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TMI Blog2017 (2) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... . Raghavendra Rao For The Revenue : Smt U. Mini Chandran ORDER PER P. MADHAVI DEVI, J.M.: Both the above appeals are filed by the assessee against the common and consolidated order of the CIT(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 the Income Tax Act, while for assessment year 2011-12, the assessment was completed u/s 143(3) of the Act. ITA Nos. 755 756/Hyd/2015 (Shri R. Rajendra Varma) 2. Brief facts of the case are that the assessee, Sri Rudraraju Ravindra Varma is an individual who is the managing director of M/s. RRV Infrastructure Ltd. A search seizure operation u/s 132 of the IT Act was conducted on NCC Ltd. and its group on 06-10-2010. M/s. RRV Infrastructure Ltd., being the sub contractor of NCC Ltd., was also covered under the above search. During the search proceedings, certain loose sheets and documents were seized. In view of the same, a notice u/s 153C was issued to the assessee. In response to the said notice, the assessee filed his return of income, returning ₹ 15.29,210/- and ₹ 1,68,61,090/-, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 153C is not valid and hence, the proceedings are valid ab-initio . 4. The Ld. DR, on the other hand, supported the orders of the authorities below and has produced the copy of the satisfaction recorded by the Assessing Officer. On 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., and also refer to the documents relating to both the assessee s before us, i.e Shri R. Rajendra Varma and Shri R. Ravi Varma and also to the quantum of income that might not have been disclosed in their books of account. Therefore, we are satisfied that the requirements of assuming jurisdiction under section 153C are fulfilled by the relevant Assessing Officer. Therefore, the additional ground of appeal for the A.Y 2009-10 is rejected. 5. On merits, for both the A.Ys, the Ld. counsel for the assessee relied upon the submissions made by the assessee before the CIT(A) and also on the copies of the ledger account and the bank statements of the assessee filed before us, while the Ld. DR supported the orders of the authorities below. 6. Having regard to the rival contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the counsel of the appellant. I am of the considered opinion that section 2(22)(e) of the Act is a deeming provision which assumes existence of certain facts if the conditions specif ied in a particular section are fulf illed. We agree that these provisions are to be construed strictly. This legal f iction has to be carried out to logical ends and not to illogical length. The copy of account of the appellant in the books of the company clearly shows that the appellant has running current account with the company and in fact the appellant had been advancing monies to the company as and when required for the purpose of business of the company. It was only for 55 days in between the year that balance of the appellant in books of account turned credit. It is beyond doubt that this section can be invoked to curtail the misuse of the funds belonging to a private limited company by its shareholders but not when there is running current account of the appellant with the company and the appellant has in fact for most the time lent the money to the company. This section had been inserted to stop the misuse of the taxing provisions by the assessees by taking the funds out of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court, the assessee s grounds of appeal for both the years on merits are allowed. ITA No. 757 758/Hyd/2015 (Shri R. Ravi Varma) 7. Both are assessee s appeals for the assessment years 2009-10 2011-12 respectfully. 8. The facts and circumstances in the case of the assessee herein are also similar to the facts of the above assessee in ITA Nos. 755 757/Hyd/2015. The assessee herein is the brother of Shri Rudraraju Rajendra Verma and is the executive director of M/s RRV Infrastructure Ltd. During the course of search in the case of M/s. RRV Infrastructure Ltd, certain loose sheets and documents were seized, in view of which, notices u/s 153C were issued to the assessee. In response to the said notices, the assessee filed his return of income declaring of ₹ 11,92,220/- and ₹ 1,71,05,570 for the assessment years 2009-10 2011-12 respectively. The Assessing Officer completed the assessment by invoking the deeming provision of Sec. 2(22)(e) of the Act, against which the assessee filed an appeal before the CIT(A). The CIT(A) confirmed the assessments and the assessee is in second appeal before us. 9. The Ld. Counsel for the assessee submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is similar to the additional ground raised by the assessee in ITA No. 755/Hyd/2015. For the detailed reasons given in the above appeal, the additional ground of appeal is rejected. As regards the merits of the addition, the assessee has placed reliance upon the decision of the Hon ble Punjab Haryana High court in the case of CIT Vs Suraj Dev Dada (cited supra), we find that the facts in the case before us are only slightly distinguishable. In this case also, the assessee has advanced interest free loans to the company and it is only for a brief period of 34 days in the A.Y 2009-10 that there was a small amount of ₹ 3,34,000/- as on 03-04-2011 debit balance in favour of the assessee in the books of the company. Even if the assessee s contentions about receiving the consideration towards development agreement is not acceptable, the decision of the Hon ble Punjab Haryana High Court would apply to the facts of the case on hand. Therefore, respectfully following the same, we 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 assessment years. 13. In the result, the appeals of the assessees for the A.Y 2009-10 are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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