESSION SUBSTANTIAL PART OF THE BUSINESS IS DIFFERENT AND DISTINCT FROM THE WORDS PRINCIPAL BUSINESS OR MAIN ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 9 BUSINESS USED IN OTHER PLACES IN THE ACT. TAKING CUE FROM PROVISIONS OF SECTION 2(22)(E) AND SECTION 2(32) OF THE ACT , THE COURTS AND VARIOUS BENCHES OF THE TRIBUNAL HAVE HELD THAT THRESHOLD OF 20% CAN BE SAFELY APPLI ED TO ASCERTAIN WHETHER A PARTICULAR BUSINESS ACTIVITY CAN BE CONSIDERED TO BE FORMING SUBSTANTIAL PART OF THE BUSINESS. IN THE INSTANT CASE, AS ALREADY STATED SUPRA THAT GGPL HAD DEPLOYED MORE THAN 20% OF ITS NET OWNED FUNDS BY WAY OF GRANTING OF INTER CORPORA TE DEPOSITS TO THE ASSESSEE AND THEN IT COULD BE CONCLUDED THAT THE SUBSTANTIAL PAR T OF COMPANYS BUSINESS CAN BE SAID TO BE GRANTING LOANS , INTER CORPORATE DEPOSITS AND ADVANCES AND THEREFORE CLAUSE (II) OF SECTION 2(22)(E) OF THE ACT BECOMES APPLICABLE IN C ASE OF SUCH COMPANY. WE FIND FROM THE PAPER BOOK OF THE ASSESSEE THAT THE INTERE ST INCOME EARNED ON LOANS AND INTER CORPORATE DEPOSITS BY GGPL CONSTITUTED SUBSTANTIAL SOURCES OF INCOME FOR GGPL. IN THESE CIRCUMSTANCES, AN ACTIVITY WHICH WAS CONSISTE NTLY CARRIED ON AND WHICH SUBSTANTIALLY CONTRIBUTED TO THE NET PROFITS OF EAC H YEAR, COULD NOT BE OVERLOOKED IN DECIDING THE QUESTION AS TO WHETHER GRANTING OF LOA NS AND INTER CORPORATE DEPOSITS FORMED SUBSTANTIAL PART OF THE BUSINESS OF GGPL. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF KISHORI LAL AGARWAL VS CIT REPORTED IN 364 ITR 158 (ALL) WHEREIN IT WAS HELD THAT ALL THAT CLAUSE (II) OF SECTION 2(22)(E) REQUIRES IS THAT THE ADVAN CE OR LOAN MUST BE MADE BY A COMPANY IN THE ORDINARY COURSE OF BUSINESS. THE SA ID CLAUSE DOES NOT REQUIRE THAT THE COMPANY MUST BE ENGAGED IN MONEY LENDING BUSINESS. THE COURT FURTHER HELD THAT WHERE LOAN IS MADE IN THE ORDINARY COURSE OF BUSINE SS, THE FACT THAT LENDING OF SURPLUS FUND IS NOT SPECIFIED IN THE MAIN OBJECTS OF THE MEMORANDUM BUT IT IS INCLUDED AS AN ANCILLARY OBJECT WOULD NOT DETRACT FROM THE FACT TH AT LOAN WAS MADE IN THE ORDINARY COURSE OF BUSINESS . APPLYING THIS JUDICIAL PRINCIPLE TO THE PRESENT CASE, WE FIND THAT MORE THAN 50% OF PAID UP CAPITAL AND RESERVES OF GG PL WERE CONSISTENTLY DEPLOYED IN THE BUSINESS OF GRANTING LOANS AND INTER CORPORATE DEPOSITS FOR THE PURPOSE OF EARNING INTEREST INCOME, CLAUSE(II) OF SECTION 2(22)(E) OF THE ACT WAS CLEARLY APPLICABLE AND THEREFORE ANY AMOUNT GRANTED BY THE SAID COMPANY DI D NOT COME WITHIN THE MISCHIEF OF ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 10 SECTION 2(22)(E) OF THE ACT. THE FOLLOWING CHART S WOULD PROVE THE FACTS OF THE CASE BEYOND DOUBT :- TOTAL FUND DEPLOYMENT IN M/S. GEETA GANESH PROMOTER S LIMITED (FIGURES SHOWN IN RS. CRORES F.Y 2006 - 07 F.Y 2007 - 08 F.Y 2008 - 09 F.Y 2009 - 10 OWN FUND CAPITAL 1.09 1.09 1.09 1.09 RESERVES 9.65 10.74 11.84 13.05 NET OWNED FUNDS (NOF) 10.74 11.83 12.93 14.14 BORROWED FUNDS 3.13 10.22 1.39 0.17 ADVANCES FROM PARTIES - - - 20.83 GROSS INVESTIBLE FUNDS (GIF) 13.87 22.05 14.32 35.14 UTILIZATION OF FUNDS LOANS GIVEN (INCLUDING THE LOAN GIVEN TO TANUJ HOLDINGS PVT. LTD OTHERS 11.14 2.73 3.16 18.89 10.00 4.32 35.14 - TOTAL 13.87 22.05 14.32 35.14 % OF NOF INVESTED IN LOANS MORE THAN 100% 26.71% 77.33% MORE THAN 100% 5 OF GIF INVESTED IN LOANS 80.32% 14.33% 69.83% 100.00% M/S. GEETA GANESH PROMOTERS LIMITED [ FIGURES SHOWN IN RUPEES] YEAR ENDED NET PROFIT INTEREST INTEREST AS % OF NET PROFIT 31/03/2007 55,13,705 14,53,599 26.36% 31/03/2008 123,24,477 117,11,240 95.02% 31/03/2009 133,47,723 70,26,224 52.64% 31/03/2010 183,58,104 230,86,852 125.76% ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 11 5.4. HENCE ON FACTS, WE HOLD THAT NO ADDITION COU LD BE MADE IN THE HANDS OF THE ASSESSEE TOWARDS DEEMED DIVIDEND ON THE FOLLOWING C ONTENTIONS :- - WHAT IS RECEIVED IS ONLY AN INTER CORPORATE DEPOSIT AND NOT A LOAN ; - ASSESSEE IS NOT A SHAREHOLDER IN GGPL AND DEEMED D IVIDEND COULD BE ASSESSED ONLY IN THE HANDS OF THE SHAREHOLDER; AND - SUBSTANTIAL PART OF BUSINESS OF GGPL IS GRANTING OF LOANS , ADVANCES AND INTER CORPORATE DEPOSITS IN THE ORDINARY COURSE OF BUSINESS. 5.5. WE ALSO FIND THAT NO INCRIMINATING MATERIALS WERE FOUND DURING THE SEARCH IN RESPECT OF THE ISSUE OF DEEMED DIVIDEND. HENCE IT CANNOT BE THE SUBJECT MATTER OF ADDITION IN 153C PROCEEDINGS IN RESPECT OF COMPLETE D ASSESSMENTS. WE HOLD THAT WHEN AN ADDITION COULD NOT BE MADE AS PER LAW IN SECTION 153C PROCEEDINGS, THEN THE SAID ORDER CANNOT BE CONSTRUED AS ERRONEOUS WARRANTING R EVISION JURISDICTION U/S 263 OF THE ACT. THIS ADDITION WAS MADE BASED ON AUDITED ACCOU NTS ALREADY AVAILABLE WITH THE REVENUE. HENCE ON THIS COUNT ALSO, THE ADDITION C ONTEMPLATED BY THE LEARNED CIT IN SECTION 263 PROCEEDINGS IS NOT IN ACCORDANCE WITH L AW. RELIANCE IN THIS REGARD PLACED BY THE LEARNED AR ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS MURLI AGRO PRODUCTS LTD ( ITA NO. 36 OF 2009 DATED 29.10.2010- BOMBAY HC) IS VERY WELL PLACED. THE QUESTION BEFORE THEIR LORDSHIPS AND DECISION R ENDERED THEREON IS AS UNDER:- QUESTION: 2) ALTHOUGH SEVERAL QUESTIONS ARE FRAMED BY THE REV ENUE, THE BASIC QUESTION RAISED IN THIS APPEAL IS, WHETHER THE INCO ME TAX APPELLATE TRIBUNAL IS JUSTIFIED IN CANCELLING THE ORDER OF CO MMISSIONER OF INCOME TAX PASSED UNDER SECTION 263 OF THE INCOME T AX ACT, 1961 ? HELD: 6. CHALLENGING THE ORDER OF THE COMMISSIONER OF I NCOME TAX PASSED UNDER SECTION 263 OF THE IT ACT, THE ASSESSE E FILED AN APPEAL AND THE ITAT BY ITS ORDER DATED 5/1/2009 SET ASIDE THE ORDER OF THE ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 12 COMMISSIONER OF INCOME TAX DATED 4/10/2007 ON THE GROUND THAT NEITHER THE COMPUTATION OF BOOK PROFIT UNDER SECTIO N 115JA NOR DEDUCTION UNDER SECTION 80HHC OF THE IT ACT WERE TH E SUBJECT MATTER OF THE PROCEEDINGS UNDER SECTION 153A AND, THEREFORE, THE COMMISSIONER OF INCOME TAX COULD NOT HAVE INVOKED T HE JURISDICTION UNDER SECTION 263 OF THE IT ACT. CHALL ENGING THE AFORESAID ORDER, THE PRESENT APPEAL IS FILED BY THE REVENUE. 7. ACCORDING TO SHRI JAISWAL, LEARNED COUNSEL FOR T HE REVENUE, ONCE THE PROCEEDINGS UNDER SECTION 153A OF THE IT A CT ARE INITIATED, THEN THE ORIGINAL ASSESSMENT/REASSESSMEN T ORDERS ALREADY PASSED IN THE ASSESSMENT YEARS COVERED UNDER SECTIO N 153A STAND ABATED AND THE ASSESSING OFFICER IS OBLIGED TO PASS FRESH ASSESSMENT/REASSESSMENT ORDERS AND DETERMINE THE TO TAL INCOME AFRESH FOR THOSE ASSESSMENT YEARS. IN THE PRESENT CASE, ACCORDING TO MR. JAISWAL, THE ASSESSMENT ORDER PASSED UNDER S ECTION 153A READ WITH SECTION 143(3) OF THE INCOME- TAX ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE BECAUSE , FIRSTLY, THE AO HAD ONLY DETERMINED UNDISCLOSED INCOME AND HAD NOT DETERMINED THE TOTAL INCOME WHICH THE MANDATE OF SECTION 153A OF THE INCOME- TAX ACT. SECONDLY, THE TOTAL COMPUTED AFTER GIVING EFFECT TO THE ORDER OF COMMISSIONER OF INCOME-TAX(A) BEING LOSS WHICH L ESS THAN 30% OF THE BOOK PROFIT, THE AO OUGHT TO HAVE COMPUTED B OOK PROFIT AS PER SECTION 115JA OF THE INCOME-TAX ACT. THIRDLY, T HE DEDUCTION ALLOWED UNDER SECTION 80HHC OF THE ACT IN THE ORIGI NAL ASSESSMENT WAS ERRONEOUS AND SINCE THE ORIGINAL ASSESSMENT ORD ER STOOD ABATED ON INITIATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT, THE AO OUGHT TO HAVE CORRECTLY COMPUTED DEDUCTION U NDER SECTION 80HHC IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE INCOME-TAX ACT. ACCORDIN GLY, MR. JAISWAL SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE, THE COMMISSIONER OF INCOME TAX WAS JUSTIFIED IN INVOKIN G JURISDICTION UNDER SECTION 263 AND THE ITAT COMMITTED AN ERROR I N SETTING ASIDE THE ORDER PASSED BY THE C.I.T. 8. WE FIND IT DIFFICULT TO ACCEPT THE ABOVE CONTENT ION RAISED ON BEHALF OF THE REVENUE. THE OBJECT OF INSERTING SECT IONS 153A, 153B AND 153C BY FINANCE ACT, 2003 BY DISCARDING THE EXI STING PROVISIONS RELATING TO SEARCH CASES CONTAINED IN CH APTER XIVB OF THE INCOME-TAX ACT, AS STATED IN THE MEMORANDUM EXP LAINING THE PROVISIONS IN THE FINANCE BILL 2003 (SEE 260 ITR (S T) 191 AT 219) WAS THAT UNDER THE EXISTING PROVISIONS RELATING TO SEARCH CASES, OFTEN DISPUTES WERE RAISED ON THE QUESTION, AS TO W HETHER A PARTICULAR INCOME COULD BE TREATED AS UNDISCLOSED INCOME OR WHETHER A PARTICULAR INCOME COULD BE SAID TO BE REL ATABLE TO THE ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 13 MATERIAL FOUND DURING THE COURSE OF SEARCH, ETC., W HICH LED TO PROLONGED LITIGATION. TO OVERCOME THAT DIFFICULTY, THE LEGISLATURE BY FINANCE ACT 2003, DECIDED TO DISCARD CHAPTER XIVB P ROVISIONS AND INTRODUCE SECTIONS 153A, 153B AND 153C IN THE IT AC T. 9. WHAT SECTION 153A CONTEMPLATES IS THAT, NOTWITHS TANDING THE REGULAR PROVISIONS FOR ASSESSMENT/REASSESSMENT CONT AINED IN THE IT ACT, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A ON OR AFTER 31/5/2003 IN TH E CASE OF ANY PERSON, THE ASSESSING OFFICER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME WITHIN TH E TIME STIPULATED THEREIN, IN RESPECT OF SIX ASSESSMENT YEARS IMMEDI ATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE AND THE REAFTER ASSESS OR REASSESS THE TOTAL INCOME FOR THOSE ASSESSMENT YEAR S. THE SECOND PROVISO TO SECTION 153A PROVIDES FOR ABATEMENT OF ASSESSMENT/REASSESSMENT PROCEEDINGS WHICH ARE PEND ING ON THE DATE OF SEARCH/REQUISITION. SECTION 153A(2) PROVIDE S THAT WHEN THE ASSESSMENT MADE UNDER SECTION 153(A)(1) IS ANNULLED , THE ASSESSMENT OR REASSESSMENT THAT STOOD ABATED SHALL STAND REVIVED. 10. THUS ON A PLAIN READING OF SECTION 153A OF THE INCOME-TAX ACT, IT BECOMES CLEAR THAT ON INITIATION OF PROCEED INGS UNDER SECTION 153A, IT IS ONLY THE ASSESSMENT/REASSESSMEN T PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SEARCH U NDER SECTION 132 OR MAKING REQUISITION UNDER SECTION 132A OF T HE ACT STAND ABATED AND NOT THE ASSESSMENTS/REASSESSMENTS ALREAD Y FINALISED FOR THOSE ASSESSMENT YEARS COVERED UNDER SECTION 153A OF THE ACT. BY A CIRCULAR NO.8 OF 2003 DATED 18-9-2003 (SEE 263 IT R (ST) 61 AT 107) THE CBDT HAS CLARIFIED THAT ON INITIATION OF P ROCEEDINGS UNDER SECTION 153A, THE PROCEEDINGS PENDING IN APPEAL, RE VISION OR RECTIFICATION PROCEEDINGS AGAINST FINALIZED ASSESSM ENT/REASSESSMENT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALIZED ASSESSMENTS/REASSESSMENTS DO NOT ABATE, THE APPEAL , REVISION OR RECTIFICATION PENDING AGAINST FINALIZED ASSESSMENT S/REASSESSMENTS WOULD NOT ABATE. THEREFORE, THE ARGUMENT OF THE REVENUE, THAT ON INITIATION OF UNDER SECTION 153A, THE ASSESSMENTS/ REASSESSMENTS FINALISED FOR THE ASSESSMENT YEARS COVERED UNDER SE CTION 153A OF THE INCOME-TAX ACT STAND ABATED CANNOT BE ACCEPTED. SIMILARLY ON ANNULMENT OF ASSESSMENT MADE UNDER SECTION 153(1) WHAT STANDS REVIVED IS THE PENDING ASSESSMENT/REASSESSMENT PROC EEDINGS WHICH STOOD ABATED AS PER SECTION 153A(1). 11. IN THE PRESENT CASE, AS CONTENDED BY SHRI MANI, LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSMENT FOR THE AS SESSMENT YEAR 1998-99 WAS FINALIZED ON 29-12-2000 AND SEARCH WAS CONDUCTED ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 14 THEREAFTER ON 3-12-2003. THEREFORE, IN THE FACTS OF THE PRESENT CASE, INITIATION OF PROCEEDINGS UNDER SECTION 153A WOULD NOT AFFECT THE ASSESSMENT FINALIZED ON 29-12-2000. 