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Radico NV Distilleries Maharashtra Ltd. Versus Commissioner of Income Tax (Central) -III, New Delhi & Ors.

2017 (10) TMI 600 - DELHI HIGH COURT

Application to Income Tax Settlement commission [ITSC] - reasons given by the ITSC for rejection of the application that the questionnaire issued by the AO was not answered - Held that:- Insofar as the first reason is concerned, once the ITSC proceeds with the settlement application, as per Section 245D (4), the proceedings before the AO comes to a standstill. This is clear from a reading of Section 245F (2) of the Act. Thus, no adverse inference can be drawn from the fact that the questionnaire .....

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t can be reconciled before the ITSC if the application is proceeded with and heard finally. The difference is too minimal when compared to the total amount disclosed, to constitute a failure to make full and true disclosure of the income - Applicant has taken contradictory stand regarding whether it is a successor company or a new set up to explain the sale of assets - ITSC appears to have proceeded on a wrong premise. There is no doubt that Shetkari is an earlier avatar of the Petitioner. T .....

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e Petitionerís applications by the ITSC would result in a failure to examine the matter comprehensively and in entirety. - It is not in dispute that the Petitioner company was undergoing restructuring. The restructuring of the shareholding is different from a company being newly setting up. The term 'process of setup' is merely a misdescription by the Petitioner of the restructuring process, in its response dated 1st April 2013, to the notice of the ITSC dated 8th February 2013. The ITSC ap .....

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propriate to set aside the impugned order of the ITSC. It is clarified that this Court has not examined the merits of the dispute which shall be examined by the ITSC in accordance with law. - W.P.(C) 3373/2013 & CM No. 6413/2013 (stay) - Dated:- 9-10-2017 - S. MURALIDHAR & PRATHIBA M. SINGH JJ. Petitioner Through: Mr. Ajay Vohra, Senior Advocate with Ms. Kavita Jha and Mr. Vaibhav Kulkarni, Advocates. Respondents Through: Mr. Rahul Chaudhary, Senior Standing Counsel with Mr. Sanjay Kumar, Ju .....

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ding cases filed by the Petitioner. Brief Facts 2. A search was conducted at the business premises of the Petitioner on 15th February, 2011 under Section 132 of the Act, Pursuant to the search, proceedings were initiated on 27th January, 2012 under Section 153A for the AYs 2005-06 to 2010-11. At that time, the assessment proceedings for AY 2011-12 were also pending before the Assessing Authority. 3. While the proceedings under Section 153A of the Act were pending, the Petitioner approached the I .....

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s on 30th January, 2013. 4. Apart from the Petitioner's application, applications were also filed by the group companies and individuals on whom searches were carried out. In total the said applicants have declared a sum of ₹ 104,10,90,845/-. A consolidated order was passed by the ITSC on 8th February, 2013 directing that Since the applicants have prima-facie fulfilled the conditions prescribed under Section 245C (1) of the Act, the applications are allowed to be proceeded with. 5. The .....

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riefcase companies. The relevant portions of the report are set out as under: It was alleged that M/s Radico NV Distilleries Maharashtra Ltd. has received substantial amount of share-capital from bogus/ nonexistent companies. Perusal of the list of allottees of M/s Radico NV Distilleries Maharashtra Ltd. shows that it has received Share capital from M/s Enn Vee Holdings Pvt. Ltd., in the following manner: F.Y. Shares Issues Amount Received (Rs.\Lacs) 2007-08 5000 400 2008-09 320000 320 2009-10 8 .....

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in the form of share-capital by M/s Radico NV Distilleries Maharashtra Ltd. from M/s Enn Vee Holdings Pvt. Ltd. is unaccounted investment. However, it would be pertinent to bring on record that M/s Enn Vee Holdings Pvt. Ltd. is a group company of the NV Group of cases which too was covered in the search and has already moved to the Settlement Commission separately. 6. The report concludes that a total of ₹ 104,10,90,845/- was the total additional income as disclosed by the Petitioner and .....

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rder dated 3rd April, 2013 rejecting the applications of the Petitioner as also that of M/s. Radico Khaitan Ltd. The reasons for rejection are recorded as under: 1. Applicant has not filed reply to questionnaire till date even though the questionnaire was issued to him by the A.O. several months back. The learned Counsel for the applicant when asked to explain the reasons for not giving a reply even after lapse of several months merely stated that as the information sought was routine the reply .....

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4.2013 it is mentioned that the Directors are trying to strengthen the financial position of Enn Vee Holdings Ltd. This reflects adversely on the capacity of Enn Vee Holdings Ltd. to advance a sum of ₹ 21.44 Crores to the applicant group. At page 64 of the Paper Book it is noted that in the year 2009 Enn Vee Holdings Ltd. had Nil income and in the year 2010 it had income of just ₹ 1.08. 4. Regarding joint venture agreement filed by theapplicant company at page 1 of the written submis .....

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report dated 18.03.2013 that the applicant had received share capital worth ₹ 21.44 crores from Enn Vee Holdings Ltd. which is a company having poor financial health as admitted by their Director's report at page 47 of the Paper Book filed on 01.04.2013 by the applicant where it is mentioned that the directors are trying to strengthen the financial position of Enn Vee Holdings Ltd. This reflects adversely on the capacity of Enn Vee Holdings Ltd. to advance a sum of ₹ 21.44 Crores .....

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with N.V. Distilleries and Breweries Pvt. Ltd. on 12.04.04 on stamp paper. However, an amendment to this agreement dated 12.04.2004 was made on 01.06.2004 stating that it will come into effect from 01.04.2004, which is even before the date of main agreement signed on 12.04.2004. It is also note worthy that the amending agreement dated 01.06.2004 is on letter head of the applicant and not on stamp paper. The agreement to amend apparently has no legal validity and cannot be accepted as the genuine .....

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ll and true disclosure of its income & (c) The application of Enn Vee against whom the allegation has been made, that it had received the bogus shares and that it is a conduit, is also currently pending before the ITSC and therefore, the Petitioner s case be also taken up along with the case of Enn Vee by the ITSC itself. Before this Court, the first issue is not pressed or argued. Submissions of the Petitioner 9. The main argument of Mr. Ajay Vohra, learned Senior Advocate appearing on beha .....

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(hereinafter referred to as Shetkari ) in which another entity Ridhi Sidhi Shares Pvt. Ltd. (hereinafter referred to as Ridhhi Sidhi ) had 100% of the shareholding. By this agreement, the shareholding of Ridhhi Sidhi was being diluted to 32% and the remaining investments were to be made by Enn Vee and other entities. Shetkari is now the Petitioner s company. 10. According to Mr. Vohra, the audited accounts of both the companies i.e.the Petitioner and Enn Vee reflected the investment made and th .....

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ue does not dispute that the application filed by Enn Vee is also pending before the ITSC and hence it would be appropriate that the ITSC considers both the applications together so that the interest of the Revenue is also protected. Mr. Vohra relies upon the judgment of this Court dated 17th May, 2017 passed in W.P.(C) 5424/2016 (Bindlas Duplux Ltd. v. Principal Commissioner of Income Tax (Central) Delhi-3 & Ors.) to submit that under a similar situation this Court had observed that It was, .....

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he merits of the case are concerned, Mr. Chaudhary submits that there was a failure by the Petitioner to make a full and true disclosure. He specifically relies upon the contradictory stand taken by the Petitioner which is recorded as reason no. 2 in the impugned order. He further submits that the AO had asked several questions to the Petitioner which were not answered by it. Mr. Chaudhary relies upon how on the one hand the Petitioner claims depreciation of the assets of the company and on the .....

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ld requirement of the full and true disclosure. Analysis and Findings 13. The reasons given by the ITSC for rejection of the application that have been canvassed before the Court are primarily threefold. First that the questionnaire issued by the AO was not answered. Secondly, there was a failure to make a full and true disclosure and thirdly that the Petitioner was taking contradictory stands. 14. Insofar as the first reason is concerned, once the ITSC proceeds with the settlement application, .....

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by the CIT from the documents seized is approximately ₹ 14,621,882/- which constitutes less than 1.5% difference in the amount disclosed and the amount computed by the CIT. It is possible that the said amount can be reconciled before the ITSC if the application is proceeded with and heard finally. The difference is too minimal when compared to the total amount disclosed, to constitute a failure to make full and true disclosure of the income. 16. Coming to the main plank of Mr. Chaudhary s .....

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at Shetkari is an earlier avatar of the Petitioner. The Joint Venture Agreement clearly shows that 100% of shareholding of Shetkari was owned by Ridhi Sidhi and that was intended to be diluted with investments from the other companies including Enn Vee. The application of Enn Vee is pending before the ITSC. The primary ground for rejection is that Enn Vee is a conduit and that it has received the substantial amount of share capital from bogus/non-existent companies. If this is so, it would have .....

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