TEJORA TECHNOLOGIES LIMITED,THANE vs. DCIT, MUMBAI

आदेश / ORDER PER:NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER :

These are cross-appeals filed by the Appeals filed by the Assessee and the Revenue challenging the order dated 12.12.2024 impugned herein passed by the ld. Commissioner of Income Tax -54, Mumbai (in short, the „ld. Commissioner‟) u/s. 250 of the Income Tax Act, 1961 (in short the „Act‟) for the AY 2017-18.

Coming to the appeal i.e. ITA Nos.512/M/2025filed by the 2. Assessee, the Assessee is aggrieved by the decision of the Ld. Commissioner in sustaining the addition of ₹3,40,67,188/- made under section 69A of the Act, vide assessment order dated 27.12.2019 passed under section 143(3) of the Act.

“7.2 As per the record available in this office a survey u/s. 133A was conducted by DDIT(Inv.) Unit-4, Mumbai in the case of the assessee on 29.03.2017. During the course of survey a statement of Shri Nitin H. Shenoy was recorded wherein reply to question in connection with the bogus transaction with M/s. Raj Export, he has stated as under:- "Sir, this is a bogus sale entry of Gold bars/Gold ETF, amounting to Rs. 1,02,50,000/- (as Annesure-1 above). Sir, actually I needed some cash in FY 2006-07 and FY 2007-08. For that, I took Bogus bills of Gold Purchase from M/s. Riddhi Siddhi Buillions Ltd, against which cash was received back. Since, the Gold Bars were being reflected in the Balance Sheet of the company M/s. Tejora Technologies Ltd, therefore, to reverse this Bogus entry, I took bogus sales bills from the following entities -M/s. Riddhi Siddhi Buillions Ltd, M/s. Raj Export, M/s. Manayan Trade Link and M/s. Dattguru Trading Co. Pvt. Ltd." 7.3 In his statement he has further stated that:- "Sir, I want to declare the Bogus Purchases of Gold Bars/gold ETF made from M/s. Riddhi Siddhi Buillions Ltd, amounting to Rs. 3,40,67,188/-, which was received back by me in cash, under the Pradhan Mantri Garib Kalyan Yojna, for which I am paying the requisite taxes today." 4. Thus, the AO on the basis of the aforesaid statement and admission, observed that the Assessee-company was in possession of cash amounting to ₹3,40,67,188/- and had expressed its intention during the survey proceedings to disclose the said amount under the Pradhan Mantri Garib Kalyan Yojana, 2016 (in short “PMGKY”). However, on verification, the AO found that no declaration in respect of the said amount had been filed under the PMGKY.

“7.4 From the above, it is apparent that the assessee company was in possession of Rs. 3,40,67,188/- and disclosed Rs. 3,40,67,188/- under PMGKY Scheme during survey u/s. 133A on 29.03.2017, but on verification, it is found that there is no record of disclosure by the assessee under the said Scheme. The assessee vide show cause notice dated 26.12.2019 was asked to show cause as under:- "As per the details available in this office, It is found that you have disclosed Rs. 3,40,67,188/- under PMGKY, during Survey u/s. 133A of the Act conducted by the DDIT(Inv.), Unit-6(4), Mumbai on 29.03.2017 but on further verification, it is found that you have not filed Form-1 in respect of disclosure under PMGKY Scheme as such you are not entitle for any relief on this count. You are therefore requested to explain as to why Rs. 3,40,67,188/- should not be treated as unexplained credit/investment and why should not be added to your total income for AY 2017-18."

“7.5 In turn the assessee vide reply filed on 27.12.2019 has submitted as under:- "In respect of the above said matter, a show cause notice u/s. 143(3) of the act dated 26.12.2019 has been issued and served upon the assessee company whereby it has been stated that the assessee company has declared an amount of Rs.34067188/- under PMGKY Scheme, however, the assessee company has not furnished Form 1 in this regard. In view of the stated facts your goodself has asked the assessee company to show cause as to why the said amount shall not be assessed as unexplained credit or investment for A.Y. 2017-18. In this regard the following is submitted: 1. As the very outset it is submitted that the assessee company has duly paid taxes under the PMGKY Scheme and also made requisite deposit of 25% of disclosure amount. Copies of challan of taxes paid and deposit receipt are enclosed. 1. It is further pertinent to mention here that the stated disclosure of income was made by Late Sh. Nitin Shenoy on 30.03.2017 and unfortunately in an accident passed away on 09.04.2017, thus, the required compliance of filing of Form 1 was not made. However, Late Sh. Nitin Shenoy during his income has not duly made disclosure of income but also paid taxes on undisclosed income declared by him. 2. Thus, after his desire alleging him to be a tax evade and now tax compliant person that too after accepting taxes paid by him is against the principles natural justice and law and even against the humanitarian grounds and values. In view of the above, stated facts no addition shall be made to the income of the assessee company in respect of disclosure of income made u/s. PMGKY Scheme only due to a technical deficiency of filing of Form 1 under the said scheme that too due to Act of God in which director and controlling person of the assessee company passed away. It is also pertinent to mention here that the assessee company is in the process of filing Form 1 before Ld. CIT and a copy of the same shall be furnished in the office of your doodself shortly. 1. Without prejudice to the above, the following is submitted :- 1. That following is evident from the statement of Late Sh. Nitin Shenoy:- 1. The bogus transaction of purchase of gold bars was entered into in FY 2006-07 and 2007- 08. 2. The bogus transaction of sale of gold bars was entered in AY 2012-13. That Sh. Nitin Shenoy declared bogus purchases of Gold Bars, Gold ETF from M/s. Riddhi Siddhi Bullions Limited. However, said purchases are not claimed as expenditure by the assessee company during the year under consideration thus, no disallowance is called for on this count. 1. That the stated disclosure cannot be assessed at unexplained credit because as evident the disclosure is made of payments for purchase of gold thus the said amount is not assessable as unexplained credit under section 68 of the Act. 2. That the stated amount is further not assessable as unexplained investment because the transaction of bogus purchase of gold is nothing but withdrawal of cash not from bank but in illegitimate manner. Thus, the same is not even an unexplained investment. 3. From the discussion on the disclosure made by Sh. Nitin Shenoy, it is evident that an excessive disclosure is made by him in his lifetime and he paid taxes thereupon. Thus, it is most humbly requested that no addition shall be made to the income of the assessee company.”

“8. I have carefully gone through the submission put forth by the assessee company and documents furnished by the assessee company and found the contention of the assessee that he has paid the taxes on the sum declared in PMGKY and completed the formalities for fixed deposits in bank etc. but since the amount of tax was paid in PMGKY the credit for tax deposited cannot be given in assessment for AY 2017-18 and since the assessee company has not completed the formalities as desired by the PMGKY Scheme, 2016 by filing Form 1, I am constraint to treat the amount of Rs. 3,40,67,188/- as unexplained money in the possession of assessee as per the provisions of Section 69A of the IT Act, accordingly an amount of Rs. 3,40,67,188/- is added to the total income of the assessee u/s. 69A of the IT Act.”

Resultantly, the Assessee’s appeal i.e. ITA Nos.512/M/2025 29. stand dismissed.

“5. I have carefully gone through the submission put forth the assessee company, but the whole affair is not convincing. In view of the facts that the amount for share application money was transferred to the assessee's bank account after depositing cash in the bank account of M/s. Siddhi Tradematrix Pvt. Ltd. as detailed below:-