12. ONCE IT IS HELD THAT THE ASSESSMENT FINALIZED O N 29.12.2000 HAS ATTAINED FINALITY, THEN THE DEDUCTION ALLOWED U NDER SECTION 80HHC OF THE INCOME-TAX ACT AS WELL AS THE LOSS COM PUTED UNDER THE ASSESSMENT DATED 29-12-2000 WOULD ATTAIN FINALI TY. IN SUCH A CASE, THE AO WHILE PASSING THE INDEPENDENT ASSESSME NT ORDER UNDER SECTION 153A READ WITH SECTION 143(3) OF THE I.T AC T COULD NOT HAVE DISTURBED THE ASSESSMENT/REASSESSMENT ORDER WHICH H AS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERED IN THE COU RSE OF THE PROCEEDINGS UNDER SECTION 153A OF THE INCOME-TAX AC T ESTABLISH THAT THE RELIEFS GRANTED UNDER THE FINALIZED ASSESSMENT/REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153A PROCEEDINGS. 13. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH O R DURING THE 153A PROCEEDINGS WHICH WOULD SHOW THAT THE RELIEF UNDER SECTION 80HHC WAS ERRONEOUS. IN SUCH A CASE, THE AO WHILE P ASSING THE ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTI ON 143(3) COULD NOT HAVE DISTURBED THE ASSESSMENT ORDER FINAL IZED ON 29.12.2000 RELATING TO SECTION 80HHC DEDUCTION AND CONSEQUENTLY THE C.I.T COULD NOT HAVE INVOKED JURISDICTION UNDER SECTION 263 OF THE ACT. 14. MOREOVER, SINCE THE AO HAD MADE ADDITION ON AC COUNT OF UNDISCLOSED INCOME AT RS. 89,19,477/- IN THE ASSESS MENT ORDER PASSED UNDER SECTION 153A, THERE WAS NO QUESTION OF COMPUTING BOOK PROFITS UNDER SECTION 115JA OF THE I.T ACT. WH EN THE ADDITION OF UNDISCLOSED INCOME WAS DELETED BY CIT(A) WITHOUT ANY DIRECTION TO COMPUTE THE BOOK PROFITS, THE AO WAS BOUND TO M ODIFY THE ASSESSMENT ORDER PASSED UNDER SECTION 153A READ WI TH S. 143(3) OF THE ACT AS DIRECTED BY CIT(A). THEREFORE, IN THE F ACTS OF THE PRESENT CASE, NO FAULT COULD BE FOUND WITH THE AO IN GIVING EFFECT TO THE ORDER OF CIT(A). CONSEQUENTLY, THE CIT COULD NOT IN VOKE JURISDICTION UNDER SECTION 263 OF THE INCOME-TAX AC T ON THE GROUND THAT THE ASSESSMENT UNDER SECTION 153A READ WITH SE CTION 143(3) WAS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF RE VENUE. 15. IN THE RESULT, THE DECISION OF THE TRIBUNAL IN QUASHING THE ORDER OF C.I.T PASSED UNDER SECTION 263 OF THE I.T ACT CANNOT BE FAULTED. ACCORDINGLY, WE SEE NO MERIT IN THE PRESEN T APPEAL AND THE SAME IS HEREBY DISMISSED WITH NO ORDER AS TO COSTS . ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 15 WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALSO SUPPORTED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS CON TINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD AND ALL CARGO GLOBAL LOGISTICS LTD REPORTED IN (2015) 374 ITR 645 (BOM) VIDE ORDER DATED 21.4.2015 , WHEREIN THE FACTS BEFORE THE BOMBAY HIGH COURT AND DECISION RENDERED THEREON ARE AS BELOW :- UNDER