DREAMTECH CONSTRUCTIONS PVT LTD.,DELHI vs. DCIT CIRCLE-10(1), NEW DELHI

6. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal.” A.Y. 2012-13

“1. That in the given facts order of Ld AO and Ld CIT-A are incorrect in so far as Ld AO passed the impugned assessment order without authority of law and wrongly exercised the jurisdiction under the Act so as to make the impugned assessment.

3 & 91/Del/2021 M/s Dreamtech Vs. DCIT 2. That in the given facts order of Ld AO and Ld CIT-A are incorrect in so far as addition made /sustained u/s 68 of the Act amounting to Rs 307,21,000 on account alleged unexplained cash credit without appreciating that no meaningful/objective enquiry at any stage is made by Ld AO on details made available at asst stage and merely on basis of extraneous and irrelevant reasons addition is sustained by Ld CIT-A.

4. That the appellant craves leave to add /alter any/all grounds of appeal before or at the time of hearing of the appeal.”

3. Brief facts of as mentioned in the order of the Ld. CIT(A) are that the assessee Company engaged in the business of construction of residential houses to acts as builders, civil and constructional contractors and real estate agent activities. Return declaring an income of Rs.2,49,969/- was filed on 04.03.2013. The case was selected for scrutiny. The AO completed the assessment u/s 143(3) vide order dated 31.03.2014 after making addition of Rs.18,31,16,000/- on account of share capital and share premium, Rs.1,47,50,000/- on account of unsecured loan u/s 68 and Rs.1 lac on account of expenses claimed for buy back. Total income of the Assessee assessed at Rs. 19,82,15,970/-. As against the Appeal before the CIT(A), the Ld. CIT(A) vide order dated 22/07/2019 dismissed the Appeal filed by the assessee by confirming the additions made by the A.O. Aggrieved by the order of the Ld. CIT(A) dated 22/07/2019, the assessee preferred the present Appeal on the grounds mentioned above.

On 26/09/2013 a notice u/s 142(1) of the Act along with detailed questionnaire was also issued. In response, the Representative of the assessee appeared and submitted that the payment have been received from two parties namely BIJ Builcon India Private Ltd. and Raj Rani Securities Pvt. Ltd. The AR of the Assessee was asked to submit the identity, creditworthiness of both the parties from whom share capital and share premium were received. The Assessee's Representative in turn filed the acknowledgement of and the documents produced by the assessee is not satisfactory, therefore, made the addition of Rs. 18,31,16,000/- u/s 68 of the Act. Further, the A.O. has also asked the assessee to submit genuineness and creditworthiness of the parties from whom the assessee received unsecured loans. In response to the same, the assessee submitted confirmation of few parties and copy of their ITR for various Assessment Years. As per the A.O. as the documents provided by the Assessee's Representative and the clarifications of the Assessee's Representative were not satisfactory, thus made addition of Rs. 1,47,50,000/- u/s 68 of the Act. As per the A.O., the assessee failed to prove the genuineness and creditworthiness of the lenders. Further, consequential expenses of Rs. 1,00,000/- has also been disallowed. It is found that the Assessee was well aware regarding the enquiry conducted by the A.O. on which proposed addition would be made, having been participated in the assessment proceedings, also replied to the notice by producing documents, Assessee cannot claim that the Assessment Order has been passed without issuing the show cause notice, thus the assessment order is violation of natural justice. assessee also filed additional evidence in support of the Assessee’s claim to substantiate the genuineness and the transaction and prove the identity of the parties made in respect of share application/premium money and the unsecured loans. The Ld. CIT(A) has called for Remand Report as per Provisions of Rule 46A of the Rules. The A.O. examined the documents produced by the Assessee and filed the Remand Report supporting the additions.

The Ld. CIT(A) has considered the contention of the assessee along with the Remand Report and the rejoinder filed by the assessee and ultimately confirmed the addition. It is to be noted that there is no requirement under law to issue show cause notice before passing the order u/s 143(3) of the Act. The assessee has participated in the assessment proceedings and specific questionnaires have been issued on specific issues and addition has been made only on the issues involved in the Notice and the questionnaires. Apart from the same, the assessee has also filed additional documents before the CIT(A) which being a first fact authority and after calling for the Remand Report, the documents produced by the Assessee has been taken into consideration and the contention of the assessee has and circumstances, we find no merit in the argument of the Ld. Assessee's Representative that the additions have been made in violation of the principles of natural justice. The issuance of show cause notice is not mandatory u/s 143(3) of the Act and non issuance of show cause notice will not be fatal to the Assessment Order, accordingly, we dismiss the Ground No. 5 of the assessee.

Sl. name Addition Nature PAN No. & Documents No. amount Address 1 Accord Sales & Rs. Share AAGC3435N & 1. Balance Sheet Tradex Pvt. Ltd. 30,00,000/- application D-111, South (From 2007-08 to money Ganesh nagar, 2012-13) Mandawali, 2. Share application New Delhi-92 form 3. Form-2 4. Challan 5. bank statement 6. ITR F.Y 08-09 7. List of directors 8. Master Data 9. Copy of PAN card 2 M/s Raj Rani Rs. Share AACCR1681B 1. Balance Sheet Securities Pvt. 25,00,000/- application & 121-A, (From 2005-06 to Ltd. money Pocket-D, 2015-16) Deep Enclave, 2. share application Ashok vihar, form Ph-3, Delhi-52 3. List of Directors 4. Master Data 5. copy of Pan card

3 Jaipuria Rs. Loan AABCJ7177M 1. Balance Sheet Buildcon Pvt. 36,00,000/- & 16, Shankar (From 2006-07 to Ltd. Vihar, Vikas 2010-11) Marg, New 2. ITR (f.Y 2010-11) Delhi 3. List of Directors

4. Master Data

4 Suresh Sharma Rs. Loan ALEPS9338L 1. bank statement 8,70,000/- & C-7, 2. Confirmation of Kaushambi, accounts (2010-11) Ghaziabad 3. ITR (F.Y 2010-11) 5 Yogender Rs. Loan AHBPK6797Q 1. Confirmation of Kumar 6,00,000/- & B-127, accounts (2010-11) Vivek Vihar, 2. ITR (F.Y 2012-13) Delhi 6 Global Estates Rs. Loan AAHPS9513R 1. Confirmation of 22,25,000/- & A-14, accounts Mathura (2010-11) Road, Mohan 2. ITR (f.Y 2011-12 to Industrial 2014-15) Estate, Delhi 7 Santosh Devi Rs. Loan 273, BG, 1. Bank Statement 41,00,000/- Phase-6, Aya (2011to 13) Nagar, New 2. Confirmation of Delhi accounts (2011-12) 8 Meditch Rs. Loan AHNPRA3057L 1. Bank statement International 20,00,000/- & Plot No. 24 (f.Y 2010-11) & 25, Burgees 2. confirmation (F.Y Park, Dilshad 2010-11) Garden, Delhi 3. ITR (f.Y 2010 to 2014-15)

During the assessment proceedings admittedly the assessee has produced the ITR, acknowledgement and during the appellate proceedings the assessee has produced detailed documents mentioned above in respect of share application and the loan by providing PAN Card and Address of the parties, balance sheet, confirmation etc. The A.O. neither during the assessment proceedings nor during the remand proceedings made any enquiry u/s 133(6)/133(1) of the Act. The application filed by the assessee along with additional documents have been allowed by the Ld. CIT(A). Thus, in our opinion, the assessee has discharged the onus have been made through banking channel though the assessee has produced the documents in support of its claim, the Ld. A.O. has not made any enquiry after the assessee discharged its initial burden cast upon u/s 68 of the Act. The Hon'ble Bombay High Court in the case of Gaurav Triyogi Singh Vs. ITO (22) 423 ITR 531 held that once the assessee discharges its onus to prove the creditworthiness of the investor companies and the genuineness of the transaction, the onus will shift on the Department to refute the assertion made by the Assessee. In the present case, the Lower Authorities have not brought anything on record to prove otherwise or to disprove the claim of the assessee and in such circumstances; the authorities are precluded from making any other addition on this count in the absence of contrary materials.

