TaxTMI 
TaxTMI 
2025 (7) TMI 1508
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....er, it has not started its business in the year under appeal. The return of income was e-filed on 12.08.2017 declaring loss of INR 11,635/- under the normal provision of Act. The case was selected for scrutiny under CASS and notice u/s 143(2) was issued on 07.09.2018 to the assessee. Thereafter, notices u/s 142(1) of the Act were issued. In response thereto, the assessee filed details from time to time. On perusal of the financials of the assessee company, it was noticed by the AO that in Note No.5 - "Other current liabilities" an amount of INR 5,01,54,567/-was shown as advance from VPS Healthcare Pvt. Ltd. against sale of shares of Rockland Hospital Limited owned by the assessee company as one of the member of promoters group. The AO asked the assessee as to why the transaction of sale of shares was disclosed in the retune of income filed nor any gain/loss was declared. The AO further observed that the said shares were subscribed by the assessee between the FY 2011-12 to 2013-14 and such investment was owned by M/s Rockland Hospital Ltd. as made by it and it is the beneficial owner thus the AO concluded that the amount received by the assessee from the sale of shares was undisclos....
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....f the said agreement, assessee received a sum of INR 5,01,54,567/- on 04.07.2016 and a certificate u/s 281 of the Act, was obtained from ITO, Ward-24, New Delhi for such transfer. Thereafter, certain disputes arose between the promoters of Rockland Hospital Limited and promoters of V.P.S Healthcare Pvt. Ltd. with regard to the transfer of these shares and certain FIRs were lodged and thus, transaction of sale of shares was not reached to the conclusion. Ld.AR further submits that when the shares were subscribed by the assessee, the Department alleged that amount invested by the assessee company were actually made by Rockland Hospital Limited who is the actual beneficial owner of these shares and therefore, in AY 2014-15 such investments was held as unexplained. Finally, Rockland Hospital Pvt. Ltd. had accepted such investments and further accepted that it as beneficial owner of such investments and paid the taxes thereon. Ld. AR further stated that due to dispute between the parties, the transaction of sale was not completed and therefore, the assessee company had not declared any income/loss from the sale of shares under the head 'Income from capital gain' in the return of income ....
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....oup companies who jointly owned the shares of Rockland Hospital Limited and also received advance during the year under appeal towards sale of shares wherein in the assessment orders passed u/s 143(3) of the Act, the Revenue has not raised any doubts with respect to such advances received by those entities from V.P.S Healthcare Pvt. Ltd. Ld. AR placed copies of such orders in the Paper Book pages 66 to 91 filed before us. In view of these facts, Ld.AR submits that due to non-finalization of transfer of shares, the income/loss was not declared in the return of income filed for the year under appeal and further, the amount was duly received from explained source thus, provision of section 68 could not be invoked. He prayed accordingly. 7. On the other hand, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits that the assessee has not shown any income/loss from sale of shares in its books of accounts for the year under appeal. The agreement for transfer of shares was executed in the year under appeal and process of transfer of shares was started therefore, it cannot be said that the agreement was not acted upon. Ld. Sr.DR further submits ....
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....eholders have also received amounts from V.P.S Healthcare Pvt. Ltd. where the amount received was shown as advance in their respective financial statements and no income was offered on account of sale of the shares during the year under appeal and in some cases, assessments were completed u/s 143(3) of the Act without doubting the treatment done by them. Under these circumstances, we find no error in the action of the assessee of not disclosing the sale of shares in the return of income filed. It is also seen that the assessee had shown these transactions of sale in the financial statements for Financial Year 2018-19 where the net result being loss was carried forward to the balance sheet under the head "Reserve & surpluses". 9. With regard to the application of provision of section 68 of the Act, we find that the AO has not doubted the identity, creditworthiness and genuineness of the transaction and solely for the reason that the investment made in the shares of Rockland Hospital. Limited was admitted by the said company and further admitted as the beneficiary owner, the AO had made the addition. For invoking the provision of section 68 of the Act, the basic condition is that ....