ITO 12(3)(1), MUMBAI, MUMBAI vs. NEXT AVENUE VENTURES PRIVATE LIMITED(EARLIER KNOWN AS KBJ VENTURES PRIVATE LIMITED), MUMBAI

This appeal is filed by the Income Tax Officer, Ward 12(2)(1), Mumbai against appellate order passed by National Faceless Appeal Centre (NFAC), Delhi dated 11th May, 2023, for A.Y. 2018-19, wherein the appeal filed by the assessee against assessment order passed under Section 143(3) read with section 144(b) of the Income-Tax Act, 1961 (the Act) dated 21st April, 2021, by national e-assessment centre, Delhi, under e-assessment scheme, 2019, was partly allowed.

The Revenue is aggrieved with that appellate order and has raised following grounds of appeal:-

Assessee has also filed cross objections challenging the assessment order raising following grounds of appeal::- i. The appellant prays that the order passed under section 143 (3) read with section 144B of the income tax act, 1961 is without following the procedure laid down for conduct of assessment under section 144B of the act and therefore the assessment

Assessee was incorporated with authorized share capital of ₹25 crores. During the course of assessment proceedings, the learned Assessing Officer noted that the company has two shareholders by the name of Mrs. Aksha Khamboj and Mr. Sukumar Shetty. The query was raised regarding the issue of share capital to Ms. Aksha Kamboj, who subscribed ₹24,99,99,000/- as share capital.

Assessee submitted the copies of the income tax return for A.Y. 2016-17, 2017-18 and 2018-19, bank statement of Kotak Mahindra Bank and Yes Bank and profit and loss account, balance sheet of the

Thus the assessment order under section 143 (3) read with section 144B of the income tax act was passed on 21/4/2021 wherein the learned assessing officer assessed the loss of ₹ 2,724,474/– and made an addition of ₹ 2,231,058,500/– under section 68 of the act to be charged to tax under section 115BBE of the act.

The assessee preferred the appeal before the National Faceless Appeal Centre, Delhi [the learned CIT (A)] passed the order dated 11 May 2013.

Before the learned CIT (A), the assessee submitted that due to lockdown the assessee could not furnish the details before the learned Assessing Officer along. Before AO, assessee has applied for the

Assessee also filed the additional evidences, which could not have been filed before the learned Assessing Officer. Assessee submitted that in view of the Covid pandemic prevailing in the country the assessee's staff was working from home. The staff was not having access to the assessee's Office so, documents and other information asked by the learned assessing officer could not be submitted. In absence of any facilities available, the assessee provided the details called for electronically on 15/1/2021 and 16/1/2021. The AO issued another list of queries on 8/4/2021 required the assessee to provide the reply on or before 13/4/2021 within four days. The assessee filed an application seeking adjournment on 10/4/2021 but same was not responded to and assessment order came to be passed on 21/4/2021. It was further stated that due to lockdown, office of the assessee was closed and there was a lockdown declared by the government of Maharashtra and office of assessee was sealed as it was in containment zone. Necessary Government orders were also produced. Therefore, assessee could not file the relevant details.Hence it was pressed that such additional evidences mayt be admitted.

The learned Assessing Officer submitted remand report on 21//2/2023 , He objected the admission of additional evidence stating that assessee was given enough opportunities [ para 2 of Remand Report] However, the learned CIT (A) applying the provisions of Rule 46A of Income Tax Rules, admitted the evidence.

The learned Assessing Officer also commented on the merits of the additions by that remand report on both the additions u/s 68 of the Act.

With respect to another addition of Rs.198,10,59,501/-, of loan availed from Nisiddh Vision Pvt. Ltd., Assessee submitted PAN, Confirmations, Annual Accounts, ITR copies and bank statements of the lender. The learned Assessing Officer issued notices under Section 133(6) of the Act to that company; a reply was received on 4th January, 2023. It was submitted that Nisiddh Vision Pvt. Ltd. is now known as Golden Wealth Advisory Pvt. Ltd. To substantiate the source of investment the lender submitted the ledger account along with address, permanent account number, the income tax return, the bank statements, ledger copy of account of assessee in its books. For source of the fund received by the lender , it was stated to be from eight different entities. For All these entities, that company furnished the necessary bank account, bank statement and the return of income and annual accounts and Income tax Assessment orders of those entities. Thus, the lender also furnished the source of the source of loans given to the assessee.

