Mr.Hemanth Kumar Bothra , Bangalore V. The Assistant Commissioner of Income Tax Central Circle-1(2), Bangalore

ITA 396/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7304 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 20-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: LAKSHMY KARTHIK
• Keywords: Salary income; Additional evidence; Deemed dividend; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B, BANGALORE BEFORE SHRI GEORGE GEORGE K, JM & SHRI JASON P.BOAZ , AM ITA NO.396/BANG/2017 : ASST.YEAR 2013-2014 SHRI HEMANTH KUMAR BOTHRA NO.14, 7 TH CROSS, JAL BHARAT NAGAR, BANASWADI ROAD, BENGALURU 560 033. PAN : AAAPH9863N. THE ASST.COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1(2) BENGALURU. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI LAKSHMY KARTHIK, CA RESPONDENT BY : SHRI PADMAMEENAKSHI, JCIT DATE OF HEARING : 23.10.2017 DATE OF PRONOUNCEMENT : 03.11.2017 O R D E R PER GEORGE GEORGE K, JM THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DI RECTED AGAINST THE ORDER OF THE CIT(A)-11, BANGALORE, DATE D 16.12.2016. THE RELEVANT ASSESSMENT YEAR IS 2013-1 4. 2. THE SOLITARY ISSUE RAISED BY THE ASSESSEE, IN H IS GROUNDS OF APPEAL, IS THAT THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.1,00,50,743 MADE BY THE AO ON ACCOUNT OF DEEM ED DIVIDEND U/S 2(22)(E) OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE ISSUE ARE AS FO LLOWS: THE ASSESSEE, AN INDIVIDUAL, HAD SHOWN HIS INCOME FROM SALARY, HOUSE PROPERTY, BUSINESS AND OTHER SOURCES. DURING THE RELEVANT PERIOD UNDER DISPUTE, THE ASSESSEE HAD FURNISHED HIS RETURN OF INCOME ADMITTING A TOTAL INCOME OF RS .14,75,250 ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 2 WHICH COMPRISED, AMONG OTHERS, A NEW UNSECURED LOAN CREDITOR FOR A SUM OF RS.1.53 CRORES. BEING QUERIE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THAT THE NEW ADVANCE OF RS1.53 CRORES WAS RECEIVED FROM M/S. NOKHA INVESTMENTS PVT. LTD. [NIPL] IN NOVEMBER, 2012. OU T OF THIS, RS1.38 CRORES AND RS.15 LAKHS WERE RECEIVED ON 5.11 .2012 AND ON 27.11.2012 RESPECTIVELY. SCRUTINIZING UPON THE DETAILS FURNISHED BY THE ASSESSEE, THE AO FOUND THAT AT THE TIME OF RECEIVING THE ADVANCE, THE ASSESSEE WAS A SHARE-HOL DER WITH 55.05% SHARE-HOLDING IN NIPL WHICH WAS A PRIVATE LI MITED COMPANY IN WHICH THE PUBLIC WERE NOT SUBSTANTIALLY INTERESTED. ACCORDING TO THE AO, AS PER THE BALANC E SHEET AS ON 31.3.2012 [AT THE END OF THE EARLIER PREVIOUS YE AR] NIPL HAD ACCUMULATED PROFITS OF RS.1,00,0,743. DURING THE R ELEVANT PREVIOUS YEAR UNDER DISPUTE, NIPL HAD EARNED FURTHE R PROFITS. ACCORDING TO THE AO, IN TERMS OF S. 2(22)(E), THE A MOUNT OF ADVANCE TO THE EXTENT OF