DHARMESH D. BHAVANI, MUMBAI V. ITO 32(1)(4), MUMBAI

ITA 4674/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2602 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 08-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Deemed dividend; Documents seized
• Section: 142(1); 133A; 148; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 4674 /M/ 20 1 6 ( ASSESSMENT YEAR : 2006 - 07 ) SHRI DHARMESH BHAVANI OFFICE NO. 2, LAXMI NIVAS NO.5, CHANDAVARKAR ROAD, BORIVALI WEST MUMBAI - 400092. VS. THE ITO - 32(1)(4) MUMBAI. ./ ./ PAN/GIR NO. : AFLPB 2291 J ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 25 . 05 .2018 DATE OF PRONOUNCEMENT 20.08 .201 8 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29 . 0 4 .201 6 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 44 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 20 06 - 07 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - BEING AGGRIEVED BY THE ORDERS OF THE LEARNED LOWER AUTHORITIES THE APPELLANT CRAVES YOUR HONOR'S LEAVE TO FILE THE APPEAL ON THE FOLLOWING ALTERNATIVE GROUNDS OF APPEAL: 1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN NOT HOLDING THAT THE REASSESSMENT MADE U/S 147/148 WAS BAD IN LAW. ASSESSEE BY: SHRI KIRAN MEHTA & RAVI DASIJA DEPARTMENT BY: SHRI RAM TIWARI (SR. AR ) ITA. NO.4674 /M/201 6 A.Y.2006 - 07 2 2) IN THE FACTS AND CIRCUMSTANCES OF THE EASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRM ING THE ADDITIONS OF RS.1,05,85,000/ - MADE U/S 69 ON ACCOUNT OF ALLEGED ''ON MONEY' PAID FOR THE PURCHASE OF FLAT. 3) THE LEARNED CIT (A) ERRED IN NOT HOLDING THAT NO ADDITION COULD BE MADE BASED SOLELY ON THE SCRAP OF LOOSE PAPERS FOUND IN THE COURSE OF S URVEY ACTION IN THE CASE OF DEV SHARDA DEVELOPERS PVT LTD. IT IS SUBMITTED THAT THE SAID LOOSE PAPERS HAD NO EVIDENTIAL VALUE. 4) THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THAT THERE WERE AMPLE OTHER EVIDENCES TO SHOW THAT THE APPELLANT HAD NOT PAID AN Y 'ON MONEY' AS ALLEGED AND HENCE NO ADDITION WAS TENABLE U/S 69 OR OTHERWISE. 5) THE LEARNED CIT (A) ERRED IN CONFIRMING AN ADDITION OF RS.6,46,721 / - MADE U/S 2 (22)(E) AS DEEMED DIVIDEND. 6) THE LEARNED CIT (A) ERRED IN CONFIRMING THE INTEREST LEVIED U/S 234A/B/C. 7) THE APPELLANT CRAVE YOUR HONORS' LEAVE TO ADD TO, MODIFY OR WITHDRAW ANY OF THE ABOVE GROUNDS AT OR BEFORE THE FINAL HEARING. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME TO THE TUNE OF RS.99,274 / - IN WHICH HE HAS ALSO CLAIMED AGRICULTURAL INCOME TO THE TUNE OF RS.51,010/ - AS EXEMPT. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE CASE WAS REOPENED U/S 148 OF THE ACT ON 10.10.2012 AND ACCORDINGLY NOTICE WAS ISSUED. THERE AFTER, THE NOTICE U/S 143(2) & 142(1) OF THE ACT WERE ALSO ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS A DIRECTOR OF A PRIVATE COMPANY CALLED M/S. DEV SHARDA DEVELOPERS PVT. LTD. A SURVEY ACTION U/S 133A(1) OF THE ACT WAS CARRIED OUT WITH THE COM PANY BY THE INVESTIGATION WING, MUMBAI ON 30.06.2008. DURING THE COURSE OF THE SURVEY ACTION VARIOUS INCRIMINATING DOCUMENTS WERE FOUND IMPOUNDED BY THE SURVEY ITA. NO.4674 /M/201 6 A.Y.2006 - 07 3 PARTIES . THE DOCUMENTS INCLUDING THE DETAILS ON MONEY PAID BY THE ASSESSEE AGAINST THE PURCHASE OF FLAT NO. 105 AT KENT GARDEN, BORIVALI (W), MUMBAI IN THE RELEVANT ASSESSMENT YEAR. THE DOCUMENTS ANNEXURE A - 5 PAGE 23, SPEAKS THAT THE ASSESSEE MADE CASH PAYMENT OF RS.1,05,85,000/ - FOR PURCHASE OF THE FLATS. THE TOTAL PAYMENT INCLUDING BROKERAGE WAS TO THE TUNE OF RS.1,42,85,000/ - AS AGAINST THE AGREEMENT VALUE OF RS.37,00,000/ - , THUS INVOLVING UNEXPLAINED INVESTMENT OF RS.1,05,85,000/ - . THE NOTICE WAS GIVEN . FINDING NO SATISFACTOR ILY REPLY , THE AMOUNT WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS SHOWN THE LOAN ADVANCES RECEIVED FROM M/S. DEV SHARDA DEVELOPERS PVT. LTD. THE ASSESSEE WAS ONE OF THE DIRECTOR IN THE SAID COMPANY, THEREFORE, THE SAID LOAN WAS TREATED A S DEEMED DIVIDEND INCOME OF SECTION 2(22)(E) OF THE ACT AND SAID AMOUNT WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.1,13,31,000/ - . THEREFORE, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) W HO DISMISSED THE APPEAL OF THE ASSESSEE , THEREFORE, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. ISSUE NO . 1 : - 4 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT. AT THE TIME OF ARGUMENT, TH E LD. REPRESENTATIVE OF THE ASSESSEE DID NOT PRESS THIS GROUND. ITA. NO.4674 /M/201 6 A.Y.2006 - 07 4 THEREFORE, THIS GROUND IS HEREBY ORDERED TO BE DISMISSED BEING NOT PRESSED. ISSUE NO S . 2 TO 4 : - 5. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION OF RS. 1,05,85,000/ - MADE U/S 69 OF THE ACT ON ACCOUNT OF ALLEGED ON MONEY. A SEARCH AND SURVEY ACTION WAS TAKEN AGAINST THE M/S. DEV SHARDA DEVELOPERS PVT. LTD. IN WHICH THE A SSESSEE WAS ONE OF THE DIRECTOR. THE DOCUMENT WAS ANNEXED A - 5 PAGE NO. 23 WAS TAKEN INTO POSSESSION IN WHICH THE CASH PAYMENT TO THE TUNE OF RS.1,05,85,000/ - FOR PURCHASE OF FLAT HAD BEEN MENTIONED. THE NOTICE WAS GIVEN AND THE ASSESSEE REPLIED THAT THE SAID FLAT WAS PURCHASED IN SUM OF RS.37,00,000/ - AND IN THIS REGARD ALSO SUBMITTED THE REG ISTERED SALE - DEED. THE ASSESSEE ALSO EXPLAINED THAT AT THE TIM E OF EXECUTION OF THE SALE - DEED, T HE VALUE OF FLAT WAS TO THE TUNE OF RS.29,72,106/ - IN ACCORDANCE WITH THE STAMP DUTY AUTHORITY WHICH WAS LES S. THEREFORE, THE WRITING RECOVERED BY THE SEARCH AN D SURVEY ACTION NOWHERE CONNECT ED WITH THE PAYMENT OF THE FLAT OF THE ASSESSEE. IT IS ALSO ASCERTAINED THAT THE ON MONEY IS NOT LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE BEING NOT LINKED WITH THE PAYMENT OF THE FLAT. IT IS SPECIFICALLY ARGUED THAT I N THE CASE OF THE FATHER AND MOTHER ON MONEY HAS ALSO ADDED TO THE INCOME OF THE ASSESSEE IN WHICH THE HONBLE ITAT IN THE CASE OF IN ITA. NO.4675/M/2016 DATED 29.12.2017 TITLE AS DEVARAM C. BHAVANI 4754 & 4755/M/2016 DATED 29.12.2017 HAS ITA. NO.4674 /M/201 6 A.Y.2006 - 07 5 DELETED THE ON MONEY ADDITION. IT IS ALSO ARGUED THAT THE CASE OF ASSESSEE IS ALSO DULY COVERED BY THE SAID CAS E S , THEREFORE, THE ADDITION IS LIABLE TO BE DELETED. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ASSESSEE PASSED BY THE CIT(A) IN QUESTION. ON APPRAISAL OF THE ORDER PASSED BY LOWER AUTHORITIES AND ALSO GOING THROUGH T HE DOCUMENTS PLACED ON RECORD, W E NOTICED THAT THE ON MONEY TO THE TUNE OF RS. 1,05,85,000/ - HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE U/S 69 OF THE ACT ON THE BASIS OF THE RECEIPT. DURING THE SEARCH AND SURVEY ACTION U/S 133A OF THE ACT , A PIECE OF PAPER WAS RECOVERED WHICH LIES AT PAGE NO. 10 OF THE PAPER BOOK. ON APPRAISAL OF THIS SAID PIECE OF PAPER, WE NOTICED THAT THE CERTAIN AMOUNT HAS BE EN DETAIL ED BUT THE SAID DOCUMENTS NOWHERE SPEAK S ABOUT THE PURCHASE OF FLAT . H OW THESE DOCUMENTS LINKED WITH THE PAYMENT OF ON MONEY TO THE TUNE OF RS. 1,05,85,000/ - ON ACCOUNT OF PURCHASE OF FLAT NO. 105 AT KENT GARDEN, BORIVALI (W), MUMBAI BY ASSESSEE IS NOT UNDERSTANDABLE . THERE IS NO CORROBORATIVE PIECE OF EVIDENCE ON RECORD . I N THE CASE OF FATHER OF THE ASSESSEE THE ADDITION OF ON MONEY HAS BEEN DELETED BY ITAT IN THE CASE OF IN ITA. NO. 4675/M/2016 DATED 29.12.2017 TITLE AS DEVARAM C. BHAVANI VS. I TO . THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 5 & 6 BELOW.: - 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORISED 4 REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT HE WAS NOT PRESSING GROUND OF APPEAL NO. 1. THE ITA. NO.4674 /M/201 6 A.Y.2006 - 07 6 GROUND OF APPEAL NO. 1 IS THUS DISMISSED AS NOT PRESSED. THE LD. A.R TOOK US THROUGH THE AGREEMENT TO SELL, DATED 23.06.2005, VIDE WHICH HE HAD HAD PURCHASED THE FLAT NO. 2002, KENT GA RDEN, BORIVALI (W), MUMBAI, DURING THE YEAR UNDER CONSIDERATION. THE LD. A.R TAKING US THROUGH THE RELEVANT EXTRACT OF THE AGREEMENT AT PAGE 19 OF THE APB, THEREIN DREW OUR ATTENTION TO THE FACT THAT THE AREA OF THE FLAT WAS 68 SQ. MTR. THAT IN THE BACKD ROP OF THE AFORESAID FACT THE LD. A.R TOOK US THROUGH THE IMPOUNDED DOCUMENT, VIZ. ANNEXURE A - 2 PAGE 37 & PAGE 105. THE LD. A.R SUBMITTED THAT THE A.O HAD DRAWN ADVERSE INFERENCES AND FURTHER ALLEGED PAYMENT OF ON MONEY OF RS. 47,00,000/ - BY THE ASSESS EE ON THE BASIS OF THE FIGURE OF RS. 72,50,000/ - WHICH STOOD MENTIONED AS AGAINST A FIGURE OF 1120 MULTIPLIED BY SIX THOUSAND AT PAGE 37 AND ALLEGED PAYMENT OF CERTAIN CASH COMMISSION AS PER IMPOUNDED PAGE 105. THE LD. A.R SUBMITTED THAT THE A.O HAD WHIM SICALLY INFERRED THE PAYMENT OF ON MONEY OF RS. 47,00,000/ - BY THE ASSESSEE BY REFERRING TO THE VAGUE NOTINGS IN THE SAID IMPOUNDED DOCUMENTS, VIZ. PAGE 37 & PAGE 105 . THE LD. A.R SUBMITTED THAT THERE WAS NO BASIS FOR THE A.O TO HAVE CONCLUDED THAT THE AMOUNT OF RS. 72,50,000/ - MENTIONED AT PAGE 37 AS WELL AS THE DUMB NOTINGS AT PAGE 105 OF THE AFORESAID IMPOUNDED DIARY PERTAINED TO THE PURCHASE OF THE PROPERTY UNDER CONSIDERATION, VIZ. FLAT NO. 2002, KENT GARDEN, BORIVALI (W), MUMBAI. THE LD. A.R IN ORD ER TO DRIVE HOME HIS AFORESAID CONTENTION, THEREIN SUBMITTED THAT THE FIGURE OF 1120 MENTIONED IN THE IMPOUNDED DOCUMENT POSSIBLY REFERRED TO AN AREA, WHICH DID NOT TALLY WITH THE AREA OF THE FLAT UNDER CONSIDERATION THAT WAS OF 68 SQ. MTRS (I.E 732 SQ. FT). IT WAS THUS SUBMITTED BY THE LD. A.R THAT THERE WAS NEITHER ANYTHING IN THE ORDERS OF THE LOWER AUTHORITIES NOR IN THE IMPOUNDED DOCUMENT, ON THE BASIS OF WHICH THE IMPUGNED NOTINGS AS AGAINST THE FIGURE OF RS. 72,50,000/ - AT PAGE 37 OR THE DUMB NOTIN GS AT PAGE 105 OF THE IMPOUNDED DIARY COULD BE RELATED TO THE PROPERTY UNDER CONSIDERATION. THE LD. A.R IN THE BACKDROP OF HIS AFORESAID CONTENTIONS AVERRED THAT THE A.O HAD MADE AN ADDITION OF RS. 47,00,000/ - ABSOLUTELY ON A BASELESS GROUND, WHICH BEING N OTHING BETTER THAN AN ADDITION IN THE THIN AIR COULD NOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. THE LD. D.R SUBMITTED THAT AS THE NOTINGS A T PAGE 37 & PAGE 105 OF THE IMPOUNDED DIARY PERTAINED TO THE FLAT NO. 2002, KENT GARDEN, BORIVALI (W), MUMBAI, THEREFORE, THE LOWER ITA. NO.4674 /M/201 6 A.Y.2006 - 07 7 AUTHORITIES AFTER CARRYING OUT A CONJOINT PERUSAL OF THE SAID DOCUMENTS HAD RIGHTLY CONCLUDED THAT THE ASSESSEE HAD PAID ON MONEY OF RS. 47,00,000/ - FOR THE PURCHASE OF THE PROPERTY. THE LD. D.R IN ORDER TO SUPPORT HIS CONTENTION RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF SURENDRA M. KHANDHAR VS. ASSISTANT COMMISSIONER OF INCOME - TAX & ORS (2010) 321 ITR 254 (BOM). THE LD. D.R RELYING ON THE SAID JUDGMENT SUBMITT ED THAT IT WAS HELD BY THE HON BLE HIGH COURT THAT AS THE ASSESSEE HAD FAILED TO REBUT THE PRESUMPTION DRAWN BY THE A.O UNDER SEC 292C, THEREFORE, THE ADDITION UNDER SEC. 69 ON THE BASIS OF THE DOCUMENT SEIZED FROM THE POSSESSION OF ASSESSEE WAS RIGHTLY MADE BY AO AND SUSTAINED BY THE TRIBUNAL. IT WAS THUS SUBMITTED BY THE LD. D.R THAT NOW WHEN THE ASSESSEE HAD FAILED TO REBUT THE PRESUMPTION DRAWN BY THE A.O ON THE BASIS OF THE NOTINGS IN T HE DIARY IMPOUNDED IN THE COURSE OF THE SURVEY PROCEEDINGS CONDUCTED ON M/S DEV SHARDA DEVELOPERS, THEREFORE, THE ADDITION OF RS. 47,00,000/ - WAS RIGHTLY MADE BY THE A.O. 6. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORD ERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ADDITION OF RS. 47,00,000/ - HAD BEEN MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE NOTINGS IN ANNEXURE A - 2 PAGE 37 & PAGE 105 ,WHICH ARE THE PAGES OF A DIARY THA T WAS IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDINGS ON THE COMPANY M/S DEV SHARDA DEVELOPERS, IN WHICH THE ASSESSEE IS A DIRECTOR. WE HAVE DELIBERATED AT LENGTH ON THE NOTINGS MENTIONED IN ANNEXURE A - 2 PAGE 37 & PAGE 105, AND FIND THAT THE ADVERSE IN FERENCE AS REGARDS PAYMENT OF ON MONEY RS. 47,00,000/ - FOR PURCHASE OF THE FLAT (INCLUDING COMMISSION) WAS MADE BY THE A.O BY REFERRING TO THE FIGURE OF RS. 72,50,000/ - WHICH STOOD MENTIONED AS AGAINST A FIGURE OF 1120 MULTIPLIED BY SIX THOUSAND IN THE SAID DOCUMENT, AND CERTAIN ROUGH NOTINGS MARKED AS COMMISSION AT PAGE 105. WE ARE OF THE CONSIDERED VIEW THAT THOUGH THERE IS NO MENTION OF THE AMOUNT OF RS. 47,00,000/ - IN THE AFORESAID DOCUMENT, THE A.O HOWEVER HAD INFERRED THE PAYMENT OF ON MONEY O F RS. 47,00,000/ - TOWARDS PURCHASE OF THE PROPERTY (INCLUDING COMMISSION) BY THE ASSESSEE BY REDUCING THE AMOUNT OF RS. 29,00,000/ - MENTIONED IN PAGE 37 OF THE IMPOUNDED DOCUMENT FROM THE AMOUNT OF RS. 72,50,000/ - (SUPRA) AND ADDING UP CERTAIN AMOUNTS MENTI ONED AS COMMISSION AT PAGE 105 OF THE IMPOUNDED DIARY. ITA. NO.4674 /M/201 6 A.Y.2006 - 07 8 6 . ACCORDINGLY, IN THE CASE OF MOTHER OF THE ASSESSEE ON MONEY HAS BEEN ORDERED TO BE DELETED IN CASE TITLED AS MRS. SHARDABEN BHAVANI VS. ITO IN ITA. NO.4754 & 4755/M/2016 DATED 29.12.2017 AND THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 6 BELOW.: - 6. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE HAVE PERUSED THE COPY OF THE AGREEMENT FOR S ALE, DATED. 23.06.2005 (PAGE 23 32) OF THE PAPER BOOK OF THE ASSESSEE (FOR SHORT APB) AND FIND THAT THE FLAT NO. 2001 IN KENT GARDEN TOWER, BORIVLI, MUMBAI WAS PURCHASED JOINTLY BY THE ASSESSEE, HER SON MR. DHARMESH D. BHAVANI AND HUSBAND SH. DEVARAM C. BHAWANI FOR A CONSIDERATION OF RS. 42 LAC. THAT A PERUSAL OF THE AGREEMENT REVEALS THAT OUT OF THE TOTAL PURCHASE CONSIDERATION OF RS. 42 LAC AN AMOUNT OF RS. 2,10,000/ - WAS PAID VIDE A CHEQUE DRAWN ON BANK OF BARODA, BORIVLI BRANCH, WHILE FOR THE BALAN CE AMOUNT OF RS. 39,90,000/ - WAS AGREED TO BE PAID WITHIN A PERIOD OF 45 DAYS. WE FIND THAT INITIALLY A LOAN OF RS. 37,50,000/ - WAS RAISED FROM CITI FINANCE FOR PURCHASE OF THE FLAT, WHICH THEREAFTER WAS FORECLOSED AND THE LOAN WAS TAKEN OVER BY BANK OF BA RODA (PAGE 17 OF APB). WE FIND THAT THE CERTIFICATE OF FORECLOSURE OF LOAN OF CITI FINANEL, DATED 25.08.2006 (PAGE 17 OF APB) AND CERTIFICATE OF MORTGAGE OF CITI FINANCE, DATED 09.08.2005 (PAGE 20 OF APB) CLEARLY MAKES A MENTION OF THE ASSESSEE, VIZ SMT. SHARDABEN BHAVANI, MR. DHARMESH D. BHAVANI (SON OF THE ASSESSEE) AND SH. DEVARAM C. BHAWANI (HUSBAND OF THE ASSESSEE), ALL OF WHOM AS OBSERVED BY US HEREINABOVE HAD JOINTLY PURCHASED THE FLAT. BE THAT AS IT MAY, A PERUSAL OF THE RECEIPTS ISSUED BY THE SELLER OF THEFLAT SH.LABHUBHAI J. GOTI (PAGE 7 - 14 OF APB) REVEALS THAT THE SOURCE OF PAYMENT OF THE BALANCE PURCHASE CONSIDERATION OF RS. 39,90,000/ - (SUPRA) HAD INITIALLY FLOWN FROM THE LOAN ACCOUNT OF M/S CITI FINANCE, AND AFTER ITS FORECLOSURE FROM T HE LOAN ACCOUNT OF BANK OF BARODA. WE FIND THAT THAT THE INVESTMENT IN THE FLAT WHICH WAS CLAIMED BY THE ASSESSEE TO HAVE BEEN INITIALLY FUNDED FROM THE LOAN RAISED FROM CITI FINANCE WAS HAVING AN OUTSTANDING BALANCE OF RS. 36,75,826/ - ON 31.03.2006, REMAI NS A FACT WHICH IS BORNE ITA. NO.4674 /M/201 6 A.Y.2006 - 07 9 FROM THE RECORDS. WE ARE OF THE CONSIDERED VIEW THAT A PERUSAL OF THE PURCHASE AGREEMENT AND OTHER DOCUMENTS CLEARLY REVEALS THAT THE FLAT WAS JOINTLY PURCHASED BY THE ASSESSEE, VIZ SMT. SHARDABEN BHAVANI, MR. DHARMESH D. BHAVANI ( SON OF THE ASSESSEE) AND SH. DEVARAM C. BHAVANI (HUSBAND OF THE ASSESSEE). THUS, THE CLAIM OF THE ASSESSEE THAT SHE WAS THE EXCLUSIVE OWNER OF THE FLAT CANNOT BE ACCEPTED AND FALLS TO GROUND. WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE PURCHASE OF THE FLAT WAS FUNDED FROM THE LOAN RAISED FROM M/S CITI FINANCE, THEREFORE, IT WAS INCORRECT ON THE PART OF THE LOWER AUTHORITIES TO CONCLUDE THAT THE SOURCE OF INVESTMENT IN THE PROPERTY WAS UNEXPLAINED. WE ARE OF THE CONSIDERED VIEW THAT THE LOWER AUTHORITIES ON THE BASIS OF PREMATURE OBSERVATIONS HAD TAKEN A HYPER TECHNICAL VIEW AND DESPITE THE FACT THAT THE MATERIAL AVAILABLE ON RECORD CLEARLY REVEALED THAT THE INVESTMENT MADE TOWARDS PURCHASE OF FLAT WAS FROM THE LOAN RAISED FROM CITI FINANCE, HAD THUS WRON GLY CONCLUDED THAT THE SOURCE OF INVESTMENT TO THE EXTENT OF RS. 36,75,826/ - ON 31.03.2006 WAS TO BE HELD AS AN UNEXPLAINED INVESTMENT U/S 69 IN THE HANDS OF THE ASSESSEE. WE ARE OF THE CONSIDERED VIEW THAT AS THE INVESTMENT OF RS. 36,75,826/ - IS CLEARLY R OUTED TO THE LOAN RAISED FROM CITI FINANCE, THEREFORE, THE ADDITION OF THE SAME AS AN UNEXPLAINED INVESTMENT U/S 69 IN THE HANDS OF THE ASSESSEE CANNOT BE SUSTAINED. WE THUS SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION OF RS. 36,75,826/ - . 12. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ADDITION OF RS. 54,20,000/ - HAD BEEN MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE NOTINGS IN ANNEXURE A - 2 PAGE 37 WHICH IS A PAGE OF A DIARY THAT WAS IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDINGS ON THE COMPANY M/S DEV SHARDA DEVELOPERS, IN WHICH THE ASSESSEE WAS A DIRECTOR. WE HAVE DELIBERATED AT LENGTH ON THE NOTINGS MENTIONE D IN ANNEXURE A - 2 PAGE, AND FIND THAT THE ADVERSE INFERENCE AS REGARDS RECEIPT OF ON MONEY RS. 54,20,000/ - WAS MADE BY THE A.O BY REFERRING TO THE FIGURE OF RS. 96,20,000/ - WHICH STOOD MENTIONED AS AGAINST A FIGURE OF 1520 (AFTER SCRIBBLING) MULTIPLIED BY SIX THOUSAND IN THE SAID DOCUMENT. WE ARE OF THE CONSIDERED VIEW THAT THOUGH THERE IS NO PROPERTY UNDER CONSIDERATION, THEREFORE, THERE WAS NO OCCASION FOR THE A.O TO HAVE ACTED UPON THE SAID IMPUGNED NOTINGS IN CONTEXT OF THE SALE OF THE PROPERTY UNDE R CONSIDERATION. WE FURTHER FIND THAT THE JUDGMENT OF THE OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF SURENDRA ITA. NO.4674 /M/201 6 A.Y.2006 - 07 10 M. KHANDHAR VS. ASSISTANT COMMISSIONER OF INCOME - TAX & ORS (2010) 321 ITR 254 (BOM) RELIED UPON BY THE LD. D.R IS DISTINGUISHABLE ON FACTS . WE FIND THAT IN THE CASE BEFORE THE HIGH COURT A ZEROX COPY OF A DOCUMENT SIGNED BY TWO PARTIES, REVEALING PAYMENT OF A LOAN OF RS. 20 LAC BY THE ASSESSEE TO THEM AND THE MANNER AS PER WHICH THE AMOUNT WAS TO BE RECEIVED BACK WAS SEIZED FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARCH & SEIZURE PROCEEDINGS. THE ASSESSEE IN THE SAID CASE NEITHER AT THE FIRST AVAILABLE OPPORTUNITY, NOR AT ANY SUBSEQUENT STAGE OF APPEAL OR BEFORE THE HIGH COURT DENIED THE DOCUMENT, BUT HAD ONLY CLAIMED THAT THE TRANSACTION MENTIONED THEREIN WAS NOT GIVEN EFFECT TO. WE FIND THAT IT WAS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE HIGH COURT HELD THAT ONCE A DOCUMENT WAS SEIZED IN THE PREMISES UNDER CONTROL OF THE ASSESSEE, THE PRESUMPTION UNDER S. 292C AS ALSO THAT UNDER S. 132(4A) FOLLOWED, AND IT WAS FOR THE ASSESSEE TO REBUT THAT PRESUMPTION. THE HIGH COURT OBSERVED THAT AS IN THE CASE BEFORE IT, NEITHER THE PRESUMPTION CREATED BY THE DOCUMENT WAS REBUTTED, NOR HAD THE ASSESSEE DENIED THE LOAN AMOUNT, THUS NO INFIRMITY COULD BE FOUND WITH THE REASONING ADOPTED BY THE TRIBUNAL FOR UPHOLDING THE CORRECTNESS OF THE CONTENTS OF THE DOCUMENTS. WE FIND THAT THE FACTS OF THE CASE BEFORE US ARE DISTINGUISHABLE AS AGAINST THE FACTS INVOLVED IN THE CASE BEFORE THE HONB LE HIGH COURT ON MULTIPLE GROUNDS, VIZ. (I). THAT AS THE PRESUMPTION UNDER SEC. 292C AND UNDER SEC. 132(4A) INVOKED IN THE CASE BEFORE THE HIGH COURT IS APPLICABLE ONLY IN A RESPECT OF DOCUMENTS SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS, THEREFORE, TH E SAME WOULD NOT BE APPLICABLE TO THE CASE OF THE PRESENT ASSESSEE WHERE SURVEY PROCEEDINGS WERE CONDUCTED; (II). THAT UNLIKE AS IN THE CASE BEFORE THE HIGH COURT, THE IMPOUNDED DOCUMENT IN THE CASE OF THE ASSESSEE WAS AN UNSIGNED DOCUMENT; (III). THAT UNL IKE AS IN THE CASE BEFORE THE HIGH COURT, THE ASSESSEE IN THE PRESENT CASE HAD NEVER ADMITTED THE CONTENTS OF THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 2 PAGE 37; AND (IV) THAT UNLIKE AS IN THE CASE BEFORE THE HIGH COURT, IN THE CASE OF THE PRESENT ASSESSEE N OTHING COULD BE SAFELY GATHERED FROM A PERUSAL OF THE DUMB NOTINGS IN THE IMPUGNED IMPOUNDED DOCUMENT. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS THAT THERE IS NO BASIS FOR RELATING THE NOTINGS IN THE IMPOUNDED DOCUMENT, VIZ. ANNEXURE A - 2 PAGE 37 WITH THE SALE OF FLAT NO. 2001, KENT GARDEN, BORIVALI (W), MUMBAI, THEREFORE, ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF RS. 54,20,000/ - MADE BY THE A.O U/S 69 ITA. NO.4674 /M/201 6 A.Y.2006 - 07 11 AND SUSTAINED BY THE CIT(A) CANNOT BE UPHELD. WE THUS SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION OF RS. 54,20,000/ - . 7 . THE ADDITION AGAINST THE ABOVE SAID TWO CASES INCLUDING THE ASSESSEE ARE ON THE BASIS OF THE SEARCH AND SEIZURE EFFECTED AT THE PREMISES OF M/S. DEV SHARDA DEVELOPERS PVT. LTD. ON APPRAISAL OF THE ORDER IN TH E CASE OF DEVARAM C. BHAVANI AND MRS. SHARDABEN BHAVANI , N O DOUBT, THE RECOVERED DOCUMENTS NOWHERE CONNECTED WITH THE TRANSACTION, THEREFORE, ON MONEY TRANSACTION WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE HAS BEEN ORDER ED TO BE DELETED . THE SIMILAR SIT UATION IS IN THE CASE ALSO IN WHICH THE DOCUMENTS WHICH LIES AT PAGE NO. 10 OF THE PAPER BOOK NOWHERE SPEAKS ABOUT THE CONNECTION WITH THE PURCHASE D OF FLAT OR LINKED WITH THE TRANSACTION IF ANY. NO ADDITION IS REQUIRED ON RAISED ON THE BASIS OF THE ASSUMPTION AND PRESUMPTION. SINCE THERE IS NO COGENT AND CONVINCING EVIDEN CE IS O N RECORD TO CONNECT THE ON MONEY IF ANY WITH TRANSACTION OF PURCHASE OF THE FLATS, THEREFORE, WE ARE OF THE VIEW THAT THE ADDITION ON ACCOUNT OF PURCHASE OF FLAT AS ON MONEY U /S 69 OF THE ACT TO THE TUNE OF RS. 1,05,85,000 / - IS NOT JUSTIFIABLE, HENCE WE DELETE THE SAME. ACCORDINGLY, THESE ISSUES ARE BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA. NO.4674 /M/201 6 A.Y.2006 - 07 12 ISSUE NO . 5 : - 8. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION OF RS.6,46,721/ - MADE U/S 2(22)(E) OF THE ACT AS DEEMED DIVIDEND INCOME. LEARNED COUNSEL OF THE ASSESSEE SUBMITS THAT ASSESSEE IS A SHAREHOLDER AND DIRECT OR IN M/S. DEV SHARDA DEVELOPERS P V T. LTD . HE IS HAVING A RUNNING ACCOUNT WITH THE COMPANY. HE SUBMITTED THAT RUNNING ACCOUNT WITH THE COMPANY CAN NOT BE EQUATED WITH A DEEMED DIVIDEND. LEARNED COUNSEL FURTHER SUBMITTED THAT AMOUNT WAS F OR THE BUSINESS EXPEDIENCY IN NORMAL COURSE OF BUSINESS. 9. PE R CONTRA LEARNED D R RELIED UPON THE ORDER OF AUTHORITIES BELOW. BUT HE DID NOT DISPUTE THAT IT IS NOT A RUNNING ACCOUNT WITH DIRECTOR. 10. UPON CAREFUL CONSIDERATION, WE AGREE WITH THE LEARNED COUNSEL THAT RUNNING ACCOUNT AND ADVANCES OUT FOR BUSINESS EXPEDIENCY CANNOT BE BROUGHT TO TAX AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. HENCE WE HOLD THAT ADDITION U/S.2(22)(E) OF THE ACT IS NOT SUSTAINABLE. HENCE WE SET ASIDE THE ORDER OF AUTHORITIES BELOW AND DELETE THE ADDITION. 9 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ITA. NO.4674 /M/201 6 A.Y.2006 - 07 13 ORDER P RONOUNCED IN THE OPEN COURT ON 20.08 . 2018 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 20.08 . 2018 . VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI