Shri Manoj Agrawal, Jaipur V. Assistant Commissioner Of Income Tax, Circle-4, Jaipur

ITA 755/JPR/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5377 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 30-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MAHLA JCIT DHK
• Keywords: Income from undisclosed sources; Deemed dividend
• Section: 133A; 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, 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 VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 755/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 MANOJ AGARWAL, 37, KRISHNA COLONY, TEEN DUKAN, DEHAR KE BALAJI, JAIPUR. CUKE VS. A.C.I.T., CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABEPA 9305 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.K. MAHLA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/10/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08/10/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 14/03/2018 OF LD. CIT(A)-2, JAIPUR FOR THE A.Y. 201 3-14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF SUB-BROKERAGE EXPENSES OF RS. 13,65 ,000/-. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF A.O. IN TREATING THE ADVANCE OF RS. 35,50,454/- GIVEN BY M/S APEKSHA HOUSING PVT. LTD. IN BUSINESS EXPEDIENCY TO ASSESSEE FOR PURCHASE OF LAND AS DEEMED DIVIDEND U/S 2(22)(E) IN THE HANDS OF ASSESSEE, THEREBY CONFIRMING THE ADDITION OF SAME. ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 2 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 3.00 LACS ON ACCOUNT OF ALLEGED UND ISCLOSED INVESTMENT IN PLOTS. 4. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 5. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. GROUND NO. 1 OF THE APPEAL IS REGARDING DISALLOWA NCE OF SUB- BROKERAGE EXPENSES. THE ASSESSEE IS AN INDIVIDUAL AN D DERIVED INCOME FROM COMMISSION ON LIC POLICY AND BROKERAGE OF REAL ESTATE. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS CONDUCTED AT THE BUSINESS PREMISES OF M/S APEKSHA HOUSING PVT. LTD. ON 06/11/2012.. THE ASSESSEE IS THE DIRECTOR OF THE SAID COMPANY AND DU RING THE STATEMENT RECORDED ON 08/11/2012, THE ASSESSEE ADMITTED THE T RANSACTION OF REAL ESTATE UNDER WHICH THE ASSESSEE RECEIVED BROKERAGE INCOME @ RS. 100 PER SQ.YARD. THE ASSESSEE ACCEPTED THE TOTAL BROKER AGE RECEIPT OF RS. 30.00 LACS AND ALSO STATED THAT HE HAS PAID TO SUB BROKERS OF RS. 15.00 LACS. IN THE RETURN OF INCOME, THE ASSESSEE HAS OFF ERED THE INCOME OF RS. 16,35,000/- FROM BROKERAGE AFTER CLAIMING THE PAYME NT OF COMMISSION TO SUB-BROKERS OF RS. 13,65,000/-. THE ASSESSING OFFICE R ASKED THE ASSESSEE TO FURNISH THE PROOF OF PAYMENTS OF COMMISSION TO S UB-BROKERS. IN RESPONSE TO THIS, THE ASSESSEE SUBMITTED THE DETAIL S OF PAYMENT OF COMMISSION TO SUB-BROKERS AS UNDER: ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 3 SUNIL RAWAT RS. 1,25,000/- VINITA RAWAT RS. 2,05,000/- RITESH MEHRA RS. 1,65,000/- JITENDRA SAIN RS. 1,30,000/- SUMER SINGH RS. 1,60,000/- GULAB CHAND PRAJAPAT RS. 1,25,000/- KAMAL AGARWAL RS. 1,35,000/- RAJENDRA PAHARIA RS. 1,90,000/- SHRI KANT KUMAWAT RS. 1,30,000/- TOTAL COMMISSION PAID RS. 13,65,000/- THE ASSESSING OFFICER DID NOT ACCEPT THIS EXPLANATIO N OF THE ASSESSEE ON THE GROUND THAT THE NAME AND DETAILS FURNISHED BY T HE ASSESSEE ARE DIFFERENT FROM THE NAMES APPEARING IN THE IMPOUNDED RECORD WHEREIN THE ASSESSEE HAS RECEIVED THE BROKERAGE FROM VARIOUS RE AL ESTATE TRANSACTIONS. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT IN THE STATEMENT RECORDED U/S 131 OF THE ACT, THE ASSESSEE HAS CLEARLY STATED IN RESPONSE TO QUESTION NO. 2 THAT HE HAD PAID COMMISS ION TO SUB-BROKERS OUT OF THE BROKERAGE INCOME OF RS. 30.00 LACS AND T HEREFORE, THE CLAIM OF PAYMENT OF COMMISSION TO SUB-BROKERS IS A GENUINE C LAIM BASED ON THE IMPOUNDED DOCUMENT SHOWING THE TRANSACTION OF REAL E STATE BY THE ASSESSEE. HE HAS FURTHER CONTENDED THAT THE ASSESSI NG OFFICER HAS DISALLOWED THE CLAIM FOR WANT OF BILLS AND VOUCHERS W HEREAS THE ENTIRE ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 4 TRANSACTION IS UNACCOUNTED INCOME AND THEREFORE, ON CE THE ASSESSEE HAS OFFERED THE INCOME ON ACCOUNT OF BROKERAGE INCOME, WHICH IS OUT OF BOOKS OF ACCOUNT THEN THE QUESTION OF SUBMITTING THE VOUC HERS RAISED BY THE SUB-BROKER DOES NOT ARISE. THE LD AR HAS FURTHER CON TENDED THAT THE PAYMENTS MADE TO THE SUB-BROKERS IS NOT DISPUTED BY THE DEPARTMENT IN SURVEY AND THEREFORE, ONCE THE RECEIPT IS ACCEPTED ON THE BASIS OF STATEMENT, THE AMOUNT OF EXPENDITURE STATED IN THE STATEMENTS SHOULD ALSO BE ACCEPTED. THE ASSESSEE HAS FILED COMPLETE DE TAILS OF PERSONS INCLUDING THE CONFIRMATION OF ID PROOF IN SUPPORT O F THE COMMISSION PAYMENT. HE HAS FURTHER CONTENDED THAT THE DIFFEREN CE IN THE NAME AND DETAILS OF THE PERSONS IS DUE TO THE REASON THAT TH E PAYMENT WAS MADE ON THE INSTANCE OF THE BROKERS WHOSE NAMES ARE APPEARIN G IN THE IMPOUNDED DOCUMENTS. THUS, THE PAYMENT WAS MADE AS PER DESIRE O F THE SUB- BROKERS AS MENTIONED IN THE IMPOUNDED DOCUMENT. FUR THER WHEN THE ASSESSEE HAS FILED THE CONFIRMATION FROM THE PARTIE S, WHO HAVE RECEIVED THE PAYMENT THEN THE MERE VARIATION IN THE NAMES TO WHOM ACTUAL PAYMENT WAS MADE AND THE NAMES APPEARING IN THE IMPO UNDED DOCUMENT CANNOT BE A REASON FOR DISALLOWANCE OF CLAI M. THUS, THE LD AR HAS SUBMITTED THAT ONCE THE INVOLVEMENT OF THE SUB- BROKER IS NOT IN DISPUTE THEN THE PAYMENT OF COMMISSION TO SUB-BROKE R CANNOT BE DISALLOWED. ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 5 5. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE TRANSACTION OF BROKERAGE WAS REVEALED ONLY DURING THE SURVEY CONDUCTED AT THE PR EMISES OF M/S APEKSHA HOUSING PVT. LTD. ON WHICH THE ASSESSEE IS A DIRECTOR. AS PER THE IMPOUNDED RECORD, THE TRANSACTIONS OF PROPERTY WERE CLEARLY REVEALED THAT THESE TRANSACTIONS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THEREFORE, THE INCOME FROM BROKERAGE WA S DETECTED ONLY DURING THE SURVEY PROCEEDINGS. THE ASSESSEES CLAIM TO HAVE PAID COMMISSION TO SUB-BROKERS, HOWEVER, THE DETAILS FURN ISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS ARE COMP LETELY DIFFERENT FROM THE DETAILS APPEARING IN THE IMPOUNDED DOCUMEN TS. HENCE, THE ASSESSEE FAILED TO ESTABLISH THE CLAIM OF PAYMENT O F COMMISSION TO SUB- BROKERS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT DURING THE SURVEY CONDUCTED U/S 133A OF THE ACT AT THE BUSINESS PREMISES OF M/S APEKSHA HOUSING PVT. LTD. ON 06/11/2012, CERTAIN DOCUMENTS WERE FOUND AND IMPOUNDED REVEALING THE BROKERAGE INCOME OF RS. 30.00 LACS EA RNED BY THE ASSESSEE FROM VARIOUS PROPERTY DEALING TRANSACTIONS. WE NOTE THAT AS PER THE IMPOUNDED DOCUMENTS AS MANY AS 112 TRANSACTIONS OF PROPERTY DEALINGS WERE CARRIED OUT BY THE ASSESSEE FROM WHICH THE ASSE SSEE HAS ACCEPTED ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 6 THE BROKERAGE INCOME OF RS. 30.00 LACS. THOUGH, THE ASSESSEE IN HIS STATEMENT ALSO CLAIMED TO HAVE PAID COMMISSION TO S UB-BROKERS, HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FUR NISHED THE DETAILS OF PAYMENT OF COMMISSION TO SUB-BROKERS TO THE EXTENT OF RS. 13,65,000/- TO NINE PERSONS. WE NOTE THAT THESE NAMES AS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ARE COMPLETELY DIFFERE NT FROM THE NAMES APPEARING IN THE IMPOUNDED DOCUMENT. FURTHER, WE NOT E THAT THE NAMES OF SUB-BROKERS MENTIONED IN THE IMPOUNDED DOCUMENT REPRESENTING THE PURCHASING PARTY WHEREAS THE ASSESSEE IS REPRESENTI NG THE VENDOR BEING M/S VAISHALI ESTATE, MANGALAM GROUP, THEREFORE, THE BROKERAGE INCOME RECEIVED BY THE ASSESSEE IS ONLY FROM THE VENDOR BE ING THE MANGALAM GROUP WHEREAS THE NAMES APPEARING IN THE IMPOUNDED D OCUMENTS ARE THE BROKERS OF THE PURCHASER OF VARIOUS PLOTS. THOUG H, THE ASSESSEE HAS PRODUCED THE DETAILS AND CONFIRMATION OF THESE NINE PERSONS, HOWEVER, THESE DOCUMENTS ARE VERY VAGUE AND NOT REVEALING TH E DETAILS OF THE TRANSACTIONS FOR WHICH THE COMMISSION WAS PAID BY TH E ASSESSEE TO THEM. ONCE THE ASSESSEE IS NOT TAKING SERVICE OF ANY BROK ER FOR SELLING THESE LANDS BUT THE IMPOUNDED DOCUMENT IS SHOWING ONLY BRO KER REPRESENTING THE PURCHASER THEN AS PER WELL KNOWN PRACTICE IN THE TRADE, THE DEALER WHO REPRESENTS THE PURCHASER RECEIVES THE BROKERAGE FROM THE PURCHASER AND DEALER WHO REPRESENT THE SELLER RECEIVES THE COM MISSION/BROKERAGE ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 7 FROM THE SELLER. THE ASSESSEE REPRESENTING THE SELL ER/VENDOR M/S MANGALAM GROUP AND RECEIVING THE BROKERAGE INCOME F ROM THE VENDOR AND THEREFORE, THE NAMES APPEARING IN THE IMPOUNDED MATERIAL WOULD NOT IPSO FACTO ESTABLISH THE PAYMENT OF BROKERAGE OR CO MMISSION BY THE ASSESSEE TO THESE PERSONS. HENCE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE. HENCE, THIS GROUND OF THE ASSESSEES APPEAL STANDS DISMISSED. 7. GROUND NO. 2 OF THE APPEAL IS WITH REGARD TO THE ADDITION MADE BY THE ASSESSING OFFICER AS DEEMED DIVIDEND U/S 2(22)( E) OF THE ACT. THE ASSESSEE IS A DIRECTOR OF M/S APEKSHA HOUSING PVT. LTD. AND 10% SHARE HOLDING OF THE SAID COMPANY. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS TAKEN LOAN/ADVANCES OF RS. 65,50,454/- FROM THE COMPANY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT SHALL NOT BE INVOKED. IN REPLY, THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE IS HAVING A LOAN ACCOUNT AS WELL AS THE RUN NING CURRENT ACCOUNT WITH THE ASSESSEE. AS PER THE LOAN ACCOUNT, THE ASSE SSEE HAS GIVEN RS. 30.00 LACS TO THE COMPANY WHEREAS AS PER THE CURRENT RUNNING ACCOUNT, THERE ARE REGULAR DAY TO DAY TRANSACTIONS OF RECEIP T AND PAYMENT TO THE COMPANY FOR THE PURPOSE OF PURCHASING OF LAND. ONLY FOR THE SECOND HALF OF THE FINANCIAL YEAR, THE ASSESSEE WAS HAVING DAY T O DAY BALANCE IN THE ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 8 CURRENT ACCOUNT WHEREAS IN THE REST OF THE PERIOD, T HE ASSESSEE WAS HAVING CREDIT BALANCE IN THE CURRENT ACCOUNT. THE AS SESSING OFFICER AFTER CONSIDERING THE LOAN OF RS. 30.00 LACS GRANTED BY T HE ASSESSEE TO THE COMPANY, HAS TREATED THE BALANCE AMOUNT OF RS. 35,5 0,454/- AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 8. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A), WHO REJECTED THE CONTENTION OF THE AS SESSEE ON THE GROUND THAT THE BALANCE IS NOTHING BUT ONLY AN INCIDENTAL DUE TO THE REGULAR DAY TO DAY TRANSACTIONS OF RECEIPT AND PAYMENT TO THE C OMPANY. HOWEVER, THE LD. CIT(A) WAS NOT CONVINCED WITH THE EXPLANATION OF T HE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 9. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE IS HAVING TWO ACCOUNTS WITH M/S APEKSHA HOUS ING PRIVATE LIMITED. ONE ACCOUNT IS OF ADVANCE GIVEN BY THE ASS ESSEE TO THE COMPANY WHEREIN THE OPENING BALANCE OF ADVANCE GIVEN TO THE COMPANY IS RS.30 LACS AND THE CLOSING BALANCE IS ALSO RS.30 LACS . THE ANOTHER ACCOUNT IS A CURRENT ACCOUNT WHERE THERE ARE TRANSACTIONS OF BOT H AMOUNT GIVEN AND RECEIVED BY THE ASSESSEE BUT THE CREDIT BALANCE AS ON 31-03-2013 IS RS.65,50,454/-. CONSIDERING BOTH THE ACCOUNTS, ASSESSING OFFICER MA DE ADDITION OF RS.35,50,454/-. FROM THE COPY OF ACCOUN T OF ASSESSEE IN BOOKS ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 9 OF COMPANY IT CAN BE NOTED THAT THE COMPANY HAS OPE NED A CURRENT ACCOUNT IN THE NAME OF THE ASSESSEE. IN THIS ACCOUN T THERE IS OPENING CREDIT BALANCE OF RS.2,05,512/-. THEREAFTER, THERE ARE NUMBER OF DEBIT/ CREDIT TRANSACTION AND AS ON 18.01.2013 THERE ARE T OTAL DEBIT TRANSACTION OF RS.78,37,000/- AND CREDIT TRANSACTION OF RS.80,9 5,220/-, THUS, AS ON 18.01.2013 ASSESSEE HAS GIVEN RS. 2,58,220/- TO THE COMPANY. TILL THIS DATE, THE ASSESSEE HAS NOT RECEIVED ANY AMOUNT FROM THE COMPANY RATHER IT HAS PROVIDED FUNDS TO THE COMPANY. THE LD. AR HA S FURTHER SUBMITTED THAT THE ADVANCES WERE GIVEN TO THE ASSESSEE IN TERM S OF AGREEMENT DATED 01/01/2013 ON ACCOUNT OF PURCHASE OF LAND BY THE COMPANY. HOWEVER, AS THE DEAL OF PURCHASE OF LAND DID NOT MAT ERIALIZE, THE SAME WAS RETURNED BACK BY THE ASSESSEE TO THE COMPANY. IN THE SUBSEQUENT YEAR, THE ASSESSEE WAS HAVING CREDIT BALANCE IN THE CURRENT ACCOUNT AND THEREFORE, THE TRANSACTIONS ARE IN THE NAME OF CURR ENT ACCOUNT AND NOT OF LOAN OR ADVANCES FOR THE SUBSTANTIAL PERIOD DURING THE YEAR UNDER CONSIDERATION SO AS TO ATTRACT THE PROVISIONS OF SE CTION 2(22)(E) OF THE ACT. IN SUPPORT OF ITS CONTENTION, THE LD AR HAS RE LIED UPON THE FOLLOWING CASE LAWS: (I) CIT VS. GAYATRI CHAKRABORTY 168 DTR 91. (II) RAVINDRA R FOTEDAR VS ACIT 167 ITF 100. (III) ACIT VS HARSHAD V. DOSHI 130 ITD 137. (IV) M/S K.G. PETROCHEM LTD. VS ACIT 176 TTJ 1 (V) SHRI ASHOK KUMAR AGARWAL VS ACIT 2016 ITL 2895. ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 10 THUS, THE LD. AR HAS SUBMITTED THAT THE COURTS HAVE CONSISTENTLY TAKEN A VIEW THAT IF THE TRANSACTION IS IN THE NAME OF DAY T O DAY BOTH WAY MOMENT OF FUND AS PER THE REQUIREMENT OF THE PARTIE S THEN IT WOULD NOT CONSTITUTE AS LOAN OR ADVANCES. 10. ON THE OTHER HAND, THE LD DR HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HA S CLAIMED TO HAVE RECEIVED THE ADVANCES FOR THE PURPOSE OF PURCHASE O F PROPERTY BUT NOT A SINGLE INSTANCE OF PURCHASE OF PROPERTY HAS BEEN BR OUGHT ON RECORD AND THUS THE EXPLANATION OF THE ASSESSEE IS NOT SUPPORT ED BY ANY MATERIAL OR EVIDENCE. HE HAS FURTHER CONTENDED THAT ONCE THE AS SESSEE HAS RECEIVED THE LOAN/ADVANCES AS ON 31/3/2013 THEN THE PROVISIO NS OF SECTION 2(22)(E) OF THE ACT ARE ATTRACTED WHEN ALL OTHER CON DITIONS OF SHARE HOLDING AND SUBSTANTIAL ACCUMULATED PROFITS ARE SPE CIFIED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. FROM THE LEDGER ACCOUNT OF ASSE SSEE IN THE BOOKS OF M/S APEKSHA HOUSING PVT. LTD., IT IS CLEAR THAT THE RE ARE TRANSACTIONS OF RECEIPT OF AMOUNT AND PAYMENT OF THE AMOUNT ON REGU LAR INTERVALS. UP TO 18/1/2013, THE ASSESSEE WAS HAVING CREDIT BALANCE IN THE CURRENT ACCOUNT WITH THE COMPANY, HOWEVER, THEREAFTER THE ASSESSEE RE CEIVED VARIOUS AMOUNTS THOUGH, IN BETWEEN, THERE WERE REPAYMENTS BY THE ASSESSEE TO ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 11 THE COMPANY. FINALLY AS ON 31/3/2013 A TOTAL DEBIT BALANCE OF RS. 65,50,454/- IS APPEARING IN THE CURRENT ACCOUNT. THE ASSESSING OFFICER ACCEPTED THAT THE ASSESSEE HAS GIVEN A LOAN OF RS. 30.00 LACS TO THE COMPANY AND THEREFORE, AFTER REDUCING THE SAID AMOU NT OF RS. 30.00 LACS FROM THE DEBIT BALANCE OF RS. 65,50,454/- IN THE CU RRENT ACCOUNT, THE ASSESSING OFFICER TREATED THE BALANCE AMOUNT OF RS. 35,50,454/- AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THE CONTENT ION RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AS WELL AS BEFO RE US IS THAT THE ASSESSEE HAS RECEIVED THESE ADVANCES ON ACCOUNT OF PURCHASE OF LAND/PROPERTY FOR THE COMPANY AND AN AGREEMENT TO T HIS EFFECT WAS ALSO ENTERED INTO BY THE PARTIES. THE LD AR HAS FURTHER S UBMITTED THAT THE AMOUNTS WERE RECEIVED AND REPAID BY THE ASSESSEE AS PER THE REQUIREMENT AND THEREFORE, IT IS NOT IN THE NATURE OF ADVANCE RECEIVED BY THE ASSESSEE AND ENJOYED THE SAME FALLING IN THE AM BIT OF LOAN OR ADVANCES U/S 2(22)(E) OF THE ACT. THERE IS NO DISPU TE THAT THERE IS A REGULAR MOMENT OF RECEIPT AND PAYMENT OF MONEY AND ONLY FOR THE LAST THREE MONTHS, THE ASSESSEE IS HAVING DEBIT BALANCE AND FOR THE REST OF THE YEAR, THE ASSESSEE WAS HAVING CREDIT BALANCE WITH THE COMPANY IN THE CURRENT ACCOUNT. FURTHER TO THE EXTENT OF RS. 30.00 LACS THOUGH, THE ASSESSING OFFICER HAS GIVEN BENEFIT OF THE SAID AMO UNT, HOWEVER, IF THE SAID AMOUNT WAS ALREADY WITH THE COMPANY THEN THE SUB SEQUENT ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 12 TRANSACTIONS AFTER 18/01/2013 TO THE EXTENT OF RS. 30.00 LACS CANNOT BE TREATED AS LOAN AND ADVANCES AS THE ASSESSEE HAD AL READY GIVEN THE SAID AMOUNT TO THE COMPANY. IF WE ANALYSE THE DETAILS AS APPEARING IN THE CURRENT ACCOUNT, WE FIND THAT THE AMOUNT REMAINED WIT H THE ASSESSEE WAS ONLY FOR A BRIEF PERIOD OF LESS THAN ONE MONTH UP 3 1/3/2013 AND THEREFORE, IT APPEARS THAT THOUGH THESE AMOUNTS WERE RECEIVED BY THE ASSESSEE BUT HAVING REGARD TO THE SHORT PERIOD DURI NG WHICH IT REMAINED WITH THE ASSESSEE, IT CANNOT BE CONSIDERED IN THE NA TURE OF LOAN OR ADVANCES BUT IT IS ONLY IN THE NATURE OF REGULAR PA YMENT AND RECEIPT IN THE CURRENT ACCOUNT. THEREFORE, ONCE THESE TRANSACTIONS ARE MUTUALLY RUNNING OR CURRENT ACCOUNT TRANSACTIONS CREATING OBLIGATION ON EACH OTHER THEN IT WOULD NOT FALL IN THE AMBIT OF LOAN AND ADVANCES. THE HONBLE KOLKATA HIGH COURT IN THE CASE OF CIT VS. GAYATRI CHAKRABORT Y (SUPRA) HAS HELD IN PARA 9, 14 AND 15 AS UNDER: 9. LAW ON THIS POINT IS CLEAR. IN THE EVENT TRANSACT IONS BETWEEN A SHAREHOLDER AND A COMPANY IN WHICH THE PUBLIC ARE NOT SUBSTANTI ALLY INTERESTED AND THE FORMER HAS SUBSTANTIAL STAKE, CREATE MUTUAL BENEFIT S AND OBLIGATIONS, THEN THE PROVISION OF TREATING ANY SUM RECEIVED BY THE S HAREHOLDER OUT OF ACCUMULATED PROFITS AS DEEMED DIVIDEND WOULD NOT AP PLY. THE COMPANY IN THE INSTANT CASE FITS THE DESCRIPTION CONCEIVED IN THE AFORESAID PROVISION TO COME WITHIN THE AMBIT OF SECTION 2(22)(E) OF THE AC T. THE CONTROVERSY WHICH FALLS FOR DETERMINATION IS WHETHER THE SUM RE CEIVED BY THE ASSESSEE FORMED PART OF RUNNING CURRENT ACCOUNT GIVING RISE TO MUTUAL OBLIGATIONS OR THE PAYMENT FORMED ONE-WAY TRAFFIC, ASSUMING THE CH ARACTER OF LOAN OR ADVANCE OUT OF ACCUMULATED PROFIT. A CO-ORDINATE BE NCH OF THIS COURT IN THE CASE OF PRADIP KUMAR MALHOTRA V. CIT [2011] 15 TAXMANN.COM 66/203 TAXMAN 110/338 ITR 538(CAL) HAS LAID DOWN THE FACTORS FOR TESTING THE TRANSACTIONS BETWEEN A COMPANY AND ITS SHAREHOLDER IN THE LIGHT OF THE AFORESAID PROVISION : ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 13 ' .WE ARE OF THE OPINION THAT THE PHRASE 'BY WAY OF ADVANCE OR LOAN' APPEARING IN SUB-CL. (E) MUST BE CONSTRUED TO MEAN THOSE ADVANCES OR LOANS WHICH A SHAREHOLDER ENJOYS FOR SI MPLY ON ACCOUNT OF BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARE S (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH O R WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN P ER CENT OF THE VOTING POWER; BUT IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION WHICH IS B ENEFICIAL TO THE COMPANY RECEIVED FROM SUCH A SHAREHOLDER, IN SUCH C ASE, SUCH ADVANCE OR LOAN CANNOT BE SAID TO A DEEMED DIVIDEND WITHIN THE MEANING OF THE ACT. THUS, FOR GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO THOSE CLASSES OF SHAREHOLDERS WOULD COME WITHIN THE PURVI EW OF S. 2(22) BUT NOT TO THE CASES WHERE THE LOAN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY BY SUCH SHAREH OLDER. ' 14. IN THIS PROCEEDING, HOWEVER, THERE IS A CLEAR F INDING OF FACT BY THE TWO STATUTORY APPELLATE FORA THAT THE ASSESSEE WAS BENE FICIARY OF THE SUMS GIVEN BY THE COMPANY AT SOME POINT OF TIME AND THE COMPAN Y WAS BENEFICIARY OF THE SUMS GIVEN BY THE ASSESSEE AT ANOTHER POINT OF TIME. THIS FINDING GIVEN BY THE TWO STATUTORY APPELLATE FORA DISTINGUISHES T HE PRESENT CASE FROM THE FACTUAL BASIS OF THE DECISION IN THE CASE OF MUKUNDRAY K. SHAH ( SUPRA ). THE RATIO OF THAT DECISION THUS DOES NOT APPLY IN THE F ACTS OF THE CASE GIVING RISE TO THIS APPEAL. 15. IN THIS FACTUAL AND LEGAL PERSPECTIVE, IN OUR OPI NION PAYMENT OF THE AFORESAID SUMS TO THE ASSESSEE CANNOT BE TREATED AS DIVIDEND OUT OF PROFIT. NO PERVERSITY HAS BEEN POINTED OUT ON BEHALF OF THE REVENUE SO FAR AS SUCH A CONCURRENT FINDING OF FACT IS CONCERNED BY THE TW O STATUTORY APPELLATE FORA. WE ARE NOT INCLINED TO DISTURB SUCH FINDING O F FACT, WHICH THE TRIBUNAL HAS BACKED WITH DETAILED ANALYSIS. WE HAVE REPRODUC ED EARLIER IN THIS JUDGMENT THE TRIBUNAL'S OBSERVATIONS ON THIS POINT. IF WE EMBARK ON A FRESH FACTUAL ENQUIRY INTO THE ACCOUNTS OF THE ASSESSEE O R THAT OF THE COMPANY INVOLVED, SUCH EXERCISE WOULD ENTAIL REAPPRECIATION OF EVIDENCE. SUCH ENQUIRY IS IMPERMISSIBLE AT THIS STAGE. THE TRIBUNA L'S DECISION THUS STANDS CONFIRMED BY US AND THE QUESTION FORMULATED BY US I S ANSWERED ACCORDINGLY, IN FAVOUR OF THE ASSESSEE. SIMILAR VIEW HAS BEEN TAKEN BY THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF RAVINDRA R FOTEDAR VS ACIT (SUPRA) AS WELL A S IN THE OTHER DECISIONS AS RELIED UPON BY THE ASSESSEE. ACCORDING LY, HAVING REGARD TO THE FREQUENCY OF THE TRANSACTIONS AND VERY SHORT SP AN OF TIME DURING WHICH THE AMOUNT REMAINED WITH THE ASSESSEE, WE HOLD T HAT THE ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 14 TRANSACTIONS ARE NOT IN THE NATURE OF LOAN OR ADVAN CES. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER O N THIS ACCOUNT. 12. GROUND NO. 3 OF THE APPEAL IS REGARDING THE ADD ITION OF RS. 3.00 LACS ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE PL OTS. 13. WE HAVE HEARD THE LD. AR AS WELL AS THE LD DR AN D CONSIDERED THE RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF S URVEY PROCEEDINGS, A DIARY/NOTE BOOK WAS IMPOUNDED, WHICH CONTAINS PARTICU LARS OF PLOTS OF MANGALAM CITY VATIKA. ON THE BASIS OF THESE DOCUMEN TS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS MADE INVESTMENT OF RS. 3.00 LACS IN THE PLOTS AND ACCORDINGLY MADE THE ADDITION. THE ASSESSE E CONTENDED BEFORE THE AUTHORITIES BELOW THAT THESE ARE THE TRANSACTION S IN WHICH THE ASSESSEE HAS ONLY A DEALER AND NOT THE INVESTOR. THI S EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AUTHORITIES BELOW. E VEN THE LD. DR HAS SUBMITTED THAT THESE TRANSACTIONS ARE ALTOGETHER DI FFERENT FROM THE TRANSACTIONS AS FOUND IN THE OTHER IMPOUNDED DOCUME NT CONTAINING 112 TRANSACTIONS AND THEREFORE, IT WAS RIGHTLY TREATED A S THE INVESTMENT MADE BY THE ASSESSEE. THE LD AR OF THE ASSESSEE IS ALSO M ADE AN ALTERNATIVE PLEA THAT EVEN IF IT IS CONSIDERED AS AN UNDISCLOSE D INVESTMENT WHEN THE ASSESSEE HAS ALREADY DISCLOSED UNACCOUNTED INCOME O F MORE THAN RS. 30.00 LACS THEN THE SOURCE OF INVESTMENT IS ALREADY EXPLAINED BY THE ITA 755/JP/2018_ MANOJ AGARWAL VS ACIT 15 ASSESSEE IN THE SHAPE OF UNACCOUNTED BROKERAGE INCO ME, WHICH WAS FOUND AND ADDED BY THE ASSESSING OFFICER. WE FIND M ERITS IN THIS ALTERNATIVE CONTENTION OF THE ASSESSEE THAT WHEN THE RE IS AN ADDITION OF RS. 30.00 LACS IN THE INCOME OF THE ASSESSEE ON ACC OUNT OF UNDISCLOSED BROKERAGE INCOME THEN EVEN IF RS. 3.00 LACS IS CONS IDERED AS UNDISCLOSED INVESTMENT, THE SOURCE OF THE SAME IS ALREADY EXPLA INED AND ESTABLISHED IN THE SHAPE OF BROKERAGE INCOME OF RS. 30.00 LACS. ACCORDINGLY, WE ALLOW THE BENEFIT OF TELESCOPIC AND DELETE THE ADDITION. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/10/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 TH OCTOBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI MANOJ AGARWAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 755/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR