M/S REFORM REALTY & LOGISTICS DEVELOPMENT PRIVATE LIMITED,CHENNAI vs. DCIT, CENTRAL CIRCLE-1(2), CHENNAO

आदेश / O R D E R

PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax (Appeals)-18, Chennai [hereinafter “CIT(A)”] dated 06.03.2023 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 153A of the Income-tax Act, 1961 (hereinafter “the Act”) dated 25.09.2021.

ITA No.437/Chny/2023 :- 2 -: 2. The grounds of appeal raised by the assessee are as under:

“1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an additions in the assessment completed U/s.143(3) r.w.s. 153A of the Act without any incriminating documents is being found during the course of search. 2. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition of Rs. 10,00,000/- u/s.68 of the Income Tax Act, 1961, by treating the share capital as alleged unexplained cash credit, without considering the facts & circumstances of the case. 3. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in invoking the provision of Section 115BBE of the Act, without considering the facts & circumstances of the case.”

has been conducted at the residential/business premises in the cases

of Golden Shelters Pvt. Ltd., NKV Krishna Group on 16.10.2019 and

the office premises of the assessee-company being the group concern

was also covered in the search operation. The A.O initiated

assessment proceedings u/s. 153A of the Act and made the addition of

share capital introduced by Shri NKV Krishna and Smt. K Preetha of

Rs.5,00,000/- each in cash u/s. 68 of the Act. The A.O in the

assessment order has noted that during the course of search and

seizure action it was found that there are 137 concerns for which

books of accounts are maintained in the Rutland Towers office and Mr

Sarvan Kumar who was maintaining the tally data stated the cash

ITA No.437/Chny/2023 :- 3 -: deposit and introduction of share application money. It was further

stated that Sri Bagavan, Shri NKV Krishna and Smt. Preetha Krishna

were conducting wellness programmes, homams, meditations and

other related activities and from these activities unaccounted income

was generated by way of cash. A pen drive was also found and

seized from the residence of Shri Badri Narayan Kota, friend of Shri

NKV Krishna and director of group company handling unaccounted

transactions and unaccounted cash of the group. Shri Saravana

Kumar, Accounts Manager of the group company has explained the

modus operandi and stated that unaccounted cash were brought in

either as the share capital or advance/unsecured loan. The A.O has

made the addition of share capital introduced by Shri NKV Krishna and

Smt. Preetha of Rs. 5,00,000/- each in cash in the books of account

u/s. 68 of the Act. In appeal before Ld. CIT(A), assessee has

submitted that the share capital of Rs 10,00,000 in the name of Shri

NKV Krishna and Smt. K . Preetha has already been recorded in the

books of account of the company and therefore, the addition made by

the Ld. AO is not based on any incriminating material and therefore

should be deleted in order passed u/s 153A. The Ld. CIT(A) has

confirmed the addition holding that the addition made was based on

the pen drive seized from the residence of Shri Badri Narayan Kota,

and statement made during the search by various persons revealing

ITA No.437/Chny/2023 :- 4 -: the modus operandi that unaccounted cash receipts was utilized for

investment in various companies, in the form of share capital ,

therefore the addition made emanated from the incriminating material

found during the course of search. The Ld. CIT(A) confirmed the

addition made u/s. 68 of the Act as nature and source has not been

proved and affirmed that it is to be taxed at special rate as per

provisions of section 115BBE.

us has argued that the share capital of Rs. 10 Lakhs has already been

recorded in regular books of account, therefore in view of the decision

of Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell

(P.) Ltd. [2023] 454 ITR 212 (SC), addition u/s 68 on the basis of

regular books of account cannot be sustained The Ld. AR has argued

that the addition has been made on the basis of regular books of

accounts, but not on the basis of incriminating material. The Ld. AR

has also took us through various annexures, seized documents to

impress upon the point that the assessee company name is not

mentioned in the documents of details of introducing unaccounted

cash in the share application money and unsecured loan/advances.

The Ld. CIT(A) therefore prayed for deletion of addition made u/s 68 in

order passed u/s 153A.

ITA No.437/Chny/2023 :- 5 -:

supported the order of Ld. CIT(A) and argued that the A.O has made

the addition on the basis of pen drive seized during the search and

statement made by the persons maintaining the account elaborating

the modus operandi of generation of unaccounted cash and their

introduction in the company as a share capital.

available on record. The assessee-company as a part of group

company of NKV Krishna group, where search was conducted on

16.10.2019 u/s 132 of I T Act. The A.O has made the addition of

share capital of Rs. 5,00,000/- each introduced by Shri NKV Krishna

and Smt. Preetha u/s. 68 of the Act. The Ld. CIT(A) has noted that the

assessee has not been able to explain the source of cash deposit and

the nature of cash recorded in the books of account and confirmed the

addition. The Ld AR took us to the seized documents of Annexure-I,

II, III and IV where details of introducing unaccounted cash into share

application money and unsecured loan /loan and advance was listed

and assessee company name does not figure in any of these

documents. The AO has made the addition based on the general

statement that unaccounted cash was introduced as share capital

without referring to any specific documents. The documents produced

ITA No.437/Chny/2023 :- 6 -: by the Ld DR as incriminating material was the copy of cash book and ledger account of Shri NKV Krisha and Preetha ji, which are entries of regular books of account . We therefore hold that addition of share capital of Rs 10,00,000/ has not been made based on incriminating material found during search The AO in the assessment order u/s 153A has assessed income at Rs 9,40,000/- against returned loss of Rs 60,000 , thus making only addition of share capital of Rs 10,00,000 u/s 68 of the Act. Therefore, in view of Honorable Supreme Court decision in the case of Abhisar Buildwell (P) Ltd addition cannot be sustained in present case without there being incriminating material. We accordingly delete the addition of share capital of Rs.10,00,000 u/s 68 of Income Tax Act made by the AO .

Order pronounced on 25th October, 2024.

Sd/- Sd/- (यस यस िव�ने� रिव) (जगदीश) (Jagadish) (SS Viswanethra Ravi) लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य सद�य / Judicial Member �याियक �याियक सद�य �याियक �याियक सद�य सद�य चे�नई/Chennai, �दनांक/Dated: 25th October, 2024. EDN/-

ITA No.437/Chny/2023 :- 7 -:

आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF