TMI Blog2020 (6) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of assessment u/s 147 - HELD THAT:- Original return was processed u/s 143(1) and the case was reopened within 4 years upon receipt of tangible information from investigation wing which suggested possible escapement of income in the hands of the assessee. In our opinion, nothing more was required at this stage since Ld. AO had sufficient reasons to form such a belief. Therefore, we do not find much substance in assessee s cross-objections and see no reason to deviate from the findings of Ld.CIT(A), in the impugned order, in this regard. Resultantly, the cross-objections stands dismissed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - I.T.A. No.3593/Mum/2019 And C.O. No.05/Mum/2020 - - - Dated:- 25-6-2020 - Shri Mahavir Singh, VP And Shri Manoj Kumar Aggarwal, AM For the Assessee : Dr.P.Daniel-Ld.AR For the Revenue : Shri Rahul Raman-CIT- DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT ME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suant to receipt of certain information from DDIT (Investigation), Unit-2(1), Kolkata, it transpired that assessee stood beneficiary of deposits of ₹ 1020 Lacs from an alleged paper company namely M/s. Minaxi Suppliers Private Limited (MSPL). Accordingly, the case was reopened as per due process of law by issuance of notice u/s. 148 on 29/03/2016 which was followed by notices u/s. 143(2) and 142(1) wherein the assessee was directed to file requisite details / evidences in support of the stated transactions. 3.3 The reasons recorded for reopening the assessment has been extracted at para 5.1 of the quantum assessment order. In the reasons, it was asserted that on the basis of inquiry conducted by the investigation wing of the department in the case of M/s KJM International (Prop. Shri Sanjoy Kumar), it was found that there were large value cash deposits from different branches, debits through RTGS and transfer to third party account, in one individual bank account maintained with ICICI Bank. It further transpired that monies were routed through various entities controlled by one Shri Anand Sharma who admitted to have indulged in hawala transactions. The entities floated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar details as filed by the assessee. 3.6 However, relying upon the findings of the investigation wing in the case of Shri Sanjoy Kumar wherein it transpired that the individual bank account of Shri Sanjoy Kumar was used to covert cash into banking instrument which was later on transferred through various layers to reach the final beneficiaries. Upon analysis of bank account, it was found that maximum amount travelled to the accounts of 3 entities viz. M/s Maxworth Vinimay Ltd., M/s Zedco Corporation and M/s Dealcomm Private Ltd. These concerns also could not be found at the given addresses and were stated to be paper companies to provide accommodation entries. The two entities namely M/s Tanish Trade Com Pvt. Ltd. and M/s MSPL were stated to be in final layers from where the funds were stated to be transferred to ultimate beneficiaries. 3.7 The further verification by investigation wing revealed that M/s MSPL had shifted office and it was not found at the given address. Examination of its financial statements revealed that it received huge securities premium with corresponding deposits but without any business activity of sale or purchase of goods or services. Receipts wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestments in unquoted shares, which reduced from ₹ 61,50,83,914 (as on 01-04-2010) to ₹ 10,00,000 (as at 31-03-2011). As per Profit Loss Account for the year ending 31-03-2011, major income is by way of interest on loan, which reduced from ₹ 1,51,88,431 (F.Y.2009-10) to ₹ 63,88,468 (F.Y.2010-11). This analysis of financial statement shows that MSPL liquidated its investments in unquoted shares just to give non-interest-bearing advances to various parties, which included the assessee company NCPL. This is anything but business prudence. From the perusal of analysis, it is pertinent to note that it is an admitted fact by Ld. AO that the substantial source of extending the loan by M/s MSPL was liquidation of investment in unquoted shares. 3.9 In the above factual background, relying upon various judicial pronouncements, it was finally held by Ld. AO that the assessee failed to prove the genuineness of the deposit received from M/s MSPL. Therefore, the same was added to the income of the assessee as unexplained cash credit u/s 68 while framing the assessment. 4.1 Aggrieved, the assessee assailed the action of Ld. AO on legal grounds as well as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt Ltd to aggregate large area of land in Sindhudurg District which has been declared a first tourism district in Maharashtra and sell the same to branded Hoteliers who will be interested in tourism business. In the course of Joint ventureship with M/s Minaxi Supplier Pvt Ltd, the appellant stated to have received ₹ 10.2 Crores from the Co-venturer for the purpose of business. The appellant submitted its financial statements, Confirmation letter from the investor, Company master data of the investor, and financial statements of the investor and copies of various judgements it relied upon in support of its contention and claimed that it complied with the provisions of Sec 68. During the course of appellate proceedings, the appellant filed name, address and PAN of the investor, loan confirmation, ledger account and bank statement reflecting the transaction and financial statements of the investor. It is seen from the facts available on record that the AO has disputed the fund received for failure of the assessee to prove the ingredients enshrined for complying the provisions Sec 68 of the Act. Existence of the transaction in the books of the assessee is a condition precedent be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment orders passed u/s 143(3) of the Act in the case of MSPL for AY 2010-11 and AY 2012-13. Therefore, the material produced on record are adequate to comply with the provisions of Sec 68 