“51. The learned ITAT after due examination of the order of CIT (Appeals) and the documents on record insofar as identity creditworthiness, genuineness of transaction of M/s. Aadhaar ventures (I) Ltd, M/s. Dhanush Technologies Ltd, M/s. Emporis Projects Ltd and M/s. L.N. Industries Ltd (formerly known as L.N. Polyster Ltd) came to the conclusion that the assessee company having receipt share application money through bank channel and furnished complete details of bank statements, copy of accounts and complied with notices issued and the directors of subscriber company also appeared with books of accounts before the appellate authority and confirmed the investment made by them with the assessee company, therefore, the identity and creditworthiness of investor and genuineness of transaction of the share applicant has been proved in the light of the ratio laid down by the M.P. High Court, Delhi High Court and the Hon’ble Supreme Court and were of the opinion that the onus cast upon the assessee as provided under Section 68 of the Act has been duly discharged by the assessee the identity of the share subscriber, creditworthiness and genuineness of the transaction is not to be doubted. The learned ITAT considered the case of the each company in great detail in para 85 to 110 of the impugned order and recorded its finding. The aforesaid finding of fact recorded by the ITAT are based on the material available on record which is a finding based on appreciation of evidence on record.

“35. The important question which arises at this stage is as to whether on the basis of these facts, could it be said that it is the assessee which has not been able to explain the source and receipt of money. According to the assessee, he had given the required information to explain the source and was not obligated to prove the source of the money. It is the submission of the assessee that even in case there is some doubt about the source of money in giving into coffers of the share applicants which they invested with the assessee, it would not automatically follow that the said money belongs to the assessee and becomes unaccounted money. According to us, the assessee appears to be correct on this aspect. We feel that something more which was necessary and required to be done by the AO was not done. The AO failed to carry his suspicions to a logical conclusion by further investigation. After the registered letters sent to the investing company had been received back undelivered, the AO presumed that these companies did not exist at the given address. No doubt, if the companies are not existing, i.e., they have only paper existence, one can draw the conclusion that he assessee had not been able to disclose the source of amount received and presumption under s. 68 of the Act for the purpose of addition of amount at the hands of the assessee. But is has to be conclusively established that the company is non- existence.”

• (Principal Commissioner of Income Tax v Agson Global (P.) Ltd. (Delhi HC) [2022] 441ITR 550 134 taxmann.com 256 (Delhi)/[2022] 441 ITR 550 (Delhi)[19-0L2022] • Principal of Income Tax v Manoj Kumar Vipin Kumar (Rajasthan HC )/[2022] 441 ITR 632 138 taxmann.com 103 (Rajasthan)/[2022] 441 ITR 632 (Rajasthan)[15-ll-2021]

16 & 91/Del/2021 M/s Dreamtech Vs. DCIT • [2022] 137 Deputy Commissioner of Income Tax v Gandhi Capital (P.) Ltd. 75 (Surat-Trib.)/[2022] 194 ITD 396. • 10 Principal Commissioner of Income Tax v Rohtak Chain Co. 59 (SC) [2019] 110 taxmann.com 59 (SC)/[2019]266 Taxman 459 /(SC)[05-08-2019]

since the Assessee herein filed detailed documentary evidences in the form of duly signed confirmation of investors/lenders (parties), details of PAN, copies of ITR, duly establishing the identity of the parties and genuineness of the transactions and the bank statements of the parties, establishing the creditworthiness of the parties to invest in the share capital of or advance loans to the Assessee Companies, in our opinion, the Assessee effectively discharged the initial burden cast upon them u/s 68 of proving identity of the investors/lenders, the genuineness of the transactions and the creditworthiness of the parties with respect to the transactions that took place between the Assessee and the investors/lenders. Since the Assesses filed the bank statements of the parties conclusively proving that the impugned sums were received through normal banking channels from the bank accounts of the parties, the burden of proving the genuineness of the transactions between the Assessee and the parties and the Assessee Companies stood discharged.

all the documents to prove the identity, genuineness and creditworthiness for the share applicants and loan parties. Thus, the Assessee can be said to have discharged the primary onus casted upon U/s 68 of the Income Tax Act, 1961.

itself has provided all the relevant material before the Ld. CIT(A) who has also called for a remand report from the Assessing Officer.

Even, during the remand proceedings, the Assessing Officer has failed to do any enquiries to prove that the share applicants are neither genuine nor bogus. The Assessing Officer has not issued summons U/s 131 to the Directors of the parties not asked the assessee to produce the parties. The Assessee, once discharged the Revenue to dispute the submissions of the Assessee by way of bringing tangible evidence on record by conducting due enquiries.

The Revenue failed to bring any concrete material on record to prove the share applicants are bogus or the assessee was a beneficiary of any entry operation or received entries from the established entry operators of the Department. As held in the cases cited above, before fastening any liability upon the Assessee, the A.O is required to show by bringing on record tangible material that the amounts received as share capital/loans from the investors/lenders actually emanated from the coffers of the Assessee or represented the undisclosed income of the Assessee.

Therefore we find merit in the Ground No. 2 to 4 of the Assessee.

Accordingly, the Ground No. 2 to 4 of the Assessee are allowed and addition made u/s 68 of the Act which was sustained by the CIT(A) is hereby deleted.

90/Del/2021 is partly allowed.

ITA No.91/Del/2021 A.Y. 2012-13 )

The assessee was asked to establish the genuineness and creditworthiness of the parties. In response to the same, the assessee filed confirmation of parties, copy of acknowledgment of ITR for various Assessment Years and the relevant page of bank statement. As per the A.O., the assessee has not filed any bank account statement in some cases. The A.O. observed that out of 22 unsecured loans the transactions entered with and creditworthiness of M/s All Time Data Pvt. Ltd., M/s G-Trading India Pvt. Ltd., M/s ASV Garments Pvt. Ltd., M/s KD Trend Wear Pvt. Ltd., M/s Kirti Advertisement Pvt. Ltd., M/s Porter Buildcon Pvt. Ltd., M/s Saggi Traexin Pvt. Ltd., M/s Shakti Builders, M/s SLB Finlease Pvt. Ltd., M/s Sunstar Infrabuild Pvt. Ltd., M/s Sunvision Advertising & Marketing Pvt. Ltd., M/s Synergy Info Data Pvt. Ltd., M/s Visit India Voyages Pvt. Ltd., M/s Jaipuria Buildcon Pvt. Ltd., M/s Mediatech International Pvt. Ltd. and M/s Shiv explained by the assessee in terms of Section 68 of the Income Tax Act, 1961. Therefore, disallowed an amount of Rs. 3,07,21,000/- u/s 68 of the Act which was credited in the books of account of the assessee as unsecured loan. Aggrieved by the assessment order dated 15/07/2019, the assessee preferred an Appeal before the CIT(A), the Ld. CIT(A) dismissed the Appeal filed by the assessee on the ground that the assessee failed to establish creditworthiness and genuineness of the transaction, wherein the Ld. CIT(A) confirmed the addition of Rs. 3,28,21,000/-. Aggrieved by the order of the Ld. CIT(A), the assessee preferred the present Appeal on the ground mentioned above.

The assessee also submitted complete set of audited financial account with ITR etc of the assessee for the subject period. The Ld. Assessee's Representative has filed paper book by reproducing those documents in following manners in the paper book:-

Sl No. Description of document in brief Page No. 1 Reply dated 04.03.2015 25 to 35 submitted before Ld. A.O. 2 Reply dated 26.02.2015 36 to 49 submitted before the Ld. A.O. 3 Reply dated 10.02.2015 50 to 171 submitted before ld. A.O. 4 Reply dated 02.02.2015 172 to 257 submitted before Ld. A.O. 258 to 262 02.02.2015 some misc documents 5 Reply to Ld. A.O. dated 263 to 280 05.01.2015 6 Full complete set of audited final 281 to 304 accounts with ITR etc of appellant for subject period.