TaxTMI 
TaxTMI 
2026 (8) TMI 1811
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....s and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition u/s. 69C of Rs. 6,50,000/ - being unexplained expenditure." 3. Brief facts of the case are that assessee filed its return of income belatedly u/s. 139(4) on 16.03.2018, reporting total income at a loss of Rs. 4,68,54,600/- which was subsequently revised, reporting total income at Nil. In the course of assessment proceedings, from the verification of statement of long term capital loss (LTCL) and Note-6 relating to 'Non-current Investments' forming part of the 'Notes to the financial statements for the ended on 31.03.2017', ld. Assessing Officer noted that assessee has sold 7,80,900 shares of Shree Ram Urban Infrastructure Ltd. (SRUIL) at a price of Rs. 80/- per share. Ld. Assessing Officer further, observed from the submission made by the assessee wherein it was stated that there was no bank account operational during the year under consideration. He initiated enquiry by issuing notices u/s. 133(6) to banking institutions and DMAT depositories, based on details given by the assessee in its submissions. Ld. Assessing Officer, further observed that assessee had reported balance number of shar....
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....- which was adjusted towards repayment of outstanding loan. (H) Assessee has submitted that after selling 7,80,910 shares of SRUIL to RCFPL, it is still liable to make payment of balance outstanding loan to RCFPL of Rs. 6,62,35,716 as on 31.03.2017. (I) Assessee has submitted that SRUIL is in the business of real estate, the market value of share price of SRUIL as on 31.03.2017 was Rs. 62.55 per share, the company was performing well and it was expected for increase in share price of SRUIL. After selling 7,80,910 shares of SRUIL, the share price of SRUIL has come down to Rs. 37/- as per last traded rate at BSE on 21.03.2018. (J) Assessee has submitted that it sold 7,80,910 shares of SRUIL at higher rate of Rs. 80/- to RCFPL in spite of having the market rate as on 31.03.2017 of Rs. 62.55 per share which was beneficial for the company. (K) Assessee incurred a loss of Rs. 4,68,54,600/- on the above transaction which it has not claimed for set off and carry forward in its return filed for the year under consideration. (L) Ld. Assessing Officer doubted the genuineness of this transaction because in the DMAT statement, the closing balance of ....
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.... Assessee had submitted that for the sale of shares of SRUIL, at the rate of Rs. 80/- per share off line, it did not credit any sum towards sale consideration but reduced the outstanding amount of loan from RCFPL as it was short of funds to repay the same. The accounting entry so passed as explained by the assessee is extracted below: Rotunda Capital & Finance (1) Pvt Ltd (DR) .. Rs. 6,24,72,800 Long Term Capital Loss on sale of Shares (DR) .. Rs. 4,68,54,600 To, Investment in Shree Ram Urban (CR) Infrastructure Limited .. Rs. 10,93,27,400 4.4. From the above, it is noted that there is a credit entry in the account of investment of SRUIL with corresponding debit in the outstanding loan account with RCFPL and the balance resulting into LTCL on sale of shares which is reported in the return filed by the assessee. This LTCL is not available to the assessee for set off and carry forward, as the return filed by it is belated one, u/s. 139(4). 5. In the above gamut of transaction undertaken by the assessee with RCFPL, it is explained that it was not in a position to repay the loan obtained from RCFPL and therefore, arrived at an understanding to sell the ....
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....r the claim of sale of shares to RCFPL, there is no transfer within the meaning of section 2(47) of the Act and therefore, there cannot be any gain or loss which could arise, subjecting it to tax. 5.4. Also, in the given set of facts, it is a case where assessee has by way of engineering this transaction, accounted for a loss scenario by way of LTCL which again has not been claimed for setoff and carry forward by filing of a belated return u/s. 139(4). This stand of the assessee makes the said arrangement revenue neutral. The only leg which remains to be addressed is the reduction of the loan liability in the hands of the assessee because of this engineered transaction for which there is no movement of funds in the bank account. 6. In the given set of facts and the arrangement made by the assessee which it has duly affirmed in all of its submissions made at all the stages of the proceedings, we are of the view that such a reduction in the loan liability made, is only for the purpose of window dressing of the balance sheet and would not lead to generation of income in the hands of the assessee subjecting it to tax under the provisions of the Act. Neither, the sale transaction ....
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....ead to sustaining the addition made by the ld. Assessing Officer which on a real income theory would not sustain as there is no real income and no real loss but a mere façade created by the assessee by window dressing of its balance sheet. In view of the foregoing, we find it appropriate to remit the issue back to the file of ld. CIT(A) for re-vising the entire case, so as to understand and list down in clear speaking terms, what all requirements he contemplated in para-8 of his first appellate order, based on which he arrived at a conclusion that the transaction undertaken by the assessee is genuine. It is directed to de novo adjudicate by taking into consideration the provisions of Companies Act, SEBI regulations and the relevant provisions of the Act. Further, it is also not discernible from the material placed on the record, whether subsequently assessee had actually lodged the share transfer form with SRUIL and the transaction as claimed has actually transpired in the subsequent period. This aspect of the issue be also looked into by the ld. CIT(A) and accordingly treatment may be given as per the provisions of the Act. Assessee is also directed to be forthwith in furni....