The Jt.CIT.,(OSD),Cent.Circle-2(2), Ahmedabad V. M/s. Neesa Agritech Pvt.Ltd., Ahmedabad

ITSSA 16/AHD/2020

AI Insights

The case involves multiple appeals by Neesa Agritech Pvt Ltd and the Department of Income Tax concerning assessments made for the assessment years 2007-08 to 2011-12. The appeals were primarily based on the additions made by the Assessing Officer under various sections of the Income-tax Act, 1961, following a search and survey operation. The tribunal noted the non-cooperative behavior of the assessee throughout the proceedings and upheld the additions made by the Assessing Officer, particularly focusing on issues like unexplained cash balances, disallowance of expenses, and deemed dividends. The tribunal also addressed the procedural aspects of how the appeals were handled, including the lack of appearance by the assessee and the reliance on the Special Auditor's report.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124738 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-02-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 07-01-2020
• Other Referred Cases: CIT V/s Ankitech Pvt. Limited, CIT V/s Madhur Housing & Development Company, CIT VS Daisy Packers (P.) Ltd, ACI.T V/s Britto Amusement (P) Ltd, National Travel Services V/s CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Depreciation; Deemed dividend; Commercial expediency; Revenue expenditure
• Section: 69; 132; 40A(3); 143(3); 133A; 153A; 2(22)(e); 37(1); 142(2A); 13; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFOREMRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER Sl. No IT(SS)A No(s) AY Appeal(s) by Appellant(s) Respondent 1 14/Ahd/2020 2007-08 Joint Commissioner of Income-tax (OSD), Central Circle-2(2), Ahmedabad Neesa Agritech Pvt. Ltd., Plot No. 278/279, Panchratna Real Estate, Opp Aroma Cold Storage, Changodar, Ahmedabad PAN : AACCS 7851 G 2 15/Ahd/2020 2010-11 Joint Commissioner of Income-tax (OSD), Central Circle-2(2), Ahmedabad Neesa Agritech Pvt. Ltd., Panchratna Real Estate, Changodar, Ahmedabad PAN : AACCS 7851 G 3 16/Ahd/2020 2011-12 Joint Commissioner of Income-tax (OSD), Central Circle-2(2), Ahmedabad Neesa Agritech Pvt. Ltd., Panchratna Real Estate, Changodar, Ahmedabad PAN : AACCS 7851 G 4 17/Ahd/2020 2007-08 Neesa Agritech Pvt. Ltd., Plot No. 278/279, Panchratna Real Estate, Opp Aroma Cold Storage, Changodar, Ahmedabad PAN : AACCS 7851 G The DCIT Central Circle 2(2), Ahmedabad 5 18/Ahd/2020 2008-09 Neesa Agritech Pvt. Ltd., Panchratna Real Estate, Changodar, Ahmedabad PAN : AACCS 7851 G The DCIT Central Circle 2(2), Ahmedabad 6 62/Ahd/2020 2009-10 Neesa Agritech Pvt. Ltd., Panchratna Real Estate, Changodar, Ahmedabad PAN : AACCS 7851 G The DCIT Central Circle 2(2), Ahmedabad 7 63/Ahd/2020 2010-11 Neesa Agritech Pvt. Ltd., Panchratna Real Estate, Changodar, Ahmedabad PAN : AACCS 7851 G The DCIT Central Circle 2(2), Ahmedabad Assesseeby : None Revenue by : Shri Vijay Kumar Jaiswal, CIT-DR सुनवाई सुनवाईसुनवाई सुनवाई क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख/Date of Hearing : 28.02.2023 घोषणा घोषणाघोषणा घोषणा क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख /Date of Pronouncement: 12.05.2023 2 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd आदेश आदेशआदेश आदेश/O R D E R PER BENCH These seven appeals of the same assessee for AYs 2007-08 to 2011-12 are directed against separate orders of the learned Commissioner of Income- Tax (Appeals)-7, Ahmedabad [hereinafter referred to as "CIT(A)" for short], of even date i.e.14.10.2019, arising out of separate orders passed by DCIT, Central Circle-2(2), Ahmedabad 1, all dated 30.09.2013, under Section 153C r.w.s. 153A r.ws. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. None appeared on behalf of the assessee before us. The assessee in the present case, we have noted, has been non-compliant and totally non- cooperative right from the very beginning, i.e. from the time the search action was conducted on the Neesa Group to the post search investigation to assessment framed on the assessee, then to the appellate proceedings before the learned CIT(A) and even before us. After the filing of the appeal before us, the matter was posted for hearing on the following dates and none appeared on behalf of the assessee on any of the occasions:- 05.04.2022, 30.05.2022, 17.08.2022, 20.10.2022, 05.12.2022 & 03.01.2023 3. The DR was directed to serve the notice which also remained un- complied with; therefore, noting that the assessee has chosen to continue with its non-compliant and non-cooperative attitude, it was decided to dispose of all these appeals ex-parte qua the assessee on the basis of the records and orders before us. 3 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd 4. As transpires from the orders of the authorities below, the Neesa Group had been subjected to the search action u/s 132 of the Act and the assessee, Neesa Agritech Pvt. Ltd., had been subjected to survey action u/s 133A of the Act. As a consequence, assessments were framed on the assessee under Section 153C r.w.s. 153A of the Act for Assessment Years 2007-08 to 2011- 2012. Various additions were made which were challenged before the learned CIT(A) who gave part relief to the assessee; aggrieved by which, the present appeals have been filed before us – with cross-appeals being filed by both the assessee and the Department for AYs 2007-08 and 2010-11; and, the assessee has come up in appeal before us for AYs 2008-09 and 2009-10 while the Department filed appeal for AY 2011-12. 