TaxTMI 
TaxTMI 
2023 (2) TMI 82
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....e rival submissions and perused the materials available on record. The assessee is a private limited company engaged in land development and construction. The return of income for the A.Y. 2017-18 was filed by the assessee company on 07/11/2017 declaring total loss of Rs 6,64,33,728/- which was duly processed u/s 143(1) of the Act. A survey u/s 133A of the Act was carried out in the premises of the assessee company on 20/09/2016 wherein the assessee came forward to make some disclosure of income in the sum of Rs 6 crores under Income Declaration Scheme (IDS) on 20/09/2016 and further sum of Rs 12,12,40,800/- was declared by the assessee being on money received at Rs 400 per square feet on 303102 square feet on the project 'Amar Harmony' at Taloja. Hence the total disclosure made by the assessee during survey proceedings worked out to Rs 18,12,40,800/- for the year under consideration. 3.2. The ld. AO observed that the assessee company had made cash deposits during the demonetization period as under:- 10.11.16 - 25,00,000 - Abhyudaya Co-op Bank, Vashi Branch 10.11.16 - 25,00,000 - SDC Bank, Vashi Branch 24.11.16 - 3,50,00,000 - SDC Ban....
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.... AO presumed that the said declaration of Rs 6 crores has been already utilized by the assessee company for business purposes and hence is not available as a source for making cash deposits into bank. From 20/09/2016 (i.e the date of survey) till 08/11/2016, the assessee had made cash deposits only to the extent of Rs 75,00,000/- and substantial sums were deposited only during the demonetization period. The ld. AO acknowledged the fact of assessee offering a sum of Rs 12,12,40,800/- in the return filed for the A.Y.2017-18 but observed that the said income was offered under the head 'any other income' of nature 'income declared under IT survey'. The ld. AO observed that though Rs 12,12,40,800/- being on money received from customers by the assessee was offered to tax by the assessee, the details of customers with name, address, PAN, amount received was not filed during the survey proceedings by the assessee. The ld. AO observed that there was substantial gap between the income offered during survey proceedings and subsequent cash deposits made during demonetization period. The ld. AO also observed that disclosure made in IDS, 2016 and during survey proceedings were not brought into ....
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....ve the agreement price. Hence obviously this income would remain only in the hands of the assessee in the form of cash. There is no evidence brought on record by the revenue that this income was not available in the form of cash balance with the assessee in the instant case. 3.8. Further we find that the assessee also declared a sum of Rs 12,12,40,800/- being on money received at Rs 400 per square feet on 303102 square feet on the project 'Amar Harmony' at Taloja. We find that this sum of Rs 12,12,40,800/- was already offered as income in Schedule 19 of the Profit and Loss Account for the year ended 31/03/2017 by the assessee. The assessee had further explained that post demonetization on 08/11/2016, the assessee company had deposited Rs 10,20,38,500/- during the period 09/11/2016 to 31/12/2016. Out of the said amount deposited, a sum of Rs 4,76,70,050/- pertains to amount declared during survey proceedings and the balance of Rs 6 crores pertains to amount declared under IDS, 2016. The balance cash of Rs 7,35,70,750/- (60000000+121240800-107670050) was already advanced to various parties and the same was grouped in the financial statements under Sundry Assets in the Balance Shee....
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....s to various parties as is evident from the balance sheet of the assessee company and remaining sum of Rs 10,76,70,050/- on 22/09/2016 was very much available in the form of cash balance with the assessee company which explains the total cash deposits made during 22/09/2016 to 31/03/2017 which includes the demonetization period of 09/11/2016 to 31/12/2016 also. 3.12. In view of the aforesaid observations, we have no hesitation to hold that the entire cash deposits made by the assessee company stood properly explained by way of available cash balance and hence there is no scope of making any addition towards unexplained cash deposits. The ld. AO is hereby directed to delete the addition made in the sum of Rs 10,20,38,500/-. Accordingly, the Ground No.2 raised by the assessee is allowed. 4. The next issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the addition made u/s.68 of the Act in respect of unsecured loans of Rs.43,27,42,916/- in the facts and circumstances of the instant case. 4.1. We have heard rival submissions and perused the materials available on record. During the year under consideration the assessee had received th....
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....0/- 4.5. The assessee furnished the audited balance sheet and audited profit and loss account of this lender company as on 31/03/2015, 31/03/2016,31/03/2017, 31/03/2018 and 31/03/2019 before the ld. AO. The assessee also submitted the list of shareholders together with their PAN for A.Y.2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 of this lender company. The ld. AO observed that this lender company was owned by M/s. Deepesh Vanijya Pvt. Ltd. and M/s. Jas Deep Tradecom Pvt. Ltd which are also having the same address of the assessee company herein. Accordingly, the ld. AO concluded that Gami family (belonging to assessee group) had already acquired the shareholding of this lender company. The ld. AO observed that this lender company had meager income in its income tax returns filed for A.Y.2017-18 and no interest has been paid by the assessee on this loan. The ld. AO observed that lender company had substantial amount of share capital and share premium in its balance sheet which was also invested in various entities including the assessee company. Finally, the ld.AO concluded that creditworthiness of the lender company had not been proved by the assessee company herein. Hence, t....
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....t the creditworthiness of the lender company is also proved beyond doubt in the instant case. If the lender company is having sufficient bank balance on the date of lending to the assessee company and the source of credit is explained thereon, then the creditworthiness of the said lender company is established beyond doubt. In the instant case this has duly been satisfied by the assessee. Hence, all the three ingredients of Section 68 of the Act has been proved beyond doubt in the instant case. In any case, this loan was already repaid by the assessee in full in A.Y.2018-19 as stated supra. Hence, we direct the ld. AO to delete the addition made u/s.68 of the Act in respect of this lender company. (ii) Astute Advisors Pvt. Ltd. Loan received during the year - Rs.2,35,00,000/- Loan outstanding at the end of Financial Year - Rs.3,46,42,916/- 4.7. The assessee has furnished the following documents before the ld. AO. (a) Financial statements of this lender company for the Asst Years 2015-16 to 2019-20. (b) Details of shareholders of this lender company for the Asst Years 2015-16 to 2019-20. (c) Ledger account of lender company as appea....
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....retch of imagination be brought to tax by applying the provisions of section 68 of the Act in view of specific wordings of the said section. We find from the perusal of the records, the ld. AO did not resort to make any verification of the evidences filed by the assessee by way of issuing notice u/s 133(6) of the Act to the lender company. In this scenario, the only logical conclusion that could be derived is that the assessee company had duly discharged its onus by furnishing all the requisite documentary evidences proving the three necessary ingredients of Section 68 of the Act and that the ld. AO had not drawn any adverse inference on the same. In view of this, we direct the ld. AO to delete the addition made in the sum of Rs.3,46,42,916/- in respect of loan received from M/s. Astute Advisors Pvt. Ltd. (iii) RG BJ Traders Pvt Ltd 1.Loan received during the year - Rs 11,17,00,000/- 2.Loan outstanding at the end of the year - Rs 2,92,00,000/- 5. We find that assessee had submitted the following documents before the ld. AO with regard to this lender company. (a) Financial statements of this lender company for the Asst Years 2015-16 to 2019-20. ....
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....any and the source of credit is explained thereon, then the creditworthiness of the said lender company is established beyond doubt. We find that the assessee had received a sum of Rs.11.17 Crores during the year and repaid the sum of Rs.8.25 Crores during the year itself thereby leaving the closing balance of the loan as on 31/03/2017 at Rs.2.92 Crores. We find that the Revenue had observed that there was a change in shareholding of the lender company and hence the amount given to the assessee by them is undisclosed income of the assessee. This allegation of the Revenue is absolutely without any basis. In this regard, we hold that merely because there has been change in shareholding of the company, it does not mean automatically that the new shareholders have introduced their undisclosed income for acquiring shares. We find that the ld. AO had stated that no interest is paid on the loans borrowed by the assessee company to the lender company. This was countered by the ld. AR by stating that the loan was borrowed in March 2017 and hence, no interest was paid during the year under consideration. However the assessee had paid interest in immediately succeeding year i.e Financial Year....
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....the companies to whom shares were allotted by DTPL, Gami Family had acquired the shares from those entities ; that there was a statement recorded during the course of search of Shri Shanker Kumar Khetan u/s.132(4) of the Act wherein he had admitted that he is engaged in the business of providing accommodation entries of various persons for the purpose of earning commission or brokerage ; that DTPL has no business activity which would justify the receipt of share premium in its books ; that the shareholders of DTPL are nothing but shell entities as they have no capacity to pay such huge premium to DTPL ; that Moon Rise Distributors Pvt. Ltd. and Buds Dealers Pvt. Ltd. are being controlled by Gami Family from 2017 onwards and hence, two companies which held shares of 92.86% in DTPL had sold its shares to the Gami Family ; that by this process, the assessee company and DTPL became related entities ; that Shri Shanker Kumar Khetan had provided accommodation entries to various companies which are listed in pages 17-19 of the assessment order and had earned commission income thereon and this commission income was agreed to be offered to tax pursuant to the search by Shri Shanker Kumar Ke....
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.... of Prohibition of Benami Property Transaction Act, 1988. For the sake of ready reference, the relevant operative portion of the order passed by the Adjudicating Authority dated 21/09/2021 is reproduced hereunder:- "32. Ld AR has that IO's presumption that Beneficial Owner had provided/arranged consideration of RS 33 crore to Shanker Khetan or his controlled entities in 2010-11 (to be introduced in M/S DTPL as share premium and share Capital) is far fetched, imaginary and unbelievable considering that the asset (loan/ Advance) has been acquired in 2016-17. It was argued that in the period of 2010-11 M/S SGPIL or any member of Gami Family had no interest whatsoever in the alleged benamidar Company or it's alleged share premium contributors. It was argued that the loan & advances were made by DTPL to SGIPL only in 2015 (2.7 crore) & 2016 (27.88). It was also stated that member of Gami Family became shareholder of M/s Moonrise Dist Pvt & M/s Buds Deals Pvt Ltd only in 2016-17. It was therefore argued that prior to 2015-16, there was no nexus of the involvement of SGIPL or members of Gami Family in the transaction of DTPL, and/ or its shareholder companies. This fact i....
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....AY 11-12 was subjected to assessment U/s 143 (3) and proceeding/ initiated under section 263 of IT Act to treat this order U/s 143 (3) as erroneous and prejudicial to the interest of Revenue had been dropped, hence Order U/s 143 (3) stand as final. Subsequently also the company continued to file return. Moreover, even the IO has stated that this company is now within the control of "Gami family". In this circumstances, treating this materially important entity as "fictitious" is not correct, this proposition can't be accepted. 34. The IO Invocation of 2(9)(D) requires that consideration for advances made to M/s SCPIL have been arranged from "non- traceable" or "fictitious" person. In the instant case, the direct source of this Advance to M/s SGPL is M/s DTPL which is existing corporate entity albeit controlled by "Gami Family". The M/s DTPL had in its various assets as on the day of making this advances including Loans & Advances given to other entities (under old management). Actually earlier composite grouping of "Loan & Advances" and "current Investments" has been replaced by new advance of Rs 33.58 Cr to M/s. SGIPL. Thus under no circumstance can it be said that th....
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....e consequential relief is granted to the defendants in the form of lifting of the prohibitions and restrictions on the impugned properties." 6.3. From the aforesaid order of the Adjudicating Authority, it is very clear that M/s. DTPL had received certain share premium from various companies in the year 2011 and that money has been utilized by them in advancing loan and advances to various parties and also by making investments in various companies in the year 2011. During the year under consideration, DTPL had received back those loans and advances and investments and that money has been utilized by DTPL to make advances to assessee company. The assessee company enters the scene in respect of the financial transaction only in this year by way of receipt of loans and accordingly during the years 2011-2016, whatever financial transactions that were undertaken by DTPL either by way of receipt of monies or by payment of monies, the assessee company was not at all involved. This fact is quite evident on perusal of order of the Adjudicating Authority dated 21/09/2021 which is reproduced supra. There is absolutely no cash trial found with cogent evidences by the ld. AO or by the ld. CI....
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....ments that had flown into the books of DTPL. The show-cause notice issued by the ld. PCIT dated 03/02/2015 u/s.263 of the Act in this regard is enclosed in pages 932 and 933 of the paper book. After going through the replies filed by DTPL, we find that the ld. PCIT had dropped the revision proceedings u/s.263 of the Act vide his order dated 28/03/2016. The order passed u/s.263 of the Act dropping the revision proceedings is enclosed in pages 936 of the paper book filed before us. 6.5. From the above, the following facts emerge:- (a) DTPL had received share capital and share premium from various entities in A.Y.2011-12. This receipt of share capital and share premium from various entities have been accepted to be genuine both in scrutiny assessment proceedings u/s.143(3) of the Act dated 07/05/2013 which is later followed by Section 263 order passed by the ld. PCIT dated 28/03/2016 dropping the revision proceedings. (b) The monies received by DTPL were invested in various entities by DTPL in A.Y. 2011-12. These monies invested by DTPL in A.Y.2011-12 had been received back by them during the year under consideration. (c) This money has been utilized by DTPL....