SHRI BALRAM KRISHAN,CHANDIGARH vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, CHANDIGARH, CHANDIGARH

– reasonable opportunity of being heard not given.\n11.Ground no. 11 – general in nature.\nITA No. 732/Chandi/2023 (Balram Krishan Aggarwal, AY 2017-18) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 - Transfer order u/s 127 dated 30.03.2018 was without sanction of\nlaw, hence bad in law.\n3. Ground No. 3 – Order deserves to be quashed in absence of incriminating material.\n4. Ground No. 4 – Payment by SEPL for construction of house and holding the same\nas deemed dividend.\n5. Ground No. 5 Purchases treated as bogus purchase.\n6. Ground No. 6 – Approval u/s 153D.\n7. Ground No. 7 – Reasonable opportunity of being heard not given.\n8. Ground No. 8- General in nature.\nITA No. 730/Chandi/2023 (Balram Krishan Aggarwal, AY 2016-17) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n10\n11\n12\n13\n14\n15\n16\n17\n18\n19\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n3. Ground No. 3 – Order deserves to be quashed in absence of incriminating material.\n4. Ground No. 4 – Transaction with Maxport held as bogus transactions.\n5. Ground No. 5 – Approval u/s 153D.\n6. Ground No. 6 - Reasonable opportunity of being heard not given.\n7. Ground No. 7- General in nature.\nITA No. 729/Chandi/2023 (Balram Krishan Aggarwal, AY 2015-16) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n3. Ground No. 3 – Order deserves to be quashed in absence of incriminating material.\n4. Ground No. 4 – Transaction with Maxport held as bogus transactions.\n5. Ground No. 5 – Approval u/s 153D.\n6. Ground No. 6 - Reasonable opportunity of being heard not given.\n7. Ground No. 7- General in nature.\nITA No. 728/Chandi/2023 (Balram Krishan Aggarwal, AY 2014-15) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n3. Ground No. 3 – Order deserves to be quashed in absence of incriminating material.\n4. Ground No. 4 – Direction to Ld. AO u/s 150 to take appropriate action u/s 148.\n5. Ground No. 5 – Approval u/s 153D.\n6. Ground No. 6 - Reasonable opportunity of being heard not given.\n7. Ground No. 7- General in nature.\n (Balram Krishan Aggarwal, AY 2013-14) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n3. Ground No. 3 – Order deserves to be quashed in absence of incriminating material.\n4. Ground No. 4 – Direction to Ld. AO u/s 150 to take appropriate action u/s 148.\n5. Ground No. 5 – Approval u/s 153D.\n6. Ground No. 6 - Reasonable opportunity of being heard not given.\n7. Ground No. 7- General in nature.\nITA No. 726/Chandi/2023 (Balram Krishan Aggarwal, AY 2012-13) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n3. Ground No. 3 – Order deserves to be quashed in absence of incriminating material.\n4. Ground No. 4 – Direction to Ld. AO u/s 150 to take appropriate action u/s 148.\n5. Ground No. 5 – Approval u/s 153D.\n6. Ground No. 6 - Reasonable opportunity of being heard not given.\n7. Ground No. 7- General in nature.\nITA No. 834/Chandi/2023 (Scott Edil Pharmacia Ltd, AY 2018-19) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 – Addition on ground of shortage of stock during search, hence GP\nrate applies on undisclosed sales.\n15\n15\n16\n17\n18\n19\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n5. Ground No. 5 – Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n6. Ground No. 6 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n7. Ground No. 7 - Reasonable opportunity of being heard not given.\n8. Ground No. 8- General in nature.\nITA No. 833/Chandi/2023 (Scott Edil Pharmacia Ltd, AY 2017-18) (Assessee’s\nappeal)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 – Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n5. Ground No. 5 – Sales from Maxport treated bogus.\n6. Ground No. 6 – Provision for doubtful debts disallowed- Dealt separately\n7. Ground No. 7 – Enhancement u/s 251(1)- Dealt separately.\n8. Ground No. 8 and 9 – Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n9. Ground No. 10 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n10. Ground No. 11 - Reasonable opportunity of being heard not given.\n11. Ground No. 12 – General in nature.\nITA No. 832/Chandi/2023 (Scott Edil Pharmacia Ltd, AY 2016-17) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n12\n13\n14\n15\n16\n17\n18\n19\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n4. Ground No. 4 – Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n5. Ground No. 5 – Enhancement u/s 251(1).\n6. Ground No. 6 – Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n7. Ground No. 7 – Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n8. Ground No. 8 - Reasonable opportunity of being heard not given.\n9. Ground No. 9 – General in nature.\nITA No. 831/Chandi/2023 (Scoot Edil Pharmacia Ltd, AY 2015-16) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 – Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n5. Ground No. 5 – Disallowance of 80IC on sales made to Maxport.\n6. Ground No. 6 - Profit treated as trading in nature instead of from manufacturing\nactivity.\n7. Ground No. 7 and 8– Disallowance of 80IC claimed ion ITR.\n8. Ground No. 9 – Enhancement u/s 251(1)- Dealt separately in ITA No.\n833/Chandi/2023, SEPL for AY 2017-18.\n9. Ground No. 10 and 11 – Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n10. Ground No. 12- Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n11. Ground No. 13- Reasonable opportunity of being heard not given.\n12. Ground No. 14 – General in nature.\nITA No. 830/Chandi/2023 (Scoot Edil Pharmacia Ltd, AY 2014-15) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 – Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n5. Ground No. 5 – Disallowance of 80IC on sales made to Maxport.\n6. Ground No. 6 and 7 - Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n7. Ground No. 8– Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n8. Ground No. 9- Reasonable opportunity of being heard not given.\n9. Ground No. 10 – General in nature.\nITA No. 829/Chandi/2023 (Scoot Edil Pharmacia Ltd, AY 2013-14) (Appeal by\nAssessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 – Addition u/s 68 on account of amount received from Jai Ambe\nPharmaceutical (JAAPL) holding the company as a shell company.\n5. Ground No. 5 – Disallowance of 80IC on sales made to JAAPL\n6. Ground No. 6 - Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n7. Ground No. 7 - Enhancement u/s 251(1)- Dealt separately in ITA No.\n833/Chandi/2023, SEPL for AY 2017-18.\n8. Ground No. 8– Direction to Ld. AO u/s 150 to take appropriate action u/s 148.\nDealt separately in SEPL for AY 2013-14.\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n9. Ground No. 9 and 10- Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n10. Ground No. 11 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n11. Ground No. 12 - Reasonable opportunity of being heard not given.\n12. Ground No. 13 – General in nature\nITA No. 842/Chandi/2023 (Scoot Edil Advanced Research Laboratories and\nEducation Ltd, AY 2010-11) (Appeal by Assessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Reopened u/s 153A using extended period of limitation. Order\ndeserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n4. Ground No. 4 - Direction to Ld. AO u/s 150 to take appropriate action u/s 148.\n5. Ground No. 5 – Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law\n6. Ground No. 6- Reasonable opportunity of being heard not given.\n7. Ground No. 7 – General in nature\nITA No. 843/Chandi/2023 (Scott Edil Advanced Research Laboratories and\nEducation Ltd, (AY 2012-13) (Appeal by Assessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 - Difference in valuation as per DVO report and books of accounts.\n5. Ground No. 5- Addition u/s 68.\n6. Ground No. 6 – Addition u/s 68 on account of receipts from employees of B.M.\nPharmaceuticals.\n7. Ground No. 7 and 8 - Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n16\n17\n18\n19\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n8. Ground No. 9 – Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law\n9. Ground No. 10- Reasonable opportunity of being heard not given.\n10. Ground No. 11 – General in nature\nITA No. 844/Chandi/2023 (Scott Edil Advanced Research Laboratories and\nEducation Ltd, AY 2013-14) (Appeal by Assessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 - Difference in valuation as per DVO report and books of accounts.\n5. Ground No. 5- Disallowance of 80IC on sales made to JAAPL.\n6. Ground No. 6 and 7 - Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n7. Ground No. 8 – Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law\n8. Ground No. 9- Reasonable opportunity of being heard not given.\n9. Ground No. 10 – General in nature.\nITA No. 855/Chandi/2023 (Scott Edil Advanced Research Laboratories and\nEducation Ltd, AY 2014-15) (Appeal by Assessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 - Difference in valuation as per DVO report and books of accounts.\n5. Ground No. 5- Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n6. Ground No. 6 - Addition u/s 68 on account of amount received from Jai Ambe\nPharmaceutical (JAAPL) holding the company as a shell company.\n7. Ground No. 7 – Purchase transactions carried out allegedly outside books.\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n8. Ground No. 8 and 9 -Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n9. Ground No. 10 – Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law\n10. Ground No. 11- Reasonable opportunity of being heard not given.\n11. Ground No. 12 – General in nature.\nITA No. 856/Chandi/2023 (Scoot Edil Advanced Research Laboratories and\nEducation Ltd, AY 2015-16) (Appeal by Assessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 - Difference in valuation as per DVO report and books of accounts.