5. As mentioned above, the orders of the authorities below reveal that the assessee was non-cooperative even during the assessment proceedings so much so that special audit under Section 142(2A) of the Act was ordered in the case of the assessee wherein also the assessee did not cooperate and did not furnish the details sought for by the Special Auditor. Even during assessment proceedings the assessee did not appear and, therefore, the Assessing Officer made addition on all the observations made by the Special Auditor in its report filed. The assessee challenged the order before the learned CIT(A); there again despite several notices served, none appeared; only written submissions were filed and the learned CIT(A) accordingly adjudicated all the appeals on the basis of the submissions made before her. 6. We have noted from the orders of the authorities below that several additions/disallowances were made by the Assessing Officer which included additions on account of deemed dividend made as per provisions of Section 2(22)(e) of the Act on account of loans and advances received by the assessee from companies in which it had beneficial interest. The 4 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd substantive addition with respect to the deemed dividend was made in the hands of Shri Sanjay Gupta while the protective addition was made in the hands of the assessee. This protective addition of deemed dividend was dealt with by the learned CIT(A) holding that this is to be decided in accordance with the decision of the larger bench of the Hon’ble Apex Court which was dealing with the identical issue and after considering the issue in the case of Shri Sanjay Gupta in whose hands the substantive addition had been made. Therefore, to this extent, part relief was allowed to the assessee. Aggrieved by this order of the learned CIT(A), the Revenue has come up in appeal before us against the partial relief so granted to the assessee on the issue of deemed dividend, while the assessee has challenged the order of the learned CIT(A) upholding the additions/disallowances made by the Assessing Officer on the basis of Special Auditors Report. 6.1 As the issues raised in all these appeals were identical arising from identical set of facts all the appeals were heard together and are being disposed of by way of this common order for the sake of convenience. 7. We shall first deal with the assessee’s appeal in IT(SS)A No. 17/Ahd/2020 for AY 2007-08. 8. Ground No. (A) raised in this appeal reads as under:- “On the facts and in the circumstances of the case and in law the ‘Commissioner of Income-tax (Appeals) where an appeal is filed before the Tribunal against the order of Commissioner (Appeals) erred in keeping the disallowance of loss of Rs.6,18,921/- on account of disallowance of loss.” 8.1 The learned CIT(A) has dealt with the facts and the issue with regard to the addition of Rs.6,18,921/- on account of disallowance of loss/unexplained cash at paragraph No.9 of her order as under:- 5 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd “9. The Fifth ground of appeal relates to addition of unexplained cash. The Special auditor has referred to cash book and submitted that on certain dates, it shows negative balance. The appellant before AO has claimed that it shows negative cash balance for few days and as appellant and NIL operates from adjourning premises, in case of extreme emergencies, cash was taken from NIL and returned to them as and when cash is available and such entries might have not been recorded in cash book which has resulted into negative cash balance. The appellant has also claimed that maximum negative cash balance is only Rs.3,61,118 but AO rejected explanation as same was not supported by evidences. In appellate proceedings, appellant has reiterated the arguments as were raised before AO. It is observed that cash ledger reproduced in assessment order is not disputed by appellant and such cash balance shows negative balance hence AO was correct in making disallowance. The claim of appellant that short term borrowing taken from NIL might not have been recorded by accountant but such claim is without any evidences and even taking amount in cash would be violation of provisions of section 269SS and 269TT hence contention of appellant cannot be accepted. This ground of appeal is dismissed.” 