SECTION 153A OF THE INCOME-TAX ACT, 1961, WH ICH ENABLES CARRYING OUT OF SEARCH OR EXERCISE OF POWER OF REQU ISITION, ASSESSMENT IN FURTHERANCE THEREOF IS CONTEMPLATED. THERE IS A MAN DATE TO ISSUE NOTICES UNDER SECTION 153(1)(A) AND ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THUS, THE CRUCIAL WORDS 'SEARCH' AND 'REQUISITION' APPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISOS. THAT WOULD THROW LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVISION. TRUE IT IS THAT THE ASSESSMENT WHICH HAS TO BE MADE IN PURSUANCE OF THE NOTICE IS IN RELATION T O THE SIX YEARS. AN ORDER WILL HAVE TO BE MADE IN THAT REGARD. WHILE MAKING T HE ORDER, THE INCOME OR THE RETURN OF INCOME FILED FOR ALL THESE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE WILL HAVE TO BE MADE TO THE IN COME DISCLOSED THEREIN. HOWEVER, THE SCOPE OF ENQUIRY THOUGH NOT CONFINED E SSENTIALLY REVOLVES AROUND THE SEARCH OR THE REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE. THE PROVISION DEALS WITH THOSE CASES WHERE ASSE SSMENT OR REASSESSMENT, IF ANY, RELATING TO THE ASSESSMENT YEARS FALLING WI THIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN SUB-SECTION (1) OF SECTION 153A WERE PENDING. IF THEY WERE PENDING ON THE DATE OF THE IN ITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SE CTION 132A , AS THE CASE MAY BE, THEY ABATE. IT IS ONLY PENDING PROCEEDINGS THAT WOULD ABATE AND NOT WHERE THERE ARE ORDERS MADE OF ASSESSMENT OR REASSE SSMENT AND WHICH ARE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF THE REQUISITION. THE ASSESSEE WAS ENGAGED IN THE OPERATION OF A CONT AINER FREIGHT STATION. IT CLAIMED DEDUCTION UNDER SECTION BO-IA( 4) PRODUCING A CERTIFICATE DATED JULY 13, 2006, FROM THE JAWAHARLA L NEHRU PORT TRUST NHAVA SHEVA DECLARING THAT THE ASSESSEE WAS CONSIDE RED AN EXTENDED ARM OF PORT-RELATED SERVICES. THE EDUCATION WAS DISALLO WED ON THE GROUND THAT THE CERTIFICATE WAS WITHDRAWN ON OCTOBER 5, 2007. T HE COMMISSIONER (APPEALS) CONFIRMED THE VIEW OF THE ASSESSING OFFIC ER. THE TRIBUNAL HELD IN FAVOUR OF THE ASSESSEE. A SEARCH WAS CARRIED OUT ON ITS PREMISES AND A NOTI CE UNDER SECTION 153A WAS ISSUED TO THE ASSESSEE. THE ASSESSEE DECLA RED A TOTAL INCOME OF RS.5,54,63,220 WHILE CLAIMING THE DEDUCTION UNDER S ECTION 80-IA(4) OF RS.1,25, 77,637. THE ASSESSING OFFICER HELD THAT TH E ASSESSEE WAS NOT ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 16 ENTITLED TO THE DEDUCTION UNDER SECTION 80-IA. THE COMMISSIONER (APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER. THE SPEC IAL BENCH OF THE TRIBUNAL HELD THAT BY THE CLEAR LANGUAGE OF SECTION 153A TOGETHER WITH ITS PROVISOS, PENDING ASSESSMENTS ABATED AND THAT THE A SSESSING OFFICER WAS REQUIRED TO MAKE ONE ASSESSMENT FOR EACH OF THE SIX YEARS ON THE BASIS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUG HT ON RECORD BY THE ASSESSING OFFICER, THAT IN OTHER CASES ASSESSMENTS WOULD BE MADE ON THE BASIS OF THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS F OUND DURING THE SEARCH AND NOT PRODUCED DURING ASSESSMENT AND ALSO ON ANY OTHER UNDISCLOSED INCOME OR PROPERTY FOUND DURING THE SEARCH. ON THE ISSUE OF DEDUCTION UNDER SECTION BO-IA(4) THE TRIBUNAL HELD THAT THE C ONTAINER FREIGHT STATION WAS AN INLAND PORT AND ITS INCOME WAS ENTITLED TO D EDUCTION UNDER SECTION 80-IA(4) . ON APPEALS: HELD, DISMISSING THE APPEALS, (I) THAT THE NOTICE U NDER SECTION 153A WAS FOUNDED ON SEARCH. IF THERE WAS NO INCRIMINATIN G MATERIAL FOUND DURING THE SEARCH THEN THE TRIBUNAL WAS RIGHT IN HOLDING T HAT THE POWER UNDER SECTION 153A BEING NOT EXPECTED TO BE EXERCISED ROU TINELY, SHOULD BE EXERCISED IF THE SEARCH REVEALED ANY INCRIMINATING MATERIAL. IF THAT WAS NOT FOUND THEN IN RELATION TO THE SECOND PHASE OF THREE YEARS, THERE WAS NO WARRANT FOR MAKING AN ORDER WITHIN THE MEANING OF T HIS PROVISION. IN VIEW OF THE AFORESAID FINDINGS AND JUDICIAL PREC EDENT RELIED UPON, WE HOLD THAT THE ADDITION TOWARDS DEEMED DIVIDEND U/S 2(22)(E) OF TH E ACT IN THE ASSESSMENTS FRAMED U/S 153C OF THE ACT FOR THE ASST YEARS 2007-08 TO 2 010-11 WITHOUT ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RE SPECT TO THOSE ASSESSMENT YEARS, IS NOT WARRANTED AND HELD AS NOT IN ACCORDANCE WITH LA W. 5.6. WE HOLD THAT THE LEARNED CIT HAD JUST ENTERT AINED A BELIEF THAT ORDER PASSED BY THE LEARNED AO U/S 153 C OF THE ACT IS ERRONEOUS , WHICH OTHERWISE DOES NOT EMANATE FROM THE PROVISIONS OF THE ACT. HENCE IN THIS SCEN ARIO, INVOKING JURISDICTION UNDER SECTION 263 PROCEEDINGS IS NOT PERMISSIBLE. 5.7. SINCE WE HAVE DECIDED THE IMPUGNED ISSUE OF ADDITION TOWARDS DEEMED DIVIDEND IN FAVOUR OF THE ASSESSEE ON FACTS AS WELL AS ON LA W, WE DONT FIND IT NECESSARY TO ITA NOS. 360- 363/KOL/2015-D-AM M/S. TANUJ HOLDINGS PVT. LTD 17 ADDRESS THE SAME ISSUE ON THE GROUND OF LIMITATION OF INVOKING JURISDICTION U/S 263 OF THE ACT. HENCE WE REFRAIN TO GIVE OUR FINDINGS IN THIS REGARD ON THE ISSUE OF LIMITATION. 5.8. IN VIEW OF THE AFORESAID FINDINGS, WE QUASH THE ORDER PASSED U/S 263 OF THE ACT BY THE LEARNED CIT AND ALLOW THE GROUNDS AND ADDITI ONAL GROUNDS RAISED BY THE ASSESSEE FOR ALL THE ASST YEARS. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE AR E ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 2 0 -01-2016 1.. THE APPELLANT: M/S. TANUJ HOLDINGS PVT. LTD 16 SUDDER STREET, KOL-16. 2 DY. COMMISSIONER OF INCOME-TAX, CC 1(2), AAYKAR POORVA, SHANTIPALLY, KOL-107. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- ( MAHAVIR SINGH JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 20 -01/2016 COPY OF THE ORDER FORWARDED TO:-