VATSAL INFRAPROJECTS PRIVATE LIMITED (MERGED WITH M/S NAYMAL REALTORS PVT. LTD.),DELHI vs. ACIT, CENTRAL CIRCLE-29, NEW DELHI

The Ground No. 9 raised by the assessee is challenging the addition made in the sum of Rs 1,14,96,208/- on account of credit in the bank account treating the same as unexplained by invoking the provisions of section 68 of the Act. Page | 1

We have heard the rival submissions and perused the materials available on record. The original return of income for the assessment year 2011-12 was filed on 29-09-2011 declaring total income of Rs 1,052. The assessee company is engaged in the business of making investments in shares of group companies and is a core investment company. The Learned AO, based on information received from Investigation Wing, alleging that credits amounting to Rs. 26,99,94,100 were found in the bank account maintained with Yes Bank in the name of the assessee company, issued notice under Section 148 of the Act dated 31-03-2018. In response to the said notice, the assessee filed return of income on 27-04-2018, declaring the same total income of Rs. 1,052. Vide notice under Section 142(1) of the Act dated 19-12-2018, the assessee was confronted to explain the nature and source of credits appearing in the bank account maintained with Yes Bank. In response thereto, the assessee furnished complete explanation while vide reply dated 22-12-2018, which are placed in pages 28-35 along with supporting documentary evidences. The assessee furnished a chart showing details of funds credited and further invested in the sum of Rs. 26,68,57,892 out of which, the Learned AO duly accepted the nature and source of credit to the extent of Rs. 26,32,57,892. The assessee furnished a copy of bank statements. With regard to the difference of Rs 36,00,000 (26,68,57,892 – 26,32,57,892), the assessee stated that the said sum was received from Tapasya Hotels and Resorts Ltd (formerly known as ACCIL Hospitality) and furnished the documents enclosing the audited financial statements of the said company for assessment year 2011-12 together with the bank statements for assessment years 2010- 11 and 2011-12 and copy of scrutiny assessment order for assessment year 2011-12, framed under Section 153A of the Act dated 29-12-2017. Similarly the assessee also furnished the documents pertaining to ACCIL Corporation (formerly known as Benzer Agencies) for explaining the credit of Rs. 80 lakhs by enclosing the audited financial statements for assessment year 2011-12, bank statements for assessment year 2011-12 and assessment order for assessment year 2011-12 framed under Section 153A of the Act dated 28-12-2017. It was stated that assessee had received an amount of Rs 1,00,00,000 on 26-2- 2010 from ACCIL Hospitality and Rs 36,00,000 represent repayment made in respect of that loan. The Learned AO however incorrectly allowed less relief by Rs 36,00,000 while accepting the nature and source of credits for Rs 26,32, 57,892. We find that the total bank statements of the assessee are enclosed in pages 38 to 41 of the Paper Book. From the same, it is found that the total credits thereon are Rs 27,47,54,100 and opening balance as on 1-4-2010 was Rs 1,16,564. Hence the total credits including opening balance was Rs 27,48,70,664. Out of this, the Learned AO accepted the nature and source of credit to the tune of Rs 26,32,57,892 leaving a balance of Rs 1,16,12,772. This includes a sum of Rs 36,00,000 representing transactions of Tapasya Hotels and Resorts Ltd as explained supra. The remaining sum of Rs 80,12,772 represent closing bank balance as on 31-3-2011. Hence we hold that the entire credits in the Yes Bank Account stood properly explained by the assessee and no part of it remains unexplained. Hence the addition made under section 68 of the Act by the Learned AO in the sum of Rs 1,14,96,208 is hereby directed to be deleted. Accordingly, the Ground No. 9 raised by the assessee is allowed.

Since the relief is granted to the assessee on merits, the adjudication of other legal grounds become academic in nature and they are left open.

In the result, the appeal of the assessee is allowed.