8.2. We have gone through the order of the learned CIT(A) and have noted that the issue in appeal relates to addition made on account of negative cash balance noted in the cash book of the assessee amounting to Rs.6,18,921/-. We have noted from the findings of the learned CIT(A) that the assessee was unable to offer any plausible explanation for the same. Its explanation being that the assessee and its related concern “NIL” were operating from adjoining premises and whenever cash was negative, it was borrowed from “NIL” by the assessee, but the relevant entries were not made in the books of the assessee. The assessee has been unable to substantiate this explanation with any evidence and, therefore, we hold that the learned CIT(A) has rightly upheld the addition made on account of negative cash balance of Rs.6,18,921/. Ground of appeal No. (A) is accordingly dismissed. 9. Ground No. (B) taken by the assessee reads as under:- “On the facts and in the circumstances of the case and in law the 'Commissioner of Income-tax (Appeals)’ where an appeal is filed before the Tribunal against the order of Commissioner (Appeals)) erred in keeping the 6 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd addition of Rs. 11,84,682/- on account of Electricity exp and Rs 435,198/- on account of mobile exp.” 9.1 The issue of disallowance of electricity expenses of Rs.11,84,682/- has been dealt with by the learned CIT(A) at paragraph no. 10 of her order bringing out the facts and adjudication as under:- “The Sixth ground of appeal relates to disallowance u/s 37(1) of the Act for Rs. 11,84,682. The special auditor at page no 110 of his report has mentioned that electricity expenses of Rs. 14,84,682 is claimed against income of Rs.78,88,006 hence AO asked appellant to produce copies of such bill and reason, for high payment of electricity. The appellant before AO has claimed, that its manufacturing process is continues hence consumption of fuel is justified and as bills are misplaced by it, it had requested UGVC to provide duplicate bills. As appellant could not submit copies of bills, AO observed that appellant has claimed electricity expenses of Rs.2,75,456 inA.Y. 2006-07 hence balance expenditure being increased expenditure of Rs 11,84,682 is disallowed. The appellant has claimed that disallowance is on presumption and relying upon submission filed in assessment proceedings that electricity is major components in thebusiness if tissue culture, disallowance should not be made. However, this contention of appellant cannot be accepted as appellant has not submitted copies of bills during assessment proceedings and addition has been made on account of non-submission of such bills. Even copies of bills were not submitted in appellate proceedings and explanation of appellant that electricity if main component in process is general explanation. The appellant has not explained why there was increase in such expenditure in current year hence disallowance made by AO u/s 37(1) of the Act for Rs 11,84,682 is confirmed and this ground of appeal is dismissed.” 9.2. We have gone through the order of the learned CIT(A) in this regard and have noted that the electricity expenses of Rs.11,84,682/- were disallowed on account of non-substantiation of the same by the assessee either before the Special Auditor or before the Assessing Officer or before the learned CIT(A). Even before us also the assessee could not produce any evidence to substantiate its claim. In the absence of any representation by the assessee before us, this claim of electricity expenses to the tune of Rs.11,84,682/- continues to be remained unsubstantiated; the addition, 7 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd therefore, confirmed by the learned CIT(A) is upheld. Therefore, this issue raised in ground of appeal No. (B) is accordingly dismissed. 10. The other issue raised in Ground No. (B) relates to disallowance of mobile expenses of Rs.4,35,198/- which has been dealt with by the learned CIT(A) at paragraph no. 11 as under:- “The Seventh grounds of appeal relates to addition of mobile expenses of Rs.4,35,198 made by AO. The special auditor has compared the salary expenses with mobile expenses and contended that such expenditure is excessive. The appellant before AO has contended that above expenditure is incurred for the purpose of business and was supported by debit note issued by NIL which is one of the group concern. It was also contended by AO that debit note is raised as per list of employees which are working in a company. It is observed that during the course of assessment proceedings, appellant has submitted ledger account of telephone expenses from books of account of NIL being group concern of appellant and expenditure is supported by debit note and these facts are not disputed by AO. The AO has made addition on the ground that appellant has failed to supply mobile bills but in present case, appellant has submitted debit note received from other group company and ledger account of NIL which is also assessed with same AO cannot be considered as inadmissible evidences. The AO has made addition on presumption and not brought anything on record that such expenditure is not allowable business expenditure hence addition made by AO for Rs.4,35,198 is deleted and this ground of appeal is allowed.” 10.1 The disallowance made on account of mobile expenses of Rs.4,35,198/, we have noted from the order of the learned CIT(A), has been deleted by him. Therefore, there remains no grievance of the assessee on this count and the ground raised by the assessee on account of disallowance of mobile expenses of Rs.4,35,198/- is accordingly dismissed as not relevant. 10.2 Ground No. (B) of assessee’s appeal is accordingly dismissed. 11. Ground No. (C) raised by the assessee reads as under:- “On the facts and in the circumstances of the case and in law the ‘Commissioner of Income-tax (Appeals)’ where an appeal is filed before the 8 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd Tribunal against the order of Commissioner (Appeals)) erred in keeping the addition of Rs. 132,000/-, Rs 9924 and Rs 181682/- on account of Depreciation Exp.” 11.1 This issue has been dealt with by the learned CIT(A) at paragraph no. 12 of her order bringing out the facts and adjudication as under:- “12. The Eight, Ninth and Nineteenth Grounds of Appeal relate to disallowance of depreciation of Rs.1,32,000, Rs.9,924 and Rs. 1,81,682,respectively. The additions have been made on the basis of observations made by Special Auditor as referred in Assessment Order and AO has observed that Appellant has failed to produce necessary explanation with regard to observations made by Special Auditor and in certain cases genuineness of the vender is in doubt. The Appellant in written submission has relied upon Tax Audit Report but in present case Special Audit Report is available on record and contention raised in such report is not rebutted. The Appellant has claimed that Changodar premises is under lock of SIDBI hence supporting documents are not available. This contention cannot be accepted, as ample opportunity of hearing is provided both by AO as well as by undersigned and my predecessor CIT (Appeals) hence both the additions are confirmed. The related grounds of appeal are dismissed.” 11.2 Since the facts relating to the issue were not coming out from the learned CIT(A)’s order, the same were gathered from the assessment order and it was noted that the disallowance of depreciation of Rs.1,32,000/-, Rs.9,924/- and Rs.1,81,682/- pertained to the following:- i) Rs.1,32,000/- - This payment relating to Civil Work of building made to Shri Jitendrabhai Prajapati found to be bogus; ii) Rs. 9,924/- - Excess Depreciation iii) Rs.1,81,682/- - Building constructed on land No. 278 found to have included bogus expenses of construction to the extent of Rs.20,18,693/-. 9 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd 11.3 All the above facts were noted by the Special Auditor on which the reply of the assessee was sought by the Assessing Officer. However, since the assessee had failed to give satisfactory reply explaining the specific queries raised by him, therefore, the disallowance of depreciation has been made by the Assessing Officer as mentioned above. 11.4 Before the learned CIT(A) also, we have noted, the assessee failed to explain the specific points noted by the Special Auditor with regard to the claim of depreciation as above; and, therefore, he confirmed the disallowance made by the Assessing Officer. In the absence of any representation by the assessee before us, the findings of the learned CIT(A) regarding the absence of any explanation by the assessee on the points of excess/wrong depreciation claimed by the assessee, as noted above, stands. We, therefore, uphold the order of the learned CIT(A) confirming the disallowance of depreciation of Rs.1,32,000/-, Rs.9,924/- and Rs.1,81,682/-. Ground No. (C) of assessee’s appeal is accordingly dismissed. 12. Ground No. (D) raised by the assessee reads as under:- “On the facts and in the circumstances of the case and in law the ‘Commissioner of Income-tax (Appeals)’ where an appeal is filed before the Tribunal against the order of Commissioner (Appeals)) erred in keeping the addition of Rs. 920,550/- on account of sec 36(1)(iii).” 12.1 The issue of disallowance u/s 36(1)(iii) for Rs.9,20,550/- has been dealt with by the learned CIT(A) at paragraph no. 13 of her order bringing out the facts and adjudication as under:- “13. The Tenth ground of appeal relate to disallowance u/s 36(1)(iii) for Rs.9,20,550. The special auditor at page no 133 of his report has observed that appellant has extended loan to Changodhar Industrial Development. Corporation and .Euclid Solution Pvt. Limited for Rs. 13,00,000 and Rs 22,96,100 for which appellant has submitted that it has sufficient interest free funds in form of share capital, reserves & surplus , interest free unsecured 10 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd loan hence disallowance u/s 36(l)(iii) cannot be made. The appellant has retreated the arguments in appellate proceedings. It is observed that AO in assessment order has held that appellant has received loan from SIDBI on various dates and advances are given to sister concerns for which no reasons have been explained. As Appellant has not established business expediency of the transactions, AO has made disallowance of interest under Section 36(1)(iii) of the Act for Rs.9,20,550. It is observed that even in Appellate Proceedings, Appellant has not proved the sources of funds which are used for giving advances to above parties and claim of Appellant that it has sufficient interest free funds with it is not supported by any evidences. The Appellant has not given any reason for giving advances to sister concern being Neesa Infrastructure Pvt. Suited out of borrowed funds of SIDBI hence Appellant has not proved nexus of borrowed funds with its use for the purpose of business hence addition to that extent is confirmed.” 12.2 We have gone through the order of the learned CIT(A). The issue relates to disallowance of interest amounting to Rs.9,20,550/- on account of interest free loan/advances given to sister concern of the assessee. The learned CIT(A) has given the finding of fact that the assessee has neither been able to establish any commercial expediency for giving the interest free advances nor has it been able to demonstrate the availability of sufficient owned funds for making the impugned loan/advances. In the absence of any counter before us to this finding of fact by the Ld.CIT(A), we see no reason to interfere in the order of the learned CIT(A) confirming the disallowance of interest expenses under Section 36(1)(iii) of the Act amounting to Rs.9,20,550/-. Ground No. (D) raised by the assessee is accordingly dismissed. 13. Ground No. (E) taken by the assessee reads as under:- “On the facts and in the circumstances of the case and in law the ‘Commissioner of Income-tax (Appeals)’ where an appeal is filed before the Tribunal against the order of Commissioner (Appeals)) erred in keeping the addition of Rs. 45,46,865/- on account of Unexplained credit.” 11 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd 13.1 The issue of addition of Rs.45,46,865/- on account of unexplained cash and bogus investments has been dealt with by the learned CIT(A) at paragraph no. 14 of her order bringing out the facts and adjudication as under:- “14. The Eleventh Ground of Appeal relates to addition of Rs.45,46,865 towards unexplained cash and bogus investments. The Assessing Officer has referred to report of Special Audit wherein it is found that Appellant has not established genuineness of preoperative expenses of Rs.5,71,107. The Appellant has not submitted copy of invoices to Assessing Officer and only contended that payments were made to group concern and journal entry is passed. This explanation was not accepted by AO as no evidence was available on record and he disallowed depreciation of Rs.57,117. As no other evidences were submitted even in Appellate Proceedings, disallowance of depreciation made by AO for Rs.57,117 is confirmed. The AO has also observed that Appellant has made cash payment for purchase of land 1281 to 1284 and cash expenditure being stamp duty and registration charges and purchase value of land for Rs.44,89,754 was added to total income as sources of such investments were not given. In Appellate Proceedings, Appellant has submitted copy of purchase deed and only stated that sources are from legal sources. As per provisions of Section 69 of the Act, when Assessee is found to be owner of any asset, Assessee is required to explain the sources of such investment and failure to provide such sources means Appellant has made unexplained investment. The Appellant has not even submitted copy of cash book wherein above payment made toward purchase of land are reflected. The copy of cash book as reproduced in Assessment Order nowhere contains such details of payment which clearly means that Appellant has made investment from undisclosed sources. Considering this fact addition made by AO for Rs.44,89,754 is confirmed. In nutshell, entire addition made by AO for Rs. 45,46,865 is confirmed. This ground of appeal is dismissed.” 13.2 We have gone through the order of the learned CIT(A) and have noted that the addition of Rs.45,46,856/- relates to investment made in land of Rs.44,89,754/- in cash; the source of which was not explained by the assessee and disallowance of depreciation of Rs.57,117/- being 10% of the preoperative expenses of Rs.57,117/- which were found to be bogus. The learned CIT(A) has noted that no evidences were produced by the assessee before him either to prove the genuineness of the preoperative expenses or 12 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd to prove the source of investment in cash for purchase of land of Rs.44,89,754/-. This factual finding of the learned CIT(A) has remained uncontroverted before us in the absence of any representation on behalf of the assessee before us. In view of the same, we see no reason to interfere in the order of the learned CIT(A) confirming the addition of Rs.45,46,856/-. Ground of appeal No. (E) of assessee’s appeal is accordingly dismissed. 14. Ground No. (F) taken by the assessee reads as under:- “On the facts and in the circumstances of the case and in law the ‘Commissioner of Income-tax (Appeals)’ where an appeal is filed before the Tribunal against the order of Commissioner (Appeals)) erred in keeping the addition of Rs 21,35,447/-, Rs 21,35,447/- Rs. 333,469/- Rs 1,58,48,686/- and Rs 400,000/- on account of Deemed dividend.” 14.1 This issue of deemed dividend has been dealt with by the learned CIT(A) at paragraph no. 15 of her order bringing out the facts and adjudication as under:- “15. The Twelfth, Thirteenth, Fourteenth and Fifteenth Grounds of appeal relate to protective addition made in the case of Appellant under Section 2(22)(e) for loan of Rs.21,35,447 received from NeesaInfrastructure India Pvt. Limited, Rs. 3,33,669 received from Gujarat Sysport Service Pvt. Limited, now known as Neesa Technologies Pvt. Limited (NTPL), Rs. 1,58,48,686 from Neesa Leisure Limited (NLL) and Rs.4,00,000 from Neesa Technology Pvt. Limited. The above amounts have been added on the ground that Appellant has received loan from above companies and Mr. Sanjay Gupta is holding substantial shareholding in both the companies. The substantive addition is required to be made in the case of Mr. Sanjay Gupta. The Appellant has claimed that advances are in nature of trade advances but no documentary evidences regarding such claim was submitted and the theory of trade advance cannot be accepted. So far as contention of Appellant that Appellant is not a beneficial shareholder in above companies from whom loans have been received, which is not even disputed by AO, it is observed that Hon'ble Delhi High Court in the case of CIT V/s Ankitech Pvt. Limited 340 ITR 14 has held that expression “being a person who is a beneficial owner of shares” would be, in addition to shareholder, first being a registered shareholder of the Company, and only on those cases provisions of Section 2(22)(e) would be applicable. This decision was further upheld by Hon'ble 13 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd Supreme Court in Civil Appeal No. 3961 of 2013 dated 5th October, 2017 in the case of CIT V/s Madhur Housing & Development Company. The Hon’ble Gujarat High court in the case of CIT VS Daisy Packers (P.) Ltd has held that “Deposit received by assessee from a company cannot be considered as deemed dividend when assessee is not a shareholder of said company”. The Hon’ble Bombay High court in the case of ACI.T V/s Britto Amusement (P) Ltd. [2014] 49 taxmann.com 256 has held that Loans or advances received by assessee-company from other company could not be treated as deemed dividend when assessee was not a shareholder of that, company. It is observed that though Hon'ble Supreme Court in the case of National Travel Services V/s CIT 89 taxmann.com 332 has observed that shareholder has only to be a person who is beneficial owner of shares and he need not necessarily be registered shareholder and matter is referred to Chief Justice for formation of bench consisting of three Judges in order to have a relook at the question but said decision has not yet come hencerelying upon the decision referred supra present addition made in appellant’s case is subject to be deleted only if the said addition is confirmed in the hands of Mr. Sanjay Gupta. However, if such sum is not considered in assessment order of Mr. Sanjay Gupta, same is required to be added to his total income as per provisions of the Act. On the basis of this factual observation, this ground of appeal is partly allowed only if addition is confirmed in the hands of Mr. Sanjay Gupta and is also subject to outcome of the case of National Travel Services v/s. CIT 89 taxmann.com 332 in Hon’ble Supreme Court.” 14.2 We have gone through the order of the learned CIT(A). The issue being adjudicated pertain to deemed dividend as per the provisions of Section 2(22)(e) of the Act and pertain to loans received by the assessee from the following:- i) Rs.21,35,447/- - Neesa Infrastructure India Pvt. Limited, ii) Rs. 3,33,669/- - Gujarat Sysport Service Pvt. Limited, iii) Rs. 1,58,48,686/- - Neesa Leisure Limited (NLL) and iv) Rs. 4,00,000/- - Neesa Technology Pvt. Limited. 14.3 The learned CIT(A) has dealt with various decisions on this issue and noted that the taxability of the deemed dividend as to whether in the hands of the recipient of the land who is not a shareholder of the company from whom the loans/advances have been given has not attained finality since 14 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd the matter has been referred to the larger bench of the Hon’ble Supreme Court in National Travel Services case (supra). The learned CIT(A) accordingly has held that the taxability of this deemed dividend is subject to the outcome of the decision of the larger bench of the Hon’ble Apex Court and directed the Assessing Officer to accordingly do so. 14.4 We do not find any infirmity in the order of the learned CIT(A) who has in all fairness noted the prevalent judicial position on the aspect of taxation of deemed dividend ashaving not yet attained finality and has, therefore, rightly directed the Assessing Officer to decide the same in accordance with the factual position of law on the same. This ground of appeal, i.e. Ground No. (F), is accordingly dismissed. 15. Ground No. (G) taken by the assessee reads as under:- “On the facts and in the circumstances of the case and in law the ‘Commissioner of Income-tax (Appeals)’ where an appeal is filed before the Tribunal against the order of Commissioner (Appeals)) erred in keeping the addition of Rs. 206,093/- on account of prior period exp.” 15.1 This issue of addition of Rs.2,06,093/- towards prior period expenses has been dealt with by the learned CIT(A) at paragraph no. 16 of her order as under:- “16. The Sixteenth Ground of Appeal relates to addition of Rs.2,06,093 towards prior period expenditure debited in profit & loss account'. The-AO." has observed that Appellant has claimed electricity charges pertaining to AY 2006-07 for Rs.1,52,004 which cannot be allowed as revenue expenditure for year under consideration. Similarly, Appellant has claimed prior period mobile expenditure of Rs.35,115 and labour of Rs.18,974 and same was also disallowed by AO on the ground that it pertains to earlier Assessment Year. It is observed that Appellant is following mercantile system of accounting and as per such system of accounting, expenditure crystallized in current year are only allowable as revenue expenditure. The Appellant has filed only general submission on this ground which is not supported by any other 15 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd evidences which can prove that liability has been crystallized in current Assessment Year hence addition made by AO for Rs.2.06,093 is confirmed.” 15.2 We have gone through the order of the learned CIT(A) and we have noted that the addition made on account of prior period expenses amounting to Rs.2,06,093/- was confirmed by the learned CIT(A) finding that the assessee was unable to substantiate its explanation that the liability of these prior period expenses had crystalized during the year and, therefore, were not to be treated as prior period expenses, but expenses of the impugned year itself. In the absence of any representation on behalf of the learned Counsel for the assessee before us, the findings of the learned CIT(A) that no explanation regarding the claim of prior period expenses has been furnished by the assessee stands. We, therefore, see no reason to interfere in the order of the learned CIT(A) confirming the addition on account of prior period expenses amounting to Rs.2,06,093/-. Ground No. (G) raised by the assessee in this appeal is accordingly dismissed. 16. Ground No. (H) raised by the assessee reads as under:- “On the facts and in the circumstances of the case and in law the ‘Commissioner of Income-tax (Appeals)’ where an appeal is filed before the Tribunal against the order of Commissioner (Appeals)) erred in keeping the addition of Rs. 526,434/- on account of cash exp.” 16.1 The issue of disallowance of Rs.5,26,434/- made on account of cash expenses under Section 40A(3) of the Act has been dealt with by the learned CIT(A) at paragraph no. 17 of her order as under:- “17. The Seventeenth Ground of Appeal relates to addition of Rs.5,26,434 made towards payment in cash. The AO in the Assessment Order has referred to Special Audit Report wherein it is found that Appellant has made payment of wages in cash hence AO has made disallowance of Rs.5,26,434 under Section 40A(3) of the Act. So far as payment of wages in cash is concerned, Appellant has submitted vouchers of Cash payment to labourers in Assessment Proceedings and contended that payment made to one party is 16 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd not in excess of Rs.20,000. Copies of same were also submitted in Appellate Proceedings. The contention of the Appellant is not acceptable as the details are not supported by cogent documentary evidences hence, addition made by AO for Rs.5,26,434 is upheld.” 16.2 We have gone through the order of the learned CIT(A) and have noted that the disallowance made under Section 40A(3) of the Act on account of expenditure incurred in cash in excess of the specified limit of Rs.20,000/- was explained by the assessee has been relating to the payment of wages to labourers. The assessee had explained that the amount of Rs.5,26,434/- was a consolidated sum of wages paid to different labourers and no single labourer was paid more than Rs.20,000/- but the learned CIT(A), we have noted, found that the assessee was unable to substantiate its explanation. In the absence of any representation on behalf of the learned Counsel for the assessee before us, the findings of the learned CIT(A) that no explanation has been furnished by the assessee regarding the claim of expenditure incurred in cash in excess of the specified limitstands. We, therefore, see no reason to interfere in the order of the learned CIT(A) confirming disallowance under Section 14A(3) of the Act amounting to Rs. 5,26,434/-, on account of expenditure incurred in cash in excess of the specified limit of Rs.20,000/-. Ground No. (H) raised by the assessee in this appeal is accordingly dismissed. 17. In the result, the assessee’s appeal in IT(SS)A No. 17/Ahd/2020 for AY 2007-08 is dismissed. 18. Now, we take up the Department’s appeal in IT(SS)A No. 14/Ahd/2020 for AY 2007-08. 19. The issue raised in the above appeal relates to the addition made by the Assessing Officer on account of deemed dividend under Section 2(22)(e) 17 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd of the Act. The assessee has also raised the ground before us on this aspect in Ground No. (F) in IT(SS)A No.17/Ahd/2020. As noted in the said ground, the learned CIT(A) has restored the issue to the Assessing Officer to adjudicate the same in accordance with law, noting that the proposition of law with regard to taxability of deemed dividend in the hands of the registered shareholder or beneficial shareholder had not attained finality having been referred to a larger Bench of the Hon’ble Apex Court. In view of the same, we find, therefore, there cannot be any grievance of the Revenue on this count; therefore, all the grounds raised by the Revenue in this appeal are dismissed. 20. In the result, the Department’s appeal in IT(SS)A No. 14/Ahd/2020 for AY 2007-08 is dismissed. 21. The issue raised by the Department in rest of its appeals, i.e. IT(SS)A Nos. 15 & 16/Ahd/2020, also relates to the addition made by the Assessing Officer on account of deemed dividend under Section 2(22)(e) of the Act, which has already been restored by the learned CIT(A) to the file of the Assessing Officer to adjudicate the same in accordance with law, noting that the proposition of law with regard to taxability of deemed dividend in the hands of the registered shareholder or beneficial shareholder had not attained finality having been referred to a larger Bench of the Hon’ble Apex Court. For the same reasons, as narrated above in paragraph No. 19 of this order, we do not find any infirmity in the order of the learned CIT(A) in this regard which is confirmed. 22. In the result, appeals preferred by the Revenue bearing IT(SS)A Nos. 15 & 16/Ahd/2020 are also dismissed. 18 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd 23. With regard to assessee’s other appeals bearing IT(SS)A Nos. 18, 62 & 63/Ahd/2020 for AYs 2008-09, 2009-10 and 2010-11, it is observed that all grounds raised by the assessee in these appeals are similar to the grounds raised in IT(SS)A No. 17/Ahd/2020; therefore, the facts and issues being similar, following the same reasoning as mentioned in the case of IT(SS)A No. 17/Ahd/2010, we are not inclined to interfere with the findings of the CIT(A), especially for the reason that the assessee was non-compliant and non-cooperative before the Special Auditor, the Assessing Officer, Ld. CIT(A), and even before us, and; therefore, the orders passed by the learned CIT(A) in all these assessment years are upheld. In the result, the appeals filed by the assessee are dismissed. 24. In the combined result, all the appeals filed by the Revenue and assessee are dismissed. Order pronounced in the open Court on 12/05/2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 12/05/2023 **bt आदेश आदेशआदेश आदेश क琉 क琉क琉 क琉 灹ितिलिप 灹ितिलिप灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 灹瀄यथ牸灹瀄यथ牸 灹瀄यथ牸 / The Respondent. 3. संबंिधत संबंिधतसंबंिधत संबंिधत आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴 / Concerned CIT 4. आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴)अपील अपीलअपील अपील (/ The CIT(A)- 5. िवभागीय िवभागीयिवभागीय िवभागीय 灹ितिनिध 灹ितिनिध灹ितिनिध 灹ितिनिध ,आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण/DR,ITAT, Ahmedabad, 6. गाड榁 गाड榁गाड榁 गाड榁 फाईल फाईलफाईल फाईल /Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, TRUE COPY सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Asstt.Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण ITAT, Ahmedabad 19 IT(SS)A No. 14-18, 62 & 63/Ahd/2020 Assessee : NeesaAgritech Pvt Ltd 1. Date of dictation ......28.02.2023/05.05.2023........ Date on which the typed draft is placed before the Dictating Member :.....01.03.2023/05.05.2023... 1. Other Member...11.05.2023..................... 2. Date on which the approved draft comes to the Sr.P.S./P.S......11.05.2023.................... 3. Date on which the fair order is placed before the Dictating Member for pronouncement...12.05.2023. 4. Date on which the fair order comes back to the Sr.P.S./P.S......12.05.2023.............. 5. Date on which the file goes to the Bench Clerk......12.05.2023........... 6. Date on which the file goes to the Head Clerk... 7. The date on which the file goes to the Assistant Registrar for signatureon the order............ 8. Date of Despatch of the Order..................