YOGESH MEHRA, MUMBAI V. DCIT, C.C.-3(1), MUMBAI

ITA 4007/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6845 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Search and seizure; Deemed dividend; Block assessment; Commercial expediency; Set aside
• Section: 143(3); 153A; 2(22)(e); 139(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4007/M/2019 ASSESSMENT YEAR: 2008-09 SHRI YOGESH MEHRA, FLAT NO.201, HARE KRISHNA SOCIETY, NORTH SOUTH ROAD NO.8, VILE PARLE (W), MUMBAI-400 009 PAN: AAAPM6139N VS. DCIT, C.C.- 3(1), AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RITU KAMAL KISHOR, A.R. REVENUE BY : SHRI T.S. KHALSA, D.R. DATE OF HEARING : 13.07.2021 DATE OF PRONOUNCEMENT : 27.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 29.03.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING AO'S ACTION OF MAKING AD DITION U/S. 2(22)(E) DESPITE THE FACT THAT DURING THE COURSE OF SEARCH NO INCRIMINAT ING MATERIAL OR EVIDENCE WAS FOUND RELATING TO DEEMED DIVIDEND AND AS ON THE DATE OF S EARCH NO ASSESSMENT OR REASSESSMENT WAS PENDING FOR THE AY 2008-09 THAT CO ULD BE ABATED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT ADJUDICATING THE ISSUE THAT THE APPELLANT HELD ONLY 14.29% SHARES IN VISH WIND INFRASTRUCTURE LIMITED PRIOR TO 22.05. 2010 DESPITE THE FACT ALL THE RELEVANT MATERIAL WAS AVAILABLE BEFORE THE LD. CIT( A). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT ADJUDICATING THE GROUND RELATIN G TO AO'S ACTION IN CONSIDERING THE COMMERCIAL AND BUSINESS TRANSACTION BETWEEN EIL AND GROUP COMPANIES WHICH ITA NO.4007/M/2019 SHRI YOGESH MEHRA 2 WERE UNDERTAKEN BY EIL FOR THE PURPOSE OF CARRYING ON ITS BUSINESS AS PAYMENT BY WAY OF LOANS AND ADVANCES FOR THE PURPOSE OF SECTIO N 2(22)(E). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE AO TO VERIFY THE LEDG ER ACCOUNTS OF WWIL/EIL IN THE BOOKS OF 4 RELATED CONCERNS FOR ASCERTAINING THE CL AIM OF APPELLANT THAT THERE ARE NO ACTUAL PAYMENTS MADE/RECEIVED AND ONLY JOURNAL ENTR IES WERE PASSED AND IF FOUND CORRECT DELETE THE ADDITION OF RS. 15,24,893/- ON A CCOUNT OF DEEMED DIVIDEND MADE BY THE AO IN RESPECT OF TRANSACTION BETWEEN WWIL/EI L WITH 4 RELATED COMPANIES DESPITE THE FACT THAT THE LEDGER ACCOUNTS WERE AVAI LABLE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME WERE ALSO FILED BEFORE THE LD. CIT(A) INSTEAD OF DELETING THE ADDITION OF RS.15,24 ,893/- MADE BY THE AO. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANT'S CASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE AO TO VERIFY THE CLAIM OF APPELLANT THAT PRIOR TO 22.05.2010, THE APPELLANT WAS HOLDING ONLY 14.29% S TAKE IN VISH WIND INFRASTRUCTURE LTD. AND IF FOUND CORRECT, NOT TO CO NSIDER THE TRANSACTION ENTERED INTO IN THE RELEVANT YEAR BETWEEN M/S. WWIL/EIL AND M/S. VW IL FOR THE PURPOSE OF APPLICABILITY OF PROVISIONS OF SECTION 2(22)(E ) DE SPITE THE FACT THAT EVIDENCES RELATING TO SHAREHOLDING OF THE APPELLANT PRIOR TO 22.05.201 0 WAS AVAILABLE BEFORE THE LD. CIT(A) INSTEAD OF DELETING THE ADDITION OF RS. 95,8 7,842/- MADE BY THE AO. 6. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND AND /OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 7. THE APPELLANT PRAYS BEFORE THE HON'BLE TRIBUN AL TO DELETE THE ADDITION MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 2(22)( E ) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL RELATING TO THE SAME WAS FOU ND DURING THE COURSE OF SEARCH. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE ORDER OF LD. CIT(A) UPHOLDING THE ASSESSMENT FRAMED UNDER SECTIO N 143(3) READ WITH SECTION 153A OF THE ACT BY IGNORING THE F ACT THAT NO INCRIMINATING MATERIAL WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH ACTION AND THEREFORE NO ADDITION CAN BE MADE IN ABSENCE OF ANY SEIZED INCRIMINATING MATERIAL AS THE ASSESSMENT HAS ATTAINED FINALITY AND WAS UNABATED ON THE DATE OF SEARCH. 4. THE FACTS IN BRIEF ARE THAT THE SEARCH ACTION UN DER SECTION 132 OF THE ACT WAS CARRIED OUT ON 14.03.2013 BY DDI T (INV.), UNIT 4, MUMBAI AT PRIVATE OFFICES, SITE OFFICE, RES IDENCE OF MAIN PERSONS OF M/S. ENERCON (INDIA) LTD. NOW KNOWN AS M /S. WIND WORLD INDIA LTD. AND OTHER RELATED COMPANIES PROMOT ED BY MR. YOGESH JOGENDRANATH MEHRA AND MR. AJAY MEHRA. THE ASSESSEE WAS ALSO COVERED UNDER THE SAID SEARCH. CONSEQUENT TO THE ITA NO.4007/M/2019 SHRI YOGESH MEHRA 3 SEARCH A NOTICE UNDER SECTION 153A OF THE ACT DATED 28.01.2014 WAS ISSUED AND DULY SERVED UPON THE ASSESSEE WHICH WAS COMPLIED WITH BY THE ASSESSEE BY FILING THE RETURN OF INCOME ON 11.08.2014 DECLARING TOTAL INCOME AT RS.1,08,67,617 /-. THE AO NOTED THAT SEARCH TEAM DURING THE COURSE OF SEARCH OPERATION HAS NOTICED THAT LOANS AND ADVANCES HAVE BEEN GIVEN BY M/S. WIND WORLD INDIA LTD. TO THE ASSOCIATED CONCERNS OF THE GROUP AND THESE WERE IN THE NATURE OF DEEMED DIVIDEND WIT HIN THE MEANING OF SECTION 2(22)(E) OF THE ACT. THE AO NOT ED THAT M/S. WIND WORLD INDIA LTD. HAS GIVEN ADVANCES TO M/S. VIS H WIND INFRASTRUCTURE LTD. RS.95,87,842/-, M/S. ENERCON WI ND FARMS (KERALA) P LTD. RS.20,500/-, M/S. ENERCON WIND FARM S (MAHARASHTRA) P LTD. RS. 10,21,417/-, M/S. ENERCON WIND FARMS (TAMIL NADU) P LTD. RS.4,96,476/- AND M/S. E NERCON WIND FARMS (GUJRAT) P LTD. RS.4,500 /-. THE AGGREGA TE AMOUNT OF THESE LOANS AND ADVANCES CAME TO RS.1,11,30,735 /-. DURING THE SEARCH IT WAS REVEALED THAT THE ASSESSEE AND HI S MOTHER HELD EQUITY SHARES IN M/S. WIND WORLD INDIA LTD. OF MORE THAN 10% AND MORE THAN 20% IN OTHER RELATED COMPANIES AS STA TED ABOVE. THE AO CAME TO CONCLUSION THAT SINCE THE M/S. WIND WORLD INDIA LTD. HAS ACCUMULATED PROFITS IN THE FORM OF R ESERVE AND SURPLUS AND THE ASSESSEE HAS SHAREHOLDINGS AS STATE D ABOVE, THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE ATTRACTED. ACCORDINGLY ISSUED A SHOW CAUSE NOTICE T O THE ASSESSEE WHICH WAS REPLIED BY THE ASSESSEE BY SUBMI TTING THAT THE MONEY ADVANCED BY M/S. WIND WORLD INDIA LTD. T O VARIOUS RELATED ENTITIES WAS OUT OF COMMERCIAL CONSIDERAT ION AND EXPEDIENCY. THE ASSESSEE SUBMITTED THAT THESE ADVA NCES WERE GIVEN FOR PURCHASE OF LAND AS THE BUSINESS OF THE A SSESSEE IS TO ITA NO.4007/M/2019 SHRI YOGESH MEHRA 4 SET UP WIND MILLS FOR ITS CUSTOMERS. IT WAS SUBMI TTED THAT DUE TO LAND CEILING ACT IN VARIOUS STATES THE LAND CAN NOT BE PURCHASED IN THE NAME OF SINGLE ENTITY AND HENCE TH E PURCHASE OF LAND IN THE NAME OF GROUP COMPANIES IS DONE. IT WAS SUBMITTED THAT THESE ADVANCES WERE IN THE NATURE O F BUSINESS ADVANCES BY THE ASSESSEE TO CARRY ON AND TO EXPAND ITS BUSINESS BY INSTALLING MORE AND MORE WIND MILLS SMOOTHLY AND EFFICIENTLY. THEREFORE THESE ADVANCES WERE GIVEN FOR GENUINE BUS INESS REQUIREMENTS AND COMMERCIAL TRANSACTIONS AND COULD NOT BE TREATED AS DEEMED DIVIDEND IN TERMS OF SECTION 2(2 2)(E) OF THE ACT. HOWEVER, THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND HE TREATED THE ADVANCES OF RS.1,11,30,735/- AS DEEMED DIVIDEND UNDER SECTION 2 (22)(E) OF THE ACT AND ADDED THE SAME TO THE INCOME OF THE ASS ESSEE BY FRAMING THE ASSESSMENT UNDER SECTION 143(3) READ WI TH 153A VIDE ORDER DATED 28.06.2017. 5. AT THE OUTSET THE LD COUNSEL OF THE ASSESSEE SUB MITTED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUAREL Y COVERED BY THE DECISION OF THE COORDINATE BENCH IN ASSESSEE OW N CASE ITA NO.4006/M/2019 A.Y. 2007-08 AND THEREFORE THE APPE AL OF THE ASSESSEE MAY BE DECIDED ACCORDINGLY FOLLOWING THE S AID DECISION. 6. AFTER HEARING BOTH THE SIDES AND PERUSING THE OR DER OF THE COORDINATE BENCH IN ITA NO. NO.4006/M/2019 A.Y. 200 7-08, WE FIND THAT THE SIMILAR ISSUE IS DECIDED BY THE COORD INATE BENCH IN ASSESSEE OWN CASE THE OPERATIVE PART WHEREOF IS EXT RACTED BELOW: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS OF AUTHORIT IES BELOW AND VARIOUS DECISIONS CITED BEFORE US. IT IS UNDISPUTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS ON THE ASSESSEE NO INCRIMINATING MATERIALS WERE FOUND IN RESPECT OF THE ASSESSEE ITA NO.4007/M/2019 SHRI YOGESH MEHRA 5 EXCEPT THE COPIES OF ASSESSEE LEDGER ACCOUNTS WHICH ARE PART OF BOOKS OF ACCOUNTS AND STATEMENT RECORDED DURING THE SEARCH ACTION U/S 132(4) OF THE ACT. IN THE INSTANT CASE, THE ASSESSEE FILED THE ORIGINAL RETUR N OF INCOME UNDER SECTION 139(1) OF THE ACT ON 30.07.2007 WHEREAS THE SEARCH WAS CONDUC TED UNDER SECTION 132(1) OF THE ACT ON14.03.2013 ALMOST AFTER MORE THAN FIVE YE ARS. THUS THE ASSESSMENT HAS ATTAINED FINALITY ON THE DATE OF SEARCH MEANING THE REBY THAT IT HAS NOT ABATED ON THE DATE OF SEARCH. IT IS ALSO A SETTLED POSITION O F LAW THAT ANY ADDITION IN A NON ABATED ASSESSMENT YEAR CAN ONLY BE MADE ON THE BASI S OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND NOT OTHERWISE . WE FIND THAT DURING THE COURSE OF SEARCH NO SUCH INCRIMINATING MATERIAL WAS FOUND BY THE SEARCH TEAM. WE HAVE ALSO PERUSED THE ORDER OF LD. CIT(A) WHEREIN L D. CIT(A) HAS NOTED THAT THE ADDITION MADE BY THE AO WAS BASED UPON INCRIMINATIN G IN THE FORM OF STATEMENT RECORDED DURING SEARCH ACTION UNDER SECTION 132(4) OF THE ACT AND THE FACTS COLLECTED DURING THE SEARCH FROM BOOKS OF ACCOUNTS THAT THE M/S. WIND WORLD INDIA LTD. WHICH HAS ADVANCED SOME LOANS TO THE RELATED ENTITIES THEREBY ATTRACTING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AS THE AS SESSEE HELD MORE THAN 10% SHAREHOLDING IN M/S. WIND WORLD INDIA LTD. AND MORE THAN 20% IN THOSE COMPANIES TO WHICH THE LOANS WERE ADVANCED. THE ISSUE BEFORE US WHETHER THE STATEMENT RECORDED DURING SEARCH U/S 132(4) OF THE ACT OR EX TRACTS OF BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE CONSTITUTE INCRIMINATING MATERIALS FOUND DURING SEARCH OR NOT. WE HAVE PERUSED THE FACTS ON RECORDS AND AF TER ANALYZING THEM IN THE LIGHT OF VARIOUS DECISIONS OF TRIBUNAL, WE OPINE THAT SUCH MATERIALS/EVIDENCES CAN NOT BE SAID TO BE FOUND DURING THE COURSE OF SEARCH. WE FU RTHER FIND MERITS IN THE CONTENTIONS OF THE ASSESSEE THAT MATERIALS HAS TO B E FOUND DURING SEARCH AND IT HAS TO BE INCRIMINATING. THEREFORE, WE ARE NOT IN AGREE MENT WITH THE CONCLUSION DRAWN BY THE LD. CIT(A) ON THIS ISSUE. IN OUR CONSIDERED OPINION, THE FINDINGS OF THE LD CIT(A) THAT STATEMENT RECORDED DURING SEARCH CONSTI TUTES INCRIMINATING MATERIAL IS ALSO NOT CORRECT AS THE SAME CAN NOT BE SAID TO BE FOUND DURING THE COURSE OF SEARCH BUT IS RECORDED TO ELICIT MORE INFORMATION/EXPLANAT ION OF THE SEARCHED PERSON ON THE INCRIMINATING DOCUMENTS/GOLD/JEWELLERY FOUND DU RING SEARCH. THEREFORE AFTER PERUSING THE MATERIAL ON RECORD AND CONSIDERING RIV AL CONTENTIONS AND ALSO THE DECISIONS CITED BEFORE US, WE ARE OF THE CONSIDERED VIEW THAT A STATEMENT RECORDED DURING THE COURSE OF SEARCH CAN NOT BE CONSIDERED A N INCRIMINATING MATERIAL IN ORDER TO MAKE ADDITION IN AN UNABATED ASSESSMENT YE AR. THE CASE OF THE ASSESSEE IS SUPPORTED BY THE DECISION OF THE CO-ORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SHIVALI MAHAJAN & OTHERS (SUPRA). THE REL EVANT PARAS ARE REPRODUCED BELOW: 3. DURING THE COURSE OF SEARCH, STATEMENT OF SHR I LALIT MAHAJAN I.E., THE ASSESSEE IN APPEAL NO.5590/DEL/2015 WAS RECORDED, I N WHICH, HE ADMITTED OF CASH INVESTMENT BY HIM AND OTHER FAMILY MEMBERS I N RESPECT OF BOOKING OF SPACE IN INDIRAPURAM HABITAT CENTRE 4. .. 7. LEARNED DR, ON THE OTHER HAND, STATED THAT DURIN G THE COURSE OF SEARCH OF AERENS GROUP WHO IS THE BUILDER AND DEVEL OPER OF INDIRAPURAM HABITAT CENTRE.... THAT THE STATEMENT UNDER S ECTION 132(4) HAS A LEGAL SANCTITY AND THAT BY ITSELF CONSTITUTES AN EVIDENCE AND ADDITION CAN BE MADE ON THE BASIS OF ASSESSEES STATEMENT 8. .. ITA NO.4007/M/2019 SHRI YOGESH MEHRA 6 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. AFTER CONSID ERING THE FACTS OF THE CASE AND THE RIVAL SUBMISSIONS, WE FIND THAT IN THESE AP PEALS, FOLLOWING TWO QUESTIONS ARISE FOR OUR CONSIDERATION : (I) WHETHER ANY MATERIAL FOUND IN THE SEARCH OF ANY OTH ER PERSON THAN THE ASSESSEE IN APPEAL CAN BE CONSIDERED IN THE ASS ESSMENT UNDER SECTION 153A OF THE ASSESSEE. (II) WHETHER THE ADDITION CAN BE MADE ONLY ON THE BASIS OF STATEMENT GIVEN BY THE ASSESSEE DURING THE COURSE O F SEARCH. . 16 NOW, COMING TO QUESTION NO.2, WE FIND THAT THIS ISS UE IS ALSO COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COUR T IN THE CASE OF HARJEEV AGGARWAL (SUPRA) AND BEST INFRASTRUCTURE (I NDIA) (P.) LTD. (SUPRA). IN THE CASE OF HARJEEV AGGARWAL (SUPRA), HON'BLE JU RISDICTIONAL HIGH COURT CONSIDERED THE EVIDENTIARY VALUE OF THE STATEMENT R ECORDED DURING THE COURSE OF SEARCH. THE RELEVANT PORTION IS PARAGRAPH 19, 20 & 24, WHICH ARE REPRODUCED BELOW FOR READY REFERENCE :-.. 17. THUS, HON'BLE JURISDICTIONAL HIGH COURT HAS HEL D THE WORDS EVIDENCE FOUND AS A RESULT OF SEARCH WOULD NOT TAKE WITHIN ITS SWEEP STATEMENTS RECORDED DURING SEARCH AND SEIZURE OPERATIONS. THE IR LORDSHIPS FURTHER OBSERVED HOWEVER, SUCH STATEMENTS ON A STANDALONE BASIS WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCOVERED DURING S EARCH AND SEIZURE OPERATIONS WOULD NOT EMPOWER THE AO TO MAKE A BLOCK ASSESSMENT MERELY BECAUSE ANY ADMISSION WAS MADE BY THE ASSESS EE DURING SEARCH OPERATION. IN PARAGRAPH 24, THEIR LORDSHIPS HAVE M ENTIONED ABOUT THE PREVAILING PRACTICE OF EXTRACTING STATEMENT BY EXER TING UNDUE INFLUENCE OR COERCION BY THE SEARCH PARTY. THOUGH THE ABOVE D ECISION IN THE CASE OF HARJEEV AGGARWAL IS WITH REFERENCE TO THE MEANING O F UNDISCLOSED INCOME U/S 158BB OF THE INCOME-TAX ACT, HOWEVER, IN OUR OPINION, THE ABOVE OBSERVATION OF HON'BLE JURISDICTIONAL HIGH CO URT WOULD BE SQUARELY APPLICABLE WHILE CONSIDERING THE EVIDENTIA RY VALUE OF THE STATEMENT WHILE MAKING THE ASSESSMENT U/S 153A 18. IN THE CASE OF BEST INFRASTRUCTURE (INDIA) (P.) LTD. (SUPRA), HON'BLE JURISDICTIONAL HIGH COURT REITERATED IN PARAGRAPH 3 8 FIFTHLY, STATEMENTS RECORDED UNDER SECTION 132(4) OF THE ACT DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLA INED BY THIS COURT IN HARJEEV AGGARWAL. 9. THEREFORE, ON THE ISSUE OF STATEMENT RECORDED U/ S 132(4) OF THE ACT BEING INCRIMINATING MATERIAL, WE ARE NOT IN AGREEMENT WIT H THE CONCLUSION DRAWN BY THE LD. CIT(A). IN OUR CONSIDERED VIEW THE STATEMENT R ECORDED UNDER SECTION 132(4) OF THE ACT CAN NOT BE CONSIDERED AS INCRIMINATING MAT ERIAL FOUND IN THE COURSE OF SEARCH. BESIDES IT IS A SETTLED LEGAL POSITION THAT IN AN ASSESSMENT FRAMED UNDER SECTION 153A OF THE ACT WHICH IS UNABATED ON THE D ATE OF SEARCH, NO ADDITION CAN BE MADE WITHOUT INCRIMINATING SEIZED MATERIALS. THE CASE OF THE ASSESSEE IS COVERED BY THE FOLLOWING DECISIONS: ITA NO.4007/M/2019 SHRI YOGESH MEHRA 7 A) IN CIT V. CONTINENTAL WAREHOUSING CORPORATION (N HAVA SHEVA) LTD. (2016) 374 ITR 645 (BOM)(HC) WHEREIN IT WAS HELD THAT NO ADDITION CAN BE MADE IN RESPECT OF ASSESSMENTS WHICH HAVE BECOME FINAL IF N O INCRIMINATING MATERIAL IS FOUND DURING SEARCH. B) IN CIT V. GURINDER SINGH BAWA [2017] 79 TAXMANN. COM 398 (BOM) WHERE IT WAS HELD THAT WHERE NO INCRIMINATING MATERIAL WAS F OUND DURING COURSE OF THE SEARCH, ENTIRE PROCEEDINGS UNDER SECTION 153A O F THE ACT WERE WITHOUT JURISDICTION. C) IN CIT V. DEEPAK KUMAR AGARWAL [2017] 86 TAXMANN .COM 3 (BOM) WHEREIN IT WAS HELD THAT ASSESSMENT UNDER SECTION 153A OF T HE ACT CAN BE MADE ONLY ON BASIS OF INCRIMINATING MATERIAL FOUND IN SEARCH UNDER SECTION 132 OF THE ACT AND ONLY INCOME RELATED TO INCRIMINATING DOCUME NTS FOUND DURING SEARCH CAN BE CONSIDERED IN THE ASSESSMENT. D) THE ITAT SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V. DCIT [2012] 18 ITR(T) 106 (MUM) (SB) (PAGE 1-20 OF PB - II) (PARA 7 AT PAGE 16) IT WAS HELD THAT IN CASE OF ASSESSMENTS WHICH DO NOT A BATE PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A, IN ADDITION TO INCOME TH AT HAS ALREADY BEEN ASSESSED, ASSESSMENT WILL BE MADE ON BASIS OF INCRI MINATING MATERIAL FOUND IN COURSE OF SEARCH BUT NOT PRODUCED IN COURSE OF ORIG INAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN COURSE OF SEARCH. 10. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS DECISIONS AS DISCUSSED ABOVE, WE ARE INCLINED TO SE T ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION AS AO HAS NO JURISDICTION TO MAKE THE ADDITION. THE GROUND NO.1 IS ALLOWED. 11. BY VIRTUE OF GROUND NO. 2 TO 5, THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) IN PARTLY UPHOLDING THE ADDITION TO THE EXTE NT OF RS. 2,95,38,019/-. 12. THE FACTS QUA THE LOANS AND ADVANCES GIVEN BY M /S. WIND WORLD INDIA LTD. HAVE ALREADY BEEN DISCUSSED IN THE GROUND NO 1 AN D ARE NOT BEING REPEATED HERE. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MA TERIAL ON RECORDS, WE FIND THAT EVEN ON MERITS, THE ASSESSEE HAS A VERY STRONG CASE IN HIS FAVOUR. WE NOTE THAT THESE LOANS AND ADVANCES WERE GIVEN OUT OF COMMERCI AL CONSIDERATIONS AND EXPEDIENCY. THE WIND WORD (INDIA) LTD. IS ENGAGED IN THE BUSINESS OF INSTALLING WIND MILLS AND SALES THEREOF. IN ORDER TO INSTALL T HE WINDMILLS IT NEEDS LAND. THE WIND WORD (INDIA) LTD. PURCHASES LAND IN THE NAME O F THESE RELATED COMPANIES IN ORDER TO OVERCOME THE LAND CEILING CONDITIONS IMPOS ED BY LAND CEILING ACT IN VOGUE IN VARIOUS STATES. FOR THE SAID PURPOSE, THE WIND W ORD (INDIA) LTD. ADVANCES LOANS TO THESE COMPANIES AND THEREAFTER THE NECESSARY ADJ USTMENTS ARE MADE UPON PURCHASE OF LAND. WE NOTE THAT THE WIND WORD (INDI A) LTD. HAS TO BUY LAND IN THE NAME OF RELATED ENTITIES/COMPANIES AND IT IS ONLY T HAT PURPOSE THE LOANS WERE ADVANCED TO THE RELATED COMPANIES. IN OUR OPINION T HE MONEY WAS ADVANCED OUT OF BUSINESS AND COMMERCIAL CONSIDERATION AND THEREFORE NOT COVERED BY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE CASE OF THE ASSESSEE IS SUPPORTED BY ITA NO.4007/M/2019 SHRI YOGESH MEHRA 8 THE FOLLOWING DECISIONS NAMELY (I) CHANDRASHEKHAR M ARUTI VS. ACIT ITA NO.5410/MUM/2012 47 CCH 0783, 183 TTJ 0459, (II). ACKRUTI CITY LTD. VS. DCIT [ITA NO. 4869/MUM/2009(III)CIT VS. SURAJ DEV DADA [(2014 ) 46 TAXMANN.COM 402 (PUNJAB & HARYANA)]. IN THE CASE OF CHANDRASEKHAR MARUTI VS . ACIT (SUPRA) THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT WHERE THERE IS A RUNNING ACCOUNT BETWEEN THE TWO SISTER CONCERNS WHEREIN THERE IS A CONTINUOUS E XCHANGE OF TRANSACTIONS AND THE ACCOUNT WAS SQUARED UP DURING THE YEAR, NO PART OF THE SAID AMOUNTS COULD BE TREATED AS BEING ATTRIBUTED TO THE SHAREHOLDERS. W E FIND THAT IN THE CASE OF THE ASSESSEE, THE FACTS ARE EXACTLY SAME AS THE FUNDS W ERE TRANSFERRED TO VARIOUS ENTITIES INTER SE OUT OF COMMERCIAL EXPEDIENCY IN O RDER TO PURCHASE LAND IN THE NAME OF THESE ENTITIES IN VARIOUS STATES IN VIEW OF THE LAND CEILING ACT IN VOGUE IN THOSE STATES. AS THE INSTALLATION OF WINDMILLS AND SALES THEREOF IS THE BUSINESS OF THE ASSESSEE AND THE NECESSARY ADJUSTMENTS ARE MADE AFT ER PURCHASE OF LAND BY THESE ENTITIES AND THEREFORE THE ADVANCING OF LOANS IS OU T OF BUSINESS AND COMMERCIAL CONSIDERATION. SIMILARLY, IN THE CASE OF AKRUTI C ITY LTD. VS. DCIT (SUPRA) THE IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY HOLD ING THAT FINANCIAL TRANSACTIONS OUT OF BUSINESS EXPEDIENCY BETWEEN TWO SISTER CONCE RNS CAN NOT BE CALLED AS LOANS OR ADVANCES FOR THE PURPOSE OF INVOKING SECTION 2(2 2)(E) OF THE ACT. THE SAME VIEW AS HELD BY THE HONBLE HIGH COURT OF PUNJAB & HARY ANA IN THE CASE OF CIT VS. SURAJ DEV DADA (SUPRA) WHEREIN IT HAS BEEN HELD THAT IT W ILL BE A TRAVESTY OF LAW TO APPLY THE PROVISION OF SECTION 2(22)(E) OF THE ACT WHERE THE ASSESSEE HAD RUNNING ACCOUNT WITH THE COMPANY WITH WHOM THE ASSESSEE ADVANCED MO NEY TO THE COMPANY AS AND WHEN REQUIRED FOR THE PURPOSE OF BUSINESS AND ALSO IN REAL SENSE THE ASSESSEE HAS NOT DERIVED ANY BENEFIT FROM THE FUNDS OF THE COMPA NY. THE ISSUE IS ALSO CLARIFIED BY CBDT IN ITS CIRCULAR NO.19/2017 DATED 12.06.2017 WH EREIN IT HAS BEEN CLARIFIED THAT TRADE ADVANCES IN THE NATURE OF COMMERCIAL TRANSACT IONS WOULD NOT FALL WITHIN THE AMBIT OF WORDS LOANS/ADVANCES WITHIN THE MEANING O F SECTION 2(22)(E) OF THE ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF VARIOUS DECISIONS AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW T HAT THE MONEY ADVANCED IS USED FOR THE PURPOSE OF BUSINESS OF THE FORMER AND THERE FORE CAN NOT A LOAN/DEPOSIT TO BE TREATED AS DEEMED DIVIDEND. ACCORDINGLY, WE ARE NOT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. CIT(A) ON THIS ISSUE. THUS WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 7. SINCE THE FACTS OF THE CASE BEFORE US ARE MATERI ALLY SAME VIS--VIS THE FACTS OF THE CASE DECIDED BY THE COOR DINATE BENCH, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION ON ACCOUNT OF DEEMED DIVI DEND. ITA NO.4007/M/2019 SHRI YOGESH MEHRA 9 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.07.2021. SD/- SD/- ( RAVISH SOOD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.