9911796707
TMI Blog2023 (1) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2015-16 is treated as a "lead case". In this appeal, the revenue has raised following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs. 4,53,66,799/- on account of addition to share capital U/s 68 of the I.T. Act. 2. It is, therefore, prayed that the order of the ld. CIT(A) be set aside and that the order of the AO be restored. 3. The appellant craves to add, modify or alter any grounds during the course of appeal proceedings." 2. Brief facts of the case are that the assessee is a company, engaged in the business of trading of equities, shares and derivatives, filed its return of income for the A.Y. 2015-16 on 30/09/2015 declaring total income of Rs. NIL. The assessee has shown current year loss of Rs. 1.87 crore under normal provisions of Income Tax Act and book profit at Rs. 2.10 crores under Section 115JB of the Income Tax Act, 1961 (in short, the Act). The case of assessee was selected for scrutiny. During the assessment, the Assessing Officer recorded that during the period under consideration, there was addition of Rs. 4.53 crores in share capital of assessee company. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maker Chamber IV, Nariman Point, Mumbai 25,000,000 25,00,00,000 Total share capital received during the year 26,99,00,000 Adhoc addition made by AO 4,53,66,799 4. The assessee further stated that all transactions pertain to equity shares application and preference share application money which were related to intergroup company transactions. To discharge the onus as per Section 68, the assessee furnished PAN, acknowledgement of return of income of share applicant, audit report alongiwth financial statement to prove the identity. To prove the genuineness of transaction, the assessee furnished receipt of money through banking channel, bank statement of share applicant, transaction between intergroup company, confirmation of transaction with assessee company, share applicant's ledger from assessees books of account, assessees ledger account from share applicant's books of account, board resolution, resolving the decision of investment in assessee company. To prove the creditworthiness of investors, the assessee submitted balance sheet and Profit & Loss Account (P&L Account) showing enough income and source of income of share applicant. By furnishing all such det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share with list of allotee, copy of ROC filing for share allotment, chart showing details of share applicants alongiwth related evidences. The assessee also furnished details in respect of each of investor in the share of assessee company. For Shri Sandeep Tandon who has invested Rs. 1.98 crore, the assessee furnished copy of ITR, copy of ITR of Archana Tandon (wife of Sandeep Tandon), copy of bank statement. With regard of Yogesh Banthia, the assessee filed copy of ITR. With regard to Quant Employee Welfare Foundation Private Ltd., the assessee furnished ITR for A.Y. 2015-16 and audit report. For preference share application money of Rs. 25.00 crore, the assessee furnished share application money ledger, copy of ledger confirmation of Quant Capital Holding P. Ltd., copy of bank statement of Quant Capital Holding P. Ltd., ITR of Quant Capital Holding P. Ltd. and audited report with balance sheet for A.Y. 2015-16. The Assessing Officer reported that the assessee furnished bank statement of Shri Sandeep Tandon and Quant Capital Holding P. Ltd. Bank statement of other four persons who has invested Rs. 20,000 each i.e. Vimal Jain, Shankar Narayan, Yogesh Banthia and Jignesh Shah wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from other sources on account of interest income and Rs. 6.89 crores on account of long term capital gain and dividend income. Out of Rs. 11.4 crores, Sandeep Tandon invested Rs. 1.98 crores each in equity share of Quant Capital Securities P. Ltd. and Qcap Securities Pvt. Limited. To strengthen their submission about the creditworthiness of Sandeep Tandon, the assessee filed his return of income of three assessment years i.e. for A.Y. 2013- 14, 2014-15 and 2015-16 showing gross total income and exempt income. In assessment year 2013-14, Sandeep Tandon was having gross total income of Rs. 2.45 crores and exempt income of Rs. 2.10 crores, in A.Y. 2014-15 having gross income of Rs. 1.97 crore and exempt income of Rs. 3.72 crores and in A.Y. 2015-16, he was having gross total income of Rs. 4.33 crores and exempt income of Rs. 6.86 crores. 7. About the investment of Rs. 25.00 Crore by Quant Capital Holdings Pvt. Ltd. in preference share of the assessee-company, the assessee reiterated that they have submitted share application money, ledger, copy of bank statement, ITR acknowledgement, audit report and financials containing balance sheet, P&L account and cash flow statement vide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Tandon was given in the form of computation of total income only and no supporting evidence was filed. The Assessing Officer further noted that the bank statement of Sandeep Tandon was filed but cash flow analysis was not filed to ascertain the source of fund deposited in the account of Sandeep Tandon. The ld. CIT(A) noted that the assessee has shown documentary evidence that the assessee received share capital during the year of Rs. 26.99 crores wherein Sandeep Tandon has invested Rs. 1.98 crores and Quant Capital Holdings Pvt. Ltd. invested Rs. 25.00 crores. The ld. CIT(A) held that there is no figure like Rs. 4.53 crores in the balance sheet against the share capital. The assessee explained the source of investment of Rs. 1.98 crore by Sandeep Tandon out of his total income of current assessment year of Rs. 11.41 crores shown in the return of income. 10. With regard to investment of Rs. 25.00 crores by Quant Capital Holdings Private Limited, the assessee has shown that they have operating profit of Rs. 22.00 crores, proceeded from issue of share at Rs. 4.6 crores and short term borrowings at Rs. 45.77 crores. The Assessing Officer doubted the source of fund in case of Sandeep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on account of unexplained share capital. Before the ld. CIT(A), the assessee filed further details. The ld. CIT(A) deleted the addition by taking the remand report from the Assessing Officer. The decision of ld. CIT(A) is not acceptable as the ld. CIT(A) accepted the explanation of assessee that they have proved the creditworthy of invertors. On the submission of assessee, the assessing officer furnished his remand report on 15/03/2018. The assessee furnished bank statement only in respect of Sandeep Tandon and Quant Capital Holdings Private Limited. Bank statement of other five persons who had made investment of Rs. 20,000/- each, in share capital of assessee were not submitted. Thus, the source of their funds for investment in shares of assessee could not be verified. Even in case of Sandeep Tandon and Quant Capital Holdings Private Limited, the cash flow analysis explaining the source of deposits was not furnished. In absence of source of deposit, the bank account of these two persons could not be verified. During the remand proceedings, the assessee was asked to explain the source of deposit appearing in the account of Quant Capital Holdings Private Limited, it was merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee made repayment of loan of Rs. 150.00 crores to Quant Broking Private Limited, Rs. 23.59 crores to Quant Capital Holdings Private Limited, Rs. 1.60 lacs to Quant Capital Securities Private Limited and Rs. 5.00 crores to Sarojini Krishna Tandon. Thus, the total of Rs. 179.32 crores. The Assessing Officer made addition of share capital of Rs. 4.53 crores and addition of repayment of loan of Rs. 179.32 crores. The assessee filed appeal before the ld. CIT(A). During the appellate proceedings, the assessee filed various submissions. The assessee specifically submitted that they are unaware of the basis on which the figure of addition of Rs. 4.53 crores were arrived while making addition on account of share capital though aggregate receipt for share capital was Rs. 26.99 crores. The details and the submissions furnished by assessee was remanded to the Assessing Officer for his verification and report. During the remand proceedings, the assessee again filed all details and evidences with regard to receipt of share capital as well as loan from various group concern. These evidences not only represented the source of funds received from various parties but also represented 'source of sour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The ld. AR submits that he has placed on record copy of audited financial statement of the assessee for year ending on 31/03/2015, the ledger account of equity and preference share application money in the books of assessee. Board's resolution accepting the share capital, forms filed before the Registrar of Companies (ROC) for allotment of shares, bank statement of assessee. The assessee also filed copy of computation of income of Sandeep Tandon showing total income of Rs. 4.32 crores, copy of ITR of Archana Tandon, copy of bank statement in joint name of Archana Tandon and Sandeep Tandon showing payment of share capital of Rs. 1.98 crore. The assessee has also filed confirmation letter from Quant Capital Holdings Pvt. Ltd., ITR of Quant Capital Holdings Pvt. Ltd. with financial statement for the year ending on 31/3/2015 with bank statement showing payment made to assessee for share capital. The assessee has also filed ITR of Quant Employees Welfare Foundation Pvt. Ltd. who has invested a meagre amount of Rs. 20,000/-. The ld. AR submits that the major contribution for share application and share capital is from Sandeep Tandon and Quant Capital Holdings Pvt. Ltd., remaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 15. The ld. AR for the assessee submits that in case of Sandeep Tandon, funds are received from joint account of Archana Tandon and Sandeep Tandon. The funds in the said accounts were received from broking entity Quant Broking Private Limited. The copy of ITR of Quant Broking Pvt. Ltd. for A.Y. 2015-16 and bank statement is filed at page No. 146 to 356 of the paper book. With regard to Quant Capital Holdings Private Limited from whom the assessee received Rs. 25.00 crores on 23/05/2014. The ld. AR submits that Rs. 2.5 crores were received on 23/05/2014, Rs. 7.5 crores on 02/06/2014 and Rs. 15.00 crores on 05/06/2014. The funds were received from Quant Broking Pvt. Limited. The ITR, bank statement and financial statement of Quant Broking Pvt. Ltd. is also placed on record at page No. 146 to 356 of the paper book, thus the assessee has also proved his source of source of investor making investment in the share capital. The ld. AR for the assessee by referring the financial activity of Quant Broking Private Limited submits that the said entity has total revenue from broking activity, profit from trading in share and securities aggregating to Rs. 29.48 crores and interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Banking Financial Company (NBFC) registered with Reserve Bank of India (RBI). Similarly, the other companies are also acting as a registered Portfolio Managers and are duly registered with SEBI. The company has its mutual fund managing substantial amount of Assets Under Management (AUM). The Assessing Officer has not appreciated such background before making allegation with respect to genuineness of share capital received. The ld. AR for the assessee submits that the investment in share capital made by group companies and once the evidence is filed by assessee explaining the receipt of share capital and explaining the source of source, the Assessing Officer could not have doubted the transaction unless there are direct clinching evidence for doubting the genuineness of transaction. To support his submission, the ld. AR relied upon the following case laws: * Renu Proptech (P) Ltd. Vs ACIT (190 ITD 378) * DCIT Vs Karmeshwar Exim (P) Ltd. (138 taxmann.com 560) * PCIT Vs Anmol Stainless (P) Ltd. (138 taxmann.com 535). 17. The ld. AR submits that once complete evidence are filed by assessee explaining the transaction on account of share capital, the primary onus was discharged b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the ld CIT(A) on considering the submissions of the assessee and the remand report of the assessing officer noted that assessing officer in his remand report has accepted the explanation of assessee with regard to source of fund for repayment of unsecured loan from Quant Broking Private Limited, Qcap Securities Private Limited , Quant Capital Holdings Private Limited and Sarojini Tandon of aggregating of Rs. 179.32 crores, such addition of unsecured loan was deleted being not sustainable. We find that so far as addition of Rs. 4.35 crores are concerned, the Assessing officer reported in his remand report dated 15/03/2018 that explanation of Sandeep Tandon was given in the form of computation of total income and bank statement of Sandeep Tandon was filed, however, cash flow analysis was not filed to ascertain the source of fund deposited in the account of Sandeep Tandon. We find that ld. CIT(A) categorically recorded that the assessee has shown documentary evidence that the assessee received share capital during the year of Rs. 26.99 crores wherein Sandeep Tandon has invested Rs. 1.98 crores and Quant Capital Holdings Private Limited invested Rs. 25.00 crores. The ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25.00 crores by Quant Capital Holdings Private Limited in preference shares of assessee the ld CIT(A) held that assessee has shown that this investor has operating profit of Rs. 22.00 crores, proceeds from issue of share at Rs. 4.6 crores and short term borrowings at Rs. 45.77 crores. The Assessing Officer doubted the source of fund in Quant Capital Holdings Private Limited only on the ground that cash flow analysis was not furnished. The ld CIT(A) held that on considering the explanation and examination of bank statement of Quant Capital Holdings Private Limited, regarding fund availability of Rs. 72.38 crores in current year, thus, the source of fund investment of Rs. 25.00 crores are very well explained and established. During the submissions the ld AR for the assessee on this issue also vehemently submitted that he has not only proved the source of investment but also proved the source of source as well. The ld AR for the assessee furnished the details of source pf source, which we have recorded in para-14 above. On perusal of such source of source, we find that the assessee has explained the source of source in the following manner; 1. Name of investor (Preference Share) Qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp;
4.
Yogesh Banthia AIUPB3135B
502/3, Palm House, 16 Mughal Lane, Mahim West, Mumbai-16
2,000
20,000
5.
Jignesh Shah ANAPS5419E
B-064, Ameya Apartment, Nariman Road, Vile Parle (E), Mumbai
2,000
20,000
6.
Quant Employee Welfare Foundation Private Limited AAACQ3247H
612-617, Maker Chamber IV, Nariman Point, Mumbai
2,000
20,000
Total
19,90,000
1,99,00,000
Preference Shares Capital:
1.
Quant Capital Holdings Private Limited
612-617, Maker Chamber IV, Nariman Point, Mumbai
25,000,000
25,00,00,000
Total share capital received during the year
26,99,00,000
26. Considering the fact that on same set of facts, the similar grounds of appeal raised by revenue in ITA No. 422/Srt/2018 for A.Y. 2015-16 is dismissed, therefore, following the principal of consistency, this appeal of the revenue being ITA No. 423/Srt/2018 for the A.Y. 2015-16 is also dismissed with similar observation.
27. In the result, both the appeals of the revenue are dismissed.
Order pronounced in the open court on 31st January, 2023. X X X X Extracts X X X X X X X X Extracts X X X X
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