TaxTMI 
TaxTMI 
2025 (3) TMI 2081
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....circumstances of the case and in law, the Learned CIT(A) has erred by allowing the appeal of the Assessee by deleting the addition of Rs. 38,82,50,000/-, as received from M/s Avas Developer & Construction Pvt. Ltd, made u/s 68 without appreciating the facts that the Assessee as well as Investor Company i.e. M/s Avas Developer & Construction Pvt. Ltd failed to provide the source of fund and nature of transaction. The same facts has also been mentioned in the Writ Petition No. 1569 of 2021 with interim application (L) No. 16884 of 2021 in Writ Petition No. 1569 of 2021 in the case of M/s Sunlight Housing Development Pvt. Ltd. which clearly established that Wadhawans and Doshi's conspired together and formulated rotation of funds in such a coordinated manner that this whole facade of Money Laundering by way of rotations was done in a single day i.e. on 02.09.2016. The Wadhawan and Doshis entered into conspiracy under which M/s Awas Developers & M/s Bidco Studs allegedly acquired preferential shares in M/s Capetown Exports & M/s Harsh Propcon respectively. Thus, these transactions of acquiring preferential shares by Wadhawan Group Companies in Doshi's Group Company are only a ....
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....ssessing Officer was not convinced. Vide Assessment Order, dated 27/12/2019, passed under Section 143(3) of the Act, the Assessing Officer made addition of INR. 38,82,60,000/- under Section 68 of the Act holding that the Assessee had failed to prove the genuineness of the transaction and creditworthiness of the Investor. 4. Being aggrieved, the Assessee preferred appeal before the CIT(A) and reiterated the submission made before the Assessing Officer. It was submitted that the Assessee had furnished following documents/details before the Assessing Officer: (a) Copy of MoU between the Assessee and Sterling Biocon Pvt. Ltd. [Page No.187 to 197 of the Paper Book] (b) Details of loans and advances to Sterling Buildcon Pvt. Ltd. of INR. 38,89,97,700/- [Page No. 1 to 3 of the Paper Book] (c) Letter by Avas Developers and Construction Pvt. Ltd. to the Board of Directors of Capetown Exports Private Limited for investment in Preference shares. [Page No. 118 of the Paper Book] (d) Letter by Avas Developers and Constructions Pvt. Ltd. to Capetown Exports Private Limited giving the details of remittances made through banking channel towards subscription o....
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....esentative wherein reliance has been placed on Paragraphs 2.4 and 4.1 to 4.11 of the Assessment Order, as well as the Fact Sheet and Legal Submission filed on behalf of the Assessee. 8. There is no dispute that the Assessee had filed the documents and details listed in paragraph 4 above before the Assessing Officer. On perusal of the same we are of the view that the Assessee had discharged the primary onus cast upon the Assessee under Section 68 of the Act. The identity of the Investor was never in doubt. As regards the genuineness of the transaction and creditworthiness of the Investor is concerned, on perusal of material on record, we find that the Assessee had explained that the Assessee had purchased land in the year around 2006 and sold the same in the Financial Year 2010-2011 along with development rights for INR. 40 Crores. Thereafter, the Assessee was looking for new opportunities for business. However due to sluggish real estate market the Assessee was not getting good business opportunities. During the relevant previous year the Assessee got good opportunity for purchasing of FSI from Sterling Buildcon Pvt. Ltd in respect of SRA Project at Chembur, Mumbai. To support t....
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....th the financial details of the 3 major shareholders: Name and address Shareholding PAN Emerald Realtors Pvt. Ltd. 15.75 AAACE4757B Bidco Studs Pvt. Ltd. 17.65 AAACB7122M Saphire Land Developers Pvt. Ltd. 17.5 AAACS7785H Satyam Realtors 17.5 AACCS7290P Serveall Constructions Pvt. Ltd. 18.45 AADCS4763Q Suansa Power Pvt. Ltd. 13.15 AACCH0092A Name Capital & Reserve (In Cr.) Loans (In Cr) Non-current Investment (In Cr) Inventories (In Cr) Emerald Realtors Pvt. Ltd. (March 16) 48.38 276.89 460.95 253.63 Emerald Realtors Pvt. Ltd. (March 15) 48.42 256.58 453.20 228.79 Bidco Studs Pvt. Ltd. (March 16) 37.82 0 26.85 0 Bidco Studs Pvt. Ltd. (March 15) 37.89 0 35.47 0 Serveall Constructions Pvt. Ltd. (March 16) 36.57 303.16 153.44 309.27 Serveall Constructions Pvt. Ltd. (March 15) 36.64 207.58 162.72 259.54 10. Further, we note that as per the audited financials, the Investor also had work-in-progress of INR. 60.02 Crore and INR. 81.61 Crore as on 31/03/2015 and 31/03/2016, respectively. Thus, it cannot be said t....
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....nd out whether they were credit-worthy or were such who could advance the alleged loans. It was further held that there was no effort made to pursue the so called alleged creditors and in those circumstances, the appellant could not do anything further. The findings and conclusion of the Tribunal were upheld that the appellant had discharged the burden that lay on him. The Bombay High court in CIT vs. Orchid Industries Pvt. Ltd. (2017) 397 ITR 136 (Bom) has held that where the Appellant has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money, entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account then no addition can be made u/s 68. 6.15 In view of the above, I am of the considerate opinion that Ld. AO has ignored the commercial arrangement. He has merely focused on the fact that the appellant has not carried out any business activity and presumed that no rational investor will not invest in app....
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....Commissioner of Income-tax vs. Orchid Industries (P.) Ltd. [2017] 397 ITR 136 (Bombay)[05-07-2017] cited on behalf of the Assessee during the course of hearing. 13. During the course of hearing the Learned Departmental Representative has placed reliance upon the observations made by the Assessing Officer regarding the terms of on which preference share capital was issued and had submitted that no Investor would have made investment on such terms. In this regard we agreed with the contention advanced on behalf of the Assessee that the Assessing Officer cannot sit in the armchair of the businessmen-Investor and review the business decision made by the businessmen-Investor to subscribe to 8% Redeemable Preference Non-Convertible Non-Cumulative Preference Shares issued by the Assessee. Therefore, we concur with the observations made by the CIT(A) in paragraph 6.15 of the order impugned, and hold that the Assessing Officer was not correct in ignoring the commercial arrangement and in coming to the conclusion that no investor would have made investment in the Assessee-company. It would be pertinent to refer to the judgment of the Hon'ble Bombay High Court in the case of Principal Comm....
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....he Act. The Tribunal further noted that information was also sought from Foreign Tax Division with regard to the genuineness of the investment made by Providence Equity Partners in PSAHIMI. Necessary information was also received. During the course of hearing of the appeal, the Commissioner had called for remand report from the Assessing Officer on the additional evidence produced on record. In the report, the Assessing Officer had made remark suggesting that the transactions were genuine. The Tribunal also verified the necessary permissions for remittances of the funds and other relevant documents. 9. It can, thus be seen that at every stage, the full inquiry of source of funds and other relevant factors in relation to the investment in question was carried out. The Assessing Officer himself carried out a detailed inquiry. His initial suspicion or in other words starting point of inquiry on the basis that apparently the investor was investing huge amount which may prima facie appear to be without adequate possible returns, may be fully justified. However, when all the relevant factors are properly explained, including the fact that the payment of dividend was not the sole....