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TMI Blog2015 (12) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority in confirming the addition of ₹ 3,70,36,474/- being the unrecoverable advance under the head "Administrative and Other expenses". - Decided against assessee. Addition under Section 69A - Held that:- The agreement for sale of the property discloses the sale consideration at ₹ 16,26,00,084/-. It is not known how the very same property was sold for ₹ 31,07,20,000/-. That means, the assessee is not willing to disclose all the material facts relating to the above said transaction. The sale deed dated 28.03.2008 was executed within two months from the date of the agreement, i.e. on 04.02.2008. Within two months period from the date of agreement, the value of the property will not go to the extent of ₹ 31,07,20,000/-. Therefore, the assessee obviously invested undisclosed money in the transaction and on sale of the property, now bringing the same as short term capital gains. The sale deed dated 28.03.2008 was executed in favour of M/s AGS Properties Development (India) Private Limited by one Shri R.R. Aroonkumar. The power of attorney was executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annel, that alone will not prove the genuineness of transaction. - ITA No. 1115/Mds/2014, ITA No.1899/Mds/2014 - - - Dated:- 16-9-2015 - N. R. S. Ganesan, JM And A. Mohan Alankamony, AM For the Appellant : Sh B Ramakrishnan, CA For the Respondent : Shri P B Sekaran, CIT ORDER Per N R S Ganesan, Judicial Member Both assessee and Revenue have filed the present appeals against the order of the Commissioner of Income Tax (Appeals)-V, Chennai, dated 27.03.2014, for the assessment year 2008-09. Therefore, we heard both the appeals together and disposing of the same by this common order. Let's first take assessee's appeal in I.T.A. No.1115/Mds/2014. 2. The first issue arises for consideration is with regard to disallowance of ₹ 3,70,36,474/- being the unrecoverable advance. 3. Sh. B. Ramakrishnan, the Ld. representative for the assessee, submitted that under the head Administrative and Other expenses , the assessee had claimed ₹ 3,70,36,474/-. The tax deducted at source receivable amounting to ₹ 1,76,13,603/- was also part of the sales already offered in the earlier year. Therefore, the same qualifies for written off under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The fact remains is that the investment made by the assessee is in the capital asset. The assessee claims the same under the head Administrative and Other expenses . Since the expenditure relates to capital asset, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority in confirming the addition of ₹ 3,70,36,474/- being the unrecoverable advance under the head Administrative and Other expenses . 7. The next ground of appeal is with regard to disallowance of ₹ 50 lakhs claimed as bad debt. During the course of hearing, Sh. B. Ramakrishnan, the Ld. representative for the assessee, submitted that he was instructed not to press this ground before this Tribunal. The Ld. representative also clarified in the note filed before this Tribunal during the course of hearing that the ground relating to bad debts of ₹ 50 lakhs is not pressed. 8. In view of the above, this ground of the appeal with regard to disallowance of bad debts is dismissed as not pressed. 9. The next ground of appeal is wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a considerable time gap between the date of agreement for purchase of property and the date on which the sale was executed. Moreover, the details of advance received and the balance amount received were not reflected in the books of the assessee. In the absence of any details of transaction relating to sale of land to M/s Arihant Hospitality (Chennai) Private Limited, the CIT(Appeals) found that the Assessing Officer has rightly upheld the addition made under Section 69A of the Act. Even before this Tribunal, the assessee could not file any details with regard to the amount said to be received on sale of property. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the addition. 12. We have considered the rival submissions on either side and perused the relevant material on record. The Assessing Officer disallowed the claim of the assessee and made addition of ₹ 31,07,20,000/- under Section 69A of the Act on the ground that the purchase and sale of the property was not reflected in the fixed asset schedule of the company. The CIT(Appeals) found that the assessee has not filed any details before the lower authorities. The CIT(Appeals) further found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered opinion that the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer under Section 69A of the Act. This Tribunal do not find any infirmity in the order of the CIT(Appeals) and accordingly, the same is confirmed. 13. The next ground of appeal is with regard to addition of ₹ 2,28,18,258/-. 14. During the course of hearing, Sh. B. Ramakrishnan, the Ld. representative for the assessee, submitted that he was instructed by the assessee not to press this ground of appeal. The Ld. representative has also filed a note of agreement before this Tribunal during the course of hearing saying that the ground relating to writing off of capital work-in-progress to the extent of ₹ 2,28,18,258/- is not pressed. 15. In view of the above, the addition made by the Assessing Officer to the extent of ₹ 2,28,18,258/- is confirmed and the ground of appeal raised by the assessee is dismissed as not pressed. 16. In the result, the appeal of the assessee is dismissed. 17. Now coming to Department's appeal in I.T.A. No.1899/Mds/2014, Shri P.B. Sekaran, the Ld. D.R. submitted that the assessee-company is engaged in the business of infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee. Referring to Section 170 of the Act, the Ld. D.R. pointed out that in case of succession of business, by way of transfer and the predecessor-company was in existence, such predecessor shall be assessed in respect of the income of the previous year in which the succession took place, upto the date of succession. The Ld. D.R. clarified that it is not a transfer of business. It is a merger of one company into another company, namely, M/s PVP Enterprises Pvt. Ltd. merged with assessee-company by way of amalgamation. Therefore, there is no transfer of business involved in this case. It is a case of merger of M/s PVP Enterprises Pvt. Ltd. into M/s PVP Ventures Ltd. Therefore, on the date of merger, M/s PVP Enterprises Pvt. Ltd. looses its identity and it is no longer in existence. Once the predecessor is not in existence, in the eye of law, no assessment could be made in the hands of the predecessor-company. If at all any assessment was made in the hands of M/s PVP Enterprises Pvt. Ltd., then that would amount to making assessment in favour of the company, which is not in existence. Therefore, the assessment order would be nullity in the eye of law. In fact, while cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -08, admitted the receipt of ₹ 508.72 Crores from M/s Platex Ltd., Mauritius. Referring to paragraph 9 of the order, the Ld. representative submitted that in view of the admission made by the Assessing Officer with regard to receipt of ₹ 508.72 Crores from M/s Platex Ltd., Mauritius, the genuineness cannot be doubted at this stage. The Ld. representative further submitted that the Assessing Officer has also made assessment with regard to interest income of Platex Ltd., Mauritius in the hands of the present assessee and also made protective assessment in the hands of M/s Platex Ltd., Mauritius. These orders of Assessing Officer were annulled by this Tribunal at Hyderabad on the ground that there ws no jurisdiction for the Assessing Officer at Hyderabad after merger of M/s PVP Ventures Pvt. Ltd. 21. Referring to Facility Agreement said to be entered into by M/s Platex Ltd., Mauritius with Deutsche Bank, Singapore Branch, the Ld. representative for the assessee submitted that Deutsche Bank provided loan to M/s Platex Ltd., Mauritius. Referring to page 84 of the paper-book, this is the bank statement from Development Credit Bank Ltd. which shows that M/s PVP Ventures Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. from SSI Limited. Now, when the company M/s PVP Ventures Pvt. Ltd. is not in existence, the question arises for consideration is whether the addition, if any, could be made in the hands of M/s PVP Ventures Pvt. Ltd. or in the hands of M/s PVP Ventures Ltd., Chennai. 23. We have gone through the provisions of Section 170 of the Act, which reads as follows:- 170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,-- (a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assessed in respect of the income of the previous year after the date of succession. (2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 170(2) of the Act, whenever the predecessor-company was not found or not in existence, then the assessment has to be made only in the hands of the successor-company. In the case before us, the amalgamation admittedly took place on 01.10.2007. Therefore, on and from 01.10.2007, M/s PVP Ventures Pvt. Ltd. is not in existence. Therefore, the question arises for consideration is when a company is not in existence due to amalgamation with effect from 01.10.02007, whether still the assessment can be made in the hands of the predecessor-company? This issue was considered by the Kolkata Bench of this Tribunal in Pampasar Distillery Ltd. v. ACIT (2007) 15 SOT 331. After referring to Section 170 of the Act, more particularly, Section 170(2) of the Act, found that in the case of amalgamation, when one entity takes over the business of another entity, the same may be the case of succession of business. Referring to the amalgamation, the Tribunal found that the amalgamating company is not in existence, therefore, no assessment can be made in the hands of non-existing company. The Tribunal found that if at all any assessment can be made, it should be made in the hands of the amalgamated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of its own, it is not known how Deutsche Bank could come forward to sanction more than ₹ 500 Crores as loan by way of Facility Agreement. In view of financial statement of M/s Platex Ltd., Mauritius and the fact that Shri Prasad V. Potluri is a common Director in all the three companies, namely, M/s Platex Ltd., Mauritius, M/s PVP Ventures Pvt. Ltd. and M/s PVP Ventures Ltd., Chennai, creates a doubt that the money might have been flown from the assessee-company to M/s Platex Ltd., Mauritius and by way of investment would have come back to Chennai through banking channel. Unfortunately, this fact was not examined by the lower authorities. Therefore, this Tribunal is of the considered opinion that the matter needs an investigation by the Assessing Officer as it was done in the case before Apex Court in CIT v. P. Mohanakala (2007) 291 ITR 278. The Assessing Officer has to examine when M/s Platex Ltd., Mauritius had no net worth and it could not generate any income of its own, how Deutsche Bank was able to sanction loan facility of more than ₹ 500 Crores. It also needs to be examined whether any loan was sanctioned and disbursed by Deutsche Bank to M/s Platex Ltd., Mau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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