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TMI Blog2017 (10) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee against the order of Ld. CIT(A), Amritsar dated 26.10.2016 for Asst. Year: 2008-09. 2. The assessee has taken 13 grounds of appeals out of which ground no. 1 to 5 relates to legal issues raised by assessee in reopening of the case whereas ground no. 6 to 11 relates to merits of the case. Ground no. 12 is against charging of interest u/s 234A, 234B and 234C and wherein ground no. 13 is against initiation of penalty u/s 271(1)( c) of the Act. 3. At the outset, the Ld. AR submitted that he will not be pressing legal grounds as taken by assessee in its grounds of appeal from ground no. 1 to 5. Arguing upon ground no. 6 to 11, the Ld. AR explained the facts of the case and submitted that assessee had purchased a piece of land measuring 56.375 Bigha for a consideration of ₹ 3,94,24,240-/- in January, 2006. It was submitted that assessee entered into one collaboration agreement on 25.10.2007 with M/s B. B. Overseas Pvt. Ltd. for the development of said land as housing colony and the builder had undertaken to develop the said land and owner i.e. assessee had agreed to place the said land at the complete disposal of the builder. The Ld. AR further submitted that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since by that time, the assessee had become aware of the dispute clause 6 was entered into the collaboration agreement whereby the assessee had agreed for clearing all cases of ceiling etc. and had stated that its cost will be borne by the owner. It was submitted that before 25.08.2007 that is the day of its agreement with B. B. Overseas Pvt. Ltd., the case filed by Shafikur Rehman was dismissed as withdrawn and a copy of which was placed at P.B. page 24 to 25. The Ld. AR submitted therefore the contention of assessee before the authorities below that the said transaction was a business transaction was correct and it was not an afterthought. The Ld. AR further submitted that assessee had submitted all the relevant documents before the authorities below and the documents now been filed in the form of notice received by assessee intimating pendency of a ceiling case and further orders by revenue court are public documents which cannot be considered as additional documents and reliance was placed on the Judgment of Jatia Investment Co. Vs. C.I.T. delivered by Calcutta High Court reported in 206 ITR 718 wherein it was held that public documents cannot be treated as additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the purview of section 2(22)(e) of the Act and therefore if the above transaction is a business transaction then as per the circular, the amount cannot be treated is deemed dividend section 2(22)(e) of the Act. On a question raised by Bench relating to refund of security deposit by assessee to the M/s B. B. Overseas Pvt. Ltd., the Ld. AR submitted that vide deed of cancellation dated 10th day of August, 2011, the amount of security deposit was refunded back to M/s B. B. Overseas Pvt. Ltd. and in this respect field a copy of such deed of cancellation, in view of the facts and circumstance it was argued that the additions sustained by Ld. CIT(A) may be deleted. 4 The Ld. DR on the other hand argued that the Assessing Officer has clearly held that the assessee did not carry any construction and the assessee was aware of the fact that no construction was permitted and therefore the agreement entered into by assessee with B. B. Overseas Pvt. Ltd. was an afterthought and is only to avoid the imposition of provisions of section 2(22)(e) of the Act. 5. The Ld. DR heavily placed his reliance on the order of authorities below. 6. We have heard the rival parties and have gone th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the change of agriculture land to be used for development of a housing colony. These documents relating to land dispute were though filed before us, for the first time but these cannot be said to be additional documents as these all documents and the facts relating to these documents in the form of collaboration agreement were already filed with authorities below. The Hon'ble Calcutta High Court in the case of Jatia Investment Co. Vs. CIT 206 ITR 718 has held that public documents cannot be treated as additional evidences in the true sense of the term. Therefore these documents being vital to the main dispute and therefore these are being taken into account for the purpose of deciding this appeal. From all these documents it is apparent that the land was in dispute but assessee became aware about the dispute only when it was brought to his notice through an advocate and which case was also dismissed as withdrawn. In view of these the view taken by the authorities below that the collaboration agreement was an afterthought is not correct. We further find that in the case of M/s B. B. Overseas Pvt. Ltd. during original assessment proceedings, the Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he litigation, by the Sh Saket Mehra in the year 2006. As per the submission of the assessee till date the status of the said land is agricultural land and no construction has started on the land parcel owing to the -litigation. It is observed that the nature of the transaction is not clear and different explanation has been given about it. As per report the agreement between Sh. Saket Mehra and M/s B B Overseas Ltd for construction of residential project on the land parcel is suspected to be a colourable device in an attempt to justify the unsecured loan/advance received from a company in which he is a director in order to dodge the provisions of deemed dividend u/s 2(22)(e) of the ! T Act. Further, if the transaction is suspected, its genuineness comes into question and the source of such fund of ₹ 1.2 Crore in the hand of Engage Enterprises Pvt Ltd is also remains to be verified leading to reason to believe that it is from unknown source. Further in the report it is mentioned that the assessee had a bank account no.-303420110000187 with Bank of India in which cash deposit has taken place. The sources of such cash deposit remains to be verified to ascertain the veraci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lony as per the collaboration agreement between the company. The transaction is suspected, if genuineness comes into question and the source remains unverified than the action as per the IT Act is to be taken on receipt of the information, the reasons were recorded in writing and the prior approval from the authority was taken. The notice u/s 148 of the IT Act, 1961 was issued on 30.03.2015. The reply letter was filed on 23. .'4.2015, where in it was stated that in response to notice u/s 148 the return of income is filed electronically on 22.04.2015 vide acknowledgement no. 566650551220415 and the copy is enclosed here with the letter, however, the notice u/s 148 is illegal, bad in law and without jurisdiction with a request to issue the reason recorded. The reasons recorded were issued. The notice u/s 143(3) and 142(1) of the IT Act, 1961 were issued. The assessee filed the objection, against the issue of notice and the reasons recorded before issue of notice dated 19.10.2015. The speaking order against the objection raised was made forwarded to the assessee. The case was attended by Sh. Suraj Mani, Account of the assessee company time to time and the necessary details were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e security deposit made by the company to its sister was a business transaction arising in the normal course of business between two concerns and the transaction did not attract section 2(22)(e) of the Act. (CIT, Agra Vs. Atul Engineering Udyog, Allahabad High Court)3 3. In view of the above it is, a settled position that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word advance in section 2(22)(e) of the Act. Accordingly, henceforth, appeals may not be filed on this ground by Officers of the Department and those already filed, in Courts/Tribunals may be withdrawn/not pressed upon. In view of the above facts, we are in agreement with the arguments of assessee that the said transaction was a business transaction and is therefore out of the purview of section 2(22)(e) of the Act. Moreover we find that assessee had repaid such deposit vide deed of cancellation dated 10.08.2011 and Amritsar Bench in a recent decision in the case of Sh. Rajan Gupta Vs. Dy. CIT in ITA No. 74/Asr/2016 vide its order dated 14.09.2017 has held that if the amount is returned back the addition cannot be made u/s 2(22)(e) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed on this ground by Officers of the Department and those already filed, in Courts/Tribunals may be withdrawn/not pressed upon. 4. The above may be brought to the notice of all concerned. If we consider the circumstances of the instant case, the Board of the Sat Agrotech Overseas Pvt. Ltd., vide resolution, authorized the Assesse to apply, sign and submit the application, papers, draft/cheque, etc. to be submitted for the purchase of commercial plots being leased out by J K Housing Board in Sector- 2, in Housing Colony, Channi Himmat, Jammu. Further, it was also resolved and agreed amongst the Director of Company that the funds shall be raised by the company to Sh. Rajan Gupta, Director for placing a bid with the understanding that the Commercial Plot will be handed over to company for its commercial use or any other purpose which the company decides in future and if the commercial plot is not allotted by the J K Housing Board then the amount shall be refunded by Sh. Rajan Gupta, Director. It is undisputed fact that for purchase of the land/plot, the earnest money to the tune of ₹ 10 Lakhs was deposited with the authority of the J K State, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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