of the Act. The AO has rejected the submissions on the ground that the assessee failed to explain the nature and genuineness of the receipt of the funds from MSPL on the basis of report of Investigation Wing. The assessment order reveals that the addition is entirely based on the report received from Investigation Wing. The AO did not bring any corroborative evidence or supporting material to prove that the money has been routed from various hawala parties as alleged in the Investigation wing report. Similarly, concluding a transaction as non-genuine does not pass the test of legal scrutiny without proper enquiry to establish that the funds were either bogus or not utilised for business purpose. As explained in the previous paragraphs, the assessee is considered to have discharged its onus after submitting the documents like confirmation letter, financial statements of the creditor/investor and bank statements. The onus then shifts to the AO to initiate a proper enquiry and bring suffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to prove the source of source of funds. Further, the AO had a finding that MSPL liquidated its investments in unquoted shares to give non-interest-bearing advances to the assessee company. Further, the disputed fund as claimed by the assessee is not an unsecured loan advanced by MSPL to the appellant company but an investment in the joint venture and an investor cannot be questioned to utilize its funds in a particular manner. Similarly, there is no case for the additions made to the total income of the assessee on the basis of dubious transactions of third parties like Shri Sanjay Kumar or Shri Anand Sharma. As is evident, the assessee has produced all the details to prove the source and the genuineness of the transaction. The details submitted by the assessee before the AO are as under- a) Confirmation from the said Minaxi Suppliers (creditor). b) Ledger Accounts of the creditor. c) Books of the creditor viz. Minaxi Suppliers Pvt.Ltd.. d) Bank Statements evidencing receipt of monies e) Income Tax Return of the creditor for A.Y. 2011-12. f) Company master data showing details of Minaxi Suppliers P. Ltd; its directors Jashmin Ramesh Bhayani and Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditworthiness of the creditors. v. Hon. Guiarat High Court in the case of DCIT v. Rohini Builders (2002) 256 ITR 360 (Gui): When all the requirements such as complete addresses of all the Creditors along with GIR Nos/ PAN as well as Confirmations along with Copies of Returns filed by the Creditors and all loans were received and repaid by account payee cheques nothing more is required were to be filed. vi. In the case of Hon. Prin. Commissioner of Income Tax. Mumbai v. Veedhata Tower Pvt. Ltd.. the question of law raised before Hon'ble Bombay High Court was Whether on the facts and in the circumstances of the case and in law, the Tribunal is correct in interpreting Sec. 68 to hold that the A.O. was not entitled to enquire into the source of the source to come to a finding that a particular credit was not genuine in terms of Sec. 68. After detailed discussion, the Hon. Court held that the assessee has submitted all the required details, the assessee is not supposed to explain the Source of Source of Receipts. Besides, the Statute by an amendment to Sec. 68 of the Act w.e.f. 1st April, 2013, effective from asstt. year 2013-14. Therefore, during the subject asstt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry carried out in the case of Kolkatta based entities and the conclusions drawn therein cannot be applied ipso facto and in a sweeping manner to all other cases who have entered into transactions during that period without making any enquiry or investigation to examine the genuineness of the particular transaction which is under suspicion. In view of the facts and circumstances mentioned above, in my opinion, the appellant has submitted sufficient evidences to prove the genuineness of the transactions during the year under consideration. In these circumstances, in my considered opinion, the assessee's contention has considerable cogency and accordingly the AO is directed to delete the addition of ₹ 10,20,00,000/- made to the total income of the assessee u/s 68 of the Act. Therefore, these grounds of appeal are allowed. Aggrieved as aforesaid, the revenue is under appeal before us. The assessee, in its cross-objection, has challenged the validity of reassessment proceedings. From the impugned order as extracted above, it is evident that Ld. CIT(A) has granted relief to the assessee primarily in view of the fact that the assessee had submitted sufficient docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft upon revenue to dislodge the assessee s claim by bringing on record material evidences and unless this onus is discharged by the revenue, no addition could be sustained u/s 68. The Hon ble Supreme Court in the case of Lovely Exports P. Ltd. [319 ITR 5], dismissing revenue s appeal, observed as under: - 2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. 3. Subject to the above, Special Leave Petition is dismissed. The ratio of said decision has subsequently been followed by various judicial authorities in catena of judicial pronouncements. The said decision has been followed by Hon ble Bombay High Court in the case of CIT Vs. Gagandeep Infrastructure Private Limited [80 Taxmann.com 272] subsequently in CIT Vs. Orchid Industries Private Limited [88 Taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, upon perusal of these documents, it could be said that the assessee had discharged the stated primary onus of Sec.68. It is pertinent to note that the assessee has produced copy of assessment order passed by revenue in the case of M/s MSPL in scrutiny assessment u/s 143(3) for AYs 2010-11 2012-13 which would lead to inevitable conclusion that the said entity was a taxable entity and regularly assessed to tax. In both the years, returned income of M/s MSPL has substantially been accepted by the revenue. 5.4 The perusal of assessee s financial statements, for the year, would show that the assessee has received unsecured loans not only from M/s MSPL but also from various other entities. The aggregate of such loans accepted by the assessee is 26.26 Crores at year-end which would show that impugned transactions are not isolated transactions but regularly carried out by the assessee during the course of its business and a part of which has already been accepted by the revenue. 5.5 Undisputedly, the amount received from M/s MSPL was through banking channels. There is no allegation of immediate cash deposit in the bank account of M/s MSPL before granting loans to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with by this Court. 11. Per contra, Mr. Padvekar, learned counsel for the respondent submits that from the facts and circumstances of the case, it is quite evident that assessee had discharged its burden to prove identity of the creditors, genuineness of the transactions and credit worthiness of the creditors. He submits that the legal position is very clear in as much as assessee is only required to explain the source and not source of the source. Decision of the Supreme Court in NRA Iron Steel P Ltd (supra) is not the case law for the aforesaid proposition. In fact, the said decision nowhere states that assessee is required to prove source of the source. 11.1. Referring to the orders passed by the authorities below, Mr. Padvekar submits that in the present case, the investigation wing of the department had carried out detailed investigation at Kolkata and found the source of the credit to be genuine. This report of the investigation wing was not taken into consideration by the Assessing Officer. Therefore, lower appellate authorities were justified in deleting the additions made by the Assessing Officer. Being a finding of fact, no substantial question of law arises in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged the primary onus contemplated by Section 68 of the Act. 15. It is also a settled proposition that assessee is not required to prove source of source. In fact, this position has been clarified by us in the recent decision in Gaurav Triyugi Singh Vs. Income Tax Officer-24(3)(1). 16. Having noted the above, we may now advert to the orders passed by the authorities below. 17. In so far order passed by the Assessing Officer is concerned, he came to the conclusion that the three companies who provided share application money to the assessee were mere entities on paper without proper addresses. The three companies had no funds of their own and that the companies had not responded to the letters written to them which could have established their credit worthiness. In that view of the matter, Assessing Officer took the view that funds aggregating ₹ 34 Crores introduced in the return of income in the garb of share application money was money from unexplained source and added the same to the income of the assessee as unexplained cash credit under Section 68 of the Act. 18. In the first appellate proceedings, it was held that assessee had produced sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng(a) Identity of the creditor (b) Genuineness of the transaction (c) Credit-worthiness of the party (i) In this case, the assessee has already proved the identity of the share applicant by furnishing their PAN, copy of IT return filed for asst. year 2010-11. (ii) Regarding the genuineness of the transaction, assessee has already filed the copy of the bank account of these three share applicants from which the share application money was paid and the copy of account of the assessee in which the said amount was deposited, which was received by RTGS. (iii) Regarding credit-worthiness of the party, it has been proved from the bank account of these three companies that they had the funds to make payment for share application money and copy of resolution passed in the meeting of their Board of Directors. (iv) Regarding source of the source, Assessing Officer has already made enquiries through the DDI (Investigation), Kolkata and collected all the materials required which proved the source of the source, though as per settled legal position on this issue, assessee need not to prove the source of the source. (v) Assessing Officer has not brought any cogent material or evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess any substantial question of law, arises from the order of the Tribunal. Consequently, the appeal is dismissed. However, there shall be no order as to cost. 5.9 Considering the entirety of facts and circumstances, we are of the considered opinion that the assessee has discharged the primary onus to demonstrate fulfilment of primary ingredients of Sec.68 and it was incumbent upon revenue to dislodge the assessee s claim by bringing on record, cogent material to establish that the assessee s unaccounted money was routed in its books of account in the garb of unsecured loans. However, we are unable to find any such material except for the fact that additions were made merely on suspicious, conjectures and surmises. Therefore, no infirmity could be found, in the impugned order, in this regard. We confirm the appellate order. Resultantly, the revenue s appeal stands dismissed. Assessee s Cross Objections 6. The Ld. AR, in the cross-objections assailed the reassessment proceedings by submitting that the proceedings were initiated merely at the behest of investigation wing without due application of mind by Ld. AO. However, we find that the original return was processed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckdown period for the purpose of aforesaid rule governing the pronouncement of the order. Accordingly, the order is being pronounced now after the re-opening of the offices. 7.3 Faced with similar facts and circumstances, the co-ordinate bench of this Tribunal comprising-off of Hon ble President and Hon ble Vice President, in its recent decision titled as DCIT V/s JSW Limited (ITA Nos. 6264 6103/Mum/2018) order dated 14/05/2020 held as under: - 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners: - (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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