ACIT-2(3)(1), MUMBAI vs. SCAL SERVICES LTD, MUMBAI

3. The relevant facts in brief are that the Assessee filed its revised Return of Income for Assessment Year 2018-2019 on 19/02/2019 declaring loss of INR.81,75,59,093/-. The case of the Assessee was selected for complete scrutiny and the Assessing Officer completed the assessment vide Assessment Order, dated 22/04/2021, passed under Section 143(3) read with Section 144B of the Act assessing total income of the Assessee at INR.553.91 Crores under normal provisions of the Act and allowing carry forward of current year loss of INR.81.75 Crores. The income of INR.553.91 Crores assessed by the Assessing Officer consisted of (a) addition of INR.534 crores made under Section 68 of the Act in respect of unsecured loans reflected in the Balance and Sheet of the Assessee-Company for the relevant previous year and (b) addition of INR.19.10 Crores made by the Assessing Officer under Section 69C of the Act by disallowing expenses claimed by the Assessee as deduction and debited to the Profit & Loss Account of the Assessee in respect of ‘Downside on Sale of Flats’. Being aggrieved, the Assessee preferred appeal before CIT(A). The Learned CIT(A) deleted both the aforesaid additions vide order dated, 28/05/2024, which has been impugned by the Revenue by way of present appeal before the Tribunal on the grounds reproduced in Paragraph 2 above.

Ground No.1&2 4. The Ground No.1 & 2 raised by the Revenue pertains to disallowance of INR.19.10 Crores made by the Assessing Officer.

4.1. The fats relevant to the adjudication of the grounds under consideration are that during the relevant previous year the Assessee had debited to the Profit & Loss Account INR.19.10 Crores under the head ‘Downside on Sale of Flats’. The Assessee had entered into different Memorandum of Understanding (For short ‘MoUs’) for purchased of residential flats with Bombay Dyeing & Mfg. Co. Ltd. (for short ‘BDMC’) and had paid the booking advance. As per the said MoUs, the risk and reward related to increase or decrease of selling price of the residential flats vested with the Assessee. The amount paid towards booking of flats under MOUs as standing in the books of accounts as on 31/03/2018 was INR.186.12 Crores disclosed under the heading 'Amount paid towards Flats Booked' in Note No. 14 of the Financial Statements for the relevant previous year. As and when the aforesaid residential flats were sold to the final customer by BDMC with the consent of the Assessee in terms of the aforesaid MoUs, the increase in the selling price of the residential flats was offered to tax as income credited to Profit & Loss Account under the head ‘Upside on Sale of Flats’ while the decrease in the selling price of the residential flats was claimed as expenses debited to the Profit & Loss Account under the head ‘Downside on Sale of Flats’. In the preceding years, the income offered to tax by the Assessee was accepted by the Assessing Officer. However, during the relevant previous year since there was a net decrease in the selling price (after aggregation of 23 flats sold during the relevant previous year), the Assessee had claimed deduction of expenses under the head ‘Downside of Sale of Flats’ amounting to INR.19.10 Crores. This was disallowed by the Assessing Officer on the ground that the Assessee had failed to furnished relevant details and documents to explain the aforesaid expenditure. Therefore, the Assessing Officer made an addition of INR.19.10 Crores under Section 69C of the Act holding that the same to be unexplained expenditure. Before the CIT(A), the Assessee filed additional evidence. The CIT(A) admitted the additional evidence after calling for a remand report from the Assessing Officer and deleted the aforesaid disallowance. Being aggrieved, the Revenue has carried the issue in appeal before the Tribunal.

4.2. We have heard both the sides on this issue and have given thoughtful consideration to the rival submissions and material on record.

4.3. During the course of hearing the Learned Departmental Representative had referred to the submissions filled by the Assessee before the Assessing Officer wherein it was stated that the Assessee had purchased flats and has suffered loss on sale of such flats. It was pointed out by the Learned Departmental Representative that the MoUs furnished by the Assessee were neither registered nor stamped. There was no purchased or sale of immovable property by the Assessee, therefore, the transactions between the Assessee and the BDMC could not be recognized as valid legal transactions. In this regard reliance was also placed by the learned Departmental Representative on the judgment of the Hon’ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana [2012] 340 ITR 1 (SC). It was further submitted by the Learned Departmental Representative that even during the remand proceedings the Assessee had failed to furnish the copy of the MoUs and therefore, the CIT(A) has incorrectly recorded in Paragraph 6.1 of the impugned order that the Assessee had furnished copy of the agreements.

4.4. Per contra, the Learned Authorized Representative for the Assessee vehemently submitted that the reliance placed by the Learned Departmental Representative on the judgment of the Hon’ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. (supra) was misplaced since in the present case Assessee had never claim that the immovable property was transferred to the Assessee. Placing reliance on the MoUs, it was submitted that the Assessee had entered into understanding to purchase flats from BDMC. As per the agreement the consideration payable by the Assessee to BDMC was filed and any increase/decreased in the market/selling price was to be borne by the Assessee. BDMC was required to provide assistance to the Assessee for sale of flats to final customer for which BDMC was compensated by way of brokerage charges. It was submitted by the Learned Authorized Representative, the Assessee had secured contractual rights which were transferred and profit/loss arising from such transfer was recorded in books of accounts and offered to tax as business income or claimed as business expense. The Assessee has offered to tax such business income from ‘Upside on Sale of Flats’ in the preceding years and the same was accepted by the Revenue without raising any doubts about the nature or genuineness of the transactions. By following the same methodology Assessee had suffered losses during the relevant previous year and had, therefore, claimed deduction was claimed for the same.

4.5. We have perused the MoUs placed on record by the Assessee. As per the ‘Risk and Rewards’ clause [Clause No. 4 reproduced hereinafter], all risk and reward attached to the flats were transferred to the Assessee from the date of execution of MOU. The same is also reproduced below:

“RISKS & REWARDS: 4.1 It is hereby explicitly agreed and confirmed between the Parties hereto that although the said Apartments are yet to be constructed by the Developers, all risk and rewards attached to the said Apartments shall be that of the Purchaser from the date of execution of this MOU and the obligation of the Purchaser to pay the said Balance Consideration as per Annexure "II" on the due dates to the Developer is final and absolute. 4.2 It is agreed by and between the parties hereto that this MOU is legally binding on both the parties and enforceable under law on both the parties.” (Emphasis Supplied) 4.6. Further, as per Clause 9.1(c)(ii) of the MoUs, if the flats were subsequently sold to the end customers, then the profit or loss arising on sale of such flats was to the borne by the Assessee. The said clause reads as under:

“9.1. (c) (ⅱ) The modalities and terms of the consideration in respect of such further sale of the said Apartments or any of them (which are subject matter of sale) shall be mutually agreed among the Developer, the purchaser and the new purchaser and that any surplus/ profit or deficit/loss earned or incurred by the purchaser on such further sale shall entirely belong to and due to the purchaser.” (Emphasis Supplied) 4.7. Under clause 9.2(j) of the MoUs, it was agreed that whenever the flats were sold, the related selling and any other expenditure with respect to the sale of flats incurred by BDMC will be reimbursed to BDMC by way of adjustment of Sale Consideration payable to Assessee. The aforesaid clause of MoUs reads as under: s “j. It is agreed between the parties that selling expenses incurred by the Developers as may be mutually agreed to between the Developer and Purchaser shall be set off against the differential amount. The Purchaser further agrees that the Developer may at its discretion waive payment of administrative charges and other dues.” (Emphasis Supplied) 4.8. In terms of the above arrangement, the Assessee (being the ‘purchaser’) had allowed BDMC (being the ‘Developer’) to make ‘further sale’ of the 23 flats to the ‘new purchaser’. As per the modalities agreed upon by the Assessee and BDMC, the consideration at which these flats were sold to end customers/new purchasers by BDMC was approved by the Assessee. In case of 20 flats the consideration paid/payable by the end customer/new purchaser was less than what the Assessee had to pay to BDMC and as a result there was a loss of INR.17.60 Crores. In case of 2 flats the consideration paid/payable by the end customer/new purchaser was more than less than what the Assessee had to pay to BDMC, therefore, there was an aggregate gain of INR.0.59 Crores. As a result, there was a Net loss of INR.17.01 Crores on account of the aforesaid transaction. Further, the Assessee had also reimbursed brokerage expenses of INR.2.09 Crores to BDMC. Accordingly, an amount of INR.19.10 Crores was debited to the Profit & Loss Account under the head 'Downside on Sale of Flats’ and claimed as business expenditure in the return of income.

4.9. We note that the stand taken by the Revenue stems from the fact that the Assessee during the assessment proceedings stated that the Assessee had purchase the flats and had suffered loss on sale of such flats. However, during the appellate proceedings before the Tribunal the Learned Authorized Representative for the Assessee clarified that there was no purchase/sale of flats the Assessee. We find that the arrangement between the Assessee and BDMC was in the nature of an underwriting agreement whereby the Assessee had agreed to purchase specified number of flats from BDMC. What is apparent is that while the MoUs use the term ‘purchase’, ‘sale’, ‘purchaser’ and ‘new purchaser’, there was no sale of immovable property affected by way of the said MoUs. Therefore, we accept the contention of the Assessee that the judgment of the Hon’ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd (supra) would not apply to the facts of the present case. As per the MOUs the Assessee took over the risk and reward related to escalation or decrease in the final selling prices of the flats whereas BDMC was entitled to claim reimbursement of brokerage charges. The contractual rights secured by the Assessee enabled the Assessee to earn business income in the Assessment Years 2013-2014 & 2014-2015. The aforesaid business income offered to tax was accepted by the Revenue without raising any doubts regarding the genuineness of the arrangement between the Assessee and BDMC. On account of same arrangement, the Assessee was under obligation to pick up the loss of INR.17.01 Crores on account of downside on sale of flats and the cost of INR.2.09 Crores on account of brokerage charges. Therefore, an amount of INR.19.10 Crores was debited to the Profit and Loss Account for the relevant previous year and claimed as deduction by the Assessee. Thus, the Assessee has followed a consistent approach in recognizing income/losses arising on account of variation in the amount of consideration the Assessee was contractually bound to pay to BDMC and the final selling price at which the flat was sold to new purchasers/end customers.

4.10. It was contended on behalf of the Revenue that the Assessee had failed to furnished relevant documents and details during the original assessment and the remand proceedings. In this regard, we note that during the assessment proceedings the Assessee had also placed before the Assessing Officer following documents as Annexures to letter dated 03/03/2021 placed at Page No.190 to264 of the Paper Book.

(i) Statement showing downside on sale of flats (ii) Ledger of Upside on sale of flats in ICC (iii) Memorandum of Understanding between Scale Services Limited and the Bombay Dyeing & Manufacturing Company Ltd dated March 30, 2012 for ONE ICC. (iv) Price sheet for ONE ICC-1202 & 2802 (v) Memorandum of Understanding between Scal Service Limited and The Bombay Dyeing & Manufacturing Company Ltd. Dated March 29, 2013 for ONE ICC (vi) Price sheet for ONE ICC – 4902 & 4903 (vii) Memorandum of Understanding between Scale Services Limited and the Bombay Dyeing & Manufacturing Company Ltd dated March 30, 2012 for TWO ICC (viii) Price sheet for TWO ICC – 1201 (ix) Brokerage vouchers 4.11. On perusal of application filed by the Assessee for admission of additional evidence, we find that the Assessee filed following additional evidences: (i) MOUs between SCAL and BDMC for sale of flats to SCAL (which were not submitted during assessment proceedings) (ii) Payment Vouchers for Brokerage paid by BDMC on behalf of SCAL (iii) Relevant extract of Audited Financial Statements from Assessment Year 2013-2014 to Assessment Year 2016-2017 (iv) Assessment Order under Section 143(3) of the Act for Assessment Year 2013-2014 and Assessment Year 2014-2015 (v) Intimation Order under Section 143(1) of the Act for Assessment Year 2015-2016 and Assessment Year 2016-2017 4.12. Perusal of the record further shows that the Assessing Officer had made following observation in the Remand Report in relation to additional evidence filed by the Assessee in relation to disallowance of INR.19.10 Crores made under Section 69C of the Act. “1. In view of the above, the Assessee states that all the necessary explanations regarding the claim of loss on downside of flats were provided during the assessment proceedings and therefore, the said loss of Rs. 19.11 crs cannot be treated as unexplained expenditure and hence same should be allowed as revenue expenditure.  The brokerage expenses incurred on the sale of flats was on account of sale of flats belonging to the assessee and hence the same was reimbursed as per the MOU with BDMC.  The total loss on the sale of flats was Rs.19.10 Crs. which comprised of Rs.17.01 Crs as loss on sale of flats and Rs.2.09 Crs. as Brokerage Reimbursement. The statement of Downside on sale of Flats.  The copies of Brokerage & Invoices were also submitted.  The Brokerage Vouchers and Invoices were in the name of BDMC as flats were sold by BDMC to end customer and assessee has reimbursed the brokerage to BDMC as per clause 9.2.(j) of the MOUs between Assessee and BDMC. To verify the claimed loss of 17.01 crore on sale of flats, the assessee was asked to submit proper documentary evidences based on which such loss have been claimed. In this regard, vide submission dated 22.02.2024, the assessee has furnished the details of the purchase cost and sale price of 22 flats. However, the assessee failed to produce the details of final costumers to whom the flats were sold and details of banking transactions for payments in this regard. As such, the genuineness of the claimed loss of 17.01 crore on sale of flats remain unverified. As such this issue may be decided on merits. However, claim regarding loss of Rs.2.09 Crore on account of brokerage charge genuine on verification.” (Emphasis Supplied) On perusal of above, it can be seen that out of disallowance of INR.19.10 crore, the Assessing Officer had concluded that claim of INR.2.09 crore on account of Brokerage Charges was found to genuine on verification. However, the Assessing Officer concluded that deduction of INR.17.01 Crore claimed by the Assessee in respect of loss of sale of flats could not be accepted on account of failure of the Assessee to furnish relevant details/documents relating to final customers to whom the flats were sold and the details of bank transactions for payments in this regard. While concluding as aforesaid the Assessing Officer has taken into consideration the submissions dated 22/02/2022, filed by the Assessee.

4.13. We note that the CIT(A) had, after taking into consideration the additional evidence, the remand report as well as the reply/submission of the Assessee deleted the addition of INR.19.10 Crores holding as under: “7.2.1 I have gone through the assessment order, remand report, submission of the appellant and facts of the case. The appellant has claimed loss and expenses of INR.19,10,62,946/- on account of downside on sale of flats. The appellant has pleaded that the brokerage expenses of INR.2.09 Crores incurred on sale of flats has been accepted by the Assessing Officer in the remand report but the loss incurred on account of sale of flats (which is in accordance with the MOUs entered with BDMC) has been rejected by the Assessing Officer in the remand report. The Assessee has during the course of remand proceedings submitted before the Assessing Officer the details of 23 purchasers alongwith copy of agreement and statement showing working of flat-wise upside earned/downside loss incurred w.r.t. the flats sold during the year under consideration. Reply filed by BDMC in response to the notice under Section 133(6) issued by the Assessing Officer is also placed on record alongwith sample bank statement reflecting the payment involved in the transactions. 7.2.2 On perusal of submission of the Assessee it is seen that the Assessee has entered into agreement(s) with BDMC wherein it is mentioned in para „Risks & Rewards‟ that although the said apartments are yet to be constructed by BDMC, all risk and rewards attached to the said Apartments shall be that of the Assessee. It is further noted that the profit arising on sale of flats of similar nature in earlier years has been offered for taxation by the appellant and has been accepted by the Department. 7.2.3 In view of the above, the addition made by the Assessing Officer of INR.19,10,62,946/- is deleted. The ground of appeal raised is allowed.” (Emphasis Supplied)

4.14. On perusal of above, we find that the CIT(A) had accepted the transactions undertaking by the Assessee with BDMC as genuine transactions. Taking note of the terms of the MOU between the Assessee and BDMC, the CIT(A) had noted that the Assessee was the owner of risks/rewards attached to the flats. In the preceding assessment years, the same arrangement had resulted in income which was offered to tax by the Assessee and the same was accepted by the Assessing Officer. Therefore, the CIT(A) was of the view that the loss arising from the same arrangement should also be allowed as deduction to the Assessee. We find that the findings returned by the CIT(A) are based upon material on record. 4.15. While concluding as above, the Learned CIT(A) had taken into consideration the reply filed by BDMC in response to notice issued under Section 133(6) of the Act. A copy of the said reply filed by BDMC has been placed before us as part of the Paper Book at Page No.510 to 803. On perusal of the same we find that the reply letter dated 21/02/2024, filed by the BDMC was accompanied by following Annexures: (i) Annexure 1: Downside Statement (ii) Annexure 2: Brokerage Invoices & Bank Statements (iii) Annexure 3: Copies of MOIs entered into with Scal Services Ltd for purchase of flats (iv) Annexure 4: Copies of Index-II/ Price sheet for sale of flats to end consumers. (v) Annexure 6: Extracts of bank statements for Assessment Year 2018-19 showing installments received during Assessment Year 2018-19 from end consumers. On perusal of the above said documents, we find that a statement of downside on sale of flats was filed by BDMC giving details of the flat as well as the name, address, Permanent Account Number and e- mail address of the end customers/new purchasers. Therefore, even though the aforesaid information/details were not furnished by the Assessee, the same were available with the Assessing Officer during the remand proceedings.

4.16. We also note that during the remand proceedings, the Assessee filed reply dated, 08/02/2024 linking the documents filed in support of loss incurred on downside of each flat with the evidence filed during the assessment proceedings and during the proceedings before the CIT(A) as additional evidence and the same reads as under:

“(i) The Assessee had purchased certain residential flats from the Bombay Dyeing & Mfg.Co. Ltd. (BDMC) vide MOU entered between them in the past for which the Assessee had paid a certain amount as booking advance. Below are the details of the said flats: S.No. Building Flat No. MOU Reference Annexure Submitted reference during assessment/ Additional evidence 1. ONE ICC 501 MOU One ICC dated 27.03.2014 & Annexure 5 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 2. ONE ICC 602 Addendum MOU dated 20.01.2017 Annexure 5 Additional Evidence 3. ONE ICC 801 MOU One ICC dated 27.03.2014 & Annexure 5 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 4. ONE ICC 1003 MOU One ICC dated 27.03.2014 & Annexure 5 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 5. ONE ICC 1202 MOU One ICC dated 30.03.2012 & Annexure 1 Annexure 1 Addendum dated 20.01.2017 to MOU & 11 submitted during Assessment 6. ONE ICC 1203 MOU One ICC dated 30.03.2012 & Annexure 1 Annexure 1 Addendum dated 20.01.2017 to MOU & 11 submitted during Assessment 7. ONE ICC 1403 MOU One ICC dated 27.03.2014 & Annexure 5 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 8. ONE ICC 1703 MOU One ICC dated 30.06.2012 & Annexure 2 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 9. ONE ICC 1903 Addendum MOU dated 20.01.2017 Annexure 6 Additional Evidence 10. ONE ICC 2403 MOU One ICC dated 27.03.2014 & Annexure 3 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 11. ONE ICC 2503 MOU One ICC dated 27.03.2014 & Annexure 5 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 12. ONE ICC 2802 MOU One ICC dated 30.03.2012 & Annexure 1 Annexure 1 Addendum dated 20.01.2017 to MOU & 11 submitted during Assessment 13. ONE ICC 4902 MOU One ICC dated 29.03.2013 & Annexure 4 Annexure 4 Addendum dated 20.01.2017 to MOU & 11 submitted during Assessment

14. ONE ICC 4903 MOU One ICC dated 29.03.2013 & Annexure 4 Annexure 4 Addendum dated 20.01.2017 to MOU & 11 submitted during Assessment 15. TWO ICC 203 Addendum MOU dated 20.01.2017 to Annexure 6 Additional MOU Evidence 16. TWO ICC 306 MOU TWO ICC dated 27.03.2014 & Annexure 8 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 17. TWO ICC 601 Addendum MOU dated 10.01.2016 & Annexure 9 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence 18. TWO ICC 606 Addendum MOU dated 20.01.2017 Annexure 6 Additional Evidence 19. TWO ICC 903 Addendum MOU dated 20.01.2017 Annexure 6 Additional Evidence 20. TWO ICC 1201 MOU TWO ICC dated 30.03.202 & Annexure 7 Annexure 7 Addendum dated 20.01.2017 to MOU & 11 submitted during Assessment 21. TWO ICC 1703 Addendum MOU dated 10.01.2016 Annexure Additional 10 & 11 Evidence 22. TWO ICC 1801 MOU TWO ICC dated 27.03.2014 & Annexure 8 Additional Addendum dated 20.01.2017 to MOU & 11 Evidence (ii) Amount paid towards booking of flats under MOU as standing in the books of accounts as on 31/03/2018 is INR.186.12 crores showing under heading 'Amount paid towards flats booked' in Note no. 14 of the Financial statements for the FY 2017-18. Copy of the Financial statements for FY 2017-18 and the copy of ledgers accounts for 'amount paid towards flat booked' is attached herewith as Annexure-12 & Annexure 13 respectively.”

4.17. A perusal of record shows that the Assessee had filed all the MoUs referred to in the table reproduced in Table in paragraph 4.16 above before the Assessing Officer either in original assessment proceedings or in the remand proceedings. Further, the Assessee as well as BDMC had filed bank statements to show that the payments were made through banking channel and to establish the genuineness of the transaction. The entries in the bank statement were corroborated by the ledger accounts and the financial statements.

4.18. In view of the above, we reject the contention of the Revenue that the Assessee had failed to support the claim for deduction in respect of amount debited to Profit & loss Account for the relevant previous year on account of ‘Downside on Sale of Flats’.

4.19. Thus, we are on the considered view that the order passed by the CIT(A) deleting the addition of INR.19.10 Crores made by the Assessing Officer under Section 69C of the Act does not suffer from any infirmity. Accordingly, Ground No.1 & 2 raised by the Revenue are dismissed.

Ground No.3 & 4 5. Ground No.3 and 4 raised by the Revenue are directed against the order of the CIT(A) deleting the disallowance of INR.534 Crores made by the Assessing Officer under Section 68 of the Act in respect of unsecured loan reflected in the Balance Sheet of the Assessee-Company as on 31/03/2018.

5.1. During the assessment proceedings the Assessee was required to furnish complete details of loans availed, interest, purpose of loans and business expediency on account of which loan were taken along with supporting documentary evidence. According to the Assessing Officer the Assessee submitted a reply but failed to submit any clarification or documentary evidences to establish identity and creditworthiness of the lender and the genuineness of the transaction. Therefore, addition of INR.534.80 Crores were made by the Assessing Officer under Section 68 of the Act.

5.2. Being aggrieved, the Assessee carried the issue in appeal before the CIT(A) and filed additional evidence to support the contention that the Assessee had secured ICDs/loan from DHFL a well known housing finance company. After calling for a remand report from the Assessing Officer, the CIT(A) admitted the additional evidence and deleted the addition on INR.534.80 Crores made by the Assessing Officer under Section 68 of the Act.

5.3. Now the Revenue is in appeal before the Tribunal challenging the above relief granted by the CIT(A).

5.4. During the course of hearing learned Departmental Representative had supported the additions made by the Assessing Officer contending that the Assessee had failed to furnished relevant documents/details during the assessment proceedings. Per contra, it was contended on behalf of the Learned Authorized Representative that failure to furnish relevant documents/details before the Assessing Officer was on account of short period of time granted by the Assessing Officer to furnished response/details and the technical problems faced by the Assessee while downloading the documents from the Income Tax Portal. It was further submitted that the Assessee had furnished additional evidence before the CIT(A), which was admitted and that the Revenue has not challenged the admission of additional evidence in appeal before the Tribunal. In rejoinder, the Learned Departmental Representative submitted that even during the remand proceedings the Assessee had failed to furnish collaborative evidence in support of its claim. It was further submitted that the Assessing Officer had clearly stated in the remand report that the bank statements furnished by the Assessee could not be verified. In this regard, we note that the Revenue has not challenged the exercise of discretion by the CIT(A) to admit the additional evidence. By way of Ground No.4 it has been contended by the Revenue that the CIT(A) had deleted the disallowance even though the Assessee had failed to furnish corroborative evidences during the remand proceedings. Similarly, in Ground No.3 it has been contended that the bank account statements furnished by Assessee have remained unverified and therefore, the same could not have been accepted by the CIT(A).

5.5. We find that the Assessee had filed written submission dated, 18/08/2023, before the CIT(A) made following submission in relation to addition of INR.534.80 crores made by the Assessing Officer under Section 68 of the Act:

“1. The Appellant had availed an Inter Corporate Deposit (ICD) of Rs..450 crores from Dewan Housing Finance Corporation (DHFL') which was received by the company on 06/09/2017. The copy of the bank statement showing credit of the same is placed at FPB page no.

6. The Assessing Officer in the impugned order has made an addition amounting to INR.534.80 crores under Section 68 of the Act as unexplained credits citing that no documentary evidence was provided during the assessment proceedings.

Name of the xx Permanent Amount of Wheth Maximum Whether the lender of Account loan or er the amount loan or depositor Number (if deposit loan or outstanding in deposit was available with taken or deposit the account at taken or the assessee) accepted was any time accepted by of the lender square during the cheque or or the d up previous year bank draft or depositor during use of the electronic previo clearing us system year through bank account Macrofil xx AAACM9372Q 263155800 Yes 263155800 Yes- Investments Electronic Limited clearing system DHFL xx AAACD1977A 5348009589 No 5348009589 Yes- Electronic clearing system

5.7. On perusal of application for admission of additional evidence, dated, 12/09/2023, filed by the Assessee, we find that Assessee has submitted that the following documents filed along with Submission, dated 18/08/2023, be admitted as additional evidence: (i) Loan Agreement with DHFL dated, 26/09/2017 (ii) Loan Sanction Letter dated, 04/10/2017 (iii) Bank Statements showing disbursement of loan (iv) Loan confirmation statement as on 31/03/2019 5.8. We find that the Assessing Officer has made following observations in the Remand Report, dated 06/03/2024, in relation to additional evidence furnished by the Assessee to support the genuineness of the unsecured loans of INR.534.80 Crores outstanding as on 31/03/2018:

“The assessee has submitted a copy of the Full Factual Paper Book as an attachment to the Letter dt. 10, January, 2024 (page nos. 1-449) the references from which are referred in the following-  Loan Sanction letter dated 04/10/2017 (Refer Page No.54-64 of FPB)  The Loan agreement dt. 05/10/2017 with Dewan Housing Finance Ltd. for loan of Rs.650/- Crs. (Refer Page No.31–53 of FPB)

 The loan was a secured loan and the charge was also duly registered with the Registrar of Companies a mandated in the Companies Act, 2013 (Refer Annexure-5 of the Letter dt. January 10, 2024)

 The receipt of Loan in the IDBI Bank on various dates – Thus the loan is received through Banking Channel (Refer Bank Statement – (Refer Page No.21-29 of FPB)  As per the Sanction of Term Loan of Rs.650/- Crs mentions loan is for General Corporate Purpose against receivables of apartments allotted to assessee by BDMC in One ICC and Two ICC as purpose of the Loan.  Loan Confirmation statement by DHFL as on 31/03/2019 – (Refer page no.69-70 of FPB)  The transaction of loan was reflected in the Financial Statements under note no 4 “Long Term Borrowings”. The transaction of loan is also reflected in the Tax Audit Report in Form 3CD in clause 31a – (Refer page no.71-174 of FPB) submitted during the assessment proceedings.  The NCLT order dated 21/02/2019 for demerger of the Real Estate Business Undertaking with effect from 01/07/2018 (Refer Page No.423-446 of FPB)  The demerger also resulted in the transfer of loan of Rs.560 Crs in the books of the assessee in favour of BDMC as on 31/03/2019.  Letter of Intimation from DHFL for Assessing/Down-selling of the loan (Refer Page No.447 of the FPB)  Letter of assignment of loan to Catalyst Trusteeship Limited acting as a trustee of India RE Opportunities Trust on 25/01/2019 (Refer Page No.448-449 of FPB)  After the transfer of Loan to the BDMC Consequent to demerger by assessee there was Letter Agreement between BDMC and Catalyst Trusteeship Limited acting as a trustee of India RE Opportunities Trust on 30/08/2019 (vide Annexure No.25 to Letter dt. February 08, 2024).  The entire loan of Rs.560/- Crs was repaid by BDMC under installments to Catalyst Trusteeship Limited acting as a Trustee of India RE Opportunities Trust (Vide Annexure No.26 to Letter dt. February 08, 2024)  The No dues Certificate by Catalyst Trusteeship Limited acting as a Trustee of India RE Opportunities Trust (Vide Annexure No.27 to Letter dt. February 08, 2024) In order to cross verify the submissions of the assessee on the transactions mentioned above, this office had issued notice u/s.133(6) to IDBI Bank Ltd. to confirm the genuineness of Bank Statement submitted by the assessee:- PAN Name of the AY Date DIN No. Party AABCI8842G IDBI Bank Ltd. 16/02/2024 ITBA/COM/17/2023- 24/1061053857 AABCI8842G IDBI Bank Ltd. 22/02/2024 ITBA/COM/17/2023- 24/1061303311 The copies of the above notices are attached herewith for ready reference. The above bank has not responded till date and despite provided several opportunities through remainder letter as mentioned above. Thus, the genuineness and creditworthiness of the transactions has remained unverified. In view of the above, the contention of the assessee on this ground found to be not acceptable and the addition of Rs.534.80 crore made by the Assessing Officer on this issue appears to be correct and be decided on the basis of the documents available on record and merits.”

On perusal of the above, it is evident that the Assessing Officer had taken note of the documentary evidence furnished by the Assessee in relation to addition of INR.534.80 Crores. However, the Assessing Officer rejected the same for the sole reason that notices issued under Section 133(6) of the Act to IDBI Bank Ltd. to confirm the genuineness of Bank Statement submitted by the Assessee were not responded to by the said bank.

5.9. After taking into consideration the additional evidence and the contention raised by the Assessing Officer in the remand report, the CIT(A) deleted the addition made of INR.534.80 Crores made under Section 68 of the Act holding as under:

7.3 Ground No. 3: Vide the said ground the appellant has contended that the AO has erred in making addition of Rs.534,80,09,689/- as unexplained credit u/s 68 of the Act. The appellant has alleged that the AO failed to appreciate that the amount of Rs 534.80 Crores were shown as Long term loan from Dewan Housing Finance Limited. 7.3.1 On perusal of submission and audited books of account of the appellant, it is seen that Dewan Housing Finance Ltd („DHFL‟) has sanctioned to the appellant long term loan of Rs. 650 out of which Rs. 534.80 crores were disbursed till the end of FY 2017-18, details of which as submitted by the appellant are as under: SI. No. Date of Amount (in Remarks disbursement crores) 1. 06/09/2017 450.00 ICD received 03/11/2017 7.40 Interest on ICD Total 457.40 Amount Converted into loan 2. 30/11/2017 4.20 Loan Disbursement 3. 29/12/2017 4.10 Loan Disbursement 4. 05/01/2018 18.60 Loan Disbursement 5. 30/01/2018 4.00 Loan Disbursement 6. 28/02/2018 12.00 Loan Disbursement 7. 07/03/2018 28.50 Loan Disbursement 8. 27/03/2018 6.00 Loan Disbursement Grand Total 534.80 7.3.2 On perusal of the audited balance sheet as on 31.03.2018 it is seen that the appellant has shown long-term borrowing of Rs.534,80,09,589/-. The appellant has provided relevant documents to substantiate its claim of long-term loan from DHFL. The appellant has also furnished the details of interest paid on the said loan alongwith details of TDS made thereon. Further, the AO during the assessment proceedings and remand proceedings has not pointed out any specific discrepancy with respect to the said loan from the DHFL. Hence, the source of amount of Rs.534,80,09,589/- in the books of the appellant stands explained. 7.3.3 Accordingly, the addition made by the AO u/s 68 of the Act of Rs.534,80,09,689/- is deleted. The ground of appeal raised is allowed.

5.10. We do not find any infirmity in the above order passed by the CIT(A) as the findings returned by the CIT(A) are supported by documents furnished by the Assessee. We find that the Assessing Officer had failed to point out any infirmity in the documents furnished by the Assessee in the remand proceedings to establish the nature and source of the loan transactions recorded in the books of accounts of the Assessee. Even during the appellate proceedings before the Tribunal, the Revenue has failed to point out any discrepancy or perversity in the order passed by the CIT(A). Further, on examination of the documents placed on record, we find that the same corroborate stand taken by the Assessee and establish the manner in which loan was received by the Assessee from DHFL. We also note that the Assessee had also placed before the CIT(A) signed/stamped copy of Bank Statement issued by the IDBI Bank Ltd. along with Rejoinder to Remand Report filed by the Assessee on 02/04/2024 to counter the objection raised by the Assessing Officer regarding non-verification of bank statements.

5.11. Thus, in view of the above, we decline to interfere in the order passed by the CIT(A) deleting the addition of INR.534.80 Crores made under Section 68 of the Act. Accordingly, Ground No.3 & 4 raised by the Revenue are dismissed.

Order pronounced on 19.06.2025.