SHRI GOVIND SWAROOP GARG, AJMER V. INCOME TAX OFFICER, WARD-1-2, AJMER

ITA 614/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9999 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C MEENA ADD
• Keywords: Depreciation; Rule of consistency; Tangible material; Corroborative evidences; Deemed dividend; Commercial expediency; TDS
• Section: 143(3); 2(22)(e); 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HE B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 614/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2010-11 SHRI GOVIND SWAROOP GARG, RAVAN KI BAGICHI, AJMER (RAJ.) CUKE VS. THE ITO, WARD1(2), AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ADNPG9550F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K C MEENA (ADD.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/03/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 02/04/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 06.02.2018 FOR AY 2010-11. 2. BRIEFLY STATED, THE FACTS OF CASE ARE THAT THE A SSESSEE IS A MAJORITY SHAREHOLDER HOLDING 80% EQUITY AND ONE OF THE DIREC TORS OF M/S RAJ AUTO WHEELS PVT. LTD., AJMER. DURING THE COURSE OF ASSES SMENT PROCEEDINGS OF M/S RAJ AUTO WHEELS PVT. LTD., AJMER FOR AY 2010-11, TH E ACIT, CIRCLE-1, AJMER FOUND THAT THE SAID COMPANY HAS GIVEN AN ADVANCE OF RS. 1.02 CRORES TO THE ASSESSEE DURING F.Y 2009-10. ON RECEIPT OF THE SAI D INFORMATION, THE ASSESSING OFFICER RECORDED THE REASONS FOR REOPENING THE ASSE SSMENT IN THE CASE OF THE ASSESSEE AND AFTER SEEKING NECESSARY APPROVAL, NOTI CE U/S 148 WAS ISSUED TO THE ASSESSEE. SUBSEQUENTLY, THE ASSESSEE FILED HIS OBJECTIONS WHICH WERE DISPOSED OFF BY THE ASSESSING OFFICER AND THEREAFTE R CONSIDERING THE SUBMISSION ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 2 OF THE ASSESSEE, THE ASSESSING OFFICER MADE AN ADDI TION OF RS. 28,35,265/- AS DEEMED DIVIDEND U/S 2(22)(E) IN THE HANDS OF THE AS SESSEE BESIDES OTHER ADDITIONS TOWARDS UNEXPLAINED CASH DEPOSIT IN THE B ANK ACCOUNT, RENTAL AND INTEREST INCOME AND ASSESSMENT WAS COMPLETED U/S 14 7 READ WITH SECTION 143(3) VIDE ORDER DATED 17.03.2015. BEING AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONF IRMED THE ACTION U/S 147 AND ALSO UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER. AGAINST THE SAID FINDING OF THE LD. CIT(A), THE ASSESSEE IS IN APPEA L BEFORE US. 3. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER U/S 147 BY IS SUANCE OF NOTICE U/S 148 AND THE CONSEQUENT ORDER PASSED U/S 147 R/W SECTION 143 (3) OF THE ACT. 4. THE LD. AR SUBMITTED THAT ON PERUSAL OF THE REA SONS SO RECORDED BEFORE ISSUANCE OF NOTICE U/S 148, IT MAY BE NOTED THAT TH ERE IS NOTHING IN THE REASONS TO JUSTIFY THE FORMATION EVEN A PRIMA FACIE VIEW TH AT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND IT WAS SUBMITTED THAT TH E MERE FACT WHICH CAME TO THE NOTICE OF THE ASSESSING OFFICER FROM THE COP Y OF THE LEDGER ACCOUNT WAS SIMPLE FACT THAT COMPANY HAD GIVEN SOME AMOUNT WHIC H THE AO HAS ASSUMED TO BE ADVANCED OF THE NATURE OF LOAN. THERE IS NO W HISPER OF ANY OTHER SUPPORTING FACT OR MATERIAL SO AS TO GIVE EVEN A VE RY REMOTE CLUE TO ASSESSING OFFICER TO CONSIDER THIS INFORMATION OF ADVANCE TO BE A CASE FALLING U/S 2(22)(E) OF THE ACT. THE LD AR SUBMITTED THAT TO BRING THE C ASE U/S 147 IN THE CONTEXT OF SECTION 2(22)(E) WHEN THE AO WAS TO DEEM A FACT, TH OUGH IT WAS NOT REALLY SO, STRICT INTERPRETATION WAS REQUIRED. THE LAW IS WELL SETTLED THAT WHEN THE LAW CREATES DEEMING FICTION, VERY STRICT INTERPRETATION OF THE LAW IS REQUIRED AND THE SCOPE OF THE FICTION IS ALSO LIMITED TO THE PARTICU LAR PURPOSE. IT WAS SUBMITTED THAT THERE MUST BE SOMETHING TO SHOW THAT THE AMOUN T GIVEN WAS IN THE NATURE OF LOAN. ON THE CONTRARY, FROM A BARE PERUSAL OF TH E ASSESSEES LEDGER ACCOUNT ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 3 IN THE BOOKS OF THE COMPANY, IT IS EVIDENT THAT THE RE ARE FREQUENT GIVING AND TAKING BACK (DEBITS & CREDITS), ABSENCE OF CHARGING ANY INTEREST AND ABSENCE OF ANY FIXED/STIPULATED PERIOD OF REPAYMENT. IN OTHER WORDS, THERE ARE NO ATTRIBUTES TO TERM THE AMOUNT GIVEN WAS IN THE NATU RE OF LOAN, EVEN REMOTELY. IT WAS SUBMITTED THAT HOW THE AO COULD HAVE ASSUMED SUCH RECEIPT TO BE IN THE NATURE OF LOAN IS NOT CLEAR. IT WAS FURTHER SUB MITTED THAT EVEN ASSUMING THAT SUBJECTED AMOUNT WERE IN THE NATURE OF LOAN, T HE NET AMOUNT GIVEN WAS RS. 51 LAKHS ONLY AND NOT RS. 1.02 CRORES AS WRONGL Y STATED IN THE REASONS RECORDED BY THE AO. IT WAS ACCORDINGLY SUBMITTED TH AT THE FACT SIMPLICITER THAT THERE WAS RECEIPT OF THE AMOUNT BY THE ASSESSEE DIR ECTOR FROM THE COMPANY, DOES NOT IPSO FACT, CONVERT THE SAME INTO THE RECEI PT OF ANY PARTICULAR NATURE, WHAT TO TALK OF IN THE NATURE OF LOAN OR ADVANCE, W ITHOUT THERE BEING ANY OTHER SUPPORTING FACTS OR ATTRIBUTES SO AS TO DEEM SUCH R ECEIPTS AS DIVIDEND. IT WAS FURTHER SUBMITTED THAT EVEN THE ASSESSING OFFICER W AS OF THE VIEW THAT THE MATTER REQUIRE FURTHER EXAMINATION, NOW, WHAT IS TH E NATURE OF THIS PAYMENT WHETHER IT IS TRADE/LOAN ADVANCES OR NOT IT CAN BE ANALYSED AND ESTABLISHED DURING THE ASSESSMENT PROCEEDINGS WHERE AMPLE OPPOR TUNITY OF BEING HEARD WILL BE GIVEN TO THE ASSESSEE. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO PAGE NO. 5, PARA NO. 3 OF THE ASSESSMENT ORDER. IT WAS S UBMITTED THAT THE INITIATION OF PROCEEDINGS U/S 147 IN VIEW OF THIS FACT IS MEAN T/INITIATED WITH A VIEW TO MAKE MORE AND DEEPER ENQUIRIES TO COVER THE SUBJECT ED RECEIPTS AS A CASE OF DEEMED DIVIDEND AND IT WAS SUBMITTED THAT IT WAS AN ATTEMPT ON THE PART OF THE AO TO EXPLORE SOME INCOME AND NOT TO SHOW THAT SOME INCOME ALREADY EXISTED WHICH ESCAPED ASSESSMENT. IT WAS ACCORDINGL Y SUBMITTED THAT IT IS A CASE OF OVERSTRETCHING OF THE POWERS CONFERRED U/S 147 OF THE ACT, WHICH ARE SUPPOSED TO HAVE BEEN EXERCISED SPARINGLY, ONLY IN THE STRICT COMPLIANCE OF LAW, AND IN THE LIGHT OF THE SETTLED JUDICIAL GUIDELINES , HENCE THE IMPUGNED REASON IS NOTHING BUT A REASON TO SUSPICION AND THEREFORE, TH E CONSEQUENT PROCEEDINGS, U/S 147 DESERVE TO BE QUASHED. ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 4 5. PER CONTRA, THE LD. DR SUBMITTED THAT FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT THE ASSESSING OFFICER HAD S UFFICIENT MATERIAL TO FORM BELIEF THAT INCOME PERTAINING TO AY 2010-11 HAD ESCAPED AS SESSMENT. IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS OF M/S RAJ AUTO WHEELS PVT. LTD., AJMER, IT CAME TO THE NOTICE OF T HE DEPARTMENT THAT CERTAIN LOAN AMOUNT WAS RECEIVED BY THE APPELLANT FROM M/S RAJ AUTO WHEELS PVT. LTD., AJMER, AND THE SAID INFORMATION WAS FORWARDED TO TH E ASSESSING OFFICER AND PROCEEDINGS WERE INITIATED U/S 147 TO BRING SUCH AM OUNT TO TAX AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. IT WAS ACCORDING LY SUBMITTED THAT THE ASSESSING OFFICER HAD THE REQUISITE MATERIAL TO FOR M THE PRIMA FACIE VIEW THAT INCOME HAS ESCAPED ASSESSMENT TO THE EXTENT OF ADVA NCES RECEIVED BY THE ASSESSEE WHICH ARE TAXABLE AS DEEMED DIVIDEND U/S 2 (22)(E) AND THEREFORE, THE ISSUANCE OF NOTICE U/S 148 AND CONSEQUENT ORDER PAS SED U/S 147 NEED TO BE UPHELD. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN ORDER TO APPRECIATE THE RIVAL CONTENT IONS, IT WOULD BE RELEVANT TO REFER TO THE REASONS SO RECORDED BY THE ASSESSING O FFICER BEFORE ISSUANCE OF NOTICE U/S 148 OF THE ACT AND THE SAME ARE REPRODUC ED AS UNDER:- THE ASSESSEE IS ONE OF THE DIRECTORS OF THE COMPAN Y NAMELY M/S RAJ AUTO WHEELS PVT. LTD., AJMER. DURING THE COURSE OF ASSES SMENT PROCEEDINGS FOR AY 2010-11 IN THE CASE OF M/S RAJ AUTO WHEELS PVT. LTD ., IT WAS NOTICED THAT THE COMPANY HAS GIVEN ADVANCES OF RS. 1.02 CRORES TO IT S DIRECTOR SHRI GOVIND GARG DURING THE YEAR UNDER CONSIDERATION. SECTION 2(22)( E) OF THE I.T. ACT SAYS AS UNDER: ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN W HICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER A S REPRESENTING A PART ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 5 OF THE ASSETS OF THE COMPANY OR OTHERWISE) [MADE AF TER THE 31 ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLD ER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SH ARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICULAR IN PROFITS) HOLDING NOT LESS THAN TEN PERCENT OF THE VOTING POW ER, 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 RE FERRED TO AS THE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEH ALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFIT S. IN VIEW OF THE PROVISIONS OF SECTION 2(22)(E) OF TH E I.T. ACT, ADVANCES OF RS. 1.02 CRORES GIVEN BY THE COMPANY TO THE ASSESSE E SHRI GOVIND SWAROOP GARG IS DEEMED DIVIDEND IN HIS HANDS AND THE SAME I S NOT OFFERED FOR TAX IN HIS RETURN OF INCOME. THEREFORE I HAVE REASON TO BELIEV E THAT INCOME OF RS. 1.02 CRORES ESCAPED ASSESSMENT. THEREFORE IT IS A FIT CA SE FOR ISSUE OF NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961. 7. THE REASONS SO RECORDED THUS TALK ABOUT THE FAC T THAT THE ASSESSEE IS A DIRECTOR AND BENEFICIAL HOLDER OF MORE THAN 10% VOT ING POWER IN M/S RAJ AUTO WHEELS PVT LTD. IT FURTHER TALKS ABOUT THE FACT TH AT THE SAID COMPANY HAS ADVANCED A SUM OF RS 1.02 CRORES TO THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS IN CASE OF M/S RAJ AUTO WHEE LS PVT LTD. ON PERUSAL OF ASSESSEES LEDGER ACCOUNT MAINTAINED WITH M/S RAJ A UTO WHEELS, IT IS NOTICED THAT THE SAID ACCOUNT IS TERMED AS GOVIND GARG - A DVANCE A/C AND HAS DEBITS TOTALING TO RS 1,01,95,000 AND CREDITS TOTALING TO RS 50,95,000 WITH CLOSING BALANCE OF RS 51,00,000. THESE ARE UNDISPUTED FACTS WHICH ARE EMERGING FROM THE RECORDS WHICH ARE SUFFICIENT ENOUGH TO HOLD A P RIMA FACIE VIEW THAT THE CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 2 (22)(E) ARE SATISFIED AND GIVEN ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 6 THE FACT THAT NO ORIGINAL ASSESSMENT HAS HAPPENED, THE INCOME TO THAT EXTENT HAS ESCAPED ASSESSMENT. THE ASSESSING OFFICER THUS HAS THE TANGIBLE MATERIAL IN HIS POSSESSION TO FORM A PRIMA FACIE VIEW THAT T HE ADVANCES ARE IN NATURE OF DEEMED DIVIDEND U/S 2(22)(E) AND INCOME TO THAT EXT ENT HAS ESCAPED ASSESSMENT. IT IS A TRITE LAW THAT BEFORE INVOKING JURISDICTION U/S 147 OF THE ACT, THE AO HAS TO RECORD A PRIMA FACIE BELIEF THAT INCOME HAS ESCAPED TAXATION AND THERE SHOULD BE A NEXUS BETWEEN THE MATERIAL AN D THE FORMATION OF BELIEF THAT INCOME HAS ESCAPED TAXATION. IN THE INSTANT C ASE, THE NECESSARY NEXUS HAS BEEN ESTABLISHED BETWEEN THE MATERIAL IN POSSES SION OF THE ASSESSING OFFICER AND THE FORMATION OF A PRIMA FACIE BELIEF T HAT THE INCOME HAS ESCAPED ASSESSMENT. WE THEREFORE DONOT FIND ANY INFIRMITY I N ASSUMPTION OF JURISDICTION U/S 147 AND THE CONSEQUENT ORDER PASSED BY THE AO U /S 147 R/W 143(3) OF THE ACT. IN THE RESULT, GROUND NO. 2 OF THE ASSESSEES APPEAL IS DISMISSED. 8. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 28,35,265/- ON ACCOUNT OF BEING DIVIDEND U/S 2(22)( E) OF THE ACT. 9. THE LD. AR SUBMITTED THAT SECTION 2(22)(E) APPLI ES TO ANY PAYMENT MADE BY A COMPANY TO A SUBSTANTIAL SHARE HOLDER BY WAY O F LOAN OR ADVANCE HOWEVER TRADE/BUSINESS ADVANCE WHICH IS NATURE OF THE MONEY TRANSACTED TO GIVE EFFECT TO A COMMERCIAL TRANSACTION DOESNT FALL WITHIN AMB IT OF PROVISIONS OF SECTION 2(22)(E). IT WAS FURTHER SUBMITTED THAT THE WORD ADVANCE WHICH APPEARS IN THE COMPANY OF THE WORD LOAN GIVEN ONLY MEAN SUCH ADVANCE WHICH CARRIES WITH IT AN OBLIGATION OF REPAYMENT. TRADE ADVANCE W HICH IS IN THE NATURE OF MONEY TRANSACTED TO GIVE EFFECT TO A COMMERCIAL TRA NSACTION WOULD NOT FALL WITHIN THE AMBIT OF THE PROVISION OF SECTION 2(22)( E) OF THE ACT. IN THE FACTS OF THE PRESENT CASE, IT WAS SUBMITTED THAT RS. 51 LAKH S WAS GIVEN TO THE ASSESSEE DIRECTOR FOR THE PURCHASE OF LAND FOR CONSTRUCTION OF SHOWROOM AND SERVICE STATION THEREON. IN SUPPORT THEREOF, THE ASSESSEE S UBMITTED A COPY OF THE ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 7 AGREEMENT DATED 04.07.2009 BEFORE LOWER AUTHORITIES AND THE SAID AGREEMENT AFFIRMED THE FACT OF GIVING ADVANCE OF RS. 32,45,00 0/- THROUGH TWO CHEQUES DATED 03.07.2009 AND 24.07.2009 RESPECTIVELY. IT WA S SUBMITTED THAT THE AGREEMENT WAS DULY SIGNED BY THE WITNESSES AND DULY NOTARIZED. AS FAR AS CONTENTS OF THE AGREEMENT, THE SAME ARE NOT IN DISP UTE. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS WRONGLY AL LEGED THAT THERE ARE TWO DIFFERENT AGREEMENTS AND SUCH CONFUSION HAS ARISEN ONLY BECAUSE OF THE DATE PUT ON THE NON JUDICIAL STAMP PAPER, WHICH WAS NOT LEGIBLE BUT FACTUALLY, THERE WAS ONLY ONE AGREEMENT AND THE DATE OF AGREEMENT WA S CLEARLY MENTIONED THEREON BEING 14.07.2009. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE DID NOT MAKE THE PAYMENT OF RS. 1 CRORE WITHIN 6 MONTHS WHI CH ITSELF SHOWS THAT THE PARTIES HAD CANCELLED THEIR AGREEMENT AND WAS NOT F ORMALIZED IN TERMS OF SALE DEED. IT WAS FURTHER SUBMITTED THAT THE DISPUTE AS TO THE TRUE NATURE OF THE SUBJECTED AMOUNT GIVEN BY THE COMPANY TO THE ASSESS EE DIRECTOR, CAME UP FOR CONSIDERATION IN THE ASSESSMENT OF THE COMPANY M/S RAJ AUTO WHEELS PVT. LTD. WHEREIN THE AO CONSIDERED THE ADVANCE GIVEN FOR NON -BUSINESS PURPOSES AND INTEREST @ 12% WAS CHARGED ON THE SAID AMOUNT ON TH E BASIS THAT COMPANY IS INTEREST FREE FUND ON THE ALLEGATION THAT THE ASSES SEE HAS PAID INTEREST TO OTHER PARTIES BUT NOT CHARGED INTEREST ON THE LOANS GIVEN TO TWO PERSONS COVERED U/S 40A(2)(B) OF THE ACT. HOWEVER WHEN THE MATTER WAS T AKEN BEFORE LD. CIT(A). THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE ADVANCE OF RS. 51,000,00/- GIVEN BY THE COMPANY TO SHRI GOVIND GAR G FOR PURCHASE OF LAND FOR SHOWROOM AND SERVICE STATION AND SUCH ADVANCE ARE F OR THE PURPOSE OF BUSINESS AND FOR THE COMMERCIAL EXPEDIENCY. 10. IT WAS FURTHER SUBMITTED THAT A BARE PERUSAL OF THE COPY OF THE ACCOUNT OF THE ASSESSEE DIRECTOR IN THE BOOKS OF THE COMPAN Y GOES TO SHOW THAT THERE ARE FREQUENT RECEIPTS AND PAYMENTS AND SUCH TRANSAC TIONS WERE IN THE FORM OF ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 8 THE CURRENT/ ACCOMMODATION/ ADJUSTMENT ENTRIES IN F ORM OF A RUNNING ACCOUNT AND NOT BEING BY WAY OF LOAN OR ADVANCE AS ENVISAGE D U/S 2(22)(E) OF THE ACT. 11. PER CONTRA, THE LD. DR RELIED HEAVILY ON THE F INDING OF THE ASSESSING OFFICER WHICH HAVE BEEN CONFIRMED BY THE LD. CIT(A) AND THE SAME ARE CONTAINED AT PARAS 3.11 AND 3.12 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED AS UNDER:- 3.11 FROM THE ABOVE SEQUENCE OF EVENTS, IT CAN BE SEEN THAT MANY DISCREPANCIES, CONTRADICTIONS ARE BEING EMANATED FR OM THE SUBMISSIONS FILED BY THE ASSESSEE FROM TIME TO TIME WHICH ARE DISCUSSED AS UNDER:- A) INITIALLY THE STAND OF THE ASSESSEE WAS THAT HE HAD ENTERED INTO AN AGREEMENT (REGISTERED) WITH M/S RAJ AUTO WHEELS (P) LTD ON 04/07/2009 FOR SALE OF HIS PROPERTY AMC NO. 402/4 SITUATED AT MISS ION PRESS BUNGALOW, HARBILAS SHARDA MARG, CIVIL LINES, AJMER. AS PER TH IS AGREEMENT, HE HAD RECEIVED AN ADVANCE OF RS 16,85,000/- & RS 15,60,00 0/- ON 3.7.2009 & ON 24.7.2009 RESPECTIVELY (TOTAL COMES TO RS 32,45,000 /-). AS PER THIS AGREEMENT ASSESSEE HAD TO RECEIVE ANOTHER RS 1 CRORE WITHIN 6 MONTHS FROM THE DATE OF AGREEMENT I.E. BY FEBRUARY, 2010. B) DUE TO THE ABOVE, INITIALLY IT WAS CONSISTENTLY ARG UED BY THE ASSESSEE THAT THE AMOUNT RECEIVED WAS A TRADE ADVAN CE AND HENCE SEC. 2(22)(E) IS NOT AT ALL APPLICABLE IN HIS CASE. (SEE OBJECTION LETTER FILED ON 12/08/2010). C) ON BEING SPECIFICALLY ASKED TO FURNISH THE PROOF OF RECEIPT OF RS 1 CRORE AS PER THE REGISTERED AGREEMENT, ASSESSEE D ID NOT SAY ANYTHING. THIS AMOUNT WAS EXPECTED TO HAVE RECEIVED BY THE AS SESSEE IN THE MONTH OF FEBRUARY, 2010 AS PER THE SO CALLED AGREEM ENT. ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 9 D) WHEN ASSESSEE WAS CONFRONTED WITH THE GLARING DISCR EPANCIES NOTICED IN THE COPY OF AGREEMENTS FURNISHED TO THE DEPARTMENT ON TWO DIFFERENT OCCASIONS I.E. ON 12/3/2014 AND ON 26/8/2 014, HE AGAIN KEPT SILENT. THE CONTRADICTIONS AND DISCREPANCIES ALREAD Y DISCUSSED IN THE FOREGOING PARAS IN THIS REGARD UNDOUBTEDLY ESTABLIS HES ON RECORD THAT ASSESSEE HAS INTENTIONALLY FURNISHED FABRICATED REC ORDS TO MISLEAD THE DEPARTMENT AND TRIED HIS LEVEL BEST TO EVADE THE PA YMENT OF LEGITIMATE TAX AS PER THE ACT. E) ON BEING POINTED OUT THE ABOVE CONTRADICTIONS, ASSE SSEE CAME FORWARD WITH ANOTHER ARGUMENT BY FILING FRESH OBJEC TION LETTER ON 02/01/2015 AS DISCUSSED IN PARA 3.10 ABOVE. THIS TI ME, IT WAS ARGUED AND ADMITTED THAT THE AMOUNT OF 'TEMPORARY A DVANCE' GOT BY THE ASSESSEE FROM COMPANY WAS RS 51,00,000/-. WHEREAS A S PER THE SO CALLED 'AGREEMENT' THE ADVANCE CLAIMED TO HAD RECEI VED BY THE ASSESSEE IN LIEU OF THIS SO CALLED 'AGREEMENT' WERE SHOWN AT RS 32,45,000/- ONLY (RS 16,85,000 ON 3.7.2009 & RS 15,60,000/- ON 24.7. 2009). THIS AGAIN PROVES THAT ASSESSEE IS AGAIN AND AGAIN FURNISHING FALSE, FABRICATED AND WRONG INFORMATION AND ARGUMENTS BEFORE THE DEPARTMENT TO EVADE PAYMENT OF TAX. F) ASSESSEE HIMSELF ADMITTED IN THE LETTER FILED ON 02 /01/2015 THAT THE AMOUNT OF ADVANCE RECEIVED BY THE ASSESSEE FROM COM PANY DURING THE F.Y. 2009-10 WAS RS 51,00,000/-. IT WAS THEN ARGUED THAT IN SUBSEQUENT YEAR I.E. IN F.Y. 2010-11 ASSESSEE HAD REPAID THE AMOUNT AND AS ON 31.3.2011 THE AMOUNT OF OUTSTANDING BALANCE WITH THE ASSESSEE REMAINED AT RS. 1,00,000/- ONLY. THIS ADMISSION ITSELF PROVES BEYON D ANY DOUBT THAT ASSESSEES CASE IS FULLY COVERED BY PROVISIONS OF S EC. 2(22)(E) OF THE ACT AS AN AMOUNT OF RS 51,00,000/-WAS WITH THE ASSESSEE AS ON 31.3.2010. EVEN IF ASSESSEE HAD REPAID THE AMOUNT OF ADVANCE P ARTLY OR FULLY IN SUBSEQUENT YEAR(S), HOW COULD IT COME FOR THE RESCU E OF THE ASSESSEE ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 10 FROM THE AMBIT OF PROVISIONS OF SECTION 2(22)(E) IS BEST KNOWN TO ASSESSEE ONLY. A LOAN OR ADVANCE FOR FEW DAYS WOULD BE WITHIN THE AMBIT OF SECTION 2(22)(E) OF THE ACT. IT DOES NOT SAY THA T IN ORDER TO COME IN THE CATEGORY OF DEEMED DIVIDEND, LOAN/ADVANCE SHOUL D BE FOR PARTICULAR MINIMUM DURATION. RELIANCE IS PLACED ON HON'BLE BOM BAY HIGH COURT'S DECISION RENDERED IN THE CASE OF WALCHAND & CO. LTD . VS. CIT (1975) 100 ITR 598. G) VIDE LETTER FILED ON 02/01/2015 IT WAS ARGUED THAT THE ADVANCE WAS TEMPORARILY GIVEN FOR PURCHASE OF PREMISES FOR COMP ANY FOR WHICH THE DEAL WAS CANCELLED LATER AND THE AMOUNT OF ADVANCE RECEIVED BACK BY THE COMPANY. THIS IS AGAINST THE FACTS ON RECORDS DUE TO THE SIMPLE R EASON THAT THE ARGUMENT OF 'AGREEMENT TO PURCHASE OF A PREMISE' HAS ALREADY BE EN PROVEN A BLATANT LIE PUT FORTH BY THE ASSESSEE AS DISCUSSED ABOVE. FURTHER, ASSESSEE DID NOT FURNISH ANY EVIDENCE TO SUPPORT HIS ARGUMENT THAT THE 'AGREEMEN T' WAS CANCELLED AT A LATER STAGE. H) IN THE LETTER FILED ON 02/01/2015, ASSESSEE CAME UP WITH A FORMULA FOR CALCULATION OF DEEMED DIVIDEND IN. ASSESSEE'S HANDS AND WORKED OUT THE SAME AT RS 17,82,120/- AS AGAINST THE RESERVES AND SURPL US SHOWN IN THE BALANCE SHEET OF THE COMPANY AS ON 31.03.2010 AT RS. 28,35, 265/-. THIS IS ALSO PROVES TO BE TOTALLY WRONG AND UNACCEPTABLE. SECTION 2(22) (E) IS UNAMBIGUOUS AND STATES ..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. I) SO FAR AS THE ACCUMULATED PROFIT IS CONCERNED, ASSE SSEE HAS AGAIN DISPUTED THE SAME BY ARGUING THAT IT WILL FURTHER BE REDUCED BY DIFFERENCE OF DEPRECIATION AS PER COMPANY LAW AND AS PER LT LAW. AGAIN THIS ARGUM ENT WAS ALSO MADE BY THE ASSESSEE WITHOUT APPRISING THE FACTS OF HIS CASE FR OM THE RECORDS OF THE COMPANY'S ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 11 BALANCE SHEET. AS PER THE BALANCE SHEET OF M/S RAJ AUTO WHEELS (P) LTD, THE RESERVES AND SURPLUS AS ON 31.3.2009 WERE SHOWN AT RS 14,48,485/-. THE PROFIT OF THE COMPANY AS ON 31.3.2010 AFTER CLAIMING DEPRECIA TION OF RS 30,23,022/-AS PER I.T. ACT WAS DEDARED AT RS 13,86,022/-. THUS THE AC CUMULATED PROFIT OF THE COMPANY AS ON 31.3.2010 COMES TO RS 28,35,265/- (RS 14,48,485 + RS 13,86,780/). IT MAY BE MENTIONED HERE THAT THIS ACC UMULATED PROFIT WAS ARRIVED AT BY THE COMPANY AFTER DEDUCTING THE ALLOWABLE DEPRED ATION AS PER INCOME-TAX ACT. THUS IT IS UNKNOWN WHAT IS THE BASIS OF A FURTHER D EDUCTION OF RS 6,07,615/- FROM THE ACCUMULATED PROFIT OF RS 28,35,265/- ASKED FOR BY THE ASSESSEE IN HIS WRITTEN REPLY FILED ON 02/01/2015 AND FURTHER RESTRICTING W ITH 80% OF THE BALANCE AMOUNT. 3.12 IN VIEW OF THE ABOVE DISCUSSED FACTS AND CIRCU MSTANCES OF THE CASE, IT HAS BECOME ABSOLUTELY CLEAR AND ESTABLISHED ON RECORD THAT ASS ESSEES CASE IS FULLY COVERED BY PROVISIONS OF SEC. 2(22)(E) WHICH AT ONE POINT OF T IME HAS EVEN BEEN ADMITTED BY THE ASSESSEE HIMSELF. ALL THE EFFORTS PUT IN BY THE ASS ESSEE TO JUSTIFY HIS ARGUMENTS HAVE BEEN PROVEN FUTILE AND IN THAT EXERCISE, THE MENS-REA IN THE MINDS OF THE ASSESSEE HAS BEEN EXPOSED. THUS AFTER CONSIDERING ALL THE FACTS OF TH E CASE IN ITS LEGALITY AND THE CONTRADICTIONS FOUND AS DISCUSSED IN THE FOREGOING PARAS, AN ADDITION OF RS. 28,35,265/- IS BEING MADE TO ASSESSEES TOTAL INCOME U/S 2(22)(E) OF THE I.T. ACT, 1961 BEING DEEMED DIVIDEND. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS HOLDING 80% EQUITY HOLD ING IN M/S RAJ AUTO WHEELS PRIVATE LIMITED DURING THE FINANCIAL YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR. DURING THE FINANCIAL YEAR, THERE ARE TOTAL ADVANCES TO THE TUNE OF RS 101.95 LACS GIVEN BY M/S RAJ AUTO WHEELS PRIVATE LIMITED TO THE ASSESSEE. THE LD CIT(A) DURING THE APPELLATE PROCEEDINGS IN CASE OF M/S RAJ AUTO WHEELS PRIVATE LIMITED HAS HELD ADVANCES TO THE TUNE OF RS 51 LACS FOR THE PURPOSES OF BUSINESS AND THEREFORE, TO THAT EXTENT, THE SAME WO ULD NOT BE CONSIDERED AND ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 12 REDUCED FOR THE PURPOSES OF DETERMINING THE DEEMED DIVIDEND IN HANDS OF THE ASSESSEE. FURTHER, THERE IS A PAYMENT OF RS 18.50 LACS MADE ON 18.01.2010 WHICH HAS BEEN RETURNED ON THE VERY NEXT DAY ON 19. 01.2010 AND THE SAME APPEARS TO BE A CURRENT ACCOUNT TRANSACTION AND NOT TO BE CONSIDERED FOR DETERMINING THE DEEMED DIVIDEND. THERE IS NOTHING O N RECORD IN TERMS OF REMAINING ADVANCES EITHER FOR BUSINESS PURPOSES OR ANY CURRENT ACCOUNT TRANSACTION. FURTHER, THE FACT THAT SUCH ADVANCES HAVE BEEN REPAID IN THE SUBSEQUENT FINANCIAL YEAR WILL NOT PROVIDE ANY RELA XATION FROM THE RIGOURS OF SECTION 2(22)(E) OF THE ACT. THEREFORE, REMAINING ADVANCES TO THE TUNE OF RS 32.45 LACS WILL BE CONSIDERED FOR DETERMINING DEEME D DIVIDEND. THE AO HAS DETERMINED THE ACCUMULATED PROFITS AT RS 28.35 LACS OF M/S RAJ AUTO WHEELS PRIVATE LIMITED WHICH HAS NOT BEEN DISPUTED BY THE ASSESSEE. THE LOWER OF THE TWO I.E, RS 28.35 LACS HAS THUS BEEN RIGHTLY BROUGH T TO TAX AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. IN THE RESULT, THE GROUND NO. 3 OF ASSESSEES APPEAL IS DISMISSED. 13. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGED TH E ADDITION OF RS. 7,57,000/- MADE BY THE AO ON ACCOUNT OF CASH DE POSIT IN HIS BANK ACCOUNT MAINTAINED WITH THE BANK OF BARODA, AJMER. 14. BRIEFLY STATED, THE FACTS OF CASE ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS DEPOSITED RS. 8,67,000 IN HIS BANK ACCOUNT MAINTAINED WITH BA NK OF BARODA, AJMER. THE ASSESSEE SUBMITTED THAT THE CASH DEPOSITS WERE OUT OF CASH WITHDRAWALS MADE FROM HIS PROPRIETARY CONCERN M/S GOVIND GARG & CO A ND OUT OF HIS CAPITAL BALANCE WITH THE FIRM. HE FURTHER SUBMITTED THAT TH ERE WAS ALSO CASH LYING FROM HIS TRUCK INCOME. THE ASSESSING OFFICER HOWEVER OB SERVED THAT AS PER CAPITAL ACCOUNT, THERE WAS NO WITHDRAWAL AND FURTHER NO CAS H BOOK IN SUPPORT OF THE WITHDRAWAL MADE FROM M/S GOVIND GARG & CO HOWEVER, HE ACCEPTED SOURCE OF CASH DEPOSITS OF RS. 1.10 LAKH FROM TRUCK INCOME AN D AFTER GIVING CREDIT ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 13 THEREOF, AN AMOUNT OF RS. 7,57,000/- WAS BROUGHT TO TAX ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE SAID ADDITION. 15. DURING THE COURSE OF HEARING, THE LD. AR SUBMI TTED THAT THE ALLEGATION OF THE ASSESSING OFFICER THAT CASH BOOK WAS NOT FURNIS HED IS NOT CORRECT AS THE AO NEVER ASKED FOR IT AT FIRST PLACE. IT WAS SUBMITTE D THAT THE AO IN HIS SHOW- CAUSE DATED 25.02.2015 HAD ASKED THE ASSESSEE TO EX PLAIN THE SOURCE OF DEPOSIT WITH THE NECESSARY SUPPORTING EVIDENCE. IN RESPONSE, THE ASSESSEE FILED COPY OF HIS CAPITAL ACCOUNT ALONG WITH FUND F LOW STATEMENT. IT WAS ACCORDINGLY SUBMITTED THAT THE AO NEVER ASKED THE A SSESSEE TO PRODUCE THE CASH BOOK OF THE PROPRIETARY CONCERN AND IT IS NOT IN DISPUTE THAT SUCH BOOKS OF THE PROPRIETARY CONCERN INCLUDING THE CASH BOOKS WE RE SUBJECTED TO EXAMINATION OF THE AUDITOR AND SUCH AUDIT REPORT AN D THE AUDITED BALANCE SHEET WERE FILED BEFORE THE AO. IT WAS ACCORDINGLY SUBMI TTED THAT THE LOWER AUTHORITIES PROCEEDED MERELY ON SUSPICION AND THE S AME CANNOT BE BASED FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE. 16. THE LD. DR SUPPORTED THE ORDER OF THE LOWER AUT HORITIES AND SUBMITTED THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS GIVEN A FINDING THAT THERE WAS NO WITHDRAWAL OF RS. 7,57,000/- FROM THE CAPITAL ACCOUNT OF THE ASSESSEE AND EVEN THE CASH BOOK WAS NOT PRODUCED. I T WAS ACCORDINGLY SUBMITTED THAT THE ACTION OF THE LOWER AUTHORITIES AND THE ADDITION SO MADE SHOULD BE CONFIRMED. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A TRITE LAW THAT WHEN AN AMOUNT I S FOUND DEPOSITED IN THE ASSESSEES BANK ACCOUNT, THE ONUS IS ON THE ASSESSE E TO EXPLAIN THE SOURCE OF SUCH DEPOSITS. IN THE INSTANT CASE, THE EXPLANATIO N OF THE ASSESSEE IS THAT ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 14 SOURCE OF SUCH DEPOSITS IS THE WITHDRAWAL OF CASH F ROM HIS CAPITAL ACCOUNT MAINTAINED WITH HIS PROPRIETARY CONCERN M/S GOVIND GARG & CO. THE AOS FINDING IS THAT THE ASSESSEE HAS NOT PRODUCED THE C ASH BOOK IN SUPPORT OF THE SAID EXPLANATION TO WHICH THE ASSESSEE HAS CONTENDE D THAT HE WAS NEVER ASKED TO PRODUCE THE CASH BOOK AT FIRST PLACE. IN VIEW O F THE CONTRADICTORY STAND TAKEN BY BOTH THE PARTIES, WE BELIEVE THAT IT WOULD BE JUST AND FAIR THAT THE ASSESSEE IS GIVEN ONE MORE OPPORTUNITY TO PRODUCE T HE CASH BOOK OF HIS PROPRIETARY CONCERN M/S GOVIND GARG & CO. BEFORE TH E AO. THE MATTER IS ACCORDINGLY SET-ASIDE TO THE FILE OF THE AO TO EXAM INE THE SAME AFRESH. IN THE RESULT, THE GROUND IS ALLOWED FOR STATISTICAL PURPO SES. 18. IN GROUND NO. 5, THE ASSESSEE HAS CHALLENGED TH E ADDITION OF RS. 1,80,592/- ON ACCOUNT OF RENTAL INCOME. BRIEFL Y STATED, THE FACTS OF CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO OBSERVED THAT THE ASSESSEE WAS IN RECEIPT OF RENTAL INCOME OF RS. 2,5 7,988/- FROM BANK OF BARODA ON WHICH TDS HAS ALSO MADE BY THE BANK OF BARODA U/ S 194I OF THE ACT. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY HE HAS NOT INCLUDED THE RENTAL INCOME FROM BANK OF BARODA IN HIS RETURN OF INCOME. IN RES PONSE, THE ASSESSEE SUBMITTED THAT RENTAL INCOME WAS RECEIVED IN THE AC COUNT OF GOVIND GARG HUF SINCE LONG BACK. HOWEVER, IN ABSENCE OF TDS CERTIFI CATE, THE SAME HAS NOT BEEN CLAIMED. THE SUBMISSION SO FILED BY THE ASSESSEE WA S NOT FOUND ACCEPTABLE AS THE ASSESSING OFFICER OBSERVED THAT IN THE RETURN O F INCOME FILED BY THE HUF, IT HAS SHOWN NET TAXABLE HOUSE PROPERTY INCOME OF RS. 2, 07,522/-. FURTHER, NO DOCUMENTARY EVIDENCE LIKE ANY AGREEMENT ENTERED INT O BETWEEN BANK OF BARODA AND GOVIND SWAROOP GARG (HUF) HAS BEEN FURNI SHED. THE AO ACCORDINGLY HELD THAT THE PROPERTY INCOME SHOWN IN THE HANDS OF THE HUF MIGHT BE A DIFFERENT PROPERTY AS EVEN THERE IS DIFFERENCE IN RENTAL INCOME SHOWN IN THE RETURN OF INCOME HUF AND AS PER ITS OF SH. GOVI ND SWAROOP GARG (INDIVIDUAL). AFTER ALLOWING DEDUCTION FOR REPAIR & MAINTENANCE @ 30%, THE NET ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 15 RENTAL INCOME OF RS. 1,80,592/- WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE SAID ADDITION HOLDING THAT ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE THAT THE RENT AL INCOME OF RS. 2,57,988/- PERTAINS TO GOVIND SWAROOP GARG (HUF ) AND NOT TO THE APPELLANT. 19. DURING THE COURSE OF HEARING, THE LD. AR REITE RATED THE SUBMISSION MADE BEFORE THE LOWER AUTHORITIES. IT WAS SUBMITTED THA T THE PREMISES GIVEN ON RENT BELONGS TO GOVIND SWAROOP GARG (HUF), THE RENTAL IN COME HAS BEEN SHOWN IN THEIR HUF A/C HAVING PAN AAXPG4033G, ASSESSED IN WA RD 2(1) AJMER. IT WAS FURTHER SUBMITTED THAT THE RENTAL INCOME HAS BEEN C REDITED IN THE HUF BANK ACCOUNT. HOWEVER THE BANK HAS WRONGLY DEDUCTED TDS FROM RENTAL INCOME SHOWN IN INDIVIDUAL ACCOUNT OF GOVIND GARG AND ACCO RDINGLY IT HAS APPEARED IN FORM NO. 26AS OF THE ASSESSEE. HOWEVER NO CREDIT HA S BEEN CLAIMED BY THE ASSESSEE IN RESPECT OF SAID TDS. IT WAS ACCORDINGL Y SUBMITTED THAT THE RENTAL INCOME HAS ALREADY BEEN ASSESSED IN HANDS OF GOVIND SWAROOP GARG (HUF) AND THE SAME CANNOT BE ADDED IN THE HANDS OF ASSESSEE. IT WAS FURTHER SUBMITTED THAT ON ENQUIRY MADE BY THE AO U/S 133(6), THE BANK REPORTED THROUGH ITS LETTER DATED 29.11.2016 THAT THE RENT WAS BEING PAI D TO SHRI GOVIND GARG HUF IN THE A/C 08110100004176. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT CLAIMED THE TDS ON THE RENTAL INCOME AS INCOME LEGA LLY AND FACTUALLY BELONGED TO THE HUF, THEREFORE, IT WAS THE HUF ALONE WHO COU LD HAVE MADE A CLAIM OF THE TDS. IT WAS FURTHER SUBMITTED THAT THE RENTAL I NCOME IN THE PAST AND THE SUBSEQUENT YEARS HAS BEEN DECLARED AND ASSESSED IN THE HANDS OF THE HUF AND THE FOLLOWING RULE OF CONSISTENCY, THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 16 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IT HAS BEEN CONTENDED BEFORE US THAT TH E RENT HAS BEEN PAID IN HUF BANK ACCOUNT HOWEVER, BY MISTAKE, THE TDS HAS BEEN DEDUCTED BY THE BANK BY QUOTING ASSESSEES PAN AND IT HAS WRONGLY BEEN REFL ECTED IN ASSESSEES FORM 26AS. IT HAS FURTHER BEEN CONTENDED THAT HUF HAS S HOWN THE RENTAL INCOME IN ITS RETURN OF INCOME AND THE SAME IS THE POSITION I N EARLIER AND SUBSEQUENT YEARS WHICH IS CONSISTENTLY BEEN FOLLOWED AND ACCEP TED BY THE DEPARTMENT. IN OUR VIEW, MERE REFLECTION OF A TRANSACTION IN ASSES SEES FORM 26AS CANNOT BE MADE A SOLE BASIS FOR BRINGING CERTAIN TRANSACTION TO TAX ESPECIALLY WHERE THE ASSESSEE IS CONTENDING THAT SUCH TRANSACTION DOESN T BELONG TO HIM AND BUT BELONG TO THE HUF. HOWEVER, IT IS FOR THE ASSESSEE TO DEMONSTRATE THAT SUCH TRANSACTION DOESNT BELONG TO HIM ESPECIALLY WHERE HUF IS A RELATED ENTITY AND THE ASSESSEE HAS ACCESS TO THE RECORDS OF THE HUF A ND IS BEING CONTROLLED BY THE ASSESSEE. WE ACCORDINGLY BELIEVE THAT WHERE TH E HUF IS THE RIGHT FULL OWNER OF THE SUBJECT RENTAL INCOME AND IT HAS ALREA DY INCLUDED THE SAME IN ITS RETURN OF INCOME, THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. WE ACCORDINGLY SET-ASIDE THE MATTER TO T HE FILE OF THE AO TO EXAMINE AFORESAID CONTENTIONS SO RAISED BY THE ASSESSEE AND DECIDE THE MATTER AFRESH. IN THE RESULT, THE GROUND IS ALLOWED FOR STATISTICA L PURPOSES. 21. IN GROUND NO. 6, THE ASSESSEE HAS CHALLENGED TH E ADDITION OF RS. 85,969/- ON ACCOUNT OF INTEREST INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE WAS IN RECEIPT OF INTEREST INCOME OF RS. 45,969/- FROM THE PUNJAB & SIND BANK AND RS. 40,000/- FROM M/S BHANSALI UDYOG ON WHICH TDS HAS BEEN DEDUCTED, HOWE VER, THE ASSESSEE HAS NOT INCLUDED THE SAME IN HIS RETURN OF INCOME. THE ASSESSEE SUBMITTED THAT THE INTEREST INCOME HAS BEEN SHOWN IN HIS PROPRIETARY C ONCERN M/S GOVIND GARG & CO AND TDS OF RS. 5,801/- HAS ALREADY BEEN CLAIMED. MOREOVER, THE TDS ON INTEREST INCOME FROM M/S BHANSALI UDYOG COULD NOT B E CLAIMED IN ABSENCE OF ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 17 FORM 16. THE AO HOWEVER DID NOT FIND THE SUBMISSION OF THE ASSESSEE ACCEPTABLE AND AFTER PERUSAL OF THE FINANCIAL STATE MENT OF THE ASSESSEE, HE BROUGHT TO TAX AT RS. 85,969/- IN HANDS OF THE ASSE SSEE. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE SAID ADDITION HOLDING THAT THE ASSESSEE COULD NOT BE PROVED ITS CASE WITH THE HELP OF DOCUMENTARY EVIDEN CES. 22. DURING THE COURSE OF HEARING, THE LD. AR REITER ATED THE SUBMISSION MADE BEFORE THE LOWER AUTHORITIES. IT WAS SUBMITTED THA T THE INTEREST INCOME OF RS. 85,969/- HAS BEEN SHOWN IN OTHER INCOME OF RS. 1,63,317/- IN THE BOOKS OF ACCOUNT OF THE PROPRIETARY CONCERN M/S GOVIND GARG & CO AS CLEAR FROM THE JOURNAL ENTRY AND P & L A/C AND THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. THE MATTER IS ACCORDINGLY S ET-ASIDE TO THE FILE OF THE AO TO EXAMINE THE AFORESAID CONTENTION SO RAISED AND W HERE THE SAME IS FOUND TO BE CORRECT AND DULY OFFERED TO TAX IN HANDS OF M/S GOVIND GARG & CO, DELETE THE IMPUGNED ADDITION. IN THE RESULT, GROUND IS ALLOWE D FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 02/04/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/04/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI GOVIND SWAROOP GARG, AJMER 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD 1(2), AJMER 3. VK;DJ VK;QDR@ CIT ITA NO. 614/JP/2018 SHRI GOVIND SWAROOP GARG, AJMER VS. ITO, WARD 1(2), AJMER 18 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 614/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR