DCIT, CENTRAL CIRCLE-2, FARIDABAD vs. PEAKWOOD REALITY PVT.LTD., GURGAON

This appeal by the Revenue is directed against order dated 26.10.2022 passed by the Ld. Commissioner of Income-tax (Appeals) – Gurgaon [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:

1. Whether Ld. CIT (A) has erred in deleting the 1. Whether Ld. CIT (A) has erred in deleting the addition of Rs. addition of Rs. 62,89,71,086/ 62,89,71,086/- made on account of unexplained investment by made on account of unexplained investment by holding that quantum addition on this issue has already been holding that quantum addition on this issue has already been holding that quantum addition on this issue has already been confirmed in the hands of M/s M3M India Holdings whereas both confirmed in the hands of M/s M3M India Holdings whereas both confirmed in the hands of M/s M3M India Holdings whereas both entities are different for the Income Tax purpose? entities are different for the Income Tax purpose? 2. Whether the Ld. CIT (A) has erred in deleting the aforesaid ther the Ld. CIT (A) has erred in deleting the aforesaid ther the Ld. CIT (A) has erred in deleting the aforesaid addition by holding that same addition has already been confirmed addition by holding that same addition has already been confirmed addition by holding that same addition has already been confirmed in the hands of M/s M3M India Holdings in view of the fact that the in the hands of M/s M3M India Holdings in view of the fact that the in the hands of M/s M3M India Holdings in view of the fact that the addition sustained by Ld. CIT (A) in the case M/s M3M India addition sustained by Ld. CIT (A) in the case M/s M3M India addition sustained by Ld. CIT (A) in the case M/s M3M India Holdings was deleted by Ld. ITAT vide its order passed in was deleted by Ld. ITAT vide its order passed in was deleted by Ld. ITAT vide its order passed in ITA No. 1120/Del/2022 dated 23.09.2022? 1120/Del/2022 dated 23.09.2022? 2. Briefly stated facts of the case are that the assessee company Briefly stated facts of the case are that the assessee company Briefly stated facts of the case are that the assessee company was earlier known as was earlier known as “Ess Gee Shelter Pvt. Ltd”. At that time t At that time the share holding of the company wa share holding of the company was with Mr Suresh Amritlal Mr Suresh Amritlal Gandhi and Family members members but they sold their stake for an amount of sold their stake for an amount of Rs.16,39,08,750/- to M/s Royal Crown Projects Pvt. Ltd. and in to M/s Royal Crown Projects Pvt. Ltd. and in to M/s Royal Crown Projects Pvt. Ltd. and in this manner, the Ro this manner, the Royal Crown Project Pvt. Ltd. beca yal Crown Project Pvt. Ltd. became holding company of the assessee company. The company of the assessee company. The M3M group wanted to M3M group wanted to acquire two companies namely acquire two companies namely M/s ‘Kenwood Mercantile Pvt. Ltd Kenwood Mercantile Pvt. Ltd”. (KMPL) and M/s “Goodfaith Builders Pvt. Ltd. (GBPL) Goodfaith Builders Pvt. Ltd. (GBPL) Goodfaith Builders Pvt. Ltd. (GBPL) as those two companies had a land companies had a land pool measuring 430 acres at Man pool measuring 430 acres at Manger, Gurugram. For the purpose of acquisition of said land of 430 acres, For the purpose of acquisition of said land of 430 acres, For the purpose of acquisition of said land of 430 acres, the M3M India Holdings transferred initial amount of Rs.175 crores M3M India Holdings transferred initial amount of Rs.175 crores M3M India Holdings transferred initial amount of Rs.175 crores to M/s Innovative Realtech Pvt. Ltd. to M/s Innovative Realtech Pvt. Ltd., who in turn transferred said who in turn transferred said fund to M/s Royal Crown Project Pvt. Ltd., f Royal Crown Project Pvt. Ltd., from where rom where, Rs.136 crores was transferred to M/s Peakwood Realty Pvt. Ltd. (i.e. the rores was transferred to M/s Peakwood Realty Pvt. Ltd. (i.e. the rores was transferred to M/s Peakwood Realty Pvt. Ltd. (i.e. the assessee). The Peakwood Realty Pvt. Ltd. acquired the share holding assessee). The Peakwood Realty Pvt. Ltd. acquired the share holding assessee). The Peakwood Realty Pvt. Ltd. acquired the share holding of those two companies namely KMPL and GBPL on 22.02.2012 for of those two companies namely KMPL and GBPL on 22.02.2012 for of those two companies namely KMPL and GBPL on 22.02.2012 for a total consideration of Rs.198 crores i.e. after five days from the a total consideration of Rs.198 crores i.e. after five days f a total consideration of Rs.198 crores i.e. after five days f transfer of the shares of M/s Peakwood Realty Pvt. Ltd. by Gandhi of the shares of M/s Peakwood Realty Pvt. Ltd. by Gandhi of the shares of M/s Peakwood Realty Pvt. Ltd. by Gandhi Family to M/s Royal Crown Project Pvt. Ltd. Family to M/s Royal Crown Project Pvt. Ltd.

2.1 A search and seizure action u/s 132 and survey action u/s A search and seizure action u/s 132 and survey action u/s A search and seizure action u/s 132 and survey action u/s 133A of the Income- -tax Act, 1961 (in short ‘the Act’) were carried tax Act, 1961 (in short ‘the Act’) were carried out at the premises of e premises of M/s Ess Gee group of cases on 17.06.2015. group of cases on 17.06.2015. In view of certain incriminating material belonging to/pertaining to In view of certain incriminating material belonging to/pertaining to In view of certain incriminating material belonging to/pertaining to the assessee found in the course of the searches at the Ess Gee the assessee found in the course of the searches at the the assessee found in the course of the searches at the Group, action u/s 153C of the Act for issue of notice was taken ction u/s 153C of the Act for issue of notice was taken ction u/s 153C of the Act for issue of notice was taken after due compliance of the procedure laid down under the er due compliance of the procedure laid down under the er due compliance of the procedure laid down under the provisions of the Act. In the satisfaction note recorded by the of the Act. In the satisfaction note recorded by the of the Act. In the satisfaction note recorded by the Assessing Officer of the searched person as well as Assessing Assessing Officer of the searched person as well as Assessing Assessing Officer of the searched person as well as Assessing Officer of the assessee Officer of the assessee, it is noted that data was extracted from the it is noted that data was extracted from the laptop found at the main office premises of the p found at the main office premises of the ‘Ess Gee Ess Gee Group’ . Said laptop was stated and admitted to belonging to Ms. aid laptop was stated and admitted to belonging to Ms. Bina Shah aid laptop was stated and admitted to belonging to Ms. who was Chartered Accountant of the group who was Chartered Accountant of the group and relation relation to page 16 to 21 of Annexure A-5 seized from the office premises of the 5 seized from the office premises of the 5 seized from the office premises of the Ess Gee Group at Nariman Point, Group at Nariman Point, Ms. Bina Shah stated that said document Shah stated that said document showed additional consideration of Rs. showed additional consideration of Rs.62,89,71,086/ 62,89,71,086/- in cash in respect of alleged transaction of acquisition of the shares of respect of alleged transaction of acquisition of the shares of respect of alleged transaction of acquisition of the shares of Kenwood Mercantile Pvt. Ltd. and Goodfaith Builders Pvt. Ltd by Kenwood Mercantile Pvt. Ltd. and Goodfaith Builders Pvt. Lt Kenwood Mercantile Pvt. Ltd. and Goodfaith Builders Pvt. Lt Ess Gee Shelters Pvt. Ltd. (now known as Peakwood Realty Pvt. Ess Gee Shelters Pvt. Ltd. (now known as Peakwood Realty Pvt. Ess Gee Shelters Pvt. Ltd. (now known as Peakwood Realty Pvt. Ltd.). Accordingly, the Assessing Officer in the assessment Ltd.). Accordingly, the Assessing Officer in the assessment Ltd.). Accordingly, the Assessing Officer in the assessment completed u/s 153C of the Act on 29.12.2017 added the sum of completed u/s 153C of the Act on 29.12.2017 added the completed u/s 153C of the Act on 29.12.2017 added the Rs.62,89,71,086/- as unexplained investment. On further appeal, as unexplained investment. On further appeal, as unexplained investment. On further appeal, the Ld. CIT(A) deleted the addition on the ground that addition for Ld. CIT(A) deleted the addition on the ground that addition for Ld. CIT(A) deleted the addition on the ground that addition for the said amount of Rs.62,89,55,192/ the said amount of Rs.62,89,55,192/- was already made by the was already made by the Assessing Officer in the case of Assessing Officer in the case of M/s M3M Holdings and which was M3M Holdings and which was confirmed by the Ld. First Appellate Authority in the case of M3M confirmed by the Ld. First Appellate Authority in the case of M3M confirmed by the Ld. First Appellate Authority in the case of M3M Holdings. Aggrieved, the Revenue is in appeal before the Tribunal by Holdings. Aggrieved, the Revenue is in appeal before the Tribunal by Holdings. Aggrieved, the Revenue is in appeal before the Tribunal by way of raising grounds as reproduced above. way of raising grounds as reproduced above.

3.We have heard the rival submissions advanced by the learned We have heard the rival submissions advanced by the learned We have heard the rival submissions advanced by the learned counsel for the parties and have carefully perused the material counsel for the parties and have carefully perused the material counsel for the parties and have carefully perused the material available on record. The main issue in the present appeal pertains The main issue in the present appeal pertains The main issue in the present appeal pertains to the addition of ₹62,89,71,086/ 62,89,71,086/-, which was made in the hands of , which was made in the hands of the assessee as unexplained investment but was subsequently the assessee as unexplained investment but was subsequently the assessee as unexplained investment but was subsequently deleted by the Learned Commissioner of Income Tax (Appeals) deleted by the Learned Commissioner of Income Tax (Appeals) deleted by the Learned Commissioner of Income Tax (Appeals) [CIT(A)]. The Revenue, being aggrieved by the said deletion, has [CIT(A)]. The Revenue, being aggrieved by the said deletion, has [CIT(A)]. The Revenue, being aggrieved by the said deletion, has preferred preferred the the present present appeal. ap peal. The The Learned Learned Departmental Departmental Representative (DR) has contended that a similar addition made in Representative (DR) has contended that a similar addition made in Representative (DR) has contended that a similar addition made in the case of M3M Holdings was deleted by the Income Tax Appellate the case of M3M Holdings was deleted by the Income Tax Appellate the case of M3M Holdings was deleted by the Income Tax Appellate Tribunal (ITAT) on the ground that the transaction in question Tribunal (ITAT) on the ground that the transaction in question Tribunal (ITAT) on the ground that the transaction in question pertained to the assessee. On t pertained to the assessee. On the other hand, the learned counsel he other hand, the learned counsel for the assessee has drawn our attention to the submissions made for the assessee has drawn our attention to the submissions made for the assessee has drawn our attention to the submissions made by the Revenue before the Hon’ble Punjab & Haryana High Court in by the Revenue before the Hon’ble Punjab & Haryana High Court in by the Revenue before the Hon’ble Punjab & Haryana High Court in the appeal concerning M3M India Holdings. It has been submitted the appeal concerning M3M India Holdings. It has been submitted the appeal concerning M3M India Holdings. It has been submitted that the Revenue’s own stan that the Revenue’s own stand before the High Court was that the d before the High Court was that the ITAT had erred in holding that the addition ought not to have been ITAT had erred in holding that the addition ought not to have been ITAT had erred in holding that the addition ought not to have been made in the hands of M3M Holdings. The Revenue had asserted made in the hands of M3M Holdings. The Revenue had asserted made in the hands of M3M Holdings. The Revenue had asserted that, based on the search and post that, based on the search and post-search inquiries, it was search inquiries, it was established that M/s M3M Holding established that M/s M3M Holdings had acquired the land in s had acquired the land in question through conduit entities, comprising paper companies and question through conduit entities, comprising paper companies and question through conduit entities, comprising paper companies and non-existent firms. Thus, as per the Revenue’s stand, the addition existent firms. Thus, as per the Revenue’s stand, the addition existent firms. Thus, as per the Revenue’s stand, the addition was correctly made in the hands of M3M Holdings, the ultimate was correctly made in the hands of M3M Holdings, the ultimate was correctly made in the hands of M3M Holdings, the ultimate holding company of the assessee, w holding company of the assessee, while the assessee itself was hile the assessee itself was merely a paper conduit. In our considered opinion, when the merely a paper conduit. In our considered opinion, when the merely a paper conduit. In our considered opinion, when the Revenue has itself taken a position that the addition ought to be Revenue has itself taken a position that the addition ought to be Revenue has itself taken a position that the addition ought to be sustained in the hands of M3M Holdings, the filing of the present sustained in the hands of M3M Holdings, the filing of the present sustained in the hands of M3M Holdings, the filing of the present appeal, disputing the findings of t appeal, disputing the findings of the CIT(A) on the ground that the he CIT(A) on the ground that the transaction belongs to M3M Holdings, appears to be untenable. transaction belongs to M3M Holdings, appears to be untenable. transaction belongs to M3M Holdings, appears to be untenable. Furthermore, we find that the Hon’ble Punjab & Haryana High Furthermore, we find that the Hon’ble Punjab & Haryana High Furthermore, we find that the Hon’ble Punjab & Haryana High Court, in its judgment dated 22.10.2024 in of 2023, Court, in its judgment dated 22.10.2024 in of 2023, Court, in its judgment dated 22.10.2024 in ITA No. 97 of 2023, recorded the Revenue’s submission that recorded the Revenue’s submission that the ultimate beneficiary of the ultimate beneficiary of the acquisition of 430 acres of land was M3M India Holdings. the acquisition of 430 acres of land was M3M India Holdings. the acquisition of 430 acres of land was M3M India Holdings. However, in the case of M3M Holdings, the addition was deleted However, in the case of M3M Holdings, the addition was deleted However, in the case of M3M Holdings, the addition was deleted solely on the ground that such an addition could not have been solely on the ground that such an addition could not have been solely on the ground that such an addition could not have been made under the provisions of Section 153 made under the provisions of Section 153A of the Income Tax Act, A of the Income Tax Act, 1961, without invoking Section 153C in the case of M3M Holdings. 1961, without invoking Section 153C in the case of M3M Holdings. 1961, without invoking Section 153C in the case of M3M Holdings. In light of the above facts and the Revenue’s own contentions before In light of the above facts and the Revenue’s own contentions before In light of the above facts and the Revenue’s own contentions before the High Court, we find no justification for interfering with the well- the High Court, we find no justification for interfering with the well the High Court, we find no justification for interfering with the well reasoned order of the CIT( reasoned order of the CIT(A). Accordingly, the ground raised in ground raised in present appeal stands dismissed. present appeal stands dismissed.

3.1 Before us, the Ld. counsel for the assessee has filed an Before us, the Ld. counsel for the assessee has filed an Before us, the Ld. counsel for the assessee has filed an application under Rule 27 of the ITAT Rules, 1963 raising the application under Rule 27 of the ITAT Rules, 1963 raising the application under Rule 27 of the ITAT Rules, 1963 raising the following ground:

"27. Respondent may support order on grounds "27. Respondent may support order on grounds decided against him: against him:- The respondent, though he may not have appealed, may The respondent, though he may not have appealed, may The respondent, though he may not have appealed, may support the order appealed against on any of the grounds any of the grounds support the order appealed against on decided against him." decided against him." 3.2 The Ld. counsel for the assessee submitted that under Rule 27 The Ld. counsel for the assessee submitted that under Rule 27 The Ld. counsel for the assessee submitted that under Rule 27 of the ITAT Rules the respondent ma of the ITAT Rules the respondent may support on the order may y support on the order may decided against him. The Ld. counsel relied on the following decided against him. The Ld. counsel relied on the following decided against him. The Ld. counsel relied on the following decisions and submitted that ground raised by the assessee should and submitted that ground raised by the assessee should and submitted that ground raised by the assessee should be adjudicated:

 83 ITR 223 (Bom) B.R.Bamsi vs. CIT) 83 ITR 223 (Bom) B.R.Bamsi vs. CIT)  129 ITR 475 (All) Moralia & Sons vs. CIT 129 ITR 475 (All) Moralia & Sons vs. CIT 129 ITR 475 (All) Moralia & Sons vs. CIT  220 ITR 3 220 ITR 398 (Ker) CIT vs. Cochin Refinieries 98 (Ker) CIT vs. Cochin Refinieries Ltd  176 CTR 406 (Gau) Assam Company (I) Ltd vs. 176 CTR 406 (Gau) Assam Company (I) Ltd vs. 176 CTR 406 (Gau) Assam Company (I) Ltd vs. CIT  102 ITD 189 (Del) ITO vs. Gurvinder Kaur 102 ITD 189 (Del) ITO vs. Gurvinder Kaur 102 ITD 189 (Del) ITO vs. Gurvinder Kaur  284 ITR 80 (SC) CIT V. Varas International 284 ITR 80 (SC) CIT V. Varas International 284 ITR 80 (SC) CIT V. Varas International P.Ltd. P.Ltd.  436 ITR 616 (Bombay) Peter Vaz vs CIT 436 ITR 616 (Bombay) Peter Vaz vs CIT 3.3 However, we find that we have alrea However, we find that we have already rejected the grounds dy rejected the grounds raised by the Revenue on merit and therefore, the grounds raised by raised by the Revenue on merit and therefore, the grounds raised by raised by the Revenue on merit and therefore, the grounds raised by the assessee are rendered merely academic and therefore, we are the assessee are rendered merely academic and therefore, we are the assessee are rendered merely academic and therefore, we are not adjudicating upon at this stage. not adjudicating upon at this stage.

Order pronounced in the open Court on nounced in the open Court on 30/01/2025. /01/2025.