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TMI Blog2022 (6) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Ld. CIT(A) had concluded that assessee had made payments to R.D. Karas and Sons in demand drafts by using unaccounted cash. This fact can be easily cross verified from the books of accounts of R.D. Karas and Sons which exercise has not been carried out by the lower authorities. Hence, we deem it fit and appropriate to remand this issue to the file of the Ld. AO for the limited purposes of carrying out the verification with R.D. Karas and Sons to check whether these demand drafts have been credited in the books of R.D. Karas and Sons. If the demand drafts are found credited in the books of accounts of R.D. Karas and Sons, then addition is to be confirmed in the hands of the assessee. If it is not found credited in the books of R.D. Karas and Sons, then the statement given by the assessee that demand drafts that were proposed to be taken but were never taken becomes true, and in such an event, no addition is made in the hands of the assessee. With these observations, we remand this issue to the file of the Ld. AO. Accordingly, the grounds raised by the assessee for A.Y. 2010-11 are allowed for statistical purposes. - ITA Nos. 1802/Mum/2020 , ITA Nos. 1806/Mum/2020 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group of companies which is engaged in the business of construction of residential and commercial building and also purchase and sale of land, FSI in and around Virar and Nalasopara. A search and seizure action u/s. 132 of the Act was carried out by the Income Tax department on 31/07/2014 in MAAD group of cases wherein residential premises of the assessee was also covered. The return of income for the A.Y. 2014-15 was filed by the assessee on 31/03/2015 in response to notice issued u/s. 153A of the Act dated 17/12/2014. The assessment u/s. 143(3) r.w.s. 153A of the Act was completed for A.Y. 2014-15 on 20/09/2016 determining total income of the assessee at Rs. 2,39,12,770/- after making addition in respect of deemed dividend u/s. 2(22)(e) of the Act in the sum of Rs. 88,99,265/- (50% of loan of Rs. 1,77,98,531/-). The Ld. AO in the assessment order observed that as per the balance sheet of lender company i.e. MAAD Realtors and Infra Ltd., as on 31/03/2013, the total reserves and surplus was Rs. 3,47,29,227/- (accumulated profits) and hence, the advance/loan given by MAAD Realtors and Infra Ltd., to DM Logistic Pvt. Ltd., where both the companies are having common shareholders i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .M. Logistic Pvt. Ltd. not appreciating that the said advance was towards acquisition of developable FSI and therefore being a trade advance was outside the ambit of section 2(22)(e) of the I.T. Act, 1961 and therefore the addition was not justified. 3. The appellant craves leave to add, alter, amend and/or vary the above grounds of appeal at any time before the decision of the appeal. 2. The brief summary of the facts are that the assessee is one of the director of the MAAD Group of companies which is engaged in the business of construction of residential and commercial buildings and also buying and selling of land, FSI in area surrounding Virar and Nalasopara. Following a search and seizure action u/s. 132 of the Act in MAAD Group of companies on 31.07.2014, the assessed's residential premise was also subjected to search. The assessee filed the return of income subsequent to notice issued u/s. 153A for the relevant assessment year and declared Rs. 84,53,689/- as total income excluding declaration made on account of cash found. After the completion of the assessment by the AO u/s. 143(3) r.w.s. 153A, the total income was determined to the tune of Rs. 2,54,47,115/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertinent to decide on the issue of condonation of delay of 50 days in filing the appeal. The assessee reasoned the delay for the Covid protocol for which there was no objection by the Ld. DR in condoning the delay. We are thereby condoning the delay of 50 days as per the request of the Ld. AR. 7. The pre-dominant issue that has to be decided in the present appeal is whether the Ld. CIT(A) has erred in not admitting the additional evidence produced u/r. 46A of the I.T. Rules, 1962, to substantiate the fact that Section 2(22)(e) of the Act does not apply to the assessed's present case and subsequently to decide on the issue that the addition u/s. 2(22)(e) has to be deleted or upheld. 8. We are of the considered opinion that the first ground of appeal has to be decided primarily on the basis of the facts of the case and the authorities to be relied on. The balance sheet of MAAD Realtors Infra Ltd. and M/s. D.M. Logistics Pvt. Ltd. seized during the search proceedings reflected loan of Rs. 1,77,98,531/- borrowed by M/s. D.M. Logistics Pvt. Ltd. from M/s. MAAD Realtors Infra Ltd. on 31.03.2014 when the assessee is a director holding 22.75% share in M/s. MAAD Realtors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in certain situation. While considering the decision of the jurisdictional Bombay High Court in the case of Smt. Prabhavati S. Shah's case (1998) 231 ITR 1 (Bom), a new dimension to the provision relating to admission of additional evidence before Ld. CIT(A) was considered. The Hon'ble Bombay High Court rejected the contention of Ld. CIT(A) and held that under section 250(4), the Ld. CIT(A) was empowered to make such further inquiry as he thinks fit and such power being quasi judicial power, it was incumbent on him to exercise the same if the facts and circumstances justify. 9. In Smt. Mohindar Kaur Vs. Central Govt. (1976) 104 ITR 120 , Section 250(5) confers power upon Ld. CIT(A) to permit the appellant to raise a fresh point which has not been even touched by rule 46A. The Court finally held that Rule 46A is not ultra virus section 250 or 251 of the Act. On the contrary, it gives a right to the appellant to produce additional evidence which was earlier not available to him. 10. Though in the present case, the additional evidence was available with the assessee he was prevented by adducing the same due to wrong interpretation of the provision. We are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion at residential premises of the assessee at M-3/4, Meru Housing Complex, Manvelpada Road, Virar (E), loose paper bundle No. 1, page No. 16 was seized. The copy of the said seized document is enclosed in pages 9 10 of the paper book. 6.2. We have perused the said seized documents contained in page 9 10 of the paper book. From its perusal, the said document contains date, mode of transaction either by cash or cheque, the amount of transaction and the name of the individuals/concerns belonging to assessee group. It is pertinent to note that the entire seized document contained in pages 9 10 of the paper book filed, pertains to transactions belonging to R.D. Karas Sons. Admittedly R.D. Karas and Sons is supplying steel and cement to MAAD Group of companies. The said seized document enclosed in pages 9 10 of the paper book, for certain dates had merely mentioned the letter 'D' under the name column. This 'D' was presumed as demand draft. Effectively, the Ld. AO presumed that the entire seized document represents total amounts payable to R.D. Karas and Sons in the tune of Rs. 1,30,30,818/- which has to be settled by cheque, cash or demand drafts, as the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of steel. It was also stated that Anil Ramchandra Gupta who arranged funds for purchasing demand draft and those demand drafts are to be issued to R.D. Karas and Sons. Similarly, in note No. 7, the assessee submitted before the Ld. CIT(A) that Deven Seth signifies partner Devendra Ladani who has to organise funds of Rs. 12,60,000/- on 07/07/2009 and make payment to R.D. Karas and Sons for purchase of steel. The assessee also gave the PAN of the aforesaid two persons before the Ld. CIT(A). Accordingly, this reply was accepted as genuine by the Ld. CIT(A) and the Ld. CIT(A) directed the Ld. AO to delete the sum of Rs. 20,60,000/- holding that such transactions pertain to Mr. Anil Ramachandra Gupta and Devendra Ladani, other Directors of MAAD group of companies and not pertaining to the assessee. 6.5. However, with regard to remaining transactions in cash amounting to Rs. 64,70,818/- where the alphabet 'D' signifying the demand drafts to be purchased or to be purchased for making payment to R.D. Karas and Sons are concerned, the assessee submitted that though it was proposed to take demand drafts on respective dates, no such demand drafts were taken for making payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself. That all these transactions had materialized is confirmed by the entry on the reverse side of the seized page indicating the date 20/3/2010-Cash-1,30,30,818/-. Further, the bifurcation into cash and bank and the trifurcation in to cheque, demand draft and cash for the total amount of Rs. 1,30,30,818/- amply indicate that the transactions have already been completed and therefore the claim of the appellant that the above said entries indicating 'D' totaling Rs. 64,70,818/- never materialized is not accepted. From the noting in the document, it is clear that the demand drafts were purchased by the appellant in cash. It is for the appellant to explain the purpose for which the demand drafts have been purchased. The onus is clearly not on the assessing officer to explain the purpose of the purchase of the demand drafts. The fact that the seized document indicated purchase of demand drafts by way of cash totaling Rs. 64,70,818/-, and the explanation offered by the appellant is liable to rejection in view of the noting and the inference made from the noting as indicated above, the treatment of the AO that the sources of cash utilized for making such demand draft remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts of group companies of MAAD group. Moreover, the Ld. CIT(A) had even given credit for transactions to be carried out by other Directors of the MAAD group and accordingly deleted a sum of Rs. 20,60,000/- from the hands of the assessee. Against this finding of the Ld. CIT(A), both assessee as well as the Revenue are not in appeal before us. Hence, for remaining transactions of Rs. 64,70,818/- the onus purely lies on the assessee to explain with cogent evidences. Since that loose sheet was seized from the preemies of the assessee, the presumption u/s. 292C of the Act would lie on the assessee and it is for the assessee to rebut the contents of the said loose sheet with cogent evidences. Moreover, it is trite law that the seized documents should be looked into in toto and both the Revenue as well as assessee could not ignore that portion of the same seized document which is detrimental to each. Reliance in this regard is placed on the decision of the Co-ordinate Bench of Pune Tribunal in the case of Chander Mohan Mehta vs. ACIT reported in 71 ITD 245. One part of the same seized document shows transactions carried out by cheques which are matching with the books of accounts of o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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