TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 343
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....s unexplained cash credit u/s.68 r.w.s. 115BBE of the Act without appreciating the fact that the assessee had failed to substantiate the identity, genuineness and creditworthiness to the M/s.TAU Investment against whom the sale of shares was shown. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 168,55,71,440/- being entire sale consideration of JBCPL shares as unexplained cash credit u/s.68 r.w.s. 115BBE of the Act without appreciating the fact that the assessee had failed to prove the source of fund through which shares of the assessee was purchased. 3. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) is correct in deciding the creditworthiness of M/s.TAU Investment on the basis of public announcement made KKR i.e. parent company regarding fund raising. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the deduction u/s.54F against the unexplained cash credit as determined by the Assessing Officer. 5. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. 6. T....
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....0/01/2023, before the Local Committee set up by the Central Board of Direct Taxes (CBDT) to deal with tax payers' grievances on High Pitched Scrutiny Assessment which was rejected vide order, dated 23/06/2023. 6. Thereafter, the Assessee approached the Hon'ble Bombay High Court in writ jurisdiction, inter alia, seeking quashing of the Assessment Order, dated 31/12/2022, and setting aside of the order, dated 23/06/2023, passed by the Local Committee. In the aforesaid Writ Petition [Writ Petition (L) No.24936 of 2023], the Hon'ble Bombay High Court passed Order, dated 07/11/2023, giving following directions to the CIT(A): "Respondent No. 5 shall dispose the stay application as well as appeal together on or before 31.01.2024 after giving personal hearing to the petitioner and by considering all documents and further material that petitioner has filed. Should petitioner wish to file any further documents/submissions, the same to be filed within two weeks of the portal being made available for filing." (Emphasis Supplied) 7. In compliance with the above directions of the Hon'ble Bombay High Court, the CIT(A) took into consideration the documents/details furnished by the A....
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....ce Tau investment holdings Pvt. Ltd. Moreover, despite asking the details of Tau investment company assessee submitted documents of KKR fund. No legal stamp was there; no revenue stamp was there on the accounts submitted. Documents are not audited and certified by any C.A. Hence in absence of all these reasons this document has no legal sanctity and is not a valid evidence as per Indian evidence act. 2. The assessee submitted extract of bank statement of Tau investment holdings Pvt. Ltd. However, in the said extract, details of all previous entries have been blackened and no information/idea about source of money has been given. The bank statement is of no use as the AO is unable to know the source of funds and also how the funds have been routed. 3. No document has been submitted which proves that the KKR Asia III Fund Investment Pvt. Ltd has funded TAU investment holdings Pvt. Ltd., Singapore. Also no confirmation has been submitted by KKR Asia III fund to explain the flow of funds. 4. No document has been submitted by the assessee regarding TAU investment holdings Pvt. Ltd., Singapore which provides any data to the AO. 5. Currently, the flow o....
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.... the fag end of time barring and it's not possible to do reference in such a short notice. 7. A simple google search shows that Tau investment holdings Pvt. Ltd. does not even has its own website. It was formed hardly 2.8 years ago on 20.3.2020 i.e just months before investment in the assessee company and that too in a tax haven of Singapore. Its paid up capital is hardly USD 14,927,608, which is meager in comparison to the amount of transaction it undertook. It is difficult to understand as to how a company formed hardly months before the investment was able to do proper business and garner funds so as to fund a Rs 3200 crore deal of JB chemicals. It clearly points to suspicion that it is a merely paper company and is being formed in a tax haven and used as a conduit to evade capital gain and other taxes. Also its source appears dubious. 8. The assessee has been requested to only prove creditworthiness of first source and not source of source. The department has not even gone deeper to source of source. Giving the basic documents of first source is the primary responsibility of the assessee, Even if assessee would have explain the first source that would have....
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....complete Share Purchase Agreement, Letter of Offer to public filed with SEBI and exchanges (containing details/information of the transaction under consideration), approval received from CCI, details of purchaser/Tau Investment, financial statements and bank accounts of Tau Investment as provided to the Assessee by Tau Investment. Before the CIT(A), the Assessee had additionally filed copy of audited accounts of Tau Investments for the year Financial Year 2019-2020 and the Confirmation, dated 30/08/2023, given by Tau Investment clearly providing the source of fund utilized by Tau Investment for making payment of consideration of INR. 1,68,55,71,440/- to the Assessee for the purchase of equity share of JBCPL. All the aforesaid documents/details were examined by the CIT(A) and after taking the same into consideration, in compliance with the directions issued by the Hon'ble Bombay High Court, the CIT(A) deleted the addition. The Revenue has failed to bring on record any material to controvert the findings returned by the CIT(A). The primary objection of the Assessing Officer relating to the source of credit/funds stands explained and therefore, the grievance of the Assessing Officer d....
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....e Act claiming to have purchased a new residential house [i.e., Flat No. 6 admeasuring 1020 sq. ft. in the building known as Avillion situated at L.D. Ruparel Marg (Little Gibbs Road), Malabar Hill, Mumbai 400006 (hereinafter referred to as 'the Residential Property')] during the relevant previous year. 14. During the assessment proceeding, vide notice dated 13/08/2022, the Assessee was asked to submit copy of Demat Account, computation of capital gain, valuation report, confirmation from purchaser with name, PAN & address etc. The Assessee, vide letter dated 11/10/2022, submitted (a) relevant pages of SPA, (b) capital gain working, (c) copy of Demat Account, (d) bank statements of the Assessee reflecting receipt of sale consideration, and (e) history and cost of acquisition of JBCPL shares and (f) fair value of shares as on 01/04/2001. 15. Thereafter, vide notice dated 19/10/2022, the Assessee was asked to submit copy of complete SPA, and provide clarification on applicability of Section 112A of the Act. Further, the Assessee was also asked to provide Audit Report, Balance Sheet and Profit & Loss Account of Tau Investments along with copy of bank statements of Tau Investment....
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....same, communication address of Tau Investments and the relevant email ID was also furnished to the Assessing Officer. The Assessee also wrote email, dated 19/12/2022, requesting Tau Investments to provide the documents sought by the Assessing Officer. Vide email dated 20/12/2022, the Assessee received (a) the relevant bank statement of Tau Investment highlighting receipt of sale consideration [and redacting all other entries therein] and (b) copy of Letter of Offer filed with SEBI which were provided by the Assessee to the Assessing Officer vide letter dated 20/12/2022. In the aforesaid letter the Assessee reiterated the contention that consideration received from the sale of the shares of JBCPL cannot be treated as unexplained cash credit under Section 68 of the Act. 19. The Assessing Officer was not satisfied by the documents/details furnished by the Assessee. According to the Assessing Officer the bank statement of Tau Investment furnished by the Assessee contained entries which were blackened/redacted and therefore, the there was no information about the source of funds and how the same were routed. The Assessing Officer also observed that the Assessee had failed to furnish ....
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....ss of the transaction and creditworthiness of Tau Investment from which amount of INR. 168,55,71,440/- has been received by the Assessee. 23. It is admitted position that SPA, Letter of Offer as well as CCI approval were placed before the Assessing Officer during the assessment proceedings. Vide letter dated 22/11/2022, the Assessee had disclosed that INR. 168,55,71,440/- was received by the Assessee from Tau Investment against transfer of shares of JBCPL at the agreed price of INR. 745 per share in an off market deal undertaken in terms of SPA. The aforesaid transfer of shares was made after complying with the provisions of the Takeover Code. It was further stated that Tau Investment was a step-down subsidiary of KKR Asia III Fund Investments Pvt. Ltd [referred to as PAC 2 in Letter of Offer]. A snapshot of financial position of KKR Asia III Fund Investments Pvt. Ltd. was available at page 31 to 32 of the aforesaid Letter of Offer and according to the same the Net Worth of KKR Asia III Fund Investments Pvt. Ltd. as on 31/03/2020 was around INR. 31,318 Crores. It was explained that KKR Asia III Fund Investments Pvt. Ltd. and Tau Investments formed part of KKR Group. It was submi....
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....) for the year ended 31/12/2017, 31/12/2018 and 31/12/2019 [as extracted from the standalone audited financial statements for the said period] and for the first quarter ended 31/03/2020 [extracted from the standalone reviewed interim financial statement for the said period]. It was stated therein that the Net Worth KKR Asia III Fund Investments Pvt. Ltd. (PAC 2) as on 31/03/2020 was around INR. 31,318 Crores. Part V of the Letter of Offer contained details of sellers [including the Assessee]. Part IX of the Letter of Offer contained the procedure for acceptance and settlement of the Open Offer and provided, inter alia, that the Open Offer would be implemented through stock exchange mechanism made available by stock exchanges. It would be pertinent to note that the aforesaid Open Offer was regulated by SEBI being the securities market regulator. The Letter of Offer was prepared in accordance with the provisions of Takeover Code which mandated making of public offer on execution of SPA for acquiring shares in excess of 25% of shareholding of JBCPL. The Letter of Offer provided credence to the submission of the Assessee that the transaction undertaken by the Assessee was part of the l....
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....y the Assessing Officer regarding the source of funds are concerned, we find that the same are allayed by the Confirmation Letter, dated 31/08/2023, filed before the CIT(A). We note that the Confirmation Letter, dated 31/08/2023, issued by Tau Investments to the Assessee [which was filed before the CIT(A)] clearly stated as under: (a) Tau Investments (having PAN No.AAHCT9365R) had filed return of income for the Assessment Year 2021-22 (b) Tau Investments had acquired 22,62,512 equity shares of J.N.Chemicals from the Assessee in terms of SPA for purchase consideration of INR. 1,68,55,71,440/- which was remitted from the bank account maintained by Tau Investments with 'The Hongkong and Shangahi Banking Corporation Limited' Singapore in the following manner: Date on which funds were debited from Tau Investment's Singapore account Date on which consideration is received by Mr. Jay Mehta Number of Shares acquired from Mr. Jay Mehta Purchase Consideration paid to Mr. Jay Mehta in INR 28/08/2020 31/08/2020 4,00,191 29,81,42,295 28/08/2020 09/11/2020 7,03,267 1,38,74,29,145 07/10/2020 09/11/2020 11,59,054 (c)....
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....her material to challenge the veracity of documents furnished by the Assessee. The Assessing Officer did not even have the benefit of considering the Confirmation Letter and/or the Audited Financial Statements for the year ended 31/12/2020 as the same were filed before the CIT(A). There nothing on record to either support the observations/findings of the Assessing Officer or to controvert the findings of the CIT(A). Accordingly, we do not find any infirmity in the order passed by the CIT(A) on this issue. Therefore, Ground No. 1 to 3 raised by the Revenue are dismissed. Ground No. 4 28. Ground No. 4 raised by the Revenue is directed against the order of CIT(A) accepting the Assessee's claim of deduction under Section 54F of the Act. 29. In the return of income the Assessee had claimed deduction of INR. 11,90,58,405/- under Section 54F of the Act in respect of the Residential Property purchased in the name of the Assessee and his wife during the relevant previous year. During the assessment proceedings, the Assessee was asked to show cause as to why 50% of the deduction should not be disallowed since the Residential Property was jointly owned. Vide reply letter dated 22/11/....
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....isions contained in Section 45 of the Transfer of Property Act, 1882 (for Short 'TPA') which reads as under: "Where immoveable property is transferred for consideration to two or more persons and such consideration is paid out of a fund belonging to them in common, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property identical, as nearly as may be, with the interests to which they were respectively entitled in the fund; and, where such consideration is paid out of separate funds belonging to them respectively, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property in proportion to the shares of the consideration which they respectively advanced. In the absence of evidence as to the interests in the fund to which they were respectively entitled, or as to the shares which they respectively advanced, such persons shall be presumed to be equally interested in the property." (Emphasis supplied) 36. Bare perusal of Section 45 of TPA shows that the said section comes into play when immovable property is transferred for a consideration to two or more persons. Sec....