DY, COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(4) , MUMBAI vs. GLINT INFRAPORJECTS PRIVATE .LTD, MUMBAI

Brief facts shows that i. Assessee is a company engaged in construction 29th business filed its return of income on ii. The return was processed under Section 143(1) of the Act and was not picked up for scrutiny. iii. Subsequently, information was received from Dy. Director of Income Tax, Investigation; Mumbai that assessee has indulged in high number of interconnected fund transfer carried out in his account without economic rationale or genuine underlying business transaction. iv. Notice under Section 148 of the Income-tax Act, 1961 (the Act) was issued on 30th March, 2019, after recording the reasons. In response to notice assessee filed return of income on 19th April, 2019, recorded reasons were requested, were provided on 9th July, 2019, against which objections were raised and speaking order was passed on 20th August, 2019, rejecting the same. The Reason as as under :-

Satguru Capital 3. Moonscape Facility Management Pvt. Ltd 4. SW Capital Pvt. Ltd.

Brown Trading Pvt. Ltd. 4.2 For instance, in the bank Account No.06372010000610 of M/s.Glint Infraprojects Pvt. Ltd. with Kotak Mahindra Bank, Andheri(East) Branch, loan & advances of Rs.15 lakhs received on 27.04.2011 from Moonscape Facility Management Pvt. Ltd. are immediately transferred to Vishwas Finvest Pvt. Ltd. on the same day as loans & advances. The creditworthiness of the loans & advances of Moonscape Facility Management Pvt. Ltd. is found to be doubtful after analyzing its financials which are tabulated as under 4.3 Further, in the bank Account No.06372010000610 of M/s.Glint Infraprojects Pvt. Ltd. with Kotak Mahindra Bank, Andheri (East) Branch, loan & advances of Rs.4,92,50,000 received from Nifty Realty Pvt. Ltd on 13.09.2011 are immediately transferred to Vishwas Finvest Pvt. Ltd. on the same day as loans & advances. The creditworthiness of the loans & advances of Nifty Realty Pvt. Ltd. is found to be doubtful after analyzing its financials which are tabulated as under:-

The Information has been considered and analyzed carefully. The DDIT (Inv.)- 2(1), Mumbal after analyzing statement of bank accounts of the assessee and its ITRs has inferred that there are high number of interconnected fund transfers carried out in in account No.06372010000610 maintained with Kotak Mahindra Bank, Andheri (E) Branch, without any economic rationale or genuine underlying business transactions with the intent of layering of funds.

After considering the information from the Investigation Wing, Mumbai and evidence available on record in the form of bank account statement and financial data of both the company i.e. M/s Moonscape Services Pvt. Ltd. and Nifty Realty Pvt. Ltd, it is held that the assessee company has indulged into transaction of Rs.5,07,50,000/- without any economic rationale or genuine underlying business transactions with sole intention of siphoning of funds to evade legitimate taxes. Therefore, I have reason to believe that the income of Rs.5,07,50,000/- chargeable to tax under the provisions of the Act has escaped assessment. Therefore, it is a fit case for reopening u/s 147 of the I.T. Act, 1961.

In this case a return of income was filed for year under consideration but no scrutiny assessment u/s.143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s.147 is reason to believe which has been recorded in above paras.

It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated

In this case more than four year have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue notice u/s.148 has been obtained separately from Commissioner of Income Tax as per the provision of section 151 of the Act.” v. Therefore, the reassessment proceedings commenced by issue of notice. vi. As per the reasons recorded, it was found that assessee is having a bank account no.610 with Kotak Mahindra Bank, wherein there are high numbers of interconnected fund transfers. It is found that there are loans and advances, investment received by the assessee and the same are immediately transferred as loans and advances, investment to other group companies. Therefore, the allegation is that assessee has received funds from group concerns and same are also given to another group concerns and such interconnected fund transfer does not have any economic rationale or underlying business transaction to support such transaction. viii. The learned Assessing Officer stated that in case of transfer of Rs.5.07 crores to Vishwas Finvest Pvt. Ltd., assessee could not produce the ITR copy and confirmation about the loans given by the assessee. ix. The addition under Section 68 of the Act was made and total income was assessed at ₹5,58,49,480/- by assessment order dated 9th December, 2019.

The learned Assessing Officer is aggrieved with the same and has challenged the addition deleted by the learned Commissioner of Income-tax (Appeals).

The learned Departmental Representative supported the order of the learned Assessing Officer and preferred the grounds of appeal stating that the assessee has received ₹5,07,00,000/- from two parties and has given the same to its sisters concern without any rationale. Further, the learned CIT (A) has deleted the addition without considering the findings of the learned Assessing Officer.

The learned Authorized Representative on the appeal of the learned Assessing Officer referred to paper book filed before us containing 93 pages submitting that from page no.50 to 93 with respect to the above two entities complete details were filed. He further referred to page no. 40 to 50, wherein ledger account of both the parties along with the bank statement of the assessee and lenders are submitted. He submits that when the

Coming to the Cross Objection filed by the assessee, he submitted that reopening made by the learned Assessing Officer also bad in law where he has placed blind reliance on report of the DDIT. He relied upon several judicial precedents stating that reopening is invalid.

The learned Departmental Representative submitted that there is no assessment made by the learned Assessing Officer on original return, subsequently tangible material as per the report of the DDIT was received, the learned Assessing Officer has formed prima facie reason of escapement of income and therefore, there is no infirmity in the reopening of the assessment.

First coming to the Cross Objection filed by the assessee against the reopening of the assessment, we find that the

In view of this, the cross objection filed by the assessee is dismissed.

On the issue of addition of ₹5,07,50,000/-, we find that assessee has received this sum from Moonscape Facility management Pvt. Ltd. of ₹15 lacs and Nifty Realty Pvt. Ltd. of ₹4,92,50,000/-. The assessee has submitted copy of the account of these companies from books of assessee, which is placed at page no.41 onwards of the paper book. On looking at the ledger account it is

In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the addition under Section 68 of the Act for the reason that; a. Assessee has shown identity, creditworthiness and genuineness of the transitions by producing, bank accounts, annual reports and income tax return and assessment order of the lender. Thus, initial onus is discharged. c. In the reasons recorded, information received the only issue is high value transaction in bank account of the assessee does not have any rationale.

Thus, we confirm the order of the learned CIT (A), dismissing the appeal of the learned Assessing Officer and CO of the assessee.

In the result, the appeal of the learned Assessing Officer and CO of the assessee, are dismissed.