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2019 (9) TMI 383

..... m capital market - HELD THAT:- Action of SEBI has no bar on the issue before us as all these are subsequent developments than the relevant accounting period and more so when we are adjudicating identity, genuineness and creditworthiness of the assessee’s advance payments received from the said entity. - further, the mere fact of the said entity not having filed its return does not prove not fatal to the assessee’s explanation proving identity, genuineness and creditworthiness of the advance receipts. Additions towards alleged bogus loan - HELD THAT:- Assessee; holder of RNI licence on behalf of M/s Disha Productions & Media Pvt. Ltd as an individual, had received the impugned sum from M/s Darpan Publication. One of the said entity director (supra) also appeared and confirmed the assessee’s case before the AO to this effect. We conclude in this fact that the lower authorities have erred in treating the impugned sum in assessee’s hands as unexplained cash credits. The same is directed to be deleted. Disallowance u/s 40A - cash payments - HELD THAT:- AO remand report itself is very very clear that none of the assessee’s cash payments has exceeded the .....

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..... section 133(6) notice to CIL which stood returned back by the Postal Authority left . He then required the assessee to profile photo id , supportive documents, profit and loss account, balance sheet and return relating to the relevant previous year creditworthiness and the corresponding bank statement thereof. 5. Case file suggests that CIL s director Shri, Pranab KR. Roy appeared before the Assessing Officer on 19.12.2016 alongwith voter ID card, muster data, director s signatory details and unsigned confirmation of account in assessee s name. He stated that CIL profit and loss account, balance-sheet, ITR and bank statement for financial year 2013-14 was not readily available. The Assessing Officer observes that assessee thereafter filed the other entities ledger copy as on 31.03.2014 with closing balance of ₹6,44,95,068/- after adjusting all credit / debit entries in the relevant previous years. He concluded in this fact that the assessee s failure in getting even the confirmation from the other side invited unexplained cash credits addition u/s68 of the Act. 6. The assessee filed appeal. He placed on record additional submission as well during the lower appellate proceedi .....

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..... Ltd., submitted a photocopy of his ID card and one unsigned confirmation of account. 5. The documents which were called by 133(6) notice were not submitted by him like profit & loss account. Balance-sheet and bank statement of M/s Chakra Infrastructure Ltd. This proves that genuineness of transaction is not proved for which onus is on the assessee. 6. He also stated that the company has not filed return of income for AY : 2014-15. This also proves that genuineness of transaction is not proved for which onus is on the assessee. 7. In this regard during appellate proceeding, the assessee has submitted that he has entered into an agreement for sale with M/s Chakra Infrastructure Ltd. who had admit to purchase a six-storied building alongwith the land of Chakranayantara Hotel including furniture and fixture from the assessee for a consideration amount of ₹ 10 crore. It was further decided that CIL would pay such amount to the assessee from time to time by 31.03.2016.However, the said deal did not materialize and the assessee was returning the money received from CIL [Ledger account of CIL is annexed herewith and marked as Annexure-G] Comments of AO 8. After going through the .....

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..... genuineness of transaction is not proved for which onus is on the assessee. 12. Further, it is stated by assessee that- © In the relevant year, the assessee received only sum of ₹ 8,52,000/- from CIL. However, the AO wrongly added the closing balance of ₹ 6,44,95,068/- to the income of the assessee without considering that the said amount also included brought forward balance. The details of the transactions with CIL in the relevant year is given as under. Opening balance Amount received Amount paid Closing balance ₹ 6,83,85,969/- ₹ 8,52,000/- ₹ 47,901/- ₹ 6,44,95,068/- The above facts find corroboration with the confirmation of account signed by the said party [Annexure H] Fro the above, it is apparent that the addition made by the Ld. AO was not permissible in law inasmuch as ₹ 6,83,85,969/- was appearing as the brought forward balance form the earlier year and during the instant year, the closing balance has, in fact, been reduced to ₹ 6,44,95,068/-. Comments of AOAs discussed above, confirmation filed by assessee is perused. The amount shown by M/s Chakra Infrastructure Ltd. does not show capacity to advance such huge loans w .....

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..... Further, profit & loss account, balance-sheet and bank statement were not filed by M/s Chakra Infrastructure Ltd., therefore, creditworthiness is not established. Therefore, the balance appearing in balance sheet of the assessee of ₹ 6,44,95,068/- remains unexplained. 15. The above discrepancies in account of assessee was categorically mentioned as it leads to some circumstantial evidences in case of assessee. In this regard, circumstantial evidences are of crucial importance collected from Public Domain which are of crucial importance. The news in the Economic Times of India dated 21.4.2016 is very relevant that SEBI barred the Firm and its Directors from the Capital market for four years of M/s Chakra Infrastructure Ltd who had garnered funds illegally. It is reproduced based on google search as under for ready reference as under. SEBI ASKS CHAKRA INFRASTRUCTURE TO REFUND INVESTORS MONEY . NEW DELHI: Markets regulator Sebi has ordered Chakra Infrastructure and its directors to refund investors money which it had raised illegally b issuing securities. Besides, the Securities and Exchange Board of India (SEBI) has barred the firm and its directors from the capital market .....

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..... in his report dated 25.8.2017, he stated that In case of Shri Jitendra Prasad Singh, DA-33,Sagarika Apartment, 1set Floor, New Town, Kolkata, Inspector - Shri Ganesh Chandra Chakladar s report is as follow- First I try to find out the existence the address i.e. of M/.s Chakara Infrastructure Ltd. of 40B/B, North Purbachal, P.O.Haltu, Kali Tala Link Road, [P.No.28, Purbachal Main Road, Kolkata-78 . Everybody of the area failed to inform about such name and address. But a grocer, named Bapi Barick, informed that M/s Chakra Infrastructure Ltd has been abolished a few years back and it was established in a room under a apartment, named Madumati . But the given address is not correct. As per his instruction I have traced out the existence of M/s Chakra Infrastructure Ltd. on going there, I notice that there is no office under name and style M/s Chakra Infrastructure Ltd. but I observe several notices affixed above the gate [enclosed photocopy]. One of them is shown as Chakra Infrastructure Ltd. I also notice that the collapsible gate is sealed. Wife of care taker, Smt. Anima Halder told me that local police sealed the gate. I observed that the building was painted and named Madumati . P .....

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..... p before this tribunal s co-ordinate benches in Smt. Sapnaben Depakbhai Patel vs. ITO Ward-10(1) Ahmedabad in ITA No.2414/Ahd/2013 decided on 13.01.2016. Learned co-ordinate bench considered the interplay between sec. 24D of the Income Tax Act vis-à-vis the sec. 17(2)(1A) and Sec. 49 of the Registration Act as well as sec. 53A of the Transfer of Property Act as under:- 23. The first reason assigned by the ld.First Appellate Authority for ignoring the agreement dated 4.4.2008 and 2.3.2009 for holding them invalid and non-genuine is that for harbouring any transfer within the meaning of clause (v) of section 2(47), there must be a transaction under which the possession of immovable property is allowed to be taken or allowed to be retained. There is no dispute with regard to the above finding of the ld.CIT(A). We also concur with regard to the observation of the ld.First Appellate Authority that Section 53A of the Transfer of Property Act (TPA), 1982 is not source by which the title to the immovable property can be acquired, but it only served as a shield to defend one s lawful possession obtained in pursuance to a contract. According to the ld.First Appellate Authority, sectio .....

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..... allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the TPA, and (b) any transaction entered into in any manner which has the effect of transferring, or enabling the enjoyment of, any immovable property. In these two eventualities, profits on account of capital gains would be taxable in the year in which such transactions are entered into, even if a transfer of immovable property is not effective or completed under the general law. In the present case, there is a fine distinction which remained un-noticed at the end of the ld. CIT(A). According to the assessee, the rights which have been alienated by her by virtue of agreement dated 4.4.2008 are the rights of capital nature. These rights have been alienated in favour of SDS. The ld.CIT(A) has referred to sections 17 and 49 of the Indian Registration Act, but, failed to notice the proviso appended to section 49 which has been incorporated by way of amendment subsequently. Thus, it is pertinent to take note of section 49 along with proviso which reads as under: 49. Effect of non-registration of documents required to be registered.-No document required by section 17 or b .....

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..... possession or executed in favour of a person in possession, is compulsorily registrable under section 17(1A) of the Registration Act, 1908, but the failure to register such a contract would only deprive the person in possession of any benefit conferred by section 53A of the 1882 Act. The proviso to section 49 of the Indian Registration Act clearly postulates that non-registration of such a contract would not prohibit the filing of a suit for specific performance based upon such an agreement or the leading of such an unregistered agreement into evidence. 12. A suit for specific performance based upon an unregistered agreement to sell accompanied by delivery of possession or executed in favour of a person who is already in possession, cannot, therefore, be said to be barred by section 17(1A) of the Registration Act, 1908. 13. Section 17(1A) merely declares that such an unregistered contract shall not be pressed into service for the purpose of section 53A of the Transfer of Property Act, 1882. Section 17(1A) of the Registration Act, 1908, does not, whether in specific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreem .....

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..... ell as his proprietary concern name. We reiterat that impugned addition sum of ₹6,44,95,068/- is the net balance of CIL. We accordingly observe that the Revenue s action of making the impugned addition of the very sum in assessee s hand on one hand and holding the same as accommodation entries on the other is not acceptable. 13. Coming to equally important aspect that the assessee s opening balance figure(s) as on 01.04.2018 read an amount of ₹6,83,85,969/- followed by further amount received of ₹8,52,00/- and amount paid ₹47,42,901/- only, this tribunals co-ordinate bench s in ITO Ward-1(4) Kolkata vs. M/s Sankhuwala Commercial Pvt. Ltd. in ITA No.1973/Kol/2016 decided on 27.07.2018 has taken into consideration the catena of case law to hold that sec. 68 addition of unexplained cash credits comes into play only qua the relevant transactions or credit instances in the specified accounting period as follows:- 8. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the claim of having received the amount in question towards share capital and share premium during the earlier F.Y. 1999-2000 .....

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..... ere introduced in the form of advance against breeding stallions owned by the assessee and thus these credit entries did not relate to the year under consideration for being considered under section 68 of the Act. Since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assessee, does not pertain to the year under consideration, under these circumstances, the A.O. was not justified in making the impugned addition under section 68 of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A). ii. In CIT v. Parameshwr Bohra 301 ITR 404 (Rajasthan) it was held in para (5) of the order: (5) On the merit of the additions made in the income of the assessee, there is a clear finding, and about which there is no dispute, that the amount added in the income of the assessee as unexplained investment or cash credit in the A.Y. 1993-94 was the same amount which was credited in the books of account of the assessee for previous year ending on 31st March, 1992. The Tribunal has categorically come to a finding, and that finding is not under challenge, that this is not a case of cash cr .....

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..... the share capital and share premium amount received in the earlier year as unexplained cash credit in the subsequent year was upheld by the Tribunal for the following reasons given in paragraph no 4 & 5 of its order: 4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee is an income tax assessee under PAN AABCJ9581H of the Tax Ward 1(4), Kolkata. The A.O. has passed the assessment order dated 21.03.2014 u/s 147/143(3)/263/144 of the Act. The A.O. has made the addition u/s 68 of the Act, therefore, we would like to reproduce section 68 of the Act which reads as under: Where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and sources thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. 5. On perusal of the aforesaid provision of law shows that an addition u/s 68 of the Act for making addition u/s 68 as unexplained cash credit the following condition has to be satisfied: a .....

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..... filed its return does not prove not fatal to the assessee s explanation proving identity, genuineness and creditworthiness of the advance receipts. We therefore direct the Assessing Officer to delete the impugned addition of ₹6,44,95,068/-. 15. Next comes assessee s fourth substantive ground seeking to delete alleged bogus loan addition of ₹71,57,971/- in case of M/s Disha Productions and Media Pvt. Ltd. This paper book page 88 contains RNI licence agreement dated 23.10.2013 with M/s Darpan Publication Ltd, accounting confirmation of ledger / books of account and M/s Disha Production and Media Pvt. Ltd. ITR acknowledgment and final account; respectively. All these sufficiently indicates that the assessee; holder of RNI licence on behalf of M/s Disha Productions & Media Pvt. Ltd as an individual, had received the impugned sum from M/s Darpan Publication. One of the said entity director (supra) also appeared and confirmed the assessee s case before the Assessing Officer to this effect. We conclude in this fact that the lower authorities have erred in treating the impugned sum in assessee s hands as unexplained cash credits. The same is directed to be deleted. 16. Next .....

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