APPU GHAR ENTERTAINMENT P.LTD,NEW DELHI vs. ACIT, CENTRAL CIRCLE-2, NEW DELHI

Both appeals of the assessee for Assessment Year (‘AY’) 2017-18 and 2018-19 are directed against orders dated 16.06.2022 of the Commissioner of Income Tax (Appeals)-23, New Delhi [‘CIT(A)’].

There are only one issue raised in each appeal. The sole issue raised in AY 2017-18 is taxability of ₹ 61,20,000/- under section 69 of the Act and the & 2114/Del/2022 Appu Ghar Entertainment Ltd. sole issue raised in AY 2018-19 is taxability of ₹ 4,10,00,000/- under section 68 of the Act.

The relevant facts giving rise to the appeal of AY 2017–18 are that the assessee had made payment of ₹ 61,20,000/- to a non-resident; namely, D E Shaw Composite Investments Appu (Mauritius) Ltd. as evident from the details in Form 15CA filed by the assessee. However, during the course of assessment proceedings, the assessee not only failed to explain the source of payment of ₹ 61,20,000/- but it also failed to file corroboratory documents substantiating its claim of acquisition of Foreign Convertible Debentures (FCD) in lieu of payment of ₹ 61,20,000/- though the Ld. AO provided many opportunities of being heard to do so. Therefore, the Ld. AO taxed the sum of ₹ 61,20,000/- under section 69 of the Act. Dissatisfied with this assessment order of AY 2017-18, the assessee filed appeal before the Ld. CIT(A) but did not succeed because it did not bring any material before the Ld. CIT(A) to contradict the finding of the Ld. AO as it never ensured any compliance though the Ld. CIT(A), as detailed in para 4 of impugned order, provided 11 opportunities of being heard. Hence, this appeal is before us.

The relevant facts giving rise to the appeal of AY 2018-19 are that the assessee had received unsecured loan of ₹ 4,10,00,000/- from one of its Group concern; namely, M/S Appu Ghar Securities & Solutions Pvt. Ltd. However, during the course of assessment proceedings, the assessee not only & 2114/Del/2022 Appu Ghar Entertainment Ltd. failed to explain the credit worthiness of M/S Appu Ghar Securities & Solutions Pvt. Ltd. but also the source of ₹ 4,10,00,000/- with corroboratory evidences though the Ld. AO provided many opportunities of being heard to do so. Therefore, the Ld. AO taxed the sum of ₹ 4,10,00,000/- under section 68 of the Act. Dissatisfied with this assessment order of AY 2018-19, the assessee filed appeal before the Ld. CIT(A) but did not succeed because it did not bring any material before the Ld. CIT(A) to contradict the finding of the Ld. AO as it never ensured any compliance though the Ld. CIT(A), as detailed in para 4 of impugned order, provided 09 opportunities of being heard. Hence, this appeal is before us.

This case was scheduled 11 times for hearing since March, 2023. However, neither anyone from the appellant assessee side attended ever nor even adjournment was ever sought. Due to consistent non-prosecution from the appellant assessee side, we have no option except to decide this case after hearing the Ld. Senior Departmental Representative (‘Sr. DR’). Accordingly, we proceeded with. We therefore, heard the Ld. Sr. DR at length, who drew our attention to various paras of assessment orders and impugned appellate orders to submit that reasonable opportunities of being heard were provided to the appellant assessee by the Authorities below. However, the appellant assessee tactfully ensured noncompliance to avoid proper investigations/enquiry.

The Ld. Sr. DR, placing emphasis on various parts of both appellate orders and reliance on the case laws cited therein by the Ld. CIT(A), submitted that the assessee did not file any corroboratory evidence before the Authorities below. He submitted that the assessee had neither explained the source of payment of ₹ 61,20,000/- to non-resident in AY 2017-18 nor explained the genuineness of loan of ₹ 4,10,00,000/- along with the credit worthiness of lender in the AY 2018-19. The appellant assessee failed to explain and discharge its onus to satisfy the Ld. AO as far as crucial limbs of sections 68 and 69 of the Act are concerned. The Ld. Sr. DR, besides the case laws cited by the Ld. CIT(A), also placed reliance on various judicial pronouncements regarding sections 68 and 69 of the Act. He prayed for dismissal both appeals.

We have heard Sr. DR and have perused the material available on record. The sole issue for our consideration here in each appeal is the taxability of ₹ 61,20,000/- under section 69 of the Act in AY 2017-18 and the taxability of ₹ 4,10,00,000/- under section 68 of the Act in AY 2018-19. We find force in the arguments/submissions/contentions of the Ld. Sr. DR that the appellant assessee had not discharged its onus to explain the sum of ₹ 61,20,000/- in AY 2017-18 and the sum of ₹ 4,10,00,000/- in AY 2018- 19. According to the section 68 and 69 of the Act, the assessee offers no explanation about the nature and source of the same or explanation offered & 2114/Del/2022 Appu Ghar Entertainment Ltd. by him is not found satisfactorily in the opinion of the AO, the said sum may be charged to tax as the income of the assessee of the relevant year. The identity, source of investment, creditworthiness/financial strength of the lender and genuineness of such transactions have to be explained by the assessee.

Under sections 68 and 69 of the Act, the burden of proof is on the assessee. However, in both appeals, the appellant assessee has not discharged its onus. The appellant assessee has neither explained the source of investment in AY 2017-18 nor the creditworthiness of the persons who advanced the loan along its genuineness. The creditworthiness of the person advancing loan to the assessee has not been demonstrated beyond doubt either before the AO or the CIT(A). The Hon’ble Supreme Court in the case of N. R. Iron and Steel Pvt. Ltd. SlP No. 29855 of 2018, referring the decision of Hon’ble Delhi High Court in the case of Oasis Hospitalities Pvt. Ltd. 333 ITR 119 (Del.) observed that merely proving the identity of the investor/lender does not discharge the onus of the assessee. In the case of Nemi Chand Kothari 264 ITR 254 (Gau.), it has been held that it cannot be said that a transaction, which takes place by way of cheque, is invariably sacrosanct.

In both appeals, the appellant assessee has failed to bring any material on the record to contradict the finding of the Ld. CIT(A). Thus, in view of the & 2114/Del/2022 Appu Ghar Entertainment Ltd. above, we do not find any infirmity in the findings of the Ld. CIT(A) in these appeals. We therefore, decline to interfere with the findings of the Ld. CIT(A) in these appeals. Thus, both appeals stand dismissed.

In the result, both appeals of the assessee are dismissed as above.