DY. COMMISSIONER OF INCOME TAX, JHANDEWALLAN EXTN., DELHI vs. BDR BUILDERS AND DEVELOPERS PRIVATE LIMITED, DELHI

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA Nos. 2451/ & 2452/Del/2023 (Assessment Years: 2016-17 & 2018-19) DCIT, Vs. BDR Builders and Jhandewalan Ext. Developers Pvt Ltd, Delhi C-43, LGF, Jangpura Extension, Delhi (Appellant) (Respondent) PAN:AACCB3977G

Assessee by : Shri Salil Agarwal, Sr. Adv Shri Sailesh Gupta, Adv Shri Madhur Agarwal, Adv Revenue by: Mrs. Sunita Verma, CIT DR Date of Hearing 04/03/2024 Date of pronouncement 14/05/2024

O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.2451/Del/2023 for AY 2016-17, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. ITBA/AST/F/17/2021-22/1042359089(1) dated 31.03.2022 against the order of assessment passed u/s 147 r.w.s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) 19.06.2023 by the Assessing Officer, ACIT, Central Circle-15, New Delhi (hereinafter referred to as „ld. AO‟).

ITA No. 2451/Del/2023 for AY 2016-17

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to argue the case only on merits of the addition. The same is reckoned as a statement made from the Bar and accordingly the Rule 27 petition filed by the assessee is hereby dismissed as not pressed.

“1. Whether on the facts & circumstances of the case and in law, ld. CIT(A) erred in deleting the addition of Rs. 7,21,00,000/- made by AO u/s 69A of the IT Act, 1961 on account of unaccounted cash receipts on sale of property. 2. Whether on the facts & circumstances of the case and in law, Id. CIT(A) erred in ignoring the documentary evidence in the shape of stamp duty value by the registering authority, cheque numbers etc. mentioned in the notes recovered by the Laptop of Sh. Rajesh Gupta related to the verified and matched transaction of sale actual property. 3. Whether on the facts & circumstances of the case and in law, ld. CIT(A) was correct in deleting the addition made by AO ignoring the fact that the cheque number mentioned in the note recovered by the Laptop of Sh. Rajesh Gupta which were verified and matched with cheque numbers appearing in the books of accounts of assessee company against the sale of the said property. 4. Whether on the facts & circumstances of the case and in law, ld. CIT(A) has erred in accepting the contention of the assessee that Sh. Rajesh Gupta was not a Director of the assessee company during the Survey proceedings whereas as per the evidence of e-mail dated 01.09.2017, Sh. Rajesh Gupta was a acting Director of the assessee company, thereby CIT(A) erred in not considering the reliability of the note found from the Laptop that cannot be doubted upon being verified documentary evidence. 5. The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. 6. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal. 4. We have heard the rival submissions and perused the material available on record. The assessee is a closely held company, engaged in the business of real estate development and sale of immovable properties. The return of income for AY 2016-17 was filed by the assessee on 14.09.2016 declaring taxable income of Rs. 3,84,46,950/-. A survey u/s 133A of the Act was carried out on the premises of the assessee company on 13.12.2018, wherein, no adverse material was found by the survey team. During the year under consideration, the assessee has raised share capital and share premium from 3 existing

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shareholders and one group company where the directors of the assessee are holding controlling interest and issued 32,66,250 equity shares to them for a total consideration of Rs. 52,26,00,000/- which consisted of share capital of Rs. 3,26,62,500/- (face value of Rs. 10) and share premium of Rs. 48,99,37,500/- (premium of Rs. 150 per share). Shares were issued as per valuation certificate obtained under Rule 11UA as on 31.03.2015 determining the book value of each share at Rs. 160 per share. When asked to explain the three ingredients of section 68 of the Act with regard to receipt of share capital and share premium by the assessee company, the assessee made the following submissions together with furnishing of the following documents:-

i) Dinesh Gupta HUF: Shri Dinesh Gupta is one of the directors of the assessee company and his HUF namely Dinesh Gupta (HUF) is also an existing shareholder of the assessee company which owned shares of the assessee company in the earlier years. During the instant year, 13,51,250 Equity shares of the company were further allotted to Dinesh Gupta HUF and an amount of Rs.21,62,00,000/- has been received which includes an amount of Rs. 1,35,12,500/- as share capital and share premium of Rs.20,26,87,500/-. This amount has been received by the assessee from regularly maintained bank account of Dinesh Gupta (HUF) and the following documents were filed by the assessee company to prove the nature and source of the amount of Rs. 21,62,00,000/- received by it from Dinesh Gupta (HUF) as subscription during the instant year:-

a) Copy of the share application form b) Confirmation of the shareholder c) Affidavit of the shareholder d) Copy of bank statement of the shareholder e) Copy of income tax returns of the shareholder f) Copy of bank account of the assessee company showing receipt of share premium from the shareholder.

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The ld AO without pointing out any discrepancy in the aforesaid documentary evidences filed by the assessee drew adverse inference against the assessee on the following grounds:-

i. That the shareholder has neither produced the detailed ITR nor the net worth of the HUF. ii. Amount invested is Rs. 21,62,00,000/- whereas the returned income of the shareholder for the instant year is only Rs. 15,85,912/-. iii. That the bank statement of the shareholder shows a peculiar pattern of huge sums credited and debited throughout the year. iv. Subscriber has poor financial credentials, weak creditability and no creditworthiness and is therefore not a genuine source from which the assessee company has received funds.

It was submitted that the ld. AO had erred in drawing adverse inference against the assessee and its shareholder only on the basis of suspicion, surmises and conjectures. At the outset, it was submitted that the shareholder was an independent income tax assessee who had duly filed copy of its complete income tax return for the AY 2016-17 before the assessing officer as is evident from the impugned order itself where the AO has found that Dinesh Gupta HUF, in compliance to notice under section 133(6) has filed income tax return copy showing income from sale of shares as also copy of assessment order passed in its case for the instant year along with its bank statement explaining source of each entry. A perusal of the impugned assessment order will show that the AO has not pointed out any specific discrepancy in any of the above documentary evidences filed by the assessee and the shareholder to discharge the onus that lays upon them u/s 68 of the Act. It is therefore submitted that the action of the AO in drawing adverse inference against the assessee is wholly wrong, arbitrary and untenable in law. It may further be evident that the assessee has duly disclosed the exact source of source of Rs. 21,62,00,000/- invested by the shareholder and the AO

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has erred in disbelieving the same only on the basis of suspicion and only for the sake of making addition. It was further submitted that the AO has also erred in drawing adverse inference against this shareholder ignoring the fact that the said shareholder had also disclosed exempt income of Rs. 17,56,10,471/- in the return of income. Further, only the current year income cannot be justifiably taken as a criterion for proving the creditworthiness without bringing any contrary material on record. It was submitted that the assessee had duly discharged the onus that lay upon it u/s 68 of the Act. In the case of this shareholder, it was explained the source of investment to be refund of loans and advances by it to other entities in earlier years as also from sale/liquidation of investments made by it in earlier years. It may further be evident that the assessee had filed documentary evidences for each source of source and therefore there is no valid basis to disprove the investment made by Dinesh Gupta HUF in the assessee company and accordingly it was prayed that the addition as made may kindly be deleted.

ii) Nimit Builders Pvt Ltd:- This shareholder is also an existing shareholder of the assessee company and owned shares of the assessee company in the earlier years. During the instant year, 8,21,250 Equity shares of the company were allotted to Nimit Builders Pvt Ltd and an amount of Rs. 13,14,00,000/- has been received which includes an amount of Rs. 82,12,500/- as share capital and share premium of Rs. 12,31,87,500/-. This amount has been received by the assessee from regularly maintained bank account of Nimit Builders Pvt Ltd and the following documents were filed by the assessee company to prove the nature and source of the amount of Rs. 13,14,00,000/- received by it from Nimit Builders Pvt Ltd as share subscription during the instant year:- a) Copy of the share application form b) Confirmation of the shareholder c) Affidavit of the shareholder d) Copy of bank statement of the shareholder Page | 5

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e) Copy of income tax return of the shareholder. f) Copy of bank account of the assessee company showing receipt of share subscription from the shareholder.

The ld AO without pointing out any discrepancy in the aforesaid documentary evidence proceeded to draw adverse inference on the assessee on the following grounds:-

a. That the returned income of the shareholder is only Rs. 14,27,950/- whereas it has made an investment of Rs. 13.14 crore in the assessee company. b. That the shareholder had received security premium money from one party namely KG Finvest which was found to be involved in the business of giving accommodation entries and therefore the source of source of the assessee is bogus and non-genuine. c. That the bank statement of shareholder shows a peculiar pattern of huge sums that are being credited and debited continuously throughout the year. d. That the audited balance sheet of the shareholder shows that it has no real business activities and that its heavy balance sheet without underlying operation shows that it is meant for investing in a circuitous manner and that the group companies are investing in each other to circulate the money of directors and therefore the onus u/s 68 is not completely discharged by the assessee company.

The assessee gave point-wise submissions in respect of the adverse observations of the ld AO as under:-

a. It is respectfully submitted that only the current year income cannot be justifiably taken as a criterion for any investment. In the case of this shareholder, it has explained the source of investment to be refund of loans and advance by it to other entities in earlier years as well as in the

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instant year for which documentary evidences in the form of confirmations of such entities confirming their transactions with the shareholder have also been furnished. Similarly, the confirmation of Ramprastha Promoters & Builders Pvt Ltd who have given certain advance to the shareholder has also been filed. It may be evident that the AO has not pointed out any discrepancy in any of these transactions which are supported by the documentary evidences. Therefore, there is no valid basis to draw an adverse inference merely because of lower taxable income of the shareholder during the instant year.

b. Regarding the investment by KG Finvest in shareholder company, it is submitted that such amount was not received by the shareholder during the instant year and therefore no adverse inference could be validly drawn by the AO against the assessee for the instant year. Further the shareholder has not claimed that the source of source in the case of the investment made by it in the assessee company is out of such funds said to have been received by it from KG Finvest. The Ld AO has failed to appreciate that the shareholder is an independent income tax assessee and therefore it is not for the AO to make assessment of the shareholder.

c. It is respectfully submitted that the AO has not brought on record any adverse material to counter the documentary evidences filed by the assessee and therefore there is no valid basis for him to draw adverse inferences only on the basis of surmises and conjecture. It is further submitted that the AO himself has found that the shareholder company was a group company and had huge security premium and share capital in its balance sheet. The AO has however falled to appreciate that no prudent businessman will keep its capital idle and therefore the group entities have invested their money as part of capital or loans to other group companies according to the needs of the business. The AO has also erred in holding that such money is the money of directors. No basis for making such arbitrary allegation has been brought on record and Page | 7

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therefore the same is wholly wrong and unjustified. It is further submitted that the AO has also failed to appreciate that the shareholder company is a distinct entity which has its own legal status and is also a separate income tax assessee. It is submitted that there is no justification to draw adverse inference only on the basis of general observation without bringing on record any material to contradict the documentary evidences filed by the assessee to discharge the onus that lay upon the assessee u/s 68 of the Act.

It may thus be evident that there is no valid basis for the learned Assessing Officer to draw any adverse inference against this shareholder. It is further submitted that the learned Assessing Officer has not pointed out any other discrepancy in any of the other documentary evidences filed by the assessee to prove nature and source of funds available to the shareholder for making investment in the assessee company and therefore also the addition made by the A.O. is wholly wrong, unjustified and untenable in law. It may be evident to your goodself that the assessee has duly discharged the onus that lay upon it u/s 68 of the Act to prove the investment made by Nimit Builders Pvt Ltd in the assessee company and accordingly it is prayed that the same be deleted.

(iii). Ram Kumar Gupta (HUF) - This shareholder is also is an existing shareholder of the assessee company. During the instant year, 3,18,750 Equity shares of the company were allotted to Ram Kumar Gupta HUF and an amount of Rs.5,10,00,000/- has been received which includes an amount of Rs. 31,87,500/- as share capital and share premium of Rs.4,78,12,500/-. This amount has been received by the assessee from regularly maintained bank account of Ram Kumar Gupta HUF and the following documents were filed by the assessee company to prove the nature and source of the amount of Rs.5,10,00,000/- received by it from Ram Kumar Gupta HUF as share subscription during the instant year:-

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a) Copy of the share application form b) Confirmation of the shareholder c) Affidavit of the shareholder d) Copy of bank statement of the shareholder e) Copy of income tax return of the shareholder. f) Copy of bank account of the assessee company showing receipt of share subscription from the shareholder.

The ld AO had not point out any discrepancy in the return of income filed by the concerned shareholder who are totally disclosed the receipt of sale proceeds of unlisted shares of Rs. 4.75 crores and therefore, there was no valid basis for the ld AO to allege that the shareholder had poor financial credentials and no creditworthiness. The ld AO however, held that the shareholder and the assessee was not furnished the source of source for the capital invested by the shareholder and drew adverse inference against the assessee.

(iv) VERMA DEVELOPERS PRIVATE LIMITED - During the instant year, 7,75,000 Equity shares of the company were further allotted to Verma Developers Private Limited and an amount of Rs. 12,40,00,000/- has been received which includes an amount of Rs. 77,50,000/- as share capital and share premium of Rs. 11,62,50,000/-. This amount has been received by the assessee from regularly maintained bank account of Verma Developers Private Limited and the following documents were filed by the assessee company to prove the nature and source of the amount of Rs.12,40,00,000/- received by it from Verma Developers Private Limited as subscription during the instant year:-

a) Copy of the share application form b) Confirmation of the shareholder c) Affidavit of the shareholder d) Copy of bank statement of the shareholder

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e) Copy of income tax return of the shareholder f. Copy of bank account of the assessee company showing receipt of share subscription from the shareholder.

The ld AO without pointing out any defect in the documentary evidence submitted by the assessee drew adverse inference against the assessee by stating that the shareholder did not have any income during the year and still held investments of Rs. 23.79 crores and had received share premium amounting to Rs. 16.20 crores. The assessee submitted that the concerned shareholder i.e. Verma Developers Pvt. Ltd had received share premium of Rs. 16.20 crores from its own shareholder and had also held non-current investment of Rs. 23.79 crores. It was submitted that the ld AO had not point out any discrepancy in the fact that the money invested by the shareholder in the assessee company was out of share capital subscription received by it from its own shareholders. It is also undisputed fact that nature and source of such funds were duly disclosed in the audited balance sheet of the shareholder who is furnished its own return of income and therefore it cannot be said that the assessee had not discharged it onus cast on it u/s 68 of the Act. The ld AO further without pointing out any discrepancy in the explanation and documentary evidences filed by the assessee held that the reply of the assessee is not tenable and no concrete evidence had been filed.

“6.2 It has been contended by the assessee that it has duly discharged the onus that lay upon it u/s 68 of the Act to prove the nature and source of the share capital and share premium received by it during the instant year from its directors, existing shareholders and their relatives. The appellant has further contended that each of such four subscribers/shareholders have also proved the nature and source of the funds invested by them in the assessee company during the instant year and thus the onus that lay upon the assessee u/s 68 of the Act stood fully discharged. It is seen from the perusal of the

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written submissions and paper book filed by the assessee that it has furnished the following documentary evidences in respect of all the subscribers/shareholders: a) Copy of the share application form. b) Confirmation of the shareholder, c) Affidavit of the shareholder. d) Copy of bank statement of the shareholder. c) Copy of income tax return of the shareholder. f) Copy of ROC return showing allotment of the shares to the shareholder. g) Copy of bank account of the assessee company showing receipt of share premium from the shareholder. Apart from the above the appellant also furnished the details of the source of source of each of the subscriber/shareholder where it had explained the nature and source of each of the amounts paid by each of such subscriber to the assessee company. It is also seen that a detailed chart was submitted before the AO by the assessee which shows the immediate source of funds in the hands of each of the shareholder which enabled them to make the investment in the assessee company. Documentary evidences in support of the availability of such funds in the hands of each of the shareholders were also filed by the assessee during assessment proceedings as well as the present appellate proceedings. 6.2.1 The copies of explanations and documentary evidences filed by the assessee have been carefully perused and examined by me. It is found as under: I. All the four subscribers of the appellant company which is an unlisted closely held company are either the existing shareholders or directors or relatives of the directors. II. The entire amount of subscription has been received by account payee cheques or through RTGS from the bank accounts of each of the subscribers. III. Each of such subscribers is an income tax assessee and has duly confirmed that they have made the investment in the assessee company and have also explained the nature and source of funds credited in their respective bank accounts out of which they made the payment for investment in the assessee company. IV. It is also seen that the exempt income earned by them is fully disclosed and accounted for in their own individual return of income filed by them. V. A perusal of the explanation filed by the assessee in respect of Dinesh Gupta HUF Shows that the nature and source of funds available

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with the subscriber out of which investment has been made in the assessee company docs not include any exempt income. VI. A perusal of the detailed chart at page no 771 to 775 of the paper book, which was also submitted before the Assessing Officer vide letter dated 28.03.22, shows that the source of funds available in the hands of Dinesh Gupta (HUF) out of which investment was made in the assessee company was explained. 6.2.2 Details of sources of funds of each subscribers explained by the appellant are as under:- i. Dinesh Gupta HUF: a) Refund of loan given to various entities 8.79 crores for which confirmation of account was also furnished. b) Sale of shares of listed companies 8.35 crores duly disclosed in the ITR of Dinesh Gupta HUF. c) Sale of shares of unlisted companies 4.13 crores duly disclosed in the ITR of Dinesh Gupta HUF. d) Loan received 0.60 crores for which confirmation of account was furnished. e) Dividend received 0.32 crores duly disclosed in the ITR of Dinesh Gupta HUF. 22.19 crores The finding of the AO that this shareholder has not produced its detailed ITR is found to be contrary to the finding of the AO himself in the impugned order itself when the AO on page 10 of the impugned order has stated that Dinesh Gupta HUF has filed copy of his income tax return showing income from sale of shares as also his assessment order for the instant year and bank statements explaining source of each entry. These documents have also been filed before the undersigned. It is seen that no specific discrepancy has been pointed out by the AO in any of these documentary evidences. In the return of income filed by this shareholder, it is seen that an exempt income of Rs. 17,56,10,471/- has been disclosed and therefore there is no valid basis for the AO to draw an adverse inference on the ground that the taxable income declared by it is only 15,85,912/- where as it has made investment of 21,62,00,000/- in the assessee company. Apart from this it is also seen that this shareholder has also received back refund of loans given by it to various persons for which confirmation of account has also been given. The AO having not found any discrepancy in any of these documents and confirmations of the source of source, was not justified in rejecting the same without bringing any contrary material on record. The investor is an

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independent income tax assessee and has filed its return and assessment has also been made in its case. Thus, in my considered view there is no justification for the AO to draw any inference regarding the pattern in his bank account when the same has already been considered in it's own assessment and the source of investment in the assessee company has been duly explained by it and no discrepancy is found by the AO in the same. ii. Nimit Builders Pvt Ltd.: a) Refund of Loan given by shareholder to various Rs. 8.70 crores entities in the earlier year or during the instant year itself for which confirmation of accounts was filed. b) Refund of advance given for immovable property Rs. 4.10 crores for which confirmation of accounts was filed. c) Advance received from Ramprastha Promoters & Rs. 1.35 crores Developers Pvt Ltd for which confirmation of accounts was filed.

From the above, it is seen that out of the amount of Rs. 13,14,00,000/- which was invested in the appellant company, an amount of Rs. 8.70 crores is out of the refund of loans given by the shareholder to various entities and confirmations of those entities have been filed to show that such loans have been paid back to the shareholder and out of the same investment has been made in the assessee company. Likewise, the confirmations of other funds received by the shareholder have been filed and it is found that the AO not pointed out any discrepancy in the same. On these facts, it is seen that there is no valid basis for the AO to draw adverse inference on the ground that the taxable income of the shareholder is only Rs. 14,27,950/- whereas the investment made by it in the assessee company is Rs. 13.14 crores. It is further seen that there is no justification for the AO to draw any adverse inference on the ground that the shareholder had received security premium money from KG Finvest (correct name is RKG Finvest Pvt Ltd which is S.K. Jain group company) when neither this amount was received by the shareholder during the instant year nor the shareholder has claimed the sameto be the source of investment made by it in the assessee company. The copy of audited balance sheet of the shareholder as 31.03.2016 has been filed by the appellant and a perusal of the same shows that no further share capital or share premium has been received from RKG Finvest Pvt Ltd during in the instant year. It is further seen that the securities premium and share capital received by the shareholder in the immediately preceding year from RKG Finvest Pvt Ltd stood added to its taxable income vide assessment order passed u/s 143(3) of the Act on 30.12.2017. Therefore, also there is no justification to draw any adverse inference against the assessee company and the shareholder

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during the instant year on this ground. It is further seen the shareholder is an independent income tax assessee and files its income tax return and his affairs are examined in its income tax proceedings. Thus, the AO has not brought on record any material to prove the allegation that the money been invested is the money of the directors. In view of above discussion, it is found that the AO has not been able to rebut the claim of the assessee that the onus that lay upon it u/s 68 of the Act has been duly discharged. iii. RAM KUMAR GUPTA HUF: a) Sale of Unlisted shares Rs. 4.75 crores Duly disclosed in the ITR filed by Shareholder. b) Refund of loan given to Rs. 0.79 crores BDR Finvest Pvt Ltd. in earlier Years. 5.54 crores From the above, it is evident that the sources of fund for investment was from sale proceeds of Rs. 4.75 crores and the Rs.79 lacs was received back as refund of loan which has been invested in the assessee company. This amount of Rs. 4.75 crores is duly disclosed in the income tax return of the shareholder which is an independent income tax assessee. Likewise, the refund of loan from BDR Finvest Pvt Ltd is also duly reflected in the bank statement of the shareholder. Thus, the assessee is found to have duly furnished the nature and source of the amount of Rs. 5,10,00,000/- received by it from this shareholder and is also found to have explained the nature and source of funds in the hands of the shareholder out of which such investment has been made. Thus, the onus that lay upon it u/s 68 of the Act stood discharged, iv. VERMA DEVELOPERS PRIVATE LIMITED a) Share Capital subscription received Rs. 7.62 crores from Nishit Capinvest Pvt Ltd, for which confirmation filed. c) Share Capital subscription received Rs. 6.20 crores from Renu Proptech Private Limited for which Confirmation filed. Rs. 13.82 crores The claim of the assessee regarding the receipt of above funds by the shareholder and its subsequent investment in the assessee company is duly verifiable from the bank statement of the shareholder as also the audited balance sheet of the shareholder company. The copies of annual returns filed by the shareholder before ROC showing allotment of shares to both the above said companies by it have also been filed along with

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confirmation of the above two companies. It is found from a perusal of the assessment order that the AO has not found any of the discrepancy in any of these documentary evidences filed by the assessee. The AO made the impugned addition only on suspicion when according to him the shareholder was a paper/shell company formed for the purpose of investing in a circuitous manner in the group concerns related to the directors of the assessee company Rajesh Gupta and Dinesh Gupta. This finding of the AO has been carefully considered. However, it is found that such a finding does not rebut the discharge of onus u/s 68 of the Act by the appellant. The shareholder company as well as its two shareholder companies are separate and independent income tax assessee whose returns of income as well as assessment orders and appellate orders have been filed. Further all these companies, according to the AO himself, are group companies controlled by the directors of the assessee company. In my considered opinion no adverse inference can be justifiably drawn merely because there is an investment of funds in inter-se the group companies when the same is done as per the needs of the business. Further, the facts remains that the AO has not brought on record any material which is contrary to the documentary evidences filed by the assessee to discharge the onus that lay upon it u/s 68 of the Act. 6.2.3 Hence, it is observed that the appellant had submitted all the requisite details as mentioned in the fore going paragraphs to discharge its burden of proof u/s 68 of the Act in respect of the share capital and share premium received by it. The assessee has duly established the identity, credit worthiness and genuineness of the share capital and share premium received by it. All the four investing entities are either existing shareholders or directors or closely related to shareholders of the appellant company. Each of such subscriber is filing its return of income and have explained the credit entries in their respective bank accounts out of which investment has been made in the assessee company. It is also seen that there are no cash deposits in the bank accounts of these four subscribers and the credits are in respect of either sale of unlisted shares for which capital gain has been declared in the returns or the source of fund is return of earlier advanced loans from various entities. The assessee has furnished all documentary evidences in support of availability of such funds in the bank account of the four subscribers out of which they have made the investment in the assessee company. Thus, the assessee has discharged the burden that lay upon it. However, the AO has failed to bring on record any specific adverse material to prove non genuineness or non-credit worthiness of these investors. 6.2.4 The observation of the AO that the income declared by the four subscribers does not justify the large amount of investment made by them is also found to be unjustified as ordinarily the current year income alone cannot be criterion of justification of any investment when there may be earlier year investments in various assets like

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loans/stocks etc. which are liquidated/received in the current year to make the investment. The AO has not brought on record any specific material to counter the documentary evidences filed by the assessee to prove the return of loan given to various entities or the sale of unlisted shares by the four subscribers which enabled them to make the investment in the assessee company. 6.2.5 In view of the above, I agree with the contention of the appellant that the AO has erred in drawing the adverse inference against assessee and its shareholders only on the basis of suspicion without bringing on record any specific adverse material which could enable him to validly reject the documentary evidences filed by the assessee to prove the nature and source of funds received by the assessee as also the nature and source of funds available in the hands of the shareholders which enabled them to make the investment in the assessee company. In my considered opinion the AO while framing the assessment in the hands of the assessee company ought not to have tried to frame the assessment of shareholders who have admittedly disclosed all their transactions in their own return of income and separate assessment orders have been passed in the cases of at least three subscribers out of four subscribers in the instant case 6.2.6 In the Assessment Order the A.O. has made observation that "Onus of proof: Prima facie onus is always on the Assessee to prove the cash credit entry found in the books of account of the Assessee. In land mark cases like Kale Khan Mohammad Hanif v. CIT[1963] 50 ITR (SC), Roshan Di Hatti v. CIT[1997] 107 ITR (SC) it has been held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an Assessee, is on him. Where the nature and source thereof cannot be explained satisfactorily, it is open to the revenue to hold that it is the income of the Assessee and no further burden is on the revenue to show that the income is from any particular source. It may also be pointed out that the burden of proof is fluid for the purposes of Section 68. Once Assessee has submitted basic documents relating to Identity, genuineness of transaction and creditworthiness then AO must do some inquiry to call for more details to invoke Section 68." Considering the same, the appellant is found to have duly discharged the onus that lay upon it u/s 68 of the Act and the AO has failed to bring any material on record to prove that the apparent is not real. The AO has disbelieved the same only on the basis of suspicion without pointing out any specific discrepancy in the documentary evidences filed by the appellant assessee. In view of the above, I find the addition of Rs. 52,26,00,000/- made by the AO u/s 68 of the Act not to be sustainable and therefore deleted. Accordingly, these Grounds of Appeal of the assessee is allowed.”

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(emphasis supplied by us)

Dinesh Gupta (HUF) – Pages 771 to 775 of Paper Book Nimit Builders Pvt Ltd – Pages 906 to 908 of Paper Book Ramkumar Gupta (HUF) – Pages 945 to 946 of Paper Book Ramkumar Gupta (HUF) – Pages 947 to 971 of Paper Book Verma Developers Pvt Ltd – Pages 579 to 770 of Paper Book 8. It is pertinent to note that some of the individual investors had huge exempt income in their hands which itself proves their creditworthiness to make investments in the assessee company. This is in addition to the fact that the assessee company had already proved even the immediate source of credit for the investors as per their bank statements. Hence source of source of investors is also proved beyond reasonable doubt by the assessee in the instant case. There is absolutely no mandate in the statute that investment should be made only out of taxable income by the investors. What is required is the availability of sufficient funds in their kitty which could explain as a source for making

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

investments in the hands of the investors. This has been proved in the instant case beyond reasonable doubt. The following tabulation would duly prove the immediate source of credit on each day of making investment by the investors in the assessee company:-

Dinesh Gupta HUF Details of immediate source of payments made to assessee company during the AY 2016-17

S.N AMOUNT PAID IMMEDIATE SOURCE OF REMARKS DOCUMENTARY O AMOUNT PAID EVIDENCES AT PAGE No. 776 TO 905 DATE AMOUNT DATE AMOUNT 1 29.09.2015 1,00,00,000.00 24.09.2015 REFUND OF LOAN CONFIRMATION OF DURING THE YEAR FROM ACCOUNT AT PAGE NO. 69,00,000.00 M/S RISHI INFRATECH 792 PVT LTD 24.09.2015 REFUND OF LOAN CONFIRMATION OF DURING THE YEAR FROM ACCOUNT AT PAGE NO. 25,00,000.00 M/S RENU PROPTECH 793 PVT LTD 28.09.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 10,81,473.41 801 TO 852 29.09.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 6,99,991.50 801 TO 852 Total 1,00,00,000.00 1,11,81,464.91

2 08.10.2015 1,20,00,000.00 30.09.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 40,22,438.43 801-852 01.10.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 3,01,556.43 801-852 06.10.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 21,17,994.62 801-852 07.10.2015 SALE OF UNLISTED SHARES CONFIRMATION OF ACCOUNT AT PAGE NO. 30,00,000.00 853 08.10.2015 SALE OF UNLISTED SHARES CONFIRMATION OF ACCOUNT AT PAGE NO. 60,00,000.00 853 Total 1,20,00,000.00 1,54,41,989.48

3 09.10.2015 08.10.2015 SALE OF UNLISTED CONFIRMATION OF SHARES ACCOUNT AT PAGE NO. 70,00,000.00 70,00,000.00 853 4 13.10.2015 13.10.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801- 49,00,000.00 66,78,516.97 852

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

i 5 14.10.2015 14.10.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801- 46,66,337.54 852 79,00,000.00 14.10.2015 SALE OF UNLISTED CONFIRMATION OF SHARES ACCOUNT AT PAGE NO. 25,00,000.00 853 Total 79,00,000.00 71,66,337.54 6 16.10.2015 1,60,00,000.00 16.10.2015 SALE OF UNLISTED CONFIRMATION OF SHARES ACCOUNT AT PAGE NO. 62,00,000.00 853 16.10.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801- 95,00,000.00 852 16.10.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801- 22,39,417.31 852 Total 1,60,00,000.00 1,79,39,417.31 7 19.10.2015 2,13,00,000.00 16.10.2015 SALE OF UNLISTED CONFIRMATION OF SHARES ACCOUNT AT PAGE NO. 30,00,000.00 853 17.10.2015 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801- 60,00,000.00 852 17.10.2015 DIVIDEND RECEIVED BANK STATEMENT AT 2,98,052.00 PAGE NO. 776 TO 791 17.10.2015 DIVIDEND RECEIVED BANK STATEMENT AT 29,03,554.00 PAGE NO. 776 TO 791

19.10.2015 SALE OF UNLISTED CONFIRMATION OF SHARES ACCOUNT AT PAGE 72,00,000.00 NO. 853 Total 2,13,00,000.00 1,94,01,606.00 8 26.10.2015 2,06,00,000.00 23.10.2015 SALE OF LISTED BROKERS SHARE CONTRACT NOTE AT 1,59,572.61 PAGE NO. 801-852 26.10.2015 SALE OF LISTED BROKERS SHARE CONTRACT NOTE AT 95,00,000.00 PAGE NO. 801-852 26.10.2015 SALE OF LISTED BROKERS SHARE CONTRACT NOTE AT 45,91,007.50 PAGE NO. 801-852 26.10.2015 SALE OF UNLISTED CONFIRMATION OF SHARES ACCOUNT nn non nn AT PAHP NJO 9^7 r\ I rAUD INU. oJj Total 2,06,00,000.00 2,06,50,580.11 9 28.10.2015 27.10.2015 SALE OF LISTED BROKERS SHARE CONTRACT NOTE AT 15,63,020.00 PAGE NO. 801-852 84,00,000.00 28.10.2015 SALE OF LISTED BROKERS SHARE CONTRACT NOTE AT 68,13,958.07 PAGE NO. 801-852 Total 84,00,000.00 83,76,978.07

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

10 16.11.2015 16.11.2015 1,50,00,000.00 REFUND OF LOAN CONFIRMATION OF DURING THE YEAR ACCOUNT AT PAGE 1,50,00,000.00 FROM M/S BDR NO. 794 FINVEST PVT LTD

1,00,00,000.00 1,00,00,000.00 1 1 2 3 . 1 2 . 2 0 1 5 2 3 . 1 2 . 2 0 1 5 R E F U N D O F C O N F I R M A T I L O A N O N O F D U R I N G T H E A C C O U N T Y E A R F R O M A T P A G E N O . 7 9 3 M / S R E N U P R O P T E C H P V T L T D

1 2 2 5 . 1 . 2 0 1 6 60,00,000.00 2 1 . 1 . 2 0 1 6 60,00,000.00 L O A N C O N F I R M A T I R E C E I V E D O N O F F R O M M / S A C C O U N T , R H E A C O P Y O F I T R D I S T R I B U T I A C K N O W L E D O N G M E N T A N D C O M P A N Y A S S E S S M E N T ( P R O P R I E T O R D E R U / S O R R O O P 1 4 3 ( 3 ) O F K I S H O R E T H E A C T M A D A N ) P A G E N O . 7 9 6 - 8 0 0 1 3 0 1 . 0 2 . 2 0 1 6 80,00,000.00 0 1 . 0 2 . 2 0 1 6 80,00,000.00 R E F U N D O F C O N F I R M A T I L O A N O N U t D U R I N G A C L X J U N 1 ^ T H E Y E A R A T P A G E N O . 7 9 4 F R O M M / S B D R F I N V E S T P V T L T D

1,00,00,000.00 1,00,00,000.00 1 4 0 1 . 0 2 . 2 0 1 6 0 1 . 0 2 . 2 0 1 6 R E F U N D O F C O N F I R M A T I L O A N O N O F D U R I N G A C C O U N T T H E Y E A R A T P A G E F R O M M / S N O . 7 9 4 B D R F I N V E S T P V T L T D 1 5 0 1 . 0 2 . 2 0 1 6 1,40,00,000.00 0 1 . 0 2 . 2 0 1 6 1,40,00,000.00 R E F U N D O F C O N F I R M A T I L O A N O N O F D U R I N G A C C O U N T T H E Y E A R A T P A G E N O . 7 9 5 F R O M M / S N I S H I T C A P I N V E S T P V T L T D

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

1 6 0 2 . 0 2 . 2 0 1 6 1 , 0 0 , 0 0 , 0 0 0 . 0 0 1 , 1 6 , 0 0 , 0 0 0 . 0 0 1 . 0 2 . 2 0 1 S A L E O F B R O K E R S 0 6 L I S T E D C O N T R A C T S H A R E S N O T E A T P A G E N O . 8 0 1 T O 8 5 2 1 8 , 0 0 , 0 0 0 . 0 0 0 1 . 0 2 . 2 0 1 B R O K E R B R O K E R S 6 S C O N T R A C T C O N T R A N O T E A T C T N O T E P A G E N O . 8 0 1 T O 8 5 2 A T P A G E N O . 8 0 1 T O 8 5 2 1,16,00,000.00 1,18,00,000.00 T o t a l 1,15,00,000.00 1,15,00,000.00 1 7 0 2 . 0 2 . 2 0 1 6 0 2 . 0 2 . 2 0 1 R E F U N D C O N F I R M A T I 6 O F O N O F L O A N A C C O U N T A T P A G E N O . 7 9 4 D U R I N G T H E Y E A R F R O M M / S B D R F I N V E S T P V T L T D 1,00,00,000.00 1,00,00,000.00 1 8 0 2 . 0 2 . 2 0 1 6 0 2 . 0 2 . 2 0 1 R E F U N D C O N F I R M A T I 6 O F O N O F L O A N A C C O U N T A T P A G E N O . 7 9 4 D U R I N G T H E Y E A R F R O M M / S B D R F I N V E S T P V T L T D 1 9 0 3 . 0 2 . 2 0 1 6 1 6 , 3 0 , 0 0 0 . 0 0 1 , 2 0 , 0 0 , 0 0 0 . 0 0 2 . 0 2 . 2 0 1 S A L E O F B R O K E R S 0 6 L I S T E D C O N T R A C T S H A R E S N O T E A T P A G E N O . 8 0 1 T O 8 5 2 5 4 , 0 0 , 0 0 0 . 0 0 0 2 . 0 2 . 2 0 1 S A L E O F B R O K E R S 6 L I S T E D C O N T R A C T S H A R E S N O T E A T P A G E N O . 8 0 1 T O 8 5 2 4 8 , 0 0 , 0 0 0 . 0 0 0 2 . 0 2 . 2 0 1 S A L E O F B R O K E R S 6 L I S T E D C O N T R A C T S H A R E S N O T E A T P A G E N O . 8 0 1 T O 8 5 2 1,20,00,000.00 1,18,30,000.00 - T o t a l 21,62,00,000.00 22,19,66,890.39 T O T A L i

NIMIT BUILDERS PRIVATE LIMITED Details of immediate source of payment made to assessee company during the AY 2016-17

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

S.NO AMOUNT PAID IMMEDIATE SOURCE OF REMARKS DOCUMENTARY AMOUNT PAID EVIDENCES AT PAGE NO. 909 TO 944 DATE AMOUNT DATE AMOUNT

1 24.09.2015 6,57,00,000.00 24.09.2015 6,04,00,000.00 REFUND OF BALANCE SHEET OF M/S ADVANCES NIMIT BUILDERS PVT GIVEN IN LTD HIGHLIGHTING EARLIER YEARS REDUCTION IN LOANS & AND DURING THE ADVANCES FROM 66 YEARS TO M/S CRORES TO 31 CRORES RISHI INFRATECH AT THE START OF YEAR PVT LTD TO AT THE END OF THE YEAR AT PAGE NO. 909 24.09.2015 REFUND OF CONFIRMATION OF TO 916 LOAN ACCOIIMT -------------------------------- 53,00,000.00 GIVEN DURING ASSESSMENT FOR THE AY THE EARLIER 15-16 OF M/S RENU YEAR TO M/S PROPTECH PVT LTD WAS RENU PROPTECH COMPLETED UNDER PVT LTD SECTION 143(3) OF THE ACT, ASSESSMENT ORDER U/S 143(3) AT PAGE NO. 929 to 935 Total 6,57,00,000.00 6,57,00,000.00

2 23.11.2015 1,32,00,000.00 16.11.2015 80,00,000.00 ADVANCE CONFIRMATION OF RECEIVED FOR ACCOUNT AT PAGE NO. SALE OF SHARES 936 FROM M/S RAMPRASTHA PROMOTERS AND DEVELOPERS PVT LTD

16.11.2015 55,00,000.00 CONFRIMATION OF ACCOUNT AT PAGE ADVANCE FOR NO. 936 PURCHASE OF SHARES FROM M/S RAMPRASTHA PROMOTERS AND DEVELOPERS PVT LTD Total 1,32,00,000.00 1,35,00,000.00 ) 3 30.11.2015 30.11.2015 REFUND OF LOAN CONFIRMATION OF GIVEN DURING THE ACCOUNT, EARLIER YEARS TO ASSESSMETFORTHE 2,08,00,000.00 2,13,00,000.00 M/S RENU AY 15-16 OF M/S RENU PROPTECH PROPTECH PVT LTD WAS COMPLETED PVT LTD OF THE ACT, UNDER SECTION ASSESSMENT ORDER 143(31 U/S 143(3) AT PAGE NO. 929 TO 935

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

4 03.12.2015 03.12.2015 1,29,00,000.00 1,29,00,000.00 REFUND OFADVANCE FOR PROPERTIES GIVEN DURING THE EARLIER YEARS TO M/S NISHIT CONFIRMATION OF INFRATECH PVT LTD ACCOUNT, BALANCE SHEET OF M/S NISHIT 5 05.12.2015 78,00,000.00 05.12.2015 81,00,000.00 INFRATECH PVT LTD REFUND AT PAGE 937- 944 OFADVANCE FOR PROPERTIES GIVEN DURING THE EARLIER YEARS TO M/S NISHIT INFRATECH PVT LTD

6 08.12.2015 10,00,000.00 08.12.2015 1,00,00,000.00 REFUND OFADVANCE FOR PROPERTIES GIVEN DURING THE EARLIER YEARS TO M/S N1SHIT INFRATECH PVT LTD - 7 15.12.2015 1,00,00,000.00 15.12.2015 1,00,00,000.00 REFUND OFADVANCE FOR PROPERTIES GIVEN DURING THE EARLIER YEARS TO M/S NISHIT INFRATECH PVT LTD TOTAL 13,14,00,000.00 14,15,00,000.00

Ram Kumar Gupta HUF Details of immediate source of payment made to assessee company during the AY 2016-17 S.NO AMOUNT PAID IMMEDIATE SOURCE OF REMARKS DOCUMENTARY AMOUNT PAID EVIDENCES AT PAGE NO. 947 TO 971 DATE AMOUNT DATE AMOUNT 1 24.09.2015 23.09.2015 SALE OF UNLISTED COPY OF BANK 42,00,000.00 86,00,000.00 SHARES TO M/S SAP STATEMENT OF COMPUSOFT PVT LTD BUYER, COPY OF FORM SH-4/ COPY OF ITR A.Y.2016- 30.09.2015 30.09.2015 SALE OF UNLISTED 17 OF BUYER 2 SHARES TO M/S SAP TOTAL AMOUNT 45,00,000.00 45,00,000.00 COMPUSOFT PVT LTD OF RS. 2,86,63,000/- SALE SAI F OF UNLISTED CONSIDERATION SHARES TO M/S SAP SHOWN UNDER 66,00,000.00 43,00,000.00 COMPUSOFT PVT LTD THE SCHEDULE 01.10.2015 SALE OF UNLISTED CAPITAL GAIN IN 23,00,000.00 SHARES TO ANIL KUMAR COLUMN NO. 5(a) Total 66,00,000.00 66,00,000.00 OF SHORT TERM 3,85,82,500/- SALE 4 03.10.2015 03.10.2015 SALE OF UNLISTED CONSIDERATION 50,00,000.00 50,00,000.00 SHARES TO M/S SAP SHOWN IN COMPUSOFT PVT LTD

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

5 06.10.2015 06.10.2015 SALE OF UNLISTED COLUMN NO. 7(a) 52,00,000.00 51,82,500.00 SHARES TO M/S SAP OF LONG TERM COMPUSOFT PVT LTD CAPITAL GAIN. SO IN TOTAL RECEIPTS FROM 6 20.01.2016 20.01.2016 SALE OF UNLISTED SALE OF 90,00,000.00 90,00,000.00 SHARES TO MRAL UNLISTED SECURITIES PVT LTD SHARES AMOUNTS TO RS. 6,72,45,500/- AT PAGE NO. 947-971

7 21.01.2016 21.01.2016 SALE OF UNLISTED SHARES TO MRAL 86,66,300.00 SECURITIES PVT LTD 86,00,000.00

8 01.02.2016 01.02.2016 REFUND OF LOAN COPY OF BANK FROM M/S BDR FINVEST STATEMENT AT 79,00,000.00 79,00,000.00 PVT LTD GIVEN ON PAGE NO. 947- 31.12.2015 950 TOTAL 5,54,48,800. 5,10,00,000.00 00

VERMA DEVELOPERS PRIVATE LIMITED Details of immediate source of payments made to assessee company during the AY 2016-17

S.NO AMOUNT PAID IMMEDIATE SOURCE OF REMARKS DOCUMENTARY AMOUNT PAID EVIDENCES AT PAGE NO. 580 TO 770 DATE AMOUNT DATE AMOUNT 1 22.09.2015 3,37,00,000.00 22.09.2015 3,37,00,000. SHARE ALLOTMENT TO CONFIRMATION OF 00 N1SHIT CAPINVEST ACCOUNT PRIVATE LIMITED ASSESSMENT FOR 2 24.09.2015 2,83,00,000.00 24.09.2015 4,25,00,000. 00 THE AY 16- 17 OF M/S NISHIT CAPINVEST PVT LTD WAS COMPLETED UNDER SECTION 143(3) OF THE ACT, ASSESSMENT ORDER U/S 143(3) AT PAGE NO. 602 TO 619 3 23.11.2015 1,34,00,000.00 23.11.2015 1,34,00,000. SHARE ALLOTMENT TO CONFIRMATION OF 00 RENU PROPTECH ACCOUNT PRIVATE LIMITED ASSESSMENT FOR THE AY 16- 17 OF 4 08.12.2015 1,78,00,000.00 08.12.2015 1,78,00,000. M/S RENU 00 PROPTECH PVT LTD WAS COMPLETED 5 10.12.2015 1,18,00,000.00 10.12.2015 1,18,00,000. UNDER SECTION 00 143(3) OF THE ACT, ASSESSMENT 6 10.12.2015 90,00,000.00 10.12.2015 90,00,000.00 ORDER U/S 143(3), CIT APPEAL (7) 7 15.12.2015 1,00,00,000.00 15.12.2015 1,00,00,000. DELHI ORDER, 00

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

HON’BLE DELHI ITAT ORDER AT PAGE NO. 636 TO 770 TOTAL 12,40,00,000.00 13,82,00,000 .00

“13. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue‟s insistence that it should prove the negative. In the case of a public issue, the Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the Company. 16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of section 68 of the Income-tax Act. The assessee has to prima facie prove (1) the identity of the creditor/sub-scriber; (2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber; (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value andconstrue it, without more, against the assessee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. 17. For a complete understanding of the concept of „burden of proof‟ attention should be drawn to decisions delivered in the context of penalty proceeding under section 271 of the Income-tax Act CIT v. Anwar Ali [1970] 76 ITR 696 was decided by the Apex Court holding that, if there is no evidence on record except the explanation of the assessee, which explanation has been found to be false, it still does not follow that the receipt constitutes taxable income. This decision was followed by the Apex Court in Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457 opining that the "mere falsity of the explanation given by the assessee is insufficient without there being, in addition, cogent material or evidence from which the necessary conclusion attracting a penalty can be drawn." However, as has been noted in Addl. CIT v. Jeevan Lal Sah 1995 Supp. (4) SCC 247 amendments were incorporated by Finance Act, 1964, into section 271 which had deleted the word "deliberately" in its sub-section 1(c), thereby shifting the onus of proof onto the assessee, rendering Anwar Ali‟s case (supra) ineffectual. Nevertheless, in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 141 it has been enunciated by the Supreme Court that though the explanation shifts the burden to the assessee to show absence of fraud, this onus is a rebuttable one. The burden is not discharged by the assessee tendering an incredible or fantastic explanation; and every explanation does not have to be accepted. In our opinion, it is for Parliament to introduce legislation if the duty presently resting on the Department is thought to be too onerous. We ought not to twist the language of a statute to remove the burden of proof altogether from the Department even though it has the necessary wherewithal to discharge it. The malaise can also be arrested if unclaimed share subscriptions are taken over by the State and/or if the assessee concerned is precluded from distributing dividends, bonus shares etc. against such share subscriptions unless they are duly claimed by the original subscribers within a prescribed period, perhaps not exceedings three years. Thereafter the shares could automatically stand transferred to the State on the principle of escheat. For these events to happen, requisite amendments to the Income-tax Act may be required. 18. We shall now turn our attention to the facts and details of the present appeals. The appeal of the revenue in respect of assessment years 1984-85 and 1986-87 was rejected on 4-9-2003 by the ITAT Bench comprising Shri R.M. Mehta and Shri Ram Bahadur. With regard to the in between assessment year 1985-86 another Bench comprising Shri H.L. Karwa and Shri B.R. Jain dismissed the Revenue‟s appeal on 12-8-2005.

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

credit within the meaning section 68 of the Act together with 3 ingredients of section 68 of the Act in respect of each of shareholder thereby duly discharging its own cast u/s 68 of the Act.

ITA No. 2452/Del/2023 – Asst Year 2018-19

“1. Whether on the facts & circumstances of the case and in law, ld. CIT(A) erred in deleting the addition of Rs. 7,21,00,000/- made by AO u/s 69A of the IT Act, 1961 on account of unaccounted cash receipts on sale of property. 2. Whether on the facts & circumstances of the case and in law, Id. CIT(A) erred in ignoring the documentary evidence in the shape of stamp duty value by the registering authority, cheque numbers etc. mentioned in the notes recovered by the Laptop of Sh. Rajesh Gupta related to the verified and matched transaction of sale actual property. 3. Whether on the facts & circumstances of the case and in law, ld. CIT(A) was correct in deleting the addition made by AO ignoring the fact that the cheque number mentioned in the note recovered by the Laptop of Sh. Rajesh Gupta which were verified and matched with cheque numbers appearing in the books of accounts of assessee company against the sale of the said property. 4. Whether on the facts & circumstances of the case and in law, ld. CIT(A) has erred in accepting the contention of the assessee that Sh. Rajesh Gupta was not a Director of the assessee company during the Survey proceedings whereas as per the evidence of e-mail dated 01.09.2017, Sh. Rajesh Gupta was a acting Director of the assessee company, thereby CIT(A) erred in not considering the reliability of the note found from the Laptop that cannot be doubted upon being verified documentary evidence. 5 The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. Page | 28

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

6.The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.”

“6.2 I have considered the submissions of the appellant and the facts of the case. The appellant in this case is a closely held company engaged in the business of real estate.. The original Return of Income was filed in this on 30.03.2019 and an assessment order u/s 143(3) of the Act was passed in the original proceedings on 09.03.2021 determining the taxable income at Rs. 3,49,46,903. The assessing officer has made addition on the basis of a 'note' which was found from laptop of Sh. Rajesh Gupta during a survey at his premises. The assessing officer relied on the "note" for the following reasons: Rajesh Gupta was director of the assessee company in the year when the transaction of sale of immovable property was entered. The agreement to sale was directly received by Sh. Rajesh Gupta, one of director of the assessee company at the time of survey proceedings, from Sh. Ashok Kumar Gupta on 01.09.2017 at 11.23AM on mail id rajesh393@gmail.com which belongs to Mr. Rajesh Kumar itself.

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

The details mentioned in "note" were "duly matching with actual actions happened with respect to sale of this property le. F-353, GK, Part-II, Delhi. A similar property at 1-575 just nearby from E-353, of 400 yards was purchased by the assessee for Rs. 16 ce. te. Rs. 4 lacs per sqr. Yards. If the contention of the assessee is believed true then the property situated m E-353 having 250 sqr. Yards area are sold at a consideration of Rs. 6 cr. Only Le. Rs. 2.40 lacs per Sqr. Yards 6.2.1 The appellant submitted that the contention of the assessing officer is not justified due the following reasons:- i. Rajesh Gupta was not the director of the assessee company at the time of survey proceedings. ii. Rajesh Gupta has ceased to be a director of the assessee company with effect from 04.11.2017 whereas the survey was carried out at his premises nearly one year after on 13.12.2018 when such "note" was found from his personal laptop. iii. The survey was conducted after more than one year of cessation of directorship of Sh. Rajesh Gupta. This time gap also includes filing of suits Dinesh Gupta & Ors. Vs Rajesh Gupta & Or CS(OS) 51 of 2018 before Honorable Delhi High Court. iv. The "note" was prepared by Rajesh Gupta as a mischief play as he wanted to put undue pressure on Dinesh Gupta and Shreyansh Gupta (current directors of the company) for family dispute settlement. v. Sh. Ashok Kumar Gupta has given a signed confirmation to the AO during the impugned assessment proceedings wherein he has stated that he has not sent any v. Sh. Ashok Kumar Gupta has given a signed confirmation to the AO during the impugned assessment proceedings wherein he has stated that he has not sent any e-mail to Rajesh Gupta on 01.09.2017 at 11.23 AM on mail id rajesh393@gmail.com. vi. The authenticity of the 'note' was not ever verified from the person (Sh. Rajesh Gupta) from whom the same was gathered. A summon was issued to Sh. Rajesh Gupta on 13.03.2023, and one of the buyers, however no one presented in office nor any reply was filed. vii. The assessing officers did not make proper inquiry to the buyers of the property. viii. The valuation report dated 26.12.2017, shows that the market value of the property was at Rs. 5,80,00,000/-. The assessing officer did not rely on the valuation report of the valuer, and relied on the unverified 'note' found from third party.

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

ix. On perusal of the copy of agreement dated 01.09.2017 and registered sale deed, it is observed that the appellant has sold the property at Rs. 6 cr. The appellant has also submitted confirmation from the buyers which also confirms that the property was sold at Rs. 6 Cr. not at Rs. 13.21 cr. x. The assessing officer did not bring any material on record which establish that the property was sold at Rs. 13.21 cr. The AO has only relied on the "note" found from third party. 6.2.2 From the above, it is obvious that a self-typed note was impounded from the premises of Sh. Rajesh Gupta who was having a family dispute with the director of the appellant assessee. Other than the self-typed note no other evidence could be gathered during survey or during assessment proceedings. Sh. Dinesh Gupta, the Director of the appellant has also given in writing that as claimed by Sh. Rajesh Gupta no such e-mail was received by him with respect to such note as found from Mr. Rajesh Gupta. The note impounded also contain details of properties which were purchased in 2005 and 2007 and all the properties mentioned therein are recorded in the regular books of account. The appellant has also produced all the documentary evidences in support of such explanation furnished before the A.O. Mr. Rajesh Gupta was a director in the company till 04.11.2017 and survey u/s 133 at the office premise of Sh. Rajesh Gupta was carried out on 13.12.2018, therefore, the documents impounded cannot be taken at its face value since he was not a part of the appellant company, neither he was associated in any manner with the appellant company at the time of survey proceedings. From the fact that there was an ongoing family dispute between Sh. Rajesh Gupta and Sh. Dinesh Gupta before Hon'ble Delhi High Court it is possible that, as claimed by Sh. Dinesh Gupta, Sh. Rajesh Gupta wanted to put pressure on Sh. Dinesh Gupta for settling the ongoing dispute. During the course of assessment proceedings, the appellant has provided all the evidences to the AO however, the AO observed that one of the plots purchased near E-353, Greater Kailash Part-2, New Delhi was purchased at much higher rate than this plot and accordingly, estimated the actual price and an amount of Rs. 7.21 Crores was treated as unexplained income of the appellant u/s 69A of the Act. During the assessment proceedings, the appellant assessee had also filed a letter signed by all the four purchasers that no e-mail has been sent by them to Sh. Rajesh Gupta and no cash over and above of the said consideration of Rs. 6 Crores were paid by them. Further, on Page 15 of the assessment order the AO mentions that "to verify the claim of buyer, a summon u/s 131 of the Income Tax Act was issued on 13.03.2023 to Sh. Rajesh Gupta, one of the buyers requiring him to attend the office of undersigned and produce the books of accounts, however, till date no one presented in office or no reply was filed. Therefore, it can be presumed that the authenticity of the letter so filed by the assessee company cannot be relied upon hence, not acceptable." It is found that Sh. Rajesh Gupta was not a buyer hence, the observation of the AO is factually incorrect. From the submissions made by the appellant, it is also observed that the appellant had also filed valuation report before the AO and the purchase value of the said property was greater than that of the valuation report. Thus, is apparent that the AO has not brought anything on record other than the note which was impounded from Sh. Rajesh Gupta who had no relation with the appellant company on the date of

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

survey neither any other documentary evidence could be gathered during the course of survey or during the assessment proceedings. In land mark case of Kale Khan Mohammad Hanif v. CIT[1963] 50 ITR (SC), Roshan Di Hatti v. CIT[1997] 107 ITR (SC) it has been held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an Assessee, is on him. Where the nature and source thereof cannot be explained satisfactorily, it is open to the revenue to hold that it is the income of the Assessee and no further burden is on the revenue to show that the income is from any particular source. It may also be pointed out that the burden of proof is fluid for the purposes of Section 68. Once Assessee has submitted basic documents relating to identity, genuineness of transaction and creditworthiness then AO must do some inquiry to call for more details to invoke Section 68. Considering the same, the appellant is found to have duly discharged the onus that lay upon it u/s 69A of the Act, as all the documentary evidences were submitted by it and all the transactions are recorded in its regular books of account. There is no evidence on record which shows that the appellant has received cash of Rs.7.21 crores from the purchaser of the property 6.2.3 In view of the above, in absence of any adverse material on record, the addition of Rs.7.21 crores made by the assessing officer is not found to be sustainable hence the addition is deleted. Therefore, these grounds of appeal filed by the appellant are allowed.”

ITA Nos. 2451/ & 2452Del/2023 BDR Builders and Developers Pvt Ltd

Order pronounced in the open court on 14/05/2024.

-Sd/- -Sd/- (ANUBHAV SHARMA) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 14/05/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi