Principal Commissioner Of Income Tax, Bathinda v. M/S Amravati Infrastructures Developers Pvt. Ltd

[.T.A. No.378 of2016(O&M) HIT IN THE HIGH COURT OF PUNJAB & HARYANA ATCHANDIGARH INCOME TAX APPEAL No.378 of 2016(0&M) Date of Decision:+11.02.2020 Principal Commissioner of Income Tax, Bathinda ...... Appellant Versus M/s Amravati Infrastructures Developers Pvt. Ltd ......Respondent. CORAM:- HON'BLE MR. JUSTICE JASWANT SINGHHON'BLE MR. JUSTICE SANT PARKASH Present:-Mr. Vivek Sethi, Advocate for the Appellant, Ms. Radhika Suri, Senior Advocate assisted byMr. Manpreet Singh Kanda, Advocate for the respondent, JASWANT SINGH, J. !!! 1That Appellant-Principal Commissioner of Income Tax has|filed instant appeal under Section 260A of the Income Tax Act, 1961 (forshort ‘IT Act’ seeking quashing of order dated 03.02.2016(Annexure A-3)passed by Ld. Income Tax Appellate Tribunal, Amritsar Bench, Amritsar(for short ‘Tribunal’) whereby appeal of the present appellant had beendismissed. 9That the Respondent-Assessee is a colonizer. The AssessingAuthority vide order dated 29.12.2011 framed assessment under Section143(3) of IT Act tor the assessment year 2009-10 whereby income wasassessed Rs.3,95,00,000/-. The Assessing Authority made additions on three counts namely; [.T.A. No.378 of2016(O&M) AT 1)Rs.1.65 Crores on account of failure of Assessee to prove identityand genuineness of the persons having introduced share capital andShare premium.and genuineness of the persons having introduced share capital andShare premium. 11) Rs.1.10 Crores on account of failure to account for accrued income@ Rs.10 Lakh per month from May’ 2008 to March’ 2009 fromM/s Satya Developers Limited as per agreement.|@ Rs.10 Lakh per month from May’ 2008 to March’ 2009 fromM/s Satya Developers Limited as per agreement.| 111)Rs.1.20 Crore on account of failure to prove capacity of the loancreditors as well as genuineness of transactions.creditors as well as genuineness of transactions. 3The Respondent-Assessee assailing aforesaid additions filed an appeal before Ld. CIT(A) who vide order dated 20.12.2012 allowed appealof the Respondent-Assessee and deleted all the additions made by AssessingAuthority. It is apt to notice here that Assessee furnished additionalinformation/evidence before CIT (A) who supplied copy of said informationto Assessing Authority while asking remand report. The AssessingAuthority in its remand report did not object to the information filed byAssessee rather asked for the same to be considered at the time of disposalof the appeal. ;Feeling dissatisfied, the Revenue filed an appeal beforeTribunal who vide order dated 03.02.2016 dismissed appeal of the Revenue.The Tribunal while dismissing appeal of Department returned findings asbelow: 6612.The Id. CIT(A) while giving relief to the assessee on account ofshare application money hasrelied upon the above judgments. He hasnot commented on the merits of the case. However, we haveexamined the issue from the angle of merits also. We find that thethree shareholders from whom share capital money along with sharepremium has been collected are all Private Limited Companieswhich have been incorporated under the Companies Act and all theseCompanies are having PAN numbers and have filed their income taxreturns. Therefore, there cannot be any doubt about the identity of [.T.A. No.378 of2016(O&M) these Companies, 6612.The Id. CIT(A) while giving relief to the assessee on account ofshare application money hasrelied upon the above judgments. He hasnot commented on the merits of the case. However, we haveexamined the issue from the angle of merits also. We find that thethree shareholders from whom share capital money along with sharepremium has been collected are all Private Limited Companieswhich have been incorporated under the Companies Act and all theseCompanies are having PAN numbers and have filed their income taxreturns. Therefore, there cannot be any doubt about the identity of [.T.A. No.378 of2016(O&M) these Companies, 13.As regards the creditworthiness of these companies, we findthat these three companies had filed audited accounts and investmentin the assessee company has been made duly reflected in theirrespective balance sheets. We find that the investments in theassessee-company has been out of share capital and reserves of theinvesting Companies. For example, the net worth of M/s. DhirManagement Consultants (P) Ltd., (one of the investing companies)as on 31.03.2009 as per balance sheet placed at paper book page 8(in short “PB-8’) is Rs.99,34,843/- out of which it had madeinvestments to the tune of Rs.75,45,930/- in various companies as 1sapparent from Schedule-VI of balance sheet placed at PB-9. TheSchedule reflects the name of assessee company where theinvestment has been reflected to the tune of Rs.70,00,000/-. |4.Similar is the position with other investing company, M/sS.K.M. Securities (P) Ltd. The second investing company has networth of Rs.1,01,05,370/- as on 31.3.2009, out of whichRs.65,00,000/- has been invested in the assessee company. This fact1s verifiable from the copy of balance sheet of investing companyplaced at PB-13. 15.Similarly the third company M/s Singhal Securities (P) Ltd.,as on 31.3.2009 had net worth of Rs.10,49,97,000/- out of whichRs.7,02,55,000/- has been invested in shares of various companiesand which fact is verifiable from PB-22, where a copy of balancesheet as on 31.3.2009 is placed. The investment made in the assesseecompany is included in this total investment. 16.From the above facts and figures, the creditworthiness of theinvesting Companies 1s also proved. 17.As regards the genuineness of transactions, we find that theassessee company has received the share capital alongwith sharepremium amount through Banking channels and from the analysis ofthe Bank Accounts of the investing companies, we find that therewere no cash deposits before investments in the assessee companyexcept an amount of Rs.1,50,000/- and these companies hadsufficient balance in their bank account to make investments in theassessee company. For example, in the case of M/s SKM Securities [.T.A. No.378 of2016(O&M) Pvt. Limited, the company had balance of Rs.35,28,860/- 1n its bankaccount with Indusind Bank as on 27.6.2008 out of whichRs.15,00,000/- was invested in the assessee company on 28.6.2008and further the investing company had balance of Rs.50,28,835/- ason 10[th]July, 2008 out of which Rs.50,00.000/- has been invested inthe assessee-company on 12[th]July, 2008. The analysis of bankaccount statement reveals that the deposit in the bank account beforeinvestments in the assessee company were all through Bankingtransactions. Therefore, the genuineness of transaction cannot bedoubted. [.T.A. No.378 of2016(O&M) Pvt. Limited, the company had balance of Rs.35,28,860/- 1n its bankaccount with Indusind Bank as on 27.6.2008 out of whichRs.15,00,000/- was invested in the assessee company on 28.6.2008and further the investing company had balance of Rs.50,28,835/- ason 10[th]July, 2008 out of which Rs.50,00.000/- has been invested inthe assessee-company on 12[th]July, 2008. The analysis of bankaccount statement reveals that the deposit in the bank account beforeinvestments in the assessee company were all through Bankingtransactions. Therefore, the genuineness of transaction cannot bedoubted. 18.As regards the investment made by M/s Dhir ManagementConsultants Pvt. Ltd., its bank statement is placed at PB-10. Fromthe analysis of this bank account, we find that the assessee companyhad invested Rs.40,00,000/- on 10.6.2008 through RTGS and furtherRs.30,00,000/- was invested on 13.6.2008 through RTGS andinvesting company had sufficient balance in its bank account,Similar is the case with bank account of M/s Singhal Securities Pvt,Ltd placed at PB 27-28, where the investing company had made aninvestment of Rs.30,00,000/- out of the available bank balance. Theinvesting company had received an amount of Rs.30,00,500/- fromone M/s. Tulika Securities on 5.6.2008 and out of this amount ofRs.30,00,000/- for investment was made in the assessee company.18.1. Therefore, the above facts and figures not only the source oinvestments but the source of source has also been established.19.In view of the above facts and findings, we find that all thethree ingredients required for fulfillment of provisions of section 68of the Act are met and therefore, the ld. CIT(A) has rightly deletedthe addition made by the AO u/s 68 of the Act. Accordingly, keepingin view the peculiar facts and circumstances of the case, Ground no.1 (1) of the appeal is dismissed. 2()As regards Ground no. I(11), the Id. DR argued that per theagreement with M/s Satya Developers Pvt. Limited, the income hadaccrued to the assessee @ Rs. 10 lacs per month for 11 months andinvited our attention to the agreement with M/s Satya DevelopersPvt. Ltd. D1.The Id. Counsel for the assessee, on the other hand, submitted [.T.A. No.378 of2016(O&M) that the agreement with M/s Satya Developers Pvt. Ltd. was anexhaustive agreement containing 33 clauses and one of theconditions as per clause-14 says that if the delay is because of theforce-majeure conditions, no compensation 1s payable. He submittedthat the PUDA had not given possession for development of theproperty even till 11.9.2006 and therefore, the delay in the executionof the project work was beyond the control of the developer. The ld.Counsel for the assessee further submitted that from the balancesheet of the developer obtained by the AO by calling the informationu/s 131, it can be seen that the developer had declared project, aswork-in-progress and furthermore, he submitted that clause-14 of thecollaboration agreement provides that the construction has to becompleted within 24 months from the date of sanction of plan orhanding over the possession, whichever is later. The Id. Counselsubmitted that handing over of the possession itself was delayed,therefore, no compensation accrued to the assessee, DD)We find that the Id. CIT(A) has made a finding of fact that asper clause-14, the developer had to complete the project within 24months from the date of sanction of plan or handing over possession,whichever 1s later excepting force majeure circumstances or anyaction of the Statutory Authority or Court orders. The clause-14reproduced by the Id. CIT(A) at page 10 of his order states thatperiod of 24 months shall be subject to force majeure conditions andin view of the facts, we hold that no compensation accrued to theassessee company as there was delay in handing over clear cutpossession to the assessee company by PUDA, which delayed thecompletion of project. Moreover, we find that assessee had filedadditional evidence before the Id. CIT(A) which was forwarded tothe AO and the AO has not made any adverse comments on theadditional evidence. In view of the above, we