9911796707
TMI Blog2015 (2) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee within the rigorous of the said section cannot be upheld. - Decided in favour of assessee. Unexplained investment - Addition made u/s 69 - CIT(A) deleted the part addition - Held that:- Revenue has not been able to refer to any argument or evidence available on record to show that the Smt. Dayawati (the owner of the land) and her husband, Sh. Om Prakash (who handled the sale of his wife land) were reliable witnesses. Infact the manner of recording statement reeks of a position where the couple appear to have given statements to explain the expenses incurred on the marriage of their daughter in February 2008. Nothing is available on record qua the education and financial status of the Smt. Dayawati except the fact that she is a PAN holder and blindly accepted her husband's word and nothing is on record to establish the credibility of Sh. Om Prakash who does not identify himself by a PAN and merely as the husband of Smt. Dayawati, his education, his legitimate source of livelihood, financial background etc. are all left unaddressed as would be evident from answers to Question No-1 put by the AO to Sh. Om Prakash on 26.12.2008 as opposed to Question No.-1 put by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned common stand of the parties, we propose to first set out the facts as available on record in the case of Kay Kay Apartments Pvt. Ltd. wherein both the department and the assessee have assailed the correctness of the order dated 27.04.2009 of CIT(A)-VIII, New Delhi on the following grounds, respectively:- Grounds raised by department in ITA No.3080/Del/2009 1. The order of the Learned Commissioner of Income Tax (Appeals) is erroneous contrary to facts law. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of ₹ 1,25,00,000/- made u/s 2(22)(e) as deemed dividend without appreciating the facts and reasons and also the case laws mentioned by the AO in his assessment order. 3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in reducing the addition made u/s 69 of ₹ 36,69,125/- to 12,41,500/-. a). Ignoring that in a group case, it has been established beyond doubt that the assessee has made payment of on money for purchasing land in the same village where other lands purchased by the assessee company are located. The Ld CIT(A) has also accepted the fact of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased lands in Gurgaon. The AO required the assessee to support its purchases. Considering the furnished copies of sale deeds made available by the assessee the AO observed that the assessee company had purchased 20.19 acres of land at Village-Sultanpur, Tehsil Parukh Nagar, Gurgaon in July, August and September 2005. The details of the land purchased is summarised at page 2 of the assessment order which disclosed that land had been purchased from 9 different parties in the afore-mentioned months. These details are extracted from the assessment order hereunder for ready-reference:- S.No. Date Stamp Sale consider ation Area (Kanals Marlas) Area in Acres Rate per acre as per sale deed Sellers Address Land Sold 1. 06.07.2005 1111009650 1851500 32K4M 4.025 460000 Sh.Om Prakash R/o- Sultanpur, Tehsil-Parukh Nagar, Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, Gurgaon 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal, R/o-Sultanpur, Tehsil- Parukh Nagar, Gurgaon Vil.-Sultanpur, Tehsil-Parukh Nagar, Gurgaon TOTAL 626750 932000 20.19375 3.1. Out of these 9 transactions the AO picked up the transaction dated 09.09.2005 at Sl. No.-7 and issued summons to the seller, Smt. Dayawati, W/o- Sh. Om Prakash, Village-Nathpur, Gurgaon and recorded her statement on oath. Considering the same he concluded that since she has accepted that the land measuring-4.5 acres located in Sultanpur, Tehsil Parukh Nagar, Gurgaon was sold by her for total consideration of ₹ 30,00,000/- which included cash receipts of ₹ 10 lakh over and above, ₹ 20 lakh received by her by bank drafts as per the registered sale deed. Considering the fact that the sale deed was registered at ₹ 20 lakh the AO confronted the assessee with the translated copy of the statement recorded. The translated version is found reproduced at page 3 of the assessment order and the assessee was issued show cause requiring it to explain why addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made. In this regard, the above objections are not valid for the following reasons:- (i) Smt. Dayawati wlo Sh. Om Prakash is the seller as per registered sale deed without whose knowledge and presence the sale could not have been registered. She is assessed to Income Tax and has PAN. In her statement in reply to Question no. 2, she has categorically replied that the property transaction related to sale of land at Village - Sultanpur was handled by her husband Sh. Om Prakash who interacted with the company. Her statement dated 14.12.2008 was recorded