The learned Assessing Officer with respect to the share capital of ₹24.99 crores noted that the director of the company has obtained a loan of ₹20 crores from Nisiddh Vision Pvt. Ltd. and further a loan of ₹5.96 crores from Nimesh Choksi. Both the parties have filed their confirmation, bank statement, Return of the income, etc to show that the loan given by them to the director of the company who in turn invested in the assessee company. However, he noted that the director has received salary of ₹1.20 crores and her income from other sources was only ₹72 lacs for the impugned assessment year and Further, creditworthiness of the lender to the director

With respect to the loan received from the Golden Advisors Pvt. Ltd, the learned Assessing Officer was of the view that the return of income for A.Y. 2018- 19 and 2019-20 showed a loan of ₹82 crores and Rs. 29 crores respectively. The learned Assessing Officer further verified that entire loan amount has been repaid by the assessee through account payee cheque in the subsequent years for which bank statement were also produced. Therefore, the learned Assessing Officer stated that though the assessee could not produce the details during the course of assessment proceedings and therefore, it

He further reiterated that during the course of the assessment proceedings before the faceless assessing officer the assessee had not submitted the requisite details therefore verification of the same could not have been done during the course of assessment proceedings. Now the assessee has filed various details, the same are perused, and addition/disallowance Wise report is submitted.

Remand report submitted by the learned assessing officer dated 21/2/23, the learned CIT (A) directed the assessee to file its comments on the remand report.

Assessee reiterated the submissions made before the learned Assessing Officer in remand proceedings. The assessee submitted with respect to the additions of ₹25 crores on share capital issued to the directors of the company, (i) bank account of the director, (ii) return of income, (iii) the confirmation along with the details of investment.(iv) availability of the source of funds with the directors, assessee explained the source of income of the directors as well as submitted the confirmation of the lenders wherefrom

With respect to the loan received from Nisiddh Vision Private Limited assessee submitted that in the remand report the learned assessing officer has categorically noted that assessee has obtained a loan from Nisiddh vision private limited of ₹ 1,981,059,500/– for which the assessee has submitted the copy of the Ledger account of the parties, bank statement, confirmation, income tax return of the lender. Further assessee has also given

with respect to the deletion of addition of ₹ 24,99,99,000/– of share capital received from one of the director Mrs. Akhsa Kamboj the learned CIT – A held that:- i. Appellant during the appellate proceedings has submitted complete details i.e. a) copy of the appellant PAN including name address and jurisdiction b) copy of ITR acknowledgement deposited, c) copy of the composite application form in relation to share application, d) copy of the board resolution. ii. In remand proceedings director of the company Ms Aksha khamboj has submitted complete details in response to notice under section 133 (6) of the act i.e. a) Ledger account of the amount invested in KBJ venture private limited along with bank statement highlighting transactions of amount invested, e) Ledger account of parties from whom loan was availed along with bank statement highlighting the transaction of loan availed from those parties and f) ITR acknowledgement of the parties from whom loan was availed along with annual return. v. Due to the lockdown imposed in the state of Maharashtra in the second wave of Covid 19 pandemic since Apple 2021 the necessary details could not be submitted by the assessee as the office of the assessee is located in a containment zone which resulted into the any ability from the side of the assessee as well as from the director of the company in submitting the details. 028. With respect to the addition of ₹ 1,981,059,501/– being unsecured loan availed from Nissidh vision private limited, addition was deleted after considering the remand report and submission of the assessee giving following reasons :- ii. proof of repayment of the entire loan amount to the lender by showing the confirmation of repayment and bank statement highlighting the transaction of loan iii. Assessee has submitted the source of fund available with Nissidh vision private limited from nine different companies. For all these nine entities assessee has submitted their bank account, permanent account number, return of income, annual accounts, annual return and confirmation of giving loan to Nissidh vision private limited. iv. The learned assessing officer issued notice under section 133 (6) of the act to the lender Nissidh Vision private limited who responded by submitting its annual return, annual accounts, bank statement, return of income and confirmation of giving loan. The lender also proved the source by giving the name of nine entities from whom initiate v. The learned that assessing officer issued notice under section 133 (6) of the act to all those nine entities to submit the necessary details. Out of the nine entities, eight entities responded to the notice under section 133 (6) of the act by submitting their income tax return, confirmation, the account copy, Ledger's, the annual reports, bank statements et cetera.

The learned CIT DR vehemently submitted that during the course of the assessment proceedings the assessee was given several opportunities but assessee did not furnish the requisite information therefore at the time of assessment assessee failed to submit those details and accordingly the learned assessing officer is aggrieved violation of the additional evidences by the learned CIT – A.

With respect to the ground of appeal number 1, the learned AR submitted that it was a Covid period and assessee could not submit the details because the office of the assessee was situated in a containment zone declared by the government of Maharashtra. In these circumstances, the staff of the assessee could not access the record in the office of the assessee and therefore it could not be submitted. He submitted that there is no infirmity in the admission of the additional evidences by the learned CIT – A.

We have carefully considered the rival contention and perused the orders of the lower authorities. It is an admitted fact that the assessee could not submit some information before the assessing officer. Before the learned CIT – A assessee submitted the copy of response from the efiling portal placed at

With respect to ground number two the learned AO is aggrieved by the action of the learned CIT – A in deleting the addition of ₹ 249,999,000/– made by the assessing officer under section 68 of the act without appreciating the fact that the assessee failed to prove the genuineness and creditworthiness of creditor in light of the glaring fact that the source of funds were borrowed from other parties by the creditor and same was invested in the form of share capital.

The learned authorized representative submitted that assessee has provided the income tax return of the sum deposited by the director in the assessee company as share capital. He submits that assessee has given the income tax return for four different assessment years to show that the director is earning substantial sum. He further referred to the statement of the director with Kotak bank Ltd wherein the amount was shown to have been deposited in the assessee company. He referred to the bank statement placed at paper book page number 27 and 28 which shows that when the

We have carefully considered the rival contention and perused the orders of the lower authorities. We have also considered remand report submitted by the learned assessing officer and paper book filed by

With respect to ground number 3 of the appeal the learned CIT DR stated that the learned CIT – A is not justified in deleting the addition of ₹ 1,981,059,501 without appreciating the fact that the assessee has failed to prove the genuineness and creditworthiness of the creditors. He submitted that the amount is received by the assessee from Nissidh Vision private limited, initial provision private limited income received the above amount from nine different entities. Also those nine entities, some of them have incurred the losses and some of them have low income and therefore the creditworthiness of those parties who deposited income the money with initial provision private limited which the Internet been deposited by that company with the assessee company lacks creditworthiness of the transaction. The learned CIT – A has not considered this aspect and therefore the order of the learned CIT – A is not sustainable.

We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also considered the remand report furnished by the assessing officer before the learned CIT – A. We have also considered the paper book submitted before the learned CIT – A and also the several judicial precedents relied upon by the parties.

The fact clearly shows that the learned assessing officer has made an addition under section 68 of the income tax act with respect to the loan received by the assessee company from another company Nisidh vision Private Limited as during the course of assessment proceedings the assessee failed to produce the necessary evidences. Before the learned CIT – A assessee submitted additional evidences which were admitted and sent for the verification before the learned assessing officer. The additional evidences were in the form of confirmation, bank statement, annual balance sheet and profit and loss account, income tax return of NVPL. The learned assessing officer examines those evidences submitted. He issued notice under section 133 (6) of

Now we come to the cross objection filed by the assessee wherein it has been challenged that the assessment order is bad in law for the reason that the provisions of section 144B (9) of the act have not been followed. When questioned by the bench that such provision has been omitted with effect from 1/4/2021 and the impugned assessment order is passed on 21/4/2021, the learned authorised representative submitted that he does not want to press the cross objection in view of the above amendment where the provisions of section 144B (9) are omitted. In view of submission of the learned AR, cross objection filed by the assessee is dismissed.

In the result appeal filed by the AO and cross objection of the assessee are dismissed.