do not find anyinfirmity in the order of the Id. CIT(A). D3.In view of the above discussion, Ground no. I(11) 1s alsodismissed. D4.As regards Ground no. I(111), the AO made addition u/s 68 ofthe Act on account of loan from M/s Golden Laminates Ltd. The ld.DR heavily relied upon the assessment order, whereas the Id, [.T.A. No.378 of2016(O&M) Counsel for the assessee relied upon the order of the Id. CIT(A). D5.In this respect, we find that the assessee had received a totalloan of Rs.255 lakhs from M/s Golden Laminates Ltd., and theassessee had filed a confirmation from the M/s Golden LamunatesLtd., regarding advancing a loan of Rs.255 lakhs by them and theconfirmation the date, cheque no. and other relevant informationalongwith company’s PAN was also filed. The AO had accepted theloan of Rs.1.05 Crore as genuine and he has rejected the loan ofRs.1.20 Crore on the plea that the same does not appear in the bankstatement of M/s Golden Laminates Ltd., whereas the ld. CIT(A) hasmade a finding of fact that the source of this Rs.1.20 Crore was fromHDFC Bank and the Id. CIT(A) had also forwarded a copy of BankAccount of HDFC to AO for his comments. The AO in the remandreport has not objected to the documents and has requested the Id,CIT(A) to consider the case while disposing of the appeal. The Id,CIT(A) has further made a finding of fact that in the statement ofHDEC, all the entries relating to advancing of loan of Rs.1.20 Croresto assessee do appear. Therefore, keeping in view the facts andcircumstances of the case, we do not find any force in the argumentsof the Id. DR. In view of the above, ground no. Il(111) 1s alsdismissed. 26.In nutshell, the appeal filed by the Revenue is dismissed.9 <Ld. Counsel for the Appellant-Revenue vehemently contendedthat Ld. CIT (A) without granting opportunity to Assessing Authority tocomment upon additional evidence; considered additional evidence whichwas not supplied to Assessing Authority inspite of proper opportunities toAssessee while framing assessment, thus CIT (A) as well Tribunal haswrongly allowed appeal of the Assessee. He further contended that therewas no reason to consider additional evidence which could be consideredonly in case of circumstances mentioned in Rule 46A(1) of IT Rules, 1962.| Per contra counsel for the Respondent-Assessee contended thatadditional information was supplied to Assessing Authority by CIT (A) and [.T.A. No.378 of2016(O&M) T/T Assessing Authority in its remand report did not dispute the additionalinformation rather asked to consider at the time of disposal of the case, thusit is unfair on the part of department to raise a plea that Assessing Authoritywas not granted proper opportunity to comment upon additionalintormation. Per contra counsel for the Respondent-Assessee contended thatadditional information was supplied to Assessing Authority by CIT (A) and [.T.A. No.378 of2016(O&M) T/T Assessing Authority in its remand report did not dispute the additionalinformation rather asked to consider at the time of disposal of the case, thusit is unfair on the part of department to raise a plea that Assessing Authoritywas not granted proper opportunity to comment upon additionalintormation. THaving scrutinized record and heard arguments of both sides,we find that present appeal is bereft of merits and deserves to be dismissed,There are concurrent findings of First Appellate Authority as well asTribunal. We are not oblivious of the fact that Tribunal is final fact findingauthority and scope of interference of this Court lies in narrow compass.The core issue raised by Appellant is that Appellate Authority withoutrecording reasons to entertain additional evidence and without grantingproper opportunity to Assessing Authority while relying upon additionalinformation allowed appeal of the Assessee. Plea of Appellant is fallacious,in view of the fact that no such plea was raised betore Tribunal apart fromfact that remand report was sought from Assessing Authority and who in itsreport did not object to additional information rather asked to consider at thetime of final disposal which vindicates stand of the Respondent-Assessee,The Revenue could be aggrieved had Appellate Authority not suppliedadditional evidence to Assessing Authority or some objection had beenraised at that stage. Failing to object rather extending implied consentdemolishes entire case of the Revenue. There is nothing in the order ofTribunal to show that Revenue raised objection of additional evidencebefore Tribunal. Thus, we do not find any merit in the argument of theAppellant. 8Questions of 1) genuineness of investors who introduced share [.T.A. No.378 of2016(O&M) capital and premium; ii) accrued income on account of delayed completionof project by M/s Satya Developers Limited; 111) capacity of persons fromwhom loan was borrowed and genuineness of transactions, have beenconsidered at length by First Appellate Authority as well Tribunal. Both theAuthorities below have returned categorical findings on each issue andcounsel for Revenue has failed to point out any infirmity in fact or lawwatranting interference of this Court. =In view of our findings, we do not find that any question of lawmuch less substantial question of law arises for our consideration.Accordingly present appeal is dismissed, (JASWANT SINGH )JUDGE (SANT PARKASH ) |JUDGE February 11th, 2020 Vinay| Whether sDeaking/reasonedWhether ReDortable Yes/NoYes/No