And as admitted by the Shri Soumit R. Jena, Director of M/s. Siddhi Tradematrix Pvt. Ltd. that in his statement recorded by Investigation Wing on 08.04.2017 that:- Sir, After demonetization, I was contacted by certain parties whom I new socially, to entire whether I can deposit their cash in old denomination notes of Rs. 500 &Rs.1000 in the bank account of my company M/s. Siddhi Tradematrix Pvt. Ltd. Therefore, I deposited their cash in old denomination notes of Rs. 500 &Rs. 1000 in the bank account of the company - M/s. Siddhi Tradematrix Pvt. Ltd. and transferred the money from the bank account of my company - M/s. Siddhi Tradematrix Pvt. Ltd. to the respective parties account. The names of the parties, along with the amounts of cash in old denomination Rs. 500 &Rs. 1000 notes. Although he has not name M/s. Tejora Technologies Ltd. categorically but from the pattern of cash deposit and transfer of money to M/s. Tejora Technologies Ltd., it is apparent that some modus operandi was adopted for cash deposited and transferred to M/s. Tejora Technologies Ltd. here the observation of Hon'ble Supreme Court in the case of SumitiDayal 214 ITR 801 is very relevant wherein the Hon'ble Supreme Court has held that the genuineness of the transaction is to be considered on the basis of surrounding circumstances, human probabilities and the conduct of the connected parties. It signifies that what is apparent must be examined on the touchstone of surrounding circumstances, human probabilities. A transaction does not become genuine merely because a paper trail has been created/filed. The AO while exercising his power as an investigating officer has a right to go beyond what is apparent. The mere filing of affidavit, gift deed etc. shall not make the gift genuine. Apart from the aforesaid facts and circumstantial evidence, Reliance is placed on following decisions: Hon'ble Delhi Court in the case of Ashok Mahendru& Sons (HUF) v CIT (2008) 9 DTR (Delhi) 222: (2008)173 TAXMAN 178 has held that even though the documentation may be in order, if there is enough material to raise a very strong suspicion that there is something not quite right with nature of transaction, the authority under the Act may reject the document and require the assessee to show that the transactions really one which is above board. Accordingly the explanation submitted by the assessee with regards to genuineness of the transactions is rejected. The material fact is thus that the identity and financial strength of the persons who have allegedly made the "statement has not been established. The appellant has failed to discharge the primary onus of proving their capacity to purchase the Debentures and to prove the genuineness of the transactions. The appellant Company has not discharged its onus and genuineness and the creditworthiness of the investors has not been established. The facts of the case have also been examined in light of the judgement of Hon'ble Delhi High Court in the case of Indus Valley Promoters Ltd. v. Commissioner of Income-tax [2008] 305 ITR. 0202 wherein it has held as under: "The assessee must discharge the burden of proving the identity of the creditors and also give the source of the deposits in order to avoid an addition under section 68 of the Income-tax Act, 1961. The creditworthiness of the depositors must be established to the satisfaction of the Assessing Officer. Where there is an unexplained cash credit is open to the Assessing Officer to hold that it is the income of the assessee and no further burden lies on the Assessing Officer to show that the income in question comes from any particular source. Recently, in the case of Navodaya Castle [56 taxmann.com 18 (SC)] it was held that, "High Court by impugned order held that certificate of incorporation, PAN etc., were not sufficient for purpose of identification of subscriber company when there was material to show that subscriber was a paper company and not a genuine investor - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes." In the case of N.R. PORTFOLIO PVT. LTD [87 DTR 0162 (Del)] it was held that "Merely furnishing names, addresses and PAN particulars, or relying on entries in a Registrar of Companies website-If upon verification, or during proceedings, AO cannot contact share applicants, or that information becomes unverifiable, or there are further doubts in pursuit of such details, onus shifts back to assessee to explain same-Yes"

Also in the case of N.R. Portfolio Pvt. Ltd [96 DTR 0281 (Del)] it was held that, "The onus to prove the identity, creditworthiness and genuineness of the transaction is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos, or the fact that third persons filed retum in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up." In the case of Tarika Properties Investment Pvt. Ltd [221 TAXMAN 0014 (Del)] it was held that, "Held, following decision of coordinate bench in CIT vs. NR Portfolio Pvt. Ltd and CIT Vs Nova Promoters and Finlease Private Limited Case (2012) 342 ITR 169 (DELHI), mere production of PAN Number assessment particulars submitted by assessee does not establish identity of a person/investor-Identification of a person includes place of work, staff and fact that it was actually carrying on business and further recognition of said company/individual in eyes of public Bank statements of investors furnished by assessee omitted to show that there was deposit of cash immediately prior to issuance of cheques Extracts of bank statements furnished by assessee were found to be fabricated. Assessee failed to establish creditworthiness of investors and also genuineness of transaction. In the case of INDEPENDENT MEDIA PVT. LTD. 82 CCH 133 (Delhi)) it was held that, "For addition u/s 68, AO need not establish money coming from assessee's coffers - For making addition under section 68, it is not incumbent upon AO to establish that money had come from assessee's coffers." In the case of Youth Construction Pvt. Ltd [357 ITR 197 (Delhi)] it was held that, "Mere proof of identity without genuineness and creditworthiness is enough-No" In the case of SreelekhaBarnerjee Vs. CIT (1963) 49 ITR 112 (SC) wherein the Hon'ble Supreme Court has held that "if explanation is unconvincing and one which deserves to be rejected, the department can reject and draw the inference that the amount represents income either from the source already disclosed by the assessee or from some undisclosed source. The Learned DR went on to raise an altogether new plea that since the nature of transaction has been questioned by the Revenue authorities, the same should be taxed under section 68 of the Act and finally concluded that there is no error committed by the lower authorities and the order of the Learned Commissioner (Appeal) deserves to be confirmed." The decision of Hon'ble Supreme Court in the case of Commissioner of Income-tax vs. P. Mohanakala 291 ITR 278 is also relevant to the case as the Hon'ble court has held as under: A bare reading of suction 68 of the Income-tax Act, 1961, suggests (i) that there has to be credit of amounts in the books maintained by the assessee; (ii) such credit has to be a sum of money during the previous year and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found In the books or (b) the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material on record. Application of mind is the sine qua non for forming the opinion. In cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessle that it was receipt of an income nature. The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature. The assessee received foreign gifts from one common donor. The payments were made to them by instruments issued by foreign banks and credited to the respective account of the assessee's by negotiation through a bank in India. Most of the cheques sent from abroad were drawn on the Citibank, N. A. Singapore. The evidence indicated that the donor was to receive suitable compensation from the assessee's. On this material the Assessing Officer held that the gifts though apparent were not real and accordingly treated all those amounts which were credited in the account books of the assessee's as their income applying section 68 of the Income-tax Ad, 1961. The assessee's did not contend that even if their explanation was not satisfactory the amounts were not of the nature of income. The Commissioner (Appeals) confirmed the assessment. On further appeal, there was a difference of opinion between the two Members of the Appellate Tribunal and the matter was referred to the Vice President who concurred with the findings and conclusions of the Assessing Officer and the Commissioner (Appeals). On appeal the High Court re-appreciated the evidence and substituted its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjecture and suspicion. On appeal to the Supreme Court: Held, reversing the decision of the High Court, that the findings of the Assessing Officer, the Commissioner (Appeals) and the Tribunal were based on the material on record and not on my conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact.

The Hon'ble Court in the case of CIT vs. Ruby Traders And Exporters Ltd., [2003] 263 ITR 300 (Cal) had observed as under: "In our view, when section 68 is resorted to, it is incumbent on the assessee to prove and establish the identity of the subscribers, their credit worthiness and the genuineness of the transaction. Once materials to prove these ingredients are produced, it is for the Assessing Officer to find out as to whether on these materials the assessee was able to establish the ingredients mentioned above. If the finding is in affirmative, in that event, section 68 cannot be attracted. If the finding is in the negative, then section 68 is definitely applicable. It is now a settled proposition of law that the Assessing Officer can lift the veil and enquire into the real nature of the transaction and enter into those questions......." 6. In view of the above facts and in law the assessee has not establish the genuineness of transactions and creditworthiness of the party and the ultimate trail of the funds to subscribe to the share application money/share premium of the assessee's company and hence, an amount of Rs. 8,89,53,000/- Is added to the total income as unexplained cash credit u/s. 68 of the I.T Act. In view of the above addition I am satisfied that the assessee has under reported it's income. Penalty proceedings u/s. 271AAC of the I. T. Act, 1961 are initiated separately for under reporting of income. 7. However, considering the submission made by the assessee company that the addition on account of cash deposited in bank account of M/s. Siddhi Tradematrix Pvt. Ltd. has already been made in the case of M/s. Siddhi Tradematrix Pvt. Ltd. in the order u/s. 144 of the IT Act, dated 03.12.2019 passed by the ITO 11(2) (1), Mumbai a copy of order u/s. 144 dated 03.12.2019 has been obtained from the ITO -11(2)(1), Mumbai and the contention of the assessee that the addition in the case of M/s. Siddhi Tradematrix Pvt. Ltd. has already been made is found correct. The assessee has also submitted a copy of order u/s. 281B dated 09.01.2018 & 09.07.2018 of the Act issued by the ITO- 11(2)(1), Mumbai, attaching the shares of M/s. Siddhi Tradematrix Pvt. Ltd. in the assessee company M/s. Tejora Technologies Ltd. 7.1 Since, the amount of cash deposited in the bank account of M/s. Siddhi Tradematrix Pvt. Ltd. out of which the funds were transferred to the assessee company M/s. Tejora Technologies Ltd. is taxed in the hands of M/s. Siddhi Tradematrix Pvt. Ltd. The addition of Rs. 8,89,53,000/-on account of unexplained cash credit u/s. 68 of the IT Act in the case of the assessee company is being made on protective basis.” 31. Thus, the AO, though held that the Assessee had failed to establish the genuineness of the transactions and the creditworthiness of M/s. Siddhi Tradematrix Pvt. Ltd., however, also found that the cash deposited in the bank account of the said company had already been brought to tax in its hands vide assessment order dated 03.12.2019 passed under section 144 of the Act. The AO, therefore, made the addition of ₹8,89,53,000/- under section 68 of the Act in the hands of the Assessee, only on a protective basis.

“... When all these very additions were considered by the Tribunal and have been confirmed or considered in the case of firm 'GK' or/and in the case of 'RC' or/and in the case of 'NR' ('DD'), then the addition cannot be made again in the hands of the assessee. Though the documents were found in the custody and control of the assessee but when the assessee conveyed that either it pertains to firm or to other persons, and when both Commissioner (Appeals) and Tribunal have accepted this plea then initial burden was discharged. When these very documents have already been considered by the Tribunal in the aforesaid cases, then certainly double addition, one in the hand of the person in whose custody the documents are found and secondly in the case of the other person where substantive addition is made, is not permitted under the IT Act. [Para 9] Under the Income-tax Act though there is no such word as substantive addition/assessment or protective addition/assessment, however, the Courts have held that in case where it appears to the Income-tax authorities that certain income has been received during the relevant year or for that matter documents/loose papers have been found and it is not clear to whom it pertains or it is not clear who has received that income and prima facie it appears that the income or/and documents/loose papers pertains to either A or B or by both together and thus it will be open to the relevant Income-tax authority to determine the said question by taking appropriate proceedings both against A and B. [Para 10] When the facts are perused in the present reference application, then it is an admitted fact and the revenue also does not deny that protective addition was made in the case of assessee whereas substantive addition was either made in the case of firm or/and in the case of 'RC' or/and in the case of 'NR' 'DD' and when the above additions have finally been sustained, as observed by the Tribunal in the case of firm or/and in the case of 'RC' or/and 'NR' 'DD', then it is a finding of fact and no question of law can be said to arise with the facts found by the Tribunal. When ultimately, the addition of these very documents had been sustained in some other case relating to the search or other partners or then the Tribunal had rightly deleted the addition as the same cannot be or could not have been made in two hands. The revenue should not have been aggrieved as the additions on the basis of loose papers/documents has ultimately been made/sustained in other cases of the group. [Para 13) In view of what have been observed herein above, the reference application does not involve any question of law and accordingly the same stands rejected. [Para 15]...”

Order pronounced in the open court on 15.07.2026.

Sd/- Sd/- PRABHASH SHANKAR NARENDER KUMAR CHOUDHRY ACCOUNTANT MEMBER JUDICIAL MEMBER (TarunKushwaha) Sr. Private Secretary Copy to: The Appellants The Respondents The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.