\n5. Ground No. 5- Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n6. Ground No. 6 - Disallowance of 80IC on sales made to Maxport.\n7. Ground No. 7 and 8 – Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment\n8. Ground No. 9 – Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law\n9. Ground No. 10- Reasonable opportunity of being heard not given.\n10. Ground No. 12 – General in nature.\nITA No. 857/Chandi/2023 (Scoot Edil Advanced Research Laboratories and\nEducation Ltd, AY 2016-17) (Appeal by Assessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 - Difference in valuation as per DVO report and books of accounts.\n5. Ground No. 5- Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n6. Ground No. 6 - Disallowance of 80IC on sales made to Maxport.\n7. Ground No. 7 – Enhancement u/s 251(1)- Carry forward of MAT credit against\nthe demand raised consequent to impugned addition made in assessment\n8. Ground No. 8 – Direction to Ld. AO u/s 150 to take appropriate action u/s 148.\n9. Ground No. 9 and 10 - Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n10. Ground No. 11 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law\n11. Ground No. 12- Reasonable opportunity of being heard not given.\n12. Ground No. 13 – General in nature\nITA No. 845/Chandi/2023 (Scoot Edil Advanced Research Laboratories and\nEducation Ltd, AY 2017-18) (Appeal by Assessee)\n1. Ground No. 1 – General in nature.\n2. Ground No. 2 – Order deserves to be quashed in absence of incriminating material.\n3. Ground No. 3 – Approval u/s 153D.\n4. Ground No. 4 - Difference in valuation as per DVO report and books of accounts.\n5. Ground No. 5- Addition made u/s 69C due to non-response by parties confirming\nthe purchases made.\n6. Ground No. 6 - Disallowance of 80IC on sales made to Maxport.\n7. Ground No. 7 and 8- Carry forward of MAT credit against the demand raised\nconsequent to impugned addition made in assessment.\n8. Ground No. 9 - Transfer order u/s 127 dtd. 30.03.2018 was without sanction of\nlaw, hence bad in law.\n9. Ground No. 10- Reasonable opportunity of being heard not given.\n10. Ground No. 11 – General in nature\nITA No. 93/Chandi/2023 (Scoot Edil Advanced Research Laboratories and\nEducation Ltd, AY 2017-18) (Appeal by Department)\n1. Ground No. 1, 2, 3, 4 and 5 – Relief by CIT(A) on revised valuation report\nsubmitted by DVO.\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n2. Ground No. 6 – General in nature.\n3. A perusal of the above grounds of appeal would reveal that the\nfollowing common issues are involved in these appeals:\nIssue 1: No incriminating Material found during the course of search action.\nIssue 2: Deemed dividend on account of credits exceeding remuneration / payments\nreceived from M/s SEPL2\nIssue 3: Difference in valuation of factory building in Village Dasora, Majra Hiltop,\nNear Venus Remedies, JharmBaddi as per DVO’s report and as books of the appellant.\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nIssue 4: Enhancement u/s 251(1) regarding alleged understatement of investment in\nproperty at 28/6, Industrial Area, Phase-2, Chandigarh.\nIssue 5 : Directions by CIT(A) to AO to initiate 147/148 proceedings taking shelter of\ns.150(1)(2) for AY 2010-11 and 2012-13.\nIssue 6: Shortage of stock found during search held as undisclosed sale.\nIssue 7: Commission/profit earned at estimated rate of 1% of total alleged sales and\npurchases, allegedly conducted outside books.\nIssue 8: Addition made by Ld. AO of Rs.58,09,346/- by disallowing deduction u/s\n80IC on account of GP on net sales of transaction made by SERLE to M/s Maxport\nIndia Pvt. Ltd.\nIssue 9 : Credits received from JAAPL and Disallowance u/s 80IC - GP earned on\nsale made to JAPPL on account of alleged bogus nature of sales to JAPPL,\nIssue 10 : Addition made u/s 2(22)(e) of the Act on account of payment by SEPL\nfor construction of House No. 3100, Sector 21, Chandigarh and House no. 323,\nSector 9, Chandigarh;\nIssue 11: Addition made of Rs.4,60,077 / - each in the hands of individuals/ owners\nof the house No.3100 u/s 69C r.w.s 115BBE of the Act on account of difference in\nvaluation as per DVO's report as compared to the books of accounts.\nIssue 12: Disallowance of doubtful debts claimed during the year.\nIssue 13 : Addition u/s 69C - purchases from parties treated as bogus.\nIssue 14: Extended period of Limitation.\nIssue 15: Transfer order u/s 127 dtd. 30.03.2018 was without sanction of law,\nhence bad in law.\nIssue 16: Carry forward of MAT credit against the demand raised consequent to\nimpugned addition made in assessment.\nIssue 17: Disallowance of 80IC on subsidy claimed in ITR.\nIssue 18 : Jewellery found at House no 2273, Sector 21C, Chandigarh & Locker no\n64, Bank of India, Sector 35, Chandigarh during the search.\n20\n21\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nIssue 19: Approval u/s 153D.\n4. Since common and identical issues are involved in most of the\ncaptioned appeals, hence we deem it appropriate to adjudicate the\nmatter issue wise for the sake of brevity and clarity.\nIssue 1: No incriminating Material found during the course of search action, hence no\naddition can be made in the cases in which assessment on the date of search stood completed\nand not abated.\nThis issue has been raised in the following appeals:\n5.\nAssessee’s appeal in ITA No. 829/Chandi/2023 is taken as the lead\ncase for the purpose of narration of facts. The assessee in this appeal\nhas taken the following ground on this issue:\nS.\nNo.\nName of the assessee\nAY\nAppeal by\nAppeal No.\n1\nMaxport India Pvt. Ltd.\n2014-15\nAssessee\n582/Chandi/2023\n2\nMaxport India Pvt. Ltd.\n2015-16\nAssessee\n583/Chandi/2023\n3\nMaxport India Pvt. Ltd.\n2016-17\nAssessee\n584/Chandi/2023\n4\nScott Edil Advance\nResearch Laboratories\nand Education Limited\n2012-13\nAssessee\n843/Chandi/2023\n5\nScott Edil Advance Research\nLaboratories and Education Limited\n2013-14\nAssessee\n844/Chandi/2023\n6\nScott Edil Advance\nResearch Laboratories\nand Education Limited\n2014-15\nAssessee\n855/Chandi/2023\n7\nScott Edil Advance\nResearch Laboratories\nand Education Limited\n2015-16\nAssessee\n856/Chandi/2023\n8\nScott Edil Advance\nResearch Laboratories\nand Education Limited\n2016-17\nAssessee\n857/Chandi/2023\n9\nScott Edil Pharmacia\nLimited\n2013-14\nAssessee\n829/Chandi/2023\n10\nScott Edil Pharmacia\nLimited\n2014-15\nAssessee\n830/Chandi/2023\n11\nScott Edil Pharmacia\nLimited\n2015-16\nAssessee\n831/Chandi/2023\n12\nScott Edil Pharmacia\nLimited\n2016-17\nAssessee\n832/Chandi/2023\n13\nBalram Krishan\nAggarwal\n2015-17\nAssessee\n729/Chandi/2023\n14\nBalram Krishan\nAggarwal\n2016-17\nAssessee\n730/Chandi/20203\nGround\nNo.\nGround No.\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nGround No. 2: That on facts, circumstances and legal position of the case, the impugned\nassessment order passed by Ld AO acquiring jurisdiction u/s 153A even when the ld. AO\nhad wrongly assumed jurisdiction u/s 153A and more-so when no incriminating material\nwas found from assessee’s own search operation u/s 132 for the year in question.\n6. The brief facts relating to the issue under consideration are that a search action u/s\n132 of the Act was carried out at the business premises of assessee on 15.11.2017.\nHowever, no incriminating material was unearthed during the course of search action.\nThe assessment was carried out u/s 153A of the Act making the impugned additions. The\nassessee in this appeal has contested the action of the Ld. CIT(A) in\nconfirming the addition made by the Assessing Officer in the course\nof assessment carried out u/s.153A of the Act despite there being no\nincriminating material found during the course of search action and\nthe assessments for all the assessment years stood completed/non-\nabated on the date of search action.\n7. Admittedly, in these appeals, the assessments for all the years\nstood completed and not abated on the date of search action. The\nlimitation period for issuing notice u/s 143(2) stood already expired\non the date search. No incriminating material was found during the\ncourse of search action. The Ld. CIT(A), however, held that there\nwas statement recorded of one of the directors namely, Mrs. Puja\nPandita of the group company M/s. Maxport India Pvt. Ltd., wherein\nshe has stated that she was not the director of the company and could\nnot explain the sale purchase transactions carried out by the assessee\ncompany with M/s. Jai Ambey Pharmaceuticals Pvt. Ltd. The Ld.\nCIT(A) has also referred statement of employees/directors of the third\nparty recorded during a separate search action in the case of Jai\nAmbey pharmaceuticals Pvt. Ltd. wherein also they stated that they\ncould not provide information related to the transaction of Maxport\nIndia Ltd. with their company. The Ld. CIT(A) held that the aforesaid\n22\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nstatements were incriminating in nature, therefore, the Assessing\nOfficer had jurisdiction to scrutinize the entire transaction/activities\nof the assessee and make impugned additions.\n8. We have heard rival contentions and gone through the records.\nSo far as the reliance of the Ld. CIT(A) on the statement of Mrs. Puja Pandita , Director\nof the M/s. Maxport India Pvt. Ltd. Is concerned, the relevant extract of her statement is\nreproduced as under:\n“Question No.5:- Please give the details of the companies/firms wherein you are\na director/partner etc.?\nAnswer: I am not a director/partner in any of the company at present or past\nalso. Also in past/present I was not a shareholder in any company. It is also\nstated that I am not a partner in any of the concerned and I am not involve in\nany of the business. I am just a employee working in the company M/s Scott Edil\nPharmacia Ltd. I did not participate in any of the meetings or conferences in any\nof the company.”\n9. A perusal of the above statement of Mrs. Pooja Pandita would\nshow that she has simply denied of having any knowledge about the\naffairs of the company. She has stated that she was just an employee\nof the company. The department has strongly relied upon the said part\nof the statement of Mrs. Puja Pandita, director of the group company.\nThe Ld. DR, however, could not point out as to how the said statement\nof Mrs. Puja Pandita, would constitute incriminating material for\nmaking the impugned additions. There is no admission in whatsoever\nmanner by said Mrs. Puja Pandita that the assessee was indulged in\nany bogus sale transaction as alleged by the department. Moreover,\nthe said statement also stood retracted by Mrs. Puja Pandita.\nMoreover, the said statement cannot be used in case of group entities\nof the assessee company as each entity is a separate income tax\n23\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nassessee. It has also been held that any statement recorded u/s.\n132(4) of the Act during the course of search action without any\ncorroborating material unearthed during the course of search action\nwould not, in itself, constitute incriminating material. Moreover, a\nperusal of the alleged statement of Mrs. Puja Pandita, director of one\nof the group entities even shows that the said Mrs. Puja Pandita has\nnot confessed about any undisclosed income of the assessee. The\nissue is squarely covered by the decision of the Hon’ble Supreme\nCourt in the case of Pr. CIT Vs. Abhiser Buildwell (P) Ltd. [2023] 149\ntaxmann.com 399 (SC), wherein the Hon’ble Supreme Court has held that in the case of\nnon-abated/completed assessments, no addition can be made by the Assessing Officer in\nan assessment carried out u/s.153A of the Act in the absence of any incriminating\nmaterial found during the search action.\n10. The Hon’ble A.P. High Court in the case of “Naresh Kumar Agarwal” (2015) 53\ntaxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any\nincriminating material etc. found from the premises of the assessee during the course of\nsearch, statement of assessee recorded under section 132(4) would not have any\nevidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in\nthe case of “Shree Chand Soni vs. DCIT” (2006) 101 TTJ 1028 (Jodhpur).\nThe Hon’ble Delhi High Court in the case of “CIT vs. Harjeev Agarwal” in ITA\nNo.8/2004 vide order dated 10.03.16 has observed that a statement made under section\n132(4) of the Act on a stand-alone basis, without reference to any other material\ndiscovered during search and seizure operation, would not empower the AO to make a\nblock assessment merely because any admission was made by the assessee during search\noperation.\n11. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64\ntaxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a\ncategorical admission under section 132(4) that the cash amount seized belonged to him\nand it represented undisclosed income not recorded in the books of accounts. The\nassessee did not immediately retract from the above admission but only during the\n24\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nassessment proceedings at a belated stage. In his retraction, the assessee stated that the\nsurrender was made under a mistaken belief and without looking into books of account\nand without understanding law and that he had been compelled and perturbed by events\nof search and that the pressure of search was built so much that he had to make the\nsurrender without having actual possession of the assets or unexplained investments or\nexpenses incurred and that there was no such income as undisclosed. The Hon’ble Delhi\nHigh Court, after considering the fact and circumstances of the case, while dismissing\nthe appeal of the revenue, observed that though the fact that the assessee may have\nretracted his statement belatedly, yet, it did not relieve the AO from examining the\nexplanation offered by the assessee with reference to the books of account produced\nbefore him. It has been held that a retracted statement even under section 132(4) of the\nAct would require some corroborative material for the Assessing Officer to proceed to\nmake additions on the basis of such statement.\n12. In the case of “Basant Bansal vs. ACIT” reported in (2015)63 taxmann.com 199\n(Jaipur Trib.), having somewhat similar facts, the assessee therein, during the search and\nseizure action u/s 132 of the Act, offered a summary discloser of income as undisclosed\nand the department accepted the summary surrender of income and thereafter advance\ntax for the said surrendered of income was also deposited, but thereafter it was contended\nby the assessee that the surrender was made under threat or coercion and that no\nincriminating material was found during the search action. The stand of the department\nwas that the admission was voluntary and was not under a mistaken belief of fact or law\nand that the assistance had enough time to go through the facts of their case, law\napplicable in their case and take advice from their counsels and advisors before filing the\nletter of surrender of undisclosed/unaccounted income and that the admission by them\nwas final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall\nappreciation of the fact and evidences before it, observed that the assessee’s surrender\nwas not based on any incriminating material and that the discloser being not voluntary\nand extracted by the department in creating a coercive situation cannot be relied solely\nto be basis of addition as undisclosed income. The co-ordinate bench of the Tribunal\nwhile relying upon various case laws of the higher authorities observed that it is well\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nsettled legal position that merely on the basis of a statement which is not supported by\nthe department with cogent corroborative material cannot be a valid basis for sustaining\nsuch ad-hoc addition. The co-ordinate bench of the Tribunal (supra) while holding so,\napart from relying upon various decisions of the higher courts has also relied upon the\ndecision of the Tribunal in the case of “Dy CIT vs. Pramukh Builders” (2008) 112 ITD\n179 (Ahd.) wherein it has been held that even in the absence of proof of coercion or\npressure, the statement by itself cannot be taken as conclusive. Therefore, merely in the\nabsence of proof of pressure, threat, coercion or inducement the statement cannot be held\nas conclusive and additions cannot be made by solely relying on a statement or a letter.\nThe facts of the appeals under consideration are on better footing. As observed, even in\nthe statement of Poo0ja Pandita, there is no admission or confession of any unexplained\nincome. The said statement therefore is of no help to the revenue to make the impugned\nadditions.\n13. Even the CBDT Letter No.286/2/2003-IT(Inv) dated Oct 3, 2003 in this respect\nread as under:\n“To\nThe Chief Commissioners of Income Tax, (Cadre Contra)\n&\nAll Directors General of Income Tax Inv.\nSir,\nSubject: Confession of additional Income during the course of search & seizure and\nsurvey operation – regarding\nInstances have come to the notice of the Board where assessees have claimed that they\nhave been forced to confess the undisclosed income during the course of the search &\nseizure and survey operations. Such confessions, if not based upon credible evidence,\nare later retracted by the concerned assessees while filing returns of income. In these\ncircumstances, on confessions during the course of search & seizure and survey\noperations do not serve any useful purpose. It is, therefore, advised that there should be\nfocus and concentration on collection of evidence of income which leads to information\non what has not been disclosed or is not likely to be disclosed before the Income Tax\nDepartments. Similarly, while recording statement during the course of search it\nseizures and survey operations no attempt should be made to obtain confession as to the\nundisclosed income. Any action on the contrary shall be viewed adversely.\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nFurther, in respect of pending assessment proceedings also, assessing officers should\nrely upon the evidences/materials gathered during the course of search/survey\noperations or thereafter while framing the relevant assessment orders\nYours faithfully,”\n14. A perusal of the above circular also shows that it is in the notice of the statutory\ncontrolling body of the Income Tax Authorities that the revenue officials are used to take\nconfessional statements from the person searched under force, pressure or threat and that\nis why they have made it mandatory that additions solely on the basis on such statements\nshould not be made and that corroborative evidences should be collected or obtained\nbefore making such additions. The circular of the CBDT is binding on the revenue\nofficials. In the facts and circumstances of this case, when seen in the light of above case\nlaws and CBDT circular, additions in this case cannot be said to be justifiably made.\n15. Moreover, Ms. Pandita, was not found in possession or control of any books of\naccount or other document or any assets as mentioned under the provisions of section\n132(4) of the Act, hence, as per the relevant provisions of the Act, the search party even\nwas not to supposed to record her statement, hence, even otherwise also, no reliance can\nbe placed on ay such statement is beyond the authority given under section 132(4) of\nthe Act.\n“ Search and seizure.\n132. (4) The authorised officer may, during the course of the search or seizure, examine\non oath any person who is found to be in possession or control of any books of account,\ndocuments, money, bullion, jewellery or other valuable article or thing and any statement\nmade by such person during such examination may thereafter be used in evidence in any\nproceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.\nExplanation.—For the removal of doubts, it is hereby declared that the examination of\nany person under this sub-section may be not merely in respect of any books of account,\nother documents or assets found as a result of the search, but also in respect of all matters\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nrelevant for the purposes of any investigation connected with any proceeding under the\nIndian Income-tax Act, 1922 (11 of 1922), or under this Act.”\n16. It may be pointed be pointed out here that section 132 of the Act is a\ncomprehensive provision. The exercise of power under the search and seizure provision,\nhaving serious consequences on the searched person, requires caution and strict\ncompliance. As per the provisions of section 132(4), the authorised officer may, during\nthe course of the search or seizure, examine on oath any person who is found to be in\npossession or control of any books of account, documents, money, bullion, jewellery or\nother valuable article or thing and any such statement recorded of him may be used in\nevidence in any proceeding under the Act. Hence, as per the provisions of section 132(4),\nfor subjecting a person to examination, such person must be found to be in possession or\ncontrol of any books of account, documents, money, bullion, jewellery or other valuable\narticle or thing. Admittedly, Mrs. Pooja Pandita was neither found in possession or\ncontrol of any books of accounts nor of any of the assets/ items as mentioned U/s 132(4).\nTherefore, the search party was neither supposed to record her statement, nor any reliance\ncan be placed on ay such statement is beyond the authority given under section 132(4) of\nthe Act.\n17. In the case of “ CIT v. Sri Ramdas Motor Transport Ltd.” Reported in (1999) 238\nITR 177 (AP), Hon’ble Andhra Pradesh High Court, while deliberating upon the\nprovisions of Section 132(4) of the Act has held in cases where no unaccounted\ndocuments or incriminating material is found, the powers under Section 132(4) of the\nAct cannot be invoked. The relevant part of the said order is reproduced below:\n“A plain reading of sub-section (4) shows that the authorised officer during the course\nof raid is empowered to examine any person if he is found to be in possession or control\nof any undisclosed books of account, documents, money or other valuable articles or\nthings, elicit information from such person with regard to such account books or money\nwhich are in his possession and can record a statement to that effect. Under this\nprovision, such statements can be used in evidence in any subsequent proceeding\ninitiated against such per son under the Act. Thus, the question of examining any person\nby the authorised officer arises only when he found such person to be in possession of\nany undisclosed money or books of account. But, in this case, it is admitted by the\nRevenue that on the dates of search, the Department was not able to find any\nunaccounted money, unaccounted bullion nor any other valuable articles or things, nor\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nany unaccounted documents nor any such incriminating material either from the\npremises of the company or from the residential houses of the managing director and\nother directors. In such a case, when the managing director or any other persons were\nfound to be not in possession of any incriminating material, the question of examining\nthem by the authorised officer during the course of search and recording any statement\nfrom them by invoking the powers under section 132(4) of the Act, does not arise.\nTherefore, the statement of the managing director of the assessee, recorded patently\nunder section 132(4) of the Act, does not have any evidentiary value.”\n8.

1. Hon’ble Delhi High Court in the case of “ CIT vs Harjeev Aggarwal” reported\nin 241 Taxman 199(Delhi) has held in para 21 of the judgement as follows:\n“ 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is\nempowered to examine on oath any person who is found in possession or control of any\nbooks of accounts, documents, money, bullion, jewellery or any other valuable article or\nthing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws\n(Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be\nexamined not only in respect of the books of accounts or other documents found as a\nresult of search but also in respect of all matters relevant for the purposes of any\ninvestigation connected with any proceeding under the Act. However, as stated earlier,\na statement on oath can only be recorded of a person who is found in possession of books\nof accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit\nsuch examination only where the books of accounts, documents and assets possessed by\na person are relevant for the purposes of the investigation being undertaken.”\n8.

5. 2. This position has been reiterated by Hon’ble Delhi High Court in the case of “Pr. CIT\nVs. Best Infrastructure(India) Pvt. Ltd.”, 397 ITR 182 (Delhi.), by observing in para 38\nof the said order that statements recorded under Section 132(4) of the Act of the Act do\nnot by themselves constitute incriminating material as has been explained by the hon’ble\nHigh Court in Harjeev Aggarwal (Supra).”\n18. So far as the statement recorded of the employees/directors of third party ( Jai\nAmbey Pharmaceuticals Pvt. Ltd.) in a separate search action is concerned, even in the\nsaid statements, there is nothing stated therein that the assessee has indulged in any bogus\ntransaction. . The said statements are not incriminating in nature. Even no reliance can\nbe legally placed on such statements of employees of a third-party during course of\nseparate search action in case of a third party. As per the provisions of section 153C of\nthe Act, in case of any incriminating material is found during the course of a search action\nwhich is relating to a person other than the searched person, then the procedure as laid\ndown u/s 153C of the Act is to be followed for making assessment/reassessment of such\nother person. The provisions of section 153C, for the sake of ready reference, are\nreproduced as under:\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n“Assessment of income of any other person.\n153C. (1) Notwithstanding anything contained in section 139, section 147, section\n148, section 149, section 151 and section 153, where the Assessing Officer is satisfied\nthat,—\n(a) any money, bullion, jewellery or other valuable article or thing, seized or\nrequisitioned, belongs to; or\n(b) any books of account or documents, seized or requisitioned, pertains or pertain to,\nor any information contained therein, relates to,\na person other than the person referred to in section 153A, then, the books of account or\ndocuments or assets, seized or requisitioned shall be handed over to the Assessing Officer\nhaving jurisdiction over such other person and that Assessing Officer shall proceed\nagainst each such other person and issue notice and assess or reassess the income of the\nother person in accordance with the provisions of section 153A, if, that Assessing Officer\nis satisfied that the books of account or documents or assets seized or requisitioned have\na bearing on the determination of the total income of such other person for six assessment\nyears immediately preceding the assessment year relevant to the previous year in which\nsearch is conducted or requisition is made and for the relevant assessment year or years\nreferred to in sub-section (1) of section 153A:\nProvided that in case of such other person, the reference to the date of initiation of the\nsearch under section 132 or making of requisition under section 132A in the second\nproviso to sub-section (1) of section 153A shall be construed as reference to the date of\nreceiving the books of account or documents or assets seized or requisitioned by the\nAssessing Officer having jurisdiction over such other person”\n19. A perusal of the above provisions would reveal that section 153C starts with a\nnon-obstante clause which covers the provisions of section 139, 147, 148, 149, 151 and\n153 of the Income Tax Act. The purpose of the said non-obstante clause is that in case\nof a conflict between the provisions of section 153C and the other sections as mentioned\nabove, the special provisions of section 153C will prevail over the other general\nprovisions of the Act. Even otherwise, it is settled law that when a special law/provision\nis enacted, that will prevail over the general provisions of the law/statute. As per the\nspecial provisions u/s 153C of the Act, in case of any incriminating material is found\nduring the course of a search action which is relating to a person other than the searched\nperson, then the procedure as laid down u/s 153C of the Act is to be followed for making\nassessment/reassessment of such other person. In that case, if the Assessing Officer of\nthe searched person is satisfied that the assets/material found during the search action\nrelates to other person, then the Assessing officer of the searched person is supposed\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nto handover/send that material to the Assessing Officer having jurisdiction over such\nother person and further that the jurisdictional Assessing Officer of the said other person\nwill have to record a satisfaction that such material has a bearing on the determination\nof income of such other person and the six assessment years preceding the date of\nreceipt of such material/books of account gets reopened and the Assessing Officer of\nsuch other person is required to make assessment in accordance with the provisions of\nsection 153C of the Act. It is not open to the Assessing Officer of such other person to\nuse that material in a subsequent assessment carried out u/s 153A of the Act in case of\nsuch other person unless the proceedings u/s 153C are pending against such other person\non the date of search. Reliance in this respect can be placed on the decisions of the co-\nordinate Delhi Bench of the Tribunal in the case of “DCIT vs Shivali Mahajan ITA\nNo.5585/Del/2015 dated 19.03.2019; Trilok Chand Choudhry vs ACIT (ITA\nNO.5870/Del/2017) dated 20.08.2019; and of the Hon’ble Delhi High Court in the case\nof PCIT (Central) vs. Anand Kumar Jain ITA 23/2021 vide order dated 12.02.2021.\n20. Even there is no reference either in the assessment order or in the impugned order\nof the CIT(A) of any incriminating unearthed relating to the assessee in the said separate\nsearch action carried out in the case of a third party. Even the alleged statements did not\nconstitute incriminating material against the assessee. In view of the above discussion,\nthe assessment orders passed u/s 153A in the 14 appeals as listed in the chart above are\nnot sustainable, hence the same are hereby quashed.\nIn the result, all the 14 appeals as mentioned in the chart above stand allowed.\nIssue 2: Deemed Dividend u/s 2(22)(e) of the Act:\n21. The issue of deemed dividend has been raised by the assessee as well as by the\ndepartment in the following appeals:\nSl.\nNo.\nName of the\nassessee\nAY\nAppeal by\nAppeal No.\nGround\nNo.\n1.\nSanjeev Kumar\nAggarwal\n2018-19\nAssessee\n480/Chandi/2023\n3\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n2. Sanjeev Kumar\nAggarwal\n2017-18\nAssessee\n489/Chandi/2023\n2\n3. Sanjeev Kumar\nAggarwal\n2017-18\nDepartment\n505/Chandi/2023\n1\n4. Sanjeev Kumar\nAggarwal\n2018-19\nDepartment\n506/Chandi/2023\n1\n5. Vaishali Aggarwal\n2017-18\nAssessee\n482/Chandi/2023\n2\n6. Vaishali Aggarwal\n2018-19\nAssessee\n483/Chandi/2023\n3\n7. Balram Krishan\nAggarwal\n2017-18\nAssessee\n731/Chandi/2023\n4\n8. Balram Krishan\nAggarwal\n2018-19\nAssessee\n732/Chandi/2023\n4\n9. Balram Krishan\nAggarwal\n2012-13\nAssessee\n726/Chandi/2023\n4\n10. Balram Krishan\nAggarwal\n2013-14\nAssessee\n727/Chandi/2023\n4\n11. Balram Krishan\nAggarwal\n2014-15\nAssessee\n728/Chandi/2023\n4\n22. At the request of the parties, the lead case, for the purpose of narration of facts\nis taken up in the case of Sanjeev Kumar Aggarwal for AY 2018-19 bearing ITA No.\n480/Chandi/2023. The assessee has raised the issue of deemed dividend vide Ground\nNo. 3 in the said appeal, which for the sake of ready reference is reproduced as under:\n“ Ground No.3: That on facts, circumstances and legal position of the case, the Worthy\nCIT(A) has erred in confirming the addition of Rs.24,63,212/- made by ld. AO u/s\n2(22)(e) received from SEPL”\n23. The brief facts relating to the issue are that during the assessment proceedings, the\nAssessing Officer (AO) observed that the assessee is substantial shareholder (48.48%)\nin M/s Scott Edil Pharmacia Limited (hereinafter referred to as \"SEPL\"). He further\nobserved that there were significant credit entries in assessee’s bank accounts from the\ncompany SEPL. The assessee received Rs.3,57,23,689/- from SEPL during the FY\n2017-18, in addition to declared remuneration of Rs.72,00,000/- (salary) and Rs.\n10,02,000/- (rent) from SEPL. The credits exceeded the amounts paid as salary and rent,\nraising suspicion that the funds were diverted for personal use. The Ld. AO show-caused\nthe assessee as to why the said credits be not treated as income of the assessee under the\ndeeming provisions of section 2(22)(e) of the Act.\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n24. In response to the queries of the ld. AO, assessee made submissions that the\naforesaid loan/transactions would not fall within the scope of deemed dividend as defined\nu/s 2(22) of the Act. The contentions raised by the assessee are summarized as under:\n(i) That the transactions were part of a running account of the assessee with SEPL in day\nto day cporse of business with regular payments and receipts and that these were not\nloans or advances as contemplated u/s 2(22)(e).\n(ii) It was further and the companies had also raised loans from banks of much higher\nvalue against personal guarantees and properties of assessee. Thus this was quid pro quo\narrangement for mutual benefits carried out in the regular course of business.\n25. The AO, however, rejected these contentions of assessee by holding that\nassessee’s case did not fall under any of the exception of sec. 2(22)(e) as the assessee\nheld substantial shares in SEPL (over 10%). He observed that all the ingredients of the\nprovisions of section 2(22) (e) were present in the transactions made by the assessee with\nSPEL and that the deeming fiction of the said section was duly attracted in the case of\nthe assessee. He therefore, treated the entire credits received by the assessee from SPEL\nas deemed dividend u/s 2(22) (e) of the Act and added the same into the income of the\nassessee. Being aggrieved by the said order of the AO, the assessee preferred appeal\nbefore the CIT(A).\n26. In appeal before the CIT(A), the assessee reiterated the submissions as were made\nbefore the Assessing Officer. The Assessee further contended that the ld. Assessing\nOfficer had considered only the credit entries but totally ignored the substantial payments\nmade by assessee to SEPL. The submissions of the assessee have been reproduced by the\nld. CIT(A) from page 102 to page 132 of the impugned order .\n27. The Ld. CIT(A), after considering the submissions of the assessee, however,\nobserved that there was nothing on record to substantiate that such transactions between\nthe assessee and M/s SEPL were in the nature of business transactions. He further\nobserved that there was nothing on record to substantiate that M/s SEPL was under\nobligation to extend such loans to the assessee against furnishing of personal guarantee.\nHe observed that that such transaction have not been carried out during the ordinary\n25\n26\n27\n28\n29\n30\n31\n32\n33\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\ncourse of business operations for business expediency between the assessee and M/s\nSEPL. He concluded that in this case all the conditions of Section 2(22)(e) were satisfied\nand that the case of the assessee was not covered by any of the exceptions provided u/s\n2(22) (e) of the Act. He, however, observed that there was merit in the contention of the\nAR of the assessee that that the AO should have considered only the amount received by\nthe assessee from the SEPL. He observed that when the assessee had made payment to\nSEPL on earlier occasion, then subsequent receipts from SEPL were repayments / refund\nof the amount by the SEPL to the assessee. He observed that in such circumstances, it\nwould be appropriate to compute dividend on the basis of peak credit for each of the\n assessment year, He therefore, restricted the additions to the extent of peak credits for\neach of the assessment year. The relevant extract of the CIT(A)’s order is reproduced as\nunder :\n“10.3 On going through the facts of the case and material on record for AY 2017-18\nand 2018-19 ( which are not completed assessments as on date of search), it is noted\nthat the appellant has entered into various transactions (receipts as well as payments)\nwith M/s SEPL/SEARLE. On going through the ledger account of the appellant in the\nbooks of M/s SEPL/SEARLE for AY 2017-18 and 2018-19, it is noted that besides\nreceipts of salary and rental income, various other amounts have been transferred to\nhim on various dates by M/s SEPL/SEARLE. Similarly payments have been made by\nhim on various dates to M/s SEPL/SEARLE. The ledger account for difference\n assessment years is like a running ledger account. There is nothing on record to\nsubstantiate that such transactions between the appellant and M/s SEPL/SEARLE\nwere in the nature of business transactions. The onus was upon the appellant to\nsubstantiate that such transaction carried out by the appellant with M/s\nSEPL/SEARLE were in the nature of commercial transactions. The appellant has failed\nto discharge onus in this respect. Accordingly the ratio of decision of Hon'ble ITAT Delhi\nin the case of Futurez Next Services Ltd (supra) is not applicable to the facts of the\npresent case. Moreover even if the argument of the appellant that he has given his\nasset as personal guarantee to the financial institutions in favour of M/s SEPL in\nexcess of loans received by her from M/s SEPL is considered, there is nothing on record\nto substantiate that when the appellant was in urgent need of funds whether he has\nrequested M/s SEPL either to get the property or to purchase the same so that he could\naccess the funds as per his requirements. There is nothing on record to substantiate\nthat M/s SEPL was under obligation to extend such loans to the appellant against\n34\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nfurnishing of personal guarantee. Therefore on such facts ratio of Hon'ble Calcutta High\nCourt in the case of Pardeep Kumar Malhotra vs CIT (supra) is not applicable to facts\nof the present case. The very nature of the ledger account of the appellant in the books\nof M/s SEPL/SEARLE demonstrates that such transactions have not been carried out\nin specific urgent circumstances. M/s SEPL/SEARLE has given the above loans to the\nappellant as a routine/ regular feature. Such transactions are in the nature of current\naccount. Such transaction have not been carried out during the ordinary course of\nbusiness operations for business expediency between the appellant and M/s SEPL.\nFrom the nature of transactions carried out by the appellant with M/s SEPL/SEARLE,\nit is evident that such transaction are in the nature of extending loans to each other on\nvarious dates. Therefore it is held that the AO was justified in bringing such\ntransactions under the ambit of section 2(22)(e) of the Act as all the remaining\nconditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being\ncompanies in which the public is not substantially interested and availability of\naccumulated profits) are fulfilled. The case of the appellant is not covered by any of\nexceptions provided u/s 2(22)(e) of the Act.”\nHowever there is merit in the argument of the LD. AR that the AO Should not have\nconsidered only the amount received from M/s SEPL/SEARLE while computing deemed\ndividend When the appellant had made payments to M/s SEPL/SEARLE on earlier\noccasions, then subsequent receipts from M/s SEPL/SEARLE by the appellant was on\naccount of receipt back of amount already given to M/s SEPL/SEARLE by the\nappellant. In such circumstances it would be logical to compute deemed dividend on\nthe basis of peak credit for each assessment year. For this purpose reliance is here by\nplaced upon the decision of Hon’ble ITAT Delhi in the case of ITO vs, Sandeep\nSabarwal /2011 /dated 01.10.2015.”\n28. The assessee, thus, has come in appeal before us on this issue agitating the\nconfirmation of the additions made by the AO; whereas, the Revenue has come in appeal\nagitating against the action of the CIT(A) in restricting the addition on account of deemed\ndividend u/s 2(22) (e) of the Act to the extent of peak credits for each of the year.\n29. We have heard the rival contentions and gone through the record. The Ld. AR\nof the assessee has contended that that the ledger account of assessee in books of SEPL\nwas a current and running ledger account, wherein payments were being exchanged in\nvery frequently and contain both type of entries i.e. receipts and payments. The Ld. Counsel\nhas contended that this nature of current account transactions could not be said to be\n“loan” or “advance” as contemplated u/s 2(22)(e). The Ld. AR of the assessee has further\ncontended that these were not gratuitous advances, but a reflection of ongoing business\n35\n36\n37\n38\n39\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\ntransactions, thus falling outside the scope of deemed dividends as per the statutory\nprovision. Reliance has been placed on following case laws :\ni). DCIT vs Futurz Next Services Ltd. (Del Trib) (ITA No. 3556/Del/2016) dated\n04.01.2022\nii). Bombay Oil Industries Ltd. Vs. DCIT (2009) 28 SOT 383 (Bom)\niii). “Exotica Housing & Infrastructure Company Pvt. Ltd. vs. ITO., 82 ITR 0046,\n(Delhi ITAT),\n31. The Ld. Counsel for the assessee has further contended that the assessee provided\npersonal guarantees to SEPL in order to secure credit facilities from banks which included\na fund-based limit of Rs.42.85 crore and a non-fund-based limit of Rs.15 crores. Copy\nof record of sanction letters of loans raised by SEPL have been placed at page 96-106 of\nthe Paper Book, the relevant part of the same is reproduced below:\n40\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n32. The ld. Counsel of the assessee has further demonstrated that the value of\nproperties and personal guarantees given by the assessee were more than the entire value\nof the loans. The guarantee given by the assessee to the SEPL was worth Rs.89.12 crores,\nwhereas, the amount in question received from the SEPL by the assessee during the year\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nwas less than Rs.4 crores. The Ld. Counsel for the assessee, thus, has contended that\nwhen the bank loan raised by the company on the basis of personal guarantee and\nmortgage of personal properties of assessee was far in excess of amount given to the\nassessee by the company, the said amount received by the assessee from SEPL cannot be\nsaid to amount to deemed dividend u/s 2(22)(e). The Ld. AR has contended that it has\nbeen held time and again that money transferred to give effect to commercial transactions\nshould be kept outside the ambit of s.2(22)(e). He in this respect has placed reliance upon\nthe following case laws:\na. Pradip Kumar Malhotra V. CIT [2001] 338 ITR 538 (Cal HC).\nb. DCIT vs. Lakra Brothers, 2007, 106 TTJ 0250, Chandigarh ITAT.\nc. Bagmane Constructions (P) Ltd. vs. CIT & Anr., 277 CTR 338, Karnataka ITAT.\nd. CIT vs. Ambassador Travels (P) Ltd., 318 ITR 376, Delhi HC\ne. Smt. Jamuna Vernekar Vs. DCIT (2021) 432 ITR 146 (Kar HC),\n33. The Ld. Counsel for the assessee, thus, has contended that it has been held in the\nabove referred to decisions that if the transactions between a shareholder and the\ncompany create mutual benefits and obligations, then the provision of treating any sum\nreceived by the shareholder out of accumulated profits as deemed dividend would not\napply.\n34. The Ld. Counsel, however, in his alternate contentions, has submitted that while\ncalculating the addition for deemed dividend, the ld. AO included all amounts received\nand ignored the payments that assessee had made to the company earlier. The amount\nreceived by assessee was not a new loan or deposit, but simply a return of the funds\npreviously given to the company. He , therefore, has submitted that that even if, the\nsaid transaction are taken in the ambit of s.2(22)(e), addition at maximum can be made\nof peak credit of these transactions. He, in this respect, has relied upon the following\njudicial precedents:\ni). CIT vs. Madhur Housing Development & Co., 93 laxmann.com 502, Supreme\nCourt.\nii). DCIT vs. Entrack Organic Haus Pvt. Ltd., ITA No. 182 of 2016, Rajasthan ITAT.\n41\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n35. It was further contended alternatively, that a credit entry once added as\nincome in the hands of the assesse u/s 2(22)(e) should not be considered again while\ncalculating peak for subsequent periods otherwise the same would lead to double\naddition of the same entry in the hands of the assessee.\n36. The ld. DR, however, has placed reliance on the orders of the lower\nauthorities and submitted that all the conditions enumerated in Section 2(22)(e) of the\nAct have been fulfilled i.e. (a) The company is closely held, (b) The shareholder holds\na substantial interest in the company, (c) The payment is made out of accumulated\nprofits, and (d) The company is not engaged in the business of money lending. She,\ntherefore, has submitted that both the lower authorities were justified in treating the\namount received by the assessee as deemed dividend in the hands of the assessee. She\nhas further contended that the Ld. CIT(A) was not justified in directing the AO to add\nonly the peak credits of the year instead of the entire advances received by the\nassessee from the SEPL.\n37. We have heard the rival contentions and gone through the record. There is no\ndenial of fact that the transactions between the assessee group company SEPL were like\nthat of a current and running account. It is noticed that from time to time the assessee and\nSEPL had given and taken loan from each other as per the business needs. The\ntransactions were continuous and running as per business needs and expediency. The\ncase laws relied upon by the Ld. Counsel for the assessee in this respect, are squarely\napplicable to the facts and circumstances of the case in hand. In the case of “ Exotica\nHousing & Infrastructure Company Pvt. Ltd. vs. ITO., 82 ITR 0046, Delhi ITAT” on\nidentical issue, it has been held as under : –\nDividend—Reception of loans and advances—Deemed dividend—\nAssessee company is engaged in business of commission agent and\nproperty development—A.O. completed assessment under section 143(3)\nafter making impugned addition under section 2(22)(e) on account of\ndeemed dividend as Assessee company has received loans and advances\nfor a value of Rs.23,70,33,000/- from E, which was squared off during\n42\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nyear—Assessee held 98% shares of E—CIT(A), dismissed appeal of\nassessee— Held, transactions carried out through current account for\nbusiness purposes would not fall within definition of \"Deemed\nDividend"—Initially assessee company has taken amount from\nsubsidiary company which was repaid and thereafter, it is assessee\ncompany which has given amount to subsidiary company on most of\noccasions and later on subsidiary company has returned amount to\nassessee—Therefore, provisions of Section 2(22)(e) would not be attracted\nin case of assessee company because on most of occasions assessee\ncompany has advanced amount to subsidiary company and ultimately\nbalance is squared-up at end of year—Assessee company has also filed\ncopy of ledger account of subsidiary company for preceding A.Y. 2012-\n2013 which revealed that there was a substantial opening balance and\nsubsidiary company has paid amount to assessee company and later on\namounts have been returned by assessee company to subsidiary\ncompany—It is assessee company who have given amount mostly to\nsubsidiary company which have been returned to subsidiary company by\nassessee company—Therefore, on such facts when Revenue did not\ndispute transactions in current account between assessee company and\nsubsidiary company in earlier as well as in subsequent year and\nassessee company on most of occasions have made payment to\nsubsidiary company, which have been returned by assessee company for\nbusiness purposes, there was no reason to apply provisions of Section\n2(22)(e)—When current account is maintained between parties, provisions\nof Section 2(22)(e) would not apply—Thus, issue is covered by aforesaid\ndecisions of Tribunal in favour of assessee as well as various decisions\nconsidered by jurisdictional Delhi High Court—Assessee’s appeal\nallowed.”\n38. Even the Ld. Counsel for the assessee has demonstrated that the assessee had\nmortgaged substantial personal properties and provided personal guarantees to enable\nSEPL to obtain credit facilities from banks which included a fund-based limit of Rs.\n12.85 crore and a non-fund-based limit of Rs.15 crore. The transactions between assessee\nand SEPL were mutually beneficial. The Ld. Counsel in this respect has referred to\n43\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nsanction letters of loans raised by SEPL which are placed from page 96-106 of Additional\nPaper Book. It is proved on the file that the advances were not gratuitous. The Ld.\nCounsel has further demonstrated from the ledger of the assessee in the books of SEPL\nthat there were both type of transactions i.e. the assessee had not only taken the advances\nbut has also given the advances. Both the assessee and SEPL would give and take\nadvances as per their business needs. These were not gratuitous loans, rather it was a case\nof quid pro quo, where, both the parties mutually benefitted from each other. The issue\nis squarely covered by the various decisions of the Tribunal as well as that of the Hon’ble\nHigh Courts of the country as referred to above in the submissions of the assessee. The\nCoordinate Kolkata Bench of the Tribunal in the case of “Shree Krishna Gyanodya\nFlour Mills Pvt. Ltd. vs. PCIT” in ITA No.1008/Kol/2016 dated 14.02.2018, wherein,\nthe Tribunal further relying upon the decision of the Mumbai Bench of the Tribunal in\nthe case of “Bombay Oil Industries Ltd. vs. DCIT” reported in [2009] 28 SOT 383\n(Bom) and also on the decision of the Calcutta High Court in the case of “Pradip Kumar\nMalhotra vs. CIT” 338 ITR 538(Cal), has held that where the loan transactions are in\nthe normal course of business and out of business expediency and are representing current\naccount transaction, in such type of transactions, the provisions of section 2(22)(e) would\nnot be attracted. The relevant part of the order of the Coordinate Bench of the Tribunal\nin the case of “Shree Krishna Gyanodya Flour Mills Pvt. Ltd. vs. PCIT” (supra) is\nreproduced as under:\n“The purpose of Section 2(22)(e) of the Act is to tax the benefit extended by private\nlimited company to its shareholders holding shares not less than 10% as beneficial\nowner of shares (not being shares entitled to a fixed rate of dividend income).\nThere is no dispute with regard to shareholding of the assessee. Now coming to\nthe amount of advance taken by assessee, we note that assessee has not only taken\nloan / advance from SVPL, but also it has sometime given advance to SVPL. Thus,\nthere was change in the balance shown by assessee. Thus, it cannot be termed as\nadvance taken by assessee as it was fluctuating during the year. In holding so, we\nfind support and guidance from the order of co-ordinate Bench of this Tribunal in\nthe case of Bombay Oil Industries Ltd. vs. DCIT reported in [2009] 28 SOT 383\n(Bom), wherein it was held as under:-\n“From the above it is clear there is distinction between deposits viz-a-vis\nloans/advances. Section 2(22)(e) enacts a deeming fiction whereby the\nscope and ambit of the word dividend has been enlarged to bring within its\n44\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nsweep certain payments made by a company as per the situations\nenumerated in the section. Such a deeming fiction would not be given a\nwider meaning than hat it purports to do. The provisions would necessarily\nbe accorded strict interpretation and the ambit of the fiction would not be\npressed beyond its true limits. The requisite condition for invoking Section\n2(22)(e) of the Act is that payment must be by way of loan or advances.\nSince there is a clear distinction between the inter-corporate deposits viz a-vz loans/advances, according to us the authorities below were not right\nin treating the same as deemed dividend u/. 2(22)(e) of the Act” [emphasis\nsupplied]\nSimilarly, we also support and guidance from the judgment of Hon’ble\njurisdictional High Court in the case of Pradip Kumar Malhotra v. CIT 338 ITR\n538 (Cal) wherein the Hon’ble High Court held as under:-\n“The phrase “by way of advance or loan” appearing in sub-clause (e) of\nsection 2(22) of the Income-tax Act, 1961, must be construed to mean those\nadvances or loans which a shareholder enjoys simply on account of being\na person who is the beneficial owner of share (not being share entitled to\na fixed rate of dividend whether with or without a right to participate in\nprofits) holding not less than ten per cent of the voting power; but if such\nloan or advance is given to such shareholder as a consequence of any\nfurther consideration which is beneficial to the company received from\nsuch a share-holder, in such case, such advance or loan cannot be said to\nbe deemed dividend within the meaning of the Act. thus, gratuitous loan or\nadvance given by a company to those clauses of shareholders would come\nwithin the purview of section 2(22) but not cases where the loan or advance\nis given in return to an advantage conferred upon the company by such\nshareholder.” [emphasis supplied]\nFrom the foregoing discussion, there remains no doubt that the transactions\nbetween assessee and SVPL is representing current account transactions.\nTherefore, the provision of Section 2(22)(e) of the Act cannot be attracted to such\ntransactions. Keeping in view the above discussions, and also bearing in mind the\nentire facts of the case, we deem it fit and proper to uphold the grievance of the\nassessee and quash the impugned revision order as devoid of jurisdiction. The\nassessee gets the relief, accordingly.”\n39. Even, as demonstrated by the Ld. Counsel for the assessee, the issue of deemed\ndividend was raised in earlier regular assessment in assessee’s own case for AY 2011-12.\nIn the assessment order for that year, passed prior to the search action, the Ld. AO had\nmade addition in respect of the deemed dividend. However, in appeal, the ld. CIT(A)\ndeleted the addition by following the above reasoning of mortgage of properties and\n45\n46\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\n46. Being aggrieved by the above order of the CIT(A) on this issue, the assessee has\ncome in appeal before us agitating against the confirmation of the addition made by the\nCIT(A), whereas the Revenue has come in appeal assailing the action of the CIT(A) to\nthe extent the addition on this issue stood deleted by him.\n47. Before us, the Ld. Counsel for the assessee has submitted that the DVO had\ncalculated the aggregate difference in construction cost and then bifurcated the same year\nwise in the same ratio in which construction value was declared by the assessee. No basis\nfor such adoption of ratio was mentioned in the report of DVO. That the DVO had\npresumed that the assessee was under-recording the construction cost in the same\nproportion in which he was recording the construction at every point of time throughout\nthe period of construction spanning more than 10 years. That these estimates were pure\nguess works without having any evidence in hand. It was further submitted by the Ld.\ncounsel that the valuation report filed by the Ld. DVO was full of errors. He has made a\nwrong computation of area as well as the rate. That the assessee has declared the expenses\non construction of relevant property in its books of accounts and that no discrepancy,\ndefect or incriminating material regarding the same was found during the course of search\naction. That even the said books have neither been doubted nor rejected by AO or the Ld.\nCIT(A). The ld. Counsel for the assessee contended that the construction on the said\nproperty was carried out primarily during FYs 2009-10 to 2011-12, though some activity\n47\n48\n49\n50\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nwas done almost every year. That the expenses incurred on the subject property were duly\nrecorded in the books. That the expenditure incurred on the construction in the books of\naccounts was at Rs.44. 51 cr. However, as per the valuation report from the independent\nregistered valuer namely M/s Sharma & Associates, was at Rs.46.07cr, which was only\n3.5% more than the value recorded in books. He, therefore has submitted that under the\ncircumstances, no addition was warranted in this case due to such a small difference.\nThe Ld. counsel for the assessee further contended that while making valuation of the\nproperty, DVO made certain mistakes which included calculation on CPWD rates rather\nthan State PWD rates, which were lesser than the CPWD rates. It has been contended\nthat thought the Ld. CIT(A) agreed with the view that State PWD rates should be used\nbut, the ld. CIT(A) did not give any relief on this count despite the fact that the assessee\nhad submitted a report wherein valuation was computed with State PWD rates and also\nprovided analysis of difference between the CPWD rates and State PWD rates. He\nsubmitted that the analysis of rates would show that the State PWD rates were more than\n20% lesser than the CPWD rates. The Ld. counsel submitted that State PWD rates would\nbe applicable for property valuation as the property is situated in a jurisdiction where\nsuch rates are applicable. The ld. Counsel of the assessee has relied upon following\nJudicial pronouncements on this issue: :\na) Smt. Kamini Sharma, Solan vs. ITO, ITA Nos.1365 to 1369 of 2010\n(Chandigarh ITAT),\nb) C.S. Daniel vs. DCIT, 220 TAXMAN 336 (Kerala HC),\nc) CIT vs. K. Jayakumar, 216 TAXMAN 166 (Madras HC), and\nd) CIT vs. D. Subramanian, 296 ITR 348 (Chennai HC)\n48. Further, the ld. Counsel for the assessee also contended that the difference in\nreport of DVO and as per books was less than 10% and therefore, the addition u/s 69B\nwas not sustainable as per the judicial precedents laid down by Hon’ble J&K HC in\nHonest Group Of Hotels (P) Ltd. Vs. Cit, 123 Taxman 0464.\n49. The Ld. Counsel for the assessee has further contended that reference made by the\nDDIT u/s 132(9D) was without rejecting the books of the accounts which was bad in law\n51\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nand that the subsequent DVO report was also legally not sustainable as per the judicial\nprecedent laid down by the Hon’ble Apex Court in the case of Sargam Cinema vs. CIT,\n328 ITR 513.\n50. The ld. Counsel for the assessee further contended that the ld. AO did not have\nany incriminating evidence to prove that the assessee incurred out-of-book construction\nexpenses. Therefore, the addition made solely on the basis of the DVO report without\nany evidence was incorrect.\n51. The ld. Counsel for the assessee has further, alternately, contended that\nundisputedly, the assessee’s only source of income was profit from manufacturing\noperation which was eligible for deduction u/s 80IC. That when there was no other source\nof income of the assessee, even if there was any undisclosed investment in construction\nof property, the same would have come from the same profit from manufacturing\noperations. Therefore, the deduction u/s 80IC should have been allowed on that\ncomponent of income invested in alleged construction.\n52. The Ld. CIT (DR) , on the other hand, has contended that the ld. AO was justified\nin making the impugned addition on the basis of valuation report of the DVO on account\nof difference calculated proportionately, based on the expenses incurred by the assessee\nover different years. She has placed reliance on the orders of ld. AO and ld. CIT(A) and\nstated the assessee's reliance on an alternate valuation report by M/s Sharma and\nAssociates, was not tenable as the DVO was an independent authority, and the valuation\nwas conducted on a reference made by the Investigation Wing u/s 132(9D), ensuring\ncredibility and impartiality. She has further contended that assessee's claim that the\nestimates made by DVO were without any evidence was not correct. That the DVO used\navailable data and professional expertise to determine the construction cost. The ld. DR\nrebutting the contentions of the Ld. AR of the assessee regarding books being not rejected\nand even no defect pointed out by any of the authorities in the same, has submitted that\nthat the books of accounts alone cannot conclusively determine the correctness of\ndeclared expenses, especially when external valuation highlights significant\ndiscrepancies. She therefore, has contended that the ld. CIT(A)’s decision to uphold the\n52\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nDVO’s valuation, with limited adjustments for self-supervision and procurement, was\nfair and reasonable.\n53. The ld. DR has also submitted that assessee’s claim for deduction u/s 80IC was\nuntenable as the addition pertains to unexplained construction costs, which were not\nderived from manufacturing activities eligible for the deduction. She has further\ncontended that the Ld. CIT(A) has rightly applied the CPWD rates for valuation of the\nproperty and that there was no discrepancy in the same. She, therefore, has relied upon\nthe findings of the lower authorities.\n54. We have heard the rival contentions and gone through the record. In this case,\nadmittedly, no incriminating material, whatsoever, was found during the course of search\naction. It has been held time and again that the report obtained of the DVO after the\nsearch action, would not fall in the definition of incriminating material. The Ld. Counsel\nfor the assessee has relied upon various case laws to stress the point that even in the\nabsence of any corroborating evidence, the addition solely on the basis of the report of\nthe DVO cannot be made even in the normal course or even in case of abated assessment\nyears on the date of search. He has further submitted that the report of the DVO was a\nmere estimation of investment and would not constitute as conclusive evidence of\ninvestment. The ld. Counsel has further relied upon the decision of the Hon’ble Supreme\nCourt in the case of PCIT vs. Abhisar Buildwell P. Ltd. Civil Appeal No.6580 of 2021\ndated 24.04.2023 reported in [2023] 149 taxmann.com 399 (SC) wherein the Hon’ble\nSupreme Court has held that in respect of completed/unabated assessments, no addition\ncan be made by the AO in an assessment carried out u/s 153A of the Income Tax Act in\nthe absence of any incriminating material found during the search action. He has further\nrelied upon various case laws to contend that the report of the DVO cannot be construed\nas an incriminating material found during the course of search action and further that\naddition cannot be made on account of unexplained investment in a property solely on\nthe basis of DVO report without any other corroborating evidence or incriminating\nevidence found in support of such addition. The Hon’ble Supreme Court in Sargam\n53\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nCinema v. CIT (328 ITR 513) has held that a DVO’s report cannot be relied upon unless\nthe books of accounts are found to be incorrect. The Income Tax Act does not mandate\nblind reliance on a DVO’s report unless corroborated by substantive proof of undisclosed\ninvestment. Valuation reports are opinion-based and susceptible to variations due to\ndiffering methodologies, assumptions, and regional price fluctuations. The reliance in\nthis respect can be placed on the following decisions:\n“(i) [Assistant Commissioner of Income Tax, Central Circle-1(3), Kolkata v. Narula\nEducational Trust [2021] 126 taxmann.com 158 (Kolkata - Trib.)\n(ii) Champaklal S. Kasat v. Deputy Commissioner of Income-tax, Cent. Cir. 1(3),\nAhmedabad [2017] 82 taxmann.com 243 (Ahmedabad - Trib.)\n(iii) Kay Jay Projects Pvt. Ltd. Versus Dcit, Central Circle, Noida 2023 (8) Tmi 431:\nAssessment u/s 153A - Addition towards the cost of construction of the building -\nReference made to ld. DVO u/s 142A - HELD THAT:- Admittedly, no incriminating\nmaterial has been found during the course of search qua this addition towards cost of\nconstruction. This fact is evident from the perusal of the orders of the lower authorities.\n[Refer para 13]\nSole basis of the addition is only the valuation report furnished by the DVO which has\nbeen obtained by the ld. AO during the course of search assessment proceedings. Then,\nthe said report cannot constitute incriminating material found during the course of\nsearch. Hence, we have no hesitation to hold that no addition could be made by placing\nreliance on the said valuation report while framing the assessment u/s 153A of the Act\nin the hands of the assessee. This issue is now well settled by the recent decision of\nSargam Cinema vs. (2009 (10) TMI 569 – SC ORDER] and in the case of CIT Vs.\nNirmal Kumar Aggarwal (2018 (10) TMI 2002- SC ORDER] as referred to supra in the\ncontentions of the ld. AR.\n(iv) The Dcit, Central Circle-1 Ludhiana Versus M/S Rajan Enterprises And Vice\nVersa 2022 (5) Tmi 1376\nAddition on account of difference in cost of construction as per the books of account and\nas per the report of the DVO - As it is an undisputed fact on record that no incriminating\nmaterial or evidence was found during the course of search which could indicate that the\nassessee had made investment towards cost of construction outside the regular books of\naccount. We also note that the Ld. CIT(A) had deleted the addition in this year by\nfollowing the order of the Ld. CIT(A) for the immediately preceding assessment year.\nSince no material was found in the search and seizure operations which could justify the\nAssessing Officer's action in referring the matter to the DVO for his opinion on valuation\nof the said properties, then the valuation arrived at by the DVO would be of no\nconsequence. Accordingly, in view of the above cited judicial precedents as well as the\nfactual finding recorded by the Ld. CIT(A) in assessment year 2016-17, which, in our\nopinion, is both sound as well as logical, we have no hesitation in upholding the same.\n54\n55\n56\n57\n58\n59\n60\n61\n62\n63\n64\n65\n66\n67\n68\n69\n70\n71\n72\n73\n74\n75\n76\n77\n78\n79\n80\n81\n82\n83\n84\n85\n86\n87\n88\n89\n90\n91\n92\n93\n94\n95\n96\n97\n98\n99\n100\n101\n102\n103\n104\n105\n106\n107\n108\n109\n110\n111\n112\n113\n114\n115\n116\n117\n118\nAccordingly, the ground raised