TaxTMI 
TaxTMI 
2022 (2) TMI 1312
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.... for the assessee SPECIAL BENCH REFERENCE Per Pramod Kumar, VP: 1. One of the issues which have come up for our adjudication in this appeal, in substance, is the Assessing Officer's grievance raising the question as to whether or not "the learned erred in deleting the addition of Rs 26,59,63,357 made by the Assessing Officer as unexplained cash credit received from Divine Tradecom Pvt Ltd (DTPL, in short) in the form of share capital under section 68". This investment made by the DTPL, in equity shares of Rs 10 each at a premium of Rs 121.37 per share, was for amount of Rs 32.90 crores, but then the offset of Rs 6,30,36,643 is given by the Assessing Officer on account of additions made in the hand of the other group companies, and the net amount of Rs 26,59,63,357 was added to the income of the assessee as an unexplained credit. It is deletion of this addition by the learned CIT(A), vide order dated 28th March 2019 for the assessment year 2014-15, which is now impugned in appeal before us. 2. Very briefly stated, the relevant material facts, as discernible from material on records, are as follows. The DTPL is a Kolkata based company with a share capital of Rs 2.45 crores, and ....
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....e money in Lotus group companies buy these investment companies for Rs 5 crores. The transaction was analyzed in the assessment order as follows: 6.14 One more important fact worth noticing is that the companies with huge reserves of 118 Crores have been bought for as minimum amount as 5 Crores. The reasons for the same has been explained in the due diligence report that the company has given huge amount of loan which has become bad. It was found that the company has given loan to Lotus group, Patel/Patni Group and Gothi who are inter connected (Please refer the statement of Shri Ashok Agarwal). Thus, the money was already lying with the companies; however, they bought the company for the sake of formality and give it a color of genuineness. More interestingly, after the companies have been bought by the Lotus Group, the loans became recoverable. Thus, the entire modus operandi reveals that the company has been incorporated to infuse the own unaccounted money by creating the layers of company. At the first layer, the unaccounted money has been given to the entry providers to make investment in some other Kolkata based companies. At the second layers the companies in which investm....
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....ment of shares to the investor company; (h) Copy of Offer letter given by the assessee to the investor dated 02.08.2013; (i) Copy of letter showing acceptance to the offer of shares filed by the investor dated 06.08.2013; (j) Copy of Affidavit of Mr. Bhagwanji Patel ; (k) Copy of letter given by the assessee to the investor for intimation of allotment dated 02.11.201; (l) Retraction Statement of Shri Pradeep Poddar dated 09.12.2014; (m) CBDT Letter F.No.286/98/2013-IT(Inv II) dt. 09.01.2014; and (n) Judgment of Hon'ble Gujrat High Court (Ramanbhai B Patel and Chetnabhen J Shah). She further observed as follows: 7.7 The expression "nature and source" has to be understood together as a requirement of identification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. The Hon'ble Supreme Court, in Kale Khan Mohd. Hanif vs. CIT [1963] 50 ITR 1, pointed out that the onus on the assessee has to be understood with reference to the facts of each case and proper inference drawn from the facts. If the prima facie inference on the fact is that the assessee's explanation is probable, the onus will shift to the Revenue. As far as the creditwo....
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....rtain coordinate benches have taken a different path, for example in DCIT Vs Leena Power Tech Engineers Pvt Ltd [(2021) 130 taxmann.com 341 (Mum)], authored by one of us (i.e. the Vice President) wherein it is observed that "genuineness of a transaction is one of the most important, foundational and critical factors in determining whether explanation given by the assessee is acceptable or not is its genuineness and this genuineness is to be examined in the light of ground realities, rather than random extracts from judicial precedents isolated from their true context as an exposition of law on a standalone basis. Undoubtedly, that is a subjective exercise, but that cannot be excuse enough to fight shy of this call of duty and not to probe the matter properly for taking a well considered call on whether the impugned share application monies received, in this case, a genuine transaction or not. Being superficial in approach is not only against the ethos of the judiciary, but certainly an antithesis for justification of the specialized Tribunals like this Tribunal. Unlike in a court of law, this Tribunal has the benefit of expertise of technical members, from accountancy and revenue s....