Sh. Amit Jindal, Chandigarh V. DCIT, Chandigarh

ITA 44/CHANDI/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6401 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-11-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHISH GUPTA
• Keywords: Unexplained cash credit; Unexplained expenditure; Business expenditure; Search and seizure; Document seized; Charitable institution; Share purchase agreement; Opportunity of being heard; Peak credit; Deemed to accrue or arise in india; Additional evidence; Deemed dividend; Commercial expediency; Documents seized
• Section: 271(1)(c); 143(3); 2(22)(e); 40(a)(ia); 12A; 12AA; 201(1); 68; 69; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , !' #! $ % , &' BEFORE: SHRI SANJAY GARG, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NOS.44 TO 47/CHD/2014 / ASSESSMENT YEARS : 2006-07 TO 2009-10 SH.AMIT JINDAL, PROP. M/S SPICY PRODUCTS R/O HOUSE NO.21, NAC MANIMAJRA, CHANDIGARH THE D.C.I.T., CENTRAL CIRCLE-1, CHANDIGARH. ./PAN NO: ACGPJ8215N /APPELLANT /RESPONDENT ./ ITA NO.108/CHD/2014 / ASSESSMENT YEARS : 2007-08 THE D.C.I.T., CIRCLE-1, CHANDIGARH. SH.AMIT JINDAL, PROP. M/S SPICY PRODUCTS R/O HOUSE NO.21, NAC MANIMAJRA, CHANDIGARH ./PAN NO: ACGPJ8215N /APPELLANT /RESPONDENT & ./ ITA NO.1171/CHD/2016 / ASSESSMENT YEAR : 2007-08 SH.AMIT JINDAL, PROP. M/S SPICY PRODUCTS R/O HOUSE NO.21, NAC MANIMAJRA, CHANDIGARH THE D.C.I.T., CENTRAL CIRCLE-1, CHANDIGARH. ./PAN NO: ACGPJ8215N /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADV. ! / REVENUE BY : SHRI ASHISH GUPTA, CIT DR '# $ /DATE OF HEARING : 12.11.2018 %&'(# /DATE OF PRONOUNCEMENT: 18.01.2019 &( /ORDER PER ANNAPURNA GUPTA, AM : ALL THE ABOVE APPEALS PERTAIN TO THE SAME ASSESSEE. THE APPEALS IN ITA NOS.44 TO 47 & 108/CHD/2014 HAVE BEE N FILED ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 2 AGAINST THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL), GURGAON (IN SHORT CI T(A) DATED 27.11.2013 PASSED U/S 250 (6) OF THE INCOME T AX ACT, 1961 (IN SHORT REFERRED TO AS ACT) AND RELATING T O ASSESSMENT YEARS 2006-07 TO 2009-10. FOR A.Y 2007- 08,CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AN D THE REVENUE IN ITA NO. 45 & 108/CHD/14 RESPECTIVELY. TH E APPEAL OF THE ASSESSEE IN ITA NO.1171/CHD/2016 IS A GAINST THE ORDER OF THE CIT(A) DATED 22.8.2016, RELATING T O A.Y 2007-08,CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT . 2. AT THE OUTSET IT WAS POINTED OUT THAT SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 15.7.2008 AT THE RESIDEN TIAL AND BUSINESS PREMISES OF JINDAL GROUP OF CASES AND THE ASSESSEE WAS ALSO COVERED. THAT THEREAFTER ASSESSMENT ORDER WAS PASSED U/S 153B(1)(B) R.W.S. 143(3) OF THE ACT FOR ALL THE IMPUGNED YEARS MAKING SIMILAR ADDITIONS. IT WAS COM MON GROUND THEREFORE THAT COMMON ISSUES AROSE IN ALL TH E SAID APPEALS. THEY WERE THEREFORE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON & CONSOLIDATED ORDER. WE SHALL FIRST BE TAKING UP THE APPEAL OF THE ASSES SEE IN ITA NO.44/CHD/2014. ITA NO.44/CHD/2014 (A.Y. 2006-07): 3. GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE READ AS UNDER: ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 3 1. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN DISMIS SING THE GROUNDS OF APPEAL PERTAINING TO OBJECTION OF ASSESSEE WITH REGARD TO REFERENCE TO THE SPECIAL AUDITOR IN TERMS OF SECTION 142 (2A). 2. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDE RING THAT THE CONDITIONS FOR REFERENCE TO THE SPECIAL AUDIT HAVE NOT BEEN FULFILLED AND SINCE THE ASSESSEE HAD NOT BEEN MAINTAINING ANY PERSONAL BOOKS OF ACCOUNTS, NO COMPLEXITY WAS THERE FOR THE PURPOSE OF REFERRING THE CASE TO THE SPECIAL AUDIT AND, AS SUCH, THE ASSESSMEN T HAVING BEEN COMPLETED BEYOND THE LIMITATION TIME DESERVES TO BE QUASHED. 4. THE SAID GROUNDS WERE NOT PRESSED BEFORE US AND ARE, THEREFORE, TREATED AS DISMISSED. 5. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UNDE R: 3. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) AMOUNTING TO RS.69,998/- (OUT OF RS.1,48,998/-) IN RESPECT OF AM OUNT SHOWN AS ALLEGED ADVANCE TO THE ASSESSEE IN DIFFERENT COMPANIES. 6. THE ABOVE GROUND IS IN RELATION TO THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND THE BRIEF FACTS REL ATING TO THE ISSUE ARE THAT THE ASSESSEE WAS DIRECTED TO GET HIS ACCOUNTS AUDITED FROM THE DULY APPOINTED SPECIAL AUDITOR U/S 142(2A) OF THE ACT. THE SPECIAL AUDITOR POINTED OUT IN ITS REPORT THAT THE ASSESSEE WAS A SHAREHOLDER IN A NUM BER OF COMPANIES HAVING SUBSTANTIAL INTEREST AND THESE COM PANIES HAD GIVEN LOANS TO THE ASSESSEE OR THE CONCERNS IN WHICH THE ASSESSEE HAD SUBSTANTIAL INTEREST. THE DETAILS OF THESE LOANS AS REPRODUCED AT PAGE 4 OF THE ASSESSMENT ORD ER ARE AS UNDER: 8. IT WAS POINTED OUT BY THE SPECIAL AUDITOR THAT T HE ASSESSEE WAS A SHAREHOLDER IN NUMBER OF COMPANIES IN WHICH THE ASSESSEE HAD A SUBSTANTIAL INTEREST. THES E COMPANIES HAD GIVEN LOANS TO THE ASSESSEE OR TO THE CONCE RNS IN ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 4 WHICH THE ASSESSEE HAD SUBSTANTIAL INTEREST. THE DET AILS OF THESE LOANS ARE AS UNDER: COMPANY WHICH IS GIVING LOAN SUBSTANTIAL INTEREST OF THE ASSESSES IN THE SAID COMPANY (MINIMUM1 0% REQUIRED) LIST OF SUBSTANTIAL INTERESTED SHAREHOLDERS IN THE COMPANY WHICH IS G IVING LOAN LOAN GIVEN TO THE ASSESSEE OR TO ANY CONCERN IN WHICH ASSESSEE IS SUBSTANTIALLY INTERESTED. ASSESSEE'S INTEREST IN SAID CONCERN LOAN AMOUNT GIVEN BEING TREATED AS DEEMED DIVIDEND U/S 2(22)(E) PROPORTIONATE SHARE OF DEEMED DIVIDEND ON THE BASIS OF SHAREHOLDING AMONG THE SUBSTANTIALLY INTERESTED SHAREHOLDERS IN THE COMPANY 600/5800 SHARE =10.34% AMIT JINDALS = 600 SHARES HEERA MOTI SPICY PRODUCTS 100% 50000 50000 HEERA MOTI HEALTH CARE PRODUCT LTD. (ACCUMULATED PROFITS OF 3740308) 600 / 5800 SHARES = 10.34% URMIL JINDAL = 1000 SHARES, AMIT JINDAL = 600 SHARES, SUNITA JINDAL = 600 SHARES, ROSHAN LAL JINDAL = 1200 SHARES HIRAMOTI AGRO PRODUCTS 20% 113322 19998 600 / 5800 SHARES = 10.34% AMIT JINDAL = 600 SHARES, ASHOK JINDAL = 1200 SHARES, ROSHAN LAL JINDAL = 1200 SHARES SWAMI DEVI DAYAL HI- TECH EDUCATION SOCIETY MEMBER 395000 79000 TOTAL 1,48,998 7. THE A.O. HELD THAT AS PER THE AFORESAID DETAILS, THE CONDITIONS ENUMERATED IN SECTION 2(22)(E) OF THE AC T, OF THE IMPUGNED PAYMENTS BEING IN THE NATURE OF DEEMED DIV IDEND, STOOD FULLY SATISFIED IN THE CASE OF THE ASSESSEE A ND CONFRONTED THE SAME TO THE ASSESSEE. IN RESPONSE, D UE REPLY WAS FILED BY THE ASSESSEE STATING THAT THE IMPUGNED ADVANCE DID NOT QUALIFY AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT SINCE THEY HAD BEEN MADE OUT OF BUSINESS EXPEDIENCY AND IN THE ORDINARY COURSE OF BUSINESS. FINDING THE SAID EXPLANATION UNACCEPTABLE AND NOT SUPPORTED BY ANY EVIDENCE, THE A.O. TREATED AN AMOUNT OF RS.1,48,998 /- AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE, AS PE R SECTION 2(22)(E) OF THE ACT, AND SUBJECTED THE SAME TO TAX. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 5 8. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.C IT(A) WHO, UPHELD THE AMOUNT ADVANCED TO M/S HEERA MOTI S PICY PRODUCTS & M/S HEERA MOTI AGRO PRODUCTS BY M/S HEE RA MOTI HEALTH CARE PRODUCT LTD., AMOUNTING TO RS.69,9 98/- IN ALL OUT OF THE IMPUGNED ADVANCE, AS DEEMED DIVIDEND , WHILE THE AMOUNT ADVANCED TO SWAMI DEVI DAYAL HI-TECH EDUCATION SOCIETY OF RS.79,000/- WAS TREATED TO BE OUTSIDE THE SCOPE OF SECTION 2(22)(E) OF THE ACT AND ADDITI ON MADE ON THIS ACCOUNT WAS DELETED. 9. AGGRIEVED BY THE ADDITION UPHELD BY THE CIT(A) T HE ASSESSEE HAS COME UP IN APPEAL BEFORE US. DURING TH E COURSE OF HEARING BEFORE US THE LD. COUNSEL FOR ASS ESSEE REITERATED THE CONTENTIONS MADE BEFORE THE LOWER AU THORITIES STATING THAT THE AMOUNT GIVEN TO M/S HERO MOTI SPIC Y PRODUCTS AND M/S HERA MOTI AGRO PRODUCTS WAS NOT IN THE NATURE OF ANY LOANS OR ADVANCES BUT WAS DONE ONLY I N A SITUATION WHERE THE BANK BALANCE WAS SHORT IN ONE O F THE BANK ACCOUNT OF GROUP CONCERNS AND THERE WAS NEED T O COVER THE BANK BALANCE IN ORDER TO HONOUR THE CHEQU E. IT WAS CONTENDED THAT THE AMOUNT WAS GIVEN IN ORDER TO AVOID ANY LOSS OF GOODWILL OF THE CONCERN AND THUS THE TR ANSACTION WAS ON ACCOUNT OF COMMERCIAL EXPEDIENCY ONLY BEING IN THE NATURE OF FINANCIAL HELP BY ONE CONCERN TO ANOTHER IN THE GROUP. RELIANCE WAS PLACED IN THIS REGARD ON THE JU DGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF BRIGHT ENTERPRISES PVT. LTD. VS. CIT (2016), 381 IT R 107 (P&H) POINTING OUT THEREFROM THAT IT WAS HELD IN TH E SAID ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 6 JUDGMENT THAT NOT ONLY THE PURCHASE AND SALE TRANSA CTIONS AMOUNTED TO BUSINESS TRANSACTIONS BUT ALSO WHERE ON E CONCERN ADVANCES MONEY TO OTHER CONCERN TO TIDE OVE R CERTAIN DIFFICULTIES IT WOULD BE TREATED AS COMMERC IAL EXPEDIENCY. THE LD. COUNSEL FOR ASSESSEE FURTHER ST ATED THAT THOUGH THE JUDGMENT WAS RENDERED IN THE CONTEXT OF SECTION 36(1)(III) BUT THE PRINCIPLE LAID DOWN IN THE SAID JUDGMENT THAT HELPING GROUP COMPANIES BY WAY OF PROVIDING FU NDS WAS IN THE NATURE OF COMMERCIAL EXPEDIENCY WAS RELE VANT FOR THE PURPOSE OF SECTION 2(22)(E) OF THE ACT ALSO. RE LIANCE WAS ALSO PLACED ON THE FOLLOWING JUDGMENTS WHEREIN THE LD. COUNSEL FOR ASSESSEE POINTED OUT, IT WAS HELD THAT WHERE TRANSACTIONS ARE IN THE NATURE OF COMMERCIAL EXPEDI ENCY, THERE IS NO QUESTION OF DEEMED DIVIDEND: 1) CIT VS. CREATIVE DYEING & PRINTING P. LTD., 318 ITR 476 2) M/S BAGMANE CONSTRUCTIONS PVT. LTD. VS. ACIT, ITA NO.446/BANG/2010 10. COPIES OF THE ORDERS WERE ALSO PLACED BEFORE US AND IT WAS POINTED OUT THAT AGAINST THE DECISION OF THE HO N'BLE DELHI HIGH COURT IN THE CASE OF CREATIVE DYEING & P RINTING P. LTD. (SUPRA) THE REVENUE HAD GONE IN APPEAL BEFO RE THE HON'BLE SUPREME COURT, WHICH HAD IN TURN DISMISSED THE SLP FILED BY THE REVENUE. THE LD. COUNSEL FOR ASSES SEE FURTHER DREW OUR ATTENTION TO THE SUBMISSIONS MADE PROVING COMMERCIAL EXPEDIENCY OF THE TRANSACTIONS A S REPRODUCED IN PARA 8.4 OF THE ASSESSMENT ORDER AS U NDER: 8.4 IN RESPONSE TO THE SAID SHOW CAUSE NOTICE, THE COUNSEL OF THE ASSESSEE VIDE ITS LETTER NO. NIL DATED 06.06.2 011 FIELD A WRITTEN REPLY. IN THE WRITTEN SUBMISSION THE ASSES SEE ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 7 REITERATED THAT THE AMOUNTS DEBITED TO THE FIRM M/S HEERA MOTI AGRO PRODUCTS, IN THE BOOKS OF THE COMPANY M/S H EERA MOTI HEALTH CARE PRODUCT LTD & M/S HIMLAND AGRO FOOD S (INDIA) LTD WERE PROVIDED OUT OF COMMERCIAL/ BUSINESS EXPEDIENCIES AND THERE WAS NO INTENTION OF PROVIDING A L OAN OR ADVANCE. IT WAS FURTHER SUBMITTED THAT THE AMOUNT S PROVIDED TO THE FIRMS IN WHICH SMT. URMIL JINDAL IS PARTNER HAVE NOT BEEN PERSONALLY WITHDRAWN BY SMT. URMIL JINDA L. NO INDIVIDUAL BENEFIT HAS BEEN OBTAINED BY SMT. URMIL JINDAL. THE ASSESSEE SUBMITTED THAT THE ENTRIES IN THE BOOKS OF ACCOUNTS NEED TO BE EXAMINED. THE ASSESSEE PRODUCED THE LEDGE R ACCOUNTS OF THE FOLLOWING PARTIES AND MADE THE FOLLO WING SUBMISSIONS. A PERUSAL OF LEDGER A/C OF M/S HEERA MOTI SPICY PRO DUCTS IN THE BOOKS OF M/S HEERA MOTI HEALTH CARE PRODUCTS LTD. R EVEALS THAT FUNDS AMOUNTING TO RS 50,000/- HAVE BEEN TRANSFERRE D, TO OBC A/C OF M/S HEERA MOTI SPICY PRODUCTS BY THE COMPANY . A PERUSAL OF BANK A/C OBC OF M/S HEERA MOTI SPICY P RODUCTS REVEALS THAT FUNDS WERE TRANSFERRED, TO M/S HEERA M OTI SPICY PRODUCTS TO KEEP THE CASH CREDIT A/C WITHIN LIMIT A ND TO CLEAR THE CHEQUES /DRAFTS ISSUED BY M/S HEERA MOTI SPICY PROD UCTS. A PERUSAL OF LEDGER A/C OF M/S HEERA MOTI AGRO PROD UCTS IN THE BOOKS OF M/S HEERA MOTI HEALTH CARE PRODUCTS LTD. R EVEALS THAT FUNDS AMOUNTING TO RS 75,000/- HAVE BEEN TRFD, TO O BC A/C OF M/S HEERA MOTI AGRO PRODUCTS BY THE COMPANY. A PERUSAL OF BANK A/C OBC OF M/S HEERA MOTI AGRO PR ODUCTS REVEALS THAT FUNDS WERE TRFD TO M/S HEERA MOTI AGRO PRODUCTS TO KEEP THE CASH CREDIT A/C WITHIN LIMIT AND TO CLEAR THE CHEQUES /DRAFTS ISSUED BY M/S HEERA MOTI AGRO PRODUCTS. BALANCE ENTRIES AMOUNTING TO RS 38,322/- ARE JUST T RANSFER ENTRIES BECAUSE OF COMMON PARTIES IN BOTH THE BOOKS A ND ARE JUST ADJUSTMENT ENTRIES NOT INVOLVING ANY ACTUAL FLOW OF CASH FROM THE COMPANY TO THE SHAREHOLDER DURING THE YEAR UNDER CONSIDERATION, RS 3,95,000 WA S ADVANCED TO SWAMI DEVI DAYAL HI-TECH EDUCATION SOCIETY IN TH E BOOKS OF M/S HEERA MOTI HEALTH CARE PRODUCTS LTD. IN THE PRE SENT CASE, THE PAYMENT HAS BEEN MADE TO A CHARITABLE TRUST. AL THOUGH, ASSESEE IS TRUSTEE IN THE TRUST, HE IS NOT ENTITLED TO 20% O R MORE OF THE INCOME OF THE TRUST. THEREFORE, THE BASIC CONDI TION TO TREAT THE AMOUNT AS DEEMED DIVIDEND HAS NOT BEEN FULFILLED. N O PERSONAL BENEFIT HAS BEEN RECEIVED BY THE ASSESSEE. 11. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LOWER AUTHORITIES. DRAWING OUR ATTENTION TO THE FINDINGS OF THE A.O. AT PARA 8.7 OF THE ORDER, LD.D R POINTED OUT THAT UNDISPUTEDLY THE FUNDS HAD BEEN TRANSFERRE D FROM ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 8 THE COMPANY TO THE FIRM AS THERE WAS SHORTAGE OF FU NDS AND THEY WERE, THEREFORE, CLEARLY NOT IN THE NATURE OF TRADE ADVANCES OR ADVANCES GIVEN IN THE ORDINARY COURSE O F BUSINESS AND WERE CLEARLY IN THE FORM OF LOANS AND ADVANCES WHICH WERE COVERED BY SECTION 2(22)(E) OF THE ACT T O BE TREATED AS DEEMED DIVIDEND. OUR ATTENTION WAS DRAWN TO THE RELEVANT FINDINGS OF THE A.O. AT PARA 8.7 OF THE OR DER AS UNDER: 8.7 THE LEDGER ACCOUNTS (COPY ENCLOSED) PRODUCED BY THE ASSESSEE IN SUPPORT ITS CONTENTION REVEAL THE FOLLO WING TRANSACTIONS BETWEEN THE COMPANIES (IN WHICH THE AS SESSEE IS A SUBSTANTIAL SHAREHOLDER) AND THE CONCERNS IN WHICH T HE ASSESSEE IS SUBSTANTIAL PARTNER. A PERUSAL OF LEDGE R ACCOUNT FILED BY THE ASSESSEE AND ADMISSION IN HER WRITTEN REPLY R EVEALS THAT THE TRANSACTIONS BETWEEN THE TWO CONCERNS ARE OF TH E FOLLOWING NATURE: THE FUNDS WERE TRANSFERRED FROM THE COMPANY TO THE FIRM TO KEEP THE KEEP THE CASH CREDIT A/C WITHIN LIMIT. THE FUNDS WERE TRANSFERRED BY THE AWAY OF TRANSFER ENTRIES TRANSFER BECAUSE OF COMMON PARTIES IN BOOKS OF ACCO UNT OF BOTH THE PARTIES THE FUNDS WERE TRANSFERRED TO THE BANK ACCOUNT OF T HE CONCERN BY THE WAY OF BANK TRANSFER OR THROUGH CHEQUES. THE ABOVE INDICATES THAT THE FUNDS HAVE BEEN TRANSF ERRED FROM THE COMPANY TO THE FIRM AS THERE WAS SHOTAGE OF FUNDS, THEREFORE, THESE CAN BE ONLY TREATED AS LOANS AND ADVANCES. THE TRANSACTIONS ARE NOT SIMPLE TRANSFER ENTRIES BU T THROUGH CHEUQES/BANK TRANSFERRED WHICH WERE ISSUED AS FUNDS WERE SHORT OF FIRM. THE TRANSFER OF FUNDS HAS NOT BEEN DO NE IN THE ORDINARY COURSE OF BUSINESS. IN THIS REGARD THE ASSESSE E FAILED TO DEMONSTRATE THAT ADVANCES WERE TRADE ADVANCES AN D WERE DONE TO THE ORDINARY COURSE OF BUSINESS. A PERUSAL OF LEDGER ACCOUNT SHOWS THAT THERE HAS NOT BEEN ANY PURCHASE /SALE BETWEEN THE TWO PARTIES. MERE ASSERTION BY THE ASSES SEE LOAN WERE PROVIDED OUT COMMERCIAL AND BUSINESS EXPEDIENC Y IS NOT ENOUGH. THE ONUS LIES THE ASSESSEE TO PROVIDE THE N ECESSARY PROOF TO THIS EFFECT. AS THE ASSESSEE HAS CONTENDED THAT THE THERE WAS NO INTENTION OF PROVIDING OF LOANS AND AD VANCE CAN NOT BE ACCEPTED. THE DEPARTMENT HAS TO LOOK INTO TH E ACTUAL TRANSACTION WHATEVER BE THE 'INTENTION'. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT DURING THE YEAR UND ER CONSIDERATION, THE MONEY WAS ADVANCED TO SWAMI DEVI DYAL HI TECH EDUCATION ACADEMY IN THE BOOKS OF M/S HEERA MO TI HEALTH CARE PRODUCTS LTD. AND PAYMENT HAS BEEN MADE TO ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 9 CHARITABLE TRUST. THE ASSESSEE HAS NOT DERIVED ANY PERSONAL BENEFIT. IT IS ALSO SUBMITTED THAT THE ASSESSEE IS NOT ENTITLED TO 20% OR MORE OF THE INCOME OF THE SOCIETY. IN THIS RE GARD IT MAY BE MENTIONED THAT THE ACCOUNTS AND THE DOCUMENTS SE IZED DURING THE COURSE OF SEARCH SHOW THAT THE FUNDS OF THE SOCIETY HAVE BEEN UTILIZED BY THE MEMBERS OF THE SOCIETY AN D THEIR FAMILY MEMBERS. THEREFORE THE CONTENTION OF THE ASSESS EE THAT NO PERSONAL BENEFIT HAS BEEN DERIVED BY THE ASSESSEE I S NOT CORRECT. 12. THE LD. DR FURTHER POINTED OUT THAT THE DECISIO N OF THE HON'BLE DELHI HIGH COURT RELIED UPON BY THE LD. COU NSEL FOR ASSESSEE IN THE CASE OF CREATIVE DYEING & PRINTING P. LTD. (SUPRA) HAD BEEN DISTINGUISHED BY THE A.O. STATING THAT IN THE SAID CASE THE ADVANCE HAD BEEN GIVEN IN THE ORD INARY COURSE OF BUSINESS AND HAD, THEREFORE, BEEN TREATED AS BUSINESS ADVANCES NOT COVERED U/S 2(22)(E) OF THE A CT BY THE HON'BLE HIGH COURT, WHILE IN THE PRESENT CASE, THE ASSESSEE HAD FAILED TO DEMONSTRATE THAT THE TRANSACTION WAS IN THE ORDINARY COURSE OF BUSINESS. 13. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND GONE THROUGH TH E CASE LAWS REFERRED TO BEFORE US. THE ISSUE BEFORE US REL ATES TO THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WHICH DEF INES THE TERM DIVIDEND AND AS PER THE SAID CLAUSE ANY PAYM ENT MADE BY A COMPANY BY WAY OF ADVANCE OR LOANS TO A SHAREHOLDER WHO IS THE BENEFICIAL OWNER OF SHARES H OLDING NOT LESS THAN 10% OF VOTING POWER OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER HAVING SUBSTANTI AL INTEREST IS TO BE TREATED AS DIVIDEND. THUS THE QUA LIFYING CONDITIONS FOR TREATING ANY PAYMENT IS DIVIDEND AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE; I) THE PAYMENT IS IN THE NATURE OF LOAN OR ADVANCE ; ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 10 II) THE PAYMENT IS MADE TO A SHAREHOLDER WHO HAS NO T LESS THAN 10% VOTING POWER INTEREST HE COMPANY; III) OR THE PAYMENT IS MADE TO ANOTHER COMPANY IN WHICH SUCH SHAREHOLDER HAS SUBSTANTIAL INTEREST, WHICH HAS BEEN DEFINED AS BEING BENEFICIAL AND ENTI TLED TO NOT LESS THAN 20% INCOME OF THE SAID COMPANY. 14. THE PRESENT CASE BEFORE US FALLS IN THE THIRD C ATEGORY, THE LOANS AND ADVANCES HAVING BEEN MADE BY A COMPAN Y IN WHICH THE ASSESSEE HAS BENEFICIAL INTEREST TO ANOTH ER COMPANY IN WHICH THE ASSESSEE HAS SUBSTANTIAL INTER EST. THE FACT OF THE ASSESSEE BEING A BENEFICIAL SHAREHO LDER IN THE COMPANY GIVING THE LOANS AND ADVANCES AND A SUBSTANTIAL SHAREHOLDER IN THE COMPANY RECEIVING TH E LOANS/ADVANCES IS NOT DISPUTED. THE ONLY DISPUTE BE FORE US IS VIS--VIS THE NATURE OF THE AMOUNT GIVEN. IT IS ALSO NOT DISPUTED BY BOTH THE PARTIES THAT THE LOANS AND ADV ANCES WHICH QUALIFY AS DEEMED DIVIDEND U/S 2(22)(E) OF T HE ACT DO NOT INCLUDE THOSE GIVEN IN THE ORDINARY COURSE OF B USINESS OR WHICH ARE IN THE NATURE OF BUSINESS ADVANCES. TH E SOLE DISPUTE BEFORE US IS WHETHER THE AMOUNT ADVANCED IN THE PRESENT CASE QUALIFY AS BUSINESS ADVANCES OR NOT. W HILE THE CONTENTION OF THE ASSESSEE IS THAT THE IMPUGNED TRA NSACTION HAS TAKEN PLACE BETWEEN THE GROUP CONCERNS TO TIDE OVER SHORT TERM FINANCIAL DIFFICULTIES AND TO KEEP THE C ASH CREDIT ACCOUNT WITHIN LIMIT AND CLEAR THE CHEQUES AND DRAF TS ISSUED, WHICH SHOWED THAT THE ADVANCES WERE FOR COMMERCIAL PURPOSES/BUSINESS ONLY, THE CONTENTION O F THE REVENUE, ON THE OTHER HAND, WAS THAT THE AMOUNTS HA VING BEEN ADVANCED FOR MEETING SHORT TERM DEFICIENCY OF FUNDS, ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 11 WERE CLEARLY IN THE NATURE OF LOANS AND ADVANCES AS STATED IN SECTION 2(22)(E) OF THE ACT AND WERE NOT IN THE NATURE OF TRADE ADVANCES GIVEN IN THE ORDINARY COURSE OF BUSI NESS AND THERE WERE NO PURCHASE OR SALE TRANSACTION BETWEEN THE TWO PARTIES, NOR ANY AGREEMENT FOR MAKING THE IMPUGNED ADVANCES AND, THEREFORE, THE SAME DID NOT QUALIFY AS A BUSINESS ADVANCE. 15. THE FACT THAT THE ADVANCES WERE MADE TO THE CO NCERNS WHICH FELL IN THE SAME GROUP I.E. JINDAL GROUP OF C ASES, HAS NOT BEEN DISPUTED AND, THEREFORE, ALSO, THE FACT TH AT THE DIRECTORS AND SHAREHOLDERS IN THE SAID CONCERNS WER E COMMON. THAT THE BUSINESS INTEREST OF ALL THE CONCE RNS WAS INTERRELATED CAN BE SAFELY DERIVED FROM THE ABOVE F ACT. ALSO NOT DISPUTED IS THE FACT THAT THE IMPUGNED ADVANCES WERE GIVEN TO KEEP THE CASH CREDIT ACCOUNT OF THE RECEIV ER IN LIMIT AND THUS CLEAR THE CHEQUES ISSUED BY IT. IN THE LI GHT OF THE SAID FACTS, WE AGREE WITH THE LD. COUNSEL FOR ASSES SEE THAT THE ADVANCES GIVEN BY ONE CONCERN TO ANOTHER CONCER N TO TIDE OVER SHORT TERM DEFICIENCY OF FUNDS WAS IN THE NATURE OF COMMERCIAL EXPEDIENCY SINCE THE FINANCIAL POSITION OF ALL THE GROUP CONCERNS WERE INTERRELATED AND INTERLINKE D AND UNDISPUTEDLY THE GOODWILL OF THE GROUP ALSO RESTED ON THE FINANCIAL RESULTS AND STABILITY OF THE ALL GROUP CO NCERNS. ANY FINANCIAL INSTABILITY IN ONE COMPANY EFFECTING ITS RESULTS WOULD HAVE IMPACTED THE GOODWILL AND ULTIMA TELY THE BUSINESS OF THE OTHER CONCERNS IN THE GROUP. THEREF ORE THE ADVANCES MADE IN THE PRESENT CASE TO TIDE OVER SHOR T TERM ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 12 DEFICIENCIES OF FUND ,IN OUR VIEW ,QUALIFIED AS AD VANCES FOR BUSINESS PURPOSE. WE DRAW SUPPORT TO OUR ABOVE VIEW FROM THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COU RT IN THE CASE OF BRIGHT ENTERPRISES PVT. LTD. (SUPRA), A S POINTED OUT BY THE LD. COUNSEL FOR ASSESSEE, WHEREIN IT HAS BEEN HELD THAT HELPING THE GROUP CONCERNS BY WAY OF PROV IDING FUNDS IS PURELY IN THE NATURE OF COMMERCIAL EXPEDIE NCY. THE RELEVANT FINDINGS OF THE HON'BLE HIGH COURT IN THIS REGARD ARE AS UNDER: THE FOLLOWING FACTS, THEREFORE, STAND ESTABLISHED. M/S KOLKATTA HOTELS PRIVATE LIMITED IS A SISTER CONCERN OF T HE APPELLANT BY VIRTUE OF THE APPELLANT HOLDING 88.75% OF ITS EQUITY SHARES. THE APPELLANT INVESTED A HUGE AMOUNT O F ABOUT RS.18 CRORES IN THE SISTER CONCERN. THE APPELLANT AND ITS SISTER CONCERN ARE IN THE SAME BUSINESS. FOR THE POINT UNDE R CONSIDERATION, IT MAY NOT HAVE MADE ANY DIFFERENCE EV EN IF THEY WERE NOT IN THE SAME BUSINESS. HOWEVER, THE FACT THAT THEY ARE IN THE SAME BUSINESS IS A FURTHER ASPECT I N THE APPELLANTS FAVOUR. THE PARTIES ADMIT THAT THE APPELLANT ADVANCED THE SAID SUM OF ABOUT RS.10.29 CRORES TO TH E APPELLANTS SISTER CONCERN FREE OF INTEREST. THE SHARE PURCHASE AGREEMENT AND IN PARTICULAR ARTICLE-3, CLAUSE 3.3(B) IND ICATES THAT THE APPELLANT HAD TO PAY VARIOUS AMOUNTS TOWARD S DISCHARGING THE LIABILITIES OF THE SISTER CONCERN IN CLUDING TOWARDS VOLUNTARY RETIREMENT SCHEME UNDER IMPLEMENTATI ON BY ITDC TO ITS EMPLOYEES, DUES OF THE MUNICIPALITY, ELECT RICITY CHARGES AND LEASE RENT. 9. WHETHER THE AMOUNT OF RS.10.29 CRORES WAS DEBITED TO THE ACCOUNT OF THE SISTER CONCERN IN RESPECT OF THE PAY MENT MADE UNDER CLAUSE 3.3(B) OF ARTICLE 3.1 OF THE SHARE PURCHAS E AGREEMENT OR WHETHER THE AMOUNT WAS ACTUALLY PAID TO THE SISTER CONCERN AND USED BY IT FOR THE PURPOSE OF BUS INESS, IS IMMATERIAL. EITHER WAY THE AMOUNT WAS USED FOR THE BUSIN ESS OF THE SISTER CONCERN. IT IS NOT EVEN SUGGESTED THA T THE ADVANCE WAS USED BY THE SISTER CONCERN FOR ANY PURPOSE OTHE R THAN FOR THE PURPOSES OF ITS BUSINESS. NOR WAS SUCH A CASE RA ISED BEFORE US. THE DOUBT, IF ANY, IS SET AT REST BY THE MEMORANDUM O F APPEAL AND THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT BEF ORE THE CIT (APPEALS). AS MR. JAIN RIGHTLY POINTED OUT, IN THE MEMORANDUM OF APPEAL, THE APPELLANT EXPRESSLY STATED TH AT IT HAD ADVANCED THE AMOUNT OF ABOUT RS.10.29 CRORES TO IT S SISTER CONCERN AS A MEASURE OF COMMERCIAL EXPEDIENCY FOR THE PURPOSE OF BUSINESS. IN THE WRITTEN SUBMISSIONS, THE A PPELLANT ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 13 INTER ALIA STATED THAT THE APPELLANT AND THE SISTER C OMPANY WERE IN THE HOTEL BUSINESS; THAT THE BOARD OF DIRECTO RS OF THE TWO COMPANIES WAS THE SAME; THAT THE APPELLANT PURCHA SED THE SHARES OF THE SISTER COMPANY AS AN INVESTMENT AN D THAT THE INVESTMENT AND ADVANCES WERE MADE FOR THE PURPO SES OF BUSINESS. FROM THE ORDER OF THE CIT (APPEALS), IT IS EVIDENT TH AT THE DEPARTMENT NEVER CONTENDED THAT THE AMOUNTS WER E NOT ADVANCED FOR COMMERCIAL EXPEDIENCY. NOR WAS IT CONTEND ED THAT THE AMOUNTS ADVANCED WERE USED BY THE SISTER C OMPANY FOR ANY PURPOSE OTHER THAN FOR THE PURPOSE OF ITS B USINESS. INDEED, SUCH A CASE WAS NOT EVEN ADVANCED BEFORE THE TRIBUNAL. 10. THE CIT (APPEALS) WAS, THEREFORE, ENTIRELY JUSTIFIE D IN COMING TO THE CONCLUSION THAT THE AMOUNT WAS ADVANCE D BY THE APPELLANT TO ITS SISTER CONCERN ON ACCOUNT OF COM MERCIAL EXPEDIENCY AND THAT THE ADVANCE WAS USED BY ITS SIST ER CONCERN FOR THE PURPOSES OF ITS BUSINESS. THE ADDITI ONAL FACTS FURTHER ESTABLISH THE FINDINGS. 11. THE TRIBUNALS OBSERVATION THAT THERE IS NOTHING O N RECORD THAT THE MONEY ADVANCED BY THE APPELLANT TO ITS SISTE R COMPANY HAD BEEN USED AS A MEASURE OF COMMERCIAL EXPEDIENCY, WAS NOT JUSTIFIED. THE APPELLANT FURNISHED ALL THE DOCUMENTS IN THIS REGARD. THE APPELLANT EXPRESSLY STAT ED THAT THE AMOUNTS HAD BEEN UTILIZED FOR COMMERCIAL ACTIVITY. THIS ASSERTION WAS NEVER DENIED. THE APPELLANT WAS NOT REQ UIRED TO DO ANYTHING FURTHER TO ESTABLISH ITS ASSERTION T HAT ITS SISTER COMPANY HAD UTILIZED THE AMOUNTS FOR THE PURPOSES O F ITS BUSINESS. THE FINDING OF THE TRIBUNAL IS NOT BASED ON ANY MATERIAL. IT IS IMPORTANT TO NOTE THAT THE TRIBUNAL HAD N OT EVEN SUGGESTED THAT SUCH A CASE WAS PUT TO THE APPELLANT OR ITS AUTHORIZED REPRESENTATIVE AND THAT DESPITE THE SAME THE APPELLANT FAILED TO ESTABLISH THE SAME. 12. THE VIEW OF THE TRIBUNAL THAT THE CIT (APPEALS) HAD NOT CONSIDERED THE DECISION OF THE SUPREME COURT IN S.A. B UILDERS LTD. VS. COMMISSIONER OF INCOME-TAX (APPEALS) AND ANOTH ER (SUPRA) IN RIGHT SPIRITS AND THAT THE CIT HAD WRONG LY INTERPRETED THE JUDGMENT IS NOT WELL-FOUNDED. IN S.A B UILDER VS. CIT (SUPRA), THE SUPREME COURT OBSERVED:- IT IS TRUE THAT THE BORROWED AMOUNT IN QUESTION WA S NOT UTILIZED BY THE ASSESSEE IN ITS OWN BUSINESS, BUT HAD BEEN ADVANCED AS INTEREST FREE LOAN TO ITS SISTER CONCERN. HOWEVER, IN OUR OPINION, THAT FACT IS NOT REALLY RELEVANT. WHAT IS RELEVANT IS WHETHER THE ASSESSEE ADVANCED SUCH AMOUNT TO ITS SIS TER CONCERN AS A MEASURE OF COMMERCIAL EXPEDIENCY . (EMPHASIS SUPPLIED) IT IS PRECISELY THIS TEST THAT WAS APPLIED BY THE CIT (A PPEALS). 13. THE COMMERCIAL EXPEDIENCY IN ADVANCING THE AMOUNT IS ESTABLISHED BEYOND DOUBT. THE APPELLANT OWNS ABOUT 8 9% OF THE EQUITY CAPITAL. A DIVISION BENCH OF THIS COURT IN C IT VS. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 14 MARUDHAR CHEMICALS & PHARMACEUTICALS (P) LTD., (2009) 319 ITR 75 (P&H) HELD:- 15. SECTION 36(1)(III) OF THE ACT PROVIDES THAT THE AMOUNT OF THE INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION HAS TO BE ALLO WED AS A DEDUCTION IN COMPUTING THE INCOME UNDER SECTION 2 8 OF THE ACT. THE EXPRESSION FOR THE PURPOSE OF BUSINESS HA S BEEN HELD TO BE WIDER IN SCOPE THAN THE EXPRESSION FOR T HE PURPOSE OF EARNING INCOME, PROFITS OR GAINS. IT HAS BEEN HELD IN S.A. BUILDERS LTD.'S CASE (SUPRA) THAT WHEN THE ASSESSEE B ORROWED THE FUND FROM THE BANK AND LENT SOME OF IT TO ITS SIS TER CONCERN AS AN INTEREST FREE LOAN, THEN THE REAL TEST TO ALLOW TH E INTEREST AS DEDUCTION UNDER SECTION 36(1)(III) OF THE ACT IS WH ETHER THIS WAS DONE AS A MEASURE OF COMMERCIAL EXPEDIENCY. IT HAS BEEN HELD THAT IN ORDER TO CLAIM A DEDUCTION, IT IS ENOUGH TO SHOW THAT THE MONEY IS EXPENDED, NOT ON NECESSITY AND WITH A VIEW TO DIRECT AND IMMEDIATE BENEFIT, BUT VOLUNTARILY AND O N ACCOUNT OF COMMERCIAL EXPEDIENCY AND IN ORDER TO INDI RECTLY TO FACILITATE THE CARRYING ON THE BUSINESS. THE EXPRESSIO N COMMERCIAL EXPEDIENCY IS AN EXPRESSION OF WIDE IMPOR T AND INCLUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN I NCURS FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LEGAL OBLIGATION, BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE IF IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY. IN S.A. BUILDERS LTD.'S CASE (SUPRA), IT WAS HELD THAT IN ORDER TO DECIDE WHETHER IT WAS FOR COMMERCIAL EXPEDIENCY, THE AUTHORITIES AND THE COURTS S HOULD HAVE EXAMINED THE PURPOSE FOR WHICH THE ASSESSEE AD VANCED MONEY TO ITS SISTER CONCERN AND WHAT THE SISTER CONC ERN DID WITH THE MONEY. IT WAS FURTHER HELD THAT IT IS NOT RELEV ANT WHETHER THE ASSESSEE HAS UTILIZED THE BORROWED AMOU NT IN ITS OWN BUSINESS OR HAS ADVANCED THE SAME AS INTEREST F REE LOAN TO ITS SISTER CONCERN. WHAT IS RELEVANT IS WHETHER THE AMOUNT, SO ADVANCED WAS AS A MEASURE OF COMMERCIAL EXPEDIENC Y OR NOT. IT IS NOT NECESSARY THAT THE AMOUNT SO ADVANCED IS EARNING PROFIT OR NOT BUT THERE MUST BE SOME NEXUS BETWEEN EXPENSES AND THE PURPOSE OF BUSINESS. IT IS IMPORTANT TO NOTE THAT THE DIVISION BENCH IN AR RIVING AT ITS CONCLUSION FOLLOWED THE JUDGMENT OF THE SUPREME COURT IN S.A. BUILDERS LTD. VS. COMMISSIONER OF INCOME-TAX (APPEALS) AND ANOTHER (SUPRA). THE DIVISION BENCH, IN FACT, AFTER REM ANDING THE MATTER, EXPRESSLY DIRECTED THE TRIBUNAL TO CONSID ER THE MATTER IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY T HE SUPREME COURT IN S.A. BUILDERS LTD. VS. COMMISSIONER OF INCOME-T AX (APPEALS) AND ANOTHER (SUPRA). 14. THE APPELLANTS CASE MEETS EACH OF THE TESTS STIPU LATED BY THE DIVISION BENCH. IN FACT, IT MEETS A HIGHER TEST. WHEN A HOLDING COMPANY INVESTS AMOUNTS FOR THE PURPOSE OF T HE BUSINESS OF ITS SUBSIDIARY, IT MUST OF NECESSITY BE HE LD TO BE AN EXPENSE ON ACCOUNT OF COMMERCIAL EXPEDIENCY. A FINA NCIAL BENEFIT OF ANY NATURE DERIVED BY THE SUBSIDIARY ON A CCOUNT OF THE AMOUNTS ADVANCED TO IT BY THE HOLDING COMPANY WOU LD NOT ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 15 MERELY INDIRECTLY BUT DIRECTLY BENEFIT ITS HOLDING CO MPANY. IN THE CASE BEFORE US, THE SUBSIDIARY HAD TO BE FUNDED T O A LARGE EXTENT FOR OTHERWISE IT WOULD NOT HAVE SURVIVED. IF IT HAD NOT SURVIVED AND HAD GONE INTO LIQUIDATION, THE APPELLAN T WOULD HAVE SUFFERED DIRECTLY ON ACCOUNT OF AN EROSION OF ITS ENTIRE INVESTMENT IN THE SUBSIDIARY. IN THIS CASE, THE FINAN CIAL ASSISTANCE WAS NOT ONLY PRUDENT BUT OF UTMOST NECESS ITY FOR WITHOUT IT THE SUBSIDIARY WOULD HAVE SUFFERED GRAVE FI NANCIAL PREJUDICE. 15. THE TRIBUNAL, THEREFORE, ERRED IN COMING TO THE CON CLUSION THAT THE CIT (APPEALS) HAD NOT CONSIDERED THE JUDGME NT OF THE SUPREME COURT IN THE CORRECT PERSPECTIVE. WITH RESPEC T, WE FIND THAT THE TRIBUNAL HAS NOT EVEN ANALYZED THE JUD GMENT OF THE SUPREME COURT IN S.A. BUILDERS LTD. VS. COMMISSIONER OF INCOME-TAX (APPEALS) AND ANOTHER (SUPRA). 16. FURTHER WE DRAW SUPPORT FORM THE JUDGMENT OF TH E HON'BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CIT & ANOTHER, 288 ITR 1 (SC) WHEREIN THE HON'BLE C OURT HELD THAT TO DETERMINE WHETHER THE LOAN WAS GIVEN AS A MEASURE OF COMMERCIAL EXPEDIENCY THE PURPOSE FOR WHICH THE AMOUNT WAS ADVANCED AND WHAT THE SISTER CONCERN DID THAT THE MONEY IS RELEVANT. THE RELEVANT FINDINGS O F THE HON'BLE SUPREME COURT IN THIS REGARD ARE AS UNDER: IT HAS BEEN REPEATEDLY HELD BY THIS COURT THAT THE E XPRESSION 'FOR THE PURPOSE OF BUSINESS' IS WIDER IN SCOPE THA N THE EXPRESSION 'FOR THE PURPOSE OF EARNING PROFITS' VID E CIT VS. MALAYALAM PLANTATIONS LTD. (1964) 53 ITR 140 (SC), CIT VS. BIRLA COTTON SPINNING & WEAVING MILLS LTD. (1971) 82 ITR 166 (SC), ETC. 27. THE HIGH COURT AND THE OTHER AUTHORITIES SHOULD H AVE EXAMINED THE PURPOSE FOR WHICH THE ASSESSEE ADVANCE D THE MONEY TO ITS SISTER-CONCERN, AND WHAT THE SISTER-CONCE RN DID WITH THIS MONEY, IN ORDER TO DECIDE WHETHER IT WAS FO R COMMERCIAL EXPEDIENCY, BUT THAT HAS NOT BEEN DONE. 28. IT IS TRUE THAT THE BORROWED AMOUNT IN QUESTION WAS NOT UTILIZED BY THE ASSESSEE IN ITS OWN BUSINESS, BUT HAD BEEN ADVANCED AS INTEREST-FREE LOAN TO ITS SISTER-CONCERN. H OWEVER, IN OUR OPINION, THAT FACT IS NOT REALLY RELEVANT. WHAT IS RELEVANT IS WHETHER THE ASSESSEE ADVANCED SUCH AMOUNT TO ITS SISTER- CONCERN AS A MEASURE OF COMMERCIAL EXPEDIENCY. 29. LEARNED COUNSEL FOR THE REVENUE RELIED ON A BOMBA Y HIGH COURT DECISION IN PHALTAN SUGAR WORKS LTD. VS. CIT (1995) 127 CTR (BOM) 359 : (1994) 208 ITR 989 (BOM) IN WHICH IT ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 16 WAS HELD THAT DEDUCTION UNDER S. 36(1)(III) CAN ONLY BE ALLOWED ON THE INTEREST IF THE ASSESSEE BORROWS CAPITAL FOR I TS OWN BUSINESS. HENCE, IT WAS HELD THAT INTEREST ON THE BORRO WED AMOUNT COULD NOT BE ALLOWED IF SUCH AMOUNT HAD BEEN ADVANCED TO A SUBSIDIARY COMPANY OF THE ASSESSEE. WITH RESPECT, WE ARE OF THE OPINION THAT THE VIEW TAKEN B Y THE BOMBAY HIGH COURT WAS NOT CORRECT. THE CORRECT VIEW IN OUR OPINION WAS WHETHER THE AMOUNT ADVANCED TO THE SUBS IDIARY OR ASSOCIATED COMPANY OR ANY OTHER PARTY WAS ADVANCE D AS A MEASURE OF COMMERCIAL EXPEDIENCY. WE ARE OF THE OPIN ION THAT THE VIEW TAKEN BY THE TRIBUNAL IN PHALTAN SUGAR WORKS LTD. (SUPRA) THAT THE INTEREST WAS DEDUCTIBLE AS THE AMOUN T WAS ADVANCED TO THE SUBSIDIARY COMPANY AS A MEASURE OF COMMERCIAL EXPEDIENCY IS THE CORRECT VIEW, AND THE VIE W TAKEN BY THE BOMBAY HIGH COURT WHICH SET ASIDE THE AFORES AID DECISION IS NOT CORRECT. 30. SIMILARLY, THE VIEW TAKEN BY THE BOMBAY HIGH COURT IN PHALTAN SUGAR WORKS LTD. VS. CIT (1994) 122 CTR (BOM) 344 : (1995) 215 ITR 582 (BOM) ALSO DOES NOT APPEAR TO BE CORRECT. 31. WE AGREE WITH THE VIEW TAKEN BY THE DELHI HIGH COU RT IN CIT VS. DALMIA CEMENT (BHARAT) LTD. (2002) 174 CTR (DEL) 188 : (2002) 254 ITR 377 (DEL) THAT ONCE IT IS ESTABLISHED THAT THERE WAS NEXUS BETWEEN THE EXPENDITURE AND THE PURP OSE OF THE BUSINESS (WHICH NEED NOT NECESSARILY BE THE BUS INESS OF THE ASSESSEE ITSELF), THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF THE BUSINESSMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DEC IDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. NO BUSINESSMAN CAN BE COM PELLED TO MAXIMIZE ITS PROFIT. THE IT AUTHORITIES MUST PUT THE MSELVES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOOK AT THE MATTER FROM THEIR OWN VIEWPOINT BUT THAT OF A PRUDE NT BUSINESSMAN. AS ALREADY STATED ABOVE, WE HAVE TO SEE T HE TRANSFER OF THE BORROWED FUNDS TO A SISTER-CONCERN F ROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM T HE POINT OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING P ROFITS. 32. WE WISH TO MAKE IT CLEAR THAT IT IS NOT OUR OPINIO N THAT IN EVERY CASE INTEREST ON BORROWED LOAN HAS TO BE ALLOWED IF THE ASSESSEE ADVANCES IT TO A SISTER-CONCERN. IT ALL DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE RESPECTIVE CASE. FOR INSTANCE, IF THE DIRECTORS OF THE SISTER-CONCERN UTILIZE THE AMOUN T ADVANCED TO IT BY THE ASSESSEE FOR THEIR PERSONAL BENEFIT, OBVI OUSLY IT CANNOT BE SAID THAT SUCH MONEY WAS ADVANCED AS A ME ASURE OF COMMERCIAL EXPEDIENCY. HOWEVER, MONEY CAN BE SAID TO BE ADVANCED TO A SISTER-CONCERN FOR COMMERCIAL EXPEDIENC Y IN MANY OTHER CIRCUMSTANCES (WHICH NEED NOT BE ENUMERA TED HERE). HOWEVER, WHERE IT IS OBVIOUS THAT A HOLDING COM PANY HAS A DEEP INTEREST IN ITS SUBSIDIARY, AND HENCE IF TH E HOLDING COMPANY ADVANCES BORROWED MONEY TO A SUBSIDIARY AND THE SAME IS USED BY THE SUBSIDIARY FOR SOME BUSINESS PUR POSES, THE ASSESSEE WOULD, IN OUR OPINION, ORDINARILY BE ENTIT LED TO DEDUCTION OF INTEREST ON ITS BORROWED LOANS. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 17 17. SINCE IN THE PRESENT CASE ADVANCES HAVE BEEN MA DE ADMITTEDLY TO TIDE OVER SHORT TERM DEFICIENCY IN TH E CASH CREDIT LIMITS, USAGE OF FUNDS FOR THE PURPOSE OF BU SINESS OF THE SAID CONCERN, WHICH ADMITTEDLY ARE ALL INTERREL ATED, IS ESTABLISHED. AND SINCE THE GOODWILL OF THE ENTIRE G ROUP RESTS ON THE PROPER FUNCTIONING OF ALL THE COMPANIES IN T HE GROUP, WHICH IN TURN AFFECTS THE BUSINESS OF THE ALL COMPA NIES IN THE GROUP ALSO, THE IMPUGNED ADVANCES, WE UNHESITAT INGLY HOLD, ARE FOR THE PURPOSE OF BUSINESS ONLY AND NOT IN THE NATURE OF LOANS AND ADVANCES SIMPLICITER BENEFITING ANY SUBSTANTIAL OR BENEFICIAL SHAREHOLDER ONLY. WE, THE REFORE, HOLD THAT THE IMPUGNED ADVANCES IN THE PRESENT CASE AMOUNTING TO RS.69,998/- DO NOT QUALIFY AS LOANS AN D ADVANCES FOR THE PURPOSE OF TREATING THEM AS DEEME D DIVIDEND AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE ADDITION MADE IN THIS REGARD IS, THEREFORE, DIR ECTED TO BE DELETED. GROUND OF APPEAL NO.3 RAISED BY THE ASS ESSEE IS, THEREFORE, ALLOWED. 18. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UND ER: 4. THAT THE WORTHY CIT (A) HAS ERRED IN RESTRICTING THE ADDITION AMOUNTING TO RS.10,36,124/- OUT OF ADDITION OF RS. 28,16,098/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 AS PER 10.1.2 OF HER ORDER. 19. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE SPECIAL AUDITORS APPOINTED HAD POINTED OUT THAT PAGE NOS.1 TO 65 OF ANNEXURE-A-2 DELTA 2 WAS A DIARY MAINTAINED BY THE ASSESSEE REGARDING DAY-TO-DAY CASH RECEIPTS AND PAY MENTS. IT WAS POINTED OUT BY THE AUDITORS THAT THE ASSESSE E HAD ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 18 MAINTAINED AN OPENING CASH BALANCE AND WAS CARRYING CLOSING BALANCE TO THE NEXT DAY AFTER CONSIDERING T HE RECEIPTS AND PAYMENTS OF EVERY DAY. WHEN CONFRONTE D WITH THE SAME THE ASSESSEE ADMITTED THAT THE DOCUMENT WA S A RECEIPT AND PAYMENT ACCOUNT MAINTAINED BY HIM BUT S TATED THAT SINCE THE PERIOD TO WHICH IT RELATED PERTAINED WAY BACK, HE WAS UNABLE TO KEEP EXACT TRACK OF THE RECE IPTS AND PAYMENTS AND THE SOURCE BEHIND IT. THE ASSESSEE, TH EREFORE, VOLUNTARILY SURRENDERED THE PEAK CREDIT ON THE BASI S OF THIS DIARY AMOUNTING TO RS.1,85,841/-. THE A.O., HOWEVER , FOUND THAT THE AUDITORS HAD REPORTED THE SAID TRANSACTION S AS RELATING TO THE UNACCOUNTED CASH RECEIVED AND UTILI ZED TOWARDS VARIOUS MISCELLANEOUS PERSONS/STATUTORY OBLIGATIONS/EXPENDITURE. HE, THEREFORE, REJECTED TH E PEAK CREDIT THEORY OF THE ASSESSEE, ON FINDING THAT UNAC COUNTED CASH HAD BEEN SPENT BY THE ASSESSEE ALSO AND NOT RO TATED IN THE NORMAL COURSE OF BUSINESS AND MADE ADDITION OF THE ENTIRE AMOUNT OF CASH SO RECEIVED EXCLUDING THE AMO UNT ALREADY RETURNED BY THE ASSESSEE, WHICH AMOUNTED TO RS.28,16,098/-, TREATING IT AS UNEXPLAINED CASH CRE DIT U/S 68 OF THE ACT. 20. BEFORE THE LD.CIT(A) DETAILED SUBMISSIONS WERE MADE BY THE ASSESSEE SHOWING THAT MAJORITY OF THE TRANSA CTION WERE ENTERED IN VARIOUS BOOKS OF ACCOUNT OF THE GRO UP CONCERNS AND A CHART WAS SUBMITTED SHOWING THAT SUBSTANTIAL TRANSACTIONS WERE IN FACT CASH SALES TO DIFFERENT CONCERNS AND THAT OTHER NOTINGS RELATED TO THE BANK ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 19 ACCOUNTS OF THE GROUP AS A WHOLE. THE DETAILED WORK ING IN THIS REGARD WAS SUBMITTED TO THE CIT(A). THE LD.CIT (A) ON THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE H ELD THAT OUT OF THE TOTAL ENTRIES OF RS.30,01,939/- SHOWN IN THE DIARY, THE ENTRIES TO THE TUNE OF RS.19,03,033/-, WHEREIN NARRATIONS AND OTHER DRAFTS WERE SUBMITTED BY THE A SSESSEE TO THE CIT(A) TO SUBSTANTIATE THE FACTS, WERE ALL A CCOUNTED FOR AND WERE ACCEPTED BY THE CIT(A). WITH REGARD TO THE ENTRIES AMOUNTING TO RS.6,15,298/- THE CONTENTION O F THE ASSESSEE THAT THEY WERE PURCHASES WHICH COULD NOT B E RECONCILED WAS ALSO ACCEPTED BY THE CIT(A) AND GP R ATE OF 20% WAS APPLIED TO THE SAME AND ADDITION OF RS.1,23,059/- WAS MADE ON ACCOUNT OF THE SAME . THUS TOTAL ADDITION OF RS.10,36,124/- (28,16,098- 19,03,033+1,23,059) WAS SUSTAINED BY THE CIT(A). 21. BEFORE US, THE LD. COUNSEL FOR ASSESSEE CONTEND ED THAT IDENTICAL ISSUE HAD ARISEN IN ASSESSMENT YEAR 2007- 08 ALSO WHEREIN THE DEPARTMENT HAD ALSO COME UP IN APPEAL CHALLENGING THE RESTRICTION OF ADDITION AND WHERE T HE DEPARTMENT HAS RAISED ADDITIONAL GROUND SEEKING RE STORING THE MATTER TO THE A.O. SINCE THE EVIDENCES FILED BY THE ASSESSEE EXPLAINING THE ENTRIES IN THE DIARY, WERE NOT CONFRONTED TO THE A.O. THE LD. COUNSEL FOR ASSESSE E CONTENDED THAT THE ISSUE BE ADJUDICATED IN ASSESSME NT YEAR 2007-08 AND THE DECISION RENDERED THEREIN BE APPLIE D TO THE PRESENT GROUND ALSO. THE LD. DR DID NOT OBJECT TO T HE SAME. ACCEPTING THE REQUEST OF THE LD. COUNSEL FOR ASSESS EE WE ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 20 SHALL BE ADJUDICATING THIS GROUND ALONGWITH GROUND RAISED BY THE ASSESSEE AND REVENUE IN ASSESSMENT YEAR 2007 -08 IN ITA NO.45/CHD/2014 AND ITA NO.108/CHD/2014 RESPECTIVELY. 22. THE ASSESSEE HAS RAISED ADDITIONAL GROUND BEFOR E US VIDE ITS LETTER DATED 10.10.2015, WHICH WERE REVISE D VIDE LETTER DATED 23-07-16 AND READS AS UNDER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX(APPE ALS) HAS ERRED IN CONFIRMING THE ADDITION ON VARIOUS ISS UES AS PER GROUND OF APPEAL DESPITE THE FACT THAT NO INCRIMINA TING EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH CONDUCTED ON 15.07.2008 BY THE DEPARTMENT ON ACCOUN T OF VARIOUS ADDITIONS WHICH HAVE BEEN CHALLENGED BY THE ASSESSEE. 23. THE SAME WAS NOT PRESSED BEFORE US AND, THEREFO RE, THE SAME IS DISMISSED AS NOT PRESSED. 24. WE SHALL NOW TAKE UP CROSS APPEALS OF THE ASSES SEE AND THE REVENUE RELATING TO ASSESSMENT YEAR 2007-08 IN ITA NO.45/CHD/2014 AND ITA NO.108/CHD/2014. ITA NO.45/CHD/2014(A.Y. 2007-08) 25. TAKING UP ASSESSEES APPEAL IN ITA NO.45/CHD/20 14, GROUND NOS.1 AND 2 RAISED BY THE ASSESSEE READ AS UNDER: 1. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN DISMI SSING THE GROUNDS OF APPEAL PERTAINING TO OBJECTION OF ASSESSEE WITH REGARD TO REFERENCE TO THE SPECIAL AUDITOR IN TERMS OF SECTION 142 (2A). 2. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDERIN G THAT THE CONDITIONS FOR REFERENCE TO THE SPECIAL AUD IT HAVE NOT BEEN FULFILLED AND SINCE THE ASSESSEE HAD N OT BEEN MAINTAINING ANY PERSONAL BOOKS OF ACCOUNTS, NO COMPLEXITY WAS THERE FOR THE PURPOSE OF REFERRING T HE CASE TO THE SPECIAL AUDIT AND, AS SUCH, THE ASSESSME NT ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 21 HAVING BEEN COMPLETED BEYOND THE LIMITATION TIME DESERVES TO BE QUASHED. THE SAME WERE NOT PRESSED BEFORE US AND ARE, THEREFORE, DISMISSED AS NOT PRESSED. 26. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER 3. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) AMOUNTING TO RS.2,42,317/- (OUT OF RS.3,42,317/-) IN RESPECT OF AMOUNT SHOWN AS ALLEGED ADVANCE TO THE ASSESSEE IN DIFFERENT COMPANIES. 27. IT WAS COMMON GROUND THAT THE ISSUE AND THE FA CTS RELATING TO THIS GROUND WERE IDENTICAL TO GROUND NO .3 RAISED BY THE ASSESSEE IN HIS APPEAL IN ITA NO.44/CHD/2014 . SINCE WE HAVE DECIDED THIS ISSUE IN THE SAID APPEAL IN FA VOUR OF THE ASSESSEE AT PARAS 13 TO 17 OF OUR ORDER ABOVE, OUR DECISION RENDERED THEREIN SHALL APPLY MUTATIS MUTAN DIS TO THIS GROUND ALSO. THIS GROUND OF APPEAL RAISED BY T HE ASSESSEE IS, THEREFORE, ALLOWED. 28. GROUND NO.5 RAISED BY THE ASSESSEE READS AS UND ER: 5. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING A DDITION OF RS.3,77,667/- ON ACCOUNT OF PROVISION 40(A)(IA) AS P ER 11.2.1 OF HER ORDER 29. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT WHIL E GOING THROUGH THE BOOKS OF ACCOUNT THE SPECIAL AUDITOR OB SERVED THAT THE ASSESSEE HAD MADE PAYMENTS AS BRAND CHARGE S AMOUNTING TO RS.3,77,667/- ON WHICH IT WAS LIABLE T O DEDUCT TDS AS PER THE PROVISIONS OF CHAPTER-XVII OF THE ACT, BUT NO TDS HAD BEEN DEDUCTED. WHEN CONFRONTED WITH THE SAME, NO REPLY WAS FURNISHED BY THE ASSESSEE AN D THE A.O., THEREFORE, ADDED THE SAID SUM TO THE INCOME O F THE ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 22 ASSESSEE AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 30. THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT (A) WHO UPHELD THE ORDER OF THE A.O. STATING THAT THE BRAND WAS REGISTERED IN THE NAME OF M/S HEERA MOTI SPICES PVT . LTD. WHO WAS CHARGING 4.1% ROYALTY ON THE TOTAL TURNOVER AND SINCE NO TDS WAS DEDUCTED ON THE SAME, THE ADDITION HAD BEEN RIGHTLY MADE BY THE A.O. U/S 40(A)(IA) OF THE ACT. 31. BEFORE US THE LD. COUNSEL FOR ASSESSEE CONTENDE D THAT THE BRAND CHARGES HAD BEEN REFLECTED AS INCOME BY T HE RECIPIENT OF THE SAME AND HAD ALSO BEEN PAID TAXES ON THE SAME. THE PRESCRIBED CERTIFICATE OF AN ACCOUNTANT U/S 201(1) OF THE ACT , IN FORM NO.26A, IN THIS REGARD WAS FILED BEFORE US. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, CONTENDED THAT IN VIEW OF THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS PER WHICH WHERE TAXES HAVE BEEN PAID BY THE RECIPIENT OF THE INCOMES, THE ASSESSEE CANNO T BE TREATED AS AN ASSESSEE IN DEFAULT FOR NOT HAVING DE DUCTED TDS ON THE SAME AND NO ADDITION, THEREFORE, CAN BE MADE U/S 40(A)(IA) OF THE ACT. THE LD. COUNSEL FOR ASSES SEE STATED THAT ITS SOLE PRAYER WAS THAT THE MATTER BE RESTORE D BACK TO THE A.O. TO VERIFY THE DOCUMENTS NOW FILED BY THE A SSESSEE AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE LD. DR DID NOT OBJECT TO THE SAME. 32. IN VIEW OF THE ABOVE, WE RESTORE THE ISSUE BACK TO THE A.O. TO VERIFY THE DOCUMENTS FILED BY THE ASSESSEE PROVING THAT THE TAXES HAVE BEEN PAID BY THE RECIPIENT OF B RAND ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 23 CHARGES AND THEREAFTER TO DECIDE THE ISSUE IN ACCOR DANCE WITH LAW. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF HEARING IN THIS REGARD. THE GROUND O F APPEAL NO.5 IS ALLOWED FOR STATISTICAL PURPOSES. 33. GROUND NO.6 RAISED BY THE ASSESSEE READS AS UND ER: 6. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING T HE ADDITION AMOUNTING TO THE TUNE OF RS.9,52,812/- OUT OF ADDITION OF RS.34,14,326/- IN RESPECT OF SUNDRY CREDITORS AS PER PARA 7.4.2 OF HER ORDER. 34. THE REVENUE, IT WAS POINTED OUT HAS ALSO RAISED GROUND OF APPEAL NO.(IV) ON THIS ISSUE WHICH READS AS UNDE R: (IV) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.24,90,514/- WHICH WAS MADE ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS?' 35. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS A SKED TO FURNISH CONFIRMATION OF THE SUNDRY CREDITORS AS APP EARING IN THE BOOKS OF ACCOUNTS. NO DETAILS WERE FURNISHED BY THE ASSESSEE. THE A.O., THEREFORE, TREATED THE INCREASE IN SUNDRY CREDITORS DURING THE YEAR AMOUNTING TO RS.34,43,326/-AS INCOME OF THE ASSESSEE. THE LD. C IT(A) RESTRICTED THE ADDITION TO RS.9,52,812/- ON FINDING THAT THE A.O. HAD ACCEPTED SUNDRY CREDITORS TO THE EXTENT OF RS.70,62,459/- IN THE SUCCEEDING ASSESSMENT YEAR I. E. A.Y. 2009-10 AND SOME OF THOSE PARTIES ALSO APPEARED IN THE IMPUGNED YEAR WHICH AMOUNTED TO RS.43,72,839/- AS DETAILED IN THE ORDER OF THE CIT(A) AT PAGE 15 OF T HE ORDER. ACCORDINGLY, THE ADDITION TO THIS EXTENT WAS DELETE D BY THE CIT(A), WHILE THE BALANCE OF RS.9,52,812/- WAS UPHE LD. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 24 36. BEFORE US THE LD. COUNSEL FOR ASSESSEE CONTENDE D THAT IDENTICAL ISSUE HAD ARISEN IN THE CASE OF M/S HEERA MOTI AGRO INDUSTRIES & M/S HEERA MOTI AGRO PRODUCTS, IN ASSESSMENT YEAR 2007-08, THE APPEAL OF THE ASSESSEE IN WHICH CASE WAS DECIDED BY THE I.T.A.T. VIDE ITS ORD ER DATED 20.9.2016 IN ITA NOS.739 & 756/CHD/2013 RESPECTIVEL Y, RESTORING THE ISSUE TO THE FILE OF THE A.O. WITH TH E DIRECTIONS TO REDECIDE THE ISSUE BY FOLLOWING THE REASONS FOR DECISION GIVEN BY THE CIT(A) FOR ASSESSMENT YEAR 2003-04 WHE REIN IDENTICAL ADDITION HAD BEEN DELETED. THE LD. COUNSE L FOR ASSESSEE POINTED OUT THAT IN THE SAID CASE IT WAS B ROUGHT TO THE NOTICE OF THE I.T.A.T. THAT IN ASSESSMENT YEAR 2003-04 THE ENTIRE BALANCE OUTSTANDING IN THE NAME OF SUNDR Y CREDITORS HAD BEEN ADDED BACK WHICH HAD BEEN DELETE D BY THE LD.CIT(A) NOTING THAT THE SAID ADDITION WAS NOT TENABLE SINCE TRADING RESULTS HAD OTHERWISE BEEN ACCEPTED B Y THE A.O. FOR THE IMPUGNED YEAR AND, THEREFORE, IT DEFIE D LOGIC TO ADD BACK ENTIRE BALANCE IN THE ACCOUNT. IT WAS ALSO NOTED THAT MANY OF THE PARTIES WERE HAVING RUNNING ACCOUN T PRIOR TO 1.4.2002 AND CIT(A), THEREFORE, HELD THAT BY ADD ING BACK ENTIRE BALANCE OF SUNDRY CREDITORS THE ENTIRE TRADI NG RESULTS OF THE ASSESSEE WOULD BE ABNORMAL. ACCORDINGLY, THE LD.CIT(A) ALLOWED ASSESSEES APPEAL RELATING TO ASS ESSMENT YEAR 2003-04 BUT FOR THE ASSESSMENT YEAR 2007-08 FR ESH CREDIT ADDITIONS WERE FOUND TO BE IN ORDER AND ADDI TION MADE BY THE A.O. WAS CONFIRMED BY THE CIT(A). IT WA S POINTED OUT FROM THE ORDER THAT THE I.T.A.T. HELD T HAT HAVING DELETED ADDITION MADE IN ASSESSMENT YEAR 2003-04, T HERE ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 25 WAS NO REASON TO CONFIRM THE ADDITIONAL CREDIT BALA NCE IN THE SUCCEEDING YEAR SINCE THESE PARTIES WERE HAVING RUNNING ACCOUNTS AND BY MAKING THESE ADDITIONS IT WOULD MAK E THE ENTIRE TRADING RESULTS ABNORMAL. THE I.T.A.T. IN TH E LIGHT OF THE SAME RESTORED THE ISSUE TO THE A.O. TO REDECIDE IT IN THE LIGHT OF THE DECISION GIVEN BY THE CIT(A) FOR ASSES SMENT YEAR 2003-04. THE RELEVANT FINDINGS OF THE I.T.A.T. AT P ARA 9 TO 9.(II) ARE AS UNDER: 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS A CASE OF SEARCH AND IT IS NOT INDICATED IF ANY MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AGAINST THE ASSESSEE TO PROVE THAT ASSESSEE HAD BOGUS LIABILITY SHOWN IN THE BOOKS OF ACCOUNT ON ACCOUNT OF PURCHASE OF MATERIAL. THE BOOKS OF ACCOUNT INCLUDING THE LEDGER ACCOUNT WERE ALREADY IN POSSESSION OF THE DEPARTMENT AND ACCORDING TO THE ASSESSEE, ALL THE MATERIALS PURCHASED HAVE BEEN SUPPORTED BY PURCHASE BILLS AND PAYMENTS ARE EVIDENCED BY BANK STATEMENTS. THE ASSESSING OFFICER HAS NOWHERE MENTIONED IN THE ASSESSMENT ORDER AS TO HOW MANY PARTIES WEE HAVING TRADE BALANCES FOR WHICH ADDITION HAS BEEN MADE AND EVEN NO SPECIFIC AMOUNT OF EACH PARTY HAS BEEN MENTIONED. THEREFORE, NO SPECIFIC FINDING OF FACT HAVE BEEN GIVEN AGAINST THE ASSESSEE FOR MAKING THE ADDITION. THE LD. CIT(APPEALS) HELD IN THE IMPUGNED ORDER THAT THE ISSUE IN ASSESSMENT YEAR UNDER APPEAL I.E. 2007- 08 IS COVERED BY HIS ORDER FOR ASSESSMENT YEAR 2003-04. THE FACTS ARE IDENTICAL AS HAVE BEEN CONSIDERED IN ASSESSMENT YEAR 2003-04. THE LD. CIT(APPEALS) IN ASSESSMENT YEAR 2003-04 DELETED THE ENTIRE ADDITION BECAUSE ENTIRE SUNDRY CREDITORS OUTSTANDING ON END OF THE FINANCIAL YEAR CANNOT BE ADDEDE. THE LD. CIT(APPEALS) NOTED THAT THE TRADING RESULTS FOR ASSESSMENT YEAR 2003-04 HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER THEREFORE, THERE IS NO LOGIC TO MAKE ADDITION OF THE ENTIRE BALANCE IN THIS ACCOUNT. 9(I) THE LD. CIT(APPEALS) ALSO NOTED THAT MANY OF THE PARTIES ARE HAVING RUNNING ACCOUNTS FROM PRIOR TO 01.04.2002. THE LD. CIT(APPEALS) ALSO HELD THAT IF ADDITION OF THIS NATURE IS CONFIRMED, THE TRADING RESULTS OF THE ASSESSEE WOULD BE ABNORMAL. THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF ARGUMENTS SUBMITTED THAT ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 26 THE DEPARTMENTAL APPEAL FOR ASSESSMENT YEAR 2003-04 HAD BEEN DISMISSED BY THE TRIBUNAL IN GROUP CASES. WHEN ACCORDING TO THE LD. CIT(APPEALS), THE ISSUE IS COVERED BY HIS ORDER FOR ASSESSMENT YEAR 2003-04, THERE SHOULD NOT BE ANY REASON TO CONFIRM THE ADDITION AGAINST THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL, BECAUSE THE FACTS ARE IDENTICAL. THE ASSESSEE PLEADED THAT PURCHASES HAVE BEEN MADE FROM VARIOUS PARTIES AND ASSESSEE HAS RUNNING ACCOUNTS WITH THEM. ALL ENTRIES ARE SHOWN IN THE BOOKS OF ACCOUNT WHICH HAVE BEEN SEIZED BY THE DEPARTMENT. THE ASSESSEE HAS PRODUCED THE CHART IN THE PAPER BOOK FROM ASSESSMENT YEAR 2002-03 TO 2008-09 TO SHOW THAT THESE ARE RUNNING ACCOUNTS WITH VARIOUS PARTIES SINCE LONG. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, EVEN IN SOME OF THE CASES OF THE GROUP, WHO WERE TRADE CREDITORS IN ASSESSMENT YEAR UNDER APPEAL, ARE ASSESSED BY THE SAME ASSESSING OFFICER, THEREFORE, FACTS SHOULD HAVE BEEN VERIFIED FROM THEIR RECORD AVAILABLE WITH THE REVENUE DEPARTMENT. IN ASSESSMENT YEAR UNDER APPEAL ALSO, TRADING RESULTS HAVE BEEN ACCEPTED BY ASSESSING OFFICER, THEREFORE, FOR BALANCE TRADING AMOUNT, THE LD. CIT(APPEALS) SHOULD NOT HAVE CONFIRMED THE ADDITION. THE PARTIES HAVE RUNNING ACCOUNTS WITH THE ASSESSEE AND IF SIMILAR ADDITION IS MADE, IT WOULD GIVE ENTIRE TRADING RESULTS OF THE ASSESSEE, TO BE ABNORMAL. THEREFORE, THE LD. CIT(APPEALS) SHOULD HAVE FOLLOWED THE ORDER FOR ASSESSMENT YEAR 2003-04 FOR THE PURPOSE OF DELETING THE ADDITION AGAINST THE ASSESSEE. HOWEVER, LD. CIT(APPEALS) NOTED THAT ADDITION IS LIMITED TO FRESH ADDITIONS ONLY. THIS REASON IS ALSO INCORRECT BECAUSE LD. COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT EVEN IF THERE ARE SOME FRESH CREDITORS FROM THE SAME PARTIES APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT THESE ARE RUNNING ACCOUNTS FROM THE EARLIER YEARS, THEREFORE, FOR DIFFERENCE OF THE AMOUNT ITSELF, NO SUCH ADDITION SHOULD BE MADE AGAINST THE ASSESSEE. SINCE, NO DETAILS HAVE BEEN GIVEN IN THE ASSESSMENT ORDER AND THE CHART NOW FILED HAVE NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AND ALSO ACCORDING TO THE ASSESSEE, WHEN NO PROPER OPPORTUNITY HAVE BEEN GIVEN BY THE ASSESSING OFFICER, IT WOULD BE REASONABLE AND APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE THIS ISSUE BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9(II) WE, ACCORDINGLY, SET ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 27 FILE OF ASSESSING OFFICER WITH DIRECTION TO RE- DECIDE THIS ISSUE BY FOLLOWING THE REASONS FOR DECISION GIVEN BY LD. CIT(APPEALS) FOR ASSESSMENT YEAR 2003-04 (SUPRA) WHEREBY ADDITION ON IDENTICAL ISSUE HAVE BEEN DELETED. THE ASSESSING OFFICER SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 37. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE FACTS IN THE PRESENT CASE WERE IDENTICAL TO THAT IN THE C ASE OF M/S HEERA MOTI AGRO PRODUCTS AND CONSIDERING THE FINDIN GS OF THE I.T.A.T. IN THE SAID CASE THE MATTER IN THE PRE SENT CASE ALSO BE RESTORED BACK TO THE A.O. IN THE LIGHT OF T HE DIRECTIONS GIVEN BY THE I.T.A.T. IN THAT CASE. THE LD. DR DID NOT OBJECT TO THE SAME. 38. IN VIEW OF THE SAME, WE RESTORE THE ISSUE TO TH E A.O. TO DECIDE AFRESH IN ACCORDANCE WITH THE DIRECTIONS GIV EN BY THE I.T.A.T. IN THE CASE OF M/S HEERA MOTI AGRO INDUSTR IES AND M/S HEERA MOTI AGRO PRODUCTS (SUPRA). 39. THE GROUND OF APPEAL NO.6, RAISED BY THE ASSESS EE AND GROUND OF APPEAL NO.(IV) OF THE REVENUE ARE THEREFO RE ALLOWED FOR STATISTICAL PURPOSES. 40. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UND ER: 4. THAT THE WORTHY CIT (A) HAS ERRED IN RESTRICTING THE ADDITION AMOUNTING TO RS.38,12,800/- OUT OF ADDITION OF RS.88,50,148/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 AS PER 10.1.1 OF HER ORDER. 41. IT WAS POINTED OUT THAT THE REVENUE HAS ALSO R AISED GROUND OF APPEAL NO.II AND ALSO AN ADDITIONAL GROUN D ON THIS ISSUE AS UNDER: 42. GROUND NO.II RAISED BY THE REVENUE READS AS UND ER: ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 28 (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.50,37,34 8/- MADE BY THE AO ON ACCOUNT OF SEIZED DOCUMENTS AS PA GES 1- 65 OF ANNEXURE-2 OF DELTA 2 AND PAGES 1-54 OF ANNEXUR E-7 OF DELTA 2? 43. THE ADDITIONAL GROUND RAISED BY THE REVENUE VI DE ITS LETTER DATED 17.04.2018 READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN LAW WHILE GIVING RELI EF WITHOUT AFFORDING AN OPPORTUNITY TO THE AO FOR EXAMINATION OF ADDITIONAL EVIDENCE PRODUCED DURING APPELLATE PROCEEDINGS WHICH WERE NOT FILED BEFORE THE AO EARLIER AND WITHOUT INVOKING THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES,1962. 44. THE ISSUE IN THE ABOVE GROUNDS RELATES TO THE A DDITION MADE ON ACCOUNT OF A SEIZED DOCUMENT, ADMITTEDLY REFLECTING CASH TRANSACTIONS OF RECEIPTS AND PAYMEN T UNDERTAKEN BY THE ASSESSEE, WHICH IN THE ABSENCE OF ANY PLAUSIBLE EXPLANATION AVAILABLE WERE SURRENDERED BY THE ASSESSEE TO THE EXTENT OF PEAK CREDIT BUT WERE TREA TED ENTIRELY AS UNEXPLAINED AND THE ENTIRE RECEIPTS ADD ED TO THE INCOME OF THE ASSESSEE. BEFORE THE LD.CIT(A) THE AS SESSEE FILED EXPLANATION OF THE ENTRIES REFLECTED IN THE D OCUMENT AND DULY SUBSTANTIATED THE SAME, CONTENDING THAT MO ST OF THEM WERE BANK ENTRIES REFLECTED IN THE BOOKS. THE LD.CIT(A), PARTLY DELETED THE ADDITION MADE ON THE BASIS OF THE EVIDENCE FILED BY THE ASSESSEE. AGGRIEVED BY TH E SAME BOTH THE ASSESSEE AND THE REVENUE HAVE COME UP IN A PPEAL BEFORE US RAISING THE ABOVE GROUNDS. 45. THE REVENUE IN THE ADDITIONAL GROUND HAS CONTEN DED THAT THE ASSESSEE HAS BEEN GRANTED RELIEF WITHOUT T HE ADDITIONAL EVIDENCES PRODUCED DURING ASSESSMENT ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 29 PROCEEDINGS BEING CONFRONTED TO THE A.O. AS PER THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 196 2. THE ASSESSEE WAS UNABLE TO CONTROVERT THE FACT THAT THE ADDITIONAL EVIDENCES FILED WERE NOT CONFRONTED TO T HE A.O. 46. IN THE LIGHT OF THE SAME, WE CONSIDER IT FIT TO RESTORE THIS ISSUE BACK TO THE A.O. TO ADJUDICATE IT AFRESH AFTER CONSIDERING AND VERIFYING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF HEARING IN THIS REGARD. 47. AS STATED IN THE EARLIER PART OF OUR ORDER, IDE NTICAL ISSUE HAS ARISEN IN ITA NO.44/CHD/2014 FILED BY THE ASSESSEE IN GROUND NO.4 OF THE SAID APPEAL BEFORE U S. THE ISSUE IN THE SAID APPEAL IS ALSO RESTORED BACK TO T HE A.O. TO BE ADJUDICATED AFRESH AFTER CONSIDERING AND VERIFYI NG THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. THEREFO RE, GROUND NO.4 OF ITA NO.44/CHD/2014 AND OF ITA NO.45/CHD/2014 AND GROUND NO.(II) AND ADDITIONAL GR OUND RAISED BY THE REVENUE IN ITS APPEAL IN ITA NO.108/CHD/2014 ARE ALLOWED FOR STATISTICAL PURPOSE S. 48. THE ASSESSEE HAS RAISED ADDITIONAL GROUND BEFOR E US VIDE ITS LETTER DATED 10.10.2015 WHICH WERE REVISED VIDE LETTER DATED 23.07.2016 AND READS AS UNDER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX(APPE ALS) HAS ERRED IN CONFIRMING THE ADDITION ON VARIOUS ISS UES AS PER GROUND OF APPEAL DESPITE THE FACT THAT NO INCRIMINA TING EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH CONDUCTED ON 15.07.2008 BY THE DEPARTMENT ON ACCOUN T OF VARIOUS ADDITIONS WHICH HAVE BEEN CHALLENGED BY THE ASSESSEE. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 30 49. THE SAME WAS NOT PRESSED BEFORE US AND, THEREFO RE, THE SAME IS DISMISSED AS NOT PRESSED. 50. THE APPEAL OF THE ASSESSEE IN ITA NO 44 & 45/ CHD/14 IS THEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSE S. 51. WE NOW TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.108/CHD/2014. 52. GROUND NO.(I) RAISED BY THE REVENUE READS AS UN DER: (I) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A)HAS ERRED IN DELETING THE ADDITION OF RS.1,00,000/- MADE BY THE AO ON ACCOUNT OF DEEMED IN COME U/S 2(22)(E) OF THE IT. ACT, 1961? 53. IN THE ABOVE GROUND THE REVENUE HAS CHALLENGED DELETION OF ADDITION MADE ON ACCOUNT OF DEEMED DIVI DEND U/S 2(22)(E) OF THE ACT ON ACCOUNT OF LOANS AND ADV ANCES GIVEN TO SWAMI DEVI DAYAL HI-TECH EDUCATION ACADEMY . THE A.O. HAD MADE ADDITION OF THE ADVANCES MADE BY M/S HEERA MOTI HEALTH CARE PRODUCT LTD. IN WHICH THE ASSESSE E WAS A BENEFICIAL SHAREHOLDER HOLDING 10.34% SHARES OF SWA MI DEVI DAYAL HI-TECH EDUCATION ACADEMY IN WHICH THE ASSESS EE WAS A MEMBER HOLDING THAT IT HAD SUBSTANTIAL INTERE ST IN IT SINCE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH SHOWED THAT THE FUNDS OF THE SOCIETY HAD BEEN UTILIZED BY THE MEMBERS OF THE SOCIETY AND THEIR FAMILY MEMBERS. TH E LD.CIT(A) DELETED THE IMPUGNED ADDITION STATING THA T THE TRANSACTION WAS OUTSIDE THE SCOPE OF SECTION 2(22)( E) OF THE ACT SINCE THE ASSESSEE WAS ONLY A MEMBER AND WAS NO T HAVING SUBSTANTIAL INTEREST IN THE TRUST. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 31 54. DURING THE COURSE OF HEARING BEFORE US THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT IDENTICAL ISSUE HAD A RISEN IN THE CASE OF ROSHAN LAL JINDAL WHEREIN THE CIT(A) HA D DELETED THE IDENTICAL ADDITION MADE ON ACCOUNT OF A MOUNTS ADVANCED TO SAME SOCIETY I.E. TO SWAMI DEVI DAYAL H I-TECH EDUCATION ACADEMY WHICH WAS UPHELD BY THE I.T.A.T. STATING THAT IT WAS NOT COVERED UNDER THE PROVISION S OF SECTION 2(22)(E) OF THE ACT. OUR ATTENTION WAS DRAW N TO THE RELEVANT FINDINGS OF THE I.T.A.T. AT PARAS 11 TO 13 OF THE ORDER AS UNDER: 11. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES. THE ISSUE IN HAND PERTAINS TO ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND AS PER PROVISIONS OF SECTION 2(22)(E) OF THE ACT. BEING A DEEMING PROVISION, BRINGING TO TAX SUMS WHICH ARE NOT ACTUALLY IN THE NATURE OF INCOME BUT ARE ONLY DEEMED TO BE SO, IT IS TO BE STRICTLY INTERPRETED. SECTION 2(22)(E) OF THE ACT READS AS UNDER: 2(22)(E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERES TED, OF ANY SUM (WHETHER AS REPRESENTING A PART OF THE A SSETS OF THE COMPANY OR OTHERWISE) 5 MADE AFTER THE 31ST DAY OF MAY, 1987 , BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (N OT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHE THER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HO LDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN, IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID CO NCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR - THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS. 12. A READING OF THE SECTION IN REVEALS THAT ANY SUM ADVANCED BY A COMPANY IN WHICH A PERSON HOLDS VOTING RIGHTS OF 10% OR MORE TO ANOTHER CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR PARTNER HAVING SUBSTANTIAL INTEREST, THE SUM SO ADVANCED IS TREATED AS DEEMED DIVIDEND. SUBSTANTIAL INTEREST HAS BEEN DEFINED UNDER THE SAID SECTION TO BEING BENEFICIAL ENTITLEMENT TO NOT LESS THAN 20% OF THE INCOME OF SUCH CONCERN. IN THE ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 32 PRESENT CASE THE FACT THAT THE ASSESSE HOLDS MORE THAN 10% VOTING RIGHTS IN HERRA MOTI HEALTH CARE PRODUCT LTD. & HEERA MOTI SPICY PVT. LTD., WHO HAD ADVANCED THE IMPUGNED SUM, IS NOT DISPUTED. WHAT IS REQUIRED TO BE SEEN IS WHETHER THE ASSESSEE WAS BENEFICIALLY ENTITLED TO 20% OR MORE OF THE INCOME OF SWAMI DEVI DAYAL HI-TECH EDUCATION ACADEMY. IT IS NOT DISPUTED THAT SWAMI DEVI DAYAL HI-TECH EDUCATION ACADEMY IS A CHARITABLE TRUST REGISTERED U/S 12AA OF THE ACT. THAT THE ASSESSEE IS A TRUSTEE IN THE SAID TRUST HAS ALSO NOT BEEN DISPUTED AND THE FACT THAT THERE ARE NO INTEREST OF ANY MEMBER OF THE SAID SOCIETY IN THE TRUST IS ALSO NOT DISPUTED. IN THE SAID CIRCUMSTANCES, WE ARE LEFT WITH NO OPTION BUT TO AGREE WITH THE LD.CIT(APPEALS) THAT SECOND LIMB OR REQUIREMENT OF SECTION 2(22)(E) OF THE ASSESSEE HAVING SUBSTANTIAL INTEREST IN THE CONCERN TO WHICH LOAN OR ADVANCE HAS BEEN GIVEN HAS NOT BEEN ESTABLISHED AND, THEREFORE, THE SAID ADVANCE CANNOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. THE ARGUMENTS OF THE LD. DR THAT THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH SHOW THAT THE FUNDS HAD BEEN UTILIZED BY THE MEMBERS OF THE SOCIETY, AND THEREFORE, ASSESSEE DERIVED PERSONAL BENEFIT IS OF NO CONSEQUENCE SINCE THE REQUIREMENT OF SECTION 2(22)(E) IS NOT WHETHER THE ASSESSEE HAS ACTUALLY DERIVED ANY PERSONAL BENEFIT FROM THE SAID CONCERN BUT IS THAT THE ASSESSEE IS BENEFICIALLY ENTITLED TO NOT LESS THAN 20% OF THE INCOME OF THE SAID CONCERN. THE WORK ENTITLED MEANS HAVING A LEGAL RIGHT TO SOMETHING. SINCE SUCH LEGAL RIGHT IS ABSENT IN THE CASE OF THE PRESENT SOCIETY, IN THE ABSENCE OF SUCH LEGAL RIGH T OF THE ASSESSEE IN THE SAID SOCIETY THE AMOUNT ADVANCED CANNOT BE TREATED AS DEEMED INCOME AS PER SECTION 2(22)(E) OF THE ACT. MOREOVER EVEN AS PER THE ARGUMENT OF THE REVENUE THE DOCUMENTS FOUND DURING SEARCH ONLY ESTABLISH THAT THE ASSESSEE HAS DERIVED BENEFIT FROM THE SAID SOCIETIES AND NOT SUBSTANTIAL BENEFIT, AS IS THE REQUIREMENT OF THE SECTION. 13. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LD.CIT(APPEALS) DELETING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND AMOUNTING TO RS.2,09,140/- ON ACCOUNT OF LOANS AND ADVANCES GIVEN TO SOCIETIES REGISTERED U/S 12A OF THE ACT. 55. THE LD. DR WAS UNABLE TO POINT ANY DISTINGUISHI NG FACTS IN THE SAID CASE. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 33 56. IN VIEW OF THE SAME SINCE IDENTICAL ISSUE HAS B EEN ADJUDICATED IN THE CASE OF ROSHAN LAL JINDAL IN ITA NO.110/CHD/2014 VIDE ORDER OF THE I.T.A.T. DATED 14.2.2017, THE PRESENT ISSUE STANDS COVERED BY THE SAID DECISION, FOLLOWING WHICH WE UPHOLD THE ORDER OF TH E CIT(A) DELETING THE ADDITION MADE U/S 2(22)(E) OF THE ACT ON ACCOUNT OF ADVANCES MADE OF RS.1,00,000/- TO SWAMI DEVI DAYAL HI-TECH EDUCATION ACADEMY . GROUND OF APPEAL NO.(I) RAISED BY THE REVENUE IS, THEREFORE, DISMISSED. 57. GROUND NO.(II) RAISED BY THE REVENUE HAS BEEN ADJUDICATED BY US ALONGWITH GROUND NO.4 RAISED BY THE ASSESSEE IN ITS APPEAL IN ITA NO.45/CHD/14, RESTORI NG THE ISSUE BACK TO THE A.O. FOR ADJUDICATION AFRESH AFT ER CONSIDERING AND VERIFYING THE EVIDENCES FILED BY TH E ASSESSEE BEFORE THE CIT(A). THIS GROUND OF APPEAL T HEREFORE STANDS ALLOWED FOR STATISTICAL PURPOSES. 58. GROUND OF APPEAL NO.(III) RAISED BY THE REVENUE READS AS UNDER: (III) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF RS.71,450/- WHICH WAS MADE ON REPAYMENT OF LOAN TO SBI?' 59. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A.O. MADE ADDITION OF AN AMOUNT OF RS.71,450/- TO THE INCOME OF THE ASSESSEE ON FINDING THAT THE REPAYMENT OF PERSONAL LOAN TAKEN BY THE ASSESSEE FROM STATE BANK OF INDIA, SAI ROAD, BADDI IN CASH TO THIS EXTENT HAD NOT BEEN REFLECTED IN THE BOOKS OF THE ASSESSEE. NO DETAILS WERE FURNISHED BY THE ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 34 ASSESSEE DURING ASSESSMENT PROCEEDINGS, NOR ANY CAS H FLOW STATEMENT FILED AND, THEREFORE, THE A.O. MADE ADDIT ION OF THE IMPUGNED SUM TO THE INCOME OF THE ASSESSEE. DUR ING APPELLATE PROCEEDINGS THE ASSESSEE FILED A DETAILED CASH FLOW STATEMENT REFLECTING REPAYMENT OF THE IMPUGNED SUM, AFTER CONSIDERING WHICH THE CIT(A) ALLOWED THE ASSESSEES APPEAL ON THIS COUNT AND DELETED THE ADDITION MADE. 60. BEFORE US THE LD. DR CONTENDED THAT THE ADDITIO NAL EVIDENCE FURNISHED BY THE ASSESSEE BEFORE THE LD.CI T(A) IN THE FORM OF CASH FLOW STATEMENT WAS NOT CONFRONTED TO THE A.O. AND, THEREFORE, THE CIT(A) HAD ERRED IN ALLOWI NG RELIEF TO THE ASSESSEE ON THE BASIS OF THIS CASH FLOW STAT EMENT WHICH WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. THE LD. DR CONTE NDED THAT THE ISSUE, THEREFORE, NEEDED TO BE RESTORED BA CK TO THE A.O. AND THEREAFTER BE ADJUDICATED. 61. THE LD. COUNSEL FOR ASSESSEE DID NOT OBJECT TO THE SAME, NOR WAS HE ABLE TO CONTROVERT THE FACT THAT T HE CASH FLOW STATEMENT WAS NOT CONFRONTED TO THE A.O. DURIN G APPELLATE PROCEEDINGS. 62. IN VIEW OF THE ABOVE, WE CONSIDER IT FIT TO RES TORE THE ISSUE BACK TO THE A.O. TO VERIFY THE CONTENTS OF TH E CASH FLOW STATEMENT AND THEREAFTER ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. THIS GROUND OF APPEAL IS, THER EFORE, ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 35 63. GROUND OF APPEAL NO.(IV) HAS BEEN DEALT WITH I N THE APPEAL OF THE ASSESSEE IN ITA NO.45/CHD/2014 ALONGW ITH GROUND NO.6 RAISED, WHEREIN THE MATTER HAS BEEN RES TORED BACK TO THE A.O. FOR FRESH ADJUDICATION. GROUND OF APPEAL NO.(IV), THEREFORE, STANDS ALLOWED FOR STATISTICAL PURPOSES. IN EFFECT THE APPEAL OF THE REVENUE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. 64. WE NOW TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.46/CHD/2014. 65. GROUND NOS.1 AND 2 RAISED BY THE ASSESSEE READS AS UNDER: 1. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN DISMI SSING THE GROUNDS OF APPEAL PERTAINING TO OBJECTION OF ASSESSEE WITH REGARD TO REFERENCE TO THE SPECIAL AUDITOR IN TERMS OF SECTION 142 (2A). 2. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDERIN G THAT THE CONDITIONS FOR REFERENCE TO THE SPECIAL AU DIT HAVE NOT BEEN FULFILLED AND SINCE THE ASSESSEE HAD NOT BEEN MAINTAINING ANY PERSONAL BOOKS OF ACCOUNTS , NO COMPLEXITY WAS THERE FOR THE PURPOSE OF REFERRING THE CASE TO THE SPECIAL AUDIT AND, AS SUCH, THE ASSESSMENT HAVING BEEN COMPLETED BEYOND THE LIMITATION TIME DESERVES TO BE QUASHED. 66. THE SAID GROUNDS WERE NOT PRESSED BEFORE US AND THE SAME ARE THEREFORE DISMISSED AS NOT PRESSED. 67. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING TH E ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) AMOUNTING TO RS.3,75,078/-(INADVERTENTLY WRITTEN AS RS.3,57,078/-) IN RESPECT OF AMOUNT SHOWN AS ALLEGED ADVANCE TO THE ASSESSEE IN DIFFERENT COMPANIES. 68. IT WAS COMMON GROUND THAT THE ISSUE AND FACTS RELATING TO THIS GROUND WAS IDENTICAL TO GROUND NO. 3 RAISED ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 36 BY THE ASSESSEE IN ITS APPEAL IN ITA NO.44/CHD/2014 .SINCE THE ISSUE HAS BEEN ADJUDICATED IN FAVOUR OF THE ASS ESSEE AT PARAS 13 TO 17 OF OUR ORDER ABOVE IN ITA NO.44/CHD /2014, THE DECISION RENDERED THEREIN SHALL APPLY MUTATIS M UTANDIS TO THIS GROUND ALSO. THIS GROUND OF APPEAL RAISED B Y THE ASSESSEE IS, THEREFORE, ALLOWED. 69. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UND ER: 4. THAT THE WORTHY CIT(A) HAS ERRED IN RESTRICTING THE ADDITION AMOUNTING TO RS.4,61,818/- ON ACCOUNT OF PROVISION OF SECTION 40(A)(IA) OF THE INCOME TAX ACT AS PER PARA 8.2 OF HER ORDER. 70. IT WAS COMMON GROUND THAT THE FACTS AND ISSUE INVOLVED IN THIS GROUND WAS IDENTICAL TO GROUND NO. 5 RAISED BY THE ASSESSEE IN HIS APPEAL IN ITA NO.45/CHD/2014 . SINCE THE ISSUE IN THE SAID CASE HAS BEEN RESTORED BACK T O THE A.O. FOR FRESH ADJUDICATION,AT PARA 32 OF OUR ORDER ABOVE, IN THE LIGHT OF THE PLEADING AND EVIDENCES FILED BY TH E ASSESSEE TO THE EFFECT THAT SINCE TAXES HAVE BEEN PAID BY TH E RECIPIENT OF INCOME NO DISALLOWANCE WAS WARRANTED U /S 40(A)(IA) IN THE CASE OF THE ASSESSEE, THE DECISION RENDERED THEREIN SHALL APPLY MUTATIS MUTANDIS TO THIS GROUN D ALSO. THIS GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE I S, THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 71. GROUND NO.5(A) & (B) RAISED BY THE ASSESSEE REA DS AS UNDER: 5 A). THAT THE WORTHY CIT (A) HAS ERRED IN RESTRIC TING ADDITION OF RS.3,98,000/- OUT OF ADDITION OF RS.7,27,000/-(BEING EXCESS OF PAYMENT OF RS.7,27,000/- OVER CASH RECEIPTS OF RS.3,29,000/-) ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 37 MADE BY THE OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69 C AS PER PARA 9.2 OF HER ORDER. B). THAT THE WORTHY CIT(A) HAS ALSO ERRED IN DIRECTING THE ASSESSING OFFICER TO APPLY GROSS PROFIT RATE OF 20.17 % ON CASH RECEIPTS OF RS.3,29,000/- AND MAKE ADDITION OF THE SAID SUM (WHICH WORKS TO RS.66,359/-) AS PER PARA 9.2. OF HER ORDER. 72. IT WAS COMMON GROUND THAT THE FACTS AND ISSUE I N THIS GROUND WERE IDENTICAL TO GROUND NO.4 RAISED BY THE ASSESSEE IN ASSESSEES APPEAL IN ITA NOS.44 & 45/CHD/2014. S INCE WE HAVE RESTORED THE ISSUE BACK TO THE A.O. IN THE ABOVE APPEALS AT PARA 46-47 OF OUR ORDER ABOVE WITH THE D IRECTION TO VERIFY THE EVIDENCES FILED BY THE ASSESSEE BEFOR E THE CIT(A) FOR EXPLAINING THE CASH RECEIPTS AND THEREAF TER DECIDE THE ISSUE, THE DECISION RENDERED THEREIN SHALL APPL Y MUTATIS MUTANDIS TO THIS GROUND ALSO. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS, THEREFORE ALLOWED FOR STATISTIC AL PURPOSES. 73. GROUND NOS.6, 7 AND 8 RAISED BY THE ASSESSEE RE AD AS UNDER: 6. THAT THE WORTHY CIT(A) HAS ALSO ERRED IN DIRECTIN G THE ASSESSING OFFICER TO APPLY GROSS PROFIT RATE OF 20.1 7% ON CASH RECEIPTS OF RS.9,50,636/ - AND MAKE ADDITION OF THE SAID SUM (WHICH WORKS TO RS.1,91,743/-) THEREBY RESTRICTING THE ADDITION TO RS.1,91,743/- OUT OF ADDITION OF RS.9,50,636/- MADE ON ACCOUNT OF UNEXPLAINED AMOUNT U/S 69 AS PER PARA 10.3 OF HER ORDER. 7. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.24,432/- ON ACCOUNT OF CERTAIN TRANSACTIONS AS PER PARA 12.2 OF HER ORDER. 8. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 81,640/- ON ACCOUNT OF CERTAIN DOCUMENTS AS PER PARA 13.2 OF HER ORDER. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 38 74. THESE GROUNDS WERE NOT PRESSED BEFORE US AND H ENCE ARE DISMISSED AS NOT PRESSED. 75. GROUND NO.9 RAISED BY THE ASSESSEE READS AS UND ER: 9.THAT THE WORTHY CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.7,62,436/- OUT OF ADDITION OF RS.13,41,754/- MADE ON ACCOUNT OF INCREASE IN SUNDRY CREDITORS AS PER PARA 15.2 OF HER ORDER 76. IT WAS COMMON GROUND THAT THE FACTS AND ISSUE I N THIS GROUND WERE IDENTICAL TO GROUND NO.6 RAISED BY THE ASSESSEE IN ASSESSEES APPEAL IN ITA NO.45/CHD/2014. SINCE W E HAVE RESTORED THE ISSUE BACK TO THE AO IN THE AFORESTATE D APPEAL AT PARAS 38 & 39 OF OUR ORDER ABOVE THE DECISION RE NDERED THEREIN SHALL APPLY MUTATIS MUTANDIS TO THIS GROUND ALSO. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS, TH EREFORE ALLOWED FOR STATISTICAL PURPOSES. 77. THE ASSESSEE HAS RAISED ADDITIONAL GROUND BEFOR E US VIDE ITS LETTER DATED 10.10.2015 WHICH READS AS UND ER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX(APPE ALS) HAS ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF SUNDRY CREDITORS AS OUTSTANDING IN THE BOOKS OF ACCOUNTS D ESPITE THE FACT THAT NO EVIDENCE WAS FOUND DURING THE COUR SE OF SEARCH THAT THE CREDITORS WERE NOT EXISTING 2. THAT THE ADDITION IS OTHERWISE NOT SUSTAINABLE B ECAUSE OF NUMBER OF JUDGEMENTS IN FAVOUR OF ASSESSEE 78. THE SAME WAS NOT PRESSED BEFORE US AND, IS THER EFORE DISMISSED AS NOT PRESSED. IN EFFECT THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. 79. WE NOW TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.47/CHD/2014. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 39 80. GROUND NO.1 AND 2 RAISED BY THE ASSESSEE READS AS UNDER: 1. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN DISMIS SING THE GROUNDS OF APPEAL PERTAINING TO OBJECTION OF ASSESSE E WITH REGARD TO REFERENCE TO THE SPECIAL AUDITOR IN TERMS OF SECTION 142 (2A). 2. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDE RING THAT THE CONDITIONS FOR REFERENCE TO THE SPECIAL AUDIT HA VE NOT BEEN FULFILLED AND SINCE THE ASSESSEE HAD NOT BEEN MAINTAINING ANY PERSONAL BOOKS OF ACCOUNTS, NO COMPLEXITY WAS THERE FOR THE PURPOSE OF REFERRING TH E CASE TO THE SPECIAL AUDIT AND, AS SUCH, THE ASSESSMENT H AVING BEEN COMPLETED BEYOND THE LIMITATION TIME DESERVES T O BE QUASHED. 81. THESE GROUNDS WERE NOT PRESSED BEFORE US AND TH E SAME ARE DISMISSED AS NOT PRESSED. 82. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) AMOUNTING TO RS.50,000 IN RESPECT OF AMOUNT SHOWN AS ALLEGED ADVANCE TO THE ASSESSEE IN DIFFERENT COMPANIES. 83. IT WAS COMMON GROUND THAT THE ISSUE AND FACTS RELATING TO THIS GROUND WAS IDENTICAL TO GROUND NO. 3 RAISED BY THE ASSESSEE IN ITS APPEAL IN ITA NO.44/CHD/2014 .SINCE THE ISSUE HAS BEEN ADJUDICATED IN FAVOUR OF THE ASS ESSEE AT PARAS 13 TO 17 OF OUR ORDER ABOVE IN ITA NO.44/CHD/ 2014 THE DECISION RENDERED THEREIN SHALL APPLY MUTATIS M UTANDIS TO THIS GROUND ALSO. THIS GROUND OF APPEAL RAISED B Y THE ASSESSEE IS, THEREFORE, ALLOWED. 84. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UND ER: 4. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING ADDITION OF RS. 4,29,694/- ON ACCOUNT OF PROVISION 40 (A)(IA) AS PER PARA 12.4.1 OF HER ORDER. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 40 85. IT WAS COMMON GROUND THAT THE FACTS AND ISSUE INVOLVED IN THIS GROUND WAS IDENTICAL TO GROUND NO. 5 RAISED BY THE ASSESSEE IN HIS APPEAL IN ITA NO.45/CHD/2014 . SINCE THE ISSUE IN THE SAID CASE HAS BEEN RESTORED BACK T O THE A.O. FOR FRESH ADJUDICATION, AT PARA 32 OF OUR ORD ER ABOVE, IN THE LIGHT OF THE PLEADING AND EVIDENCES FILED BY THE ASSESSEE TO THE EFFECT THAT SINCE TAXES HAVE BEEN P AID BY THE RECIPIENT OF INCOME NO DISALLOWANCE WAS WARRANTED U /S 40(A)(IA) IN THE CASE OF THE ASSESSEE, THE DECISION RENDERED THEREIN SHALL APPLY MUTATIS MUTANDIS TO THIS GROUN D ALSO. THIS GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE I S, THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 86. GROUND NO.5 RAISED BY THE ASSESSEE READS AS UND ER: 5. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 19,70,494/- IN RESPECT OF SUNDRY CR EDITORS AS PER PARA 7.4.2 OF HER ORDER. 87. IT WAS COMMON GROUND THAT THE FACTS AND ISSUE I N THIS GROUND WERE IDENTICAL TO GROUND NO.6 RAISED BY THE ASSESSEE IN ASSESSEES APPEAL IN ITA NO.45/CHD/2014. SINCE W E HAVE RESTORED THE ISSUE BACK TO THE AO IN THE AFORESTATE D APPEAL AT PARAS 38 & 39 OF OUR ORDER ABOVE THE DECISION RE NDERED THEREIN SHALL APPLY MUTATIS MUTANDIS TO THIS GROUND ALSO. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS, TH EREFORE ALLOWED FOR STATISTICAL PURPOSES. 88. THE ASSESSEE HAS RAISED ADDITIONAL GROUND BEFOR E US VIDE ITS LETTER DATED 10.10.2015 WHICH READS AS UND ER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX(APPE ALS) HAS ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF SUNDRY ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 41 CREDITORS AS OUTSTANDING IN THE BOOKS OF ACCOUNTS D ESPITE THE FACT THAT NO EVIDENCE WAS FOUND DURING THE COUR SE OF SEARCH THAT THE CREDITORS WERE NOT EXISTING 2. THAT THE ADDITION IS OTHERWISE NOT SUSTAINABLE B ECAUSE OF NUMBER OF JUDGEMENTS IN FAVOUR OF ASSESSEE 89. THE SAME WAS NOT PRESSED BEFORE US AND, IS THER EFORE DISMISSED AS NOT PRESSED. IN EFFECT THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. 90. WE NOW TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.1171/CHD/2016. 91. THE PRESENT APPEAL HAS BEEN FILED AGAINST THE CONFIRMATION OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT AND THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE WORTHY C1T (A)-3, GURGAON HAS ERRED IN UPHOLDING PENALTY U/S 271(1)(C) LEVIED BY THE ASSESS ING OFFICER ON THE FOLLOWING AMOUNTS: - I). UNEXPLAINED CASH CREDIT RS.38,12,800/- II). SUNDRY CREDITORS RS.9,52,812/- 2. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDE RING THAT THE PENALTY U/S 271(1)(C) IS NOT LEVIABLE AS THERE I S NEITHER ANY CONCEALMENT OF INCOME NOR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND A NY GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 92. DURING THE COURSE OF HEARING BEFORE US, IT WAS POINTED OUT THAT THE PENALTY HAD BEEN LEVIED ON ACCOUNT OF THE ADDITIONS MADE OF UNEXPLAINED CASH CREDITS AND SUND RY CREDITORS. IT WAS POINTED OUT THAT BOTH THESE ISSUE S HAVE BEEN RAISED IN THE APPEALS FILED BY THE ASSESSEE FO R THE IMPUGNED YEAR. ITA NOS.144 TO 47 & 108/CHD/2014 ITA NO.1171/CHD/2016 A.YS.2006-07 TO 2009-10 42 WE FIND THAT BOTH THESE ISSUES HAVE BEEN RESTORED B ACK TO THE A.O. FOR ADJUDICATING AFRESH VIDE OUR ORDER IN ITA NO.45/CHD/2014 IN GROUND NO.4 & 6 AT PARAS 46 & 47 & 38- 39. THEREFORE, THERE REMAINS NO BASIS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND THE PENALTY LEVIED IS, THEREFORE, DELETED. IN EFFECT THE APPEAL OF THE ASSESSEE IS ALLOWED 93. IN THE RESULT; I) THE APPEALS OF THE ASSESSEE IN ITA NOS.44 TO 47/CHD/2014 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. II) THE APPEAL OF THE REVENUE IN ITA NO.108/CHD/201 4 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. VI) THE APPEAL OF THE ASSESSEE IN ITA NO.1171/CHD/2 016 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ' #! $ % (SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER &' / ACCOUNTANT MEMBER )' /DATED: 18 TH JANUARY, 2019 * ! * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR