Sh. Roshan Lal Jindal, Chandigarh V. DCIT, Chandigarh

ITA 51/CHANDI/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6880 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GULSHAN RAJ
• Keywords: Document seized; Charitable institution; Deemed to accrue or arise in india; Additional evidence; Deemed dividend; Documents seized
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.51 /CHD/2014 (ASSESSMENT YEAR : 2006-07) SH.ROSHAN LAL JINDAL VS. THE D.C.I.T., # 83, NAC MANIMAJRA, CENTRAL CIRCLE-1, CHANDIGARH. CHANDIGARH. PAN: AAMPJ1997R ITA NO.110 /CHD/2014 (ASSESSMENT YEAR : 2006-07) THE D.C.I.T., VS. SH.ROSHAN LAL JINDAL CENTRAL CIRCLE-1, # 83, NAC MANIMAJRA, CHANDIGARH. CHANDIGARH. PAN: AAMPJ1997R AND ITA NOS.52 TO 54/CHD/2014 (ASSESSMENT YEARS : 2007-08 TO 2009-10) SH.ROSHAN LAL JINDAL VS. THE D.C.I.T., # 83, NAC MANIMAJRA, CENTRAL CIRCLE-1, CHANDIGARH. CHANDIGARH. PAN: AAMPJ1997R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL, ADVOCATE RESPONDENT BY : SHRI GULSHAN RAJ, CIT DR DATE OF HEARING : 03.08.2017 DATE OF PRONOUNCEMENT : 14.09.2017 O R D E R PER BENCH : ALL THE ABOVE APPEALS RELATE TO THE SAME ASSESSEE ON ACCOUNT OF ASSESSMENT FRAMED CONSEQUENT TO SEARCH C ARRIED OUT ON THE ASSESSEE. THEREFORE, ALL WERE HEARD TOG ETHER. WHILE THE APPEAL IN ITA NO.51/CHD/2014 AND ITA NO.110/CHD/2014 ARE CROSS APPEALS BY THE ASSESSEE A ND 2 THE REVENUE AGAINST THE ORDER PASSED BY THE LD.CIT(APPEALS)(CENTRAL), GURGAON DATED 27.11.2013 FOR ASSESSMENT YEAR 2006-07, THE APPEALS IN ITA NO. 52/CHD/2014, ITA NO. 53/CHD/2014 AND ITA NO. 54/CHD/2014 HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD.CIT(APPEALS)(CENTRAL), GURGA ON DATED 27.11.2013. 31.10.2013 AND 31.10.2013 FOR ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 RESPECTIVELY 2. AT THE OUTSET IT MAY BE STATED THAT DURING THE COURSE OF HEARING BEFORE US THE LD. COUNSEL FOR THE ASSESS EE SOUGHT PERMISSION TO WITHDRAW THE ASSESSEES APPEAL FILED IN ITA NOS.52 & 54/CHD/2014. IN VIEW OF THE SAME, THE SAI D TWO APPEALS ARE TREATED AS DISMISSED. 3. WE SHALL NOW BE FIRST TAKING UP REVENUES APPEAL IN ITA NO.110/CHD/2014 ITA NO.110/CHD/2014(REVENUES APPEAL) : 4. GROUND NO.(I) RAISED BY THE REVENUE READS AS UND ER: (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.209140/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF DEEMED INCOME U/S 2(22)(E) OF THE IT. ACT, 1961?' 5. IN THE ABOVE GROUND THE REVENUE HAS CHALLENGED DELETION OF ADDITION MADE ON ACCOUNT OF DEEMED DIVI DEND UNDER SECTION 2(22)(E) AMOUNTING TO RS.2,09,140/-. 6. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT DURIN G ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT 3 THE ASSESSEE WAS A SHAREHOLDER IN A NUMBER OF COMPA NIES IN WHICH HE HAD SUBSTANTIAL INTEREST AND THESE COMP ANIES HAD GIVEN LOANS TO THE ASSESSEE AS WELL AS TO COMPA NIES IN WHICH THE ASSESSEE HAD SUBSTANTIAL INTEREST. TO IL LUSTRATE THE POSITION, THE ASSESSING OFFICER MADE A CHART RE PRODUCED AT PAGE 4 OF THE ASSESSMENT ORDER AS UNDER: COMPANY SUBSTANTIAL LIST OF LOAN GIVEN ASSESSEE'S LOAN PROPORTIONATE WHICH IS GIVING INTEREST OF SUBSTANTIAL TO THE INTEREST IN AMOUNT SHARE OF LOAN THE INTERESTED ASSESSEE OR SAID GIVEN DEEMED ASSESSEE IN SHAREHOLDERS TO ANY CONCERN BEING DIVIDEND ON THE SAID IN THE CONCERN IN TREATED THE BASIS OF I COMPANY COMPANY WHICH AS SHAREHOLDING (MINIMUM WHICH IS ASSESSEE IS DEEMED AMONG THE 10% GIVING LOAN SUBSTANTIALLY DIVIDEND SUBSTANTIALLY REQUIRED) INTERESTED. U/S INTERESTED 2(22)(E) SHAREHOLDERS IN THE COMPANY HIMLAND AGRO 1640/ GARGI JINDAL SWAMI DEVI MEMBER 525000 NIL FOODS INDIA LTD. 15800 = 2900 DAYAL HI- (ACCUMULATED SHARES = SHARES, TECH PROFITS OF 10.38% URMIL JINDAL EDUCATION 6230330) = 2300 SOCIETY SHARES, ASHOK JINDAL = 1640 SHARES 1200 / 5800 AMIT JINDAL = HIRAMOTI 20% 113322 39996 SHARES = 600 SHARES, AGRO HEERA MOTI 20.69% R.I, JINDAL = PRODUCTS HEALTHCARE 1200 SHARES, PRODUCT LTD. ( URMIL JINDAL ACCUMULATED = 1000 PROFITS OF SHARES, 3740308) SUNITA JINDAL = 600 SHARES 1200 / 5800 AMIT JINDAL = SWAMI DEVI MEMBER 395000 158000 SHARES = 600 SHARES, DAYAL HI- 20.69% ASHOK JINDAL TECH = 1200 EDUCATION SHARES SOCIETY 4 ROSHAN LAL JINDAL = 1200 SHARES 6061/33311 ROSHAN LAL HIRAMOTI 20% SHARES = JINDAL = 6061 AGRO 18.20% SHARES, PRODUCTS URMIL JINDAL = 5140 SHARES 47000 47000 HEERAMOTI SPICY PVT. LTD. (ACCUMULATED PROFITS OF 3222755) 6061/33311 SHARES = 18.20% ROSHAN LAL JINDAL = 6061 SHARES, SWAMI DEVI DAYAL HI- TECH MEMBER 87000 51140 ASHOK JINDAL EDUCATION = 4250 SOCIETY SHARES TOTAL 2,96,136 7. ON BEING CONFRONTED WITH THE SAME, THE ASSESSEE SUBMITTED THAT THE SUMS WERE ADVANCED OUT OF COMMER CIAL OR BUSINESS EXPEDIENCY AND THERE WAS NO INTENTION O F PROVIDING LOANS OR ADVANCES. THE ASSESSEE ALSO SUB MITTED THAT THE ADVANCES GIVEN TO SWAMI DEVI DAYAL HI-TECH SOCIETY IN THE BOOKS OF HEERA MOTI HEALTH CARE PROD UCT LTD. & HEERA MOTI SPICY PVT. LTD. AMOUNTING IN ALL TO RS.2,09,140/- COULD NOT BE TREATED AS DEEMED DIVIDE ND UNDER SECTION 22(E) OF THE ACT SINCE THE ASSESSEE WAS ONL Y THE TRUSTEE IN THE SAID TRUST AND WAS NOT ENTITLED TO 20% OR MORE IN THE INCOME OF THE TRUST. THE ASSESSING OFFICER REJECTED THE A SSESSEES CONTENTION STATING THAT COMMERCIAL AND BUSINESS EXP EDIENCY FOR ADVANCING THE SAID LOANS HAD NOT BEEN ESTABLISHED B Y THE ASSESSEE WITH NECESSARY PROOF AND WITH RESPECT TO ADVANCE MA DE TO SWAMI DEVI DAYAL HI-TECH EDUCATION ACADEMY, THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH SHOWED THAT THE FUNDS H AD BEEN UTILIZED BY THE MEMBERS OF THE SOCIETY AND THEIR FA MILY MEMBERS AND, THEREFORE, THE CONTENTION OF THE ASSESSEE THAT NO PERSONAL 5 BENEFIT HAD BEEN DERIVED BY THE ASSESSEE WAS NOT CO RRECT. THE ASSESSING OFFICER, THEREFORE, TREATED THE SUM O F RS.2,96,137/- AS DEEMED DIVIDEND AND ADDED THE SAME TO THE TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR UND ER CONSIDERATION. 8. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO DELETED THE ADDITION MADE WITH RESPECT TO THE AMOUNTS ADVANCED TO SWAMI DEVI DAYAL HI-TECH EDUCATION ACADEMY OF RS.2,09,140/- HOLDING THAT SIN CE IT WAS A SOCIETY/TRUST WHICH HAD BEEN GRANTED REGISTRA TION U/S 12AA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THE ADVANCE WAS OUTSIDE THE SCOPE OF SECTION 2(22)( E) OF THE ACT. THE BALANCE ADDITION MADE WAS UPHELD. IT IS AGAINST THE AFORESTATED DELETION OF ADDITION THAT THE REVEN UE HAS NOW COME UP IN APPEAL BEFORE US. 9. DURING THE COURSE OF HEARING BEFORE US THE LD. D R RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE ASSESSING OFFICER HAD CLEARLY POINTED OUT THAT THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH SHOWED THAT THE FUNDS OF THE SOCIETY HAD BEEN UTILIZED BY THE M EMBERS OF THE SOCIETY AND THEIR FAMILY MEMBERS AND, THEREF ORE, IT WAS INCORRECT TO STATE THAT NO PERSONAL BENEFIT HAD BEEN DERIVED BY THE ASSESSEE FROM THE TRUST/SOCIETY. 10. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND , RELIED UPON THE ORDER OF THE LD.CIT(APPEALS) AND STATED TH AT THE SAID TRUST/SOCIETY BEING A CHARITABLE SOCIETY REGIS TERED U/S 12AA OF THE ACT AND THE ASSESSEE BEING MERELY A TRU STEE IN 6 THE SAME WITH NO DEFINED SHARE, IT WAS NOT COVERED UNDER HE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AS HELD B Y THE LD.CIT(APPEALS). THE LD. COUNSEL FOR ASSESSEE PLEAD ED THAT THE LD.CIT(APPEALS)S ORDER ON THIS ACCOUNT BE, THE REFORE, UPHELD. 11. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES. THE ISSUE IN HAND PERTAINS TO ADDITION MADE ON ACCO UNT OF DEEMED DIVIDEND AS PER PROVISIONS OF SECTION 2(22)( E) OF THE ACT. BEING A DEEMING PROVISION, BRINGING TO TAX SUM S WHICH ARE NOT ACTUALLY IN THE NATURE OF INCOME BUT ARE ON LY 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 COMPAN Y IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS O F 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 OWNE R OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE O F DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIP ATE IN PROFITS) HOLDING 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 REFERR ED TO AS THE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR- THE INDIVIDUAL BENEFIT, OF A NY 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 SU M ADVANCED BY A COMPANY IN WHICH A PERSON HOLDS VOTIN G RIGHTS OF 10% OR MORE TO ANOTHER CONCERN IN WHICH S UCH SHAREHOLDER IS A MEMBER OR PARTNER HAVING SUBSTANTI AL INTEREST, THE SUM SO ADVANCED IS TREATED AS DEEMED DIVIDEND. SUBSTANTIAL INTEREST HAS BEEN DEFINED UND ER THE SAID SECTION TO BEING BENEFICIAL ENTITLEMENT TO NOT LESS THAN 7 20% OF THE INCOME OF SUCH CONCERN. IN THE PRESENT C ASE THE FACT THAT THE ASSESSE HOLDS MORE THAN 10% VOTING RI GHTS IN HERRA MOTI HEALTH CARE PRODUCT LTD. & HEERA MOTI SP ICY PVT. LTD., WHO HAD ADVANCED THE IMPUGNED SUM, IS NO T DISPUTED. WHAT IS REQUIRED TO BE SEEN IS WHETHER TH E ASSESSEE WAS BENEFICIALLY ENTITLED TO 20% OR MORE O F THE INCOME OF SWAMI DEVI DAYAL HI-TECH EDUCATION ACADEM Y. IT IS NOT DISPUTED THAT SWAMI DEVI DAYAL HI-TECH EDUCA TION ACADEMY IS A CHARITABLE TRUST REGISTERED U/S 12AA O F THE ACT. THAT THE ASSESSEE IS A TRUSTEE IN THE SAID T RUST HAS ALSO NOT BEEN DISPUTED AND THE FACT THAT THERE ARE NO INTEREST OF ANY MEMBER OF THE SAID SOCIETY IN THE T RUST IS ALSO NOT DISPUTED. IN THE SAID CIRCUMSTANCES, WE A RE LEFT WITH NO OPTION BUT TO AGREE WITH THE LD.CIT(APPEALS ) THAT SECOND LIMB OR REQUIREMENT OF SECTION 2(22)(E) OF T HE 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 ASSE SSEE. THE ARGUMENTS OF THE LD. DR THAT THE DOCUMENTS SEIZ ED DURING THE COURSE OF SEARCH SHOW THAT THE FUNDS HAD BEEN UTILIZED BY THE MEMBERS OF THE SOCIETY, AND THEREFO RE, ASSESSEE DERIVED PERSONAL BENEFIT IS OF NO CONSEQUE NCE SINCE THE REQUIREMENT OF SECTION 2(22)(E) IS NOT W HETHER THE ASSESSEE HAS ACTUALLY DERIVED ANY PERSONAL BENEFIT FROM THE SAID CONCERN BUT IS THAT THE ASSESSEE IS BENEFICIAL LY ENTITLED TO NOT LESS THAN 20% OF THE INCOME OF THE SAID CONC ERN. THE WORK ENTITLED MEANS HAVING A LEGAL RIGHT TO SOMET HING. 8 SINCE SUCH LEGAL RIGHT IS ABSENT IN THE CASE OF THE PRESENT SOCIETY, IN THE ABSENCE OF SUCH LEGAL RIGHT OF THE ASSESSEE IN THE SAID SOCIETY THE AMOUNT ADVANCED CANNOT BE T REATED AS DEEMED INCOME AS PER SECTION 2(22)(E) OF THE ACT . MOREOVER EVEN AS PER THE ARGUMENT OF THE REVENUE TH E DOCUMENTS FOUND DURING SEARCH ONLY ESTABLISH THAT T HE ASSESSEE HAS DERIVED BENEFIT FROM THE SAID SOCIETIE S AND NOT SUBSTANTIAL BENEFIT, AS IS THE REQUIREMENT OF THE SECTION. 13. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF TH E LD.CIT(APPEALS) DELETING THE ADDITION MADE ON ACCO UNT OF DEEMED DIVIDEND AMOUNTING TO RS.2,09,140/- ON ACCOU NT OF LOANS AND ADVANCES GIVEN TO SOCIETIES REGISTERED U/ S 12A OF THE ACT. GROUND NO.1 RAISED BY THE REVENUE IS, THEREFORE, DISMISSED. 14. GROUND NOS.2 AND 3 WERE TAKEN TOGETHER BY THE L D. COUNSEL FOR ASSESSEE WHILE PUTTING FORTH THE CONTEN TIONS OF THE ASSESSEE AGAINST THE GROUNDS RAISED BY THE REVE NUE AND COMMON ARGUMENTS WITH RESPECT TO THE SAME WERE ADVA NCED. WE SHALL, THEREFORE, BE DEALING WITH BOTH THE GROUN DS TOGETHER. GROUND NOS.2 AND 3 READ AS UNDER: '(II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .3,75,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CREDIT AMOUNT IN THE BANK ACCOUNT OF THE ASSESSEE, ON THE BASIS O F ADDITIONAL EVIDENCE OF DATELESS CASH FLOW STATEMENT ADMITTED WITHOUT OPPORTUNITY TO THE AO?' '(III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF 9 RS.30,00,000/- MADE BY THE AO ON ACCOUNT OF SEIZED DOCUMENTS AS PAGES 28-30 OF A-15 SEIZED FROM SWAMI DEVI DYAL HI TECH EDUCATION ACADEMY, ON THE BASIS O F ADDITIONAL EVIDENCE ADMITTED WITHOUT OPPORTUNITY TO THE AO?' 15. GROUND NO.2 PERTAINS TO DELETION OF ADDITION OF RS.3,75,000/- MADE ON ACCOUNT OF DEPOSIT IN ORIENTA L BANK OF COMMERCE(IN SHORT OBC) DURING THE YEAR WHICH REMAINED UNEXPLAINED. DURING ASSESSMENT PROCEEDING S THE ASSESSING OFFICER FOUND THAT THE CASH AMOUNTING TO RS.3,75,000/- WAS DEPOSITED BY THE ASSESSEE IN HIS BANK ACCOUNT MAINTAINED WITH OBC. ON BEING CONFRONTED W ITH THE SAME, THE ASSESSEE SUBMITTED THAT THE SAME WAS DEPOSITED OUT OF WITHDRAWALS MADE OUT OF OTHER BANK ACCOUNTS, & INCOMINGS FROM BROUGHT FORWARD CASH IN HAND, IN SHORT MEANING THAT THE DEPOSITS COULD BE EXPLAIN ED OUT OF CASH FLOW STATEMENT. THE ASSESSING OFFICER REJEC TED ASSESSEES CONTENTION SINCE NO CASH FLOW STATEMENT WAS FILED BY THE ASSESSEE AND MADE ADDITION OF THE SAID CASH DEPOSITS OF RS.3,75,000/- TO THE INCOME OF THE ASSE SSEE HOLDING THE SAME TO BE UNEXPLAINED. 16. DURING APPELLATE PROCEEDINGS BEFORE THE LD.CIT( A) THE ASSESSEE FURNISHED THE CASH FLOW STATEMENT. RELYIN G UPON THE SAME, THE LD.CIT(A) FOUND THAT THE SAID CASH DE POSIT WAS MADE OUT OF REGULAR SAVINGS AS PER CASH IN HAND . THE LD.CIT(A) STATED THAT IT WAS SUBMITTED THAT THE CAS H FLOW WAS PREPARED FROM BANK STATEMENT AND ENTRIES IN THE SEIZED BOOKS AND, THEREFORE, NO ADVERSE INFERENCE COULD BE DRAWN FROM THE SAME. SHE, THEREFORE, DELETED THE ADDITIO N MADE ON ACCOUNT OF THE SAME. 10 17. IN GROUND NO.3 THE REVENUE HAS CHALLENGED DELET ION OF ADDITION MADE OF RS.30 LACS ON ACCOUNT OF SEIZED DO CUMENTS WHICH WAS AN AGREEMENT TO SELL DATED 19.12.2005 OF LAND MEASURING 52 KANAL 14 MARLA BETWEEN SHRI ROSHAN LAL JINDAL AND SMT.SHALLEY & OTHERS FOR AN AGREED AMOUN T OF RS.16 LACS PER ACRE ALONGWITH RECEIPT OF CASH ADVA NCE OF RS.30 LACS. THE ASSESSEE SUBMITTED THAT THE SAME W AS ON ACCOUNT OF ADVANCE RECEIVED ON SALE OF LAND BUT SIN CE THE ASSESSEE FAILED TO GIVE COMPLETE DETAILS OF THE TRA NSACTION AND PRODUCE DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CONTENTION ,THE ASSESSING OFFICER MADE ADDITION O F THE SAME. 18. DURING APPELLATE PROCEEDINGS BEFORE THE LD.CIT( A) THE ASSESSEE SUBMITTED COPIES OF THE PURCHASE DEEDS OF THE IMPUGNED LAND AND SUBMITTED THE SOURCE OF THE PAYME NT AS BEING DD PURCHASED FROM THE REGULAR BANK ACCOUNT OF THE ASSESSEE AND CASH AVAILABLE WITH THE ASSESSEE AS EV IDENCED FROM THE CASH FLOW STATEMENT SUBMITTED. THE ASSESSE E FURTHER STATED THAT THE SAID DEAL HAD NOT MATURED A ND ULTIMATELY CASH RECEIVED IN ADVANCE HAD BEEN RETURN ED BACK IN THE SAME YEAR. THE ASSESSEE SUBMITTED THAT BOTH THE RECEIPTS AND REFUND OF THE ADVANCE WAS INCORPORATED IN THE CASH FLOW STATEMENT. THE LD.CIT(APPEALS) ACCEPTE D THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITIO N MADE OF RS.30 LACS. 19. BEFORE US THE LD. DR URGED THAT THE LD.CIT(APPE ALS) HAD DELETED BOTH THE ABOVE ADDITIONS ON THE BASIS O F 11 ADDITIONAL EVIDENCES WITHOUT AFFORDING AN OPPORTUNI TY TO THE ASSESSING OFFICER AND IN CONTRAVENTION OF THE PROVI SIONS OF RULE 46 OF THE INCOME TAX RULES. THE LD. DR URGED THAT THE ISSUE BE RESTORED BACK TO THE ASSESSING OFFICER TO EXAMINE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESS EE. 20. THE LD. COUNSEL FOR ASSESSEE DID NOT OBJECT TO THE SAME. 21. UNDENIABLY BOTH THE ABOVE ADDITIONS HAVE BEEN D ELETED BY THE CIT(A) ON THE BASIS OF THE CASH FLOW STATEME NT WHICH WAS NEVER PRODUCED BEFORE THE AO AND WAS FURNISHED FOR THE FIRST TIME BEFORE THE CIT(A). THE CASH FLOW STATEME NT CLEARLY IS AN ADDITIONAL EVIDENCE THE ADMITTANCE OF WHICH I S GOVERNED BY RULE 46A. THE REVENUE HAS NOT CHALLENGE D THE ADMISSION OF THE ADDITIONAL EVIDENCE. HOWEVER, SUB CLAUSE 3 OF RULE 46 CLEARLY REQUIRES THE CIT(A) TO ALLOW T HE AO A REASONABLE OPPORTUNITY TO EXAMINE THE EVIDENCE OR DOCUMENT BEFORE TAKING IT INTO ACCOUNT. IN VIEW THEREOF, WE CONSIDER IT FIT TO RESTORE BOTH THE ISS UES BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE AD DITIONAL DOCUMENTS/EVIDENCES FILED BY THE ASSESSEE WITH RESP ECT TO BOTH THE GROUNDS AND THEREAFTER ADJUDICATE THE ISSU E IN ACCORDANCE WITH LAW. NEEDLESS TO ADD THAT THE ASSE SSEE BE GIVEN DUE OPPORTUNITY IN THIS REGARD. IN VIEW OF THE ABOVE BOTH THE GROUNDS 2 AND 3 RAIS ED BY THE REVENUE STAND ALLOWED FOR STATISTICAL PURPOS ES. THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12 22. WE SHALL NOW TAKE UP ASSESSEES APPEAL IN ITA NO.51/CHD/2014. ITA NO.51/CHD/2014(ASSESSEES APPEAL) : 23. THE GROUNDS RAISED BY THE ASSESSEE ARE 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 AU DITOR IN TERMS OF SECTION 142 (2A). 2. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDERIN G THAT THE CONDITIONS OR REFERENCE TO THE SPECIAL AUDIT HAV E NOT BEEN FULFILLED AND SINCE THE ASSESSEE HAD NOT BEEN MAINTAINING ANY PERSONAL BOOKS OF ACCOUNTS, NO COMPLE XITY 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, THE SAME DESER VES TO BE QUASHED. 3. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING TH E ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) AMOUNTING TO RS.85,636/- (OUT OF RS.2,96,136) IN RESPECT OF AMOU NT SHOWN AS ALLEGED ADVANCE TO THE ASSESSEE IN DIFFERENT COMPANIES. 4. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING T HE ADDITION OF RS. 6 LACS IN RESPECT OF CAPITAL INTRODUCE D BY THE ASSESSEE IN M/S HEERA MOTI AGRO PRODUCTS AS PER PARA 9.3.3 OF HER ORDER. 5. THAT THE CIT (A) HAS ERRED IN CONFIRMING THE ADDIT ION OF RS.43,000/- ON ACCOUNT OF CERTAIN SEIZED DOCUMENTS AS PER PARA 9.5.3 OF HER ORDER. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 24. GROUND NOS.1, 2 AND 3 RAISED BY THE ASSESSEE WE RE NOT PRESSED BEFORE US AND ARE, THEREFORE, TREATED AS DI SMISSED. GROUND NO.6 BEING GENERAL IN NATURE NEEDS NO ADJUDI CATION. 25. GROUND NOS.4 AND 5 ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION SINCE THE PLEADING OF THE LD. COUNSEL FOR ASSESSEE VIS--VIS BOTH THE GROUNDS WAS IDENTICAL. 13 26. IN GROUND NO.4 THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITION OF RS.6 LACS IN RESPECT OF CAPITAL INTRODUCED BY THE ASSESSEE IN M/S HEERA MOTI AGRO PRODUCTS. 27. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAD INTRODUCED RS..6 LACS AS FRESH CAPITAL IN THE FIRM OF M/S HEERA MOTI AGRO PRODUCTS. THE ASSESSEE TRIED TO EXPLAIN THE SOURCE OF THE SAME AS RS.1.5 LACS RE CEIVED FROM LIC, RS.2.15 LACS OUT OF WITHDRAWALS MADE FROM A FIRM M/S HEERA MOTI AGRO PRODUCTS AND THE BALANCE RS.2.3 5 LACS OUT OF CASH FLOW STATEMENT. THE ASSESSING OFFICER NOT BEING SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE MADE THE ADDITION OF THE ENTIRE AMOUNT OF RS.6 LACS HOLDING THAT NEITHER CASH FLOW STATEMENT NOR ANY DOCUMENTARY EVI DENCE WAS FILED IN SUPPORT OF THE CONTENTION OF THE ASSES SEE. 28. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED TH E CASH FLOW STATEMENT. THE LD.CIT(APPEALS) FOUND THAT THE LIC RECEIVED WERE NOT REFLECTED IN THE SAME AND THE CA SH FLOW STATEMENT WAS WITHOUT DATE AND HENCE, THE AVAILABIL ITY OF FUNDS AND INVESTMENT COULD NOT BE PROPERLY COMPREHE NDED THEREFROM. THE LD.CIT(APPEALS), THEREFORE, CONFIRM ED THE ADDITION MADE BY THE ASSESSING OFFICER. 29. IN GROUND NO.5 THE ASSESSEE HAS CONTESTED THE A DDITION OF RS.43,000/- MADE ON ACCOUNT OF SEIZED DOCUMENTS. 14 30. BRIEF FACTS RELEVANT OF THE ACT THE SAME ARE TH AT DURING THE COURSE OF SEARCH PAGES 2, 26, 28 AND 34 OF ANNE XURE A- 14 DELTA-1 WERE FOUND AND SEIZED. THE SAME WAS A N OTE PAD MAINTAINED BY THE ASSESSEE FOR DAY-TO-DAY CASH RECE IPTS AND PAYMENTS ENTERED. AS PER PAGE-34 OF THE SAID ANNEX URE CASH RECEIVED OF RS.43,000/- WAS REFLECTED IN THE S AME. NO REPLY EXPLAINING THE NATURE OF THE SAME WAS FILED B Y THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AND, THE ASS ESSING OFFICER, THEREFORE, ADDED THE ENTIRE AMOUNT TO THE INCOME OF THE ASSESSEE. 31. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE SUBMIT TED THAT THE SAID SUM REPRESENTED REGULAR WITHDRAWALS F ROM THE BANK AND WHICH AS PER THE ASSESSEE WAS DULY REFLECT ED IN THE CASH FLOW STATEMENT FILED. THE LD.CIT(APPEALS) REJECTED ASSESSEES CONTENTION AND UPHELD THE ADDITION SO MA DE. 32. BEFORE US WITH RESPECT TO BOTH THE ABOVE GROUND S RAISED BY THE ASSESSEE, THE ONLY CONTENTION RAISED BY THE LD. COUNSEL FOR ASSESSEE WAS THAT THE LD.CIT(APPEAL S) HAD UPHELD THE ADDITION REJECTING THE CASH FLOW STATEME NT SUBMITTED BY THE ASSESSEE WHILE, ON THE OTHER HAND, ON THE BASIS OF THE VERY SAME CASH FLOW STATEMENT IT HAD D ELETED ADDITION MADE WHICH HAVE BEEN CONTESTED BY THE REVE NUE IN ITS APPEAL IN ITA NO.110/CHD/2014. THE LD. COUNSEL FOR ASSESSEE STATED THAT SINCE THE REVENUE HAS PLEADED THAT THE CASH FLOW STATEMENT WAS ACCEPTED BY THE LD.CIT(APPE ALS) WITHOUT CONFRONTING IT TO THE ASSESSING OFFICER, TH E SAME OUGHT TO BE SENT BACK TO THE ASSESSING OFFICER FOR 15 VERIFICATION, IN THE INTEREST OF JUSTICE AND DRAWIN G PARITY FROM THE SAME, THE ISSUES IN THE PRESENT APPEAL ALS O SHOULD BE SENT BACK TO THE ASSESSING OFFICER TO DECIDE AFT ER VERIFYING THE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE. 33. THE LD. DR DID NOT OBJECT TO THE SAME. 34. WE FIND MERIT IN THE CONTENTION OF THE LD. COUN SEL FOR ASSESSEE. UNDENIABLY, DURING ASSESSMENT PROCEEDING S THE ASSESSEE HAD NOT BEEN ABLE TO PRODUCE ITS CASH FLOW STATEMENT TO EXPLAIN VARIOUS TRANSACTIONS WHICH WER E NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF SEARCH WHICH WAS UNDERTAKEN AT THE ASSESSEE PREMISES. THE CASH FLOW STATEMENT WAS SUBSEQUENTLY SUBMITTED TO THE LD.CIT(APPEALS) DURING THE COURSE OF HEARING BEFORE HIM AND ON THE BASIS OF WHICH THE LD.CIT(APPEALS) UPHELD CE RTAIN ADDITIONS/DISALLOWANCES AND ALSO DELETED CERTAIN ADDITIONS/DISALLOWANCES. FURTHER IT IS ALSO A FACT THAT THE LD.CIT(APPEALS) DID NOT CONFRONT THE SAID CASH FLOW STATEMENT TO THE ASSESSING OFFICER BEFORE PASSING H IS APPELLATE ORDER. SINCE IN THE REVENUES APPEAL IN ITA NO.110/CHD/2014 WE HAVE ACCEPTED THE PLEADINGS OF THE LD. DR TO RESTORE THE ADDITIONS DELETED BY THE LD.CIT(APPEALS) TO THE ASSESSING OFFICER FOR VERIFI CATION OF THE CASH FLOW STATEMENT, WE ACCEPT THE PLEADINGS OF THE LD. COUNSEL FOR ASSESSEE IN THE PRESENT APPEAL AND RESTORE THE ISSUES RAISED IN THE ABOVE TWO GROUNDS ALSO TO THE ASSESSING OFFICER TO EXAMINE THE SAME AFRESH IN THE 16 LIGHT OF THE ADDITIONAL EVIDENCES FILED BY THE ASSE SSEE AND DECIDE THE SAME THEREAFTER IN ACCORDANCE WITH LAW. NEEDLESS TO ADD THE ASSESSEE BE GIVEN DUE OPPORTUNI TY OF HEARING IN THIS REGARD. GROUND NOS.4 AND 5 RAISED BY THE ASSESSEE, THEREFORE, STAND ALLOWED FOR STATISTICAL PURPOSES. 35. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSE E STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 36. WE SHALL NOW TAKE UP ASSESSEES APPEAL IN ITA NO.53/CHD/2014. ITA NO.53/CHD/2014(ASSESSEES APPEAL) : 37. THE GROUNDS RAISED BY THE ASSESSEE ARE 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 AU DITOR IN TERMS OF SECTION 142 (2A). 2. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDERIN G THAT THE CONDITIONS OR REFERENCE TO THE SPECIAL AUDIT HAV E NOT BEEN FULFILLED AND SINCE THE ASSESSEE HAD NOT BEEN MAINTAINING ANY PERSONAL BOOKS OF ACCOUNTS, NO COMPLE XITY 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, THE SAME DESER VES TO BE QUASHED. 3. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING TH E ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) AMOUNTING TO RS.1,50,401IN RESPECT OF AMOUNT SHOWN AS ALLEGED ADVANCE TO THE ASSESSEE IN DIFFERENT COMPANIES. 4. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL T HE WORTHY CIT (A) HAS ERRED INN NOT GIVING RELIEF OF RS.43,150/- IN RESPECT OF AMOUNT SHOWN AS ADVANCE I N THE BOOKS OF M/S MAHAPRABHU RAM MULKH. 5. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING T HE ADDITION OF RS.30,69,300/- ON ACCOUNT OF CERTAIN SEIZED DOCUMENTS AS PER PARA 11.2.3 OF HER ORDER. 6. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING T HE ADDITION OF RS.77,78,633/- ON ACCOUNT OF CERTAIN SEIZED DOCUMENTS AS PER PARA 11.3.3 OF HER ORDER. 17 7. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING T HE ADDITION OF RS.5,00,000/- ON ACCOUNT OF CERTAIN SEIZED DOCUMENTS AS PER PARA 11.4.3 OF HER ORDER. 8. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING T HE ADDITION OF RS.33,11,300/- ON ACCOUNT OF CERTAIN SEIZED DOCUMENTS AS PER PARA 11.5.3 OF HER ORDER. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 38. GROUND NOS.1, 2 AND 3 RAISED BY THE ASSESSEE WE RE NOT PRESSED BEFORE US AND ARE, THEREFORE, TREATED AS DI SMISSED. GROUND NO.8 BEING GENERAL IN NATURE REQUIRES NO ADJUDICATION. 39. IN GROUND NO.4-7 VARIOUS ADDITIONS AS MENTIONED IN THE SAID GROUNDS WERE MADE ON THE BASIS OF SEIZED DOCUM ENTS WHICH THE ASSESSEE EXPLAINED DURING THE APPELLATE PROCEEDINGS THROUGH ITS CASH FLOW STATEMENT AND WHI CH WAS NOT ACCEPTED BY THE LD.CIT(APPEALS). 40. BEFORE US THE CONTENTION RAISED BY THE ASSESSEE WAS SIMILAR TO THAT RAISED IN ITS APPEAL IN ITA NO.51/C HD/2014 I.E. THE CIT(A) HAS ACCEPTED THE CONTENTS OF THE CA SH FLOW WITH REGARD TO CERTAIN ISSUES AND REJECTED IT ON OT HER ISSUES WHILE AS PER RULE 46A THE CASH FLOW SHOULD HAVE BEE N ALLOWED TO BE FIRST EXAMINED BY THE AO. LD COUNSEL FOR THE ASSESSEE REQUESTED RESTORING THE MATTER BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER EXAM INING THE CASH FLOW STATEMENT. 41. SINCE THE FACTS AND CIRCUMSTANCES IN THE PRESEN T APPEAL ARE IDENTICAL TO THAT IN ITA NO.51/CHD/2014, THE DECISION RENDERED THEREIN WILL APPLY MUTATIS MUTAND IS TO 18 THIS APPEAL ALSO FOLLOWING WHICH WE RESTORE GROUND NO.4-7 OF THE PRESENT APPEAL TO THE FILE OF THE AO FOR FRE SH ADJUDICATION IN ACCORDANCE WITH LAW AND IN THE LIG HT OF THE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES 42. IN THE RESULT, I) THE APPEAL OF THE REVENUE IN ITA NO.110/CHD/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. II) THE APPEALS OF THE ASSESSEE IN ITA NOS.52 & 54/CHD/2014 ARE DISMISSED AS WITHDRAWN III) THE APPEALS OF THE ASSESSEE IN ITA NO.51 & 53/CHD/2014 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH SEPTEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH