R. Ravi Verma, Hyd, Hyderabad V. DCIT, Central Circle-1(1), Hyd, Hyderabad

ITA 757/HYD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6161 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 20-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U. MINI CHANDRAN
• Keywords: Deemed dividend; Documents seized
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 2(22)(e); 153; 153C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. 755 & 756/HYD/2015 ASSESSMENT YEAR: 2009-10 & 2011-12 SHRI R. RAJENDRA VARMA HYDERABAD PAN AAGPV0068F VS. THE DCIT, CENTRAL CIRCLE 1 (1), HYDERABAD (APPELLANT) (RESPONDENT) ITA NOS. 757 & 758/HYD/2015 ASSESSMENT YEAR: 2009-10 & 2011-12 SHRI R. RAVI VARMA HYDERABAD PAN AFSPR9675 VS. THE DCIT, CENTRAL CIRCLE 1 (1), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. RAGHAVENDRA RAO REVENUE BY : SMT U. MINI CHANDRAN DATE OF HEARING : 20-12-2016 DATE OF PRONOUNCEMENT : 03-02-2017 ORDER PER P. MADHAVI DEVI, J.M.: BOTH THE ABOVE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE COMMON AND CONSOLIDATED ORDER OF THE CI T(A)- XI DATED 12-03-2015, FOR THE ASSESSMENT YEARS 2009- 10 & 2011-12 RESPECTFULLY. FOR THE A.Y. 2009-10, THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 153C OF T HE INCOME TAX ACT, WHILE FOR ASSESSMENT YEAR 2011-12, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. 2 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. ITA NOS. 755 & 756/HYD/2015 (SHRI R. RAJENDRA VARMA) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, S RI RUDRARAJU RAVINDRA VARMA IS AN INDIVIDUAL WHO IS TH E MANAGING DIRECTOR OF M/S. RRV INFRASTRUCTURE LTD. A SEARCH & SEIZURE OPERATION U/S 132 OF THE IT ACT W AS CONDUCTED ON NCC LTD. AND ITS GROUP ON 06-10-2010. M/S. RRV INFRASTRUCTURE LTD., BEING THE SUB CONTRACTOR O F NCC LTD., WAS ALSO COVERED UNDER THE ABOVE SEARCH. DUR ING THE SEARCH PROCEEDINGS, CERTAIN LOOSE SHEETS AND DOCUME NTS WERE SEIZED. IN VIEW OF THE SAME, A NOTICE U/S 153 C WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NO TICE, THE ASSESSEE FILED HIS RETURN OF INCOME, RETURNING RS.15.29,210/- AND RS. 1,68,61,090/-, AS HIS INCOME FOR THE ASSESSMENT YEARS 2009-10 & 2010-11 RESPECTIVELY . THE ASSESSING OFFICER OBSERVED THAT THE LEDGER ACCOUNT OF COPIES OF SHRI R.R. VARMA IN THE BOOKS OF M/S. RRV INFRASTRUCTURE LTD., SHOWED A DEBIT BALANCE OF RS.20,34,665/-AS ON 10-02-2009. THE ASSESSEE WAS, THEREFORE, ASKED TO EXPLAIN WHY THIS AMOUNT SHOULD NOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSE SSEE U/S 2(22)(E) OF THE ACT. THE ASSESSEE COULD NOT EX PLAIN THE 3 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. ENTRIES AND THEREFORE THE ASSESSING OFFICER TREATED THE SAID AMOUNT AS DEEMED DIVIDEND IN THE HANDS OF THE ASSES SEE AND BROUGHT IT TO TAX. SIMILARLY, FOR THE A.Y 2011 -12 ALSO, SIMILAR ADDITION WAS MADE DURING THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT. AGGRIEVED, THE ASS ESSEE FILED APPEALS BEFORE THE CIT(A), FOR THE BOTH ASSES SMENT YEARS SUBMITTING THAT THE ASSESSEE HAS BEEN ADVANCI NG INTEREST FREE LOANS TO THE COMPANY OVER A PERIOD OF TIME AND THERE WAS A DEBIT BALANCE IN HIS ACCOUNT ONLY F OR A VERY SHORT PERIOD DURING THE RELEVANT F.YS AND THAT THE ASSESSEE HAS RUNNING CURRENT ACCOUNT WITH THE COMPA NY AND THE DEBIT BALANCE FOR A SHORT PERIOD SHOULD NOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSE SSEE U/S 2(22)(E) OF THE ACT. IN SUPPORT OF HIS CONTENT IONS, HE PLACED RELIANCE UPON THE DECISION OF THE HONBLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SURAJ DEV DADA [2011] 338 ITR 538 (CAL). THE CIT(A) HOWEVER, WAS N OT CONVINCED WITH THE ASSESSEES CONTENTIONS AND THERE FORE, CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGGRI EVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. FOR BOTH THE A.YS I.E 2009-10 & 2011-12, THE ASS ESSEE HAS RAISED GROUNDS OF APPEAL AGAINST THE ADDITION M ADE 4 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. U/S 2(22)(E) AND FOR THE A.Y. 2009-10, THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND OF APPEAL CHALLENG ING THE VALIDITY OF PROCEEDINGS U/S 153C OF THE ACT. IT I S SUBMITTED THAT IN THE CASE OF THE ASSESSEE BEFORE U S, THOUGH THE NOTICE U/S 153C IS ALLEGEDLY ISSUED FOR SIX ASSESSMENT YEARS I.E A.YS 2005-06 TO 2010-11, IT D OES NOT MENTIONE ANY OF THE PARTICULARS REGARDING THE PERSO N IN WHOSE CASE, THE RELEVANT SEARCH WAS CONDUCTED OR TH E MONEY, BULLION OR JEWELLARY OR ANY BOOKS OF ACCOUNT S OR DOCUMENTS SEIZED BELONG TO THE ASSESSEE AND THE SATISFACTION, IF ANY, RECORDED U/S 153C OF THE ACT BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEAR CHED PERSONS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE NOTICE U/S 153C IS NOT VALID AND HENCE, THE PROCEED INGS ARE VALID AB-INITIO . 4. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW AND HAS PRODUCED THE COPY OF THE SATISFACTION RECORDED BY THE ASSESSING OFFICER. O N GOING THROUGH THE SAME, WE FIND THAT THE SATISFACTION IS RECORDED FOR THE PERIOD OF SIX YEARS I.E 2005-06 TO 2010-11 AND REFER TO THE SEARCH CONDUCTED IN THE OF M/S. NCC LTD., AN D ALSO REFER TO THE DOCUMENTS RELATING TO BOTH THE ASSESSE ES 5 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. BEFORE US, I.E SHRI R. RAJENDRA VARMA AND SHRI R. R AVI VARMA AND ALSO TO THE QUANTUM OF INCOME THAT MIGHT NOT HAVE BEEN DISCLOSED IN THEIR BOOKS OF ACCOUNT. THE REFORE, WE ARE SATISFIED THAT THE REQUIREMENTS OF ASSUMING JURISDICTION UNDER SECTION 153C ARE FULFILLED BY TH E RELEVANT ASSESSING OFFICER. THEREFORE, THE ADDITIONAL GROUN D OF APPEAL FOR THE A.Y 2009-10 IS REJECTED. 5. ON MERITS, FOR BOTH THE A.YS, THE LD. COUNSEL FO R THE ASSESSEE RELIED UPON THE SUBMISSIONS MADE BY THE AS SESSEE BEFORE THE CIT(A) AND ALSO ON THE COPIES OF THE LED GER ACCOUNT AND THE BANK STATEMENTS OF THE ASSESSEE FIL ED BEFORE US, WHILE THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY, THE ASSESSEE IS HAVING A RUNNING CURRENT ACCOUNT WITH T HE COMPANY AND ALSO THAT IT IS ALWAYS THE ASSESSEE WHO HAS BEEN ADVANCING INTEREST FREE LOANS AND ADVANCES TO THE COMPANY. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE DEBIT BALANCES HAVE BEEN FOR A VERY B RIEF PERIOD, I.E ONLY FOR LESS THAN 50 DAYS FOR AN AMOUN T OF RS. 20,34,665/- AND LESS THAN 21 DAYS FOR AN AMOUNT OF RS. 6 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. 1,57,200/- AS IS EVIDENT FROM THE BOOKS OF ACCOUNT PRODUCED BEFORE US. WE FIND THAT THE HONBLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF CIT VS SURAJ DEV DADA (CITED SUPRA) AS CONSIDERED THE EXACTLY SIMILAR SIT UATION AND AT PARAS 8 TO 10 HAS HELD AS UNDER: 8. IN VIEW OF THE FINDINGS RECORDED BY THE COMMISS IONER OF INCOME-TAX (APPEALS) AS WELL AS THE TRIBUNAL, THERE WAS NO JUSTIFICATION FOR MAKING AN ADDITION OF RS. 3,50,00 0 UNDER SECTION 36(I)(III) OF THE ACT. THE ASSESSEE HAD NOT CHARGED ANY INTEREST ON THE AMOUNT ADVANCED TO M/S. NALANDA SPI NNERS AS THE AMOUNT ADVANCED TO NALANDA SPINNERS WAS NOT RET URNED FOR WHICH A CIVIL SUIT WAS FILED AND WITH THE ASSISTANC E OF INFLUENTIAL PEOPLE, THE SAME WAS RECOVERED. MOREOVE R, FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08, SIMILAR ADDIT IONS HAD BEEN DELETED WHICH HAS ATTAINED FINALLY. THE JUDGME NT IN S. A. BUILDERS' CASE (SUPRA), THUS, DOES NOT HELP THE REV ENUE. 9. INCIDENTALLY, IT MAY BE NOTICED THAT ON MARCH 18 , 2013, NOTICE OF MOTION WAS ISSUED ON QUESTION NO. (III) ONLY WHE N THE FOLLOWING ORDER WAS PASSED: 'PRESENT: MS. SAVITA SAXENA, ADVOCATE FOR THE APPEL LANT. NOTICE OF MOTION FOR MAY 27, 2013, IN RESPECT OF SUBSTANTIAL QUESTION NO. (III) ONLY. THE LEARNED COUNSEL FOR THE REVENUE ARGUED THAT NO REASONS HAVE BEEN ASSIGNED WHILE DECLINING QUESTIONS NOS. ( I) AND (II), WHICH ARE SUBSTANTIAL QUESTIONS OF LAW AND IN VIEW OF THE PROVISO TO SECTION 260A(4) OF THE ACT, ARE REQUIRED TO BE ADJUDICATED BY THIS COURT. ACCORDINGLY, WE PROCEED TO DECIDE QUESTIONS NOS. (I) AND (II) AS WELL. IT WOULD BE AP POSITE TO REFER TO THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) AND THE TRIBUNAL ON QUESTIONS NOS. (I) AND (II). THE CO MMISSIONER OF INCOME-TAX (APPEALS) WITH RESPECT TO QUESTIONS NOS. (I) AND (II) HAD NOTICED AS UNDER: '4. I HAVE GONE THROUGH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND REPLY SUBMITTED BY THE CO UNSEL OF THE APPELLANT. I AM OF THE CONSIDERED OPINION TH AT SECTION 2(22)(E) OF THE ACT IS A DEEMING PROVISION WHICH ASSUMES EXISTENCE OF CERTAIN FACTS IF THE CONDITION S SPECIFIED IN A PARTICULAR SECTION ARE FULFILLED. WE AGREE THAT THESE PROVISIONS ARE TO BE CONSTRUED STRICTLY. THIS LEGAL FICTION HAS TO BE CARRIED OUT TO LOGICAL ENDS AND NOT TO ILLOGICAL LENGTH. THE COPY OF ACCOUNT OF THE APP ELLANT IN 7 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. THE BOOKS OF THE COMPANY CLEARLY SHOWS THAT THE APP ELLANT HAS RUNNING CURRENT ACCOUNT WITH THE COMPANY AND IN FACT THE APPELLANT HAD BEEN ADVANCING MONIES TO THE COMP ANY AS AND WHEN REQUIRED FOR THE PURPOSE OF BUSINESS OF THE COMPANY. IT WAS ONLY FOR 55 DAYS IN BETWEEN THE YEA R THAT BALANCE OF THE APPELLANT IN BOOKS OF ACCOUNT T URNED CREDIT. IT IS BEYOND DOUBT THAT THIS SECTION CAN BE INVOKED TO CURTAIL THE MISUSE OF THE FUNDS BELONGING TO A P RIVATE LIMITED COMPANY BY ITS SHAREHOLDERS BUT NOT WHEN TH ERE IS RUNNING CURRENT ACCOUNT OF THE APPELLANT WITH THE C OMPANY AND THE APPELLANT HAS IN FACT FOR MOST THE TIME LENT THE MO NEY TO THE COMPANY. THIS SECTION HAD BEEN INSERTED TO STOP THE MISUSE OF THE TAXING PROVISIONS BY THE ASSESSEES BY TAKING TH E FUNDS OUT OF THE COMPANY BY WAY OF LOANS OR ADVANCES INSTEAD OF DIVIDENDS AND THUS AVOID TAX. BUT IN THIS CASE WHER E THERE IS NO SUCH INTENTION OF THE APPELLANT AND HE HAD IN FACT ADVANCED MONEY TO THE COMPANY, CREDIT IN THAT ACCOUNT FOR SO ME DAYS CANNOT BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E). IT IS EVIDENT FACT THAT THE APPELLANT IN REAL SENSE NO T DERIVED ANY BENEFIT FROM THE FUNDS OF THE COMPANY AND, THEREFOR E, BY NO STRETCH OF IMAGINATION IT CAN BE SAID THAT THE COMP ANY HAS DISBURSED OR GIVEN DIVIDEND TO ITS SHAREHOLDER/DIRE CTOR IN THE GUISE OF LOAN. IT WILL BE TRAVESTY OF LAW TO APPLY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT TO THE FACTS OF THE PRE SENT CASE WHETHER IN FACT THE PERSON CONCERNED HAS NOT GAINED ANY BENEFIT FROM THE FUNDS OF THE COMPANY AND ONE HAS TO CONSID ER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE APPLYING THE PROVISIONS OF THIS SECTION. HENCE, THE PROVISIONS OF SECTION 2(22)(E) COULD NOT BE INVOKED WHEN THERE IS A GENUINE BUSINESS TRANSACTION BETWEEN THE TWO ENTITIES AND F UNDS OF THE APPELLANT-DIRECTOR WERE IN FACT LYING WITH THE COMP ANY FOR MOST OF THE TIME. 4.1 IN VIEW OF THE ABOVE DISCUSSED POSITION OF THE CASE, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTA INABLE AND DESERVES TO BE DELETED. HENCE, THE SAME IS HEREBY D ELETED. THEREFORE, THIS GROUND OF APPEAL OF THE APPELLANT I S ALLOWED.' THE AFORESAID FINDINGS WERE AFFIRMED IN APPEAL BY T HE TRIBUNAL. 10. FROM THE ABOVE, IT EMERGES THAT THE COMMISSIONE R OF INCOME-TAX (APPEALS) AND THE TRIBUNAL HAD CONCURREN TLY RECORDED THAT THE ASSESSEE HAD RUNNING ACCOUNT WITH THE COMPANY M/S. DADA MOTORS PVT. LTD. AND HAD BEEN ADV ANCING MONEY TO IT. IT WAS FURTHER OBSERVED THAT THE PROVI SIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT ATTRACTED IN T HE PRESENT CASE AS THIS PROVISION WAS INSERTED TO STOP THE MISUSE B Y THE ASSESSEE BY TAKING THE FUNDS OUT OF THE COMPANY BY WAY OF LOAN ADVANCES INSTEAD OF DIVIDENDS AND THEREBY AVOID TAX . IN THE PRESENT CASE, THE ASSESSEE HAD IN FACT ADVANCED MON EY TO THE COMPANY AND THERE WAS CREDIT FOR ONLY 55 DAYS FOR W HICH THE 8 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. PROVISIONS OF SECTION 2(22)(E) OF THE ACT COULD NOT BE INVOKED. THESE FINDINGS WERE NOT SHOWN TO BE ERRONEOUS OR PE RVERSE IN ANY MANNER. WE FIND THAT THE FACTS AND CIRCUMSTANCES BEFORE US ARE ALSO SIMILAR. THEREFORE, RESPECTFULLY FOLLOWING THE DEC ISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT, THE ASSE SSEES GROUNDS OF APPEAL FOR BOTH THE YEARS ON MERITS ARE ALLOWED. ITA NO. 757 & 758/HYD/2015 (SHRI R. RAVI VARMA) 7. BOTH ARE ASSESSEES APPEALS FOR THE ASSESSMENT Y EARS 2009-10 & 2011-12 RESPECTFULLY. 8. THE FACTS AND CIRCUMSTANCES IN THE CASE OF THE ASSESSEE HEREIN ARE ALSO SIMILAR TO THE FACTS OF TH E ABOVE ASSESSEE IN ITA NOS. 755 & 757/HYD/2015. THE ASSES SEE HEREIN IS THE BROTHER OF SHRI RUDRARAJU RAJENDRA VE RMA AND IS THE EXECUTIVE DIRECTOR OF M/S RRV INFRASTRUC TURE LTD. DURING THE COURSE OF SEARCH IN THE CASE OF M/ S. RRV INFRASTRUCTURE LTD, CERTAIN LOOSE SHEETS AND DOCUME NTS WERE SEIZED, IN VIEW OF WHICH, NOTICES U/S 153C WER E ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICES, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING OF RS . 11,92,220/- AND RS. 1,71,05,570 FOR THE ASSESSMENT YEARS 2009-10 & 2011-12 RESPECTIVELY. THE ASSESSING OFFIC ER 9 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. COMPLETED THE ASSESSMENT BY INVOKING THE DEEMING PROVISION OF SEC. 2(22)(E) OF THE ACT, AGAINST WHIC H THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CI T(A) CONFIRMED THE ASSESSMENTS AND THE ASSESSEE IS IN SE COND APPEAL BEFORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE CASE OF THE ASSESSEE IN THIS CASE, ASSESSING OF FICER FOUND THAT THERE WAS A DEBIT BALANCE IN THE ASSESSE ES LEDGER ACCOUNT IN THE BOOKS OF THE COMPANY M/S RRV INFRASTRUCTURE LTD AND THE ASSESSEES EXPLANATION W AS CALLED FOR. IT IS SUBMITTED THAT, SINCE THE ASSESS EE COULD NOT EXPLAIN THE SAID ENTRY IN THE BOOKS, THE ASSESS ING OFFICER TREATED IT AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT, IN THE HANDS OF THE ASSESSEE AND BROUGHT IT TO TAX. ON APPEAL TO THE CIT(A), THE ASSESSEE SUBMITTED THAT T HE SUM OF RS. 53,80,801/- WAS AN ADVANCE RECEIVED BY THE ASSESSEE AS A CONSIDERATION FOR THE DEVELOPMENT AGR EEMENT ENTERED INTO BY THE ASSESSEE WITH THE COMPANY AND THEREFORE IT CANNOT BE TREATED AS DEEMED DIVIDEND U /S 2(22)(E) OF THE ACT. THE CIT(A), HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTIONS AND THE ASSESSEE IS IN SECON D APPEAL BEFORE US. 10 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. 10. THE LD. DR RELIED UP ON THE ORDERS OF THE AUTHO RITIES BELOW. 11. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY THE A SSESSEE HAS ENTERED INTO A DEVELOPMENT AGREEMENT WHICH WAS CANCELLED LATER ON AS THE COMPANY WAS UNABLE TO FIL E THE APPLICATION FOR PERMISSION BEFORE THE HUDA, DUE TO THE REGULARIZATION PROBLEM AND THE COMPANY HAD ASKED TH E ASSESSEE TO RETURN THE ADVANCE MONEY WITHIN TWO WEE KS THEREFROM, FAILING WHICH INTEREST @ 2% P.M WAS TO B E CHARGED FOR THE DELAYED PERIOD. THE ASSESSEE DID NO T PRODUCE ANY EVIDENCE REGARDING THESE CONTENTIONS BE FORE THE CIT(A) ON BEFORE US EXCEPT FOR THE UNREGISTERED DEVELOPMENT AGREEMENT. THE CIT(A) HAS CONSIDERED T HAT A DEVELOPMENT AGREEMENT NEEDS TO BE REGISTERED SO FOR AS IT HAS THE EFFECT OF RIGHT / TITLE / INTEREST IN THE P ROPERTY IN FAVOUR OF THE DEVELOPER AND FURTHER THAT NO DOCUMEN TARY EVIDENCE HAS BEEN FURNISHED TO SUBSTANTIATE THE PLE A THAT THE AGREEMENT COULD NOT BE ACTED UPON DUE TO PROBLE MS IN GETTING THE HUDA PERMISSION. THE CIT(A) THEREFORE HELD THAT THE ASSESSEES PLEA THAT THE AMOUNT WAS RECEIV ED AS AN ADVANCE FOR DEVELOPMENT OF PROPERTY IS ONLY AN 11 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. AFTERTHOUGHT AND THEREFORE NOT ACCEPTABLE. HE THER EFORE, CONFIRMED THIS AMOUNT AS DEEMED DIVIDEND U/S 2(22)( E) OF THE ACT. IN ADDITION TO THE GROUND OF APPEAL AGAINS T THE ADDITION MADE U/S 2(22)(E) OF THE ACT, THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND OF APPEAL CHALLENGING T HE VALIDITY OF THE PROCEEDINGS U/S 153C OF THE ACT FOR THE A.Y 2009-10. THIS GROUND IS SIMILAR TO THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN ITA NO. 755/HYD/2015. FO R THE DETAILED REASONS GIVEN IN THE ABOVE APPEAL, THE ADD ITIONAL GROUND OF APPEAL IS REJECTED. AS REGARDS THE MERIT S OF THE ADDITION, THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SURAJ DEV DADA (CITED SUPRA), WE FIN D THAT THE FACTS IN THE CASE BEFORE US ARE ONLY SLIGHTLY DISTINGUISHABLE. IN THIS CASE ALSO, THE ASSESSEE HA S ADVANCED INTEREST FREE LOANS TO THE COMPANY AND IT IS ONLY FOR A BRIEF PERIOD OF 34 DAYS IN THE A.Y 2009-10 TH AT THERE WAS A SMALL AMOUNT OF RS. 3,34,000/- AS ON 03-04-20 11 DEBIT BALANCE IN FAVOUR OF THE ASSESSEE IN THE BOOK S OF THE COMPANY. EVEN IF THE ASSESSEES CONTENTIONS ABOUT RECEIVING THE CONSIDERATION TOWARDS DEVELOPMENT AGR EEMENT IS NOT ACCEPTABLE, THE DECISION OF THE HONBLE PUNJ AB & 12 ITA NO. 755, 756, 757 & 758/HYD/2015 SHRI R. RAJENDRA VARMA & SHRI R. RAVI VARMA, HYDERA BAD. HARYANA HIGH COURT WOULD APPLY TO THE FACTS OF THE CASE ON HAND. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, W E HOLD THAT THIS AMOUNT CANNOT BROUGHT TO TAX U/S 2(22)(E) OF THE ACT IN THE HANDS OF THE ASSESSEE FOR BOTH THE ASSES SMENT YEARS. 13. IN THE RESULT, THE APPEALS OF THE ASSESSEES FOR THE A.Y 2009-10 ARE PARTLY ALLOWED AND THE APPEALS OF THE ASSESSEE FOR THE A.Y 2011-12 ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 3 RD FEBRUARY , 2017. SD/- SD/- (B. RAMA KOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 3 RD FEBRUARY , 2017. KRK 1) M/S. RRV INFRASTRUCTURE LTD. C/O PR DATLA & CO CA, 6-3-788/A/9, 1 ST FLOOR, DURGA NAGAR, AMEERPET HYDERABAD-16 2) DCIT, CIRCLE -1(1), HYDERABAD 3) CIT -XI, HYDERABAD 4) PCIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE