Sri Bhashyam Ramakrishna, Hyderabad V. THE DCIT, CENTRAL CIRCLE, Vijayawada

ITA 437/VIZ/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8966 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Unexplained investment; Search and seizure; Source of fund; Corroborative evidences; Deemed dividend; Block assessment; Revised return
• Section: 143(3); 142(1); 153A; 132; 28; 15

Judgement Text

ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.437 TO 440/VIZAG/2013 ( / ASSESSMENT YEARS: 2005-06, 2007-08, 2008-09 & 2009-10) SRI BHASHYAM RAMAKRISHNA VIJAYAWADA DCIT, CENTRAL CIRCLE, VIJAYAWADA [PAN NO. ACHPB2332B ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.443 TO 446/VIZAG/2013 ( / ASSESSMENT YEARS: 2003-04, 2005-06, 2006-07 & 2008-09) DCIT, CENTRAL CIRCLE, VIJAYAWADA SRI BHASHYAM RAM AKRISHNA VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI R. GOVINDA RAJAN, DR / DATE OF HEARING : 27.04.2017 / DATE OF PRONOUNCEMENT : 05.05.2017 ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 2 / O R D E R PER BENCH: THESE CROSS APPEALS FILED BY THE REVENUE, AS WELL AS THE ASSESSEE ARE DIRECTED AGAINST SEPARATE, BUT IDENTIC AL ORDERS OF THE CIT(A), GUNTUR DATED 16.1.2013 FOR THE ASSESSMENT Y EARS 2003-04, 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10. SINC E, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. ITA NOS.443 TO 446 OF 2013 (REVENUE): 2. THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA N O.443/VIZAG/2013 ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVING IN COME FROM REMUNERATION FROM COMPANY, INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES, FILED HIS ORIGINAL RETURN OF INCOME U/S 139(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T'). A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT, WAS CONDUCTED IN THE GROUP CASES OF BHASHYAM GROUP, GUNTUR ON 10.2.2009. DURING THE COURSE OF SEARCH & SEIZURE PROCEEDINGS, CERTAIN INCRIMINATING DOCUME NTS RELATING TO THE ASSESSEE WERE FOUND AND SEIZED. CONSEQUENT TO SEAR CH, THE CASE HAS BEEN CENTRALIZED TO CENTRAL CIRCLE, VIJAYAWADA VIDE NOTIFICATION NO.F.NO.CIT/GNT/CENTRALISATION/2009-10 DATED 31.7.2 009. A NOTICE U/S ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 3 153A OF THE ACT, DATED 30.11.2009 WAS ISSUED, CALLI NG FOR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 TO 2008-09. IN RESPONSE TO NOTICES, THE ASSESSEE HAS FILED HIS RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2003-04 TO 2008-09 ON 18.1.2010 DECLARING INCO ME ADMITTED DURING THE COURSE OF SEARCH & SEIZURE OPERATION. T HE ASSESSEE ALSO FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 2.2.2010. 3. SUBSEQUENTLY, THE CASES HAVE BEEN SELECTED FOR S CRUTINY AND ACCORDINGLY, NOTICES U/S 143(2) & 142(1) OF THE ACT , ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND FILED INFORMATION AS CALLED FOR. THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09 HAVE BEEN COMPLETED U/S 143(3) R .W.S. 153A OF THE ACT, ON 30.11.2010 AND THE ASSESSMENT FOR THE ASSES SMENT YEAR 2009-10 HAS BEEN COMPLETED U/S 143(3) OF THE ACT ON 30.11.10. IN THE ASSESSMENT, THE A.O. HAS MADE ADDITIONS TOWARDS DIS ALLOWANCE OF INTEREST, DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT, INFLATION OF EXPENDITURE, ADDITIONS TOWARDS UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT IN THE NAME OF EMPLOYEES UNEXPLAINED INVESTMENT IN PURCHASE OF SITE AND SUPPRESSION OF RECEIPTS. 4. AGGRIEVED BY THE ASSESSMENT ORDERS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 4 CHALLENGED, ADDITIONS MADE BY THE A.O. TOWARDS DISA LLOWANCE OF INTEREST AND DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT, FOR TH E ASSESSMENT YEARS 2003-04 TO 2008-09, ON THE GROUND THAT, IN THE ABSE NCE OF ANY INCRIMINATING MATERIAL OR INFORMATION, OF ANY KIND FOUND DURING THE COURSE OF SEARCH PROCEEDINGS, NO ADDITION CAN BE MA DE TO THE CONCLUDED ASSESSMENTS, THEREFORE, PRAYED THAT THE ADDITIONS M ADE BY THE A.O. CANNOT BE SUSTAINED IN THE EYES OF LAW. THE ASSESS EE ALSO CHALLENGED ADDITIONS MADE BY THE A.O. TOWARDS INFLATION OF EXP ENDITURE, UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT IN THE NAM E OF EMPLOYEES, UNEXPLAINED INVESTMENT IN PURCHASE OF SITE AND ADDI TION TOWARDS SUPPRESSION OF RECEIPTS. 5. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO RELIED UPON THE DECISION OF ITAT, SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2 012) 137 ITD 287, OBSERVED THAT THE ADDITIONS MADE BY THE A.O. TOWARD S DISALLOWANCE OF INTEREST AND ON ACCOUNT OF DEEMED DIVIDEND IS BASED ON RETURNS OF INCOME FILED AND NOT BASED ON ANY INCRIMINATING MAT ERIAL FOUND IN COURSE OF SEARCH PROCEEDINGS THE CIT(A) FURTHER OB SERVED THAT THE HONBLE ITAT, IN THE SAID CASE OBSERVED THAT IN CAS ES WHERE ASSESSMENT HAS BEEN ABATED, THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION U/S 153A OF THE ACT. IN OTHER CASES, WHERE THE ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 5 ASSESSMENT HAS NOT BEEN ABATED, ADDITIONS CAN BE MA DE IN THE ASSESSMENT U/S 153A OF THE ACT, ONLY ON THE BASIS O F INCRIMINATING MATERIAL I.E. BOOKS OF ACCOUNTS AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH, BUT NOT PRODUCED IN THE COURSE OF ORIGIN AL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THIS CASE, THE A.O. HAS MADE ADDITIONS ONLY ON T HE BASIS OF FINANCIAL STATEMENTS FILED BY THE ASSESSEE ALONG WITH ORIGINA L RETURN OF INCOME WITHOUT THERE BEING ANY INCRIMINATING MATERIALS AND HENCE, ADDITIONS MADE BY THE A.O. TOWARDS DISALLOWANCE OF INTEREST A ND DEEMED DIVIDEND CANNOT SUSTAINED IN THE EYES OF LAW. WITH THESE OBS ERVATIONS, DELETED ADDITIONS MADE BY THE A.O. FOR THE ASSESSMENT YEAR 2003-04, 2005-06, 2006-07 & 2008-09. IN SO FAR AS ADDITIONS MADE TOW ARDS INFLATION OF EXPENDITURE, UNEXPLAINED DEPOSIT IN THE BANK ACCOUN T IN THE NAME OF EMPLOYEES, UNEXPLAINED INVESTMENT IN PURCHASE OF SI TE AND SUPPRESSION OF RECEIPTS, THE CIT(A) FOR THE DETAILED DISCUSSION IN HIS ORDER, CONFIRMED ADDITIONS MADE BY THE A.O. AS REGARDS DEEMED DIVID END U/S 2(22)(E) OF THE ACT FOR THE ASSESSMENT YEAR 2009-10, THE CIT(A) OBSERVED THAT THE A.O. HAS MADE ADDITIONS TOWARDS DEEMED DIVIDEND ON THE SOUND FOOTING, AS THE ASSESSEE HAS BORROWED LOAN FROM THE COMPANY WHICH ATTRACTS THE DEEMING PROVISIONS PROVIDED U/S 2(22)( E) OF THE ACT. ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 6 AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. 6. THE REVENUE HAS RAISED COMMON GROUNDS OF APPEAL FOR THE ASSESSMENT YEARS 2003-04, 2005-06, 2006-07 & 2008-0 9. FOR THE SAKE OF BREVITY, THE GROUNDS OF APPEAL ARE EXTRACTED FRO M ITA NO.443/VIZAG/2013 FOR THE ASSESSMENT YEAR 2003-04, WHICH READS AS FOLLOWS: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH IN FA CTS AND IN LAW. 2. THE LEARNED CIT(A) IS NOT CORRECT IN DELETING THE D ISALLOWANCE OF INTEREST AND ADDITION ON ACCOUNT OF DEEMED DIVIDEND . 3. THE LEARNED CIT(A) SHOULD HAVE APPRECIATED THE FACT THAT NO ASSESSMENT WAS DONE U/S 143(3) OF I.T. ACT, 1961. 4. THE LEARNED CIT(A) ERRED IN IGNORING THE FACT THAT THE ADDITIONS WERE MADE ON THE BASIS OF SEIZED MATERIALS. 5. THE LEARNED CIT(A) ERRED IN IGNORING THE SEIZURE OF INCRIMINATING MATERIAL EVIDENCING SUPPRESSION OF RECEIPTS, INFLAT ION OF EXPENDITURE AND UNACCOUNTING INVESTMENTS MADE BY THE GROUP. 6. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE DEC ISION OF HONBLE HIGH COUIRT OF DELHI IN THE CASE OF CIT VS. ANIL KU MAR BHATIA REPORTED IN (2012) 211 TAXMAN 453 . 7. THE ONLY ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM REVENUES APPEAL IS WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE A.O. IS RIGHT IN MAKING ADDITIONS TOWARDS DISALLOWA NCE OF INTEREST AND ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT, IN THE ASSESSMENTS U/S 153A OF THE ACT, IN THE CASE OF COMPLETED ASSES SMENTS WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE C OURSE OF SEARCH. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED THAT IN THE CA SE OF COMPLETED ASSESSMENTS THE A.O. HAS NO JURISDICTION TO MAKE AN Y ADDITIONS TOWARDS ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 7 RETURNED INCOME, IN THE ABSENCE OF INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF SEARCH. IN THE CASE OF ABATED ASSESS MENTS AND ASSESSMENTS, WHICH ARE PENDING AS ON THE DATE OF IN ITIATION OF SEARCH, THE A.O. CAN ASSUME JURISDICTION TO ASSESS/RE-ASSES S TOTAL INCOME, WHICH IS FOUND DURING THE COURSE OF SEARCH. THE A.R. FUR THER SUBMITTED THAT THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09 ARE ALREADY CONCLUDED AND NO PROCEEDINGS ARE PENDING AS ON THE DATE OF INITIATION OF SEARCH AND HENCE, THE A.O. IS PRECLUD ED FROM MAKING ADDITIONS WITHOUT ANY SEIZED MATERIALS. IN SUPPORT OF HIS ARGUMENTS, RELIED UPON THE DECISION OF ITAT, VISAKHAPATNAM BEN CH IN THE CASE OF HARI PRASAD BHARARIA IN ITA NOS.435 TO 441/VIZAG/20 14 DATED 9.9.2016. 8. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT O NCE A SEARCH IS INITIATED, THE ASSESSMENT FOR 6 ASSESSMENT YEARS IM MEDIATELY PRECEDING TO THE DATE OF SEARCH GETS RE-OPENED AND THE A.O. W ILL GET JURISDICTION TO ASSESS/RE-ASSESS TOTAL INCOME OF THOSE 6 ASSESSMENT YEARS, WHETHER OR NOT ANY INCRIMINATING MATERIAL FOUND DURING THE COU RSE OF SEARCH. THE D.R. FURTHER ARGUED THAT THE PROVISIONS OF SECTION 153A OF THE ACT, SHALL BE ATTRACTED BY THE INITIATION OF SEARCH PROCEEDING S U/S 132 OF THE ACT, IN WHICH CASE, THE CONCLUDED ASSESSMENTS WILL BE RE-OP ENED AS PER THE PROVISIONS OF SECTION 153A OF THE ACT, AND SUCH RE- OPENING IS NOT DEPENDING UPON EXISTENCE OR OTHERWISE OF UNDISCLOSE D INCOME. THE D.R. ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 8 FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 15 3A OF THE ACT, GETS POWERS TO THE ASSESSING OFFICER TO RE-ASSESS THE TO TAL INCOME OF THE 6 ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THE A.O. IS EMPOWERED TO RE-OPEN THOSE PROCEEDINGS AND RE-AS SESS THE TOTAL INCOME TAKING NOTE OF THE UNDISCLOSED INCOME, IF AN Y UNEARTHED DURING THE SEARCH AND ANY OTHER INCOME WHICH COMES TO THE KNOWLEDGE OF THE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS. THUS, THE LEGAL PROPOSITION IS THAT ONCE THE PROCEEDINGS ARE INITIATED U/S 153A OF THE ACT, EVEN IN THE CASES WHERE THE ASSESSMENT ORDER IS PASSED, IT STANDS RE-OPENED AND THE A.O. ASSUMES JURISDICTION TO ASSESS THE TOT AL INCOME INCLUDING THE UNDISCLOSED INCOME, IF ANY FOUND DURING THE COU RSE OF SEARCH. THE LD. D.R. IN SUPPORT OF HIS ARGUMENTS RELIED UPON CE RTAIN JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE HIGH C OURT OF KERALA AND ALSO THE HONBLE HIGH COURT OF DELHI. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHE THER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE A.O. IS RIGHT IN MAKING ADDITIONS, IN RESPECT OF ASSESSMENT YEARS FOR WHICH THE ASSESSMEN T PROCEEDINGS HAS NOT BEEN ABATED AS ON THE DATE OF SEARCH, IN THE AB SENCE OF ANY INCRIMINATING MATERIALS. THE LD. A.R. FOR THE ASSE SSEE, SUBMITTED THAT ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 9 THE ISSUE HAS BEEN ALREADY CONSIDERED BY THE COORDI NATE BENCH OF VISAKHAPATNAM ITAT, IN THE CASE OF SRI HARI PRASAD BHARARIA VS. DCIT IN ITA NOS.435 TO 441/VIZAG/2014 DATED 9.9.2016, WHERE IN IT HAS BEEN OBSERVED THAT THE A.O. HAS NO JURISDICTION TO MAKE ANY ADDITIONS FOR THE ASSESSMENTS U/S 153A OF THE ACT FOR THE ASSESSMENT YEARS FOR WHICH THE PROCEEDINGS HAS NOT BEEN ABATED AS ON THE DATE OF S EARCH, WITHOUT THERE BEING ANY INCRIMINATING MATERIALS. THE RELEV ANT PORTION OF THE ORDER IS EXTRACTED BELOW: 12. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE FACTUAL MATRIX OF THE CASE IS THAT THERE WAS A SEARCH ACTIO N U/S 132 OF THE ACT. CONSEQUENT TO THE SEARCH, THE ASSESSEE CASE WAS CEN TRALIZED AND ACCORDINGLY, NOTICE U/S 153A OF THE ACT WAS ISSUED REQUIRING ASS ESSEE TO FILE RETURN FOR 6 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR IN WHICH SEARCH IS CONDUCTED. THE ASSESSEE FILED RETURNS IN RESPONSE TO NOTICE U/S 153A OF THE ACT. THE A.O. COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153A OF THE ACT AND MADE ADDITIONS TOWARDS DEEMED DIVIDE ND UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE A.O. WAS OF THE OPINION THAT TRANSACTIONS BETWEEN THE ASSESSEE AND HIS COMPANY IS COMING WITH IN THE DEFINITION OF DEEMED DIVIDEND UNDER THE PROVISIONS OF SECTION 2(2 2)(E) OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSMENT ORDE R PASSED BY THE A.O. U/S 143(3) R.W.S. 153A OF THE ACT, FOR THE ASSESSMENT Y EARS 2005-06 TO 2009-10 IS NULL AND VOID AS THE A.O. HAS MADE ADDITIONS TOW ARDS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT WITHOUT ANY INCRIMINATING MATER IALS. THE ASSESSEE FURTHER CONTENDED THAT AS PER SECTION 153A OF THE ACT, DE-N OVO ASSESSMENT CAN BE MADE ONLY IN RESPECT OF ASSESSMENT YEAR FOR WHICH T HE ASSESSMENT PROCEEDINGS HAS BEEN ABATED AND THAT IN RESPECT OF ASSESSMENT YEARS FOR WHICH THE ASSESSMENT HAD ALREADY BEEN COMPLETED, NO ADDITIONS CAN BE MADE U/S 153A OF THE ACT UNLESS THERE WAS INCRIMINA TING MATERIAL FOUND DURING THE COURSE OF SEARCH. 13. THE A.O. HAS PASSED ASSESSMENT ORDERS U/S 153A OF THE ACT, FOR ALL THE SIX ASSESSMENT YEARS, IMMEDIATELY PRECEDING THE YEAR IN WHICH THE SEARCH WAS CONDUCTED. ACCORDING TO THE A.O., AS PER THE PR OVISIONS OF SECTION 153A OF THE ACT, THERE IS NO LIMITATION OR RESTRICTION P ROVIDED IN THE NEW PROCEDURE OF SEARCH ASSESSMENT ON THE POWERS OF THE A.O. FOR MAKING ASSESSMENT/RE- ASSESSMENT AND THE A.O. IS NOT REQUIRED TO CONFINE HIS ASSESSMENTS ON THE MATERIALS FOUND DURING THE COURSE OF SEARCH AS WAS THE CASE IN THE OLD ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 10 PROCEDURE OF BLOCK ASSESSMENTS. IT IS THE CONTENTIO N OF THE ASSESSEE THAT THE A.O. CANNOT DISTURB THE COMPLETED ASSESSMENT UNLESS THERE WAS A SEIZED MATERIAL. THE ASSESSEE FURTHER CONTENDED THAT WHERE ASSESSMENTS ARE NOT PENDING AS ON THE DATE OF SEARCH AND TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT HAS BEEN EXPIRED, IRRESPECTIVE OF THE FA CT THAT THOSE ASSESSMENTS HAVE BEEN COMPLETED U/S 143(1) OR 143(3) OF THE ACT , THEN THE A.O. HAS NO POWER TO RE-ASSESS THE INCOME OF THOSE COMPLETED AS SESSMENT YEARS. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE, FOR TH E REASON THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS.300 TO 305/VIZAG/2012, IN CASE OF L. SURYAKANTHAM VS. ACIT, HAS CONSIDERED SIMILAR ISSUE AND HELD THAT THE A.O. HAD NO JURISDICTION TO MAKE ADDITIONS U/S 153A OF THE ACT, FOR THE ASSESSMENTS WHICH ARE NOT PENDING AS ON THE DATE OF SEARCH AND ALSO THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE AC T HAS BEEN EXPIRED. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW: 19. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE FACTUAL MATRIX OF THE CASE IS THAT THERE WAS A SEARCH ACTIO N U/S 132 OF THE ACT. DURING THE COURSE OF SEARCH, INCRIMINATING DOCUMENT S FOUND REVEALS THAT THE ASSESSEE HAS INFLATED LABOUR CHARGES FOR THE AS SESSMENT YEARS 2008- 09 & 2009-10. BASED ON THE DOCUMENTS FOUND DURING SEARCH, THE ASSESSEE HAS ACCEPTED THAT HE HAS INFLATED 10% LABO UR CHARGES AND WHICH IS COMMON IN THIS LINE OF BUSINESS. CONSEQUENT TO SEARCH ACTION U/S 132 OF THE ACT, THE ASSESSEE CASE HAS BEEN CENTRALIZED AND ACCORDINGLY FRESH ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED BY ISSUI NG NOTICE U/S 153A/153C OF THE ACT FOR THE SIX ASSESSMENT YEARS I MMEDIATELY PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE ASSESSEE HAS FILED REVISED RETURNS IN RESPONSE TO NOTICE U/S 153 A OF THE ACT AND ADMITTED THE ADDITIONAL INCOME DISCLOSED DURING THE COURSE OF SEARCH. THE CASE HAS BEEN SELECTED FOR SCRUTINY. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE BOOK S OF ACCOUNTS AND RELEVANT BILLS & VOUCHERS IN SUPPORT OF EXPENDITURE CLAIMED. IN RESPONSE, THE ASSESSEE FILED WRITTEN SUBMISSION AND STATED TH AT THE BOOKS OF ACCOUNTS ARE NOT AVAILABLE AND HENCE CANNOT BE FURN ISHED. THEREFORE, THE A.O. ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAI N WHY THE NET PROFIT FROM THE BUSINESS SHALL NOT BE ESTIMATED. IN RESPON SE TO SHOW CAUSE NOTICE, THE ASSESSEE HAS FILED A WRITTEN REPLY AND CONTENDED THAT THE INCOME FOR THE ASSESSMENT YEAR 2004-05, 2005-06 AND 2007-08 CANNOT BE TINKERED WITH, AS THERE WAS NO INCRIMINATING MATERI AL FOUND DURING THE COURSE OF SEARCH FOR THE ABOVE ASSESSMENT YEARS AND AS SUCH NO ADDITIONS CAN BE MADE TO THE RETURNED INCOME. IT IS FURTHER S UBMITTED THAT AS PER SEC. 153A OF THE ACT, DE-NOVO ASSESSMENT CAN BE MAD E ONLY IN RESPECT OF THE ASSESSMENT YEAR FOR WHICH THE ASSESSMENT PROCEE DINGS HAD BEEN ABATED AND THAT IN RESPECT OF ASSESSMENT YEARS FOR WHICH THE ASSESSMENT HAD ALREADY BEEN REACHED A FINALITY, SUCH ASSESSMEN T COULD NOT BE MADE U/S 153A OF THE ACT UNLESS THERE WAS SEIZED MATERIA LS . ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 11 20. THE A.O. HAS PASSED REASSESSMENT ORDERS U/S 153 A/153C OF THE ACT FOR ALL THE SIX ASSESSMENT YEARS IMMEDIATELY PRECED ING THE YEAR IN WHICH SEARCH WAS CONDUCTED. ACCORDING TO THE A.O., AS PE R THE PROVISIONS OF SECTION 153A OF THE ACT, THERE IS NO LIMITATION OR RESTRICTION PROVIDED IN THE NEW PROCEDURE OF SEARCH ASSESSMENTS ON THE POWERS O F A.O. FOR MAKING ASSESSMENT/REASSESSMENT AND THE A.O. IS NOT REQUIRE D TO CONFINE HIS ASSESSMENTS ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH AS WAS THE CASE IN THE OLD PROCEDURE OF BLOCK ASSESSMENTS. TH E NEW PROCEDURE OF BLOCK ASSESSMENT WAS EXPLAINED BY WAY OF PROVISIONS OF SECTION 153A OF THE ACT. AS PER SECTION 153A OF THE ACT, THE A.O. SHALL ASSESS OR REASSESS THE TOTAL INCOME OF THE SPECIFIED SIX ASSESSMENT YE ARS IRRESPECTIVE OF THE FACT THAT THE ASSESSMENT OF THE SAID YEARS WERE COM PLETED OR PENDING AS ON THE DATE OF SEARCH. THEREFORE, THE A.O. HAS REA SSESSED THE INCOME OF SIX ASSESSMENT YEARS AND RECOMPUTED THE PROFITS AFR ESH AFTER CONSIDERING THE RELEVANT FACTS AVAILABLE ON RECORD. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE A.O. CANNOT DISTURB THE COMPLETED ASSESSMENTS UNLESS THERE WAS A SEIZED MATERIAL. THE ASSESSEE FURTHER C ONTENDED THAT WHERE ASSESSMENTS ARE NOT PENDING AS ON THE DATE OF SEARC H AND TIME LIMIT FOR ISSUE OF NOTICES U/S 143(2) OF THE ACT HAS BEEN EXP IRED, IRRESPECTIVE OF THE FACT THAT THOSE ASSESSMENTS HAVE BEEN COMPLETED U/S 143(1) OR 143(3) OF THE ACT, THEN THE A.O. HAS NO POWER TO REASSESS THE INCOME OF THOSE COMPLETED ASSESSMENT YEARS. 21. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ISSUE NO LONGER RES INTEGRA, AS THE ISSUE HAS B EEN ALREADY DECIDED BY THE ITAT, SPECIAL BENCH AND HELD THAT WHERE THE ASS ESSMENTS ARE NOT PENDING AS ON THE DATE OF SEARCH, THE A.O. LOSSES J URISDICTION U/S 153A OF THE ACT TO REASSESS THE INCOME OF THOSE COMPLETED A SSESSMENTS. THOUGH THE PROVISIONS OF SECTION 153A OF THE ACT DOES NOT SPECIFY ABATED AND COMPLETED ASSESSMENTS, THE NATURAL MEANING ASSIGNED TO IT SHOULD BE GIVEN TO INTERPRET THE PROVISIONS IN SUCH A WAY THA T WHICH SHALL NOT CAUSE UNDUE HARDSHIP TO THE TAX PAYERS. THE PROVISIONS OF SECTION 153A OF THE ACT EXPLAINED THE PROCEDURE OF ASSESSMENTS, ABATED ASSESSMENTS AND THE MANNER IN WHICH THE ASSESSMENT SHOULD BE FRAMED, WH ICH WAS FURTHER SUPPORTED BY CIRCULAR NO.7 OF 2003 ISSUED BY THE CB DT. WHEN THE LAW HAS EXPLAINED THE POSITION OF ABATED ASSESSMENTS, THEN THE SAME WAY THE COMPLETED ASSESSMENT SHOULD BE TREATED SO AS TO UND ERSTAND THAT THOSE ASSESSMENTS ARE REACHED FINALITY AND WHICH CANNOT B E TINKERED WITH UNLESS THERE WAS A SEIZED DOCUMENT. THEREFORE, WE ARE OF T HE CONSIDERED OPINION THAT WHERE SEARCH IS INITIATED, ALL PENDING ASSESSM ENTS ARE MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEAR SH ALL BE MADE SEPARATELY ON THE BASIS OF FINDINGS OF SEARCH AND O THER MATERIAL EXISTING OR BROUGHT ON RECORD BY THE A.O. IN RESPECT OF NON ABA TED OR COMPLETED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BAS IS OF BOOKS OF ACCOUNTS OR OTHER RELEVANT DOCUMENTS FOUND DURING T HE COURSE OF SEARCH, BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSME NT. ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 12 22. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE D OCUMENT AVAILABLE ON RECORD, WE FIND THAT THE ASSESSMENT FOR THE ASSE SSMENT YEAR 2004-05 TO 2007-08 WERE NOT PENDING AS ON THE DATE OF SEARC H. THE FACT THAT THE ASSESSMENT HAS BEEN COMPLETED U/S 143(1) & 143(3) O F THE ACT ARE NOT MATERIAL. THE TIME LIMIT FOR ISSUE OF NOTICE U/S 14 3(2) OF THE ACT HAS BEEN EXPIRED. ON FURTHER VERIFICATION OF THE DOCUMENTS A VAILABLE ON RECORD, WE FIND THAT THERE WAS NO INCRIMINATING DOCUMENTS FOUN D DURING THE COURSE OF SEARCH IN RESPECT OF ASSESSMENT YEAR 2004-05 TO 200 7-08. THEREFORE, WE ARE OF THE OPINION THAT THE A.O. WAS NOT CORRECT IN REASSESSING THE TOTAL INCOME OF THE ASSESSMENT YEAR 2004-05 TO 2007-08 IN THE ABSENCE OF ANY SEIZED MATERIALS. ACCORDINGLY, WE DIRECT THE A.O. TO DELETE THE ADDITIONS MADE FOR THE ASSESSMENT YEAR 2004-05, 2005-06 & 200 7-08. 23. IT IS PERTINENT TO DISCUSS HEREIN THE CASE LAWS RELIED UPON BY THE ASSESSEE. THE ASSESSEE HAS RELIED UPON THE ITAT, S PECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012) 137 ITD 287. THE COORDINATE BENCH OF THIS TRIBUNAL, WHILE DECIDI NG THE ISSUE IN FAVOUR OF THE ASSESSEE HELD AS UNDER: IN ASSESSMENTS THAT ARE ABATED, THE AO ARETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A F OR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY B EEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF IN CRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 24. THE ASSESSEE RELIED UPON, A.P. HIGH COURT DECIS ION IN THE CASE OF CIT VS. M/S. AMR INDIA LTD. IN ITTA NO.354 OF 2014 D ATED 12.6.2014. THE HONBLE HIGH COURT HELD THAT THE A.O. HAS NO JURISD ICTION TO RE-AGITATE THE ASSESSMENTS WHICH WERE ALREADY COMPLETED AND SUBSID ING. THE RELEVANT PORTION IS EXTRACTED BELOW: WE HAVE HEARD SRI J.V. PRASAD, LEARNED COUNSEL FOR THE APPELLANT, AND GONE THROUGH THE IMPUGNED JUDGEMENT AND ORDER OF TH E LEARNED TRIBUNAL. IT APPEARS THAT THE LEARNED TRIBUNAL FOUND ON FACT T HAT AFTER COMPLETION OF ASSESSMENT PROCEEDINGS AND AFTER REACHING FINALITY THEREON, THE ASSESSING OFFICER TRIED TO REAGITATE THE ASSESSMENTS. ACCORD ING TO US, THE LEARNED TRIBUNAL HAS RIGHTLY HELD THAT THE ASSESSING OFFICE R HAS NO JURISDICTION TO REAGITATE THE ASSESSMENTS WHICH WERE ALREADY COMPLE TED AND SUBSISTING. WE THEREFORE DO NOT FIND ANY ELEMENT OF LAW TO BE D ECIDED IN THIS APPEAL. HENCE, THE APPEAL IS DISMISSED. THERE WILL BE NO O RDER AS TO COSTS. 25. THE ASSESSEE HAS RELIED UPON THE COORDINATE BEN CH DECISION OF ITAT, VISAKHAPATNAM IN THE CASE OF A.T. RAYUDU IN I TA NO.373 TO ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 13 379/VIZAG/2014. THE COORDINATE BENCH, UNDER SIMILAR CIRCUMSTANCES HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION IS REPRODUCED HEREUNDER: 22. IN THIS REGARD, IT IS ALSO PERTINENT TO REFER TO THE FOLLOWING OBSERVATIONS MADE BY THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD (SUPRA):- 57 (F) IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD VS. ITO (106 JTR 57)(SC), IT HAS BEEN MENTIONED IN THE LAST PARAGRAPH OF THE JUDGMENT THAT THE COURT HAS TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE M UST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTI VATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SE T AT REST JUDICIAL AND QUASI JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. OUR DECISION IS IN CONSONANCE WITH THIS OBSERVATION. THE DECISION RENDERED BY THE SPECIAL BENCH THAT THE ASSESSING OFFICER CAN MAKE ADDITIONS IN THE CASE OF CONCLUDED ASSESSMENTS ON T HE BASIS OF INCRIMINATING MATERIALS IS ALSO BASED UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD (SUPRA). 23. WE HAVE EARLIER NOTICED THAT THE HON'BLE JURIS DICTIONAL ANDHRA PRADESH HIGH COURT HAS ALSO UPHELD BY THE ORDERS PASSED BY THE TRIBUNAL BY FOLLOWING THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD (SUPRA) IN THE FOLLOWING CASES: - (A) SREE LALITHA CONSTRUCTIONS (J1TA NO 368 OF 2014) (B) M/S. HYDERABAD HOUSE PVT LTD (ITTA NO.266 OF 2 013) (C)M/S. AMR INDIA LTD (FITA NO.357 /V/2014) FURTHER WE AGREE WITH THE CONTENTIONS OF THE ASSESS EE THAT THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF GOP AL DAS BHADRUKA (SUPRA) HAVE BEEN RENDERED ON THE FACTS PREVAILING IN THOSE CASE S, SINCE THE ISSUE RELATING TO CONCLUDED ASSESSMENTS AND PENDING ASSESSMENTS WAS N OT BEFORE THE I1ON'BLE ANDHRA PRADESH HIGH COURT ON THE CONTRARY, THE ABOV E SAID THREE DECISIONS OF THE JURISDICTIONAL HIGH COURT COMES TO THE SUPPORT OF T HE ASSESSEE'S CONTENTIONS WITH REGARD TO THE LEGAL PROPOSITION AGITATED BEFORE US, BESIDES THE DECISIONS RENDERED BY VARIOUS OTHER HIGH COURTS. ACCORDINGLY, WE ARE O F THE VIEW THAT THE SCOPE OF ENQUIRY IN THE CASE OF UNABATED ASSESSMENTS, I.E., THE ASSESSMENT YEARS IN WHICH PROCEEDINGS ARE NOT PENDING, IS THAT THE UNDISCLOSE D INCOME SHOULD BE ASCERTAINED ONLY ON THE BASIS OF MATERIALS FOUND DURING THE COU RSE OF SEARCH. IF NO INCRIMINATING MATERIAL SHOWING ANY UNDISCLOSED INCOME WAS FOUND I N THE CASE OF CONCLUDED PROCEEDINGS, THEN THE QUESTION OF MAKING ANY ADDITI ON DOES NOT ARISE. IN THAT CASE, THE ASSESSING OFFICER SHOULD COMPLETE THE ASSESSMEN T OF THOSE YEARS BY DETERMINING THE VERY SAME TOTAL INCOME THAT WAS ASS ESSED IN THE EARLIER PROCEEDING. 24. IN VIEW OF THE ABOVE, WE ARE UNABLE TO AGREE W ITH THE CONTENTIONS OF LD STANDING COUNSEL THAT THE ASSESSING OFFICER WOULD G ET UNFETTERED POWERS IN THE ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 14 CASE OF UNABATED ASSESSMENTS, ONCE THEY WERE REOPEN ED US 153A OF THE ACT. IN OUR VIEW, IN THE CASE OF UNABATED ASSESSMENTS, THE TOTAL INCOME SHOULD BE DETERMINED BY THE ASSESSING OFFICER BY COMBINING TH E INCOME ALREADY ASSESSED/DISCLOSED IN THE RETURN OF INCOME AND THE UNDISCLOSED INCOME, IF ANY, FOUND DURING THE COURSE OF SEARCH PROCEEDING. EVEN OTHERWISE, IT IS SETTLED PROPOSITION OF LAW THAT THE ASSESSEE IS ENTITLED TO TAKE SUPPORT OF THE DECISION IN HIS FAVOUR, WHEN TWO CONTRADICTORY VIEWS HAVE BEEN EXPRESSED BY THE HIGH COURTS. IN THE INSTANT CASE THE HONBLE JURISDICTIO NAL HIGH COURT COMES TO THE SUPPORT OF THE ASSESSEE IN RESPECT OF THE LEGAL PRO POSITION IN ADDITION TO THE DECISION RENDERED BY THE HON'BLE BOMBAY HIGH COURT. ACCORDINGLY, WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE ON THE LEGAL ISS UE. 26. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N IN THE CASE OF ALL CARGO LOGISTICS PVT. LTD. (SUPRA), WE ARE OF THE OP INION THAT THE A.O. HAS MADE REASSESSMENT U/S 153A/153C OF THE ACT ON THE B ASIS OF INFORMATION/MATERIAL AVAILABLE IN THE RETURN OF INC OME, WITHOUT REFERRING TO ANY SEIZED MATERIAL. THEREFORE, FOLLOWING THE SPEC IAL BENCH DECISION (SUPRA) WE HOLD THAT THE A.O. HAD NO JURISDICTION T O MAKE ADDITIONS U/S 153A OF THE ACT FOR THE ASSESSMENTS WHICH ARE NOT P ENDING AS ON THE DATE OF SEARCH. IN THIS CASE, THE SEARCH WAS CONDUCTED ON 14.7.2009. THE ASSESSMENT FOR THE ASSESSMENT YEARS 2004-05 TO 2007 -08, WERE NOT PENDING AS ON THE DATE OF SEARCH. THE TIME LIMIT F OR ISSUE OF NOTICE UNDER SEC. 143(2) HAS BEEN EXPIRED. THEREFORE, THE A.O. H AS NO JURISDICTION TO REASSESS THE INCOME FOR THE ASSESSMENT YEAR 2004-05 TO 2007-08 IN THE ABSENCE OF ANY INCRIMINATING MATERIALS. HENCE, WE DELETE THE ADDITIONS MADE BY THE A.O. FOR THE ASSESSMENT YEAR 2004-05, 2 005-06 & 2007-08. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS A LLOWED. 14. IN THIS VIEW OF THE MATTER AND CONSIDERING FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO RESPECTFULLY FOLLOWING THE DECIS ION OF CO-ORDINATE BENCH OF VISAKHAPATNAM, IN THE CASE OF L. SURYAKANTHAM VS. A CIT, IN ITA NOS.300 TO 305/VIZAG/2012, WE ARE OF THE VIEW THAT THE A.O. HA S MADE REASSESSMENT U/S 153A/153C OF THE ACT, ON THE BASIS OF INFORMATION/M ATERIAL AVAILABLE IN THE RETURN OF INCOME, WITHOUT REFERRING TO ANY SEIZED M ATERIAL. THEREFORE, FOLLOWING THE SPECIAL BENCH DECISION (SUPRA) WE HOL D THAT THE A.O. HAD NO JURISDICTION TO MAKE ADDITIONS U/S 153A OF THE ACT, FOR THE ASSESSMENTS WHICH ARE NOT PENDING AS ON THE DATE OF SEARCH. THE ASSES SMENT FOR THE ASSESSMENT YEARS 2005-06 TO 2009-10 WERE NOT PENDING AS ON THE DATE OF SEARCH. THE TIME LIMIT FOR ISSUE OF NOTICE UNDER SEC. 143(2) HA S BEEN EXPIRED. THEREFORE, THE A.O. HAS NO JURISDICTION TO REASSESS THE INCOME FOR THE ASSESSMENT YEAR 2005-06 TO 2009-10 IN THE ABSENCE OF ANY INCRIMINAT ING MATERIALS. THE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). HENCE, WE INCLI NED TO UPHOLD CIT(A) ORDER AND DIRECT THE A.O. TO DELETE THE ADDITIONS MADE TO WARDS DEEMED DIVIDEND FOR THE ASSESSMENT YEAR 2005-06 TO 2009-10. ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 15 10. IN SO FAR AS CASE LAWS RELIED UPON BY THE LD. D .R., WE FIND THAT THE ITAT SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LIMITED VS. DCIT (2012) 137 ITR 289, HAS CONSIDERED THE RATIOS OF HIGH COURTS INCLUDING THE DECISION OF HONBLE A.P. HIGH COURT I N THE CASE OF GOPAL LAL BHADURKA VS. DCIT, WHILE DECIDING THE ISSUE IN FAVO UR OF THE ASSESSEE. THEREFORE, WITH DUE RESPECT TO THE OTHER HIGH COURT S DECISIONS, WHICH ARE IN FAVOUR OF THE REVENUE, WE PREFER TO FOLLOW T HE SPECIAL BENCH DECISION OF ITAT, IN THE CASE OF ALL CARGO GLOBAL L OGISTICS LIMITED VS. DCIT (SUPRA) AND HENCE OPINED THAT THE CASE LAWS RE LIED UPON BY THE LD. D.R. ARE NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE. 11. IN THIS CASE, THE ASSESSMENT FOR THE ASSESSMENT YEARS 2003-04, 2005-06, 2006-07 & 2008-09 ARE ALREADY CONCLUDED AN D THERE IS NO PROCEEDINGS PENDING FOR THOSE ASSESSMENT YEARS. TH E TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT HAS BEEN EXPI RED. THE A.O. HAS MADE ADDITIONS TOWARDS DISALLOWANCE OF INTEREST AND ON ACCOUNT OF DEEMED DIVIDEND WITHOUT ANY INCRIMINATING MATERIALS . THEREFORE, WE ARE OF THE VIEW THAT THE A.O. HAS NO JURISDICTION TO MA KE ADDITIONS FOR THE ASSESSMENT YEARS 2003-04, 2005-06, 2006-07 & 2008-0 9, IN THE ABSENCE OF ANY INCRIMINATING MATERIALS. WE FURTHER OBSERVED THAT THE A.O. HAS MADE ADDITIONS TOWARDS DISALLOWANCE OF INTEREST AND ON ACCOUNT OF DEEMED DIVIDEND BASED ON THE BOOKS OF ACCOUNTS AND FINANCIAL ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 16 STATEMENTS, WHICH WERE ALREADY PART OF REGULAR RETU RN FILED BY THE ASSESSEE U/S 139(1) OF THE ACT, BUT NOT BASED ON AN Y INCRIMINATING MATERIALS UNEARTHED DURING THE COURSE OF SEARCH. T HEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A.O. HAS NO JURISDICTI ON TO MAKE ADDITIONS IN THE ABSENCE OF SEIZED MATERIALS FOR THE ASSESSME NT YEARS WHICH ARE CONCLUDED AS ON THE DATE OF SEARCH. THE CIT(A) AFT ER CONSIDERING RELEVANT FACTS HAS RIGHTLY DIRECTED THE A.O. TO DEL ETE ADDITIONS MADE TOWARDS DISALLOWANCE OF INTEREST AND DEEMED DIVIDEN D U/S 2(22)(E) OF THE ACT. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT(A), HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND D ISMISS APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2003-04, 20 05-06, 2006-07 & 2008-09. ITA NO.437 FOR A.Y. 2005-06 (ASSESSEE): 12. THE ONLY ISSUE CAME UP FOR OUR CONSIDERATION FR OM ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2005-06 IS ADDITIONS TOWARDS INFLATION OF EXPENDITURE. THE A.O. MADE DISALLOWANCE OF A SUM O F ` 7,50,000/- TOWARDS INFLATION OF EXPENDITURE ON THE GROUND THAT THE ASSESSEE HAS INFLATED HOSTEL EXPENDITURE MAINLY WITH REGARD TO P URCHASE OF VEGETABLES AND OTHER PROVISIONS AND ALSO THE SAID EXPENDITURE ARE SUPPORTED BY SELF-MADE VOUCHERS. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS ADMITTED INFLATION OF EXPENDITURE DURING THE COURSE OF SEARCH ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 17 PROCEEDINGS IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT NO INCRIMINATING MA TERIAL WAS FOUND DURING THE COURSE OF SEARCH OR SUBSEQUENT ENQUIRIES TO SUSPECT INFLATION IN THE ABOVE EXPENDITURE. THOUGH HE HAD ADMITTED I NFLATION OF EXPENDITURE AT THE TIME OF SEARCH PROCEEDINGS, THE SAID ADMISSION IS SELF-CONFESSED WITHOUT THERE BEING ANY INCRIMINATIN G MATERIALS, THEREFORE, THE A.O. WAS INCORRECT IN MAKING ADDITIO NS TOWARDS INFLATION OF EXPENDITURE. WE DO NOT FIND ANY MERITS IN THE ARGUM ENTS OF THE ASSESSEE, FOR THE REASON THAT THE ASSESSEE HIMSELF HAD ADMITTED INFLATION OF HOSTEL EXPENDITURE MAINLY WITH REGARD TO THE PUR CHASE OF VEGETABLES AND OTHER PROVISIONS. WE FURTHER OBSERVED THAT THE EXPENDITURE INCURRED TOWARDS PURCHASE OF VEGETABLES AND OTHER PROVISIONS IS SUPPORTED BY SELF-MADE VOUCHERS AND DID NOT HAVE PROPER EVIDENCE TO PROVE THE VERACITY OF THE EXPENDITURE, THEREFORE, WE ARE OF T HE VIEW THAT THE A.O. WAS RIGHT IN DISALLOWING INFLATION OF EXPENDITURE. THE CIT(A) AFTER CONSIDERING THE RELEVANT EXPLANATIONS OF THE ASSESS EE HAS RIGHTLY UPHELD ADDITIONS MADE BY THE A.O. WE DO NOT FIND ANY ERRO R IN THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) OR DER AND DISMISS APPEAL FILED BY THE ASSESSEE. ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 18 ITA NOS.438 TO 440 OF 2013 (ASSESSEE): 13. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION IS ADDITIONS TOWARDS UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT, IN THE NAME OF THE EMPLOYEES AND UNEXPLAINED INVESTMENT IN PURCHASE OF SITE. THE A.O. MADE ADDITIONS TOWARDS UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT, IN THE NAME OF THE EMPLOYEES BASED ON THE INCRIMINATIN G MATERIALS FOUND DURING THE COURSE OF SEARCH, WHICH SUGGEST THAT ASS ESSEE HAS MADE DEPOSITS IN THE NAME OF THE EMPLOYEES WHICH INCLUDE S ` 10 LAKHS FOUND CREDIT IN THE ACCOUNT OF THE EMPLOYEES G. SRINIVASA RAO. THE A.O. FURTHER OBSERVED THAT THE SAID CASH DEPOSIT IN THE BANK ACCOUNT ARE OUTSIDE THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS ADMITTED CASH DEPOSI TS IN THE BANK ACCOUNT IN THE NAME OF THE EMPLOYEES DURING THE COU RSE OF SEARCH AND ALSO AGREED TO DISCLOSE ADDITIONAL INCOME TOWARDS C ASH DEPOSITS. THE ASSESSEE CONTENDED THAT THOUGH HE HAD ADMITTED UNEX PLAINED DEPOSITS IN THE BANK ACCOUNT IN THE NAME OF THE EMPLOYEES AN D ALSO AGREED TO OFFER ADDITIONAL INCOME, BECAUSE OF ADMISSION OF HI GHER INCOME FOR THE RELEVANT ASSESSMENT YEAR, THE A.O. OUGHT TO HAVE TE LESCOPED THE ADDITIONS MADE TOWARDS UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT IN THE NAME OF THE EMPLOYEES. THE ASSESSEE FURTHER CONTEN DED THAT IN ADDITION TO INFLATION OF EXPENDITURE, THE ASSESSEE ALSO ADMITTED AN ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 19 ADDITIONAL UNDISCLOSED INCOME FOR THE RELEVANT ASSE SSMENT YEARS, THE SOURCE OF WHICH IS AVAILABLE TO EXPLAIN THE CASH DE POSITS IN THE BANK ACCOUNT OF THE EMPLOYEES, THEREFORE, TELESCOPING SH OULD BE DONE FOR THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOS ITS. 14. HAVING HEARD BOTH THE SIDES, WE FIND FORCE IN T HE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS ADMIT TED ADDITIONAL INCOME TOWARDS INFLATION OF EXPENDITURE FOR THE REL EVANT ASSESSMENT YEARS, WHICH IS MORE THAN THE CASH DEPOSITS FOUND I N THE NAME OF THE EMPLOYEES. THE ASSESSEE EXPLAINED THE CASH DEPOSIT S FOUND IN THE NAME OF THE EMPLOYEES OUT OF THE SOURCES AVAILABLE IN THE FORM OF UNDISCLOSED INCOME OFFERED TOWARDS INFLATION OF EXP ENDITURE. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS ERRED IN NOT A LLOWING THE BENEFIT OF TELESCOPING TOWARDS ADDITIONS MADE ON ACCOUNT OF CA SH DEPOSITS IN THE NAME OF THE EMPLOYEES OUT OF ADDITIONS MADE TOWARDS INFLATION OF EXPENDITURES, IGNORING THE FACT THAT THE SAID SOURC ES OF INCOME IN THE FORM OF UNDISCLOSED INCOME OUT OF INFLATION OF EXPE NDITURE IS UTILIZED TO ACQUIRE ANY OTHER ASSETS OR EXPENDED FOR ANY OTHER PURPOSES. IN THE ABSENCE OF ANY SPECIFIC FINDING AS TO UTILIZATION O F SOURCE AVAILABLE IN THE FORM OF ADDITIONAL INCOME OUT OF INFLATION OF EXPEN DITURE, THE A.O. OUGHT TO HAVE TELESCOPED THE SOURCES AVAILABLE TOWARDS AD DITIONS MADE TOWARDS UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOU NT IN THE NAME OF ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 20 THE EMPLOYEES. THE CIT(A) WITHOUT APPRECIATING THE FACTS, SIMPLY UPHELD ADDITIONS MADE BY THE A.O. THEREFORE, WE DI RECT THE A.O. TO ALLOW THE BENEFIT OF TELESCOPE TOWARDS ADDITIONAL I NCOME AVAILABLE IN THE FORM OF INFLATION OF EXPENDITURE. IN SO FAR AS UNE XPLAINED INVESTMENT IN PURCHASE OF SITE, THE ASSESSEE HIMSELF ADMITTED THA T THE SAID INVESTMENT IS OUTSIDE THE BOOKS OF ACCOUNTS. HOWEVER, CLAIMS THAT THE SOURCES OF INCOME AVAILABLE IN THE FORM OF ADDITIONAL INCOME O FFERED TOWARDS INFLATION OF EXPENDITURE SHOULD BE TELESCOPED TOWAR DS ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF SI TE. THEREFORE, WE DIRECT THE A.O. TO ALLOW BENEFIT OF TELESCOPING ON ADDITIONAL INCOME OFFERED TOWARDS INFLATION OF EXPENDITURE TO UNEXPLA INED INVESTMENT IN PURCHASE OF SITE. 15. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS SUPPRESSION OF RECEIPTS. THE A.O. MADE ADD ITIONS OF ` 5,72,500/- TOWARDS SUPPRESSION OF RECEIPTS ON THE G ROUND THAT THE ASSESSEE HAS SHORT ACCOUNTED RECEIPTS FROM BHASHYAM PUBLIC SCHOOL, GAJUWAKA. THE A.O. WAS OF THE OPINION THAT AS PER THE MIS REPORTS SENT FROM BRANCH OFFICE TO HEAD OFFICE, THE TOTAL FEES C OLLECTIONS FOR THE FINANCIAL YEAR 2007-08 WAS AT ` 2,19,03,500/-, WHEREAS IN THE BOOKS OF ACCOUNTS MAINTAINED AT THE HEAD OFFICE IN RESPECT O F FEES COLLECTION, THE ASSESSEE HAS ACCOUNTED AN AMOUNT OF ` 2,12,46,750/- INCLUDING FEES ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 21 RECEIVABLE OF ` 10,62,000/-, THUS THERE WAS A DIFFERENCE OF ` 5,72,500/- FOR WHICH THE ASSESSEE HAS FAILED TO FURNISH PROPER EXPLANATIONS. THOUGH THE ASSESSEE STATED THAT ON ACCOUNT OF FURTH ER CONCESSION ALLOWED TO SOME STUDENTS, THE RECEIVABLE FROM THE B HASHYAM PUBLIC SCHOOL HAS REDUCED FROM ` 15,78,750/- TO ` 10,62,000/-, THEREFORE, THE ASSESSEE MADE A PROVISION OF ` 10,62,000/- IN THE BOOKS OF ACCOUNTS, WHICH RESULTS SHORT ADMISSION OF FEES RECEIPTS OF ` 5,72,500/-, FAILED TO PROVE THE SAME WITH NECESSARY SUPPORTING EVIDENCES. IT IS THE CLAIM OF THE ASSESSEE THAT THE MIS REPORT SENT FROM BRANCH O FFICE TO HEAD OFFICE IS ON TENTATIVE BASIS, WHEREAS THE BOOKS SHOWS ACTU AL FEES COLLECTED FROM THE STUDENTS, ACCORDING TO WHICH THE ASSESSEE HAS ALLOWED ADDITIONAL CONCESSION OF ` 5,72,500/- TO FEW STUDENTS BECAUSE OF WHICH THERE IS A DIFFERENCE WHICH HAS BEEN EXPLAINED BEFO RE THE A.O. WITH NECESSARY EVIDENCES. THE ASSESSEE FURTHER CONTENDE D THAT IT IS NOT THE CASE OF THE A.O. THAT THE ASSESSEE HAS COLLECTED FE ES FROM THE STUDENTS, BUT FAILED TO RECORD IN THE BOOKS OF ACCOUNTS. THE A.O. MERELY ON THE BASIS OF MIS REPORT SENT FROM BRANCH OFFICE HAS CON CLUDED THAT THE ASSESSEE HAS OMITTED TO CONSIDER FEES COLLECTIONS O F ` 5,72,500/- WHICH IS INCORRECT. 16. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD, WE FIND THAT THE A.O. HAS MADE ADDITIONS SOLELY ON THE BASIS OF MIS ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 22 REPORT SENT FROM BRANCH OFFICE TO HEAD OFFICE WHICH WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERATIONS. WE FURTHER OBSERVED THAT THE ADDITIONS MADE BY THE A.O. IS NOT SUPPORTED BY VALID EVIDENCES, EXCEPT INTERNAL MIS REPORT SENT FROM BRANCH OFFICE TO HEAD OFFICE FOR THEIR ACCOUNTING PURPOSES. THE ASSESSEE, ON THE OT HER HAND, CATEGORICALLY PROVED THAT THE BOOKS OF ACCOUNTS HAS BEEN PREPARED BASED ON THE ACTUAL RECEIPT OF FEES COLLECTIONS AS PER WHICH THE FEES RECEIVABLE AT THE END OF THE FINANCIAL YEAR IS AT ` 10,62,000/- BUT NOT ` 15,78,750/-, THUS THERE IS NO DIFFERENCE IN FEES CO LLECTION. THE A.O. WITHOUT APPRECIATING FACTS, SIMPLY MADE ADDITIONS T OWARDS SUPPRESSION OF RECEIPTS. THEREFORE, WE DIRECT THE A.O. TO DELE TE ADDITIONS MADE TOWARDS SUPPRESSION OF RECEIPTS. 17. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2009-10, IS ADDITION S TOWARDS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE A.O. OBSERVED THAT THE ASSESSEE HA S RECEIVED LOAN AMOUNT OF ` 1,53,00,000/- FROM THE COMPANY, IN WHICH HE HOLDS SUBSTANTIAL INTEREST. THE A.O. FURTHER OBSERVED TH AT THE LOAN ADVANCED IS IN THE NATURE OF LOANS AND ADVANCES WHICH FALLS WITHIN THE AMBIT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. IT IS THE CLAIM OF THE ASSESSEE THAT THE LOAN RECEIVED FROM THE COMPANY IS NOT A GR ATUITOUS PAYMENT, ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 23 BUT ONLY A SHORT TERM ARRANGEMENT, WHICH HAS BEEN R EPAID IN THE NORMAL COURSE OF BUSINESS, THEREFORE, THE A.O. WAS INCORRE CT IN HOLDING THAT THE AMOUNT RECEIVED FROM THE COMPANY FALLS WITHIN THE A MBIT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THE ASSESSEE FUR THER CONTENDED THAT HE HAD EXTENDED HIS PERSONAL PROPERTIES AS SECURITY FOR THE LOANS BORROWED BY THE COMPANY, IN TURN THE COMPANY HAS GI VEN SHORT TERM LOANS, WHICH CANNOT BE CONSIDERED AS LOANS AND ADVA NCES TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. IT IS F URTHER SUBMITTED THAT THE TRANSACTION BETWEEN THE ASSESSEE AND THE COMPANY AR E MUTUALLY BENEFITED EACH OTHER, THEREFORE, THE A.O. WAS TOTAL LY ERRED IN TREATING THE LOANS AS LOANS AND ADVANCES, WHICH COMES UNDER THE PURVIEW OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 18. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE LOANS BORROWED FROM T HE COMPANY AND ACCUMULATED PROFIT AS ON THE DATE OF LOAN. THE ONL Y DISPUTE WITH REGARD TO THE NATURE OF LOAN BORROWED FROM THE COMPANY. T HE ASSESSEE CLAIMS THAT THE AMOUNT BORROWED FROM THE COMPANY IS NOT A GRATUITOUS PAYMENT,BUT ONLY A SHORT TERM ADVANCE RECEIVED IN T HE NORMAL COURSE OF BUSINESS, WHICH HAS BEEN REPAID. THE ASSESSEE FURT HER CONTENDED THAT THE TRANSACTION BETWEEN THE ASSESSEE AND COMPANY IS MUTUALLY ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 24 BENEFITTED, BECAUSE HE HAD ALLOWED HIS PERSONAL PRO PERTIES TO BE MORTGAGED WITH THE BANKS FOR AVAILING LOAN FOR THE BUSINESS PURPOSE OF THE COMPANY. IN TURN, THE COMPANY HAS ADVANCED SHO RT TERM LOAN, THEREFORE, THE TRANSACTION CANNOT BE RECORDED AS LO ANS AND ADVANCES WHICH ATTRACTS THE DEEMING FICTION PROVIDED U/S 2(2 2)(E) OF THE ACT. WE FIND MERITS IN THE ARGUMENTS OF THE ASSESSEE, FOR T HE REASON THAT IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD GIVEN HIS PERSO NAL PROPERTIES AS COLLATERAL SECURITIES TO THE BANKS FOR AVAILING FIN ANCIAL FACILITIES FOR THE COMPANY IN ITS BUSINESS. WE FURTHER OBSERVED THAT T HE ASSESSEE HAS GIVEN ITS PERSONAL PROPERTIES ON NOMINAL RENT TO TH E COMPANY FOR RUNNING ITS SCHOOLS. WE FURTHER NOTICED THAT THE SAID TRAN SACTION BETWEEN THE ASSESSEE AND HIS COMPANY IS A SHORT TERM ARRANGEMEN T, WHICH HAS BEEN REPAID IN THE NORMAL COURSE OF ITS BUSINESS. THERE FORE, WE ARE OF THE VIEW THAT THE AMOUNT DRAWN BY THE ASSESSEE FROM HIS COMPANY IS NOT A GRATUITOUS PAYMENT WHICH ATTRACTS THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 19. THE ASSESSEE HAS RELIED UPON THE DECISION OF IT AT, VISAKHAPATNAM IN THE CASE OF DCIT VS. SHRI HARI PRASAD BHARARIA I N ITA NOS.435 TO 441/VIZAG/2014, DATED 9.9.2016. THE COORDINATE BEN CH OF THIS TRIBUNAL, UNDER SIMILAR CIRCUMSTANCES, HELD THAT WHEN BOTH TH E PARTIES ARE MUTUALLY BENEFITED OUT OF THE TRANSACTION BETWEEN T HE ASSESSEE AND THE ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 25 COMPANY, THE SAID TRANSACTIONS CANNOT BE CONSIDERED AS GRATUITOUS PAYMENT WHICH FALLS UNDER THE AMBIT OF PROVISIONS O F SECTION 2(22)(E) OF THE ACT. THE RELEVANT PORTION OF THE ORDER IS EXTR ACTED BELOW: 17. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE A.O. HAS MADE ADDITIONS TOWARDS LOANS AND ADVANCES UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT , ON THE GROUND THAT TRANSACTION BETWEEN THE ASSESSEE AND HIS COMPANY IS COMING WITH IN THE DEFINITION OF LOANS AND ADVANCES. THE ASSESSEE CLAIMS THAT TRANSACTION BETW EEN HIMSELF AND HIS COMPANY IS NOT A GRACIOUS PAYMENT WHICH IS COMING WITHIN THE M EANING OF LOANS AND ADVANCES AS DEFINED U/S 2(22)(E) OF THE ACT. THE CIT(A) AFTE R CONSIDERING THE EXPLANATION FURNISHED BY THE ASSESSEE AND ALSO FOLLOWING THE DE CISION OF KOLKATA HIGH COURT, IN THE CASE OF PRADIP KUMAR MALHOTRA VS. CIT, HELD THA T THE TRANSACTION BETWEEN THE ASSESSEE AND HIS COMPANY ARE NOT GRACIOUS PAYMENT W HICH IS COMING WITHIN THE MEANING OF LOANS AND ADVANCES AS DEFINED U/S 2(22)( E) OF THE ACT. THE RELEVANT PORTION OF THE CIT(A) ORDER IS REPRODUCED HEREUNDER : 7.2 HOWEVER, EVEN ON MERITS ALSO, ALTERNATE CONTENTION OF THE APPELLANT IS CONSIDERED. IT IS NOTED THAT THE APPELLANT HAS MOR TGAGED HIS PERSONAL PROPERTY TO VARIOUS BANKS AND OBTAINED LOANS FOR THE BUSINESS O F THE COMPANY. THE DOCUMENTS FILED BY THE APPELLANT OF THE SANCTION LETTERS FROM VARIOUS BANKS SUPPORTS THIS CONTENTION AND THE DETAILS OF THE MORTGAGE LOANS TA KEN FROM VARIOUS BANKS ALONG WITH SANCTION LETTERS AND THE PROPERTIES PROVIDED B Y THE APPELLANT AS COLLATERAL SECURITY TO OBTAIN LOANS FROM THE SAID BANKS IS TAB ULATED BELOW. DATE OF SANCTION NAME OF THE BANK NAME OF THE BORROWER CREDIT FACILITY (RS.) PROPERTY MORTGAGED 23.3.2004 STATE BANK OF HYDERABAD, SIRIPURAM JUNCTION, VIZAG M/S. SAMPATH VINAYAK STEELS PVT. LTD. 30 LAKHS AGRICULTURAL LAND 10.2.2006 STATE BANK OF HYDERABAD, SIRIPURAM JUNCTION, VIZAG M/S. SAMPATH VINAYAK STEELS PVT. LTD. 100 LAKHS 4 STORYED BUILDING ON 555 SQ.YDS SITUATED AT RAJENDRANAGAR, VIZAG IN THE NAME OF (A) HARI PRASAD BHARARIA (B) SHIVLAL BHARARIA (BROTHERS) RENEWAL STATE BANK OF HYDERABAD, SIRIPURAM JUNCTION, VIZAG M/S. SAMPATH VINAYAK STEELS PVT. LTD. 100 LAKHS 4 STORYED BUILDING ON 555 SQ.YDS SITUATED AT RAJENDRANAGAR, VIZAG IN THE NAME OF (A) HARI PRASAD BHARARIA (B) SHIVLAL BHARARIA (BROTHERS) ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 26 7.11.2007 THE DHANALAKSHMI BANK, VIP ROAD, VIZAG M/S. SAMPATH VINAYAK STEELS PVT. LTD. 150 LAKHS (1) 4 STORYED BUILDING ON 555 SQ.YDS. SITUATED AT RAJENDRANAGAR, VIZAG IN THE NAME OF (A) HARI PRASAD BHARARIA (B) SHIVLAL BHARARIA (BROTHERS) (2) VUDA APARTMENT ADMEASURING 1485 SQ.FT. SITUATED AT MMTC COLONY, SEETHAMMADHARA, VIZAG IN THE NAME OF HARI PRASAD BHARARIA. RENEWAL THE DHANALAKSHMI BANK, VIP ROAD, VIZAG M/S. SAMPATH VINAYAK STEELS PVT. LTD. 150 LAKHS (1) 4 STOREYED BUILDING ON 555 SQ.YDS. SITUATED AT RAJENDRANAGAR, VIZAG IN THE NAME OF (A) HARI PRASAD BHARARIA (B) SHIVLAL BHARARIA (BROTHERS) (2) VUDA APARTMENT ADMEASURING 1485 SQ.FT. SITUATED AT MMTC COLONY, SEETHAMMADHARA, VIZAG IN THE NAME OF HARI PRASAD BHARARIA. 13.11.2009 AXIS BANK LTD., RAMNAGAR, VIZAG M/S. SAMPATH VINAYAK STEELS PVT. LTD. 300 LAKHS (1) 4 STORYED BUILDING ON 555 SQ.YDS SITUATED AT RAJENDRANAGAR, VIZAG IN THE NAME OF (A) HARI PRASAD BHARARIA (B) SHIVLAL BHARARIA (BROTHERS) (2) VUDA APARTMENT ADMEASURING 1485 SQ.FT. SITUATED AT MMTC COLONY, SEETHAMMADHARA, VIZAG IN THE NAME OF HARI PRASAD BHARARIA. 12.11.2010 AXIS BANK LTD. RAMNAGAR, VIZAG M/S. SAMPATH VINAYAK STEELS PVT. LTD. 400 LAKHS (1) 4 STORYED BUILDING ON 555 SQ.YDS. SITUATED AT RAJENDRANAGAR, VIZAG IN THE NAME OF (A) HARI PRASAD BHARARIA (B) SHIVLAL BHARARIA (BROTHERS) (2) VUDA APARTMENT ADMEASURING 1485 SQ.FT. SITUATED AT MMTC COLONY, SEETHAMMADHARA, VIZAG IN THE NAME OF HARI PRASAD BHARARIA. EVEN TILL DATE, THE AXIS BANK HAS GRANTED CASH CRE DIT FACILITY TO THE SAID COMPANY ON THE BASIS OF THE COLLATERAL SECURITY PRO VIDED BY THE PROPERTIES AND ALSO THE PERSONAL GUARANTEE OF THE APPELLANT AND HIS FAM ILY MEMBERS (LATEST SANCTION LETTER BEING 6.3.2013). 7.3 IT IS NOTED THAT THE FACTS IN THE CASE OF PRADIP KUMAR MALHOTRA VS CIT (SUPRA) ARE AKIN TO THE FACTS UNDER REFERENCE WHICH IS GIVEN BELOW. 'THE PHRASE 'BY WAY OF ADVANCE OR LOAN' APPEARING S UB-CLAUSE(E) OF SECTION 2(22) OF THE INCOME TAX ACT, 1961 MUST BE CONSTRUED TO MEAN T HOSE ADVANCES OR LOANS WHICH A SHAREHOLDER ENJOYS SIMPLY ON ACCOUNT OF BEING A P ERSON WHO IS THE BENEFICIAL ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 27 OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIX ED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HO/DI NG NOT LESS THAN TEN PER CENT OF THE VOTING POWER; BUT IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION WHICH IS B ENEFICIAL TO THE COMPANY RECEIVED FROM SUCH A SHAREHOLDER, IN SUCH CASE, SUC H ADVANCE OR LOAN CANNOT BE SAID TO BE DEEMED DIVIDEND WITHIN THE MEANING OF THE ACT . THUS, GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO THOSE CLASSES OF SHAR EHOLDERS WOULD COME WITHIN THE PURVIEW OF SECTION 2(22) BUT NOT CASES WHERE THE LO AN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY BY SUCH SHAREHOLDER. THE ASSESSEE HAD SUBSTANTIAL SHAREHOLDING IN A PRIV ATE COMPANY. THE ASSESSEE PERMITTED HIS IMMOVABLE PROPERTY TO BE MORTGAGED TO THE BANK FOR ENABLING THE COMPANY TO TAKE THE BENEFIT OF LOAN AND IN SPITE OF REQUEST OF THE ASSESSEE, THE COMPANY WAS UNABLE TO RELEASE THE PROPERTY FROM MOR TGAGE. CONSEQUENTLY, THE BOARD OF DIRECTORS OF THE COMPANY PASSED A RESOLUTI ON AUTHORIZING THE ASSESSEE TO OBTAIN FROM THE COMPANY INTEREST FREE DEPOSIT UP TO RS.50 LAKHS AS AND WHEN REQUIRED. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1999-2000, THE ASSESSEE OBTAINED FROM THE COMPANY A SUM OF RS.20,7 5,000 BY WAY OF SECURITY DEPOSIT. OUT OF THE AMOUNT, A SUM OF RS.20 LAKHS WA S SUBSEQUENTLY RETURNED BY THE ASSESSEE TO THE COMPANY. IN THE ASSESSMENT MADE FOR 19992000 THE ASSESSING OFFICER ADDED THE SUM OF RS. 20,75, 000 AS DEEMED D IVIDEND. THIS WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE H IGH COURT HELD, ALLOWING THE APPEAL, THAT FOR RETAINING THE B ENEFIT OF LOAN AVAILED OF FROM THE BANK, IF DECISION WAS TAKEN TO GIVE ADVANCE TO THE ASSESSEE SUCH DECISION WAS NOT TO GIVE GRATUITOUS ADVANCE TO ITS SHAREHOLDER BUT TO P ROTECT THE BUSINESS INTEREST OF THE COMPANY. THE SUM OF RS.20,75,000 COULD NOT BE TREAT ED AS DEEMED DIVIDEND,' 07.4 SINCE IN THE PRESENT CASE ALSO, THE APPELLANT HAS MORTGAGED HIS PROPERTY TO VARIOUS BANKS AND OBTAINED LOANS FOR THE BUSINESS O F THE COMPANY. EVEN THOUGH THERE IS A PERSONAL ELEMENT OF INDIVIDUAL BENEFIT T O THE APPELLANT, THE COMPANY FROM WHICH THE ADVANCES WERE TAKEN ALSO BENEFITED BY USI NG THE PROPERTY AS COLLATERAL SECURITY TO THE BANK. THUS, AS OBSERVED BY THE HON' BLE CALCUTTA HIGH COURT THAT THE LOAN OR ADVANCE GIVEN IN RETURN TO AN ADVANTAGE CON FERRED UPON THE COMPANY BY A SHAREHOLDER IS NOT A GRATUITOUS LOAN OR ADVANCE GIV EN BY THE COMPANY AND DOES NOT COME UNDER THE PURVIEW OF SECTION 2(22)(E). IN VIEW OF THE ABOVE, THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND BY THE ASSESSING OFFICER IS ORDERED TO BE DELETED FOR AYS 2005-06 TO 2011-12. SINCE TH E ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT, THE MATTER RELATING TO THE APPELLANTS REMUNERATION DOES NOT ARISE. 18. THE CIT(A) HAS CONSIDERED THE ISSUE IN DETAIL A ND HELD THAT THE TRANSACTION BETWEEN THE ASSESSEE AND HIS COMPANY ARE NOT COMING WITHIN THE MEANING OF LOANS AND ADVANCES AS DEFINED U/S 2(22)(E) OF THE ACT. T HE FACTS REMAIN UNCHANGED. THE REVENUE HAS FAILED TO BROUGHT ON RECORD ANY EVIDENC ES TO PROVE THAT THE FINDINGS OF THE FACT RECORDED BY THE CIT(A) IS INCORRECT. THER EFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED ADDITIONS MADE TOWARDS D EEMED DIVIDEND UNDER THE ITA NOS.437 TO 440 & 443 TO 446 /VIZAG/2013 SRI BHASHYAM RAMAKRISHNA, GUNTUR 28 PROVISIONS OF SECTION 2(22)(E) OF THE ACT. WE DO N OT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPH OLD THE CIT(A) ORDER AND DISMISS THE APPEAL FILED BY THE REVENUE. 20. IN THIS VIEW OF THE MATTER AND ALSO CONSIDERING THE RATIO OF THE COORDINATE BENCH, IN THE CASE OF SHRI HARI PRASAD B HARARIA VS. DCIT (SUPRA), WE ARE OF THE VIEW THAT THE TRANSACTION BE TWEEN THE ASSESSEE AND HIS COMPANY IS NOT A GRATUITOUS PAYMENT, WHICH FALLS UNDER THE AMBIT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THEREFORE, WE DIRECT THE A.O. TO DELETE ADDITIONS MADE TOWARDS DEEMED DI VIDEND. 21. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E IN ITA NOS.438 TO 440/VIZAG/2013 FOR THE ASSESSMENT YEARS 2007-08, 20 08-09 & 2009-10 ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 TH MAY17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 05.05.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI BHASHYAM RAMAKRISHNA, 4-4-10 5, 3 RD LANE, CHANDRAMOULINAGAR, GUNTUR 2. / THE RESPONDENT DCIT, CENTRAL CIRCLE, VIJAYAWAD A 3. + / THE CIT (CENTRAL), HYDERABAD 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER