TaxTMI 
TaxTMI 
2025 (2) TMI 1580
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....,75,00,000/- made u/s. 68, on account of unproved cash credit from Delhi based paper companies, without giving any credence to the material seized, post search enquiries made, and the enquiries made during the assessment by the assessing officer. 3. The Id. CIT(Appeal) erred in concluding that the investments made by the above concerns are genuine, as against the overwhelming evidence that the transactions are neither genuine nor the investors had credit worthiness. 4. The Id. CIT(Appeal) failed to appreciate the fact that no details of collaborated real estate projects undertaken by the assessee and investor could be proved even after four years of investment. Thus, the genuineness of the transaction cannot be proved. 5. The Id. CIT(Appeal) erred in holding that mere routing of transaction through banking channel is sufficient to prove the genuineness of the transaction as against the established law that the assessee needs to prove the credit worthiness of the investor and genuineness of the transaction. 6. The Id. CIT(Appeal) erred in ignoring the search and post search investigations which conclusively prove that the above concerns existed on....
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....td. 4200000 11 Reliable Finance Corp.Pvt.Ltd. 2650000 12 Silvant Investment and Finance Pvt.Ltd. 6000000 13 S.K.P.J.Investments 3400000 14 Star Info Vision Pvt.Ltd. 4150000 15 VA Realcon Pvt.Ltd. 4250000 Total 5,75,00,000 4. Accordingly, issued notice u/s 153C of the Act on 27.02.2019 and called upon the assessee to file return of income. In response to the notice issued u/s 153C of the Act, the assessee filed its return of income on 25.03.2019 by admitting total income of Rs. 2,86,900/-. 5. During the course of assessment proceedings, the Assessing Officer noticed that Shri Ajaz Farooqi and his associated companies have received loans / advances / investments to the tune of Rs. 5,75,00,000/- from various Delhi based companies during the A.Y.2014-15. In order to verify the amount of advance / investment received from Delhi based companies, the Assessing Officer called upon the assessee to file relevant evidences and also prove identity, credit worthiness and genuineness of the transaction. During the course of post search operation, enquiries were conducted at Delhi, to verify the genuineness of claim of investme....
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....d that once, the assessment is abated as on date of search, the Assessing Officer shall have power to assess or reassess total income, including any undisclosed income found as a result of search. Therefore, rejected the legal ground taken by the assessee. 8. The Ld.CIT(A) had also deleted the additions made by the Assessing Officer towards investment received from M/s Efficient Industrial Finance Ltd. u/s 68 of the Act, by holding that the assessee is able to prove the identity of the investor company and also proved genuineness of transactions and creditworthiness of the parties, by filing details like PAN, return of income filed for the relevant assessment year, financial statements along with confirmation letters. Further, since the investment is routed through proper banking channel, the Ld.CIT(A) observed that the Assessing Officer is erred in making additions towards investment u/s 68 of the Act, as unexplained money and therefore, deleted the additions made by the Assessing Officer. Relevant findings of the Ld.CIT(A) are as under : 6.2 I have considered the assessment order, submissions of the appellant and the material placed before me. During the year, the app....
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....thiness of the creditor and the genuineness of the transactions. There is no adverse finding on the documents produced by the appellant. ii) The enquiries at the Delhi and the statement recorded of Mr. Bardia create suspicion as to the transactions of the appellant company with the creditor. The suspicion should lead to investigation to bring out the facts and material on record to disprove the contention of the appellant. No such enquiries were conducted by the AO to bring out facts/material on record. Suspicion, however strong, can not substitute for evidence. The AO ought to have conducted further enquiries to take it to the logical conclusion. iii) The appellant discharged, the initial 'burden of proof by producing all the documentary evidences. The AO has not contradicted any of the evidences produced by the appellant. Unless some evidence is brought on record and appellant is confronted with such evidence, the burden does not shift back to the appellant. iv) No evidences, were found during the Search which are incriminating as to the transactions with various companies. The enquiries conducted were post search enquiries only. Otherwise, the tran....
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....o Name of the company 1 Efficient Industrial Finance Ltd 2 Goose Shares and Securities P Ltd 3 Karpo Real Estate P Ltd 4 Karpo Builders P Ltd 5 Jasnath Infrastructure P Ltd 6 Tarini Enterprises Ltd 7 Khatushyam Shares and Securities P Itd 8 R. K Investments P Ltd 9 Minimm Shares and Securities P Ltd 10 Gaiety Realtech P Ltd Ans: I am furnishing herewith the relevant letter heads of all the above companies containing the registered addresses. Q.7. Where are the books of accounts of the above companies maintained? Ans: The books of accounts of these companies are maintained at the Corporate office i.e 20-B, Old Gupta Colony, Delhi. Q8. On verification it is found that the building at the above address is being demolished and no office was found functioning there. Please explain. Ans: Yes, the premise is under renovation. So we have shifted the relevant records temporarily to 3/14A, 1st Floor, Double Storey, Vijay nagar colony, Delhi. However, books of accounts are not readily available at this office. Back up of the accounts was taken up and kept with our auditor. I will furnis....
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....ease furnish the details of the share holders of the above companies with full address with PAN. Ans: I will compile and forward the details of the share holders of the above companies by post by 10.10.2017. Q.13. How do you know Sri. Ajaz Farooqi and Smt Laxmi Raman? Ans: We met them through common friend Sri. V. P Anand. Q.14. What is the purpose of the above mentioned investments? Ans: The above mentioned advances/investments were made to collaborate real estate projects with the above mentioned companies/individual. Q.15. Please state whether the above mentioned investments are still receivable. Ans: Yes, the above mentioned investments are still receivable by our companies. Q.16. Have you received any benefit out of the above investments made .? Ans: No, we have not yet received any benefits out of the above investments as this money has been invested for the collaboration/joint ventures of the projects. Q.17. Please furnish the details of the proposed projects. Ans: The projects at various places which are still in process. Q.18. It is seen that the amounts invested by ....
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.... response from the investor companies, as to the source of the funds invested. Further, the Ld.CIT(A) failed to appreciate the fact that the assessee company failed to produce directors of the investor companies for examination, despite opportunity given. Although, the Assessing Officer has brought out clear facts, but, the Ld.CIT(A) simply deleted the additions made by the Assessing Officer only on the basis of paper evidence filed by the assessee contrary to the facts brought on record by the Assessing Officer. Therefore, he submitted that the order of the Ld.CIT(A) should be reversed and additions made by the Assessing Officer should be upheld. 11. The learned counsel for the assessee, Shri P.Murali Mohan Rao, CA, on the other hand, supporting the order of the Ld.CIT(A) submitted that the assessing company has placed all possible evidence, including address and PAN of the creditor, their financial statement along with bank account copy and also filed confirmation letter to prove identity, genuineness of transactions and credit worthiness of the parties. Further investment has come from bank account, for which relevant evidences have been filed. Further, the Assessing Officer ....
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....ing Officer had also taken support from certain material found during the course of search in the case of Shri V.P.Anand and Shri Ajaz Farooqi and observed that the assessee has routed its unaccounted money, by way of advances / investments from Delhi based companies and returned cash. Therefore, the Assessing Officer came to the conclusion that the assessee could not prove identity, genuineness of the transaction and credit worthiness of the investment from Delhi based investor companies. 13. We have given our careful consideration to the reasons given by the Assessing Officer to make additions towards advances / investment from Delhi based investor company as unexplained cash credit u/s 68 of the Act, in light of various averments made by the Learned counsel for the assessee and we ourselves do not subscribe to the reasons given by the Assessing Officer for the simple reason that, the assessee had filed complete details of investor company and its identify, including name and address, PAN, financial statements, bank statements and also confirmation letters and proved identity of the investor company, genuineness of transactions and creditworthiness of the parties. Further, as ....
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....notices issued by the Assessing Officer. Similar view has been taken by the Hon'ble Gujarat High Court in the case of DCIT Vs. Rohini Builders (2002) 256 ITR 360 (Guj). The sum and substance of the ratios laid down by the Hon'ble Supreme Court and other High Courts is that once, identity, genuineness of transactions and creditworthiness of the creditor is proved, then the sum received from the creditor cannot be treated as income of the assessee u/s 68 of the Act. Although the Assessing Officer referred to number of judicial precedents, including the decision of Hon'ble Supreme Court in the case of PCIT Vs. NRA Iron and Steel Private Ltd. (2019) 412 ITR 161, but facts remain that the facts of the present case are entirely different from various case laws referred by the Assessing Officer and therefore, in our considered view, the case laws relied upon by the Assessing Officer are considered to be not applicable to the case of the assessee. 14. In view of this matter and considering the facts of the present case and also by following the ratios of Hon'ble Supreme Court in the cases discussed herein above, we are of the considered view, that the Assessing Officer i....
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....the pen drive. On verification of the documents, it is found that the workings related to consideration paid for purchase of property at plot No.806 and 806/1, Road No.36, Jubilee Hills, Hyderabad by the company, M/s Asma Estates and Investments Pvt. Ltd. from Mr.Susheel Kumar Hora, MRs. Kamal Hora and M/s Arthik Infra Projects Pvt.Ltd. in March, 2014. As per the sheets, the total cost of the property, excluding the stamp duty is mentioned at Rs. 24,75,00,000/-, out of which Rs. 9,25,55,861/- was paid through cheques to Mr.Susheel Kumar Hora, MRs. Kamal Hora and M/s Arthik Infra Projects Ltd. and the balance amount of Rs. 15,49,44,139/- was paid in cash. 18. Consequent to search, notice u/s 153C of the Act was issued on 27.02.2019 and in response to the notice, the assessee filed its return of income on 25.03.2019. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that house property bearing MCH No.8-2-293/82/A/806/1, admeasuring 965 sq.yds of land with 100 sq.ft constructed area was owned by Mr.Susheel Kumar Hora and Mrs. Kamal Hora. There was another house property bearing MCH No. 8-2-293/82/A/806, admeasuring 600....
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.... seized from Mr.Jayanta Kumar Dutta, coupled with various documents, came to the conclusion that, consequent to development agreement cum GPA with Mr.Susheel Kumar Hora and Kamal Hora, the rights in the property was transferred to the assessee company and on subsequent cancellation of development agreement cum GPA vide document No.1187/2014 dated 06.03.2014, the assessee has relinquished its rights over the property in favour of the purchaser, M/s Asma Estates & Investments Pvt.Ltd. Therefore, the consideration paid in cash as recorded in the documents found in the pen drive seized from Jayanta Kumar Dutta is nothing but the consideration paid for relinquishment of rights over development agreement and therefore, opined that the amount of Rs. 7,76,99,000/- received by the assessee company in cash from Asma Estates & Investments Pvt.Ltd. is undisclosed income, assessable under the head 'income from other sources'. Therefore, made addition of Rs. 7,76,99,000/- to the total income of the assessee. 19. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the Ld.CIT(A), the assessee has filed written submission on the issue, which has be....
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....pment agreement' and the 'sale deed' in favour of the appellant was never in possession of the appellant company as mentioned in the cancellation deed. The above shows that the property was fully with and under control of Mr. Susheel Hora and not with the appellant company. In view of the above, it is held that the whole transaction of appellant is with Mr. Hora and his family. Accordingly, no amount is taxable in the hands of the appellant. The addition made is not warranted and the same is deleted. 20. Ms.M.Narmada, Ld.CIT-LD.DR submitted that the Ld.CIT(A) erred in deleting the addition of Rs. 7,76,99,000/- made towards unaccounted receipt of cash for relinquishing rights over development agreement in respect of property at Jubilee Hills without appreciating the fact that the assessee has got right over the property by way of development agreement and after a period of six years, the said agreement has been cancelled to facilitate M/s Asma Estates and Investments Pvt. Ltd to purchase property, which is nothing but relinquishing of right over the property, therefore, the cash payment as recorded in the material found in the pend drive is evidence of payment of cash....
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....6/1 was owned by Mr.Susheel Kumar Hora and Mrs.Kamal Hora. It is also an admitted fact that the property at Road No.36, Jubilee Hills, bearing GHMC No. 8-2- 293/82/A/806 was owned by Mr.Praveen Goel. The two parcels of land owned by Mr.Susheel Kumar Hora and Kamal Hora and Mr.Praveen Goel has been given on joint development to the assessee company, by way of development agreement cum GPA dated 26.06.2008. The said development agreement has been cancelled on 06.03.2014 and the property has been purchased by M/s Asma Estates & Investments Pvt. Ltd. from original land owners. These facts are not disputed by the Assessing Officer. However, the Assessing Officer made addition of Rs. 7,76,99,000/- towards alleged cash consideration paid to the assessee company for relinquishment of rights over the property based on document found in the pen drive seized from the premises of Jayanta Kumar Dutta. According to the Assessing Officer, the assessee company got right over the property in pursuant to Development cum GPA and upon relinquishment of rights by cancellation of development agreement, the assessee company has received consideration in cash. Therefore, opined that the assessee company h....