DCIT CC-5(1), MUMBAI vs. JOGIA PROPERTIES LIMITED, MUMBAI

This is the bunch of 4 appeals filed by Assessing officer and 4 cross objections filed by Assessee for two Assessment years i.e. AY 2007-08 and 2008-09 where in ld. CIT [A] has deleted the addition in the hands of these two Assessee namely Jogia properties Limited and Vidisha Properties P Ltd on the solitary basis that addition in the hands of these two entities made u/s 68 with respect to share capital by the ld. AO deserves to be deleted because the addition has been confirmed in the hands of Shree Global Tradefin Limited.

The only ground of appeal is that the learned CIT (A) has deleted the addition in the hands of the assessee considering that the issue of substantive addition in the case of Shree Global Tradefin Limited has not reached the finality.

Identical issue is also there in the appeal of Revenue for A.Y. 2008-09 in case of Vidisha properties Limited and for AY 2007-08 and 2008-09 in case of Jogia Properties Limited as captioned above.

Assessee has raised cross objection for both these years challenging the reopening of the assessment raising following grounds for A.Y. 2007-08:-

The brief facts of the case in Vidisha properties Limited for A.Y. 2007-08 shows that assessee is a company who filed its return of income on 22ndOctober 2007 declaring nil income from its alleged business of property development. Search was conducted by the investigation wing in Jogia group on 4thMarch 2010. Therefore, notice under Section 153A of the Act was issued to the assessee wherein the return of income was filed on 26thFebruary 2011 declared nil income. Subsequently, on 26thDecember 2011 the assessment order under Section 153A read with section 143(3) of the Act was passed on determining the total income of the assessee at ₹2 crores. Subsequently, on the basis of information received from the investigation wing

Assessee aggrieved with that order preferred the appeal before the learned CIT (A), who passed the combined order / consolidated order for A.Y. 2007-08, 2008-09, and 2009-10 in case of the assessee. For A.Y. 2007-08, the learned CIT (A) accepted the contention of the learned Authorised Representative that similar addition under Section 68 of the Act is made in the case of Shree Global Tradefin Pvt Ltd, whose appeals were pending before the learned Commissioner of Income-tax (Appeals). He held that while the amounts received through these entities are not genuine and creditworthiness is not there of the fifty- four entries, there is almost one to one correspondence between the amount received by the 14 entities and subsequent amount received through them by the Shree Global Tradefin Ltd. As Shree Global Tradefin Limited is the ultimate beneficiary who has received the money. Therefore, it is only logical that the amount is assessed in the hands of Shree Global Tradefin Limited. The learned Assessing Officer was queried on this, and he has reported that the addition in case of Jogia group 8 cases be treated as protective addition. Therefore, the learned CIT (A) was of the view that the addition must be made only in the hands of the Shree Global Tradefin Pvt. Ltd. since the

The learned Departmental Representative vehemently submitted that it is not an addition made on protective basis as nothing is mentioned in the assessment order. He reiterated that the provision of Section 68 of the Act clearly applies in the case of the assessee. Therefore, the learned CIT (A) clearly to fall into error in deleting theaddition.

The learned Authorized Representative vehemently relied upon the order of the co-ordinate Bench in case of Cikura Properties Ltd. in and CO No.181/Mum/2018 dated 6thAugust 2020 and submitted that on identical facts and circumstances, the appeal of the Revenue as well as the CO of the Assessee were dismissed. He also referred to paragraph no. 9 of that order wherein the order of the learned CIT (A) on identical basis was upheld.

We have carefully considered the rival contention and perused the orders of the lower authorities. We have also

Admittedly, the facts clearly shows that assesses i.e. divisa properties Limited and Jogia Properties Limited are a company wherein from A.Y. 2007-08 till 2009-10 sum of ₹43.50 crores is received as share application money which in turn has been deposited as share capital in another company Shree Global Tradefin Pvt. Ltd.

During the year, assesseei.e.Vidisha Properties Limited has received ₹2 crores on various dates from Alok Diamond Industries Ltd. which is a company controlled and managed by Mr. Pravin Jain. Naturally, the above sum is found to be credited in the books of accounts of the assessee for which no satisfactory explanation is available with respect to the creditworthiness and genuineness of the transaction and therefore, the addition was made under Section 68 of the Act.

The learned CIT (A) deleted the above addition under the pretext that the above sum has been added in the hands of Shree Global Tradefin Pvt. Ltd. He therefore vide Para no. 8.29 has held as under:-

In the next paragraph, he held that the amounts received as share application money at a premium during the year fails the test of creditworthiness and genuineness. Despite holding so, he deleted the addition in the hands of the assessee.

The identical issue arose in the case of Cikura Properties Ltd. in for A.Y. 2009-10 dated 6thAugust, 2020, wherein in paragraph no. 3.2 it is stated that the Tribunal deleted the addition in the hands of Shree Global Tradefin Limited in ITA No.7310 to 7313/Mum/2017 dated 15th October, 2018 where there is no finding by the co-ordinate Bench that the income is belonging to the present assessee i.e. Cikura Properties

We find that as recorded in paragraph no.3.2 that in case of Shri Global Tradefin Private Limited, the addition is deleted. On careful reading of the order of the Bench in case of Shri Global Tradefin Limited dated 15thOctober 2018, we find that the co-ordinate Bench quashed the reassessment order in case of that assessee and further the addition was deleted in the hands of that company because source of source is not required to be established.

It is very interesting to read several paragraphs of the order of the co-ordinate bench in case of Shree Global Tradefin Limited, which shows that the addition in the hands of that assessee was deleted for the reason that the money coming from this assessee is supported by the source of this assessee , therefore addition in the hands of ShreeGlobal Tradefin was explained and hence deleted. At page no.246 of that order clearly points that even in the hands of 9 companies [where assessee is also one of those companies], the source of the funds have been explained as emanating from these companies. Therefore, the addition was deleted in the hands of Shree Global Tradefin Limited.

There is no evidence available with ld CIT [A] to state that both these companies are conduit. If that be so ,he should have invoked provisions of other laws which he is dutybound to invoke. But he rests his this finding only for deletion of addition in the handsof the assessee.

It is not an issue of protective addition as well as substantive addition but it is an issue that in whose books money is credited. Apparently, the money is credited in the books of account of the assessee; therefore, the provision of Section 68 of the Act should have been decided in the hands of assessee. The learned CIT (A) is also clearly fell into error in holding that section 68 of the Act addition would be in the hands of only the beneficiary.

There is no finding in the assessment orders that these additions were made in the ahnds of these two assesses on protective basis. Therefore it is unusual for CIT [A] to hold so. He has merely relied upon the statement of ld AO quoted by ld AR in

We find that Section 68 of the Act does not talk about any beneficiaries but is added in the hands of each and every

In view of this, we set aside the whole issue in the appeal of the learned Assessing Officer back to the file of the learned Assessing Officer with a direction to the assessee to prove identity and creditworthiness of the deposits as well as the genuineness of the transactions. The learned Assessing Officer should examine the claim of the assessee in light of various statements of entry operators recorded during the course of survey and search and there after decide the issue afresh in accordance with law. Needless to say initial onus would be on the assessee to prove the cash credit to the satisfaction of ld. AO. The learned Assessing Officer may carry out the inquiry as well as examination of various persons, if found proper, either

In the result, the solitary ground of appeal of the learned Assessing Officer is allowed with above directions.

In the result, all the four appeals filed by the learned Assessing Officer and CO filed by the assessee are allowed for statistical purposes.