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TMI Blog2024 (4) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 143(3) r.w.s. 147 by invoking section 69A of the Act." 3. Brief facts leading to the case are that a survey action under section 133A of the Act was undertaken in the case of M/s VMS Industries, Ahmedabad on 10.12.2010. Two months later and consequent to that, survey was also conducted in the case of the assessee and in the case of M/s Softouch Cosmetic Marketing P. Ltd. Bhavnagar ("SCMPL" for short) on 01.2.2011 in the office premises. During the course of survey it was revealed that the assessee had received an amount of Rs. 4,45,17,089/- from the bank account of M/s.J.D. Steel and its associate firms ("JDS" for short) during the impugned year, and the transactions thereof were not reflected in the return of income. The case of the assessee was reopened by issuing notice under section 148 of the Act on 19.3.2012. Thereafter assessment was framed under section 147 of the Act, treating the amount received by the assessee of Rs. 4,45,17,089/-, from the bank accounts of "JDS" and its associates, as own funds of the assessee, allegedly brought into its books as and in the guise of unsecured loans received from other parties. The same was accordingly added to the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in the case of M/s.VMS industries by the Department during the survey action conducted under section 133A of the Act revealed it had received huge share application money by allotting shares to various parties numbering seventeen, listed at page no.8 of the ld.CIT(A) at a huge premium, which was not justified. iii) That the Department was also aware of the fact that from the survey action conducted, these shares of M/s.VMS at huge premiums were immediately thereafter bought by the promoter and their relatives at a much lower rate; substantially below par value. The investigation wing of the Department was aware that using this modus operandi, the promoters had introduced their own unaccounted income in the form of share capital/premium routed through various fictitious concerns. iv) That the share capital introduced in M/s.VMS included the amount received from the "SCMPL" amounting to Rs. 3.34 crores. The survey also revealed that the funds had flown into "SCMPL" from the assessee before us, i.e. Global Ship Trade P. Ltd. who in turn had received this fund from the bank account standing in the names of various proprietorship concerns of Shri Haresh Parmar. The ld.counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed the same in its income tax return filed. The ld.counsel for the assessee pointed out that it had been stated to the Ld.CIT(A) that no man of normal prudence would throw away his huge money by incurring huge losses, and not even claiming loss in its income tax return. The ld.counsel for the assessee contended that this improbability was pointed out to the ld.CIT(A) to demonstrate the fact that the assessee was not actually beneficiary in the transaction, and was only used as an intermediary for the personal benefits of the promoters and other associated concerns of VMS Industries. Further, the ld.counsel for the assessee, pointed out that after demonstrating all the above facts, which were very much in the know of the Department, it was pointed out to the ld.CIT(A) that the AO while making addition of the impugned amount of Rs. 4,45,17,089/- received from JDS and others, had gone on to record incorrect facts. It was pointed out to the ld.CIT(A) that while the AO had recorded the fact of shares of M/s.VMS Industries sold at premium at Rs. 2/- per share, but the fact of the matter was, they were sold at a price of Rs. 2/- per share, which was much below par, and that it had po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account in the name of the firm and signed blank cheques, for which, he was given Rs. 5000/- per month. All these facts were verified from the bank statements of JDS and its associates concerns, and entire transaction and money trail from JDS to the assessee, M/s.Global Trade P.Ltd., and sister concern "SCMPL" identified in the said order. It was pointed out that, the AO in the said order, had also noted the statement of the director of the assessee-company, admitting to the fact of the VMS Industries being the ultimate beneficiary of these funds. The ld.counsel for the assessee further pointed out from the assessment order in the case of VMS that even the AO of "SCMPL" had admitted to this modus operandi adopted. 12. After having pointed out all the above, the ld.counsel for the assessee contended that surrounding facts and circumstances, which were adequately demonstrated to the ld.CIT(A) clearly pointed out to the facts, without any doubt, that money introduced in the assessee-company was not its own and that of VMS Industries. The ld.counsel for the assessee contended that the despite clarity of the facts, the ld.CIT(A) still went on to confirm the addition in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow prices below par to the promoters of the company and their relatives. The Department was aware of the absence of any justification of the unreasonably high price at which shares were sold to the assessee-company and the "SCMPL" or of the price at which it was sold to the promoters of M/s.VMS industries and its associate concern. Each and very fund trail of the transaction was in the knowledge of the Department, which is evident from the fact noted in the order of the VMS industries Ltd. wherein entire movement of each and every fund from the firm of Haresh Parmar to the assessee-company and the "SCMPL" and ultimately to VMS Industries was identified. The Ld.CIT(A) does not dispute this fact which was brought to his notice by the assessee during appellate proceedings. Nor does the Ld.DR before us. 16. Coupled with this is the admission of the director of the assessee-company, who was also director of the "SCMPL", who had admitted entire modus operandi of its transaction in the statement recorded post-survey action conducted on the assessee-company. He had also revealed, how the director of VMS Industries, Shri Manoj Jain who was auditor of the assessee-company had used his fidu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Coming to the fact that the addition made in the hands of the VMS Industries of these funds stood deleted by the ld.CIT(A), we have been informed that the Department had gone in appeal against the order of the ld.CIT(A), but during the pendency of the appeal, the assessee settled the dispute under VSVS scheme. Therefore, no benefit can be derived from the appellate order passed in the case of VMS industries. 20. Ignoring thus the appellate order passed in the case of M/s VMS Industries and considering the entire facts and circumstances of the case, which had been extracted from the inquiry from the Department itself, by conducting survey on all the persons concerned in the money trail including the ultimate beneficiary and intermediary i.e. the assessee and the "SCMPL", the preponderance of probability is to the effect that the money introduced to the assessee-company from JDS Industries was not its own income. For this proposition, we heavily rely on the decision of the Hon'ble Apex court in the case of Sumati Dayal Vs. CIT (1995) 214 ITR 801. 21. In view of the above, the addition made in the present case is held to be not sustainable and is directed to be deleted. Ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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