ACCUMULATED PROFITS AS ON THE DATE OF GIVING THE ADVANCE WAS LIABLE TO BE TAXED AS DEEMED DIVIDEND INCOME. AFTER DUE CONSIDERATION OF THE ASSESSEES EXPLANATION AS INCORPORATED IN HIS IMPUGNED ORDER UNDER CONSIDE RATION, THE AO HAD MADE AN ADDITION OF RS.1,00,50,743 AS DE EMED DIVIDEND U/S 2(22)(E) OF THE ACT IN THE HANDS OF TH E ASSESSEE FOR THE FOLLOWING REASONS: 5..THE EXPLANATION IS A SELF-SERVING ARGUMENT A ND IS AN ATTEMPT TO GIVE A SIMPLE AND STRAIGHT-FORWARD LOAN, THE COLOUR OF AN ADVANCE FOR PURCHASE. THE UNCON VINCING NATURE OF THE EXPLANATION IS BORNE OUT BY THE FACT THAT THE PROPERTY IN QUESTION WAS ULTIMATELY NOT TRANSFERRED BY THE ASSESSEE TO M/S. NOKHA INVESTMENTS PVT LTD. THE ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 3 JUDGMENTS CITED BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. IN BAGMANE CONSTRUCT IONS PVT LTD, THE LAND WAS BEING PURCHASED BY THE SHAREH OLDER ON BEHALF OF THE COMPANY OUT OF THE COMPANYS FUNDS . THE FACTS OF THE ASSESSEES CASE ARE DIFFERENT FROM THO SE CITED BY THE ASSESSEE. IN THE CASE OF THE ASSESSEE, THE PROPERTY IS HELD BY HIM ON HIS OWN BEHALF AND HE HAS ULTIMAT ELY NOT TRANSFERRED THE PROPERTY TO THE COMPANY. THERE FORE, THE TRANSACTION CANNOT BE ACCEPTED A S A COMMERCIAL TRANSACTION AND IS NOTHING BUT A PURE AND SIMPLE LO AN. THE ASSESSEE HAS SHOWN THE AMOUNT OF RS.1,53,00,000 /- AS A LOAN IN THE RETURN OF INCOME. THE ASSESSEE OW NS SHARES IN THE COMPANY, NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND, HOLDING NOT LESS THAN TEN PER CEN T OF THE VOTING POWER. IN THE CIRCUMSTANCES, THE PROVISIONS OF SECTION 2 (22)(E) ARE CLEARLY ATTRACTED IN THE CASE OF THE ASSSESSEE. 6. AS MENTIONED EARLIER, THE ACCUMULATED PROFIT OF M /S. NOKHA INVESTMENTS PVT. LTD AT THE BEGINNING OF THE YEAR ON 1.4.2012 WAS RS.1,00,50,743/-. IN RESPECT OF THE INCOME EARNED BY M/S. NOKHA INVESTMENTS PVT. LTD DU RING THE RELEVANT PREVIOUS YEAR, IT HAS BEEN SUBMITTED T HAT THE SAME ACCRUED TO THE COMPANY IN CONNECTION WITH TRANSACTIONS CARRIED OUT AFTER THE DATE ON WHICH TH E COMPANY GAVE THE ADVANCE TO THE ASSESSEE. THEREFOR E, AS ON THE DATE OF ADVANCE, THE ACCUMULATED PROFIT OF T HE COMPANY WAS RS.1,00,50,743/- ONLY. 7. ... 4. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE WITH T HE FIRST APPELLATE AUTHORITY. AFTER CAREFUL CONSIDERATION O F THE ASSESSEES CONTENTIONS, VARIOUS CASE LAWS RELIED UP ON BY THE ASSESSEE AND EXTENSIVELY QUOTING THE DECISION OF TH E (I) HONBLE MADRAS HIGH COURT IN THE CASE OF SUNIL KAPOOR V. CI T, CHENNAI AND (II) THE FINDINGS OF THE EARLIER BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT V. TOBBY SIMON, THE CI T (A) WAS ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 4 OF THE VIEW THAT THE PROVISIONS OF S 2(22)(E) OF TH E ACT WERE CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE. FOR READY REFERENCE, THE RELEVANT PORTIONS OF THE REASONING O F THE CIT (A) ARE EXTRACTED AS UNDER: 7.NONE OF THE CASE LAWS RELIED UPON BY THE APPELLANT ARE APPLICABLE TO THE FACTS OF THE CASE. IN VIEW OF THE DEFINITION, THE BASIC CRITERIA FOR INVOCATIO N OF PROVISION OF 2(22)(E) ARE THAT (I) THE COMPANY MAKING PAYMENT SHALL BE COMPANY IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED; (II) THE COMPANY SHALL HAVE ACCUMULATED PROFIT; (III) THE SHARE HOLDERS MUST BE HOLDING MORE THAN 10% OF THE SHARES; (IV) THE PAYMENT TO THE SHAREHOLDERS OR TO THE CONCERNS IN WHICH THE SHAREHOLDER HAS A SUBSTANTIAL INTEREST SHALL CONSTITUTE DEEMED DIVIDEND IN THE HANDS OF THE PAYE E; & (V) THE DEEMED DIVIDEND SHALL BE RESTRICTED TO THE ACCUMULATED PROFITS. APPLYING THE ABOVE PRINCIPLES, IT IS SEEN THAT THE APPELLANT HAS MORE THAN 10% OF SHARES IN M/S. NOKHA INVESTMEN TS PVT LTD FROM WHOM THE MONEY WAS RECEIVED, M/S. NOKH A INVESTMENTS PVT LTD IS A COMPANY IN WHICH THE PUBLI C ARE NOT SUBSTANTIALLY INTEREST AND IT HAD SUFFICIENT ACCUMULATED PROFITS. THUS, THE PAYMENT MADE TO THE APPELLANT CAN BE STRICTLY CONSTRUED AS DEEMED DIVID END. THE ARGUMENT OF THE APPELLANT THAT THE MONEY WAS NO T A LOAN DOESNT APPEAR TO BE CORRECT. THE APPELLANT H AS TAKEN LOAN FROM THE COMPANY IN WHICH IT HAD 55.05% INTEREST. ALL THE PAPER WORK SUBMITTED BY THE APPEL LANT IS ONLY TO CAMOUFLAGE THE REAL INTENTION OF THE APPELL ANT. THE APPELLANT HAS GIVEN VERY FLIMSY REASON STATING THAT M/S. NOKHA INVESTMENTS PVT LTD WAS NOT INTERESTED IN BUY ING THE PROPERTY DUE TO FALL IN MARKET VALUE OF PROPERT Y AND CONSEQUENT CHANGE IN CIRCUMSTANCES. BY THIS ACT OF THE ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 5 APPELLANT, THE COMPANY HAS NOT DERIVED ANY BENEFIT WHATSOEVER. M/S. NOKHA INVESTMENTS PVT LTD IS NOT IN THE MONEY LENDING BUSINESS............................. ...................... 5. AGGRIEVED, THE ASSESSEE COME UP WITH THE PRESENT APPEAL BEFORE APPEAL. DURING THE COURSE OF HEARING, THE L EARNED COUNSEL FOR THE ASSESSEE HAD REITERATED WHAT HAS BE EN CONTENDED BEFORE THE AUTHORITIES BELOW. IN FURTHER ANCE, THE ELABORATE SUBMISSIONS MADE ARE SUMMARIZED AS UNDER: - DURING THE YEAR UNDER DISPUTE, THE ASSESSEE AGREE D TO SELL HIS PROPERTY SITUATED AT III BLOCK, HRBR EXTEN SION WHICH HE HAD CONSTRUCTED PARTLY THROUGH OWN FUNDS AND THR OUGH HOUSING LOAN BORROWED FROM HDFC BANK TO NIPL FOR A CONSIDERATION OF RS.3 CRORES; - THAT WHEN NIPL WAS LOOKING FOR A PROPERTY AROUND HRBR AREA FOR LOCATING ITS CORPORATE OFFICE, THE ASSESSE E VOLUNTEERED TO SELL HIS PROPERTY AND, ACCORDINGLY, A MEMORANDUM OF UNDERSTANDING DT. 7.9.2012 WAS ENTERED INTO BETWEEN THEM WHEREIN IT WAS AGREED, AMONG OTHERS, THAT BEFORE EX ECUTING THE AGREEMENT FOR SALE, THE ASSESSEE WILL ENSURE TH AT THE SUBJECT PROPERTY WAS FREE FROM ALL THE ENCUMBRANCES . IN ORDER TO ENSURE FOR A CLEAR TITLE, NIPL AGREED TO GIVE RS .1.38 CRORES AS ADVANCE TOWARDS CONSIDERATION FOR PURCHASE OF TH E SUBJECT PROPERTY ON THE UNDERSTANDING THAT THE LOAN LIABILI TY TOWARDS HDFC BE DISCHARGED BEFORE THE TRANSFER OF THE SAME TO NIPL. IT WAS FURTHER AGREED THAT NIPL WOULD PAY A FURTHER ADVANCE NOT EXCEEDING RS.15 LAKHS FOR MEETING INCIDENTAL EX PENSES IN CONNECTION WITH THE TRANSFER OF THE SUBJECT PROPERT Y; AND THAT ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 6 IT WAS AGREED THAT THE ADVANCES PAID WOULD BE ADJUS TED TOWARDS THE TOTAL COST OF THE PROPERTY TO BE PAID B Y NIPL TO THE ASSESSEE; - THAT IT WAS, FURTHER, AGREED IN THE MOU THAT THE TRANSACTION SHOULD BE OVER ON OR BEFORE 4.11.2013 O R ELSE, NIPL WOULD BE AT LIBERTY TO CANCEL THE MOU AND RECO VER THE ADVANCES ALONG WITH 12% OF INTEREST. IN CASE, NIP L DID NOT ACQUIRE THE PROPERTY AS AGREED UPON, THEN THE ASSES SEE WOULD BE LIABLE TO RETURN ONLY THE ADVANCES SO RECEIVED; - THE FACTS WERE THAT ON RECEIPT OF THE ADVANCES, T HE LOAN WITH HDFC WAS CLEARED AND THE SUBJECT PROPERTY WAS FREE FROM ALL THE ENCUMBRANCES AS AGREED UPON. HOWEVER, DUE TO FALL IN THE MARKET VALUE OF THE PROPERTY AND CONSEQ UENT CHANGES IN THE CIRCUMSTANCES, THE BOARD OF NIPL DEC IDED TO CANCEL THE MOU ENTERED INTO, AS A RESULT OF WHICH, RS.1.53 CRORES WAS RETURNED BY THE ASSESSEE TO NIPL 5.1 EXTENSIVELY QUOTING THE PROVISIONS OF S. 2 (22) (E) OF THE ACT AND ALSO CITING THE VARIOUS CASE LAWS, NAMELY: (I) CIT V. HINDUSTAN PETROLEUM CORPORATION LTD 187 ITR 1 (BOM); (II) GOPAL AND SONS (HUF) V. CIT (SC); (III) CIT V. CREATIVE DYEING AND PRINTING PVT LTD 318 I TR 476 (DEL); (IV) S.A. BUILDERS V. CIT 288 ITR 1 (SC); ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 7 (V) M/S. DINA SUDHIR SHAH MUMBAI V. ACIT ITA NO.4184/MUM/2014GOPAL AND SONS (HUF) V. CIT (SC); (VI) CIT V. CREATIVE DYEING AND PRINTING PVT LTD 318 I TR 476 (DEL); (VII) S.A. BUILDERS V. CIT 288 ITR 1 (SC); (VIII) M/S. DINA SUDHIR SHAH MUMBAI V. ACIT ITA NO.4184/MUM/2014 ITAT, MUMBAI; 5.2 IT WAS SUBMITTED THAT THE PROVISIONS OF S 2 (22 (E) OF THE ACT SHALL APPLY ONLY WHEN THE AMOUNT WAS GIVEN AS LOAN OR ADVANCE AND THAT THE COMMERCIAL AND TRADING TRANSA CTIONS ARE EXCLUDED FROM THE AMBIT OF THE PROVISIONS OF S. 2 (22)(E) OF THE ACT AND THAT THE PAYMENT OF ADVANCE OF MONEY WA S TOWARDS A COMMERCIAL TRANSACTION RELATING TO SALE O F PROPERTY AND THE SAME CANNOT BE CONSIDERED TO BE IN THE NATU RE OF LOAN OR ADVANCE AS UPHELD BY VARIOUS JUDGMENTS (SUPRA). 5.3 IN CONCLUSION, IT WAS PRAYED THAT THE PROVISION S OF S. 2(22)(E) OF THE ACT SHALL NOT APPLY TO THE IMPUGNED TRANSACTION AND, HENCE, THE ADDITION MADE BY THE AO AND, SUBSEQ UENT CONFIRMATION BY THE CIT (A) REQUIRES TO BE DELETED. 5.4 TO SUBSTANTIATE HIS CONTENTIONS, THE LEARNED CO UNSEL HAD FURNISHED COPIES OF (I) MEMORANDUM OF UNDERSTANDING ; AND (II) CASE LAWS RELIED IN THE FORM OF A PAPER BOOK. 6. ON THE OTHER HAND, THE LEARNED D.R SUPPORTED THE STAND TAKEN BY THE ASSESSING OFFICER AS WELL AS THE FIRST APPELLATE AUTHORITY. AS THERE WAS NO INFIRMITY IN THE STAND OF THE ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 8 AUTHORITIES BELOW, IT WAS PLEADED THAT THE ADDITION MADE AS WELL AS CONFIRMED BY THE CIT (A) DESERVES TO BE SUS TAINED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RELEVANT CASE RECORDS AS WELL AS THE VA RIOUS CASE LAWS RELIED ON BY THE LEARNED COUNSEL [REFER: PAPER BOOK OF THE ASSESSEE]. 8. BEFORE TAKING UP THE ISSUE FOR ADJUDICATION, WE WOULD LIKE TO POINT OUT THAT DURING THE COURSE OF HEARING ; THE LEARNED COUNSEL HAD SOUGHT THE PERMISSION OF THIS BENCH TO FURNISH A PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE [DT.2 3.10.2017] ALONG WITH THE COPIES OF THE FOLLOWING DOCUMENTS AS ADDITIONAL EVIDENCE, NAMELY: (A) COPY OF BANK STATEMENT FOR THE PERIOD FROM 1.10.20 12 TO 31.03.2013 EVIDENCING RECEIPT OF ADVANCE FROM THE COMPANY AND ALSO THE FULL AND FINAL SETTLEMENT OF L OAN FROM HDFC BANK LTD; AND (B) COPY OF CONFIRMATION LETTER FROM HDFC BANK ON FULL AND FINAL SETTLEMENT OF HOUSING LOAN. 8.1 IN SUBSTANCE, IT WAS PRAYED TO ADMIT THE ADDITI ONAL EVIDENCE AND DISPOSE OF THE APPEAL IN ACCORDANCE WI TH THE MERITS OF THE ISSUE. 8.2 AFTER DUE CONSIDERATION OF RIVAL SUBMISSIONS, T HE PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE FURNISHED BY T HE ASSESSEE WAS ADMITTED AND ORDERED TO TAKE ON RECORD. 9. THE CRUST OF THE ISSUE FOR CONSIDERATION BEFORE US IS: WHETHER THE AO WAS WITHIN HIS DOMAIN TO INVOKE THE ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 9 PROVISIONS OF S 2 (22)(E) OF THE ACT TO TREAT A SUM OF RS.1,00,50,743/- AS DEEMED DIVIDEND? 9.1 IT WAS THE CASE OF THE ASSESSEE THAT HE HAD ENT ERED INTO A MEMORANDUM OF UNDERSTANDING [DATED 7.12.2012] WITH NIPL TO SELL THE SUBJECT PROPERTY FOR A CONSIDERATION OF RS.3.25,00,000/- (SIC) RS.3,00,00,000/- [REFER: PAG E 2 OF MOU] AND RECEIVED AN ADVANCE OF RS.1.53 CRORES WHIC H WILL BE ADJUSTED AGAINST THE SALE CONSIDERATION OF RS.3 CRO RES. IT WAS THE CONTENTION OF THE ASSESSEE THAT AS SOON AS THE RECEIPT OF THE ADVANCE, THE SAME WAS IMMEDIATELY PAID TO HDFC LTD TO CLEAR THE LOAN AVAILED ON THE SUBJECT PROPERTY AND, THUS, CLAIMED BEFORE THE AO THAT THE PAYMENT MADE BY NIPL WAS ADVANCE FOR THE PURCHASE OF THE SUBJECT PROPERTY AN D, HENCE, SUCH AN ADVANCE CANNOT BE TERMED AS DEEMED DIVIDEND U/S 2 (22) (E) OF THE ACT. IT WAS, FURTHER, ARGUED THAT DUE TO FALL IN MARKET VALUE OF PROPERTY, THE BOARD OF NIPL DECIDED AGAINST ACQUIRING THE PROPERTY AND CONSEQUENTLY, THE ASSESS EE RETURNED THE ADVANCE OF RS.1.53 CRORES TO NIPL ON 2 6.3.2013. 9.2 HOWEVER, THE AO TOOK A DIVERGENT VIEW THAT AT T HE TIME OF RECEIVING THE ADVANCE, THE ASSESSEE WAS A SHARE-HOL DER WITH 55.05% SHARE-HOLDING IN NIPL WHICH WAS A PRIVATE LI MITED COMPANY IN WHICH THE PUBLIC WERE NOT SUBSTANTIALLY INTERESTED. IT WAS, FURTHER, STATED BY THE AO TH AT AS PER THE BALANCE SHEET AS ON 31.3.2012 I.E., AT THE END OF T HE EARLIER PREVIOUS YEAR, THE COMPANY, NIPL HAD ACCUMULATED PR OFITS OF RS.1,00,50,743/-.DURING THE RELEVANT PREVIOUS YEAR, NIPL HAD EARNED FURTHER PROFITS. ACCORDING TO THE AO, IN TE RMS OF S. 2 ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 10 (22)(E) OF THE ACT, THE AMOUNT OF ADVANCE TO THE EX TENT OF ACCUMULATED PROFITS AS ON THE DATE OF GIVING THE AD VANCE WAS LIABLE TO BE TAXED AS DEEMED DIVIDEND INCOME OF THE ASSESSEE. TO STRENGTHEN HIS STAND, THE AO HELD THAT THE EXPLA NATION WAS A SELF-SERVING ARGUMENT AND WAS AN ATTEMPT TO GIVE A SIMPLE AND STRAIGHT-FORWARD LOAN THE COLOUR OF AN ADVANCE FOR PURCHASE. SUBSEQUENTLY, THE FIRST APPELLATE AUTHO RITY ALSO TOOK A STAND THAT THE ASSESSEE HAD MORE THAN 10% OF SHARES IN NIPL FROM WHOM THE MONEY WAS RECEIVED, NIPL WAS A COMPANY IN WHICH THE PUBLIC WERE NOT SUBSTANTIALLY INTERESTED AND IT HAD SUFFICIENT ACCUMULATED PROFITS. THUS, T HE PAYMENT MADE TO THE ASSESSEE CAN BE STRICTLY CONSTRUED AS D EEMED DIVIDEND. THE ARGUMENT OF THE ASSESSEE, ACCORDING TO THE CIT(A), THAT THE MONEY WAS NOT A LOAN DOESNT APPEA R TO BE CORRECT. THE ASSESSEE HAD TAKEN LOAN FROM THE COMP ANY IN WHICH HE HAD 55.05% INTEREST. ALL THE PAPER WORK S UBMITTED BY THE ASSESSEE WAS ONLY TO CAMOUFLAGE THE REAL INT ENTION OF THE ASSESSEE. IN THE VIEW OF THE CIT (A), THE ASS ESSEE HAD GIVEN VERY FLIMSY REASON STATING THAT NIPL WAS NOT INTERESTED IN BUYING THE PROPERTY DUE TO FALL IN MARKET VALUE OF PROPERTY AND CONSEQUENT CHANGE IN CIRCUMSTANCES. BY THIS AC T OF THE ASSESSEE, THE COMPANY HAD NOT DERIVED ANY BENEFIT WHATSOEVER. BEFORE US ALSO, THE ASSESSEE HAD NOT C ONTRAVENED THE STAND OF THE AUTHORITIES BELOW WITH ANY DOCUMEN TARY EVIDENCE. 9.3 ON A CAREFUL PERUSAL OF THE COPY OF THE MEMORAN DUM OF UNDERSTANDING [REFER: PAPER BOOK OF THE ASSESSEE], WE FIND THAT THE ASSESSEE HAD HIMSELF SIGNED ON BEHALF OF N IPL ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 11 (PURCHASER) AND FOR HIMSELF (SELLER). THE AUTHENTI CITY OF THE SO CALLED MOU CANNOT ALSO BE CROSS VERIFIED AS IT WAS NOT REGISTERED WITH THE REGISTERING AUTHORITY. THUS, T HE AOS OBSERVATION THAT THE EXPLANATION [OF THE ASSESSEE] IS A SELF SERVING ARGUMENT. [PARA 5 OF THE ASST. ORDER] CAN NOT BE BRUSHED ASIDE. THE ASSESSEES ARGUMENT THAT DUE TO FALL IN MARKET VALUE OF PROPERTY AND SUBSEQUENT CHANGE IN CIRCUMSTANCES, THE SALE PROCESS FELL THROUGH ETC., CANNOT BE TAKEN ITS FACE VALUE AS NO DOCUMENTARY EVIDENCE WAS ADDUCED TO SUBSTANTIATE ITS CLAIM. THE SALIENT FEATURE IN T HE ISSUE WAS THAT THE SUBJECT PROPERTY WAS OWNED BY THE ASSESSEE [THE SELLER] WHO HIMSELF WAS HOLDING 55.05% SHARE IN NIP L [THE PURCHASER] AND, THUS, IN OUR VIEW, THE SO CALLED F ALL IN MARKET VALUE OF PROPERTY AND SUBSEQUENT CHANGE IN CIRCUMST ANCES WOULD NOT HAVE COME IN THE WAY OF ALLEGED SALE TRAN SACTION OF THE SUBJECT PROPERTY. 9.4 WE HAVE WITH DUE RESPECTS PERUSED THE CASE LAWS ON WHICH THE ASSESSEE HAD PLACED STRONG RELIANCE AND O F THE VIEW THAT THOSE CASE LAWS WILL NOT COME TO THE RESCUE OF THE ASSESSEE. THE CASE LAWS RELIED ON BY THE ASSESSEE A RE FOR THE PROPOSITION THAT WHEN AMOUNTS ARE ADVANCED FOR BUSI NESS TRANSACTION / OUT COMMERCIAL EXPEDIENCY, THE SAME W OULD NOT COME WITHIN THE PURVIEW OF DEEMED DIVIDEND U/S 2(22 )(E) OF THE ACT. IN THE INSTANT CASE, AS MENTIONED EARLIER, THE AMOUNTS RECEIVED BY ASSESSEE IS NOTHING BUT LOAN / ADVANCE FROM NIPL AND ASSESSEE IS CAMOUFLAGING THE SAME AS A COMMERCIAL TRANSACTION RELATING TO SALE OF PROPERTY IN ORDER TO ITA NO.396/BANG/2017. SHRI HEMANT KUMAR BOTHRA. 12 GET OVER THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME-TAX ACT. 9.5 IN OVER-ALL CONSIDERATION OF THE ISSUE AS DELIB ERATED UPON IN THE FORE-GOING PARAGRAPHS AND ALSO THE REASONING OF THE ASSESSING OFFICER AS WELL AS THE CIT (A), WE ARE OF THE VIEW THAT THE AO WAS WITHIN HIS REALM TO INVOKE THE PROVISIO NS OF S. 2 (22)(E) OF THE ACT. IN SUBSTANCE, WE UPHOLD THE AC TION OF THE AUTHORITIES BELOW IN THE MATTER. IT IS ORDERED ACC ORDINGLY. 10. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. ORDER PRONOUNCED ON THIS 03 RD DAY OF NOVEMBER , 2017. SD/- SD/- (JASON P.BOAZ) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE ; DATED : 03 RD NOVEMBER, 2017. DEVDAS* COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER, (ASSTT. REGISTRAR) ITAT, BANGALORE 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, BENGALURU. 4. CIT(A)-11, BENGALURU 5. DR, ITAT, BANGALORE 6. GUARD FILE.