in the presence of her husband. Since, the sale of land was in her name the evidence regarding payments received from such sale was given by Smt. Dayawati on the basis of inputs received from her husband Sh. Om Prakash. Therefore, the statement of Smt Dayawati is not mere hear say but a statement of facts told on oath under section 131 of the Income Tax Act, 1961. It is oral evidence based on personal knowledge derived from inputs from her husband who has handled the sale transaction. ii) Statement of Sh. Om Prakash has also been recorded on oath on 26 12 2008 In which he has stated that the land in the name of his wife Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records be seen so as to determine whether she had disclosed the said amount in her own return was also considered to be not relevant for the purposes of the issue. 3.4.2. The other argument that how and where the funds were held by Smt. Dayawati till the date of the marriage of her daughter the AO concluded could not be doubted as he was of the view that parents in villages start preparing for marriage of their daughters very early. 3.4.3. The following decisions relied upon by the assessee were also considered to be not relevant by the AO in view of the statement of Smt. Dayawati already available and duly confronted to the assessee company on record:- 1). CIT vs P.V.Kalyanasundaram 282 ITR 259; 2). CIT vs Krishnan 210 ITR 707 (Mad.); and 3). CIT vs M.K.Brothers 163 ITR 249 (Guj.) 3.5. Accordingly addition of ₹ 10 lakh was made in the hands of the assessee company as unexplained investment u/s 69 of the Act. The AO further concluded that these facts lead to the conclusion that the rate of land at village Sultanpur was ₹ 6,60,000/- per acre in September 2005 when the land was sold by Smt. Dayawati. He further concluded that it also proved that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1328250 402250 3. 02.08.2005 Vill. Sultanpur, Tehsil-Parukh Nagar, Gurgaon 1119000 1.34375 832744 Not applicable 0 4. 06.09.2005 Vill. Sultanpur, Tehsil-Parukh Nagar, Gurgaon 300000 0.6 500000 396000 96000 5. 06.09.2005 Vill. Sultanpur, Tehsil-Parukh Nagar, Gurgaon 844000 1.8875 447152 1245750 401750 6. 07.09.2005 Vill. Sultanpur, Tehsil-Parukh Nagar, Gurgaon 1810000 3.61875 500173 2388375 578375 7. 20.09.2005 Vill. Sultanpur, Tehsil-Parukh Nagar, Gurgaon 656500 1.3125 500190 866250 209750 8. 27. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record it was pointed out that it can be seen that for one of the properties the rate of purchase was ₹ 8,32,744/- per acre which was in excess of the assumed rate of ₹ 6,60,000/- applied by the AO. The AO's stand accordingly was assailed on the ground that it was arbitrary and not in consonance with the provisions of the Act. Reliance yet again was placed on the decisions relied upon by before the AO. Reliance was also placed upon the CIT vs R.S.Rathore (1995) 212 ITR 390, 394 (Raj.). It was submitted that the onus placed upon the department to prove that the amount invested is more than the recorded consideration has not been discharged. Reliance was placed upon the following decisions:- - J.S.Parkar vs. P.B.Palekar 94 ITR 616, 644 (Bom.); - CIT vs Naresh Khatter (HUF) (2003) 261 ITR 664 (Del); - Amrit Kumari Surana vs CIT (1997) 226 ITR 344 (Raj.); and - CIT vs Dr. S. Bharti (2002) 254 ITR 261 (Del.) 4.2. It was also canvassed that the AO has wrongly invoked section 69 as on facts it was not attracted as the said section would have come into play only when the investment was wholly undisclosed and not when the asset is disclosed. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3, I hold that the AO has discharged to burden cast specifically upon him, enough material of independent nature has been placed on record which justify the stand adopted by the AO and that due opportunity was afforded to the assessee to put forth its view. In view of the above, I uphold the action of the AO in bringing to tax a sum of ₹ 10 lakhs as undisclosed consideration/undisclosed investment in terms of the provisions of section 69B. 5.1. However the uniform application of the rate of ₹ 6,60,000/- per acre to the other 8 instances of sale by the AO was not approved by him. The Ld. CIT(A) assailed the AO's stand in ignoring the relevant parameters governing the price of land namely location; size; dimension; and also the proximity to the existing road etc. as these according to him would have been the relevant criteria for influencing the rate. He also castigated the AO for not even making any attempt to ascertain the rate at which the stamp duty authority had valued the land at the time of Registration. Considering the same to be relevant he proceeded to work out the sustainable addition by tabulating the data by considering the value of the stamp authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (2) (3)=(2)x100/6.0 (4) (5)=(3)-(4) 1. 1,20,750 20,12,500 18,51,500 1,61,000 2. 60,390 10,06,500 9,26,000 80,500 2,41,500 5.3. In view of the above he restricted the addition of ₹ 26 lakh odd to ₹ 2,41,500/- for properties found mentioned at Sl. No.-1 2, apart from that the addition of ₹ 10 lakh sustained by him for the property mentioned at Sl. No.-7 by holding as under:- Thus, for the instances at S.No.1 2, the stamp duty authority has itself has considered the sale by higher sum by ₹ 1,61,000/- and 80,500/- respectively. The stamp duty levied by the stamp duty authority is an evidence which is independent in nature and which has been accepted by the assessee while registration of the said properties. The payment of understated consideration to this extent cannot be ruled out and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been invoked by the AO and the CIT(A) cannot substitute section 69 applied by the AO with section 69B. It was his submission that although the CIT(A) has not agreed with the stand of the assessee but it cannot be ignored that even if section 69B is considered even then on facts it is not applicable as assessee has offered explanation which cannot be ignored. The addition made and sustained of ₹ 10 lakh based on the statement of Smt. Dayawati, it was submitted cannot be upheld as when read alongwith the cross-examination the record shows that the AO needed to support the same by the statement of her husband, Sh. Om Prakash. It was submitted the record would show that it was never confronted to the assessee and the request for opportunity to cross-examine the husband was arbitrarily brushed aside. Accordingly it was his submission that the same should be deleted. Addressing the other additions it was his submission that the finding of the CIT(A) that a uniform rate cannot apply to the remaining instances of sale was correct but in the absence of any evidence to the contrary how the evidence supported by Sale Deeds could be interfered with it was submitted should be strongly de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house, However on 14.12.2008 where the statement of my wife was recorded, I told her about the deal and incorporated all the details in her statement. The response to Question No.-4 further demonstrates that the statement of Smt. Dayawati treated to be a prime witness is based on hearsay where the concerned husband had already expressed the opinion that she was never kept informed about the transaction at the relevant point of time by her husband who for reasons best known to himself only on 14.12.2008 addressing the transaction which took place on 09.09.2005 affirms in his answer to Question No.-4 (extracted at page 5 of the assessee order) that he concurred with the statement of his wife and further the fact that the statement is based on the facts as told to my wife by me, which are correct and based on truth . Whether the statement is based on truth and is correct or not cannot be based on self certification of Sh.Om Prakash and will be addressed subsequently, however, the fact remains that Smt. Dayawati as a witness who no doubt was cross-examined by a Chartered Accountant was clearly a dumb tutored witness as her knowledge was based purely on hearsay since evidently he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porated in his wife's statement. Considering the overall socio-economic fabric wherein the boasts and claims of ignorance on the part of his spouse by Sh. Om Prakash may be warranted on facts as the wife of Sh.Om Prakash may not have much choice but to blindly believe and accept her husband's assertion of facts and events which took place three years ago. However we do not see any such constraint for the AO or the CIT(A) to also subscribe to this blind faith and repose the same trust in the evidence of a prime witness based on hearsay. Nothing has been placed on record by the Revenue to address the fact why Sh.Om Prakash and his assertions blindly accepted by his wife in good faith in his overall wisdom and welfare for her family be accepted and given greater preference as opposed to the recorded evidence by way of sale deed on record. The fact that Smt. Dayawati is a tutored witness it is seen further demonstrated by the fact that in response to Question no.-3 recorded on 14.12.2008 she is found to have stated as per the extract at page 3 of the assessment order that the full value of sale consideration was ₹ 30 lakh. Sale was registered for ₹ 20 lakh on 09.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005. The half baked story does not inspire any trust whatsoever. We do not deem it appropriate to deliberate on the possible sources of Sh. Om Prakash's income as neither there is anything on record qua the same nor is it necessary for the purposes of the present proceedings to deliberate thereon suffice it to say that the Revenue has left glaring loopholes in the so-called self serving evidence on record which does not inspire any confidence whatsoever on the statements of Smt. Dayawati or Sh. Om Prakash and the consequent addition of ₹ 10 lakhs in the hands of the assessee or the addition of brokerage etc. for the purchase of the specific land. 9.2. Accordingly in view of the above reasoning on facts, we hold that the AO erred in making the addition of ₹ 10 lakh and the CIT(A) erred in conforming the same based on the statement of a tutored witness who as per her own statement had no personal knowledge of the events and relied blindly in good faith on hearsay information given to her by her husband. The other witness infact who could have been prime witness as the facts allegedly were only known to him was never made available for cross-examination and even ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of funds and buyers in the market. It is seen that no evidence has been led by the Revenue to show that the instances of recorded sales supported by Registered Sale Deeds did not reflect the correct picture. Section 69B does not permit drawing of inferences based on subjective beliefs and necessitate cogent evidence to be taken into consideration so as to justify its invokation. Since in the facts of the present case nothing has been placed by the department apart from the statement of a tutored witness the action cannot be upheld. Accordingly the remaining additions sustained by the CIT(A) are also ordered to be deleted. Since the sale price remains undisturbed the addition on brokerage etc. also does not survive which was made by the AO u/s 69C and partly sustained by the CIT(A). 9.4. For ready-reference we reproduce the statements from the assessment order relied upon by the Revenue:- Statement of Smt. Dayawati recorded on 14.12.2008 Q.1. Please identify yourself. Ans:-My name is Dayawati. My husband's name is Sh.Om Prakash. I reside at House No.-U-15/62, DLF-III, Town House, Gurgaon. I am showing my PAN card (ABGPY9951K) for identification. Q.2.As per inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Malik, whose name is mentioned in the sale deed. The cash was received at my house. 0.6. Did you receive the cash before or after the registration of sale deed. Ans. The cash was received before the registration of sale deed. 0. 7. To whom was the cash handed over? Ans. The cash was handed over to my husband Sh. Om Prakash. 0.8. Were you informed by your husband at the time of receipt of cash? Ans. No 0.9. When was your daughter married? Ans. My daughter got married on 15.02.2008 0.10. Please inform where did you keep the cash for 2 ~ years? Ans -. This is an internal matter, which I do not wish to divulge. 0.11. What was the amount of sale consideration as admitted before the registrar? Ans. Amount mentioned in the sale deed. Q.12.Did you give the earlier statement voluntarily? Ans. Yes, The statement was given in the presence of my husband. Q.13. Do you wish to state anything else? Ans.No, nothing else. Cross examination conducted by Sh.U.N.Marwah CA on behalf of M/s Kay Kay Apartments Pvt. Ltd. On 26/12/2008 at camp office of DCIT, Circle-5(1), Delhi at U-15/62, Town House, DLF-III, Gurgaon, Haryana in the presence of Sh. Anil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. are allowed. 10. The next issue in the department's appeal is addressed by Ground No.-2 which has been reproduced in the earlier part of this order. The facts relatable to the said issue are found discussed at pages 11 to 15 in the assessment order. A perusal of the same shows that the AO observing that the assessee had received unsecured loan of ₹ 1,25,00,000 from M/s Kohli Housing Development Pvt. Ltd. and the fact that both the assessee company and M/s Kohli Housing Development Pvt. Ltd. have Sh. Sudershan Kohli and Smt. Kum Kum Kohli as common shareholders having 50% share each in both these companies. In the circumstances he was of the view that the loan amount is deemed dividend u/s 2(22)(e) of the Act in the hands of assessee company to the extent to which M/s Kohli Housing Development Pvt. As a result thereof he issued a show cause notice to the assessee to explain its stand. The show cause notice is extracted from the assessment order hereunder for ready-reference:- During the relevant year. assessee company has received unsecured loan of ₹ 1,25.00,000 from M/s Kohli Housing Development Pvt. Ltd. Shareholding pattern of both these companies s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred at the same price at which the shares were initially subscribed i.e. @ ₹ 10/- per share and no share premium was charged even though the assessee company had assets in the form of land holding. All the above mentioned companies had transferred the shares by way of transfer by Ajay Vats and Vinay Vats and these were incorporated in 24.05.2005 (Kay Kay Apartments Pvt. Ltd. and Kay kay Buildworth Pvt. Ltd.) and 18.07.2005 (Kay Kay Royal Apartments Pvt. Ltd. and Kay Kay Executive Apartments Pvt. Ltd.) and all these companies were transferred by way of share transferred in favour of Sudharshan Kohli and Kum Kum Kohli after the advance from M/s Kohli Housing Development Pvt. Ltd. for acquiring the land at Gurgaon on 24.10.2005/22.11.2005. He observed that the above mentioned companies became the land holdings companies of M/s Kohli Housing Hosing Development Pvt. Ltd. who is a developer and by virtue of land holding in sister concerns is controlling the land holdings. The AO was of the view that the transactions have been planned to take the advance from M/s Kohli Housing Development Pvt. Ltd. prior to transfer of shares of the assessee company from the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. These are extracted from the impugned order:- 3.1 The ld. AR of the appellant has made extensive arguments to counter the addition made by the AO on this issue. Bringing out the facts of the case, it is submitted that the appellant company was promoted and incorporated by Mr. Ajay Vats Mr. Vinay Vats as original subscribers, under certificate of incorporation dated 24th May 2005 with the main object of dealing in real estate. The initial expenditure on incorporation being fees paid to Register of Companies amounting to ₹ 4,800/- was undertaken by the said Mr. Ajay Vats the said amount was reimbursed to him vide cheque no. 192026 drawn on Andhra Bank on 5th July 2005. The subscribers had in terms of the Memorandum Articles of Association undertaken to subscribe for 5,000 equity shares each of the company of a face value of ₹ 10/- each. Accordingly Mr. Ajay Vats and Mr. Vinay Vats made payment of a sum of ₹ 50,000/- each by means of bank transfer on 30th June 2005 from their respective saving Bank A/cs with Andhra Bank, Gurgaon Branch, Gurgaon, The company pursuant to the aforesaid payment issued share, certificate no. 0001 bearing distinctive no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was also canvassed that the AO on facts erred in invoking the specific section on the following reasoning:- Elaborating the basic conditions of section 2(22)(e) for its applicability, it is submitted that the section requires the satisfaction of the cumulative conditions for bringing a sum into taxable net. The primary condition is that on the date of transaction, the payer and receiver shall be covered by the law in terms of stipulated threshold shareholding pattern. It is submitted that on the aforesaid dates on which loan is taken by the appellant company, there had been no such relationship as Mr. Sudarshan Kumar Kohli and Mrs. Kum Kum Kohli became directors on a subsequent date, on 24.10.2005. 11.2. Addressing the case law relied upon by the AO following arguments assailing the AO's stand are found to have been advanced:- 3.4 Reacting to the case laws relied by the AO in the assessment order, the Id,AR of the appellant submitted that none of the cases have any resemblance or similarity with the facts of the appellant's case. Explaining the facts of the respective cases, the distinctions were outlined. 3.4.1. It is submitted that in McDowell Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different in the case under consideration. 3.4.3 In the case of Miss P. Sarada v. CIT(1998) 229 ITR 444 (SC), the liability was already identified due to fact that the loan was made to a shareholder having substantial interest in company, which had accumulated profits. But the liability was circumvented by making withdrawals subsequently and adjusting against credit balance of another shareholder and hence the decision. The facts and the issues in the case of the appellant are totally different and as such the said case cannot be relied upon. 3.4.4 Regarding the case of Nandlal Kanoria v. CIT (1980) 122 ITR 405 (CAL), it is submitted that in that case loan was given by company to proprietary concern and assessee received loan from proprietary concern. But, in the case of the appellant's case, the facts are wholly different and as such not applicable to the present case. 3.4.5 In the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC), it is submitted that the assessee purchased certain house property and claimed it should not be brought to tax in his hands in view of the deed of trust executed by his wife. The assessee merely made a statement that the amount repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of assessee. 11.3. It was further canvassed that in the peculiar facts and circumstances the onus was upon the Revenue to prove that the apparent is not real. Without placing any supporting material and confronting the assessee with the same the AO it was submitted cannot disregard the facts available on record. Reliance was upon the decision of the Apex Court in the case of CIT vs Bedi Co. Pvt. Ltd. 230 ITR 580 (SC). IT was submitted that the burden of proving that the apparent state of affairs was not real was very heavy on the department. Reliance was also placed upon Mahalingappa (G) vs Savitha (GM) [2005] 147 Taxmann 583 (SC) and Rajagopal Reddy (R) vs Padmini Chandrashekhran 213 ITR 340 (SC) which has held that after the benami transaction (prohibition Act) the registered holder is the real owner and the burden to prove whether the transaction is benami or sham is on the department. Reliance was also placed upon the following decisions so as to contend that the assessee company does not fall in the ambit of section 2(22)(e) of the Act:- - CIT vs. Parvathavardini Ammal 219 ITR 661 (Kerala); - CIT vs H.K.Mittal (1996) 219 ITR 420 (All.); - Victor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent voting power. ii) The second category: to any concern in which such shareholder is a member or a partner having substantial interest, entitled to not less than twenty percent of the income of such concern. iii) The third category: any payment by any such company on behalf or for the individual benefit of any such shareholder. But in all these three categories the extent of deemed dividend is confined to the available accumulated profits of such company. In order to be deemed dividend within the meaning of section 2(22)(e), in any of the three categories, all the ingredients are to be satisfied, viz., (a)the company must qualify, (b) the payment must qualify, (c) the persons to whom the payment is made must also qualify, and (d) the payment is to be made out of the accumulated profits of the company. All these four ingredients in relation to the qualification of the company, the shareholder, the concern and the payment by way of loan or advance in respect of the first two categories and any kind of payment in respect of the third category out of accumulated profits, are required to be established. The issue of taxability of loan raised to be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 9. Circular letter issued by co. seeking no objection for sale of shares 14.10.2005 Co.in accordance with article 7 issued circular letter seeking NOC. 10. Sale of shares between Vats Kohli 21.10.2005 Parties executed the documents, handed over share script Consideration passed. 11. Registration of transfer in books of co. 24.10.2005 Co.at its board meeting held on 24.10.2005 approved the transfer of shares and recorded the name of Kohli group as the shareholder. From the above, it is evident that the assessee company took loan aggregating to ₹ 1.25 crores in July/August,2005 from KDHPL when the relationship between the assessee company and the Kohli Group was not established in terms of the provisions of section 2(22)(e). The assessee company, on the dates of receipt of loan, had not been share holder with any of Kohli Group of Companies including KDHPL. There were no common shareholders either. Thus, neither the payer company qualifies nor the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t anything on record to establish that the sequence of events had been only with a view to evade the payment of tax. The presumption made by the AO has not been substantiated by any evidence whatsoever on this account. The AO has also not established by any evidence that the transactions were not bonafide. Indirectly, the AO has taken the Vats as a benami of Kohli Group for this set of transactions but not an iota of evidence is brought on record is establish and substantiate it. By merely giving up the control over 4 companies, and handing over their reins in the hands of Kohli Group, it can't be said that it is a device to subvert payment of taxes. It could be an initiating point of suspicion but not sufficient enough to put in the bracket of a subterfuge of tax-evasion. The similar nature of transactions in 4 different companies can not convert the suspicion of the AO into proven fact particularly when the AO has also not brought any evidence or material which substantively overcomes the independent documentary evidences about compliance to the statutory provisions such as formation of the assessee company, its promoter directors, issue of share capital, transactions through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) (iv) with the main object of dealing in real estate. The initial expenditure on incorporation being fees paid to Registrar of Companies amounting to ₹ 4,800/- was undertaken by the said Mr. Ajay Vats and the said amount was reimbursed to him by the said Cos as Under: (i) Kay Kay Royal Apartments P.Ltd vide cheque no. 197376 drawn on Andhra Bank on 21st September 2005; (ii) Kay Kay Apartments P.Ltd vide cheque no. 192026 drawn on Andhra Bank on 7th July 2005; (iii) Kay Kay Buildworth P.Ltd vide cheque no. 197176 drawn on Andhra Bank on 7th July 2005. (iv) Kay Kay Executive Apartments P.Ltd vide cheque no. 197226 drawn on Andhra Bank on 21st September 2005. (copy of bank statement in support placed at page 62 of the paper book). 2.1. The subscribers, i.e. Vats Group had in terms of the Memorandum Articles of Association undertaken to subscribe for 5,000 equity shares each of the company of a face value of ₹ 10/- each. Company Name No. Of Shares Amount paid Date of payment 1. Kay Kay Aptts. P. Ltd. Ajay Vats 5000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Apptt. P. Ltd. 24.10.2005 2.Kay Kay Buildworth P. LTd. 24.10.2005 3.Kay Kay Executive Apptts. P.Ltd. 22.11.2005 4.Kay Kay Royal Apptts.P.Ltd. 24.10.2005 14.3. It was submitted that the assessee in response to the show cause notice furnished letter dated 29.12.2008 alongwith all relevant documents in support of it's claim including certificate of an independent company secretary and an affidavit of the sellers of the shares confirming the facts. These documents available in the Paper Book it was argued have not been rebutted by the Revenue. It was submitted that the action of the AO based on the case laws distinguished in detail before the CIT(A) has also not been contradicted by the Ld. Sr. DR as no contrary argument either on fact or law has been advanced. It was also submitted that no contrary decision has also been referred to by the Revenue to take a contrary view. In view of the same it was submitted that the impugned order deserves to be upheld. For the sake of completeness attention was invited to the specific provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recipient is not a shareholder. Reliance was placed upon the following decisions:- (a) CIT v. AR Magnetics (P.) Ltd. (2014) 220 Taxman 209 (Delhi)(HC) (b) CIT v. Navyug Promoters (P) Ltd. (2011) 203 Taxman 618 (Delhi)(High Court) (c) Commissioner of Income-tax-I v. Bikaner Cuisine (P.) Ltd. [2014] 45 taxmann.com 253 (Delhi) (d) CIT v. Daisy Packers (P.) Ltd. (2014) 220 Taxman 331 (Guj)(HC) (e) CIT vs. Ankitech (P.) Ltd. [2011] 199 Taxman 341 (Delhi High Court) (f) CIT vs. Gopal Clothing Company (P.) Ltd. [2012] 207 Taxman 134 (Delhi HC)(MAG.) (g) CIT vs. Impact Containers Pvt. Ltd (Bombay High Court) ITA No. 114/2012 (h) CIT v. MCC Marketing (P.) Ltd. [2011] 16 taxmann.com 411 (Delhi) (i) ACIT v. Britto Amusement P. Ltd. (2014) 360 ITR 544 (Bom) (j) CIT v. Hotel Hilltop (2008) 217 CTR 527 (Raj.) 14.6. Specific reliance was also on the following findings of the CIT(A) in para 4.8.5 4.9 which read as under:- 4.8.5. Thus, it is evident that even after the amendment to section 2(22)(e), the amount received will not be taxable in the hands of the recipient until and unless he is not only a registered shareholder but also a beneficial shareholder. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and CO.-274/Del/2009 is allowed. 19. As per the common stand of the parties the facts and arguments on the two issues in the ITA No.-3079/Del/2009; ITA No.-3081/Del/2009 and ITA No.- 3082/Del/2009 are same. For similar reasons these remaining three appeals also meet the same fate. The stand of the parties is found to be correct as it is seen that in all these appeals Ground Nos. 1 5 are identical and vide Ground No.-2 similar addition deleted by the CIT(A) is assailed on same set of facts. Vide Ground No.-3 and 4 it is seen that based on the very same statement of Smt. Dayawati and Sh. Om Prakash in ITA No.-3079/Del/2009 considering the six instances of purchases made and in ITA No.-3081/Del/2009 and ITA No.- 3082/Del/2009 considering the 12 and 5 instances of purchases respectively the AO has proceeded to make addition in similar lines which has been restricted by the CIT(A) in ITA No.-3079/Del/2009 and totally deleted in the remaining two appeals as admittedly the stamp value was much less than the settled price for similar reasoning the CIT(A)'s order assailed by the Revenue vide Ground No.-2 in each of these appeals is upheld and the finding in Ground Nos.-3 4 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the assessment order and the submission of the appellant company. The additions made by the AO u/s 69 69C in the case of four companies mentioned above have been discussed at length in the respective appellate orders of even date. It is matter of fact that the acquisition of the land was made by these 4 companies when these had no relationship with the appellant company. It is trite that the provisions of section 69B and 69C are applicable on the assessee who makes the undisclosed investment/payment and the amount concerned is deemed to be the income of that person only. Moreover, privity is not established by the AO between the appellant company and the 4 entities mentioned in the assessment order about the utilization of loans raised from the appellant company and their use for the purposes of acquisition of the agricultural land. Considering the position of law and that the addition to the extent required have been upheld substantively in the respective cases of M/s Kay kay Apartments Pvt. Ltd. and M/s Kay Kay Royal Apartments Pvt. Ltd., I hold that the protective addition in the case of the assessee company is not proper. The AO is, therefore, directed to give relief to ..... 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